Will Labour’s planning reforms deliver 1.5 million homes by 2030?
Given the time it takes to get from submitting a planning application to a family moving into a brand new home, we already have a good idea how far recent changes will go to achieving that target.
Building 1.5 million homes by the end of this parliament was central to the Labour government’s election winning manifesto. That might be a drop in the ocean compared to the 4 to 6 million extra homes we need, but it is still an ambitious target compared to past delivery rates.
The new Secretary of State, Steve Reed, has already recommitted to that target, pledging to “Build, Baby, Build.”1
“We are doubling down on our plans to unleash one of the biggest eras of building in our country’s history and we are backing the builders all the way,” Reed said following his appointment. “Through major planning reform and investment, we will break down the barriers to development and build the 1.5 million homes this country needs as part of our Plan for Change.”2
Reed’s recognition that reforming the planning system is the single most important tool to achieve their goal is a good starting point. The planning system is the gatekeeper of new development; homes can’t be built without securing planning permission first.
But how likely is it that the steps they are taking will see that target achieved?
Labour inherited a planning system that was on its knees
Labour’s starting point was pretty bleak. Just 221,700 additional homes were delivered in 2023/24 (and only 198,000 of those were new builds).3 That compares badly to the 300,000 completions per year we need to average to hit Labour’s target.
The problem is particularly acute in London, which should be delivering around a third of all new homes but is struggling to reach half the level needed.
In the year before the last election, both the number of new homes granted planning permission and the number of new Local Plans submitted for examination - which release housing land for development in the first place - fell to 10-year lows. That points to a further deterioration in housing supply in the coming years.
When it can easily be two years after a planning application has been submitted, reversing those trends needs rapid action. The later changes are made, the less time they will have to impact building rates before the next election and the more likely Labour’s target will be missed.
Positive changes were rapidly introduced after the election
The new government understood that and was quick to start changing the system. A new formula for calculating housing need, designed to increase housing targets across the country, was published alongside a revised National Planning Policy Framework - which introduced a new “grey belt” category of land as well as rolling back many of the most restrictive changes introduced by the Conservatives only a year before.
The new, higher housing targets are already making a big difference. They have made it easier to secure planning permission in areas with a poor past record of delivery, and have given councils a concrete figure to centre local plans around.
Grey belt policy - which applies to the least important parts of the green belt - has had a similarly positive impact in those local authorities where green belt dominates. It has returned the green belt to what it was meant to be - a tool for managing growth - rather than the trump card preventing development that it had become. The impact of grey belt policy is somewhat reduced by the extra affordable housing the policy requires, especially outside the most expensive markets areas, but it will still deliver extra homes.
Further beneficial changes have been proposed - but have yet to come into effect
Those changes were followed by a rash of consultations on other potential reforms. A national scheme of delegation for planning applications would expose fewer of them to the vagaries of local politics at planning committees. Brownfield passports have the potential to increase development rates in existing urban areas. Simplified application requirements for sites of up to 50 homes could help address the precipitous decline in the number of small and medium sized developers. A new, simpler Local Plan process is intended to increase the number of councils with an up-to-date plan from the current abysmal figure of roughly 25% - critical if our supposedly plan-led system is to work.
Most powerful of all could be National Development Management Policies - an idea of the last government to standardise decision making across the country. If used correctly, they could provide an opportunity to deliver explicitly pro-growth directives - like making it clear that increased density is appropriate around train stations, for example. Or they could make very little difference at all, simply re-badging existing national policies and allowing local authorities to change them anyway.
There is much to like in these emerging reforms, but they still haven’t been introduced. Time is already running out for them to impact build rates in this parliament - the government must press ahead, and quickly.
Other changes may be beneficial in the long-term but will have little effect - or even a negative one - in the near future.
Not all their proposed changes are for the better - at least in the short-term.
For all the political heat the Planning and Infrastructure Bill has attracted, it will make very little difference to house building rates in the near future. Whilst the simplified environmental survey requirements it proposes are eminently sensible, they are dependent on Natural England first implementing Environmental Delivery Plans. It will be some time before the first of those is in place, let alone before we have the sort of near-national coverage that would noticeably simplify house building. If the pace at which Natural England has prepared plans to deal with nutrient pollution in rivers is anything to go by, it could be many years before we get there.
Local government reform, which will see smaller councils amalgamated into larger ones, means some authorities are delaying plan-making as they expect to be abolished. Spatial Development Strategies - intended to pool housing targets across larger areas before redistributing them, amongst other things - are likely to delay progress in the short-term as authorities wait to find out how many homes they should be planning for.
In both cases, there is merit in planning for some issues over larger areas, but they are potential improvements for the future, not the here and now.
So-called “build out transparency measures” will be solely detrimental to housing supply. A re-heated solution to the non-existent problem of land banking, the proposals would add another set of paperwork, increase risk for funders (and therefore interest rates for developers), and introduce another potential reason for councils to refuse perfectly adequate planning applications.
Even the new housing targets themselves were accompanied by an elaborate set of rules governing when they will start to apply - and in many cases that won’t be for many years. For example, if a local plan is less than five years old, the old target can still be used for decision-making even if it is far below the new one.4 Over the next 18 months or so, we will see new plans allowed to come into force if they include a housing target that is within 80% of the new, higher one.
Not every council actually believes in building more homes
Ultimately, responsibility for granting planning permission for greater numbers of homes rests not with the government but with local authorities - and not all of them are very keen.
Some councils have taken advantage of the transitional arrangements to the new housing targets to prepare plans under the old, lower numbers. Some 47 authorities are currently having plans examined under those old rules, locking in housing targets 34% below those that would be required today. For context, just 52 councils submitted local plans for examination in the previous three years combined.
Other authorities are openly contesting the new targets.
Cotswold District Council and Cheshire East Council, for example, have written to the government asking for their housing targets to be reduced.5 Castle Point Borough Council is openly flouting them, preparing a plan that aims to deliver barely half their new housing target.
Many councils are finding other ways to resist development. They might accept they don’t have enough housing land available, for example, but point to subjective reasons like character impacts or landscape harm to refuse permission.
That explains why 17.5% of all homes granted permission so far this year have come via the appeal system - double the usual rate. Those homes will still get built, of course, but much later than they would otherwise. When those issues are raised at pre-application stage, the cost and risk associated with an appeal means that in some cases applications won’t be submitted in the first place, even if the reasons given by for opposing the scheme seems spurious.
There are a plethora of other policy issues delaying development that the government are - so far - doing little to address
To get close to their target, the government needs to remove grit from the planning system to really make the machine hum, operating as smoothly and efficiently as possible. That’s the best remaining way for the government to influence build rates in the short-term and contribute towards their target.
Fortunately, that are plenty of areas where that can be done.
The way the planning system deals with puddles is delaying 100,000 homes or more, without doing anything to reduce flood risk. This could be fixed almost immediately with an update to the planning practice guidance. (EDIT - since this post was published, the practice guidance was indeed updated to fix this issue, which just goes to show what is possible if the government puts its mind to it).
Uncertainty about the capacity of sewer networks is delaying the delivery of at least 30,000 new homes. That’s despite water companies having a legal duty to provide sewer connections for new developments and - in many cases - not raising any capacity issues with councils.
Other low-hanging fruit for improvement include pre-application advice, the operation of the statutory consultee process, standardising Section 106 agreements (which secure affordable housing and financial contributions towards infrastructure upgrades) amongst many others (which will be the subject of a future post).
There is, as yet, little sign that the government is doing anything to address these issues, but there is huge potential for them to exploit.
Planning isn’t the only regulatory system impacting housing development
Other regulatory systems are slowing delivery too. Around 30,000 new homes are awaiting approval from the Building Safety Regulator, which must now sign-off high-rise developments. This has contributed to home building in London almost grinding to a halt, with an almost 60% fall in new home starts over the last year and hundreds of flats sitting empty.
The typical cost of building a new home is already £242,000 - higher than house prices across 20% of the country. Build costs have been rising with inflation at the same time as other regulations have increased them still further, making the development of some sites unviable.
For example, the Future Homes Standard - which aims to reduce the carbon emissions of new homes by 75% compared to previous regulations - will increase construction costs by around £7,000 per home.
A potential reform of landfill tax - which would see clean, safe material like topsoil or crushed concrete taxed in the same way as contaminated waste - would add more than £20,000 to the cost of a new home.
These are all areas the government could look at to remove obstacles to development and reduce costs.
Things are getting worse before they get better
The declining number of new homes being granted planning permission means falling completion rates are baked in for a little while yet.
There are some signs of optimism. The number of applications being submitted is starting to rise, largely in response to the changes to the planning system the government has introduced already. It’s just that those changes won’t be enough by themselves to push delivery to 300,000 homes a year and beyond, and the next wave of reforms has been slow in coming.
So Labour will miss its 1.5 million homes target by 2030 but missing the target doesn’t have to mean missing the chance to change direction.
Ministers must hold their nerve on further reforms - resisting the temptation to plump for the least controversial, least impactful options - and clear the grit out of the system. Then building rates can start rising again setting us on a path to 300,000 new homes a year - and hopefully more.
A slogan he appears to have borrowed from Conservative YIMBYs.
This is, it must be said, quite a change from the days when Reed lead the charge against the last government’s attempt at planning reform, branding their proposals a “developers’ charter.” But we all make mistakes.
Net additions have averaged around 230,000 homes a year for the last 8 years which is almost exactly the number of homes England’s local plans have been aiming to deliver. Housing targets really matter.
Policy does require that, where the old housing target is less than 80% of the new one, a 20% buffer needs to apply when calculating housing supply. While that will see some extra delivery in those authorities, it won’t increase to the level of the new housing targets.
Although both received short-shrift from ministers.