UK overhauls home-building rules in bid to boost productivity

* Government to counter delays in housing projects

* Local authorities face fines if slow on planning

* Launch of new productivity plan follows UK budget (Adds details from plan, reaction from economist, investor)

By William Schomberg

LONDON, July 9 (Reuters) - Britain's government said on Friday it would remove obstacles to building new houses as it tries to tackle a chronic shortage of homes and put its economy on a sounder footing.

At the centre of a new programme to boost Britain's poor productivity record are powers for the government to step in and draw up housing plans if local authorities fail to do so.

Town halls that drag their feet on planning decisions may be fined, the government said as it moved to reduce the delays for housing projects that are often caused by local objections.

The plan follows the first government budget since Prime Minister David Cameron's Conservative Party won national elections in May.

Britain's economy has grown strongly over the past two years and the number of people in work has hit a record high. But growth in output per worker lags behind that in many other advanced countries, posing a threat to the recovery.

"In stark terms, it now takes a worker in the UK five days to produce what his or her counterparts in Germany can deliver in four," business minister Sajid Javid said.

The new plan brings together existing proposals in areas including transport, trade and the devolution of power to cities and regions. It also focuses on training which critics say lags far behind other European countries.

Javid said it was unacceptable that Britain was one of few advanced countries where the skills of 16- to 24-year-olds were no better than those of 55- to 64-year-olds. Finance minister George Osborne said that in the last 25 years, France had built more than 2,500 miles (4,000 km) of motorway while Britain had built just 300.

But the housing rule changes are the programme's centrepiece. British house prices have surged in the last two years to record highs, pushed up in part by government measures to make it easier for people to get mortgages.

The government hopes that a nimbler land and housing market will make it easier for people to own homes close to their work and give firms more freedom of location.

BROWNFIELD PUSH

Planning permission will be granted automatically for housing developments on suitable brownfield sites, land formerly used for industrial or commercial purposes.

"That has really been an ongoing problem for many years in the UK for the housebuilding side but also for new business," said John Van Reenen, director of the Centre for Economic Performance at the London School of Economics.

The plan was also welcomed by some investors.

"We all know that the UK needs to build masses more homes but for years all we've had is policies to help ever increasing numbers of people to buy too few properties," Andrew Allen, head of global property strategy at Aberdeen Asset Management (Other OTC: ABDNF - news) .

"There's plenty of money from investors waiting in the wings to invest and indeed fund the much-needed residential schemes."

John Hawksworth, chief economist at PwC, said the government should rethink its reluctance to borrow to fund investment and take advantage of rock-bottom borrowing costs to radically improve housing and transport infrastructure.

"The government could be bolder in this area," he said.

The government said it had hired former Bank of England deputy governor Charles Bean to lead a review of British statistics so productivity can be measured more accurately. (Writing by William Schomberg; Additional reporting by Andy Bruce; Editing by Ruth Pitchford)