The provision of affordable housing as part of wider construction projects could be ditched under plans being considered by ministers to deregulate the planning system in about a dozen “investment zones”.
Sources said the controversial move was being contemplated ahead of a mini-budget by the chancellor, Kwasi Kwarteng, on Friday outlining the government’s growth strategy and promised tax cuts.
Swathes of environmental and planning regulations are expected to be ditched to “drive growth and speed up development” in the first batch of roughly 12 investment zones.
The zones are modelled on freeports, and are meant to encourage more business investment by granting firms tax relief and cutting red tape.
The prime minister, Liz Truss, mooted the idea during her leadership campaign, saying it would help with her plans to “unleash investment and boost economic growth right across the country”.
Councils began expressing interest in applying to become investment zones this week and Kwarteng hopes to be able to point to the uptake as proof of the policy’s popularity in his speech to the House of Commons later this week, insiders said.
A letter from the levelling up department sent to local authorities and seen by the Guardian said that one of the main benefits of becoming an investment zone would be “designated planning sites to build for growth and housing”.
It added: “Where planning applications remain necessary, they will be radically streamlined. Planning sites may be co-located with, or separate to, tax sites, depending on what makes most sense for the local economy.”
While each deal will be bespoke, local authorities granted investment zone status may be able to let developers circumvent requirements for affordable housing to be built alongside any proposed new property, according to government sources.
And planning obligations like section 106 agreements, which require developers to mitigate pressure on the local area by building or paying for additional infrastructure projects in exchange for planning permission, could also be scaled back in the first batch of investment zones.
It is also believed that plans were drawn up for a ban on development in the green belt to include an exemption for investment zones. However, the idea was not taken forward.
Simon Clarke, the levelling up secretary, is said to be wary of the last Tory rebellion over planning reforms, which Boris Johnson’s government was eventually forced to abandon.
The levelling up department declined to comment on speculation about the upcoming fiscal event.