Could a Labour government break Britain’s planning deadlock?
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More than half a decade after the Broke Hill golf course closed for business, its overgrown greens and fairways have become a haven for deer, rabbits and a healthy population of wood pigeons.
Striding past the concrete rubble that was once a clubhouse, Ben Geering, head of planning at property firm Quinn Estates, describes what this abandoned site near the Greater London commuter town of Orpington, could have looked like if his company had got its way.
The Canterbury-based firm and its corporate partners had hoped to turn the 65-hectare plot into a housing development that would have delivered 800 new dwellings, with space for sports clubs, a retirement community and a new primary school.
But the proposal was rejected on appeal in 2022 after officials decided it would harm the greenbelt, the collar of protected land around London and other English cities introduced in 1955 to prevent uncontrolled urban expansion. It accounts for almost 13 per cent of England’s land mass.
“We have got a growing housing need; a growing affordability crisis,” says Geering, whose company is still exploring ways of using at least some of the sprawling plot. “Should we not be thinking about releasing some of this greenbelt carefully in a way that benefits society?”
The stranglehold that greenbelt imposes on housing development in Britain is one aspect of a stringent planning regime that shadow chancellor Rachel Reeves has condemned as “the single biggest obstacle to our economic success”. If Labour comes to power in July, it hopes to shake up the labyrinthine system to improve housing affordability and, ultimately, unlock growth.
Some economists share the same view as Reeves. In a time of straitened budgets, radical reform that unlocks hundreds of thousands of homes around high-productivity cities would deliver a positive jolt to a UK that has been stagnating since the pandemic, they argue.
“A construction boom would be really good for the economy,” says Anthony Breach, associate director at the Centre for Cities think-tank. “Planning reform would have a big impact on economic performance over the course of the next parliament — and the parliament after.”
Britain’s restrictive, unpredictable and politically permeated planning system has long hindered homebuilding, which peaked in the 1960s and has never fully recovered. If the UK had built houses at the average western European pace between 1955 and 2015, it would have added a further 4.3mn homes to its stock, according to the Centre for Cities.
Attempts by the Conservative government to accelerate homebuilding during the past 14 years have often been stymied by internal opposition from their own MPs in the rural heartlands. Labour, by contrast, has a more urban support base.
With less than a month to go before an election that polls suggest will sweep Labour leader Sir Keir Starmer to power, planning officials say his party will have to act swiftly and boldly to shift the dial on that housing deficit.
Labour will give more detail about its plans for government when it launches its manifesto on Thursday, but insiders say its strategy on housing is to bring together multiple strands of policy to have a material impact on the current situation. “It requires several quite tricky things to all come together — strategic planning reform, implementing changes to compulsory purchase orders, the integration of transport with housing policy and greenbelt land release all working in concert to increase output,” says a person familiar with the party’s thinking.
Yet industry insiders warn it will be difficult for Starmer to achieve his stated goal to “bulldoze through” the planning system, break the earth on a generation of new towns and build 1.5mn houses over the next five years.
Layers of well-intentioned regulation on issues like the environment have given different agencies and reluctant councils more ways to prevent developments, says Rob Perrins, CEO of Berkeley Group, which is building more than 10 per cent of all new homes in London.
“The way planning has evolved over recent years, there are now far more reasons to say ‘no’ to things. And there are more people who have got veto power,” he adds. “We have got complete paralysis.”
The UK’s housing situation makes for sobering reading.
House prices in England are now eight times earnings, more than twice the ratio when Labour took office in 1997, according to official statistics. Home ownership rates have fallen, and the number of households living in temporary accommodation in England is at a record high. The UK also has the highest share of prewar homes (38 per cent) of any European country, according to Eurostat.
At a time when the UK continues to struggle to lift per-capita GDP levels and households have yet to recover from the cost of living crisis, the economic burden of the housing crisis is significant, analysts say.
Not only do high housing costs act as a drag on disposable incomes, especially for poorer households, they also have implications for the labour market. Constraints on housing availability lengthen commuting times, reduce the talent pool for businesses and make it harder for workers to access high-productivity roles in key cities that are engines of growth.
Freeing up development would not only boost productivity, but also generate a “positive hit from actually building things”, says Paul Cheshire, Emeritus Professor of economic geography at the London School of Economics. “There definitely would be a growth pay-off.”
That optimistic take has historical roots. In the early 1930s a housebuilding boom fuelled by cheap credit and loose regulations helped lift Britain out of a double-dip recession, according to research by the late economic historian Nicholas Crafts. After the war, large amounts of publicly funded housing boosted the industry further, but this petered out and remains severely constrained given the fragile public finances.
While some details are yet to be fleshed out, Labour has announced a number of policies that broadly have industry support. They plan to bring back hard, top-down housing targets to push reluctant councils to meet local need.
Starmer has also said the party is open to building homes on the so-called “greybelt”, or low-quality land within the green belts around cities. While the Tories have set a target of 300,000 new homes a year, Labour says it will follow suit by building 1.5mn homes over five years. Alongside this, the party wants to build a swath of “new towns” outside London, repeating the success of places like Milton Keynes, established in the 1960s and awarded city status in 2022.
Under Labour’s plans, councils and social housing bodies would be helped to forcibly purchase land without paying so-called hope value — an estimate based on how much it would be worth if developed in the future — to stop landowners charging inflated prices for their land. The party also wants to pioneer “new models of strategic development for larger sites”, allowing local authorities or metro mayors to collaborate more effectively when developing land that straddles multiple regions.
Housebuilders and real estate investors are broadly hopeful about what they have heard from Labour so far. But senior industry executives want the next government to be realistic rather than revolutionary. “If step one is a full root and branch review of planning, then we’re still going to be talking about it after the next election,” says Mark Allan, chief executive of Land Securities, a FTSE 100-listed landlord. If the government sets out to “boil the ocean” then there will be scant progress, he adds.
The homebuilding quagmire has stymied successive Labour, coalition and Conservative governments, which have zigzagged between top-down targets and locally driven plans. The result has been huge uncertainty for investors.
After it took power in 2010, the coalition ditched Labour’s policy of “regional spatial strategies” that identified where housing could be sustainably built.
Eric Pickles, then the Conservative local government secretary, promised a “radical restoration of local power” and the end of “top-down targets from regional quangos and bureaucrats”.
Following a period of prolonged uncertainty during which the government introduced a National Planning Policy Framework (NPPF), new targets emerged in 2018 with the introduction of a “standard method” to calculate housing needs. However, the Conservatives were forced into a series of retreats by opposition from local councillors and backbench MPs.
The first U-turn came in 2020 when Boris Johnson’s government scrapped plans to impose targets on local councils following a proposed tweak to the standard method that would have increased house building requirements in the South.
His opponents — including his predecessor Theresa May — dubbed it a “mutant algorithm” and forced the government to back down. Rishi Sunak’s government backtracked further in December 2023 by again reducing demands on councils to build homes by watering down the standard method into an “advisory starting point” rather than a hard requirement.
In 2022, the newly appointed housing secretary Michael Gove — the 16th person to hold the position since 2010 — urged the Competition and Markets Authority to investigate the “cartel” of housebuilders. However, the regulator did not find anti-competitive behaviour throttling supply. The agency instead largely blamed the planning system, and the UK’s heavy reliance on “speculative” private developers who do not have economic incentives to build as many homes as the country needs.
“It’s clear that the system at a district level is not delivering,” says Sophie Metcalfe, a researcher at the Institute for Government think-tank. “It’s almost reached the point where the government appears to be saying ‘we want more houses’ at a national level, but fewer homes at a local level.”
One way of breaking planning deadlocks and getting the economy moving, says Allan of Land Securities, is for the next government to prioritise the top 50 or 100 major projects of national importance. “That is one of those areas where there needs to be a degree of central co-ordination, however unpalatable that is to local or regional levels.”
But to meet a target of 300,000 homes per year on average over the five-year parliament, Labour would need to speed up the approval of run-of-the-mill housing developments by local authorities across the country.
Clare Miller, CEO of Clarion, the UK’s largest housing association which specialises in affordable homes, says the top priority should be helping local authority planning departments push through stalled projects, rather than wholesale reform of planning legislation.
“Putting a modest amount of resource into local authorities to improve skills and capacity would be money well spent and would unlock a huge number of projects that are currently stalled and taking too long to get through the system,” she adds.
Perrins, of Berkeley Group, says the next government also needs to look at the level of density that is allowed in urban areas. “If you don’t want to go outward and you don’t want to go downward, you have to go up,” he adds.
He says the political buzzword “of ‘gentle density’ is an issue”, suggesting that the concept of introducing bigger buildings such as town houses — but not tower blocks — does not go far enough. “You will not get the homes you require, especially around the transport nodes,” he adds.
If housing needs cannot be satisfied in existing urban areas, then there is no other option but to look to the greenbelt.
Labour’s plan of developing “greybelt” land — defined as greenbelt land that is considered “poor-quality and ugly” — comes with its own complications.
“That could present a very significant viability challenge for land that may also need remediation if it is truly poor quality,” says Matthew Tucker, senior associate at Burges Salmon, a Bristol-based law firm that advises property developers and local authorities.
But there are other challenges with Labour’s broader vision. Plans will have to be delivered by under-resourced planning departments which have been decimated by years of cuts to local government, says Matt Griffith, director of policy at Business West, the regional chamber of commerce for the Southwest. Labour is hoping to immediately add an extra 300 planning officers to a nationwide workforce, which is less than a tenth of the planners who left public service during the first decade of the current Conservative government.
The most economically viable projects were also likely to be in the south of the UK, adds Griffith, where the politics of development is most hotly contested.
Lindsay Judge, research director at the Resolution Foundation, added that there is a “really big question” as to how feasible building 300,000 new homes a year will be given, historically, those levels have been achieved during big programmes of public building.
Laying out the party’s ambitions, Matthew Pennycook, shadow housing minister, said in the House of Commons in March that Labour would pursue “a discrete number of targeted changes to the existing system”.
But some analysts fear that prioritising quick wins would risk missing the wider opportunity that could come if the party wins a large parliamentary majority in next month’s election.
Deeper reforms are needed to create a wider, strategic planning system that creates medium and longer-term certainty for investors, says Philip McCann of the Productivity Institute think-tank. “The whole system is entirely dysfunctional from top to bottom and that is not going to be solved by building small new towns in the greenbelt,” he adds.
Breach, of the Centre for Cities, agrees that Labour will need to adopt more ambitious changes if it wants to achieve the sweeping growth benefits that Reeves appears to envisage.
Labour’s willingness to take on the system that stifles development on greenbelt areas will represent a critical test of its ambition.
While it is positive that Labour was breaking the taboo over developing parts of the greenbelt, the party’s inclination to rule out building on “nature spots” could end up backfiring, Breach says.
So far, defenders of the greenbelt appear notably relaxed by the party’s approach. “We are not too worried about their policy, if they are sticking mostly to the idea of building on old car parks and petrol stations,” says Roger Mortlock, chief executive of the Campaign to Protect Rural England.
If that is correct, development stalemates on sites such as Broke Hill will remain a familiar feature on the country’s homebuilding landscape. As a former golf course, the site did not enjoy protections on the grounds of biodiversity or natural beauty.
The decision by Sevenoaks, the local authority, to block the development was based on the “significant harm” the new housing would create to the so-called openness of the greenbelt, a quality that hinges on the judgment of local planners.
“It comes down to the idea of not wanting more people near you,” says Geering of Quinn Estates, discussing local opposition to the scheme. “What are the alternatives? The homes need to be built.”
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