The government’s reforms to the UK’s planning system will result in housebuilding being at its highest level in over 40 years, the independent Office for Budget Responsibility says.
The OBR says the government’s plans should help deliver an extra 170,000 homes by 2029/30 – boosting homes built by 30% that year after a 13 year house building low in 2025-26.
The government has a long-publicised target of 1.5m new homes this parliament in England. The OBR confirms the government is on track to build an extra 1.3m homes by the end of this parliament, although this is across the whole of the UK.
Further reforms, such as the Planning and Infrastructure Bill, the government’s long term housing strategy and the new Affordable Homes Programme – on which the government made a £2 billion down payment this week – are not reflected in the forecast.
As a result of the planning reforms the UK’s economic watchdog also think the economy will be 0.2% larger by 2029/30, worth around £6.8 billion in today’s prices.
The OBR has also concluded this could rise to over 0.4% in 2034/35.
The government claims this boost to GDP is driven by:
- Higher productivity in the construction sector, from bringing land on the edges of our largest towns and cities into more productive use, lower planning costs and removing artificial constraints imposed by planning that prevent the construction sector from expanding;
- A greater flow of ‘housing services’ – there will be more houses for the same number of people, allowing new households to form (e.g. people moving out of their parents’ home into a home of their own). This increases GDP through more rent being paid (where new homes are let out), or ‘imputed rents’ (which reflects what owner occupiers would pay to rent their home on the open market); and
- Beyond the five-year forecast, greater housing availability increases labour mobility which contributes further to growth, by allowing people to move to high productivity places.
Homes will be built on disused car parks and petrol stations, whilst national landscapes and sites of special scientific interest will continue be protected. Government guidance ensures that Green Belt will not be fundamentally undermined.
This features as part of the government’s Plan for Change to get Britain building, which also includes the Planning and Infrastructure Bill currently going through parliament, which the OBR will take a judgement on in due course.
The government will also consult on policies to support a more streamlined and consistent planning system.
The government will shortly publish a Long Term Housing Strategy and has committed to set out details of further new government investment in social and affordable housing to at the Spending Review this summer, following on from the £2 billion down payment announced yesterday as well as confirming the government’s plans to provide certainty for building the new generation of new towns.
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