The government’s changes to housebuilding will result in a £6.8bn boost to GDP by 2029, according to OBR figures included in the Spring Statement.
Chancellor Rachel Reeves called the forecast the “biggest ever” positive growth impact that the OBR has projected from a non-fiscal government policy.
Changes to the UK’s housebuilding market were a cornerstone of Labour’s economic and social manifesto, with a promise to build 1.5m new homes by 2029.
After reaching office, the government made a number of significant reforms to planning.
Changes to the national planning policy framework were published in December, while the Planning and Infrastructure Bill, which aims to simplify and devolve the planning process, passed its second reading in Parliament on Monday, 22 March.
In her Spring Statement, Reeves said that changes to the planning framework would help the UK build over £1.3m homes over the next five years, taking the government “within touching distance” of its manifesto promise.
The OBR concluded that changes to the planning framwork will result in a 0.2 per cent, or £6.8bn, boost to GDP by 2029/2030, and a 0.4 per cent boost to GDP by 2035.
“The government’s planning reform measures have led to the biggest positive real GDP effect that the OBR has reflected in its forecast for a policy with no fiscal cost,” Reeves said.
The Chancellor said the government would use the additional income to reduce borrowing by £3.4bn in 2029-30
“This improvement in the growth outlook reflects only the changes to residential planning.
“The government is going further and faster to drive growth through ambitious supply side reforms, including via increased capital spending, regulatory reform and the Planning and Infrastructure Bill,” Reeves said.
Earlier this week, the government announced a £2bn top-up into the UK’s affordable housing sector as part of its pledge to revitalise residential construction, as well as £600m to help bridge the construction skills gap.
The funds precede the government’s Spending Review on June 11, which is set to feature details of a new, multi-year Affordable Homes Programme to replace the existing scheme started under the conservatives.