Philip Hammond is being urged to earmark £7bn for new transport links in the “brain belt” spanning Oxford, Cambridge and Milton Keynes in next week’s budget, and persuade local authorities to build the first new towns in half a century.
The national infrastructure commission, backed by the government and chaired by Labour peer Andrew Adonis, is calling for the rate of housebuilding to be doubled across a swath of central England, to deliver a million new homes.
In exchange, Lord Adonis, a former transport secretary, says the Treasury should be willing to devolve new powers from Whitehall, and fund a series of infrastructure projects to provide rapid links across the region, including:
- Accelerating plans to complete a new east-west rail link from Oxford to Cambridge via Bedford by 2030, based on the partly dismantled “Varsity Line”.
- An Oxford-Cambridge expressway to speed up road links between the two fast-growing university cities.
- New stations in South Cambridge and Cowley, on the outskirts of Oxford.
The commission also calls for several new towns to be created – between Oxford and Milton Keynes, and Bedford and Cambridge – “from smaller scale garden towns of around 10,000 homes through to new city-scale developments of up to 150,000 homes”.
Adonis believes the pledge of major new infrastructure, coupled with devolution of new powers to councils, could help to overcome public scepticism about significant new housebuilding.
“There’s a deal on offer here, which is that government puts in serious investment to transform rail and road links, in return for which the local authorities agree to double the rate of housebuilding, and build new towns in suitable and environmentally sustainable locations.”
“I am hopeful that we will get good news in the budget,” he said, adding that this kind of deal – coupling transport infrastructure with devolution to unlock housebuilding – could be copied elsewhere.
The national infrastructure commission was asked by the government to make recommendations about how best to underpin economic growth in an arc spanning Oxford and Cambridge, Milton Keynes, and nearby towns including Bedford and Northampton.
Hammond responded positively to its interim findings last year. The final report, published on Friday, identifies housing as the key constraint on economic expansion.
“The Cambridge-Milton Keynes-Oxford arc must be made a national priority. Its world-class research, innovation and technology can help the UK prosper in a changing global economy. But success cannot be taken for granted. Without urgent action, a chronic undersupply of homes could jeopardise growth, limit access to labour and put prosperity at risk.”
An east-west rail link has been under discussion since the mid-1990s, and some parts of it have already been completed – reopening the line to Bicester, for example. The commission says new stations, and junctions on the new fast road connection, could act as “magnets for development”.
Bob Price, leader of Oxford city council, said: “This region is already growing strongly and the Oxford-Cambridge ‘brain belt’ offers an opportunity to create a fourth economic powerhouse for the UK to rival those in London, the Midlands and the north.”
Housing, which Theresa May has called a personal mission, is expected to be a significant theme of next week’s budget – though the Treasury has pushed back against demands from ministers, including the communities secretary, Sajid Javid, for the government to increase borrowing to invest directly in new homes.
Hammond favours less interventionist measures, such as further liberalisation of the planning regime, and is also thought to be considering cutting stamp duty for first-time buyers.
Allowing local authorities to introduce new council tax bands for the most expensive properties is another option aimed at keeping the lid on house prices.
Javid, who believes the government should be prepared to borrow up to an extra £50bn to invest in housing, gave a strongly worded speech on housing on Thursday in Bristol, in which he defended younger workers unable to get a foot on the property ladder.
The local government association, which represents councils, is calling on the chancellor to give them the power to borrow directly, so that they can invest in social housing – something the Treasury has long resisted because it fears central government would have to bail them out.
Martin Tett, the LGA’s housing spokesman, said: “We are still significantly short of the 300,000 homes we need to be building each year. The last time we hit that number, in the 1970s, councils built more than 40% of them. Councils are serious about delivering the right kind of homes, supported by infrastructure, for our residents, and are playing their part – approving nine out of 10 planning permissions.”
“The chancellor has an opportunity to go down in the history books as the chancellor who allowed an entire generation of affordable homes to be created, by allowing councils the freedom to borrow to build. We encourage him to take this opportunity in the autumn budget next Wednesday.”