Reeves’ growth plans hitched to infrastructure, AI and life sciences

Reeves shared fresh details of the government’s plan for growth in a major speech on Wednesday, confirming plans to improve connectivity between the university cities of Oxford and Cambridge, to support the clustering of organisations involved in AI development and life sciences in the ‘Oxford-Cambridge Growth Corridor’, as well as the government’s support for the development of a third runway at Heathrow, the UK’s biggest airport – the government is inviting proposals to be submitted for that project before the summer.

Reeves used her speech to stress the potential to build on sectoral strengths across different cities and regions of the UK, like financial services in Leeds and technology in Manchester, as part of efforts to improve overall living standards in those areas. She signalled, for example, that the government will back the growth of offshore wind development in areas such as East Anglia and Yorkshire, as well as the redevelopment of Manchester United’s Old Trafford stadium – and the new housing scheme planned in tandem with that initiative.

Reeves further confirmed the government is reviewing it’s so-called ‘green book’ – the rules governing how the government decides on which projects to channel public funding and other mechanisms of support towards – to ensure investment is delivered in areas beyond the south-east of England.

The government has already pledged major reforms to planning rules and processes, to enable speedier development of major infrastructure and housing and prevent projects from being unduly delayed by legal challenges. Among other things, it is intent on bringing a new Planning and Infrastructure Bill before parliament in the spring.

Planning law expert Iain Gilbey of Pinsent Masons, who specialises in residential development, welcomed the government’s focus on delivering growth but said significant public funding will be needed if it is to achieve its housing targets.

“The growing head of steam around the clear political messaging on growth and planning and regulatory reform is to be welcomed,” Gilbey said. “However, translating that messaging and proposed reform into actual delivery is a significantly greater challenge.”

“For the government to meet its strategic objective of delivering 1.5 million new homes in this parliamentary term would require a delivery rate of around 800 homes a day. We have not seen that level of housebuilding since the post-war period of the 1950s. The combined effects of higher interest rates and relative illiquidity in the lending markets, an ageing and diminishing construction workforce, supply chain pressures and the cost of raw materials, compound the challenge. Without very significant fiscal and funding interventions in housing delivery, with a much greater role for local authorities and registered providers, the objective will simply not be met,” he said.

The Oxford-Cambridge Growth Corridor plans include measures previously announced by the government, including funding for East-West Rail and A-road improvements; as well as the priority building of a new cancer hospital in Cambridge, on which Cambridge University, Addenbrookes Hospital and Cancer Research UK are partnering. The government also previously confirmed that its first ‘AI growth zone’ will be in Culham, Oxfordshire. Reeves said new housing will be provided for in the Oxford-Cambridge Growth Corridor to support demand from people to live, work and study in the area. She said the corridor has the potential to be Europe’s answer to Silicon Valley. 

The Oxford-Cambridge Growth Corridor concept was developed under the last Labour government in the early 2000s and is now being restored as a priority initiative by this Labour government.

Planning and infrastructure expert Robbie Owen of Pinsent Masons said: “The re-launch of the Oxford-Cambridge Growth Corridor, with all of the attendant rhetoric and hype, only served to emphasise the enormous challenges that will be faced in its delivery. The chancellor said that central government would need to work with local leaders and businesses but the further devolution announced last month and the raft of planning reforms government has made or committed to will be nothing like enough. Effective and timely delivery is going to require much more – further and bolder planning reforms and positive action taken by government across Whitehall and its agencies to underpin the support for the corridor. This would best be done by government putting in place a national policy statement for the corridor, as that would then strongly support development brought forward for permission, whether to local authorities or as nationally significant infrastructure or business and commercial projects, giving it a presumption that it should be approved.”

In a statement to MPs, transport secretary Heidi Alexander said airport capacity constraints are “hindering the country’s ability to reap the growth benefits of aviation”, particularly in in the south east of England. Alexander is expected to make decisions soon on expansion plans at Gatwick and Luton airports, while Reeves said the government would work with local authorities in Yorkshire to consider how Doncaster Sheffield airport might be reopened for business – it closed in 2022.

Amidst some opposition to airport expansion – including from members of her own party – on environmental grounds, Reeves said that the government would ensure a third runway at Heathrow would be delivered in line with the government’s legal, environmental and climate objectives.

In her speech, Reeves also flagged increased investment in new water infrastructure, following the outcome of Ofwat’s 2024 price review, and how the National Wealth Fund, which the Labour government established last year, will deliver targeted regional investment for city regions, including Glasgow and the West Midlands.

Other initiatives the government is pursuing to drive growth which Reeves referenced in her speech include regulatory reforms and international trade agreements.

Public policy expert Andrew Henderson of Pinsent Masons said: “The chancellor’s speech highlighted ambitious supply side reforms to facilitate investment and unlock economic growth, which will be welcomed by businesses. However, many of the changes are longer-term, and are predicated upon reforms being translated into legislation through the forthcoming Planning and Infrastructure Bill. This may inhibit the UK government’s ability to deliver economic growth in the short-term, which Labour is already being judged upon.”