What Can the Built Environment Sector Expect from a Potential Labour Government Next Week?

Written by Harry Gilham, Senior Account Director

Last month, Instinctif Partners held its annual Navigating Change in the Built Environment panel at its London offices. While our diverse clients and industry contacts within real estate enjoyed some early morning networking, the panel—which included former Conservative and Labour MPs as well as business leaders—highlighted several key issues for a new Government to contend with.

The undersupply of new homes, driven by a planning crisis, was the hot topic of the day. In 2022-23, there were 234,400 net additional dwellings according to the ONS. This is similar to 2021-22, indicating a continuing trend of missing the 300,000 annual new homes target—a benchmark figure long criticised as too small against the UK’s growing population. So, what changes to planning policy will a likely incoming Labour Government bring? Planning reform has been talked about for years with very little success—how can a new Government do things differently?

Up until Labour’s manifesto launch, the party had only outlined a handful of policies and a lot of rhetoric. The manifesto provided more details, but considerable policy detail remains to be seen. Politically, this is natural territory for Labour to occupy. Rising house prices, caused by lack of supply and high demand, have pushed the dream of home ownership out of reach for many young people, causing them to live at home and/or in the private rented sector for longer.

The people most impacted by this are often Labour voters, typically younger and more metropolitan, living in big cities and renting from private landlords. On the other hand, much of the Conservative voter base often consists of older homeowners living in rural areas, which often face huge opposition to new housing from local residents.

The Labour Party is promising to ‘back the builders’ and take on the ‘nimbys’ to help more young people onto the property ladder.

The quick changes Labour has outlined in its manifesto include:

• Restoring housebuilding targets, though only back to the previous Conservative target of 300,000 a year.
• Ensuring all local authorities have up-to-date Local Plans and intervening where they don’t.
• Reforming and strengthening the presumption in favour of sustainable development in the National Planning Policy Framework.
• Changing some green belt classifications to a new ‘grey belt’ to make it easier for housebuilders to build on poor-quality green belt land (such as car parks).

In addition to this, Labour has pledged to hire 300 more planning officers to help speed up the planning process, funded by increasing the stamp duty surcharge paid by foreign buyers. More long-term ambitions include building the next generation of new towns and ensuring more social housing is built. Arguably, the most interesting policies put forward are introducing “mechanisms for cross-boundary strategic planning” and devolving more power to the Combined Authorities on planning. There was also a vague pledge to “implement solutions to unlock the building of homes affected by nutrient neutrality without weakening environmental protections.”

However, Labour’s policies are not quite as far-reaching as what was proposed by Boris Johnson’s Conservative Government in 2020. Local councils will still be in charge of determining where new housing will be built, though Keir Starmer has pledged to intervene to prevent obstruction of new housing developments if needed. So, will these policies actually boost housebuilding meaningfully?

The main challenge that Labour will face is the many political persuasions of local councils across the UK. In more rural councils, particularly in the south of England, Labour does not have local authority control. The Liberal Democrats can often take a hyper-local approach to campaigning on development issues. Politically, the Conservatives will likely see opposition to Labour housing plans as a way of winning back voters they have lost. Various ‘Nimby’ groups are increasingly organised and will continue to campaign against new housing in their area—something we at Instinctif see firsthand, working with many housebuilders to achieve planning permissions.

Alongside planning reform, Labour has talked about increasing public consultation on new housing for communities. Developers will need to continue engaging with communities and, if anything, do more engagement than before, despite changes to the planning system. ‘Nimby’ groups will still persist at a local level.

However, all may not be lost for those keen to see a new Government get building. The expectation within the Labour Party is that changes to planning guidance from central Government will help outflank these groups. There is real passion for boosting housebuilding amongst Labour MPs. We are seeing a new generation of Labour Parliamentary candidates emerge who are personally affected by the current housebuilding crisis. Many have experienced living in the expensive private rented sector and living at their family home for longer. Some have a background in local Government and know how convoluted the planning system is.

The incoming Labour Parliamentary Party will thus have a plethora of new MPs personally keen on delivering meaningful planning reform and boosting housebuilding. Many will also represent seats where their voters agree with this approach. To win a good parliamentary majority, Labour does not need to win the rural seats that are Lib Dem/Conservative battlegrounds where voters are more opposed to new housebuilding, even though they may end up winning some. Their route to a majority lies in winning back more seats in towns and cities in England and across Scotland and Wales. Labour can continue to be bold and push through the reform they have already outlined at a national level.

Over the coming year, it will be incredibly important for developers to engage with the Labour Party on the proposed changes at a national level. The Labour Party has repeatedly stressed its keenness to work with businesses in the private sector to deliver on its growth aims. At Instinctif Partners, we have been helping businesses across key sectors engage with the Labour Party. If this is of interest, don’t hesitate to get in touch at harry.gilham@instinctif.com.