Against a backdrop of falling growth forecasts, chancellor Rachel Reeves doubled down on the importance of planning reforms and the ‘Get Britain Building Again' agenda in her Spring Statement today.
The chancellor said she was not satisfied with the Office of Budget Responsibility's (OBR) forecast that this year's growth will be just 1% of GDP, down by half from its previous estimate.
She went to champion the Government’s wider planning strategy as central to its quest for growth, taking advantage of a positive response from the OBR in this area and Parliamentary timing, with the Planning and Infrastructure Bill having just passed its second reading.
The Bill will speed up planning decisions and reduce the number of opportunities for legal challenges to two for most challenges and only one for those judged ‘totally without merit’ – repeat judicial reviews have cost National Highways 'hundreds of millions of pounds' on its road schemes in recent years.
She told the House of Commons: ‘The Government’s [National Planning and Policy Framework (NPPF)] 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.’
The new NPPF, which came in last year, is estimated by the OBR to increase annual housebuilding by around 30% by 2029-30, taking net additions to a 40-year high, and resulting in an additional 170,000 homes over the forecast. This increases the level of real GDP by 0.2% by 2029-30, adding £6.8bn to the economy, and by over 0.4% in 2034-35, the Treasury said.
These reforms were described as ‘just the first step in the Government’s ambitious package of reforms to get Britain building again’.
‘The Government will announce details of new investment in social and affordable housing, publish a Long-Term Housing Strategy, and later in the year confirm the location of major new towns,’ it said in the Spring Statement document.
Ms Reeves will set out capital spending plans for the Parliament at the Spending Review in June. Ahead of that, the Government announced an additional £2bn for social and affordable housing for 2026-27.
This was described as ‘a down payment’ on its plans to build 1.5 million homes in England in this Parliament.
In the Spring Statement, the Government said it would increase capital spending by a further £13bn over the Parliament ‘to support growth-enhancing investments including infrastructure, housing, and defence innovation’. This is in addition to the £100bn increase in capital spending over the Parliament announced at the Budget last autumn.
The Government has committed £625m package for skills in construction, expected to provide up to 60,000 more skilled workers this Parliament.
Localis chief executive Jonathan Werran said: ‘Changes to the National Planning Policy Framework, which come at no apparent fiscal cost to help deliver 1.3 million new homes in the next five years will face the stubborn reality that you can’t house a family of four in a planning consent.
‘We must hope the requisite labour, material and skills and other infrastructure elements, whether energy, transport or water, can also materialise in line with regional strategic planning ambitions and the onward march of English devolution.
‘With this in mind, and modest though it may be against total government expenditure, the £2bn increase in capital spending to help crowd in private investment is a positive sign that we won’t repeat the ‘death slide’ of investment under George Osborne’s 2010 spending review.
‘The emerging role of the National Wealth Fund and other institutional sources must help accelerate investment at scale and pace to deliver the infrastructure we need - whether that be affordable housing, energy or fixing an immense backlog crumbling public infrastructure in the health and educational estate.’
