Hammond to announce yet another ‘relaxation’ of planning rules (its just permission in principle re announced)


The Treasury is to allocate £2bn to boost housebuilding and address what Sajid Javid, communities secretary, has called a “moral duty” to tackle Britain’s longstanding housing shortage.

Mr Javid and Philip Hammond, the chancellor, will on Monday announce the funding, which will be used in a bid to speed up housebuilding by using public land, relaxing planning rules and encouraging new types of development such as custom build and off-site construction.

In addition the chancellor will launch a £3bn fund to provide loans to small housebuilders.

Mr Hammond, in his first major domestic spending announcement, will say the government is determined to use “all the tools at our disposal” to tackle the housing shortage, which Britain has suffered from “for decades”

The chancellor has a deep knowledge of the housing industry, having set up a small housebuilder called Castlemead in the 1980s. He still owns the controlling interest in the company though it is held through a discretionary trust managed by two of his business associates.

Despite the spending announcement, Mr Hammond will insist he will not abandon fiscal discipline, particularly as the Treasury predicted an economic shock after June’s Brexit vote. He will confirm that he has abandoned George Osborne’s target of a fiscal surplus by 2020, but will also warn that the deficit remains unsustainable.

“A fundamental part of maintaining our global competitiveness is getting our public finances back in order,” he will say. “Piling up debt for our children and our grandchildren to pay off is not only unsustainable, it is not fair.”

“The fiscal policies that George Osborne set out were the right ones for that time,” Mr Hammond will say. “When times change, we must change with them. But make no mistake. The task of fiscal consolidation must continue. And it must happen within the context of a clear, credible fiscal framework that will anchor expectations.”

The housebuilders’ loans fund was originally announced by Mr Osborne but is being launched on Monday by his successor.

Mr Javid said last week that increasing housing construction volumes was his “number one priority”. At present, annual construction rates are running at about 170,000 homes but most economists agree at least 250,000 are needed each year to stem rising housing costs.

The new government has moved away from David Cameron’s focus on home ownership. Under Mr Cameron and Mr Osborne, the Conservatives focused their housing policy on ownership, with the Help to Buy scheme subsidising tens of thousands of new buyers.

Mr Javid said the government would instead focus on building more homes of all tenures, including rented housing. He has also vowed not to let Brexit worsen the construction industry’s skills shortage, one of the key factors that housebuilders say is holding them back.

Revealing the new spending plans on Monday, Mr Javid will say it is “only by building more houses that we will alleviate the financial burden on those who are struggling”.

The government will also relax planning rules to make it easier to build on brownfield land by giving automatic permission in principle for suitable sites, and for developers to replace old office buildings with new residential construction. 

In all, the plans could deliver nearly 60,000 more homes by 2021, the Treasury estimate

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