UK housing strategy shifts toward mayor-led developments

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UK housing mayor-led shift

Highlights

Prime Minister Burnham plans to shift major housing development responsibility to metro mayors, moving away from Sir Keir Starmer's centrally managed new towns programme ahead of the October 28 Budget.
Cost concerns and lack of ringfenced funds for new towns drive preference for urban extensions via mayoral development corporations using devolved powers and financing to be detailed in the Budget.
Support for proposed projects in London, Leeds, Manchester, and Bristol contrasts with uncertainty for non-mayoral areas like Milton Keynes and Tempsford, with government considering prioritization of a limited group of sites.

Budget plans reshape housing delivery

As reported by Financial Times, Burnham wants mayors to take responsibility for significant housing schemes instead of relying primarily on the centrally managed new towns programme championed by his predecessor Sir Keir Starmer. People familiar with the discussions say he is wary of committing substantial central government funding ahead of the October 28 Budget, as the Treasury seeks to limit the scale of tax rises.

Allies of the prime minister say the rethink does not amount to abandoning new towns altogether. Starmer had initially made the policy a personal priority, setting out plans for about a dozen large-scale settlements before that ambition was reduced to seven projects.

Burnham is said to have less appetite for large greenfield schemes and to prefer urban extensions that can be advanced by metro mayors. Under the approach being discussed, projects in mayoral areas would be delivered through mayoral development corporations using devolved powers and financing, a mechanism expected to be outlined in the Budget.

Concerns over cost are also shaping the review. Burnham has promised more spending on council housing, while ministers never assigned dedicated funding to the new towns programme and instead expected projects to compete for money from existing housing budgets. As local authorities submitted capital requirements, officials became increasingly concerned about the potential scale of the bill, according to people familiar with the matter.

Regional backing varies across proposed sites

Projects in London, Leeds, Manchester and Bristol have support from local mayors, who can choose to establish development corporations and press ahead even without direct central backing. But other proposed locations sit outside metro mayor areas, complicating delivery for schemes such as an expansion of Milton Keynes and leaving uncertainty around Tempsford in Bedfordshire.

Tempsford remains strategically important because of its position on the East Coast main line and East-West Rail, and it is seen as central to ambitions for the Oxford-Cambridge corridor, which Burnham supports. Dan Thorp, chief executive of employers' group Cambridge Ahead, says Tempsford is a key component of the government's regional growth strategy.

One option under consideration is for the government to back a limited group of projects, including Tempsford, Leeds South Bank and Crews Hill in north London. Another is to avoid central commitments altogether and leave delivery to mayors.

Gary Sector, a partner in the planning and infrastructure consenting team at Addleshaw Goddard, says it is still unclear whether mayors will have the funding and policy framework needed to deliver such schemes. He adds that regions may respond better to taking responsibility for their own housing delivery than to a top-down Whitehall model, while the Ministry of Housing says it is assessing options for each proposed location, including development corporations where appropriate.

In our earlier article on Chancellor John Healey’s deficit-reduction plans ahead of the October 28 Budget, we explained that the Treasury was signalling a tighter fiscal phase and a commitment to keeping borrowing under control. We also noted that fresh GDP data showing 0.1% growth in August offered only limited support for the government’s growth narrative, while political pressure was building around how the Budget would balance discipline with targeted relief.

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