According to the London School of Economics, around half of UK business investment is in buildings, and much of the remaining investment is in businesses that need to be housed in buildings. The ability to develop is therefore fundamental to the UK’s economic prospects. But construction is made more risky and expensive in the UK compared to other countries by the unpredictability of the planning system, driven by a lack of joined-up, long-term decision-making.

To allow productive areas to grow, the UK needs:

• Up-to-date local development plans that link infrastructure, employment and development.
  Less than a quarter of local planning authorities (LPAs) in England actually have an up-to-date plan, and the rate of adoption of new plans has been slowing in response to continued policy uncertainty. As a result, progress towards compliance with the National Planning Policy Framework (NPPF) has ground to a halt, with one in five LPAs still failing to adopt an NPPF-compliant plan over a decade after the framework’s introduction.
  
  
• Plans and decision-making at the right level – reflecting functional economic areas.
  Wales is the only part of the UK that has full strategic planning. In England, there is no requirement for housing need that can’t be met within a local authority boundary to be accommodated elsewhere. Under-delivery in major cities accounts for 90% of the housing shortfall against need. While targets adopted in local plans are broadly being met, the targets don’t incorporate a 35% uplift from the standard method and, therefore, don’t meet housing need, creating a gap between new homes delivery and government ambitions for 300,000 homes per annum.
  
  
• Decision-making processes that give investors confidence that major development and regeneration can be delivered.
  Commercial and residential space will only be delivered if the right infrastructure is in place. In October 2023, the National Infrastructure Commission (NIC) published its latest National Infrastructure Assessment, which concluded that slow decision-making and uncertainty in infrastructure planning was a major barrier to the UK’s economic growth.

The commission found that:

• overall investment in infrastructure needs to increase from an average of around £55bn per year over the last decade to £70-£80bn per year in the 2030s, and £60-£70bn per year in the 2040s.
• investment from the private sector will need to increase from around £30-£40bn per year over the last decade to £40-£50bn in the 2030s and 40s. 
• Planning timelines for nationally significant projects have increased by 65% since 2012.
• Nearly 60% of infrastructure decisions have been through judicial review.

This uncertain decision-making process will not encourage private capital to invest in the infrastructure so desperately needed to unlock growth. Nor will it give real estate developers and investors the confidence that transport, power and water infrastructure needed to support new development will be delivered.

In our study, we’ve looked at the growth potential of UK Core cities and selected high growth locations. According to Oxford Economics, these locations are forecast to see gross value added (GVA) economic growth of £50bn over the next ten years, adding more than 400,000 jobs to the UK economy.

However, to realise full growth potential, we need updated and regularly reviewed National Policy Statements to set clear plans for bridging the infrastructure gap. This must then be translated to spatial regional requirements that reflect growth ambitions, and finally used to inform the local planning process, so that developers and investors can have confidence that schemes will not be held up by a lack of infrastructure.

As James Heath, chief executive of the NIC remarked in March 2024, “policy stability and predictable regulatory models” are critical to securing the investment needed to ensure that the UK has the infrastructure in place to boost growth.  

Further information

Contact Emily Williams or Clare Bailey