David Cameron and Nick Clegg unveil plans to kick-start Britain's ailing house building industry

David Cameron and Nick Clegg today unveiled a package of measures designed to kick-start Britain’s moribund house building industry as part of a renewed Government focus on economic growth.

Under changes to the planning system restrictions on extending homes and businesses will be relaxed. House owners will be allowed to extend their properties by up to eight metres without gaining full permission, and rules on shops and offices expanding will also be loosened.

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.

Among other measures announced:

• Up to16,500 first-time buyers will receive help getting on the housing ladder under an extension of the FirstBuy scheme.

• There will also be a relaxation of the rules requiring all new developments to include affordable housing. Under changed regulations developers will be able to go ahead with project that don’t include social housing if they can show the requirements are making sites “commercially unviable”.

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

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

Treasury funding of £300 million has been found to build up to 15,000 such properties and bring 5,000 empty homes back into use, Downing Street said. Ministers are fearful that if enough affordable homes are built then rent prices will rise – potentially pushing up housing benefit costs.

Mr Cameron told Daybreak the package was all about confidence.

“Frankly we had a situation where the lenders did not want to lend so the builders could not build and the buyers could not buy,” he said. “We are talking today about 140,000 jobs provided by building an extra 70,000 houses.”

Mr Clegg said the government was telling private house builders: “If you are finding it too expensive to raise money yourself to put shovels in the ground to employ on construction sites and build homes for private rent and to build affordable homes we are going to make it cheaper for you to do so”.

He added: “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'.

“Our calculations are that there are some sites where they will be able to proceed without building affordable homes. That is why we are putting up £300 million to more than make up for any loss.

“The net effect of all of these proposals, let me be very clear, is more, not less, affordable homes.”

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”.

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

“If there was a button you could push in Whitehall that just said 'growth comes', I would have pushed it long ago,” he said.

“There isn't. What the Government can do is set the conditions for growth, provide that background of low interest rates, of low taxation which we've done with companies, of a steady and sensible Government doing its bit.

”Then you'll find that households will want to come forward and invest, and businesses will want to come forward and invest. That's how it has to work.“

But Shadow chief secretary to the Treasury Rachel Reeves said the proposals would not be enough to kick-start growth.

“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,” she said.

“We need to get Britain building again, but the Government has slashed the housing budget and the number of affordable homes being built is down by 68%. And they have failed to deliver many of the infrastructure projects they announced last year.

”If ministers really want to help homeowners and small firms, why don't they listen to our idea to cut VAT to 5% on home improvements, repairs and maintenance?

“And why do they refuse to repeat the bank bonus tax to fund the building of 25,000 affordable homes and 100,000 jobs for young people?”