Labour vows to scrap business rates in manifesto

The Labour Party has vowed to replace England’s business rates system and change planning laws to speed up development in its election manifesto. The party promised to scrap rates to “level the playing field between the high street and online giants, better incentivise investment, tackle empty properties and support entrepreneurship”. Leader Sir Keir Starmer pledged to make planning changes to “forge ahead” with infrastructure, and make major projects “faster and cheaper by slashing red tape”. The national planning policy would be updated to speed up development for laboratories, digital infrastructure and gigafactories. Additionally, Labour said it would seek to increase investment from pension funds in UK markets as a key source of private capital. The party said it will start a national wealth fund to support investment, with £1.8bn allocated to upgrading ports and building supply chains in the UK, and £1.5bn for new gigafactories. Planning overhaul Labour reiterated its pledge to update the national planning policy framework, including restoring mandatory housing targets, as part of its bid to develop 1.5m homes during its first five years in power. The party seeks to appoint 300 additional planning officers, funded by increasing the rate of the stamp duty surcharge paid by non-UK residents. Combined authorities would be granted fresh planning powers. The manifesto outlined aims to support developments by “ensuring communities directly benefit”, but added that the party will “not be afraid to make full use of intervention powers to build the houses we need”. “Tough action” would be taken to ensure planning authorities act on up-to-date local plans and reform. A “new generation” of new towns would also be ushered in as part of a “series of large-scale new communities” across England that also include urban extensions and regeneration projects. A “brownfield-first” approach to development will be used, with approval fast-tracked on urban sites. As previously set out by the party, it will also release lower-quality “grey belt” land for development. Further reform for compulsory purchase compensation rules to improve land assembly, speed up site delivery and deliver housing benefits has also been promised. A permanent mortgage guarantee scheme would be put in place to support first-time buyers. Further steps would be taken to ban new leasehold flats, while ensuring commonhold is the default tenure. In the private rented sector, the party said it will “immediately abolish” section 21 “no fault” evictions. Elsewhere, “all relevant powers” will be used to develop prisons to address the shortage. In education, Labour has promised to open an additional 3,000 nurseries. Business rates relief would end for private schools and would be invested into state schools. How the industry reacted Real estate welcomed the party’s focus on unlocking development, and highlighted the party’s increased focus on the private sector’s role in supporting major projects. Simon Peacock, head of regions at JLL, said it was “heartening to see Labour grab the bull by the horns and be so bold in its commitments to level up the UK’s economy”. He said a “concerted investment programme in the right amount, and quality, of planners” will help ease the load on the planning system, and that businesses are prepared to pay a higher premium to ensure the resources are there. Peacock also praised Labour’s commitment to devolution to boost investment confidence. “The Labour Party has an uphill battle to show voters it has the appetite, and the necessary plans, to drive regional growth, spur investment and address our deep-rooted productivity issues but this manifesto will settle some nerves,” he added. Lizzy Galbraith, political economist at abrdn, noted that Labour’s housing target is “very ambitious – even with planning reform – so it will be interesting to see if such a target will be made mandatory”. Galbraith added that the enhanced role of the private sector in the financing and delivery of infrastructure projects, compared with their plans a few years ago, was a “notable shift” in the party’s strategy. She said: “Labour has shifted to a vision in which the state aims to direct investments towards high-value projects and restore investor confidence through a combination of clearer planning documents, fewer fiscal events and, in some cases, joint financing. Labour believes it can rectify the current challenges of fluctuating government policies and inconsistency, which have previously undermined private investor trust.” Praise for focus on planning revamp Justin Young, chief executive of the RICS, said: “Legislation that makes the delivery of any infrastructure is welcomed; red tape is currently acting as a significant barrier to growth. One such example can be found in Cambridge, where the failure to deliver a new water reservoir is threatening to stall the UK’s fast-growing, £94bn-a-year life sciences industry, which has a critical mass in the city.” Young added that planning reform is needed for the housebuilding sector to “function efficiently”. “A simplification of the planning system – which is currently expensive to navigate and riddled with uncertainty – should help reverse this decline by delivering significant certainty,” he said. Additionally, Young said the next government should create a cross-department skills task force to address the skills shortage, otherwise the UK will miss its targets to deliver 300,000 homes per year and £805bn infrastructure pipeline. He praised Labour for tackling the issue through its proposed skills England body. Melanie Leech, chief executive of the British Property Federation, said it was “positive” to see Labour reaffirm its “commitment to an industrial strategy and to working closely with business to deliver its ambitions”. She added that Labour is “right to focus on improving the planning system as the key enabler of growth”. “Introducing effective strategic planning means decisions are made at the appropriate national or regional level, rather than just locally, which will allow us to deliver more homes against a clear target and also provide the logistics infrastructure and business spaces we need to support sustainable communities,” she said. “Measures to ensure up-to-date local plans are in place and a new approach to ‘grey belt’ land are also welcome, as is the commitment to more local authority planners so that existing projects can be unblocked, and local authorities are better able to engage with our sector to provide for future needs.” Paul Rickard, managing director of Pocket Living, said: “Given that the downturn in construction remains the biggest drag on this nation’s GDP, planning reform without the need to increase public spending should be low-hanging fruit for any future government. This manifesto seems to be a genuine attempt at starting that difficult and long-overdue process and getting more new homes built, though it is vital that we focus on numbers delivered as opposed to specific tenures. “We all know that brownfield and previously developed sites offer the best prospect of increasing supply, which is why we welcome the strong focus on them. However, these sites can only be unlocked by streamlining the planning process, along the lines we have suggested for small sites by granting a presumption in favour of development provided that affordable housing requirements are met. With the SME sector staring down the barrel of extinction, the need for these types of policies has never been greater and we would urge Labour to be radical in their approach.” ‘Hazy’ on rates reform The manifesto garnered some criticism on its stance on rates. Simon Green, head of business rates at Gerald Eve, called the manifesto “underwhelming”. “Predictably, Labour is hazy on the details and there has been no explanation of how they plan to achieve this reform – whether by raising revenue via an online sales tax, cutting the uniform business rate multiplier for the retail sector and small businesses, or perhaps a combination of the two,” said Green. He added that the Conservative and Liberal Democrats’ manifestos performed “little better” on the same front. “Britain’s business rates system must be overhauled, not patched up with sticking plasters; yet none of the main parties have really addressed the fundamental issues with the system or suggested a realistic alternative,” said Green. “Business rates must be made simpler and cheaper rather than being replaced completely or further complicated by differential tax rates and complex reliefs: this is the only way to help our businesses.” Law firms warned that Labour’s commitment to scrapping section 21 could lead to a “serious issue”, if it does not give the courts time to adjust. Greg Simms, real estate disputes partner at Addleshaw Goddard, said: “Labour’s promise to immediately abolish section 21 ‘no-fault’ evictions is certainly a bold move. While this will undoubtedly give better protection to tenants, it will lead to a requirement for a court hearing for each and every possession claim. It’s hard to see how the courts are going to handle such a sudden shift given their current backlog and delays. This has the risk of causing a huge amount of disruption and I’m just not sure it is practical given the current situation in the courts.” Image © ADAM VAUGHAN/EPA-EFE/Shutterstock