Is Sir Keir Starmer “betting the house” on growth?

The Labour Party’s manifesto “Change” has made clear it will not be spending its way to growing the economy, with its focus instead being rooted in creating secure foundations for growth. One key pillar of this is the party’s much vaunted pledge to build 1.5 million new homes over the course of the next parliament by reforming the planning system.

The fact the 1.5 million figure hasn’t been annualised for the 5-year parliamentary term demonstrates the “mission led” purpose to Labour’s focus. Rather than fixate on targets at any cost, the message Labour has sought to communicate through the manifesto and other prior announcements is one of certainty, stability and security; one that planning and housing professionals will be keen to see. Rome wasn’t built in a day, and neither will the new towns that the party is pledging to deliver. And, Labour’s plans for delivery can only be achieved once its reforms end up on the statute book.

What are Labour’s policies on planning and housing?

To create the conditions for getting to 1.5 million homes built, policy pledges include re-instating housing targets, devolving planning powers to Combined and Mayoral Authorities and the quietly radical promise of taking steps to ensure that “for specific types of development schemes, landowners are awarded fair compensation”, instead of a ‘hope value’ on sites owned. The last of these policies harks back nearly 50 years, when Labour leader Harold Wilson attempted to introduce land reform in the party’s October 1974 manifesto. However, with only a thin majority secured at that General Election, Wilson’s attempts to introduce reform were strangled at an early stage and never realised.

It remains to be seen how much Labour could intervene in the land market, but strategic intervention on select sites to secure more favourable terms with landowners may allow developers the fiscal headroom to commit building the physical and social infrastructure (read schools, GPs, green spaces) major developments need. Those who have spent enough time in dusty church halls running public exhibitions will know inadequate infrastructure is typically the first complaint lodged by residents, often fearful that any new communities will encroach on the limited resources they feel are available to them.

Meanwhile, the party has promised to empower Combined authorities with new planning powers, creating a requirement for them to strategically plan for housing and growth in their areas, which should enable strategic development to better align with where future job opportunities will be created via Labour’s industrial strategy. To also help facilitate more locally led planning, Combined authorities would also be granted “new freedoms and flexibilities to make better use of grant funding”. A failure to deploy grant funding for housing projects has beset the Conservatives in recent years – who admitted to returning a third of DLUHC’s budget of £1.9bn back to the Treasury that was due to be directed towards housing projects and building safety. With such narrow self-imposed spending parameters, Labour will want to sweat what few resources it may have available to it through affordable housing grant moneys for the private sector to seize upon.

Other (more loudly) radical proposals also include the potential de-classification of Green Belt land although the detail behind what poor quality Green (or grey) Belt constitutes is yet to be defined; expect a new dividing line to form among MPs representing urban fringe areas on the issue. Similarly, one can also expect a contested space around the future development of data centres, with Labour promising to remove planning barriers to build them – tell that to the residents of Havering.

What action will be taken straight away?

We expect “day one” activity to encompass the unwinding of changes made to the NPPF via the Levelling Up and Regeneration Bill, unwinding the effect of the Villiers-Seely amendment to remove housing targets.

Primary legislation would need to come into effect to reverse the changes, but Labour will want to work fast to reset expectations on local authorities being accountable for building, and not blocking. This is reinforced by its commitments to take “tough action” to ensure local authorities have up-to-date Local Plans, the progression of which are all-too-often at the mercy of party politics. Both should provide signals of confidence to the sector to upscale plans for building. Much of this rhetoric should be front and centre of the King’s Speech on 17 July.

What has the reaction been?

While there is quiet radicalism on offer, Labour’s pledges on planning and housing have received a lukewarm reception from the sector so far who are keen to see concrete plans. This is unsurprising. However, with tax rises and cuts to public services effectively ruled out, it appears that Labour is banking on stimulating growth by removing potential barriers to housing and infrastructure, more locally-led decision making and the reinstatement of measures to make councils accountable for building. More detail will surely follow if Sir Keir can secure a mandate to execute his vision for growth.