Richard Cook is head of economics at Pegasus
The government is faced with many significant challenges, and one of the most pressing is significantly increasing the construction of new homes. Following the updated National Planning Policy Framework (NPPF) and its commitment to building 1.5 million homes over the next five years, or 300,000 per annum, the government has unveiled its plans for the next generation of new towns, with each consisting of at least 10,000 homes. For these extremely welcome new towns to become a reality rather than a pipe dream, several barriers will need to be removed from the planning system and the construction sector.
“Planners will be left in limbo while construction personnel shortages are resolved, and vice versa”
More than 100 sites have come forward to be considered as new towns, and while only a small number of these are likely to end up being selected by the New Towns Taskforce, their contribution to housing supply will be significant. With the relaxed NPPF opening the floodgates, there will likely be a marked increase in applications for housing schemes over the next few years. This will keep planning consultancies extremely busy, but it will also put more pressure on already stretched local authority planning departments. The Home Builders Federation surveyed local authorities in 2023/24 in England & Wales, with 80 per cent of councils reporting operating at or below full staffing capacity. Proposals from government will see 300 additional local authority planners but this will only translate to around one per local authority, meaning they will still not be suitably prepared for the influx of planning applications coming their way.
Numerous issues
There are numerous other issues that need addressing in the planning system to get more homes built. These include low housing targets in local plans, having a proper discussion about the merits of building on the greenbelt, nimbyism, affordable homes versus viability, and local politics. Unless planning authorities are properly resourced, the government’s ambitions will fall at the very first hurdle, and the system will not be nimble enough to deal with a greater volume of applications.
However, the issue of resourcing goes beyond planning authorities, with the construction sector likely to be a big beneficiary of the new towns programme. Construction is faced with the same arithmetic problem; there are not enough members of the workforce to fulfil the ambitions for housebuilding that have been set out. The sector is looking ahead to significant recruitment issues as it seeks to attract new people and replace retiring members of the workforce, all while juggling the mounting increase in construction output required to meet the new lofty housebuilding targets.
Resource issues in the planning and construction sectors go hand in hand. Planners will be left in limbo while construction personnel shortages are resolved, and vice versa. Failure to address the needs of both sectors simultaneously will hold back the government’s ambitions for new towns and the wider housebuilding agenda. Get it right, though, and the payoff will be huge. If 100,000 homes are built over the next 15 years as a result of the new homes programme, the economic benefits could include over 7,000 construction jobs, £20bn of construction output over 15 years, and annual household spend in excess of £3bn. That’s even before considering more than 230,000 people actually living in these homes and generating council tax revenue of over £200m a year, amounting to a significant monetary incentive to resolve the current issues.
It won’t actually be until new towns start going through the planning process that we know for certain whether the decision-making process is getting any faster. At a time when the government is desperate to grow the economy, new towns could give a much-needed long-term boost to the Treasury if the barriers that have plagued the planning system for years are finally broken.