Growth is UK’s ‘national mission’, Rachel Reeves declares

Rachel Reeves, the UK’s new chancellor, will set out far-reaching planning reforms on Monday to “fix the foundations of Britain’s economy”, as she begins a dash to raise the country’s growth prospects.

In her first major speech since taking office, Reeves will say that boosting growth is “a national mission” and the “guiding light” in Labour’s approach to planning reforms that would “get Britain building again”.

“Where governments have been unwilling to take the difficult decisions to deliver growth — or have waited too long to act — I will deliver,” she will tell an audience of financial services chiefs, investors and green industry leaders.

“It is now a national mission. There is no time to waste,” Reeves will say.

Among the measures to be set out by Reeves will be an attempt to unblock “stalled sites” of large housing schemes stuck in mid-development. She will work with mayors and councils to draw a list of target sites.

Overhauling the planning system is a long-cherished dream of Tory rightwingers, but changes were often thwarted by anti-development voters, many of them living in greenbelt seats now represented by Labour MPs.

Reeves wants to show Labour has the determination to carry out serious planning reforms, which have the advantage of stimulating growth without adding to public spending or national debt.

The chancellor has spent the 72 hours since Labour’s landslide election victory in talks with Treasury officials about what can be done immediately to boost growth, according to people familiar with the matter.

She has also held discussions over the weekend with the other three members of the “quad” of senior figures in the new Labour government: Prime Minister Sir Keir Starmer, deputy prime minister Angela Rayner and chancellor of the Duchy of Lancaster Pat McFadden.

Shares in housebuilders rose on Friday after Labour’s win in anticipation of bold action on planning.

Labour wants to reimpose housebuilding targets on local councils that were watered down by the previous Conservative government, and push greenbelt reforms to release “grey belt” areas of ugly, yet protected, land.

Reeves will work with Rayner on an early “policy blitz” to show how they will build 1.5mn homes over five years, according to Treasury insiders. New-home completion figures last year under the Tories were 212,570, barely changed from the year before.

The chancellor has decided to postpone until after the summer holidays the set-piece Mansion House speech on financial services that her Tory predecessor, Jeremy Hunt, had planned to deliver on July 11, government insiders said.

But the government is still expected to reveal more in coming days about its aims to bolster investment, including by forging partnerships with big private sector players.

It has pledged to create a £7.3bn national wealth fund, which would plough money into ports, gigafactories and steel. A report by a panel led by Sir Mark Carney, the former Bank of England governor, will be presented to Reeves later this week detailing how the fund could work in practice. 

Underscoring the challenge facing Reeves to boost growth, a survey by the British Chambers of Commerce found that only a quarter of businesses reported that they boosted their investment levels in the latest quarter, little changed from the previous three-month period.

That low level came despite 58 per cent of companies reporting that they expected a lift to revenue in the coming 12 months, according to the survey of nearly 5,000 companies.

Reeves is due to deliver her first Budget in September or October. She will face an uphill battle convincing the government’s Office for Budget Responsibility to lift its growth forecasts because the watchdog’s projections are already more optimistic than other forecasters. 

The OBR expects 1.9 per cent growth next year and an expansion of 2 per cent for 2026, above the 1.2 per cent and 1.4 per cent forecast by economists polled by Reuters. The IMF also forecasts slower growth than the OBR.

The UK has a weak fiscal outlook, with government debt set to exceed 90 per cent of GDP this year. Analysts at Citigroup have suggested Reeves could commission an early interim forecast from the OBR. This would highlight Labour’s unforgiving fiscal and economic inheritance.