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8 July 2024updated 09 Jul 2024 2:10pm

Can Rachel Reeves defeat the Nimbys?

Labour must be prepared for some unpalatable compromises if it intends to achieve real results.

By Will Dunn

The Chancellor, Rachel Reeves, has just given her first speech in government in which she outlined her early priorities for creating the economic growth which underlies all of Labour’s ambitions in power. Central to this project is the reform of the planning system, which Reeves described – not for the first time – as “the graveyard of economic ambition”. The government wants to deliver 1.5 million new homes by the end of this parliament and significant leaps in infrastructure.

In the front row sat Angela Rayner, secretary of state for housing, communities and levelling up and deputy prime minister, who will lead the reforms needed to unblock the planning system. These reforms will involve spending some of the political capital Labour has accrued in its landslide victory. Under the new rules, which include the return of mandatory housing targets, contentious planning decisions will be taken at a national rather than a local level, pushed through by Rayner’s “direct intervention” where the development is important to the wider goal of economic growth. Rayner is already intervening in two planning appeals.

Reeves clarified that local communities will have a say in where houses are built, but they will have to approve a certain number of applications; she also announced 1,400 new planning officers to ensure councils can’t claim they lack to resources to approve plans. “The answer cannot always be no,” she said.

Some of the measures Reeves outlined are achievable immediately. The government has already published a statement removing the extra “policy test” in the National Planning Policy Framework which amounted to a de facto ban on onshore wind development. Wind farms on land can now be approved in the same way as other energy developments. Similarly, asking the departments for transport and energy to prioritise infrastructure developments is a quick change to the machinery of government.

But while it’s possible to achieve a lot in 72 hours of policymaking, it will be the years of bitter local dispute ahead which reveal whether Britain’s planning disease is curable. Labour MPs will have to explain to their constituents why they are opposing new housing developments, something many have done, including Matthew Pennycook (now the housing minister), who has objected to at least two housing developments in his London constituency.

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The government will also have to contend with housing developers, on whom it is relying to deliver all these new houses: “we’re not going to be in the business of building those homes directly”, Reeves explained. For housebuilders, a historic increase in the number of houses built is a risk, in that it can depress prices and reduce the rate of return on new investment. Not only that, but Reeves was clear that she wanted to prioritise building on “brownfield” and “grey belt” land, which is often well situated (close to train stations, jobs and shops) but takes extra work. This is why many developers prefer out-of-town developments on green belt land – it’s easier to develop, and there aren’t the same issues with things like traffic or working around other infrastructure.

It seems unlikely that the government will be able to persuade businesses like Persimmon and Barratt – which are doing very nicely indeed from the status quo – to take on extra risk without offering them some incentives.

To really become “the party of home ownership”, as Reeves described Labour, it will have to pursue outcomes – such as declining or at least stagnant house prices – that others might find rather upsetting. It is too early to say what the trade-offs will be to achieve change of this magnitude, but some compromise will be inevitable.

[See also: Election night should have been jubilant. Why did it feel flat?]

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