Starmer Rips Up Planning Rules to Boost Growth in King’s Speech

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(Bloomberg) — Prime Minister Keir Starmer vowed to pursue Britain’s most ambitious planning reforms in decades and insisted getting the country building was a non-negotiable part of boosting economic growth, as he unveiled a wide-ranging legislative program for his landslide-winning Labour government.

In what will be seen as a dramatic step-change from the previous Conservative administration, Starmer announced 39 bills at the King’s Speech on Wednesday — Labour’s first in 15 years — in areas including renewable energy, housebuilding, workers’ rights, railways, artificial intelligence and cyber security. 

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That contrasts with the 21 bills proposed by ex-premier Rishi Sunak in the last Tory policy program laid out by King Charles III in November 2023, before Starmer and Labour won power at last month’s general election. It represents an attempt by the new administration to show it is hitting the ground running.

“Securing economic growth will be a fundamental mission,” King Charles said in the speech to Parliament. “It is my government’s objective to see rising living standards in all nations and regions in the United Kingdom.”

Reforming Britain’s planning system to enable 1.5 million homes to be built in the next five years, in additional to critical energy, industrial and transport infrastructure projects, was “key to unlocking our country’s economic growth,” the government said in policy documents accompanying the speech.

Starmer’s administration would enable “democratic engagement” with planning reforms, but that conversation would have to focus on “how, not if, homes and infrastructure are built,” it said, a direct warning to so-called NIMBYs who have opposed building works in their local areas.

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That’s a sign that Starmer is willing to make decisions which may not be popular with some voters in his pursuit of a more prosperous economy, as he shifts decision-making power on planning decisions away from local communities toward central government. “The current planning regime acts as a major brake on economic growth,” it said.

Labour’s plans flesh out the challenge it faces. Chancellor of the Exchequer Rachel Reeves has described the economic legacy from 14 years of Conservative rule as the worst since World War II.

Growth has started to pick up but the recovery from the pandemic has been the second slowest among the Group of Seven advanced nations after Germany, the tax burden is the highest in over 70 years and public services need investment.

Starmer has pledged to lift UK growth to the top of the G-7, which would deliver a big boost to government revenues. But the International Monetary Fund forecast this week the UK would remain mid-table for the next two years.

Economists have warned Reeves may have to fill a multi-billion pound hole in the budget expected in September or October, as the Office for Budget Responsibility’s forecasts look too optimistic.

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Almost the top line of the King’s Speech was a nod to the rocky foundations. “Stability will be the cornerstone of my government’s economic policy and every decision will be consistent with its fiscal rules,” the monarch said. 

That was a reference to the “fiscal lock” the government said would require OBR assessments ahead of fiscal events, an attempt to draw a contrast with the infamous mini-budget of Liz Truss that roiled markets in 2022. 

With little fiscal firepower to boost growth, Labour is gambling on legislative reforms to attract private investment. The first King’s Speech was peppered with bills designed to release capital and remove obstacles to investment.

Planning reforms included measures to water down local powers to block developments and removing the “hope value” right for landowners to demand highest possible valuation in compulsory purchase compensation.

A National Wealth Fund backed by an additional £7.3 billion of government money will aim to drive investment in the green energy, with a formal target of raising £3 of private investment for every £1 that the fund invests itself.

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Labour’s manifesto commitment to bring rail services back into public ownership will also be legislated. The government also committed to improve rail connectivity in northern England, a move that could offset the impact of Sunak’s decision to scrap a chunk of the flagship High Speed 2 rail project.

Workers’ rights reforms — which have been the subject of concerns from some businesses — will see the government “deliver a genuine living wage,” alongside a ban on so-called zero-hour contracts and a raft of other measures aimed at improving workplace conditions.

But Labour’s promise to lower the UK voting age to 16 does not appear in the government’s legislative agenda. Given the next general election is not due until 2029, Starmer may have decided to put the controversial move on hold.

In a statement, Starmer sought to draw a line under the past 14 years of Conservative rule that has been typified by political and economic turmoil.

“The snake oil charm of populism may sound seductive, but it drives us into the dead end of further division and greater disappointment,” the premier said, in apparent reference to his predecessors like the Brexit-backing Boris Johnson, but also US presidential candidate Donald Trump and right-wing parties surging in Europe. Nigel Farage’s Reform UK is strengthening in the UK.

“My government will be committed to uniting the country in our shared mission of national renewal,” Starmer said. “We will serve every person, regardless of how they voted, to fix the foundations of this nation for the long term. The era of politics as performance and self-interest above service is over.” He added: “The fight for trust is the battle that defines our political era.”

—With assistance from Isabella Ward.

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