Reform planning for 1.5m homes

Policy baseline

The government target is 1.5 million homes over the Parliament. Planning reform is low-cost fiscally but can require infrastructure and local-capacity spending.

• Targets housing supply, not demand subsidy.
• Fiscal costs are mostly planning and infrastructure.
• Economic upside depends on completions.

Core trade-offs

The direct beneficiaries are buyers, renters and construction firms. The costs fall mainly on existing landowners and infrastructure budgets. The main economic question is permissions may not become completed homes.

• Buyers, renters and construction firms gain most directly.
• Costs fall mainly on existing landowners and infrastructure budgets.
• Key risk: permissions may not become completed homes.

Fiscal impact by 2028-29

-GBP 2.0bn to +GBP 5.0bn. Central estimate: +GBP 0.5bn.

• Positive numbers mean net fiscal cost; negative numbers mean Exchequer savings.
• Main channel is the scored tax, spending or delivery change.
• Offsets depend on tax receipts, behaviour and pass-through.
• Range reflects uncertain implementation and economic response.
• This is not an official costing.

Economic impact by 2028-29

• Jobs: Construction jobs rise if planning, finance and skills constraints are resolved.
• Wages: Construction wages may rise in shortages; renters and buyers gain from greater supply.
• Prices: More supply should reduce price pressure; infrastructure costs may be partly passed on.
• GDP / productivity: Likely positive if homes are additional and located near productive labour markets.

Assessment

This is a real trade-off, not a free gain. Buyers, renters and construction firms benefit, while existing landowners and infrastructure budgets bear most costs. Overall output depends on behaviour, capacity and pass-through.

Confidence: Medium-low. Higher on the policy target and fiscal channel; lower on behaviour, pass-through and economy-wide effects.

Main risks

• Build-out risk: Planning approval does not guarantee completions if demand, finance or infrastructure are weak.
• Infrastructure pressure: New homes need transport, schools, health and utilities funding.
• Local resistance: Legal and political constraints can delay delivery.

Safeguards

• Fund planning teams and infrastructure upfront.
• Track completions, not permissions.
• Target high-demand labour-market areas first.

Academic evidence

UK government evidence

Sources

• PolicyLens illustrative scenario methodology for reform planning for 1.5m homes Internal - PolicyLens, 2026
• The Economic Implications of Housing Supply Academic article - Glaeser and Gyourko, Journal of Economic Perspectives, 2018
• The Impact of Supply Constraints on House Prices Academic article - Hilber and Vermeulen, Economic Journal, 2016
• Plan for Change UK government plan - HM Government, 2024
• Planning and Infrastructure Bill UK legislation - Ministry of Housing, Communities and Local Government, 2025
• Change: Labour Party Manifesto 2024 Party policy source - Labour Party, 2024

Other Labour policies

• Raise employer National Insurance
• Apply VAT to private school fees
• Replace non-dom tax status
• Raise capital gains tax rates
• Extend the Energy Profits Levy
• Capitalise the National Wealth Fund
• Capitalise Great British Energy
• Expand the Warm Homes Plan