Spring Forecast 2025: Labour plans to build its way to economic growth
Earlier today, the Chancellor delivered her Spring Statement and… well… let's just say that it caught me a little by surprise.
It is now beyond clear that the pledge for 1.5 million homes* by the end of the parliament, and delivering the planning reforms required to achieve it, is not just Labour's plan to solve the housing crisis. It is also one of (if not the) key drivers in their push for economic growth.
According to the Spring Statement, the OBR has stated that the NPPF reforms alone: “will lead to 170,000 additional homes built over the forecast period. This increases the level of real GDP by 0.2% by 2029-30, adding £6.8 billion to the economy, and by over 0.4% in 2034-35. 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….. This improvement in the growth outlook reflects only the changes to residential planning”
That, fairly punchy, statement is based on the NPPF changes alone - it does not factor in the changes proposed by the Planning & Infrastructure Bill, which the Spring Statement describes as follows:
"The Planning and Infrastructure Bill will streamline planning processes and unlock a new scale of housing and critical infrastructure delivery by:
- Delivering a faster and more certain consenting process for critical infrastructure;
- Introducing a more strategic approach to nature recovery;
- Improving certainty and decision‑making in the planning system;
- Unlocking land and securing public value for large‑scale investment; and
- Introducing effective mechanisms for cross‑boundary strategic planning.
These reforms will help to deliver the scale of change needed to tackle the housing crisis and reduce energy bills and commuting times by fast‑tracking housebuilding and critical infrastructure, creating a more appealing environment for businesses to invest."
This is a critical point for Labour, as whilst the NPPF changes do seem to have spurred more activity on the ground (anecdotally at least, we won't have the planning application figures for the first quarter of 2025 for a while yet), there are still MANY challenges facing the sector, including (but by no means limited to):
- local planning authority resourcing;
- issues around water and nutrient neutrality;
- delays caused by the Building Safety Regulator;
- A complex and resource heavy NSIP and DCO process;
- resourcing and capacity in construction
- the availability of financing;
- stubbornly high build costs; and
- the willingness and ability of RPs to take on s.106 Affordable Housing
which have the ability to blunt the edges of Labour's growth aspirations.
Some of these issues (such as nutrient and water neutrality, and LPA resourcing) are the subject of measures in the Planning and Infrastructure Bill, which passed its second reading on Monday.
Others were a feature of the last budget - including the pledge to train 300 additional planning officers, which whilst being a valuable contribution, would be less than one per local planning authority.
Yet more have been the subject of funding announcements over the last few days. In particular, the Spring Statement confirms that:
- an additional £2 billion will be invested in social and affordable housing in 2026‑27. This will be followed by further announcements on wider long‑term investment into social and affordable housing in the Spending Review; and
- £625 million in England over four years to boost construction skills training, including:
- £100 million to support 35,000 construction‑focused skills bootcamp places.
- A further £40 million for up to 10,000 additional places on new construction Foundation Apprenticeships
- An additional £165 million for providers to deliver more construction courses; and
- £100 million to establish 10 new Technical Excellence Colleges specialised in construction in every region in England.
There has also been a pledge to review and improve the operation of Regulators and Statutory Consultees (which I may have mentioned in earlier blogs).
Whether this will be enough has yet to be determined. It is probably safe to say, however, that the Government needs all of these different measures to work, and work quickly, if they are to unleash the building boom on which, it appears, our economic hopes are pinned.
Some of them will prove contentious. You only need to read the Hansard report of yesterday's six-hour long debate on the Planning and Infrastructure Bill to get a taste of the battle lines that are already being drawn on that one… but Labour does have a large majority and seems pretty darned determined that the PIB will fly.
So... There you have it. Planning and Development is at the heart of Labour's plans to rejuvenate Britain and rebuild its public services*.
It is down to us.
No pressure there then. I should probably stop blogging and get back to work.
*Although, it should probably be pointed out that the last time we built 300,000 homes a year - that figure was driven by a large, and sustained, state house-building programme…. which does not appear to be on the cards at present.
The Office for Budget Responsibility (OBR) says that the planning reforms included in the government’s National Planning and Policy Framework (NPPF) will lead to 170,000 additional homes built over the forecast period. This increases the level of real GDP by 0.2% by 2029-30, adding £6.8 billion to the economy, and by over 0.4% in 2034-35. 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........ 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.”
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