Homes England adds £50m for the Milton Keynes East roads after building costs rose about 40% since 2020. Berkeley must finish them and cover any overruns.
Milton Keynes East, the new district being built east of the M1 by Newport Pagnell, is getting another £50 million of government money to finish its main roads.
The money comes from Homes England’s Housing Infrastructure Fund (HIF). The city council accepted it on 27 October, in a delegated decision by the council leader, Cllr Jane Carr. It goes on top of the £94.6 million HIF grant the council accepted in July 2020.
The council’s decision report is franker than its press release about why the extra money is needed. The 2020 budget was, in its words, “completely outstripped” by building cost inflation.
Why the first £94.6m was not enough
The 2020 grant split into two parts:
- £79.6m for roads
- £15m for the first primary school and a community health hub
Work on both started in autumn 2023. The report says the first phase of roads, the school and the health hub are now complete. The council’s release says the school and health hub are due to open next year.
Prices rose faster than anyone planned for. The report cites:
- the on-off pandemic shutdowns of 2020 and 2021
- the spike in material prices after Russia invaded Ukraine in February 2022
- a peak year-on-year rise of 26.8% in the construction “all work” index, in June 2022
- material costs about 40% higher by early 2025 than in 2020
Berkeley, the lead developer, raised the cost pressures. Homes England checked the first phase and decided a further £50m was justified. The money is meant to cover the financing gap from phase one and to speed up the second and third phases.
Who pays for what
The council does not build the roads itself. It receives the grant and passes it to Berkeley (St James) under a grant share agreement, in return for agreed milestones. Both that agreement and the council’s agreement with Homes England are now being varied.
The report sets out the other money in the pot:
- Berkeley has committed £90 million of its own funding to the highway works.
- Berkeley must cover any cost overruns beyond the grant, as a condition of the offer.
- The council puts in £9.5 million towards the Eastern Perimeter Road. In return it gets an access junction to land it owns inside the site.
- The council’s tariff adds £28.5m set in 2021, which the report says is now worth £41 million with indexation.
The grant can only be drawn down for spending up to 31 March 2028. The detailed conditions are in an annex the council has kept confidential.
What gets built next
Berkeley has already started early phase two work, including earth moving to open up land for homes and industrial units. The report says that work, and the Eastern Perimeter Road, will continue into 2027.
After that, Berkeley plans to sell plots to other housebuilders and to industrial occupiers. The report expects at least two more housebuilders, besides Berkeley and Bloor, to be building on the site by 2028.
The council’s release says the roads will help unlock 5,500 homes. Berkeley’s managing director, Stephen Kirwan, said the partnership would also deliver a 160-acre country park and more than 4,000 jobs in a 4 million square foot industrial hub on the south of the site.
The new roads also give early access to land further east. That land is the Eastern Strategic City Extension in the draft MK City Plan 2050, which is still being examined by planning inspectors.
What it means for you
The report names three wards as affected: Broughton and Moulsoe, Newport Pagnell, and Campbell Park and Willen. Expect construction traffic and road work around the site to carry on through 2027. We list current closures, including the A509 night closures from 2 November, on our roadworks and travel page.
The money does not change how many homes are planned. It changes how soon the roads that serve them arrive. Without it, the report says, Berkeley would only have paid for the remaining roads as land sales came in, leaving the timetable “wholly dependent on the market”.
The council’s report says the papers will go to the Budget and Resources Scrutiny Committee’s planning group, which decides whether to look at the deal in more detail. For the wider picture of where new homes are planned, see our Milton Keynes planning news.
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