The reform of the British Labor Party’s plans is warmly welcomed by investors | News

Institutional investors have welcomed the UK Labor Party’s announcement of an immediate update to its national policy planning framework, aimed at reversing previous changes by restoring mandatory housing targets and improving plans for new roads, railways, reservoirs and other key infrastructure.

However, they want commitments to be translated into concrete reforms and securing financing, with a long-term perspective considered necessary to solve the problems.

Lizzy Galbraith, political economist at Abrdn, said: “Reform planning is undoubtedly a key part of Labour’s growth strategy. We have already heard that they intend to focus on planning reforms in their first 100 days in office, committing to build 1.5 million homes in the next parliament and with the potential intention of re-designating green belt areas to facilitate such investment, as well as overturning councils that were considered persistently blocking new solutions.

“Nevertheless, such housing targets are very ambitious – even with planning reform – so it will be interesting to see whether such a target becomes mandatory.”

Jon Phillips, chief executive of the Global Infrastructure Investor Association, said: “Our latest pulse survey of global investors clearly shows that the next government faces a significant challenge in restoring confidence in the UK as an attractive place to invest. The country is at the bottom of the list of Europe’s largest economies in terms of investor sentiment, with its two biggest barriers being political instability and an unattractive regulatory regime.

“The proposed creation of a National Infrastructure and Services Transformation Authority reflects our long-standing call to strengthen the role of the National Infrastructure Commission, and a 10-year investment strategy would demonstrate a new focus on infrastructure across government, helping to restore investor confidence.”

James Dunne, operational property director at Abrdn, said: “As a long-term investor and provider of professionally managed, affordable rental homes across Europe, Abrdn welcomes any initiative to unlock the roadblocks to housing delivery in the UK.

“The planning system requires reform and investment to enable appropriate and sustainable development that meets the critical need for new housing in all locations and geographies, while strengthening local communities and respecting our environment.”

Kier Starmer’s opposition party plans to adopt a “brownfield-first approach, prioritizing the development of previously used land where possible and the rapid approval of urban brownfield sites”.

He expects it will “bring about the changes we need to keep going, with new roads, railways, reservoirs and other infrastructure of national importance.”

“We will define new national policy statements, make major projects faster and cheaper by cutting red tape, and build support for development, delivering direct benefits to communities,” the party said in its manifesto.

Phillips said the commitment to set out new national policy briefs and an overhaul of the planning system are the next steps that will accelerate the delivery of major infrastructure projects, helping the UK achieve ambitious net zero targets.

“We welcome proposals for greater alignment across governments, which is very much in line with our call for a ‘golden thread’ connecting departments to support a more comprehensive and coordinated approach to attracting the investment the UK clearly needs,” Phillips added.

Galbraith said: “A noticeable change in Labor’s strategy is the increased role of the private sector in financing and delivering infrastructure projects compared to plans from several years ago. Now Labor has embraced a vision in which the state aims to channel investment into high-value projects and restore investor confidence through a combination of clearer planning documents, fewer fiscal events and, in some cases, shared financing.

“Labour believes it can address the current challenges of variable government policy and inconsistency that have previously undermined private investor confidence.”

Dunne said: “It’s encouraging to see this issue at the heart of political parties’ political priorities for the next term and we hope this will translate into quick, tangible reforms and funding not just in the short term, but with the long-term vision and stability that is sorely needed, to solve these ongoing, deep-seated problems.

Phillips said the next government faces challenging economic conditions and infrastructure issues, which most directly relate to water regulator Ofwat’s draft findings on how much water companies can invest over the next five years.

“The way the Labor government responds to the challenges facing the water sector can go a long way towards rebuilding investor confidence that the UK is creating the right conditions to drive investment and growth.

“It is important that the next government recognizes that the majority of infrastructure investment required over the next 20 years will need to come from the private sector. “A new ‘deal’ between government, investors and regulators that takes on the challenge of meeting net zero targets will create an environment that is more likely to attract the investment the UK clearly needs,” Phillips added.

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