Planning for growth: Can planning reform rescue the economy?

Since Labour came to power, the economic headlines have been mixed to say the least, with the latest analysis from the Organisation for Economic Co-operation and Development (OECD) no exception. 

According to the OECD, the UK is on track to experience the highest rate of inflation among G7 nations this year, with rising food costs a major driver.  

For many, this comes as no surprise. Critics warned that hiking business taxes would be inflationary and the OECD’s numbers appear to justify those concerns. 

That said, the OECD does point to a degree of resilience. The UK economy is expected to grow by 1.4% this year, which is an improvement on last year’s 1.1% and the second-fastest rate in the G7 after the US.  

Ministers will be quick to claim this as a win. Chancellor of the Exchequer Rachel Reeves has already said that the figures "confirm that the British economy is stronger than forecast – it has been the fastest growing of any G7 economy in the first half of the year”. 

Look ahead though, and the outlook for 2026 is less encouraging. Growth is forecast to drop back to 1%, leaving the UK trailing the US, Canada, and Germany – hardly the platform for the government’s ambitious growth agenda. 

Ministers are, therefore, reaching for the lever they think will deliver quickest: planning reform. The forthcoming Planning and Infrastructure Bill is being positioned as the centrepiece of that effort. Increasingly, it looks like legislation that could make or break this government, sitting alongside small boats as one of the defining tests of its credibility. 

Reports over the summer suggested that the Chancellor was preparing a further package of planning and environmental reforms, underlining just how heavily ministers are relying on reform to deliver the new homes and critical infrastructure needed to drive growth. 

Critics will worry about community voice and environmental safeguards, but the government’s direction of travel seems clear: a bias towards delivery. If the Bill passes, developers and investors should see a clearer path from application to approval, creating the conditions for growth even in a challenging economic climate. 

That direction was underlined over the weekend when Transport Secretary Heidi Alexander approved Gatwick’s plan to bring its northern runway into regular use. The scheme had to navigate years of planning hurdles and public scrutiny, with SEC Newgate supporting Gatwick throughout by helping the airport engage stakeholders and communities. Now approved, the project is set to add billions to the economy and create thousands of jobs. 

The OECD’s warning on inflation is a reminder that the UK’s economic headwinds are far from over. A modest improvement in growth this year is welcome, but it falls well short of the step change the government is banking on. It comes as no surprise, therefore, that planning reform is being cast as central to the growth agenda. Whether the Planning and Infrastructure Bill delivers on that promise will go a long way to deciding not just the government’s success, but the UK’s ability to turn fragile recovery into sustained growth.