When it comes to boosting growth, there is one thing that the new Labour government is banking on more than anything else: reform of the planning system.
Just look at the party’s manifesto. “Britain is hampered by a planning regime that means we struggle to build either the infrastructure or housing the country needs,” the manifesto said, saying it acts as a “major brake on economic growth”.
The new Labour government is expected to announce reforms in a matter of days in an indication of how important this issue is for the government.
So how do Labour hope to get Britain building again?
Housing
The housing shortage is widely seen as a major factor contributing to the slowdown in productivity growth, because it prevents people from living in Britain’s most productive areas.
It has also contributed to increasing unaffordability of housing. In England and Wales, the average house is now worth over eight times the average annual salary, up from just over four times in 2000.
Labour has pledged to build 1.5m new homes over the course of the next parliament. The latest available figures show that only 234,000 new dwellings were completed in the 2023 financial year, which was little changed on 2022.
To achieve this, Labour will re-introduce mandatory housebuilding targets for local councils, which were dropped by the Conservatives in 2022 under pressure from backbenchers.
The party has also promised to free up lower quality parts of the green belt for construction, dubbing these areas the ‘grey-belt’.
A further part of the plan to get Britain building again is to reform so-called ‘hope value’ payments.
Under current compulsory purchase rules, authorities have to compensate landowners for the value of land if it were sold with planning permission, rather than the market value. Development land with planning approval is worth around 80 times more than agricultural land.
Taking away the requirement to pay the ‘hope value’ will make it cheaper for local authorities to deliver affordable houses.
A final feature is to boost resources for the planning industry by hiring 300 extra planners. Last year, the Institute reported that from 2013 to 2020, a quarter of planners left the public sector.
Claire Dutch, co-head of planning at law firm Ashurst said, successive governments had “drained local planning authorities of scant resources”.
Infrastructure
The other part of the planning regime concerns infrastructure, where Britain also struggles.
As a recent report from the Tony Blair Institute said: “The UK has fewer 5G sites per person than the United States (US), Japan and European Union (EU), it has some of the lowest levels of water storage and its energy system is not ready to power the decade of electrification that lies ahead.”
The most simple aspects of reforming planning rules around infrastructure is widening the list of projects which are eligible for the National Significant Infrastructure Project (NSIP) regime.
This would make the biggest difference for things like 5G infrastructure or gigafactories, which were not particularly important when the policy proposals were first introduced back in 2012.
The NSIP regime was introduced specifically to limit local veto power on important pieces of infrastructure, but this is no longer proving effective. Since 2012, when the system was last reformed, the average time it takes to secure consent has increased by 65 per cent, rising to more than four years from the previous two and a half.
The big question for Labour is essentially the extent to which the party is willing to limit engagement with communities affected by the projects.
The rhetoric has been very punchy. “I’m not going to accept a situation where our planning system means it takes 13 years to build an offshore wind farm,” Starmer has said.
However, there has not been any real detail on how they will update the policy framework to facilitate the construction of infrastructure. Many governments have put planning reform at the centre of their agenda, although none has really succeeded.
As analysts at Oxford Economics said, “delivering on these ambitions is easier said than done”.