Rachel Reeves is set to announce a round of planning changes before the budget as a way to kickstart Britain’s sluggish economic growth, but ministers are at odds over how radical to be.
The chancellor will announce a number of moves designed to make it easier for developers to build houses and infrastructure projects, in the hope that they will fill about £3bn of her estimated £30bn black hole.
The package is designed to bolster fragile private sector confidence, which fell to a record low last month, according to figures from the Institute of Directors.
Ministers are planning a separate nature bill later in the parliament designed to rewrite some of the environmental rules that the government believes unfairly hold up new projects in parts of the country.
But senior members of the government have said the latest attempts to encourage new building will amount only to technical adjustments to what they have already announced. They are at odds over whether to push ahead with an entirely new planning bill, which the prime minister has said is “almost certainly” needed, but which some ministers believe would be an unnecessary distraction.
A government source said: “The Treasury is desperate to make announcements on planning, but the truth is we are already doing most of the stuff we wanted to, and trying to reopen all of that is not a good idea.”
Alexa Culver, a planning lawyer at RSK Wilding, said the government was presiding over a “chaotic slew of destructive new bills, with no strategy, vision, due process, consultation or democratic mandate”.
A government spokesperson said: “The chancellor and the housing secretary are working together to reform the outdated planning system that’s been holding this country back – so we can build the 1.5m homes hardworking people need and have given the green light to projects like the Lower Thames Crossing to drive jobs and growth.”
Reeves and Keir Starmer have put planning reform at the heart of their growth plans, launching a bill earlier this year to make it easier to build without paying as much for expensive wildlife protection.
However, ministers encountered a backlash from developers when they watered down the bill earlier this summer. The government then decided to change the bill after pressure from Labour MPs and set stricter rules for companies on how and when they must put in place mitigations to protect nature.
As a result, Reeves has been looking for ways to strengthen the bill again in the Lords.
Although she has not taken any final decisions, she is understood to be looking at a proposal by the Labour peer Philip Hunt to make it easier to build projects that are likely to have a minimal environmental impact. She is also exploring a separate amendment by the Conservative peer Charles Banner to make it easier to adapt project plans once they have already been approved.
Other changes could include further restrictions on who can bring a judicial review against an infrastructure project and how many times they could do so, as well as banning judges from quashing a planning approval if legal cases are still being heard.
Reeves will announce her support for changes to the bill in the hope that it will pass the Lords and receive royal assent before the budget. If she does so, officials believe the Office for Budget Responsibility could judge it to add about £3bn a year to the economy in the long term.
Nick Williams, who advised the prime minister on infrastructure until earlier this year, said: ‘The existing planning and infrastructure bill is already a hugely ambitious reform but there is room to go further, whether through amendments to the current bill or future legislation.”
Some in government, however, believe the chancellor risks reopening a bruising political fight over the bill if she pushes for significant changes, and think that some of the problems identified by peers could be solved without legislation.
One senior government official said: “The risk is by doing this she makes the bill even harder to pass and that will have the opposite effect to what is intended.”
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While debate rages over how to change the planning bill, the environment secretary, Emma Reynolds, is drawing up a separate nature bill that officials say would also help speed up the planning system.
The changes being considered for that bill include the UK abandoning a European list of species and habitats that need to be protected and drawing up a British one instead.
Officials say this would help avoid delaying planning projects as they could damage species that are already abundant in the UK, such as newts, but environmental campaigners say it could damage areas of natural importance.
Craig Bennett, the chief executive of the Wildlife Trusts, said: “We were promised by the last Conservative government that we would not allow regression on EU environmental law after Brexit, and Labour promised this in opposition too.”
The government is far from united, however, on whether to push ahead with proposals for an entirely new planning bill aimed specifically at clearing the way for significant infrastructure projects such as Heathrow’s plan to build a third runway.
A new bill would enable the government to take further steps to restrict judicial reviews and could even allow the prime minister to draw up a list of important infrastructure projects that receive automatic approval.
Mark Carney, the Canadian prime minister, recently announced five projects that would get automatic approval, and some in Downing Street and the Treasury are keen to follow that lead.
Starmer suggested strongly last week that a new bill would be forthcoming, telling ITV’s Robert Peston the government would “almost certainly” bring in new planning legislation. But he is encountering resistance from other parts of the government, including officials at the housing ministry, who say such a bill would be unnecessary.
One senior government source said: “What would a new bill even say? There would be about two clauses and that would be it.”
