Rachel Reeves Spring Budget – What Does this Mean for the Planning Industry?

After months of speculation that froze decision-making across the property sector, Chancellor Rachel Reeves finally delivered her Spring Budget.

The Office for Budget Responsibility's (OBR) forecasts paint a mixed picture. Gross Domestic Product (GDP) growth for 2026 has been revised - down to 1.4%, though 2025 is expected to reach 1.5% - partly boosted by households rushing property transactions ahead of stamp duty changes. This serves as a reminder of just how central housing and development activity remains to broader economic performance.

(Source: Chris McAndrew)

Planning Reform Remains the Cornerstone

What's striking about this Budget is how central planning continues to be in the Government's growth strategy. The OBR identifies changes to the National Planning Policy Framework and increased departmental capital spending as among the most significant supply-side policies of this Parliament. The Chancellor herself acknowledged that planning reform will be essential to raising medium and long-term economic output.

This is not just political rhetoric. The OBR's analysis suggests that without successful planning reform, the modest growth forecasts look increasingly fragile. For those of us working day-to-day in the planning system, this places enormous responsibility on getting the reforms right and getting them implemented effectively at local authority level.

Housing Supply: The Lag Before the Leap?

The housing supply forecasts reveal an interesting trajectory. The OBR has slightly reduced its projections compared to March, mainly due to higher expected mortgage rates from 2028. However, there are early positive signals, with recent data showing a 68% year-on-year increase in residential planning permissions.

The OBR acknowledges that the impact of March 2025's residential planning reforms has not yet materialised in completions data, with most increases in housebuilding expected from 2027-28 onwards. At Bluestone Planning, we are already seeing increased activity from developers and landowners positioning themselves for this anticipated upturn, particularly in areas where local planning authorities are engaging constructively with the Government's reformed approach.

What is Missing? Demand-Side Support

One notable gap in this Budget is meaningful demand-side stimulus. While supply-side planning reforms are crucial, they need to be matched with measures that support actual transactions and purchases. The proposed consultation on a new Lifetime ISA for first-time buyers is a modest step but falls short of the comprehensive demand support the development industry has been calling for.

The combination of a new 'mansion tax' on higher-value properties and increased taxation on property income dampened sentiment in the housebuilding sector, with share prices taking an immediate hit. This highlights the delicate balance required: planning reform can unlock supply but without buyer confidence and affordability support, delivery may still fall short of targets.

Looking Ahead: The Capacity Challenge

For planning consultancies like Bluestone Planning, this Budget reinforces that our sector sits at the heart of the Government's economic strategy. The forthcoming Planning and Infrastructure Bill, while the OBR considers its impact modest in isolation, forms part of a broader reform package that could genuinely shift the dial on development delivery.

However, there's a critical elephant in the room that this Budget doesn't adequately address: local authority planning capacity. The Government is expecting councils to process significantly more applications, deliver ambitious housing targets and implement complex policy reforms - all while many planning departments are severely under-resourced and struggling with staff retention.

Across Oxfordshire and beyond, we are witnessing the very real consequences of years of local government funding cuts. Planning departments are operating with skeleton teams, relying heavily on agency staff and consultants to fill gaps. Experienced planners are leaving the public sector for better-paid roles in private practice or retiring early. The result is lengthening determination periods, inconsistent decision-making and a system straining under existing pressures - let alone the increased workload the Government's growth agenda will generate.

The £13bn increase in departmental capital budgets mentioned by the OBR is welcome but capital spending on infrastructure will not address the day-to-day revenue funding shortfall that prevents councils from recruiting and retaining planning officers. Without direct investment in planning department capacity, both financial resources and professional development, even the best-designed reforms risk faltering at the implementation stage.

This creates a paradox: the Government has placed planning reform at the centre of its economic growth strategy, yet the local authorities tasked with delivering it lack the resources to do so effectively. For applicants and their advisors, this means continuing delays, greater uncertainty and the need for even more robust and well-evidenced applications to support hard-pressed planning officers in making timely decisions.

The Government has made its bet on planning as the engine of growth. Whether that gamble pays off will depend not just on policy design but on ensuring the people and teams responsible for implementing those policies have the capacity to deliver. That's the challenge that must be addressed if the optimistic forecasts are to become reality.

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At Bluestone Planning, we are working closely with clients to navigate this challenging environment, helping them prepare applications that anticipate capacity constraints and engage constructively with resource-limited planning teams. We are also collaborating with local authorities on strategic planning documents and guidance that can help streamline decision-making.

Contact us on +44 1235 766825 or email admin@bluestoneplanning.co.uk to discuss how these changes may influence your planning strategy and how we can support you in responding confidently and effectively.