October Update

Parliament returned early, on 2 September, so that the new government could get on with legislation. It rose again on 12 September for the party conferences, to return on 7 October. There has been hardly a day gone by during September without yet another announcement from the government on planning and housing, although somewhat lost in the controversy which seems to have enveloped the Labour party currently. Many of the planning proposals lack detail which, due to the rush, are probably still being worked through. There have been some examples of ‘running flags up the flagpole’ to see what the reaction is, and probably more to come.

NPPF Consultation

The NPPF consultation concluded on 24 September. The Lords minister for housing and local government, Baroness Taylor of Stevenage, said the government had so far received “thousands and thousands” of responses to the consultation. Speaking at the Labour Party Conference on 22 September, she said the government will issue the revised NPPF “maybe later on this year”, although it “may take into next year because there’s a lot of responses”.

Labour Conference

The Labour party conference ran from 22 to 25 September with numerous comments and announcements. The chancellor said the new government had “wasted no time in ripping out the blockages in our planning system” in order “to get Britain building again”. In his keynote speech on Tuesday, the prime minister said he would have to make the tough decisions to get housing and energy infrastructure built. He warned communities that they will have to accept new homes, prisons and electricity pylons. Although not committing to any targets, Angela Rayner did reiterate the party’s pledge to deliver the “biggest wave of social housing in a generation” and declared it a “moral mission”.

Devolution

Devolution and local government reform is firmly back on the table. The deputy prime minister said that the government would bring forward a white paper mapping out “how we will move power out of Whitehall” to give mayors more housing and planning powers. There have been rumours swirling around the corridors of power that local government reform will happen in this parliament, with several councils being lined up to be fast tracked in the coming year. It should not be underestimated just how significant that could be: new mayors and combined authorities coupled with new unitary authorities, so removing one tier of local government.

Economy

The economy continues to improve with Interest rates held at 5% at the September meeting, although the Bank of England indicated they were on a downward trend. Inflation remained under control at 2.2% in September, dropping to 1.7% in October, within the Bank of England’s 2% target. GDP grew by 0.6% in Q2 (April to June) following a 0.7% growth the previous quarter. It is estimated to grow by 0.9% in Q3 although the outlook is for the economy to slow as confidence caused by the imminent budget and the impact that will have on growth has caused ‘jitters’ with markets and consumers. The Nationwide reported (30 Sept) that house prices were rising at their fastest annual rate for two years. Prices grew by 3.2% in September, well above the 2.4% in August. Robert Gardner, Nationwide’s chief economist, said: “Income growth has continued to outstrip house price growth in recent months while borrowing costs have edged lower amid expectations that the Bank of England will continue to lower interest rates in the coming quarters. These trends have helped to improve affordability for prospective buyers and underpinned a modest increase in activity and house prices, though both remain subdued by historic standards.”

Output and planning applications

The construction sector is maintaining solid output growth, according to S&P Global. Its UK Construction PMI reported a sustained rebound in total business activity in August. Tim Moore, Economics Director at S&P Global Market Intelligence, said: “The UK construction sector appears to have turned a corner after a difficult start to 2024, with renewed vigour in the house building segment the most notable development in August. Residential work expanded at the fastest pace for almost two years as lower borrowing costs and a gradual recovery in market conditions helped to boost activity.” Meanwhile, government data shows housing starts in Q2 in England down 65% on the same time last year, although Q2 2023 was an unusually high peak so not too much should be read into this. That said, the level of planning applications in England are at an all-time low: applications between April and June were down 9%, with year on year to June, down 10%.