Labour's new towns initiative: navigating the law

September 4, 2024

Labour has pledged to build a "generation of new towns" in its Manifesto as part of its plan to build 1.5 million new homes over the next five years. Alexander Rose, Lee Pickett, Andrew Batterton and Jessica Harrison explore some of the legal issues which are likely to arise from delivering this important policy and put forward solutions which can be implemented.

Tempsford

If you haven't heard of Tempsford yet – then you soon will.

This village of 590 nestled in the Bedfordshire countryside has been identified by a think tank as the location for a new town of between 250,000 - 350,000 people. As such it sits at the apex of the discussion about the need for new housing vs the impact on local people.

The report by the think tank, UK Day One, makes a strong case as to why Tempsford would be a strong location for a new town. The village has excellent transport links – Tempsford is at the junction of the East Coast Mainline and the planned East West Rail line, as well as being close to the A1. This means it is close to areas of high economic activity – London (which has the country's most acute housing shortage) is only 45 minutes commute away, whilst Cambridge 20 minutes. Furthermore, it sits within comparatively flat, open countryside.

At the same time, the scale of what is proposed will undoubtedly draw out many of the counter arguments to such development. After all a town of up to 350,000 residents would be significantly bigger than Oxford and Cambridge combined. Indeed, with a population of only 50,000 less than Manchester, there would surely be calls for Tempsford to be granted city status. New homes are needed, but the impact of those living locally needs to be taken into account.

The Towns of the Future

It remains to be seen whether Labour takes forward the proposal of Tempsford, but the new government has already committed to creating new towns in its manifesto, stating that "in partnership with local leaders and communities, a Labour government will build a new generation of new towns, inspired by the proud legacy of the 1945 Labour government. Alongside urban extensions and regeneration projects, these will form part of a series of large-scale new communities across England".

Housing Minister, Angela Rayner has said that a New Town Commission will be set up within the first six months of the new government, which will unveil a list of new towns by the end of the first year. Already there is speculation that sites near Oxford, Bristol, and York will be chosen.

The new towns are expected to have 40% affordable housing and developers will be held to the 'New Towns Code' in order to ensure that the new homes meet the highest standard of good design and sustainable living.

Labour sees housebuilding as a core part of its mission focussed government – recognising that building more houses will help kick-start economic growth. It has also stated that the policy is "built on the foundations" of the post-war Labour administration, led by Clement Attlee, which built Stevenage, Milton Keynes, and Welwyn Garden City.

What legal issues are likely to arise from the creation of new towns?

Labour plans to "turbo-charge" development in specific places and to play "a strategic role in housebuilding". It has some powerful levers available to it (such as the ability to streamline regulation and to offer targeted subsidies) but also recognises that the construction of significant developments will only be achieved in partnership with developers and other private sector stakeholders.

Legal considerations include:

New Legislation – the Office of Parliamentary Counsel will already be working on draft 'Planning and Infrastructure Bill' for Parliament to consider in the coming months, after this was announced in the 2024 Kings Speech. This aims to simplify and accelerate planning processes, update the rules around compulsory purchase and increase the capacity of local authority planning teams. These changes to the law will help the government deliver their policy more quickly, but much of the preparatory work for the new towns initiative can start before the new legislation receives Royal Assent.
Planning – inevitably planning is one of the first considerations when an administration wishes to take "a strategic role in housebuilding", but the rules in this area have been identified as a pinch point in delivery and therefore are about to be changed. Prime Minister Sir Keir Starmer has said the current rules act as " a major brake on economic growth" and “we will reform the planning rules to build the homes and infrastructure the country desperately needs”. In our experience of the rules, many delays actually occur due to a lack of expertise, but the reforms being proposed are to be welcomed.
Acquisitions and Compulsory Purchase Orders – when the State is engaged in delivery, whether this be the delivery of highways or other infrastructure, there is a need to take control of strategic sites. The quickest and simplest route is usually an agreed purchase, however if landowners are reluctant to sell, authorities may also need to consider making a compulsory purchase order (CPO). Labour plans to reform the system with the aim of ensuring that compensation paid to landowners is fair, but not excessive, when important infrastructure and affordable housing are being delivered and modernising planning committees.
Engagement, Consultation and Challenges – the impact of developments on local residents and stakeholders is not to be underestimated. Legal support is often required to manage the process of taking the views of local communities into account, but at the same time ensuring other considerations are properly taking into account balanced decisions are reached. Labour plans to reform this area of law to ensure "engagement with how, not if, homes and infrastructure are built". This change of emphasis will need to be handled carefully.
Real Estate – legal input will be required to deliver State owned infrastructure but also to ensure this investment unlocks private development, including delivering on the commitment to implement the highest stands of good design and sustainable living. The government plans to closely monitor progress of the new towns, meaning that it is important to plan the steps which need to be taken at the outset, in order to ensure no delays arise.
Public Funding – incentives will need to be offered to ensure the delivery of some aspects of new towns, for example to encourage delivery on brownfield sites or to bridge viability gaps preventing the delivery of affordable housing. Advice will be required to ensure grant funding agreements ensure the delivery of the government's priorities whilst safeguarding public funds.
Subsidy Control – when public funding is awarded it will be necessary for public authorities to comply with the Subsidy Control Act 2022. DWF has a market leading team in this area of law and can advise on how to navigate the rules quickly and efficiently.
Procurement law - with the Procurement Act 2023 coming into force in October, public authorities looking to select contractors will want to get legal input to avoid challenges, which can delay the delivery of projects.

Conclusion

The new Labour government is prioritising the delivery of housing, including through the creation of new towns. Changes to legislation are to be welcomed, but delivering at pace is often down to local delivery decisions. Careful planning and understanding the law will therefore inevitably be an important element of the creation of the new towns.

Alexander Rose, Lee Pickett and Andrew Batterton are partners and Jessica Harrison is a trainee solicitor at DWF.