Chamber of Commerce warns new Gove housing reforms could ‘squeeze out’ economic activity from the capital

The London Chamber of Commerce and Industry (LCCI) has warned housing reform proposals, announced by Michael Gove today, could “squeeze out” economic activity in the capital.

Levelling up and housing secretary Gove announced plans on Tuesday to drive more so-called ‘brownfield’ site developments in London, pouring pressure on local councils to ramp up new home construction.

Gove is pushing every council in England to prioritise housebuilding on brownfield sites – land that has previously been used – with a particular focus on those councils falling short on housing targets, estimated to be around 80 per cent.

But interim chief executive of LCCI, Karim Fatehi MBE, said it is “imperative that any reforms to housebuilding in The London Plan do not squeeze out land for economic activity and jobs in favour of meeting the need for the greater provision of affordable housing in London.”

LCCI members are concerned that the allocation of land is veering away from economic purposes as demand for online commerce has surged.

Fatehi said a dearth of available logistics space has muscled businesses further out of London, impacting their ability to serve consumers and stripping the capital of job opportunities.

“The London Chamber will study the details of the proposed plan and we will engage with the Government, businesses and The Mayor of London to ensure they are workable for businesses,” he added.

It comes as the government is fumbling to solve Britain’s deepening housing crisis, following anger about the challenges of home ownership especially among younger voters, ahead of the upcoming general election.

Gove’s proposed changes include making it tougher for large city councils to reject brownfield construction if housing targets are missed.

Responding to the planning reform proposals, London Councils’ executive member for housing, Darren Rodwell, said: “Boroughs are strongly pro-housing growth and doing everything they can to turbocharge building the new homes Londoners desperately need. These developments are almost always on brownfield sites.”

But, according to Rodwell, the main problems holding London’s housebuilding efforts back are “insufficient capital funding and infrastructure investment, as well as construction skills shortages.”

Boroughs are concerned that the “proposed further liberalisation of permitted development rights” would undermine their local democratic oversight and accountability in the planning process. 

“Too often [Permitted Development Rights] PDR has produced poor-quality accommodation, with no affordable housing, and loss of employment sites and negative impacts on London’s high streets,” Rodwell added.

Gove’s move is also expected to collide with London mayor Sadiq Khan’s housing strategy for the capital. An independent review, commissioned by the secretary of state in December and published on Tuesday, recommended to make it easier to obtain building permits on brownfield sites.

The mayor, who faces re-election in May, branded it a “stunt” and accused Prime Minister Rishi Sunak of “undermining devolution”.

Khan also faced accusations of failing to build enough homes for Londoners last year, which he said was “desperate nonsense”.

Gove’s review stated that potential changes to the brownfield policy could increase capacity to deliver new homes by almost 11 per cent, or around 4,000 homes per year.

Sunak has reaffirmed his commitment to building one million homes during this Parliament, saying the government is “on track” to meet this.

He said: “We pledged to build the right homes in the right places – protecting our precious countryside and building more in urban areas where demand is highest. Today’s package is us delivering on that.

“The changes announced today will deliver the right mix of homes across England.”

Consultations on the brownfield presumption are due to run until the end of March.