The Spending Review: Implications for Planning
The Chancellor has just stepped down from the dispatch box and a vast number of documents have just appeared on the government's website.
The 2025 spending review has been published. Which means that it is time to pick over the documents and try to figure out what it means for our planning system…
Well, it is probably fair to say that the spending review has treated planning and development with a slightly odd mix of generosity and restraint.
On the one hand the Treasury has announced significant investments in social housing, transport and nuclear energy projects – which will be well received. On the other hand, day-to-day departmental spending remains tight.
Day to Day Spend
The overall departmental spending limits can be found in the following table
Whilst MHCLG has not fared the worst out of the government departments; that 1.1% increase for local government is going to have to fund an awful lot of change.
MHCLG is responsible for funding the most ambitious local government reform programme in my working memory; whilst simultaneously responding to significant and ambitious changes to the planning system. It also includes a lot of funding for health and social care. That relatively small budget increase will need to stretch a long way.
Those of us following the Planning & Infrastructure Bill's progress through parliament* may be a little surprised by the plans to reduce DEFRA's budget by 2.3% over the same period. After all, Natural England is about to become responsible for delivering environmental improvements across the country and is integral to ensuring that Part 3 of the Bill functions as intended. However, the detail of how the budget will be allocated within DEFRA has yet to be seen.
Capital Investment
Now that I have satisfied my more Eeyore-ish tendencies - let's have a look at the capital spending and investment announcements.
Quite a lot of the detail on specific infrastructure projects is being deferred until the government publishes its 10-Year Infrastructure Strategy and Industrial Strategy later this month. However, we do have promises of the following:
Transport
- A significant increase in funding for transportation projects across the country including:
- The TransPennine Route Upgrade, for which the government will provide £3.5 billion; and
- £2.5 billion to progress the delivery of East West Rail, supporting housing developments and unlocking the potential of the Oxford to Cambridge Growth Corridor
Housing
- Significant investments in social and affordable housing, including
- £39 billion for a new 10-year Affordable Homes Programme.
- Catalysing additional private investment to further boost house building by confirming £4.8 billion in financial transactions (FTs) from 2026-27 to 2029-30 via Homes England; and
- Investing in infrastructure and land remediation to deliver new housing schemes in partnership with the private sector.
- the launch of a permanent, UK-wide Mortgage Guarantee Scheme in July to ensure the consistent availability of mortgages for buyers with small deposits.
Energy
- The promise of investment in significant energy projects, including:
- Allocating £9.4 billion to Carbon Capture, Usage and Storage (CCUS) over the SR period.
- Committing £2.6 billion capital investment to decarbonise transport from 2026-27 to 2029-30. This includes £1.4 billion to support the continued uptake of electric vehicles, including vans and HGVs, and £400 million to support the rollout of charging infrastructure, building on the almost 80,000 public charging devices already available; and,
- Investing to upgrade homes and support tens of thousands of good jobs in every part of the country through the Warm Homes Plan.
As well as details of long-term integrated settlements for strategic mayoral authorities; guidance on how to produce the Local Growth Plans designed to underpin them; and details of a programme of direct investment into regeneration plans in neighbourhoods around country.
It is is probably safe to say that when it comes to the government's plans for capital spending - there is a lot of information to get your head around.
Conclusion
The best news in the spending review is the fact that social and affordable housing is finally being treated as infrastructure spending and, as such, is getting a boost.
The promised £39 billion investment in social and affordable housing is extremely welcome. The current lack of demand from registered providers for s.106 Affordable Housing is a real barrier to delivering consented housing sites, so the issues facing registered providers are impacting all parts of the house-building industry. The sooner these can be rectified the better.
If the government is to have any hope of getting close to their target of 1.5 million homes by the end of the parliament, then a strong affordable housing sector is essential. So, the sooner that we get the details of the long-term rent settlement reported by the Guardian, the better.
However, LPA resourcing issues have not gone away and the further changes to planning fees proposed by the Planning and Infrastructure Bill are some way off being delivered. Finding the funds for increased staffing and other resources within this spending envelope will be tricky.
In short, whilst the infrastructure spending promised in this review is welcome, the benefits from it will take some time to appear. The fact that the measures in the Planning & Infrastructure Bill have yet to make it onto the statute books, coupled with the tight departmental spending allocations, means that it the spending review is unlikely to make an immediate difference to those beleaguered LPAs and developers who are struggling with the system right now.
For things to get dramatically better, Labour needs to grow the economy and that takes time. So, I guess we are all going to have to hang on a little longer.
*and in particular the controversy over the government's plans for nature in part 3 of the Bill
Rachel Reeves will nearly double government spending on affordable housing on Wednesday, providing a major boost to the housebuilding sector and bringing the government’s housing targets a step closer.
The chancellor will announce nearly £40bn worth of grants to be spent over 10 years for local authorities, private developers and housing associations – a major increase on the previous programme.
She will also allow social landlords to raise rents by 1 percentage point above inflation for the same period, another key demand of housing providers.”
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