GL Hearn response to MHCLG Planning for the future: Consultation on proposals for reform of the planning system in England

GL Hearn welcome this Ministry of Housing, Communities & Local Government (MHCLG) consultation and are pleased to share our response.

29 October 2020

Detailed responses to consultation questions

Question 5
Do you agree that Local Plans should be simplified in line with our proposals?

Yes

We welcome government's headline objective of simplifying Local Plans. The plan-led system has historically suffered from the production of long and overly complicated documents that duplicate national policy and guidance and include other material that is already published elsewhere.

The previous administration set up the Local Plans Expert Group (LPEG) in 2015 under the Communities Secretary, Greg Clark MP, and Minister of Housing and Planning, Brandon Lewis MP. Their report was published in March 2016 and made a number of recommendations about the scope and content of Local Plans as well as the way that they should be prepared. At that time, it was found that less than a third of the country had an up-to-date Local Plan in place [1]. According to the White Paper that has now risen to 50%.

There have been previous attempts to streamline the content and process of Plan-making but without success. A Local Plan should be a concise exposition of the strategic proposals for the Plan-making body (whether a single LPA or joint planning authority) and should not repeat policy and guidance from other sources.

The proposals to replace the current range of policies with three broad zones has the potential to be an extremely positive evolution. Our depth of experience in assisting in policy preparation, as well as interpreting policy on behalf of the users of the plan system (landowners, developers and the wider community), informs our view that care will need to be taken to ensure that the differentiation between policies that protect different kinds of landscapes and heritage assets as well as other qualities of the built and natural environment is not over-simplified or reduced by this approach. The risk is that introducing zones that are too blunt in their content will diminish quality in the built environment through a one-size-fits-all approach that does not recognise the different qualities and constraints of the various designations.

The objective of creating a Local Plan that sets out where development will be accommodated (and where land will be protected) must incorporate democratic legitimacy through engagement and consultation. The proposals to reduce the opportunities for consultation as currently drawn risk materially reducing consultation and engagement and thus potentially raising the risks of increased challenges to Local Plans (and thereby defeating the objective of creating a more efficient planning system). We understand why the reduction is proposed and we emphasise the necessity of enabling full and effective engagement in the new process using innovative digital as well as other means of engagement and consultation. The last seven months of living and working under COVID-19 have necessitated invention in the sphere of engagement and consultation. GL Hearn has developed an online consultation platform that can be used to facilitate engagement with the community and all interested parties on planning application proposals as well as other initiatives. The platform allows for any-time access and engagement as well as for live discussion and Q&A sessions and is one of a number of powerful tools that are being developed across the industry to improve access and engagement.

Related to this, the process of defining the three zones (Growth, Renewal and Protection) must be transparent and backed by appropriate and proportionate evidence. Local Plan examinations will continue to be an essential part of plan preparation and as plans will provide the equivalent of outline planning permission for development for a ten year period, those examinations will need to be able to test candidate sites as well as objections to ensure that the plan is robust and deliverable.

The risk in creating a much faster and simpler Local Plan process that produces far greater certainty for all, is that there will be a higher rate of challenges to those plans from those who feel that their concerns and proposals were not given due attention or that the plan is not robust in its justification. The unintended consequence is that the process of plan making becomes longer and does not produce the very certainty that was intended.

[1] Paragraph S2, ‘Local Plans report to the Communities Secretary and Minister for Housing and Planning’ LPEG March 2016

Question 6
Do you agree with our proposals for streamlining the development management content of Local Plans, and setting out general development management policies nationally?

Yes

As explained in our answer to Question 5, we wholeheartedly agree with the proposal to strip out much of the generic development management policies from Local Plans. Now such policies along with their supporting text, account for a large part of Local Plan documents despite past attempts at cutting back on this material. The LPEG Report of March 2016 included recommendations to this effect [2]. Those policies sometimes contain adjustments and specific wording to address local differences, but we consider that such local specificity could be incorporated into the zonal policies of Local Plans.

Inclusion of Development Management policies within a revised NPPF could be an effective way of removing the duplication from Local Plans. The corollary of this change is that changes to primary legislation will be required to place the NPPF (or that part that contains the Development Management policies at least) on an equivalent footing as the Local Plan for decision-taking purposes. This means changes to Section 38(6) of the Act at a minimum within new legislation.

[2] Paragraph S37, ‘Local Plans report to the Communities Secretary and Minister for Housing and Planning’ LPEG March 2016

Question 7(a)
Do you agree with our proposals to replace existing legal and policy tests for Local Plans with a consolidated test of “sustainable development”, which would include consideration of environmental impact?

Yes

The criteria by which Local Plans are judged have rightly been the subject of scrutiny and debate since the Plan-led system was introduced in the 1990 Act. Much of this has been done through the process of Local Plan Examinations and PINS Guidance (for example ‘The Procedure Guide to Local Plan Examinations’ by The Planning Inspectorate (5th Edition, June 2019)).

This scrutiny has led to changes in the tests as defined in successive versions of the NPPF (2012 and 2019) as well as in the way that the Inspectorate applies the tests of soundness at examination.

As noted elsewhere in our response to the White Paper, the government’s proposals seek to strengthen the importance of the Local Plan and the zonal policies therein as part of the wider proposals to simplify the Planning system and make it more efficient. This increased importance brings with it a necessity to prepare carefully thought-through and justified Local Plans. In the absence of a thorough approach to their preparation they will be incapable of planning for precisely the sustainable development that the White Paper refers to as the proposed new test to replace the existing tests of soundness.

The current tests of soundness are set out at Paragraph 35 of the NPPF and except for the references to meeting un-met needs of neighbouring authorities which may change under the proposals to remove the Duty to Co-operate, the rest of the tests concern sensible and practical requirements that should surely be met under the new Local Plan as well.

That is to say, the plan must be prepared to meet housing requirements (a proposal of the White Paper); be an appropriate strategy taking account of reasonable alternatives and proportionate evidence; deliverable over the plan-period (a pre-requisite for sustainable development); and be consistent with national policy in the NPPF.

In the absence of government’s definition of the proposed sustainable development test, the current tests drive at many of the same objectives that are set out in the White Paper. The element that may be missing from the existing tests is something more explicit about securing sustainable development.

The commonly accepted definition of sustainable development is that set out in the Brundtland Report:
"Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs." [3]

While we now understand considerably more about the science and mechanisms around how we might achieve it, this element of any new test or tests for the Local Plan is now of critical importance as we move towards zero carbon development to meet international obligations.

In summary, we would support a change to the legal and policy tests for Local Plans provided that the replacement test incorporates sufficient criteria to ensure that the Plan can:

Provide a strategy which can meet at a minimum the housing requirement;

the plan represents an appropriate strategy consistent with national policy;
the proposals within it are justified by proportionate evidence and deliverable in the plan period; and
the proposals do not compromise the ability of future generations to meet their own needs.

If the replacement test is not drawn to incorporate these elements, then the strong risk is that the Local Plan process will be ineffective at producing robust Plans that can deliver the much-needed development. The unintended consequences will be that Plan-led development is not delivered and Plans are subject to increased levels of Challenge, leading to the continuation of planning by appeal and the need for future revisions to legislation and the NPPF to incorporate revisions to the test.

[3] Report of the World Commission on Environment and Development: Our Common Future, Chapter 2 towards Sustainable Development, Paragraph 1 – World Commission on Environment and Development (1987)

Question 7(b)
How could strategic, cross-boundary issues be best planned for in the absence of a formal Duty to Cooperate?

The question of how to effectively plan for strategic growth requirements and infrastructure has been at the heart of reforms to the planning system in recent decades. The former regional planning approach was a model which some considered lacked accountability at the local level. Despite the regional planning tier being swept away by the 2010 reforms around localism, it achieved a lot in its time and many of the spatial strategies and foci for development remain largely in place today (including Thames Gateway, Gatwick Diamond, Milton Keynes – Bedford regeneration corridor (Marston Vale)).

There have been notably few success stories in regional/sub-regional planning since the Localism Act in 2010. The Duty to Co-operate has been amended through revisions to the NPPF and NPPG and the relevant test of soundness has been strengthened within the latest (2019) version of the NPPF. However, it remains the case that the Duty to Co-operate lacks teeth. As currently drawn, it cannot exert the necessary influence to bring about political consensus and constructive co-operation that is required.

The success in planning for high levels of growth around Oxford and Cambridge is an exception to this rule, as is the wider Ox-Cam Arc and related rail and road infrastructure proposals. Although momentum on the latter issue has faltered in recent years, there has been a strong level of commitment from constituent local planning authorities along the route, backed up by targeted support and funding from central government.

If the Duty to Co-operate is removed then the alternatives are either a re-introduction of the regional level of planning or else active encouragement of LPAs to re-organise themselves into larger groupings under a unitary model (either county based or some other combination of LPAs including metropolitan groupings) as heralded by the forthcoming White Paper on devolution and local government reorganisation.

As the recent report by PwC finds, there are potentially significant efficiencies and savings to be made through this approach, depending on the form of agglomeration that is pursued [4]. There are likely to be some practical synergies and opportunities for more effective sub-regional planning created by such groupings at county level although there are some instances where the barriers to growth experienced by many or all LPAs within a county may mean that creation of a unitary county authority simply means that those same barriers exist at the higher level (e.g. Green Belt) and the question of how to meet housing needs in such areas may remain largely as intractable as it is now.

On this basis there is a need at least for a facility for wider sub-regional or regional planning body or mechanism that can be constituted between counties (or whatever grouping of LPAs exist). The question of how London’s growth should best be met with relation to the surrounding Travel to Work Areas and other economic inter-relationships is a good example of this issue to which no practical solutions currently exist. This package of reforms presents an ideal opportunity to put in place the capability to create higher-tier bodies in those circumstances where they are required.

[4] ‘Evaluating the Importance of Scale in proposals for local government reorganisation’ PwC August 2020

Question 8(a)
Do you agree that a standard method for establishing housing requirements (that takes into account constraints) should be introduced?

Yes

We agree that a binding housing requirement should be introduced to provide the basis on which Local Plans must be prepared. The provision of enough homes to meet the needs of our society is a fundamental objective of the planning system, but too often there are debates over the number with the result that Local Plans do not plan for sufficient numbers of homes and issues of affordability continue to worsen. We have made separate detailed comments on the proposed revisions to the standard method under the sister consultation paper.

That having been said, the question of how constraints are considered is vitally important. We have not seen any details of how government envisage this process of determining what impact constraints (and any calculation of urban capacity) will have on the result of the standard method. The impact of the various constraints is necessarily unique to each LPA and so any approach will need to allow for those circumstances to be considered.

We know that there will be many local planning authorities and particularly in areas of low affordability who will already be lobbying Ministers to lower the eventual requirement in their administrative areas. Often these are districts close to metropolitan areas with a high proportion of Green Belt but where housing and other pressures are acute. If the government’s objectives of trying to improve affordability of homes is to be met then there will need to be a recognition within such districts that they need to review their Green Belt (as some have already done) and play their part in providing enough (and the right type) of homes for their communities.  We say this recognising that this part of the planning process above many others is highly politicised and it is important that the process of determining housing requirements is justified and transparent. If there is no transparency, then the likelihood is an increase in the number of legal challenges to plans and decisions which will do nothing to assist with delivery.

With the above in mind, we suggest that a process for the determination of the housing requirement is put in place. That process must allow all interested parties an opportunity to provide their input and above all must be open such that there can be no basis for dispute or legal challenge after the binding requirement is set.

Question 8(b)
Do you agree that affordability and the extent of existing urban areas are appropriate indicators of the quantity of development to be accommodated?

Yes

Affordability

It is a welcome step to apply an adjustment that reflects changes in affordability over time as well as taking a snapshot from the most recent year. As a result, the revised standard method will be more likely to capture true demand for homes in different areas. It also acknowledges the progress made by local authorities to make homes more affordable. It is right that the median workplace affordability ratio is treated as the lead indicator in determining an appropriate supply of land to meet demand for homes.
Existing stock

Using the existing stock of dwellings as a baseline places a limit on the supply of land for housing where the growth in households is forecast to be weak. It also acts as a minimum, creating the expectation that these areas will still generate new homes, and these will be delivered within existing urban settlements, an emphasis that is consistent with sustainable development.
Conversely, those areas where households are growing relatively quickly are likely to see an increase in housing targets. In areas where the existing stock is relatively small, this increase will be large relative to the existing stock, and this may generate some resistance. However, given that the objective of the policy is to shift development to areas of high demand, this resistance could be construed as the policy achieving its aims.

Government want local authorities to work together to address housing needs across district boundaries (the purpose of a raft of policies from “duty to cooperate” to combined authorities and metro-mayors and, arguably, the housing delivery test). The revised standard method will increase the pressure on authorities to do so by making the logic of setting and addressing housing targets at the housing market area level irresistible.

The effect

To take West Northamptonshire as an example, the effect of the new standard method calculation is to increase housing targets in Daventry and South Northamptonshire districts, and reduce them in Northampton when compared with the existing method. The former are less populated rural parts of West Northamptonshire that are forecast to see relatively large increases in household numbers compared with the urban area of Northampton.

For Northampton, the combination of the large existing settlement and weak household growth results in a reduced standard method calculation. However, by dint of size of the existing stock, Northampton is still expected to deliver a substantial number of homes.
The overall effect is to increase housing numbers where, judged by population growth and affordability, demand will be greatest. On this basis, the policy is an effective tool for driving the supply of land for housing where growth should take place, increasing economic productivity, welfare of households and the smooth operation of housing markets.

While these changes to the standard method are therefore welcome, the effect on land supply will be curtailed unless it is accompanied by fresh guidance on Green Belt release. Government should find a way to enable more development to come forward in areas of the Green Belt where the environmental, amenity and social value is low and the uplift in economic and social value by permitting development is great. This is particularly true in areas of high demand where proposed developments deliver not only new homes, but other environmental and social benefits.

Question 9(a)
Do you agree that there should be automatic permission for areas for substantial development (growth areas) with faster routes for detailed consent?

Yes

This is a welcome proposal that should help to increase certainty for developers and landowners as well as for the local community and importantly should speed up the delivery of much needed new homes and other infrastructure. However, the basis for these faster routes is the preparation of a robust Local Plan in a timely fashion. The new proposals place increased weight on the Local Plan (and NPPF) in decision-making and therefore an efficient and effective Plan-making process is essential for the benefits of these routes to consent to be realised. We make comment on the relevant proposals for reform of the Local Plan process elsewhere.

Question 9(b)
Do you agree with our proposals above for the consent arrangements for Renewal and Protected areas?

Yes

The proposed consent arrangements for Renewal Areas are supported as they should provide greater certainty to all involved in the planning process and should provide a faster route to consent, subject to the Plan-making process being efficient and effective, as we set out in our response to question 9a.

Routes to consent in protected areas are not proposed to change and we support the logic of that within the wider proposed reforms. However, the policies concerning protected areas do not appear to be changing. This is a missed opportunity in the context of what is a major reform of the planning system and furthermore will risk frustrating some of the objectives of the reform (i.e. to increase the supply and delivery of homes for those who currently cannot afford them or who cannot otherwise get access to them) as it will not allow for a much-needed review of the purpose and functioning of Green Belt policy which is now one of the oldest elements of the planning system that arguably no longer serves the purposes for which it was originally designed.

Societal, economic and environmental circumstances and pressures have changed out of all recognition from those in the middle part of the last century. For us to achieve sustainable development around many of our largest cities and towns it has been and will continue to be necessary to review areas of Green Belt for development. At present this is happening in a piecemeal fashion. A comprehensive review could allow re-evaluation of the purposes and functions of the Green Belt at a national level. It could consider what land is important to retain in open aspect and which areas may be better made available for development and therefore enable the delivery of those homes that the proposed changes to the Standard Method show to be needed.

Question 10
Do you agree with our proposals to make decision-making faster and more certain?

Yes

We welcome the principle of making the decision-making process quicker and increasing certainty. Delays in the planning process assist no-one and it is in the best interests of the community as well as those promoting development that the process of considering development proposals is as swift and predictable as it can be.

The proposal to increase delegation of decision-making to officers on detailed applications (where the principle of development has already been agreed) is welcomed.

We welcome the proposal to shorten and standardise the material that must be submitted with a planning application and the associated digitisation of the material (in the context of a digitised planning system) would make the processing of data much more efficient.

Extensions to time limits

The focus on time limits for determination of applications is understandable in principle but we would not want to see the imposition of immutable time limits on the consideration of applications. For larger and more complex proposals the statutory time limits of 13 or 16 weeks are generally insufficient and the ability to discuss and agree an extension(s) to determination periods for applications is an important element of the process. Without that, significant time and cost can be wasted through the re-submission of applications when a simple extension of time (mutually acceptable) can ensure the simplest and quickest route to a decision on complex schemes.

Question 11
Do you agree with our proposals for digitised, web-based Local Plans?

Yes

Yes, we wholeheartedly support these proposals as part of a comprehensive shift to a digitised planning system in which all the data sets and information can be shared and read across platforms and accessed easily by all in the community. There is such a wealth of data that is currently and has been submitted as evidence to support Local Plans as well as in support of planning applications and Environmental Impact Assessments, but almost all of this is in reality stored in paper form or read-only pdf format. It is not ‘live data’ and we are therefore losing enormous amounts of data that could play a large part in helping us to make progress across all areas of planning and environmental impact.

For these proposals to be effective (as with the wider shift to a digitised planning system) the technology must be properly resourced, and training provided to all those who administer the system.  Resourcing is a critical issue, and given the constant developments in digital technology, it will also be essential that long-term funding streams are identified and made available to local planning authorities so that they can continue to develop and upgrade hardware and software to avoid the otherwise inevitable obsolescence.

As already mentioned in our response to Question 5, we are fully supportive of moves towards greater use of technology in planning and have developed our own virtual consultation platform to allow us to engage with communities even during lockdown restrictions linked to COVID-19.

Question 12
Do you agree with our proposals for a 30-month statutory timescale to produce Local Plans?

The 30-month timescale is undoubtedly a positive ambition. It will undoubtedly require a well-resourced team of officers and commitment from local councillors over what will likely be more than one electoral cycle. 

Our depth of experience of Local Plan preparation (both through assisting local planning authorities in their preparation as well as advising investors, developers and landowners who engage in the process) which can often take five years and sometimes over 10 years, tells us that there will need to be very clear parameters for local plan preparation and incentives (and penalties) to ensure timely preparation.  The threat of intervention by the Secretary of State in Local Plan preparation has been rare and largely ineffective in ensuring fast and efficient Local Plan preparation.  The exception to this is perhaps the case of South Oxfordshire’s Local Plan which has been put back on track after a hiatus and appears likely to be adopted on or around the deadline set by government.  There are numerous others that have not managed to prepare and adopt Local Plans including St Albans DC and York Council.

The emphasis within the reforms on a plan-led system mean that even greater importance will attach to LPA’s having an up-to-date Local Plan in place.  While we acknowledge and support the intention to create greater levels of engagement in the Plan process, the corollary of the increased importance of the Plan is that more effort and investment will be put in by investors, developers, landowners and other stakeholders in promoting their interests (as well as the wider public). This will necessarily put the timescale of 30 months under more pressure. On a related point, the intention to incorporate design guidance and coding for sites and wider areas within Local Plans will also require greater engagement than is currently experienced. The design process is iterative by nature and requires time to allow inputs from stakeholders and the community.  We invite you to take advice on this and consider whether this timescale will allow for those inputs.

Question13(a)
Do you agree that Neighbourhood Plans should be retained in the reformed planning system?

It is in some senses hard to see what the role of Neighbourhood Plans should be under the proposed reforms to the Plan-making.
The decisions over land use will all be taken within Local Plans leaving perhaps some input on design for the neighbourhood level. We recognise the desire of many communities to engage in steering the future direction of their communities. That is something that could be done within the Local Plan process as we understand the intention of the reforms, but equally could continue to happen through Neighbourhood Plans also.

The risk with maintaining Neighbourhood Plans is that it adds a further step in the process of planning for and delivering much needed development and the government’s objectives of securing development in a faster more efficient way would be more easily achieved if the Neighbourhood Plan level were to be removed (at least from their status as part of the Development Plan).

Question 13(b)
How can the neighbourhood planning process be developed to meet our objectives, such as in the use of digital tools and reflecting community preferences about design?

The neighbourhood planning process could be developed through the introduction of more digital tools and indeed this would be necessary if this level of planning is to key-in to the digitised Local Plan that will sit above it. As we comment in our response to 13a, the government may wish to reflect on whether neighbourhood planning should be undertaken in the form of a Supplementary Planning Document rather than as part of the Development Plan. This would help to ensure that much needed development is planned for in one step through the Local Plan rather than potentially through a two-step process including Neighbourhood Plans.

Question 14
Do you agree there should be a stronger emphasis on the build out of developments? And if so, what further measures would you support?

Yes

Delivery of the development planned and permitted through the system is essential. As the Letwin Review and other studies have highlighted, there are a number of potential barriers to delivery and market absorption is certainly one of the main reasons why build-out of schemes can be slower than anticipated or desired[5].

The delivery of development is at the heart of the objectives for the planning system. Although delivery is often out of the control of local planning authorities there is much that can be done to assist it and facilitate it and indeed recent changes to the NPPF (and in particular the introduction of the Housing Delivery Test) has helped to focus minds on removing barriers to delivery.

One of the tools that has been effective in producing a greater number of planning consents and thus opportunities for delivery has been the 5-year Housing Land Supply test. We are concerned to see that government proposes to remove this test (relying simply on the Housing Delivery Test). This would in our view be a retrograde step for the simple reason that the supply of sites is something that is controlled by the planning system and, has a determinative effect on the rate at which development can be delivered.  The great strength of having both the supply and delivery tests is that they ensure that focus is put on both ends of the process, rather than simply relying on the delivery of those sites that the system has managed to process to consent.    

We would also underline the importance of planning conditions being used sparingly and ensuring that they are not unduly onerous. The need to remove or amend conditions is a common reason why the implementation of development is held up and a greater focus on keeping such conditions to a minimum would assist in realising swifter build-out of developments. The delays caused by the imposition of unnecessary pre-commencement conditions as well as unduly onerous conditions was highlighted in government’s ‘Fixing the Broken Housing Market’ [6].

While we note the intention in the White Paper for S106 Agreements to work in conjunction with the proposed Infrastructure Levy, it is important to recognise that the latter is designed to be a funding tool rather than a delivery tool. There will still be an important need for some form of legal agreement, hopefully based upon standard templates as previously commended, to secure infrastructure delivery of certain matters related to the delivery of for major development and associated infrastructure as well as securing commitment to either do or not do something relative to the implementation and/or operation of the development.

[5] ‘Independent Review of Build Out Final Report’ Paragraph 1.7– Sir Oliver Letwin MP CM 9720 Oct 2018

[6] ‘Fixing the Broken Housing Market’ Chapter 2 – DCLG Cm9352 February 2017

Question 17
Do you agree with our proposals for improving the production and use of design guides and codes?

Yes

We have been advising clients in both the private and public sectors on the preparation and use of design guides and codes for major developments for many years and their effectiveness in helping to achieve high quality places and buildings is undoubted. The design process is iterative and time-extensive in nature and the proposed widespread use of guides and codes will require significant resources both in terms of finance and people.

We welcome the emphasis on design that runs through the entire Reform proposals, but in order that this has the intended effect, it is vital that sufficient resources are available to local planning authorities.

There is a tension in the reforms between the objectives of making the Plan-making process faster, while introducing greater levels of detail in terms of design guides and codes. The option of the latter being prepared as SPD is of course valid, albeit that the weight attached would be less than if they were prepared as part of the Development Plan (and thereby potentially placing design at a disadvantage to other matters in the decision-making process). There needs to be adequate resourcing of the system to ensure that priority is given to production of these guides and codes as part of the Plan-making process where practical.

Question 18
Do you agree that we should establish a new body to support design coding and building better places, and that each authority should have a chief officer for design and place-making?

Yes

The championing of Design at a national and local level is vital to securing better and more beautiful places. Some successes have been achieved through the former Commission for Architecture and the Built Environment (CABE) in the past, and the current network of Design Panels, on which some members of GL Hearn serve, can have a positive impact on certain kinds of development, although their existence is patchy and their resources are frequently stretched so that they can only engage with a limited number of schemes/situations. We therefore welcome proposals to either support a national network of such bodies or the creation of a new body that can champion design.

Consistent with our response to q.17, we welcome the proposal to create a Chief officer for design and place-making in each local planning authority. The former position of chief architect within local government certainly improved the ability of local government to secure their objectives in terms of design for the built environment, and together with a process of preparing and implementing design codes/guides that engages the community as well as other stakeholders, this will ensure that focus is brought to place-making and all forms of development

Question 22(a)
Should the government replace the Community Infrastructure Levy and Section 106 planning obligations with a new consolidated Infrastructure Levy, which is charged as a fixed proportion of development value above a set threshold?

The proposals for an Infrastructure Levy are, in principle, a welcome step forward towards the creation of a funding mechanism for infrastructure which is transparent and gives certainty for all involved, whether this be developer, landowner, local planning authority or local community. However, from the available material to date we understand that the proposed Infrastructure Levy is a funding mechanism rather than a delivery mechanism and that is an important distinction when considering the future of S106 Obligations.

S106 Obligations are currently negotiated with developers on a case-by-case basis, while CIL is a fixed charge, levied on the floorspace of new development. Although both have contributed to the delivery of infrastructure, they both have potential short comings leading to inconsistency. For example, planning obligations under section 106 can lead to significant inconsistencies as regards their scope and scale depending upon multiple variables including the various parties’ negotiating positions and the relative viability of developments and their ability to fund different levels of Obligation. Likewise, 52% of local authorities had not adopted CIL by the end of 2019 and therefore the requirement to pay CIL can simply be related to the location of a proposal rather than its scale or extent of supporting infrastructure it will require.

We do have a number of concerns regarding the implementation of an Infrastructure Levy, which we set out below and in response to subsequent questions.

Firstly, not all developments deliver an uplift in land value. Whilst the proposals mean that developments falling beneath a minimum threshold in value uplift are exempt from the Infrastructure Levy this would then mean there would be less revenue to direct towards infrastructure. This could have particular spatial consequences in re-enforcing regional disparities. For example, values of completed developments will generally be much greater in London and the southern regions of England than elsewhere. It is noted that currently the geographic distribution of planning obligations and CIL is weighted towards the South and East of England (53% of all Obligations and CIL was collected in these regions in 2019 [7]).

Secondly, in bringing forward reform it is important to ensure the revised proposals capture the benefits from the existing system. S106 Obligations enable applicants to commit to all necessary mitigation measures that cannot be secured by way of a planning condition and which are necessary to overcome what would otherwise be reasons to refuse the development proposals. They can ensure that the necessary infrastructure is delivered at the right time. Significantly, they are more than just a means to secure funding, they can ensure employment and training measures are delivered, green transportation plans are produced and implemented, open space is provided and maintained.

More detail on the Levy proposal is needed, if local authorities and developers alike are to successfully navigate the process. Therefore, we think that legal agreements will continue to be required to secure delivery of certain matters.

[7] The Incidence, Value and Delivery of Planning Obligations and Community Infrastructure Levy in England in 2018-19 Pg8 - MHCLG August 2020

Question 22(b)
Should the Infrastructure Levy rates be set nationally at a single rate, set nationally at an area-specific rate, or set locally?
Nationally at a single rate / Nationally at an area-specific rate / Locally

Locally

The question of how a rate(s) should be set must take account of the evolution of the current CIL and recent research on it [8]. The origins of CIL involved the same question of the level at which the rates should be set and it was decided that they must be defined at a local level (at local planning authority or smaller area) in order to accommodate the enormous differences in land values and local economies that exist up and down the country.

Without the ability to set rates locally the outcome would have been that very large parts of the country would simply not have implemented CIL as it would have made development unviable. As it is, in 2016 over half of those local authorities who adopted CIL were based in London and the South East of England where markets and values are highest. As the DCLG Research Report notes, the main reasons cited for not progressing CIL were lack of viability and the need to prioritise provision of affordable housing which is not covered by the CIL mechanism [9].

We are clear that rates for the proposed Infrastructure Levy must be set locally so that they can be sensitive to local markets and values and thereby (and in the proposals own terms) ensure that the amount of value-capture can be maximised while not making development unviable.

Greater clarity must also be provided in regards to the calculation of the proposed value-based minimum threshold above which the levy is charged and as to how IL will be calculated so as to be robust enough that “when prices go up the benefits are shared fairly between developers and the local community, and when prices go down there is no need to re-negotiate agreements”. At what stage would a developer have certainty as to whether the minimum threshold was not exceeded? Would a developer be able to appeal against the valuation? How would phased and / or revised schemes be dealt with?

[8] The value, impact and delivery of the Community Infrastructure Levy – Report of the Study DCLG February 2017

[9] Ibid, para 6.

Question 22(c)
Should the Infrastructure Levy aim to capture the same amount of value overall, or more value, to support greater investment in infrastructure, affordable housing and local communities?
Same amount overall / More value / Less value / Not sure. Please provide supporting statement.

More value

The proposals for the proposed Infrastructure Levy are that it will cover affordable housing as well as the other forms of infrastructure that have to date been delivered via S106 Obligations and/or CIL. On this basis it is essential that the Infrastructure Levy captures more value than CIL, in fact it will need to capture significantly more in order to fund the same amount of affordable housing as currently delivered via S106 Obligations. The relationship between value capture and the cost of necessary infrastructure under CIL has not been strong. Findings within the CIL Review Team’s report of October 2016 were that CIL was yielding between just 5% and 20% of the cost of necessary infrastructure, leaving the shortfall to be made up by local authorities [10].

Research into the total value of developer contributions in 2019 found that CIL accounted for 12% of all contributions in 2018/19 (consistent with the findings of the 2016 Review above), while more significantly it found that affordable housing contributions represent 67% of the value of all developer contributions [11].

These statistics shed light on the scale of the task facing the creation of a new Infrastructure Levy that can achieve the funding of both necessary infrastructure (that which is reasonable and necessary for development proposals) as well as the current level of affordable housing provision. That is before the new system is asked to contribute towards meeting the additional need for affordable housing that is currently not being met as well as contribute towards wider community infrastructure or other spending priorities as referred to by question 25 of the White Paper. In terms of the former, while the total provision of affordable housing in 2018/19 was a little over 57,000 homes, the identified need for affordable homes (defined in the research as social rented, shared ownership and intermediate rent) is circa 150,000 homes per annum [12].

[10] ‘A New Approach to Developer Contributions A report by the CIL Review Team’ para 3.3.2 October 2016

[11] The value, impact and delivery of the Community Infrastructure Levy – Report of the Study Pg8 DCLG February 2017

[12] Affordable Housing Supply: April 2018 to March 2019 England pp3 Housing Statistical Release MHCLG November 2019 and 2018 UK Housing Review Autumn Briefing Paper pp7

Question 22(d)
Should we allow local authorities to borrow against the Infrastructure Levy, to support infrastructure delivery in their area?

Yes

As currently drawn, the proposed IL will not be payable until occupation and therefore the ability of local authorities to borrow against future IL receipts will be vital if infrastructure is to be delivered when it is needed. This form of borrowing and delivery by local authorities has not been widely taken up to date, mainly because the clauses in the primary legislation around CIL that would allow them to do so have not been enacted by government. The prospect therefore raises a number of issues around the resources and skill sets of local authorities.

The risk is that if the resources and support are not put in place, necessary infrastructure will not be delivered in time for development and that will lead to obvious problems of under-capacity but will also weaken public confidence in the planning system, something that the reforms are expressly intended to improve.

Research undertaken in 2016 on the operation of CIL found that there are often time lags between the commencement of development on sites and the delivery of the infrastructure that had been deemed necessary to provide alongside development of the site. These delays have been caused both by the approach to phased payments for CIL but also and more importantly by the transfer of risk from the developer to the local authority, which often lacks the technical skills, resources and financial capacity to deliver. In such circumstances it is generally more efficient and effective for developers to deliver the infrastructure as an in-kind contribution, but they have often been prevented from doing so under the CIL regulations. This has the effect of increasing pressure on existing infrastructure as well as reducing confidence in the planning system to deliver, but also depressing prices for development [13].

The ability in legislation for local authorities to borrow against anticipated future receipts from IL is critical, but as import is to secure the necessary resources and skills to implement that ability on the ground, otherwise the delivery of infrastructure will be frustrated with major implications for the successful delivery of the development which it is intended to serve as well as the communities that are intended to benefit from it.

[13] ‘A New Approach to Developer Contributions A report by the CIL Review Team’ para 3.4.3 October 2016

Question 24(a)
Do you agree that we should aim to secure at least the same amount of affordable housing under the Infrastructure Levy, and as much on-site affordable provision, as at present?

Yes

Yes, this is essential. The total provision of affordable housing in 2018/19 was a little over 57,000 homes of which 49% were delivered via S106 Obligations [14].

The identified need for affordable homes (defined in the research as social rented, shared ownership and intermediate rent) is circa 150,000 homes per annum [15].

There is therefore a significant under-supply of affordable housing and in the absence of a step-change in external grant funding it will be important that the percentage delivered by the IL does not dip below that currently provided via S106 Obligations.

The mixed tenure approach of providing both affordable and private housing within the same estate means a move away from the monolithic single tenure estates of the 1960s which in many cases are now being regenerated to include a more balanced tenure mix. We are concerned that there could be a return to tenure segregation if a large proportion of affordable housing isn’t provided on-site.

The proposed Infrastructure Levy has regard to viability as too high; a charge may lead to less development.

[14] Affordable Housing Supply: April 2018 to March 2019 England pp3 Housing Statistical Release MHCLG November 2019

[15] 2018 UK Housing Review Autumn Briefing Paper pp7

Question 24(b)
Should affordable housing be secured as in-kind payment towards the Infrastructure Levy, or as a ‘right to purchase’ at discounted rates for local authorities?

Yes

The provision of affordable housing on-site by developers is an effective and efficient way of delivery and we support the proposal that it should be secured as in-kind payment. It is important that the local authority is clear about the requirements e.g. tenure mix for affordable housing in their community, in order that developers and affordable housing providers can bid effectively for new opportunities without referring back to the local authority for clarification for each and every bid.

Rather than the local authority nominating the affordable housing provider, the developer should be able to approach any registered provider in order that the value of the affordable housing is not kept unnecessarily low. Many developers have strategic partnerships with providers, and these should be encouraged and maintained.

Question 24(c)
If an in-kind delivery approach is taken, should we mitigate against local authority overpayment risk?

Yes

One of the consequences of the proposals for Infrastructure Levy is that there may be circumstances in which both developer and local authority find they have over or under-paid against the Levy calculation. In these circumstances it will be important to mitigate these risks in order that confidence can be maintained by the parties involved in the transaction.

We are however concerned that the un-intended consequences of the proposed gap between valuation and payment of Infrastructure Levy (and hence the need to mitigate the risk of over or under-payment) is that public confidence in the system of delivering affordable homes and other forms of infrastructure will be weakened due to the inherent uncertainty over what will finally be delivered. This is an area of the proposed reforms that needs much more detailed thought and consideration and we look forward to reviewing subsequent detail on the proposed Infrastructure Levy.

Question 24(d)
If an in-kind delivery approach is taken, are there additional steps that would need to be taken to support affordable housing quality?

Yes

Affordable housing providers have robust quality assurance processes, and these will be maintained regardless of how the housing is procured. In the comparatively infrequent event that what is constructed does not meet the standards of the Registered Provider then the proposal to revert to a cash contribution could constitute a powerful incentive to developers to uphold the high standards of construction that are demanded for affordable units.

Question 25
Should local authorities have fewer restrictions over how they spend the Infrastructure Levy?

Yes

Consistent with our answers to question 22 above, we are supportive of the principle of local authorities having fewer restrictions over what they spend the Infrastructure Levy receipts on provided that they secure delivery of the infrastructure and affordable homes that have been identified as being required.

The opportunity to invest funding from the Infrastructure Levy beyond what we term ‘core infrastructure’ (that is infrastructure identified as necessary to make development acceptable together with the required amount of affordable housing) could, potentially help local authorities to secure local community support for new development. Potential additional benefits such as funding to improve other Council-run services, and or lower council tax, would be positive outcomes. However, if such an approach were adopted there would have to be an unambiguous definition as to what ‘core infrastructure’ related to. The ability for local authorities to spend Infrastructure Levy on matters beyond core infrastructure must be set out in such a way that there is no incentive for local authorities to divert Infrastructure Levy funds towards non-core infrastructure unless they have surplus funds to use. If appropriate controls are not put in place, then we have a concern that the Infrastructure Levy may not be effective in helping to deliver sustainable development.

Question 25(a)
If yes, should an affordable housing ‘ring-fence’ be developed?

As we say in response to question 25, the delivery of what we term ‘core infrastructure’ which includes that infrastructure that is defined as necessary to make development acceptable together with the required level of affordable housing, is essential before local authorities consider what other priorities they may wish to spend Infrastructure Levy receipts on. We are not determined that ring-fencing is necessarily required to achieve this, but it will be important that regulations governing the use of Infrastructure Levy receipts are tightly drawn to ensure that the delivery of affordable housing remains at the top of the list of priorities.