Economic development policy briefing
Contents
Understanding employment land need
Integration of plans and strategies
Supporting industries and industrial clusters
Executive summary
Economic growth underpins much of the government’s policy agenda, with planning contributing significantly to this. In particular, economic development planning policy will be essential for implementing local and national economic strategies, helping achieve growth by operationalising the employment land needed to scale up important industries. The following briefing expands on three key areas in economic development planning policy that could help achieve this. It will outline key issues in these areas, as well as policy recommendations to help realise the instrumental role of planning in economic development.
The first section of the briefing covers measuring and forecasting employment land need and outlines how and why economic needs assessment guidance needs updating. Recommendations include:
- Standardisation of economic needs assessments, to help build a more coherent evidence base between planning authorities.
- Updating associated inputs like use classes and the employment density guide and considering more frequent updates.
The second section on integrating plans and strategies looks at how local growth plans written by mayoral strategic authorities will feed into other plans and strategies. Recommendations include:
- Establishing monitoring and reporting guidelines, to ensure planning decisions tie into the priorities outlined in local growth plans.
- Governance mechanisms to facilitate alignment within mayoral strategic authorities.
- Further guidance on plan review and update processes.
The final section on industries and industrial clusters outlines how proposed policy measures will support specific industries targeted by the government for growth, and what more could be done in this area. Recommendations include:
- Stronger mechanisms for collaboration where industrial clusters do not fit within strategic boundaries.
- Incentivising strategic plan preparation through funding allocations.
- Making interactive sectoral spatial maps available, to facilitate site identification for investors.
Background
The government has made economic growth the central pillar of its agenda, with planning a key component in several areas. This is demonstrated by the nature of planning-related legislation and policy introduced since 2024, including the Planning and Infrastructure Act 2025 and the English Devolution and Community Empowerment Bill, the Industrial and 10-year Infrastructure Strategies, and the proposed revised National Planning Policy Framework (NPPF).
Devolution of powers and responsibilities is set to play an important role in economic development, with Mayoral Strategic Authorities (MSAs) expected to produce Local Growth Plans (LGPs) as a strategic framework to guide economic priorities. Strategic authorities will also need to produce Spatial Development Strategies (SDSs) to act as the spatial representation of the priorities outlined in each LGP. Though there is little detail on how it will work in practice, the 10-year infrastructure strategy and industrial strategy are expected to feed into these strategic-level plans.
The structure of the revised NPPF is significantly different from the previous framework, consisting of 20 themed chapters and 133 policies, with each chapter split into plan-making and decision-making policies. Of particular note is chapter 7 of the NPPF, titled ‘Building a strong, effective economy’. Plan-making policies in this chapter require planning authorities to outline an economic vision in their development plans, to allocate sites to implement this vision, and address barriers to investment. On decision-making, substantial weight is given to the economic benefits of development, also requiring that in the case of employment land unmet need, existing development plan allocations and – for the first time – market signals be considered. In addition, Annex A of the consultation document expanded on the role of AI and data centres in transforming the UK economy, detailing measures like changes to the Nationally Significant Infrastructure Projects (NSIP) regime and AI Growth Zones to streamline AI infrastructure build-out. These will all have implications for economic development at national, strategic and local levels.
Understanding employment land need
To deliver on growth, Local Planning Authorities (LPAs) first need to establish the type and amount of employment land required to cater to business need in their area. Economic Needs Assessments (ENAs) are an analysis undertaken by plan-making authorities to do this. Government guidance on ENAs has not been updated since 2019 and is much less prescriptive than the housing need assessment formula, which was updated in 2024, resulting in a significant increase in the yearly housebuilding target. In contrast to the housing need formula, the ENA guidance recommends some inputs, but these are ultimately suggestions, and it leaves methods and the resulting outputs to authorities or the firm they commission to carry out the assessment. While this can be useful in enabling authorities to cater closely to local context, there are some issues that stem from the lack of standardisation. Introducing a degree of uniformity in these assessments will make it easier for planning authorities to ensure a plan- and evidence-led approach to economic development.
The lack of standardisation in ENA guidance and methods means that different authorities can use different sources and methods for similar assessments, making ENAs inconsistent between areas. This can complicate the process of evidencing local plans, and at a higher level, SDSs or LGPs. LGP guidance suggests that Mayoral Strategic Authorities (MSAs) could include economic evidence and data from constituent Local Authorities (LAs) in their LGPs, however, building a coherent cross-boundary evidence base using different sources is difficult.
In addition, the employment output forecasts recommended in ENA guidance to forecast employment land need are not fit for purpose for emerging industries like advanced manufacturing. Due to high levels of automation, such sectors can produce fewer jobs by floorspace than other industries but nonetheless increase productivity, meaning the use of jobs creation in ENAs do not always accurately reflect the industry’s contribution to the local or national economy. As a result, authorities may be disincentivised from planning for low job to floorspace ratio industries, potentially resulting in land allocation that is insufficient for growth ambitions. Some of these are the precise industries the government seek to help grow, yet ENA guidance does not reflect or enable this.
The use of forecasting also has the potential to impact the level of ambition in local plan land allocation and policies for economic development. Where ENAs rely on past data to forecast future need, past jobs delivery by different sectors is, to an extent, reproduced in future projections. For emerging industries like advanced manufacturing and AI there is little data to inform such projections. Along with long-running resourcing and funding issues in LPAs, this can make it harder for planning teams to devise forward-thinking and ambitious economic development planning policies. Work by Savills on analysing suppressed demand is a notable recent effort to address the problems of existing forecast measures, using ‘lost demand’ to assess need in a more forward-looking way.
This is why a review of ENA guidance, and an updated framework or method for assessing economic and employment land need is necessary. The proposed revised NPPF recently consulted on requires authorities to use “any relevant standardised tools, methods and templates published by the Secretary of State” appropriate to the plan being prepared. Given that ENA guidance has not been updated in over six years, and growth is a core focus of the government, this would be an opportune moment to establish a ‘Standard Economic Method’ for use in future local plans. The framework should be clearer and more robust than the current guidance and would ideally include standardised formulae and recommended outputs. This should be a framework that can be applied within LPAs nationwide, using easily accessible data inputs and clear methods. Some principles we recommend ENA guidance should adhere to are:
Standardised
Firstly, as outlined above, economic needs assessments should be supported by use of a core, standardised set of data sources, methods and digital planning tools. This would provide an accessible and scalable evidence base for each area’s target industries, given its capabilities, and fit with the government’s approach to standardisation of other matters within planning, like national decision making policies, national validation lists, the emerging national model planning conditions and planning obligations.
Reflect local context
The framework should encourage pragmatism when determining the industries that could contribute to an area’s economic development. This includes considering what industries an area is suited to and competitively placed to attract, being cognisant of rural as well as urban needs. The guidance should encourage LPAs to be specific about the key industries and sectors supported for growth, and consider the specific infrastructural, energy, workforce and land needs of those industries. Local Growth Plans devised by Mayoral Strategic Authorities would act as a guide here to help ensure appropriate spatial location of industries.
Efficient
Completion of the ENA should align with other strategies and plans, so as not to hinder their progress, and where possible, use a shared evidence base. The section below on integrating plans and strategies deals with plan timelines in more detail.
Forward looking
The ENA guidance should encourage forward thinking, including around topics such as attracting emerging industries, diversifying the local economy, climate change, and designing for active travel.
In addition to updating guidance, key metrics used in ENAs such as the employment densities guide, last updated in 2015, should be updated more frequently, including adequate specificity around new industries. A review of use classes would also be beneficial here where several emerging industries are routinely classified as sui generis. Establishing a specific use class for these industries would help facilitate consistency and predictability in planning and licensing for them. This could also be an opportunity to address unintended consequences from previous use class revisions, such as changes to class E resulting in loss of retail frontages in high streets and town centres.
The above recommendations could be followed using a moderately, or very prescriptive approach. A moderately prescriptive approach might entail the government providing formulae and data sources to form the core of any ENA written or commissioned by an authority, as with the housing needs assessment. While the central elements of the ENA would be expected to follow government guidance, authorities would be able to include other analysis of their choosing. This approach has the benefit of allowing local context to be incorporated through any additional analysis included. However, this does limit how standardised ENAs are, potentially making comparison and aggregation of wider ENA outputs difficult.
Alternatively, a very prescriptive approach may involve the government providing the formulae, structure and data sources to be used by authorities, with minimal expected deviation from this framework. This approach would be highly standardised, allowing for easy comparison and aggregation of outputs, for use at different levels of governance (i.e. strategic, regional, national). However, it may not adequately reflect the diversity of subnational economies across England and be more likely to lead to contestation.
Making ENAs more standardised with updated guidance, including using standardised data inputs and outputs could enable cross-boundary comparison and aggregation of LAs’ (and strategic authorities’) evidence bases. This would make it easier to use digital and mapping tools to help direct economic development at local and strategic levels, and to monitor changes over time. The use of standardised methods could increase transparency around how economic need assessments are conducted, ensuring that the evidence base is consistent, transparent and robust. Moreover, establishing a more standardised ENA process using widely accessible inputs will also improve the efficiency and reduce the resource requirements of plan preparation, making the new 30-month timetable easier to achieve.
Integration of plans and strategies
To support their growth mission, the government has asked all MSAs to produce LGPs to act as a 10-year strategic framework, focusing on economic needs, opportunities and priorities in their area. Once passed, The English Devolution and Community Empowerment Act (‘English Devolution Act’) make these a statutory requirement for MSAs. As LGPs are intended to provide strategic direction for other plans and strategies produced by MSAs – including SDSs – they will consequently steer planning policy.
Government guidance on LGPs requires that at a minimum they contain an economic overview of the strategic authority area, agreed shared priorities between the MSA and government, and an investment pipeline. MSAs are also expected to set out a long-term vision for their area, highlighting where national initiatives and (to be) devolved powers like strategic planning, transport, housing and skills and education can support those ambitions. Planning powers to be devolved include preparation of SDSs, the power to call in planning decisions, and Mayoral Development tools, like the ability to issue Mayoral Development Orders and establish Mayoral Development Corporations. These will allow mayors to proactively shape economic development using land acquisition, planning and development powers. LGP guidance also recognises the importance of data and evidence, suggesting MSAs use existing economic assessments carried out by the strategic authority and constituent planning authorities. As outlined in the ‘Understanding employment land need’ section of this briefing, a common evidence base can help make comparison and cross-boundary working within and between strategic authorities simpler.
Translating strategic ambitions into deliverable outcomes will require clear processes and strong relationships between and within different tiers of government. The interaction between national priorities, mayoral strategies and local plans may create new points of friction, particularly where growth objectives cut across administrative boundaries, or require the alignment of multiple policy levers. Effective integration will rely not just on plan content, but on the structures, duties and monitoring arrangements that underpin collaboration and decision-making. However, existing government guidance lacks clarity on what it means in practice to align SDSs and other strategic plans with LGPs. Given the multitude of relationships at play here, the RTPI recommend that government set out in guidance a clear framework and hierarchy for how these plans work together. This could include:
Monitoring and reporting guidelines
Establishing proportionate monitoring and reporting guidelines, with authorities to demonstrate how plans are supporting LGP priorities. Alongside measures in the proposed revised NPPF (like PM11, on demonstrating cooperation between authorities), this would include a requirement for Local Plans, SDSs and Local Transport Plans to outline how they contribute to their strategic authority’s LGP. MSAs should also collect data to review progress of, and report on the priority areas identified in their LGP, as well as national priorities. This will enable MSAs to measure delivery against their priorities and allow course correction, where necessary.
Mechanisms to facilitate alignment within MSAs
To ensure effective integration of plans and strategies, LGP guidance should provide recommendations for mechanisms to facilitate alignment such as shared evidence bases, monitoring frameworks, and regular fora for LPAs and stakeholders to collaborate. This will also depend on collaboration beyond formal plan-making. Planning, transport, housing, skills and economic development functions within both strategic authorities and LPAs must work together to develop genuinely place-based business cases. This is especially important in the context of industrial strategy priorities and infrastructure delivery. Here, land use planning, grid capacity, transport connections and workforce provision must be coordinated to unlock growth in key industries. As such, alignment between strategic authorities, and with key bodies like the National Infrastructure and Service Transformation Authority (NISTA) on LGPs and SDSs will be crucial.
Guidance on plan review and update
Consideration should be given to how integration is maintained over time, not just when plans are prepared. In many places LGPs, SDSs and local plans will likely operate on different review cycles and without clear expectations, these could quickly become mis-aligned. Government should therefore provide guidance on and encourage MSAs to set out clear processes for plan reviews and updates, including how changes to plans could trigger reviews of others. More widely, guidance on sequencing of plans would also be welcome.
Towards more effective stakeholder engagement
Expectations for public and stakeholder engagement should also be clarified, including how communities, businesses and infrastructure providers should be engaged, and at which level. For engagement with infrastructure providers and other institutional bodies, this could include making available to planning teams a regional or sub-regional directory of contacts for relevant stakeholders, making it easier for authorities to find the right people to talk to and maintain consistent points of contact.
Providing additional clarity and certainty will give LPAs, developers, investors and communities the reassurance that planning decisions are grounded in a coherent, long-term vision, and that LGPs will effectively and consistently shape economic and spatial development across MSAs. However, this must be underpinned by adequate resourcing in both local and strategic authority planning teams. Strategic planning expertise should be incorporated at senior levels within strategic authorities to ensure that the multiple plans the authority oversee are spatially coherent, and that they feed through into the authority’s SDS. LPAs must also be sufficiently resourced to put together the local plans that will support growth by identifying land for economic development – particularly with the upcoming transition to the new 30-month plan timetable.
Currently, LGP guidance deals only with established mayoral strategic authorities. This recognises that mayors have the necessary powers and institutions at their disposal to take full advantage of LGPs. However, there are emerging and high growth areas without a mayor like Cheshire and Oxford that are not working towards an LGP and could see their growth momentum slowed in comparison to peers as a result. Some of these areas will be expected to produce an SDS yet may not have the appropriate growth strategy to guide this in the same way as other areas. For those areas where a non-mayoral combined or strategic authority is in place, the government should publish guidance on how they can undertake preparatory work towards an LGP, or produce an abridged LGP, and how existing powers may be used to support it.
Taken together, clearer guidance on plan hierarchy, alignment mechanisms and monitoring would help ensure that the various plans and strategies that MSAs and their constituent LPAs are responsible for will align. This will enable LGPs to fulfil their intended purpose, providing a stable, longer term strategic framework that aligns economic development and planning while remaining sufficiently flexible to incorporate local priorities and democratic engagement.
Supporting industries and industrial clusters
The government published their 10-year industrial strategy in the summer of 2025, aimed at increasing business investment and growing industries with the most potential. Identified in the strategy are the eight industries targeted for growth (the IS-8). However, there is little in the strategy about how sectoral plans will intersect with local plans and Spatial Development Strategies (SDSs). Measures outlined in the strategy, like Industrial Strategy Zones (ISZs; an amalgamation of the Freeport and Investment Zone policies of the previous government) promise to provide streamlined planning processes to facilitate investible sites for these industries. This includes support for planning authorities to process large-scale planning applications, and assistance for developing masterplans and engaging stakeholders.
Industry specific measures are also proposed to help streamline development for the IS-8 sectors. This includes the ability for the Secretary of State to direct data centres, gigafactories and laboratories into the Nationally Significant Infrastructure Project (NSIP) regime. For data centres, this will allow the co-location of energy generation (including renewables) and data centre development. To deliver these facilities at pace, the government outlined reforms in its AI Growth Zones paper to ease grid connections and shorten NSIP consenting timelines. Greater flexibility will also be afforded by enabling certain projects to be directed outside of the NSIP regime where appropriate, as outlined in the recent NPPF consultation.
As measures like ISZs and AI Growth Zones will be the responsibility of Mayoral Strategic Authorities (MSAs) where they fall within one, devolved planning powers outlined in the English Devolution Act can be used to help said streamlining. For example, Mayoral Development Orders will allow Mayors to grant permission for a development without needing a planning application to be submitted. Mayors will also have the power to designate Mayoral Development Areas, and establish Mayoral Development Corporations for those areas, to deliver large scale developments. The broad range of new and strengthened existing powers available to Mayors means they will have the ability to convene stakeholders across sectors for several purposes, including to facilitate development within local industrial clusters.
However, as the government acknowledged in their recent consultation on SDSs, industries and industrial clusters are rarely contained neatly within one strategic authority and administrative boundaries will not always align with functional economic areas. In these cases, inter-authority coordination will be required to facilitate strategic development. The government have made clear their expectation for SDSs to be supportive of the economic development ambitions of cross-boundary growth areas. Clause 22 of the English Devolution Act outlines a Mayoral duty to collaborate, which will aid this, but we believe this needs to be more detailed to effectively incentivise and enable cooperation.
Currently, direction on inter-authority collaboration for strategic authorities is sparse, though may be forthcoming in the form of government guidance. We believe that to ensure coherent site allocation, infrastructure alignment and coordination of investment, cross-boundary collaboration requires concrete governance arrangements. The government should outline clear expectations on how cross-boundary cooperation should operate in practice. This has the potential to improve intra-authority cooperation as well as inter-authority cooperation.
Effective governance arrangements
To ensure a consistent approach between authorities, one such mechanism should be to establish formal joint committees or working groups for industrial clusters that span multiple strategic authorities. These could be underpinned by mayoral development areas and place-based business cases, and would include shared mechanisms for oversight, transparency, consultation, and stakeholder engagement. While English Devolution Act guidance published before its royal assent mentions ensuring that Mayors “have a formal process by which they can collaborate with neighbouring Mayors”, a ‘process’ may not hold the weight that a more concrete governance arrangement does. There is also little information on how non-mayoral authorities such as foundational authorities and unitary authorities can ensure the same level of collaboration without the corresponding powers. As with Clause 22 in the English Devolution Act, we believe more detail is required here.
There are a number of previous or current models these governance structures could emulate, including Local Enterprise Partnerships, Aggregate Working Parties, and services shared between councils. As noted by the Planning Advisory Service such arrangements could be supported by tools like Memorandums of Understanding (MoUs), or Statements of Common Ground.
While a public-sector model that is accountable to a government secretariat may enable a stronger feedback loop into government, examples of cross-sector working like Local Enterprise Partnerships have proven effective in the past. Public-private partnerships provide a good models of spatially coordinating cross-boundary industrial clusters and attracting investment. A notable example is the UK Innovation Corridor, which has been instrumental in securing investment in the biological sciences sector between London and Peterborough.
Incentivise SDS adoption and delivery
To further incentivise devolution and the delivery of strategic planning, access to funding for strategic site accelerators and other similar investment programmes could be linked to progress on SDS milestones. To avoid disadvantaging authorities that face resource constraints or have yet to define boundaries, technical assistance and capacity‑building support should be provided to those working toward SDSs but lacking sufficient staff or resources.
Accessible sectoral spatial maps
While SDSs are high level and strategic, there is an opportunity for MSAs to use their convening powers to bring together data from LPAs, not just to inform SDSs, but to help investors streamline the site identification process. To incorporate industrial strategy at a strategic level, Strategic Authorities should be encouraged to provide sector-specific spatial outlines for the key identified sectors in their local growth plan, within their SDS (if not already produced elsewhere). An example of sectoral spatial maps is the South Yorkshire Combined Mayoral Authority (SYMCA), who in their 2024 Plan for Good Growth, identified key geographic areas as the spatial representation of the missions outlined in their vision. The SYMCA highlighted certain areas, aiming to encourage industries to take up locations and invest in them where their spatial and workforce needs can be met. In turn, it is expected this will contribute to jobs, the local economy, and furthering agglomeration in the relevant areas.
To make the process of site identification more accessible and transparent, strategic authorities should further be encouraged to publish interactive sectoral spatial maps online, and coordinate with LPAs and landowners to display available land on it (emulating Homes England’s Land Hub, DSIT’s Innovation Clusters Map).The outlines would map proposed footprint for locally important industries and any existing or proposed supportive infrastructure. These can signal where relevant industries would have the best chance of thriving, helping simplify location decisions and streamline the process of identifying land for development.
The RTPI have called for a National Spatial Framework to align industrial, housing and infrastructure planning needs. The national spatial priorities promised in the next iteration of the Infrastructure Strategy are an opportunity to do this. These should consider opportunities to develop nationally significant employment clusters, identifying areas for appropriate co-location of industry and the necessary infrastructure and workforce to support it.
However, there are industries that would benefit from a national level spatial strategy sooner, particularly those with specific locational and resourcing requirements. While the proposed revised NPPF requires that locational requirements be considered where there’s unmet need, the only industry singled out for this is freight and logistics – other industries with similarly specific locational requirements are not mentioned. For example, with the growing demand for data centres, government steer on appropriate locations given their energy and cooling needs would be beneficial, to ensure they are placed in areas fit to host them. The proposal of place-based business cases, and NSIP reforms enabling co-location of data centre and energy infrastructure development represent an opportunity to expand measures that allow joined-up planning and development, representing a positive step towards such integrated spatial planning and delivery.
As outlined above, providing additional direction will enable the integration needed to attract investment, while giving industry clarity around what strategic authorities’ plans are, and confidence that planning will not be a barrier to growth. Priority funding for areas that are most advanced in delivering strategic planning milestones, support for those that are not, and interactive sectoral spatial maps outlining areas and land ideal for development can ensure industry and investors have certainty and clarity around planning. In addition, establishing cluster-specific governance fora will facilitate consistency, and a joint up approach to planning and delivery between sectors. These also have the potential to act as a testing ground where different cluster working groups can learn and share knowledge around what works to foster growth.