A Conservative government would solve the housing shortage by scrapping national targets and handing control over building projects directly to local communities, according to Grant Shapps, the Shadow Housing Minister.

In a radical shake-up of the planning system, a parish or village could bypass the local authority planning committee and rubber-stamp a local development project directly, if the proposal achieved 90 per cent approval in a referendum.

In a speech this week to the Institute for Public Policy Research, Mr Shapps said that the Conservative Party was “unashamedly pro-development” and intended to “create a nation of homebuilders” by encouraging local housing trusts to deal directly with developers. Local planning committees would, in certain cases, be “removed”.

Local authorities would be given financial incentives to encourage development, Mr Shapps said. A Conservative government “would match ... the council tax revenue received on all new homes for a period of six years”. In the case of affordable housing, the subsidy would rise to 125 per cent of the council tax rate. Funding would come from scrapping quangos such as regional development bodies.

The Conservatives believe that this “democratic” approach would kickstart housebuilding more effectively than legislation and targets.

Local authorities are struggling to facilitate a national housebuilding target of three million new homes by 2020. The Government’s figures show that only 90,430 new houses were begun in 2008-09, down 42 per cent on the previous year and well below an annual requirement of 240,000 new houses to meet the target. More than 43,500 new “affordable” homes — often bankrolled by government-funded housing associations rather than by private developers — were built in 2007-08, against a target of 70,000 a year by 2010-11.

Mr Shapps argues that his proposals would result in the end of Nimbyism, because communities are unlikely to protest against developments over which they have more control. The Government has faced difficulties over developments such as proposed eco-towns, which many local residents perceive to be inappropriate for their communities, partly because they are centrally imposed.

The Conservatives cannot abandon all housing targets, however. They are committed to upholding government plans to ensure that all new homes are “zero carbon” by 2016 and will soon unveil proposals to retrofit existing homes to meet energy-efficiency guidelines.

Brian Berry, director of external affairs for the Federation of Master Builders, said: “Giving more power to local communities to decide on housing policy may sound good, but in practice may mean that in certain parts of the country fewer, and not more, homes will be built.”

Liz Peace, the chief executive of the British Property Federation, said that “poorly implemented localism — as a result of inadequate resources — could lead to greater delays”.

Shapps’s aim

• Financial incentives for local authorities to encourage development

• Parishes could rubber-stamp development directly, if 90 per cent approval in referendum

• “Create a nation of homebuilders” by encouraging local housing trusts to deal directly with developers

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