Government Announces Plans for Construction Sector

Government announces plans for Construction Sector

Rachel Reeves’ maiden speech as Chancellor on 8 July 2024 put the construction sector centre stage with the ambitious target to build 1.5m new homes within five years and the announcement of major infrastructure projects, the most significant planning reform since the Town & Country Planning Act 1947 and, controversially, the announcement that the government would be releasing low quality l and from the green belt for development.

It is no secret that Developers finds themselves in a perfect storm of high interest rates, land prices and construction costs, increased, burdensome regulation and a planning system that is bulging at the seams.

Rachel Reeves’ promise to “get Britain building again” and promise of the largest increase in affordable housing in a generation will be empty rhetoric without substantial planning reform, investment and fiscal stimulus.

At the forefront of the government’s announcement was the anticipated Planning and Infrastructure Bill which is intended to streamline and “modernise” the planning system.  There is very little meat on the bones at this stage, but the word “modernise” is likely to mean increased planning fees to pay for greater resource and the privatisation of much of the planning process.

Whereas the previous government’s reform promoted a centralised planning regime, the current government has announced its plans to be local plan based, with the powers to push through large developments where central government considers the local authority has got it wrong.  Giving with one hand and taking away with the other.  Local authorities will have more control over development, but with the return of mandatory housing targets and central government looking over their shoulders, we expect to see an increase in planning approvals across the next five years.  For the reasons set out below, that will not necessarily see the creation of 1.5m homes.

Some significant infrastructure projects have been shelved in the name of austerity.  The Stonehenge Tunnel, Arundel Bypass, Lower Thames Crossing and Boris’ New Hospital Programme (which, incidentally, did not involve the building of any “new” hospitals) have all been paused or aborted entirely.  But a new 10 year infrastructure strategy is to be unveiled in the spring, following up on the creation of the British Infrastructure Taskforce. We expect to see substantial investment and centralised planning decision making in respect of infrastructure projects over the term of this government.

Controversially, the government has announced that “grey belt land” (low quality/previously developed green belt land) will be made available for development, contingent on a provision of 50%+ affordable housing on such sites and the exhaustion of brownfield sites.  Successive governments have been obsessed with the idea that there are plentiful brownfield sites around the UK awaiting development.  Those Developers reading this article will know that is not the case.

What the government’s announcements do not say, is “how” their ambitious targets will be achieved, particularly in relation to planning reform, which will need to be bold to have the desired effect.  The government’s initial announcement that it would hire 300 new planning officers is dampened when you consider it would amount to 0.7 planning officers per planning authority.  We need to see real investment in the planning system and deregulation, to create an environment where there is sufficient profit for Developers to take planning and construction risk.  Until we create that environment, there is no real chance that 1.5m homes will be built in the next five years.