Published by Global Banking and Finance Review
Posted on January 29, 2025
By Muvija M and Sam Tabahriti
LONDON (Reuters) - British finance minister Rachel Reeves spelled out her plans to revive the country's slow-moving economy on Wednesday, adding to recent pledges to reform investment and planning rules with a commitment to back airport expansion at Heathrow.
Below are the key actions the government has announced to remove hurdles to growth since taking power last July:
PLANNING
The government plans to limit the number of legal challenges that opponents can bring to slow major infrastructure projects.
At present, even legal challenges deemed to have little chance of success can be brought back to the courts three separate times. New rules are designed to ensure that in the weakest cases only one such challenge can be made.
The current first attempt - known as the paper permission stage - will also be scrapped.
HEATHROW RUNWAY EXPANSION
On Wednesday Reeves gave her backing for the construction of a third runway at London's Heathrow Airport.
Successive governments have dithered about expansion of the site in west London, with politicians caught between the need to build more capacity and concerns about pollution and carbon emissions.
Reeves said she wanted permission granted by the end of this parliament, which is due to end in 2029. The head of Heathrow, Thomas Woldbye, said it could be operational by 2035.
OXFORD-CAMBRIDGE CORRIDOR
The government will further support the "growth corridor" that exists between the university cities of Oxford and Cambridge by working with industry and local government to speed up the building of homes, laboratories and transport networks, including a direct train line.
The area, which is home to fast-growing companies spun out of the universities and to industry leaders such as AstraZeneca, could add up to 78 billion pounds ($96.8 billion) to the overall economy by 2035 if plans are implemented, industry experts say.
PENSION REFORMS
New pension reforms are set to allow the release of what the government calls "trapped" corporate pension surpluses - estimated to be worth more than 100 billion pounds - to be invested in the wider economy.
The government has said legislative changes could enable all defined benefit pension schemes to change their rules to permit the use of such funds where there is trustee-employer agreement.
Reeves also wants to build a slew of "megafunds," with plans to consolidate about 60 defined contribution pension schemes and 86 Local Government Pension Schemes to make them more cost-efficient and large enough to bankroll ambitious projects.
INVESTMENT
Reeves has said the National Wealth Fund and the Office for Investment will work with local leaders to drive regional economic growth by focusing on sectors such as technology, manufacturing and green energy.
HOUSING
The government said there would be new mandatory housing targets, including building more homes where housing is least affordable. Local authorities have been tasked with coming up with timetables for new housebuilding plans or else risk intervention from ministers.
The measures are part of the government's efforts to meet a pledge to build 1.5 million new homes in the next five years, including ordering local authorities to build more houses.
REGULATORY RESET
The government has urged the country's regulators, including competition, energy and water, to remove barriers to economic growth, asking them to create a regulatory environment that boosts investment and innovation.
Reeves forced out the chairman of the country's competition watchdog last week, saying he did not agree with her views on how to speed up Britain's economy.
FINANCIAL REFORMS
Earlier this month, the Bank of England (BoE) delayed the implementation of tougher bank capital rules by a year to January 2027 in order to gain clarity on what the United States will do under Donald Trump as president.
In October, the BoE proposed moving to a five-year bonus deferral period for all senior managers, down from the eight years some face, relaxing rules that were put in place after the global financial crisis.
Britain's Financial Conduct Authority in December outlined proposals for a new platform to enable trading in shares of privately-owned firms to help the country's lacklustre capital markets and encourage new IPOs.
The BoE is also planning to lower its proposed capital requirements for lending to small and medium-sized businesses.
In 2023, the previous Conservative government scrapped a decade-old cap on banker bonuses.
($1 = 0.8055 pounds)
(Reporting by Sam Tabahriti and Muvija M; Editing by Gareth Jones)
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