UK construction
Building houses in the UK (Reuters)

Chancellor George Osborne will announce today (10 July) sweeping changes to planning permissions issued by local councils in a bid to boost housebuilding in the UK.

The Financial Times says that after years of prodding the local authorities to accelerate housebuilding, Osborne has finally lost patience and is pushing to sideline them in the planning process.

A new law will allow ministers to impose a housing plan on a local authority if it fails to come up with one, as well as imposing penalties on those that fail to process planning applications quickly.

A zone system will be set up to give automatic planning permission on designated brownfield sites, which Osborne hopes will lead to the development of empty land in towns and cities.

There are fears that the new plan may result in councils being forced to allow new housing on greenfield sites.

Another proposal is to scrap the need for planning permission in London for developers who wish to extend buildings to the height of neighbouring properties, the BBC reports.

Planning powers will also be devolved to mayors in London and Manchester, while enhanced compulsory purchase powers will allow more brownfield land to be made available for development.

New reforms part of Osborne's 'Fixing the Foundations' package

In a statement released before the publication of a 90 page productivity document, Osborne said: "Britain has been incapable of building enough homes. The reforms we made to the planning system in the last parliament have started to improve the situation: planning permissions and housing starts are at a seven year high.

"But we need to go further and I am not prepared to stand by when people who want to get on the housing ladder can't do so," Osborne added.

"We'll keep on protecting the greenbelt but these latest planning reforms are a vital part of a comprehensive plan to confront the challenge of our lifetime and raise productivity and living standards," he said.

The productivity document, jointly written by former Goldman Sachs economist and treasury minister Jim O'Neill and Business Secretary Sajid Javid will be launched in Birmingham today (10 July).

The document is part of the chancellor's 'Fixing the Foundations' package which has been tagged by the Treasury as the second half of the budget.

Osborne has conceded that current planning rules will prevent the Conservatives from meeting its promise of building 200,000 starter homes and 275,000 affordable homes by 2020.

Treasury sources say that housebuilding boosts productivity as it helps to have workers living close to their workplaces, the BBC reports.