Government has tweaked its housing targets in a more growth-friendly direction – but major cities outside London still left behind

Tweaking the affordability criteria in the Government’s housing targets should help deliver more homes in areas with the most economic potential, as well as in areas with acute affordability challenges, since they are now more focused on the most productive travel to work areas, the Resolution Foundation said today (Thursday) of the Government’s response to its planning reform consultation.

While the Government is right to loosen planning rules in order to increase housing supply, the Foundation had cautioned that the pre-consultation national planning policy framework wasn’t focused enough on building homes where they are most likely to boost growth. The changes announced today should go some way towards addressing this.

Today’s changes, relative to the original plans, should boost building in productive travel to work areas in the South, including London and Cambridge. However, they reduce targets in major cities like Birmingham, Manchester and Sheffield, which are currently more affordable. Housing targets have been reduced in eight of the UK’s ten largest cities (by travel to work area), with only London and Slough/Heathrow seeing their targets increased.

The Foundation notes that Britain’s major cities outside London have middling levels of productivity, but also huge potential for growth through agglomeration – especially given the UK’s strengths in services industries. They should be more of a priority in the Government’s housebuilding agenda, advises the Foundation.

And while the Government’s housing targets have been pushed in a more growth-friendly direction, more remains to be done to tackle Britain’s housing affordability crisis.

The Foundation says the Government should use the upcoming Spending Review to supplement the ambition shown in its planning reforms with hard cash – in the form of far greater investment in social housing.

Emily Fry, Senior Economist at the Resolution Foundation, said:

“The Government has shown welcome ambition on its planning reforms, and the changes to its housing targets announced today push those reforms in an even more growth-friendly direction, with higher targets for London and Cambridge.

“However, we should also focus housebuilding efforts on areas with huge economic potential, including our major cities across the Midlands and the North. Building should happen not only where productivity is highest now, but where it might most plausibly be raised in the future.

“As well as rising to Britain’s growth challenge, the Government needs to tackle the housing costs crisis. Social housing will need to play a key role – and the upcoming Spending Review offers the perfect opportunity to fund a major uplift in affordable housing.”