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Economic watchdog also forecast 0.2% to be added to GDP by 2029/30 because of planning reforms – worth around £6.8bn in today’s prices
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For a zero-cost policy this is the biggest positive growth effect the OBR have ever taken on – while also protecting £3.4 billion for UK public services
The government’s reforms to the UK’s planning system will result in housebuilding being at its highest level in over 40 years, the OBR has concluded in its forecast for today’s Spring Statement.
The government’s bold planning reforms back the builders not the blockers to 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.
This brings the UK one step closer to the government’s Plan for Change mission to build 1.5 million new homes this parliament with the OBR confirming the government is on track to build an extra 1.3 million homes by the end of this parliament. 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 and will all help to reach the 1.5 million target.
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 have also concluded in their forecasting that this could rise to over 0.4% in 2034/35 – meaning billions of pounds more for public services like the NHS and more construction jobs to get houses built for hardworking families.
For a zero-cost policy, this is the biggest positive growth effect the OBR have ever forecast.
The boost to GDP is driven by:
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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.
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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).
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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 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. As part of delivering the Plan for Change milestone to deliver 1.5 million homes by the end of this Parliament, the government will 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 year, following on from the £2 billion down payment announced yesterday as well as confirming the government’s plans to provide certainty for the transformative programme of building the new generation of new towns.
Background
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The planning reforms are the reforms to the National Planning Policy Framework. Planning changes act as a supply side reform, increasing potential output in the economy and sustainably increasing both the UK’s productivity and economic activity.
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The government has modernised Green Belt policy to ensure development is permitted on low quality grey belt land, including disused car parks and petrol stations, while ensuring land safeguarded for environmental reasons, including national landscapes and sites of special scientific interest, continue to be protected.
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Development on the grey belt is subject to Golden Rules to ensure that the benefits of new housing are felt by communities. Recent planning guidance and the NPPF ensures the overall purposes of the Green Belt are not fundamentally undermined. Affordable housing requirements (the “Golden Rules”) mean that NPPF reforms will not only deliver more homes, but also address the acute affordability pressures caused by low levels of housebuilding in recent parliaments.
