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Next week, conservative leader David Cameron faces his first national electoral test since he emerged from the political shadows last autumn.

The local council polls will show whether Cameron's makeover of the party's image translates into votes.

One of the areas where Cameron has left his most decisive mark is on housing and planning policy. Both he and George Osborne, the shadow chancellor, have moved swiftly to distance the Tories from the anti-development stance that the party has struck since its 1997 general election defeat. Keith Mitchell, Conservative chairman of the South East England Regional Assembly (SEERA), jokes that he needs to check the Tory website twice a day to see whether his party's policy has changed.

Labour would be justified in grumbling that the Conservatives are not only stealing its policies, but its jokes as well. Cameron's keynote speech on housing last month featured a sideswipe at what he termed the BANANAs, which stands for ºÚ¶´ÉçÇø Absolutely Nothing Anywhere Near Anybody. The same acronym had popped up in an earlier speech by housing minister Yvette Cooper. Why have the Tories performed such an abrupt volte-face on an issue that is so close to their hearts? And can Cameron, given his commitment to strong local decision-making, persuade his party to swing into line on the issue?

A view from the heartlands

Some Tories cling to the belief that Cameron is saying nothing new. "This isn't a Nixon in China moment," says Peter Franklin, until recently a researcher at Conservative Central Office, who now works for Greg Clark, MP for Tunbridge Wells. Kettering MP Philip Hollobone, a prominent campaigner against the government's plans to build homes in Northamptonshire before his election last May, agrees. "I'm not sure that it is such a sharp change as it is being made out. It's right that we should emphasise this issue, because it's becoming a real problem for people to find somewhere to live. We would never have been in favour of BANANA; the important thing is to build the housing in a sensible place. We should allow those places that want to grow to grow."

But both of these Tory footsoldiers are wrong, according to the party's housing and planning spokesman, Michael Gove. While stressing the valuable work done by his predecessor, John Hayes, he says: "It's a significant development from what's been said before." The appointment to the housing portfolio of the Times columnist, a key member of Cameron's "Notting Hill set", was the first sign that the party leader was taking such issues seriously.

Osborne admitted recently that the party's renewed interest in housing had been sparked by the way the issue was being flagged up as a concern by focus groups. "The Conservative party has now realised that the housing crisis and the massive under-supply is a political issue," says Ian Thorn, director of the Green Issues public affairs company. "The Cameron leadership realises that the party needs to move forward and beyond its core audience. There's a recognition that to get closer to government, they need to respond to one of the most pressing social policy issues facing the country."

Nick Keable, vice-president of The Saint Consulting Group and a former Tory councillor, says the Conservatives are keen to appeal to young voters. Banging the green-belt drum may warm the hearts of the party's staunchest supporters, who tend to be well heeled and middle class, but it is unlikely to strike a chord with aspirational youngsters struggling to get on to the first rung of the housing ladder. This, after all, was the very constituency that Margaret Thatcher wooed so successfully with her right-to-buy policy during the 1980s.

Gove explains how housing is central to rekindling the aspirational torch that propelled the Tories to four general election victories in a row. "If you look at how life in Britain has changed in the last 20 to 25 years, the standard of food is better, clothing is cheaper, all sorts of goods are less expensive and better quality. Only if you look at the housing market do you find that things are more expensive and cramped for people than their parents would have felt entitled to."

Even the party's hard-core older supporters are waking up to the problems created by housing undersupply, argues Franklin. "People who live in the areas under threat from development have children who can't afford to live around them and have to commute from the town, which is not sustainable."

'You are only going to get the right sort of development if you work with the grain of local communities'

Michael Gove, MP

But will an appeal to core Thatcherite values be enough to overcome entrenched anti-development prejudices? Keable says it may, if only because the Conservative parliamentary party is "desperate" for success. "But they are going to have to swallow some pretty unpalatable medicine to move from where they have been in the last few years,"

he says. "It's going to be very hard for Cameron to keep his party in line."

Not much has been heard from John Prescott's shadow - and arch green belt defender - Caroline Spelman about the planning aspects of her brief since Cameron signalled his change of tack. She is one of a number of shadow cabinet members understood to be uncomfortable with the new direction that Cameron has mapped out.

And several Tory grandees remain vociferous opponents of housing development, including ex-deputy leader Peter Lilley, who has been a big critic of plans to extend west Stevenage into the green belt. John Redwood, the former Welsh secretary who as co-chair of Cameron's commission on economic competitiveness, will have a key role in shaping the Tories' new planning policy, is another fierce critic of greenfield housebuilding. And ex-Cabinet minister John Gummer, appointed by Cameron to oversee the party's environment commission, has told Regenerate that his group will not advocate a watering down of the party's commitment to preventing sprawl. "Some of the MPs in the South-east are expressing the strength of feeling around the green belt," says SEERA's Mitchell. Henry Oliver, head of planning at the Campaign to Protect Rural England, confirms this: "They have been having a pretty fierce debate about this."

Cameron's mechanism for resolving such tensions is to give local councils more planning powers. At the launch of the recent Policy Exchange report, Better Homes, Greener Cities, which called for a deregulation of the planning system and more freedom for councils, Osborne said: "We support giving local communities a much greater say in the development of their area and making them responsible for balancing the interests of existing homeowners and their children. We have to show people that they have an interest in allowing development."

Political sustainability

Gove argues that the Tory's move to empower local authorities will produce more politically sustainable solutions than the government's top-down approach. "You are only going to get the right sort of development, if you work with the grain of local communities and seek to address concerns," he says.

But the suggestion that local councils should have more planning powers is anathema to the average housebuilder. "I am very sceptical when Gove says that this will be determined by the local community," says Gareth Capner, director of planning consultancy Barton Willmore. "Local communities have tended to be resistant to change, there truly has to be a central direction."

Green Issues' Thorn believes councils could be offered a more relaxed planning regime. "Provided that you can deliver the numbers, you will be offered a more flexible approach to dealing with issues of density." Osborne has suggested that it may be possible to build on the protected scrubby bits of land on the outskirts of England's towns and villages. This is in preference to development on back gardens, which Cameron wants to make harder.

Nevertheless, housebuilders expecting a smoother ride from Cameron's new-look Tories are likely to be in for a surprise, at least at the local level where a generation of councillors has cut its teeth campaigning against development. "Local politicians tend to reflect the situation on the ground, which tends to be anti-housebuilder," says Thorn. Derek Ashley, who holds the strategic planning portfolio in the cabinet of Tory-run Hertfordshire council, explains how local-central tensions will continue to be a fact of life. "We are determined to look after the people of Hertfordshire. We don't want to become the Middlesex of the 21st century. We deal with the government on the interests of the people of Hertfordshire, not on whether they are in our party."

The Cul-de-sac is back

Where the Conservatives stand on housing and regeneration

Culs-de-sac went out with the end of Brookside – but they could come back in with the Tories

Affordable housing

David Cameron has said he wants more starter homes and more shared-ownership housing, but hasn't gone into detail as to how the homes will be delivered.

Environmentalism

The Conservatives are promoting environmentalism in a big way, with even David Cameron's own home being greened. They have announced plans to introduce their own climate change levy, but little hard detail beyond that. Instead Cameron speaks lyrically of creating "a Britain in which there are more beautiful, affordable, eco-friendly homes".

Home Information Packs

The Conservatives have said they will abolish HIPS, the home sellers' pack, which the government plans to introduce next year.

Housing design

In Labour's sustainable communities, culs-de-sac have been abolished in favour of permeable street layouts, but the Conservatives want to see their return. The Tories favour safe and secure placemaking, including culs-de-sac, which are advocated by the Association of Chief Police Officers in its Secured by Design approach.

Increasing housing supply

The message from the top is that more homes need to be built, a clear volte-face on the Tories' stance under Michael Howard. Shadow chancellor George Osborne has said the party is looking at allowing the development of scrubby sites officially designated as greenfield on the outskirts of towns and cities.

New homes warranty

John Gummer, who is heading the Conservatives' working group on quality of life, says the Conservatives will strengthen new homes warranties, increasing the present defects warranty period from two years to 10.

Planning gain supplement

David Cameron has made it clear he would abolish the proposed planning gain supplement, or land tax, if Labour brings it into force in 2008. This would encourage landowners to hold on to land in the hope that the Conservatives would get into power at the next election, as has happened with previous attempts to implement a development land tax.

Refurbishment

Perhaps the most controversial of all Conservative ideas is a proposal to free homeowners' alterations to post-war properties from planning constraints. The intention behind the move would be to ease pressure on local authority planning departments, but it could unleash a flurry of neighbour disputes.