Planning reform aims to deliver boost to flagging economy

The Government is to re-write the planning rules to speed up development and inject new life into the flagging economy as David Cameron attempts to seize back the political initiative following a bruising summer.

As MPs prepared to return to Westminster tomorrow, ministers were putting the finishing touches to a series of high-profile initiatives intended to show they understand the pressing need to get growth back into the economy.

Chancellor George Osborne said officials were working on plans for a Government-backed bank for small businesses. He confirmed that they would be publishing Bills to ease the planning rules and to enable ministers to use the Government's balance sheet to underwrite new construction projects.

He said that councils would also be encouraged to use existing rules which allow them to build on the Green Belt if an equivalent area of land elsewhere is brought into the Green Belt.

However ministers were facing an immediate challenge from the Tory right, with David Davis - who fought Mr Cameron for the party leadership in 2005 - setting out his own alternative strategy for growth.

He will use a high-profile speech to the Centre for Policy Studies (CPS) think-tank to call for a radical programme of cuts to taxes, regulation and public spending to kick-start the economy.

Mr Osborne, however, made clear that he was sticking to his existing strategy, insisting that it was beginning to deliver results despite the continuing recession.

"Our economy is healing, jobs are being created, it is taking time, but there is no easy route to a magical recovery," he told BBC1's The Andrew Marr Show.

He added, in an echo of Margaret Thatcher's famous phrase: "There is no alternative easy road."

In such difficult economic conditions, he said, it was vital that any obstacles to growth were removed - including speeding up the planning process rules so that "we can actually build roads more quickly than it takes to fight a world war".

Mr Osborne said: "It is absolutely ludicrous that it takes years to get planning decisions in this country. This country, in the current economic environment, cannot afford to wait years for development."

His frustration echoed that of Mr Cameron, who wrote in The Mail on Sunday: "The nations we're competing against don't stand for this kind of paralysis and neither must we.

"Frankly, I am frustrated by the hoops you have to jump through to get anything done - and I come back to Parliament more determined than ever to cut through the dither that holds this country back."

With Transport Secretary Justine Greening set to launch a major consultation on airport expansion, Mr Osborne also acknowledged the need to get on with a decision on the thorny issue of future provision in the South East of England.

The Prime Minister was accused over the summer by London Mayor Boris Johnson of "pussyfooting around" the subject, while former environment minister Tim Yeo said Mr Cameron needed to show whether he was "man or mouse".

Mr Osborne said he was "firmly in the camp" of businesses which argued that there had to be more runway capacity in the South East and that "all the options" should be examined.

"We do need to deal with the fact that there is opposition across communities to particular airport developments," he said.

"I understand all about the local pressures. But you've got to as a nation be able to overcome those and make a sensible decision about where that extra runway capacity in the South East should be."

He brushed off a call by Tory backbencher Brian Binley for Mr Cameron to move him from the Treasury in the forthcoming Cabinet reshuffle, urging his critics in the party to rally behind the Government's economic strategy.

"Of course, I read all these people coming up with different proposals for what we should do. Quite often they are mutually contradictory," he said.

"I would say this to all the critics - on the Labour side and indeed even in the coalition - I would say: get behind the government in making it easier to develop things, to get things built, to support infrastructure development. That is deregulation."

However in an interview with The Sunday Telegraph ahead of his CPS speech, Mr Davis said that the Government should have done more to tackle the deficit earlier, and that a further round of spending cuts before the general election in 2015 was now "inevitable".

He said: "The coalition's cuts should have been earlier and deeper. This is not about individual policy areas. This is about something more fundamental ... something deeper. There is an alternative economic policy."

For Labour, shadow treasury minister Chris Leslie said that Mr Osborne had run out of ideas and that changes to the planning rules would not address the contraction in the construction sector.

Friends of the Earth campaigner Anna Watson said Mr Osborne's "meddling" in planning policy was undermining protection of the Green Belt.

PA