How Development Corporations can bridge the infrastructure investment gap

In this article, we explore how Development Corporations can play a critical role; they’re a proven yet evolving solution that could transform how we approach large-scale infrastructure and regeneration projects. With 12 new towns announced and fresh legislative frameworks empowering local authorities, now is the prime moment to understand how these vehicles can help to boost housing delivery at scale.

The strategic advantage of co-ordinated development

A Development Corporation is a statutory public body established to spearhead the large-scale regeneration and economic growth of a specific, defined area, often using special powers over planning and land assembly. They offer something that fragmented private sector approaches cannot: strategic coordination at scale. By assembling land strategically and streamlining planning processes, they can create the stable, predictable environment that both investors and communities need. They include a range of features that can enhance growth, including use of private sector development expertise alongside public sector benefits such as plan making powers, land assembly powers and access to public sector funding sources.

Transition from central to locally led development corporations

Traditionally, Development Corporations in the UK have been led by central government. This was initially in the form of post war New Town Development Corporations, and subsequently via Urban Development Corporations in such as the London Docklands Development Corporation.

Following the introduction of Mayoral Development Corporations in 2011, the legislative landscape for Development Corporations has continued to shift towards local leadership, with new forms of Locally Led Development Corporation[1]. These enable ‘non Mayoral’ authorities to establish a Development Corporation with a unique governance structure that harnesses private sector development expertise via a skills based board reporting to a public sector oversight authority. This evolution empowers local authorities to deliver growth tailored to their communities' needs, but it also transfers the responsibility for initiating these corporations to the local level.

Why are development corporations on the agenda?

Despite the range of models available, there are only 7 Development Corporations in the UK (6 MDCs and 1 UDC). However, this appears to be changing with Development Corporations increasingly being considered as an effective delivery vehicle. The New Towns Task Force’s report to government[2] (published September 2025) recommends that delivery of new towns is most appropriate through a development corporation. Indeed, with the announcement of 12 new town areas, these are expected to be delivered largely via development corporations. Further, Greater Manchester Mayor Andy Burnham has outlined his intentions to deliver a series of different MDCs at strategic locations.

Tackling viability head on

The current development landscape is littered with projects that look good on paper but fail to progress due to viability challenges. Development Corporations directly address these barriers through their unique combination of powers and funding mechanisms. Where utilising their planning powers, they can eliminate the costly delays and uncertainty that can plague conventional development routes. Their land assembly capabilities can unlock sites where fragmented ownership has historically presented insurmountable challenges and they can bridge viability gaps through diverse funding mechanisms.

In terms of funding, Development Corporations have the ability to borrow money from both public and private sector sources of finance alongside access to public sector grant funding. Critically, a Development Corporation case to government can include bespoke requests around revenue raising measures that may enhance the viability of a scheme. By creating a clear, long-term vision and de-risking development sites, Development Corporations can make their areas attractive to institutional investors seeking stable, long-term returns.

Clearing the path forward

Despite this promising framework, two key challenges must be addressed to unlock Development Corporations' full potential.

First, clarity is needed on balance sheet treatment and nature of central government support, particularly around local forms of Development Corporation. Clear guidance from government around this and other matters, for example, in the form a toolkit, would encourage investor confidence.

Second, developing a long-term funding strategy which attracts investment requires considerable preparation. Development Corporation proposals will need to develop a bespoke and robust funding and finance approach. This will involve ensuring there is a robust financial model in place, clear governance structure, clarity over revenue raising powers and preparing a clear funding prospectus.

Learning from the past, building for the future

The original post-war New Towns programme offers a powerful precedent for what's possible with patient, long-term thinking. Financed through 60-year Treasury loans at competitive rates, these developments ultimately housed 2.76 million people. The £4.75 billion investment was fully repaid by 1999, demonstrating that well-structured Development Corporations can deliver both social and financial returns.

As the UK grapples with a housing shortage, Development Corporations offer a proven pathway to unlock the scale of investment and coordination required. The future of UK infrastructure development lies, not in choosing between public and private sector approaches, but in intelligently combining their respective strengths through vehicles designed for 21st-century challenges.

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[1] Locally Led New Town Development Corporation & Locally Led Urban Development Corporation

[2] New Towns Taskforce: final report