Liz Truss to rip up green planning laws in bid to kickstart housebuilding

Tax incentives and relaxed environmental protections are part of new plans to be announced in mini-budget

New rules will make it easier for housebuilders to construct new housing on Green Belt land
New rules will make it easier for housebuilders to construct new housing on Green Belt land Credit: ANDREW BOYERS /REUTERS

Green planning laws will be ripped up by Liz Truss in this week’s fiscal event in a move that could see tens of thousands of new homes built on protected land.

Ministers have drawn up plans for new “investment zones” that will hand businesses tax breaks and encourage house building in areas of high economic growth.

Whitehall sources said the zones will be distributed across the UK. 

In an attempt to encourage more building, The Telegraph understands ministers will relax environmental protections within the zones, including EU directives that protect newts, toads and bats from developers.

The policy will form a major component of this week’s “mini Budget”, which will be announced by Kwasi Kwarteng on Friday morning.

The statement is also expected to include plans to cut stamp duty to further unlock the housing market, reduce National Insurance Contributions and cut corporation tax.

Speaking at a roundtable with business leaders in New York on Wednesday, Ms Truss said that Mr Kwarteng will announce measures to simplify the tax system.

"We want lower, simpler taxes in the UK to incentivise investment, to get more businesses going in the UK," she said.

"We’re also going to be introducing low tax investment zones across the country, in parts that are left behind. It’s going to be easier to get things done in those zones."

Ms Truss told business leaders that she wants the City of London to be "the most competitive place for financial services in the world", adding that a series of reforms to financial services will form part of Friday's announcement.

Officials in the Department for Levelling Up, Housing and Communities have drawn up a list of green rules that could be relaxed in investment zones.

Ministers are preparing to relax "nutrient neutrality”, which dictates that councils cannot give planning permission to developments that could result in an increase in the levels of phosphate and nitrate levels in water.

Ms Truss vowed last month to axe "Brussels red tape" on the environment, arguing that it has "stalled" housing projects.

The Housebuilding Federation say that removing this requirement could allow the development of around 100,000 homes across the country - a third of the Government's annual target for new houses.

The Habitats Directive, another EU regulation, could also be paused within investment zones, along with rules on "water neutrality" - which can prevent housebuilding if there is a perceived impact on small aquatic animals, like snails.

Other environmental regulations that are in line for being axed include "recreation mitigation zones" which can block developers from starting building projects that might lead to "recreational" pressure on local woodland.

The move will likely result in tens of thousands of new homes being built in green areas that have previously been shielded from development by environmental regulations, which one Government source said would be unpopular with many voters in the South of England.

Kwasi Kwarteng, the Chancellor of the Exchequor, is expected to announce investment zones as part of his mini-budget on Friday
Kwasi Kwarteng, the Chancellor of the Exchequor, is expected to announce investment zones as part of his mini-budget on Friday Credit: TOBY MELVILLE /REUTERS

"It will be very difficult. In the Red Wall, the housing issue isn't as acute, but in the South where it is, Tory MPs' majorities are at stake,” they said.

Ms Truss said in 2019 she supported building a million new homes on the green belt, but appeared to abandon that position when asked about it during the Conservative leadership race last month.

Now ministers have decided to allow further building in specific green areas if they expect that it will produce economic growth.

Robert Jenrick, the former housing secretary, was previously forced to row back on his attempts to overhaul planning laws following a revolt from Conservative backbenchers, who feared losing their seats because of anger about house building in green areas.

In many “Blue Wall” constituencies in the South of England, the Conservatives are under threat from the Liberal Democrats, who have campaigned against further development of green land.

A second Government source said that while scrapping laws designed to protect wildlife would encourage construction, it may “make people squeal” about the effect on the environment.

A plan to “compensate” the environment by creating new green areas in place of land developed within investment zones was discussed at an early stage but has since been scrapped, the Telegraph understands.

Government insiders say Ms Truss’s brand of “levelling up” differs from projects designed by Mr Johnson and Rishi Sunak, which were largely focussed on giving government grants to councils in deprived areas.

Under the new investment zone policy, any council across the UK will be allowed to apply to create an area where regulations are relaxed and businesses will pay less tax, including local authorities that are already wealthy.

“It’s a supply-side approach to it. It’s all about creating areas for the private sector to invest in,” said a Whitehall source.

The source added that the policy would eventually result in poorer areas of the UK becoming richer, but that economic growth would be required first.

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