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Wed, 10th Nov 2010 14:19

By Estelle Shirbon and Lorraine Turner

LONDON, Nov 10 (Reuters) - A British minister's decision to scrap regional housing targets was unlawful, a court ruled on Wednesday, a decision which home builders said should allow thousands of stalled development projects to go ahead.

But the government said the ruling would make little difference as it was about to overhaul the planning system and local authorities should take this into account in their decisions on housing developments.

Home builders argue that by scrapping the targets before introducing an alternative planning system, the government created a policy vacuum that caused delays and confusion.

'The abrupt decision to scrap regional housing targets ... was a hasty and damaging move, which has already seen plans for over 180,000 homes scrapped,' said the National Housing Federation, which represents the low-cost social housing sector.

'We hope the government will now put in place the necessary arrangements to ensure the homes this country desperately needs are delivered,' said the group's chief executive, David Orr.

The minister behind the disputed decision, Eric Pickles, said a new Localism Bill to overhaul the planning system would start its passage through parliament before Christmas.

'Whilst respecting the court's decision, this ruling changes very little,' he said in a written statement to parliament.

Chris Millington, an analyst at Numis Securities, said that while long-term government plans were unaffected, the ruling could be seen as positive in the short term for some companies.

'In the short term, people may see it as a small positive for those that have a larger strategic landbank (such as) Bovis , Persimmon and Taylor Wimpey,' he said.

Pickles, who is the secretary of state for communities and local government, abolished broad regional strategies that included the housing targets on July 6, just weeks after a the governing coalition of Conservatives and Liberal Democrats came to power.

He argued that the regional strategies, introduced under previous Labour governments, were top-down targets that created unnecessary red tape and had failed to stimulate home building on the scale required to meet society's needs.

Home builder Cala Homes (South) Ltd took the government to court, arguing Pickles had abused his powers and should have first introduced legislation to change the planning system. The High Court ruled in the company's favour.

(Editing by David Holmes) Keywords: BRITAIN BUILDERS/

(estelle.shirbon@thomsonreuters.com, +44 207 542 7947, Reuters Messaging: estelle.shirbon.reuters.com@reuters.net)

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