Chancellor sets out bold infrastructure plans to drive economic growth
Chancellor Rachel Reeves has set out further plans to kick start the economy in a speech in Oxfordshire yesterday, stating that economic growth is the number one mission of this government and its Plan for Change.
The Chancellor announced plans to develop a "growth corridor" between Oxford and Cambridge. This initiative includes significant investments in housing, transport links, and reservoirs to help encourage innovation and economic development in the region. The government will deliver the East-West Rail project to drive growth between Oxford, Milton Keynes, and Cambridge and upgrade the A428 to reduce journey times between Milton Keynes and Cambridge. According to industry experts, the delivery of the Oxford-Cambridge Growth Corridor will boost the UK economy by up to £78 billion by 2035.
In addition to the new growth corridor, the Chancellor expressed support for expanding London's Heathrow Airport and is open to backing new runways at Gatwick and Luton airports. The delivery of the new £9 billion Lower Thames Crossing, the UK's largest road tunnel, which will link Tilbury in Essex and Gravesend in Kent was also noted; albeit, how this will be funded is still to be confirmed. The Chancellor also reaffirmed the government's commitment to the Transpennine Route Upgrade, which will connect York, Leeds, Huddersfield, and Manchester with fully electric local and regional rail services.
The Government is considering several proposals to encourage private investment, such as changes to pensions regulation, in the hope of unlocking funds to be invested in pro-growth projects. In addition to this, the Chancellor is promising to sweep away some of the barriers that slow down major (and minor) infrastructure projects. That means a new planning and infrastructure bill, coming in the spring, which will make it harder to object to buildings on environmental grounds.
The Government is also working with key stakeholders to remove barriers to new development. The Chancellor announced the Environment Agency has lifted its objections to a new development around Cambridge that could unlock 4,500 new homes and associated community spaces such as schools and leisure facilities as well as office and laboratory space in Cambridge City Centre. The government has also agreed for water companies to unlock £7.9 billion investment for the next 5 years to improve our water infrastructure and provide a foundation for growth. This includes nine new reservoirs, such as the new Fens Reservoir serving Cambridge and the Abingdon Reservoir near Oxford.
Whilst the Chancellor is determined to sweep aside the constraints on new infrastructure and housing projects, the politics of delivering on these promises of this will not be easy. The Oxford-Cambridge corridor, which the Chancellor wants to turn into the UK’s Silicon Valley, passes through semi-rural areas where development is unlikely to be popular.
Furthermore, the Government has been accused of putting the climate at risk with high carbon projects including the expansion of Heathrow airport and new road projects. Despite having previously promised to be the first green chancellor and having exalted the benefits of green growth. Undoubtedly, the Government will face significant challenges from environmental campaigners on how the new growth plans align with their net zero targets.
New planning policy and legislation to be introduced will provide a framework to deliver new development and economic growth. While these pro-growth plans are welcomed, further support and investment will be required to address existing issues with the planning system including additional funding for under-resourced Local Authorities who are struggling to meet their current caseload. A survey undertaken by the House Builders Federation (HBF) shows that “80% of Local Authorities are operating below full capacity, with many unable to keep up with the rising demand for housing applications” (Planning on Empty, HBF).
The HBF go on to estimate that circa 2,200 planning officers are needed across England and Wales to address the gap, with Local Authorities facing high turnover rates and reliance on costly agency workers. If local authorities are to successfully help deliver this pro-growth agenda, they need the necessary funds and skills to respond effectively to new development in a timely manner.