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David Cameron plans land release to boost growth

Prime minister to unveil ‘pay later’ housing blueprint for vacant government sites

David Cameron will try on Sunday to answer Tory and Labour critics who say his government has no plan for growth by announcing proposals to release enough public land to build 100,000 new homes and support 200,000 jobs by 2015.

On the opening day of the Tory conference in Manchester, the prime minister will say that every government department will be told to release vacant land and office space “to build the homes the country needs”.

Under a “build now, pay later” scheme, developers will be able to begin construction work immediately and only pay for the land when the houses are sold. The aim, Cameron will say, will be not only to stimulate economic activity and boost employment but also to help more young people onto the property ladder by increasing the supply of homes.

Government sources said many Whitehall departments had been reluctant to release land to the market because prices were so low and they believed a better return could be achieved later. But under the new plan they will be compelled to make land available, if and when appropriate building schemes are identified.

The eventual price to be paid for the land would be linked to the sale prices achieved for the houses, meaning taxpayers could benefit in a rising market, Cameron will argue.

The plan follows criticism from both Labour and most recently the Conservative chairman of the Commons treasury select committee, Andrew Tyrie, that the government lacks an economic strategy to lift the country out of the economic doldrums.

Tyrie said on Saturday that the government still did not have a credible plan for growth to go alongside the cuts agenda – echoing Ed Miliband’s attack during Labour’s conference last week. “There is much to do, and it is not just a question of gaps in policy,” Tyrie said. “A coherent and credible plan for the long-term economic growth rate of the UK economy is needed.

“The big society, localism, the green strategy – whether right or wrong, these and other initiatives have seemed at best irrelevant to the task in hand, if not downright contradictory to it; likewise the huge spending hike on overseas aid and the cost of the Libyan expedition.”

Last week the shadow chancellor, Ed Balls, set out a five-point “growth package” that included plans to slash VAT to 5% on home improvements and a one-year small firms national insurance tax holiday for taking on extra workers.

He also restated the need to reverse January’s VAT rise from 17.5% to 20% and promised a repeat of this year’s bankers’ bonus tax, using the money to guarantee 100,000 jobs for young people and building 25,000 affordable homes.

Labour believes that its message on the need to cut public spending at a slow rate and stimulate investment by bringing forward infrastructre spending is striking a chord with voters and the business community.

On Saturday Labour accused the government of massaging figures on the number of new companies that were being set up. In August the Tories claimed that 506,000 businesses had been created since the coalition took office.

But Labour said research had shown the data referred only to gross numbers of new business registrations and did not take into account de-registration owing to liquidation or other reasons. When de-registrations are factored in, only 108,000 new businesses were created, in net terms, from May 2010 to August 2011, and 99,000 in the year to 1 August 2011. Chuka Umanna, shadow minister for small business and enterprise, said the way the Tories were misrepresenting the figures was “shocking”.

He added: “By cutting too far and too fast, the government has dented confidence and is holding back the creation of new businesses. Tens of thousands more public sector jobs are being lost than those created in the private sector to compensate.”

In his conference speech on Monday, Chancellor George Osborne is expected to dampen down speculation of tax cuts before the election, saying the need to bring the deficit down remains urgent. © 2011 Guardian News and Media Limited or its affiliated companies. All rights reserved. | Use of this content is subject to our Terms & Conditions | More Feeds