Anthony Breach is an associate director at Centre for Cities, where he leads on housing and planning.
The new Government is making planning reform and devolution a central part of its economic strategy. The previous Conservative Government made similar moves with the Levelling Up and Regeneration Act and the development of the metro mayors, but struggled to prioritise the same areas as a key goals for national economic policy. So will it be different this time?
The reason for this prioritisation is that the UK is an outlier compared to its peers on planning and devolution. We are unique in the G7 for not having a zoning system, and we instead try to operate a dysfunctional discretionary planning system.
We are also by far the most centralised country in the G7, with only five per cent of the total tax take collected by local government, blunting the incentives of local councils to take on Nimbys and grow their local economy and taxbase.
These problems affect the national economy primarily in how they damage the economies of the big cities outside of London, nearly all of which perform more similar to cities in the former East Germany or the poor South of Italy than successful local economies in France, West Germany, and northern Italy.
There is simply no way to improve the performance of the entire country without the big cities as their underperformance is so great – 57 per cent of the UK’s total output gap with France and Germany is between the UK’s big cities outside London and their peers.
In practice, this means access to city centres of big cities is poor for commuters, as they are too cramped to work well for cars, but not dense enough to support comprehensive public transport networks.
That’s the diagnosis. Are the proposals announced in the King’s Speech on the right track?
In the flurry of changes to planning policy we have seen so far, the Government has picked relatively easy wins. But for their economic agenda to succeed they will need to win more difficult battles to increase housebuilding within and near the big cities.
The most interesting proposal of the Infrastructure and Planning Bill is in its measures to “modernise planning committees”. At present, and even though planning policy states this shouldn’t happen, councillors can and do reject applications even when planners decide they are compliant with their own local plan.
If this is formalised by guaranteeing planning permission for applications that are local plan compliant, housebuilding would increase as the system would be faster and more certain.
However, although the King’s Speech has set out a series of ambitious “small-r” reforms to improve the existing planning system, we have not yet seen the Government announce any “Big-R” reforms to shift from the current system to a G7-style, rules-based zoning system.
It’s an open question as to whether the Government will hit its 1.5 million target without doing so, but if planning reform is to provide the load-bearing role in economic strategy that ministers claim it will, a zoning system needs to be on the table.
Zoning particularly matters for building within cities. The announced small-r planning reforms to get the existing local plan system covering all of England and providing more certainty for allocated sites will mostly help new greenfield developments.
A large increase in brownfield development to replace exhausted building stock and build up around urban railway and tube stations – allowing more people access to shorter commutes – depends on a shift to a zoning system that sets clear and distinct planning rules for different urban neighbourhoods.
Urban transport is not as central to the Government’s agenda as planning. Improving East-West rail across the North of England will have the greatest national economic benefits if it functionally makes it easier to commute to the city centres of the big Northern cities, but to make a big difference to accessibility it will need to be paired with densification along existing and new lines so people can access the network in walking distance of their homes.
On devolution, the new Government seems likely to continue the approach of the previous, with its commitment to both “widening” devolution to new areas and “deepening” it in the big cities where there are already mayors.
If the new English Devolution Bill explicitly requires planning powers to be transferred to mayors it could be a step forward, not just in terms of economic growth but also away from a case-by-case deals-based approach and towards the kind of systemic thinking local government now needs.
In contrast, we’ve so far seen very little from the Government on the fraught and urgent question of local finance. The present system’s difficulties are not just risking local services, but are damaging economic growth by penalising councils that grow their local economies with reduced levels of grant.
A party with a serious pro-growth agenda would tackle both of these issues by pursuing fiscal devolution. Allowing councils more control over local taxation would allow them to cut taxes for those with the least ability to pay, and raise revenues by supporting local (and therefore national) economic growth including new development. Either the Conservatives or the Government could plausibly take up this mantle.
In short, the Government is connecting at least some of its policy ideas to the right diagnosis on the most persistent problems in the British economy, but remains to be seen whether they will be enough – not least because the benefits they promise will take time to appear.
Where this presents a problem is in the Government’s conception of growth. The Government has announced its ambition to have the fastest growth in the G7 for two years on the trot. But this is too short-term to really matter for national competitiveness or the public finances.
The Government is continuing a trend in British politics, including the previous Government, to compare our performance to the rest of the G7 on very short timeframes. Whichever country is growing the fastest in the G7 right at this moment has little to do with the steady increases in productivity the UK needs over time. Permanently increasing living standards is a marathon, not a sprint.
To address this, the purpose of the reforms should instead be towards the long-term goal of making Britain richer than Germany.
Catching up with the Germans will take time and faster growth than we’re used to. But this target would mean the real benchmark for economic success in the G7 would be how we are narrowing productivity gap with Germany and France over the course of multiple Parliaments.
If the productivity gap instead gets wider over this new Labour Government, that’s a much more serious flashing red alarm for the health of the national economy than whether we have the second- or sixth-fastest growth in the G7 in Q3 of 2026.
Together, this suggests any serious economic programme, Labour or Conservative, depends on how much they improve the underperforming big cities over the long-term.
Making our cities better is not a pie-in-the-sky goal – simply having cities that are normal by the standards of the G7 would be enough to make a big difference to growth and national prosperity. If the Government’s planning and devolution reforms go far enough then their wider economic programme could succeed. If not, it will be down to the Conservatives to finish the job.
Anthony Breach is an associate director at Centre for Cities, where he leads on housing and planning.
The new Government is making planning reform and devolution a central part of its economic strategy. The previous Conservative Government made similar moves with the Levelling Up and Regeneration Act and the development of the metro mayors, but struggled to prioritise the same areas as a key goals for national economic policy. So will it be different this time?
The reason for this prioritisation is that the UK is an outlier compared to its peers on planning and devolution. We are unique in the G7 for not having a zoning system, and we instead try to operate a dysfunctional discretionary planning system.
We are also by far the most centralised country in the G7, with only five per cent of the total tax take collected by local government, blunting the incentives of local councils to take on Nimbys and grow their local economy and taxbase.
These problems affect the national economy primarily in how they damage the economies of the big cities outside of London, nearly all of which perform more similar to cities in the former East Germany or the poor South of Italy than successful local economies in France, West Germany, and northern Italy.
There is simply no way to improve the performance of the entire country without the big cities as their underperformance is so great – 57 per cent of the UK’s total output gap with France and Germany is between the UK’s big cities outside London and their peers.
In practice, this means access to city centres of big cities is poor for commuters, as they are too cramped to work well for cars, but not dense enough to support comprehensive public transport networks.
That’s the diagnosis. Are the proposals announced in the King’s Speech on the right track?
In the flurry of changes to planning policy we have seen so far, the Government has picked relatively easy wins. But for their economic agenda to succeed they will need to win more difficult battles to increase housebuilding within and near the big cities.
The most interesting proposal of the Infrastructure and Planning Bill is in its measures to “modernise planning committees”. At present, and even though planning policy states this shouldn’t happen, councillors can and do reject applications even when planners decide they are compliant with their own local plan.
If this is formalised by guaranteeing planning permission for applications that are local plan compliant, housebuilding would increase as the system would be faster and more certain.
However, although the King’s Speech has set out a series of ambitious “small-r” reforms to improve the existing planning system, we have not yet seen the Government announce any “Big-R” reforms to shift from the current system to a G7-style, rules-based zoning system.
It’s an open question as to whether the Government will hit its 1.5 million target without doing so, but if planning reform is to provide the load-bearing role in economic strategy that ministers claim it will, a zoning system needs to be on the table.
Zoning particularly matters for building within cities. The announced small-r planning reforms to get the existing local plan system covering all of England and providing more certainty for allocated sites will mostly help new greenfield developments.
A large increase in brownfield development to replace exhausted building stock and build up around urban railway and tube stations – allowing more people access to shorter commutes – depends on a shift to a zoning system that sets clear and distinct planning rules for different urban neighbourhoods.
Urban transport is not as central to the Government’s agenda as planning. Improving East-West rail across the North of England will have the greatest national economic benefits if it functionally makes it easier to commute to the city centres of the big Northern cities, but to make a big difference to accessibility it will need to be paired with densification along existing and new lines so people can access the network in walking distance of their homes.
On devolution, the new Government seems likely to continue the approach of the previous, with its commitment to both “widening” devolution to new areas and “deepening” it in the big cities where there are already mayors.
If the new English Devolution Bill explicitly requires planning powers to be transferred to mayors it could be a step forward, not just in terms of economic growth but also away from a case-by-case deals-based approach and towards the kind of systemic thinking local government now needs.
In contrast, we’ve so far seen very little from the Government on the fraught and urgent question of local finance. The present system’s difficulties are not just risking local services, but are damaging economic growth by penalising councils that grow their local economies with reduced levels of grant.
A party with a serious pro-growth agenda would tackle both of these issues by pursuing fiscal devolution. Allowing councils more control over local taxation would allow them to cut taxes for those with the least ability to pay, and raise revenues by supporting local (and therefore national) economic growth including new development. Either the Conservatives or the Government could plausibly take up this mantle.
In short, the Government is connecting at least some of its policy ideas to the right diagnosis on the most persistent problems in the British economy, but remains to be seen whether they will be enough – not least because the benefits they promise will take time to appear.
Where this presents a problem is in the Government’s conception of growth. The Government has announced its ambition to have the fastest growth in the G7 for two years on the trot. But this is too short-term to really matter for national competitiveness or the public finances.
The Government is continuing a trend in British politics, including the previous Government, to compare our performance to the rest of the G7 on very short timeframes. Whichever country is growing the fastest in the G7 right at this moment has little to do with the steady increases in productivity the UK needs over time. Permanently increasing living standards is a marathon, not a sprint.
To address this, the purpose of the reforms should instead be towards the long-term goal of making Britain richer than Germany.
Catching up with the Germans will take time and faster growth than we’re used to. But this target would mean the real benchmark for economic success in the G7 would be how we are narrowing productivity gap with Germany and France over the course of multiple Parliaments.
If the productivity gap instead gets wider over this new Labour Government, that’s a much more serious flashing red alarm for the health of the national economy than whether we have the second- or sixth-fastest growth in the G7 in Q3 of 2026.
Together, this suggests any serious economic programme, Labour or Conservative, depends on how much they improve the underperforming big cities over the long-term.
Making our cities better is not a pie-in-the-sky goal – simply having cities that are normal by the standards of the G7 would be enough to make a big difference to growth and national prosperity. If the Government’s planning and devolution reforms go far enough then their wider economic programme could succeed. If not, it will be down to the Conservatives to finish the job.