LONDON: The new British government on Wednesday said that the delivery process for critical infrastructure would be streamlined and more power given to local leaders under a proposed planning overhaul aimed at unlocking growth. New Prime Minister Keir Starmer has made boosting Britain’s anemic growth one of the government’s core aims since winning a July 4 election, and has pledged to build, rather than block, new housing and infrastructure.
The government said that the proposed new planning law would support economic growth and that local consent would only be able to shape how, not if, new projects are built. "My ministers will get Britain building, including through planning reform, as they seek to accelerate the delivery of high quality infrastructure and housing,” King Charles said as he read out the government’s legislative agenda.
The Planning and Infrastructure Bill will accelerate upgrades to the national grid, simplify processes around major new infrastructure projects and reform compulsory purchase compensation rules to block "excessive” payouts, the government said. It also plans to increase the capacity of local planning authorities. In a separate proposed law, the government plans to establish a new framework for devolution in England, giving more powers to the mayors of metropolitan areas and to local combined authorities.
Local leaders will be given powers over planning, transport networks and jobs, as well as establishing a quicker process for more regions to be able to make use of such powers. "My government believes that greater devolution of decision making is at the heart of a modern dynamic economy and is a key driver of economic growth,” Charles said.
"Legislation will be introduced to give new powers to metro mayors and combined authorities. This will support local growth plans that bring economic benefit to communities.”
The new government will also strengthen the role of the country’s official budget watchdog under new laws that Starmer hopes will boost Britain’s attractiveness to investors. Under the planned new legislation - announced in parliament by King Charles - all fiscal events making "significant and permanent tax and public spending changes” will be assessed by the Office of Budget Responsibility, the government said.
Former Prime Minister Liz Truss and her finance minister Kwasi Kwarteng triggered a crash in British government bond prices in 2022 when they announced big tax cuts in a "mini-budget” plan that they did not allow the OBR to assess. The watchdog’s forecasts on growth and government borrowing typically accompany budgets and other big fiscal statements.
Some analysts say the new legislation is unlikely to make much practical difference as the Labour Party has made it clear it intends to involve the OBR in assessing its fiscal plans.
"The litmus test of success for Labour will be whether they can get UK growth going again, which is going to require difficult reform of the planning system, green industrial policy, and a potentially closer relationship with the EU,” Paul Diggle, chief economist at investment firm abrdn, said.
Starmer and his finance minister Rachel Reeves have said they want to turn Britain into the Group of Seven economy with the fastest sustainable growth rate through a combination of reforms to the planning system and more investment. They have committed to fiscal rules similar to those of the Conservative government led by Rishi Sunak with a bit more room for borrowing to fund investment.
Their plan to require OBR scrutiny of budgets and other fiscal events had previously been announced as part of the Labour Party’s pre-election policy program. The government also confirmed in the King’s Speech its plan to create a National Wealth Fund to help drive investment into key industrial sectors including renewable energy. The National Wealth Fund will build on an existing UK Infrastructure Bank, and will receive 7.3 billion pounds ($9.5 billion) of capital to attract 20 billion pounds of private investment. — Reuters