UK Markets open in 3 hrs 19 mins

Cameron: Planning Changes Will Rebuild Economy

(c) Sky News 2012

David Cameron has pledged to get the planning system "off people's backs" and revive the economy by easing restrictions for homes and businesses.

Tens of thousands of families will be allowed to extend their properties by up to eight metres without gaining full permission, and rules on shops and offices expanding will be loosened.

Obligations for including affordable housing in new developments could also be waived where they are holding projects back.

But Labour insisted the Government was "kidding itself" that the package would shake the country out of its malaise.

Under the changes, full planning permission - required for extensions of more than a few metres from the rear wall of any home - will only now be needed for those beyond six or eight metres, depending on whether it is terraced or detached.

Businesses will be able to expand shops by 100 square metres and industrial units by 200 square metres.

Shops and offices will be allowed to develop up to the boundary of the premises.

Another 16,500 first-time buyers are also to receive help getting on the housing ladder under an extension of the FirstBuy scheme announced by the Prime Minister and Deputy Prime Minister.

Would-be homeowners without a deposit are given an equity loan of up to 20% of the purchase price under the scheme.

Ministers have also decided that developers will no longer have to wait five years to apply to change affordable housing requirements if they are making sites "commercially unviable".

However, Deputy Prime Minister Nick Clegg insisted the change would be more than compensated for by extra Government investment to support the building of more affordable homes.

Treasury funding of £300m has been found to help provide up to 15,000 such properties and bring 5,000 empty homes back into use, Downing Street said.

And new legislation will provide Government guarantees of up to £40bn of major infrastructure projects and up to £10bn of new homes, including a move to guarantee the debt of housing associations and private sector developers.

Mr Clegg said of the change in social housing restrictions: "Instead of having developers sitting for five years on useless land where nothing has happened, no young people are being employed on construction sites, no affordable homes are being built, no new houses are being built for first-time buyers, we are saying 'Let's undo that knot at an earlier stage'."

The Prime Minister said: "This Government means business in delivering plans to help people, build new homes and kick-start the economy.

"We're determined to cut through the bureaucracy that holds us back. That starts with getting the planners off our backs."

Mr Cameron said he wanted to help the people "in their thirties living at home with mum and dad desperate for that starter flat or house".

The package of measures would mean an extra 70,000 houses and 140,000 jobs, he insisted.

But he also cautioned that it was a "a tough economic environment" and the Government could not turn "UK plc" around by itself.

Labour claimed the plans would not be enough to fix the ailing economy.

Shadow chief secretary to the Treasury Rachel Reeves said: "With our economy in a double-dip recession and a serious housing crisis, the Government are kidding themselves if they think these announcements are up to the scale of the challenge."

And the Local Government Association said it was a myth that housing development was held back by the current planning system - and that the new ideas would not work.

LGA chairman Sir Merrick Cockell said: "Local authorities are overwhelmingly saying 'yes' to new development.

"Removing affordable housing requirements will not make it easier for developers to sell houses more cheaply, and so will not address the underlying wider economic issues that are stalling development."

More From Sky News