In a report published today, the National Infrastructure Commission (NIC) says that the rates of housebuilding in the Cambridge-Milton Keynes-Oxford corridor "will need to double", delivering up to one million new homes by 2050, "if the arc is to achieve its economic potential".
According to the report, it is unlikely that this level of development can be delivered if growth is focused exclusively on the fringes of existing towns and cities, or through the development of small garden towns and villages.
"Government and local authorities will need to plan for, and work with investors, developers and housebuilders to deliver large new settlements and major urban extensions - including the first new towns in over a generation," the report says.
Such development opportunities could range from "smaller-scale garden towns of around 10,000 homes through to new city-scale developments of up to 150,000 homes", according to the study.
In the report, the commission proposes a series of "deals" between government and local areas which would fund a series of infrastructure projects in the region and seek local commitment to accelerated housebuilding, "in exchange for certainty over investment in enabling infrastructure, and the freedoms and resources necessary to shape growth in a way that enhances quality of life for new and existing residents".
The study recommends that the government and local areas should "work together, through a robust and transparent process, to designate locations for new and expanded settlements by 2020".
"The commission is optimistic that government and local authorities will reach agreement on the scale and location of new settlements in the national interest," the report says. "However, if agreement cannot ultimately be reached, the secretary of state should designate these new settlements."
The report also recommends that the government should work with local authorities to establish appropriate delivery vehicles for new and expanded settlements across the arc. It proposes that new town development corporations should be established to deliver larger new and expanded settlements.
Government should consider the need for agreements "extending flexibilities in the application of five-year land supply requirements", the report suggests, in order to help ensure that local areas are not exposed to increased risk of speculative development as a result of their commitment to additional growth. These agreements should only be considered in cases where local authorities agree deals to accommodate significantly higher levels of housing growth, the report says.
At present, the requirement to maintain a five-year land supply creates an incentive for local planning authorities to focus on smaller sites that are more likely to deliver in shorter timescales, the report says. This can be at the expense of larger sites which could make a greater contribution to meeting long-term housing need, it adds.
The report also proposes that the government should, "through bespoke deals with local areas, make changes to the operation and application of Community Infrastructure Levy (CIL) and section 106 agreements across the arc".
It calls for local authorities, "working together through appropriate governance structures", to be given the power to levy a city-regional CIL. Restrictions on the pooling of section 106 revenues and on the forward funding of infrastructure against future receipts should be removed, the report also suggests.
NIC chairman Lord Adonis said: "A ground-breaking deal between ministers and local leaders could transform the area, helping to double the rate of housebuilding and deliver the first new towns this country has seen for half a century.
"With this one of the most economically important parts of the UK, it could add billions of pounds a year to the national economy."
Partnering for Prosperity: A new deal for the Cambridge-Milton Keynes-Oxford Arc is available here.