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The Pitfalls & Opportunities Around Planning Reform

24/09/2020

The Government has recently introduced substantial changes to the Use Classes Order, including the creation of three new use classes. However, these changes are just the tip of the iceberg of the Government’s intended reforms. A White Paper currently undergoing consultation will deliver the most significant overhaul of the English planning system since the introduction of the Town & Country Planning Act in 1947. As with any change there will inevitably be winners, losers and unintended consequences.

 

What's Driving This?

Planning reform is a key component of the Government’s proposed ‘New Deal for Britain’, intended to fuel economic recovery in the wake of COVID-19. The Prime Minister has stated a belief that the current planning system is a 20th century relic, which is artificially constraining the potential of the country as we approach the third decade of the 21st century. The Government’s mantra is therefore to build back better, build back greener, and build back faster. 

This plays itself out in many of the planning reform measures, that seek to improve the system in three ways: (1) make it simpler, (2) make it clearer/cost effective, and (3) make it quicker.

SIMPLER. The first limb of simplicity is achieved through a classification system, segmenting land in Local Plans into three categories: (1) growth areas (suitable for substantial development with automatic outline approval), (2) renewal areas (where there is a general presumption for suitable smaller scale development and gentle densification), and (3) protected areas (where scrutiny will continue to be applied through full planning applications.)

Beyond this, less focus will be given to deliverability when considering whether Local Plans are sound; the 5-year housing land supply will be scrapped, and a national flat rate infrastructure levy will be applied. Finally, planning applications will be shorter and more standardised.

COST EFFECTIVE. The planning process will be driven by digitised data with Local Plans becoming: ‘visual, map based, standardised, and based on the latest digital technology.’ Application fees will be nationally benchmarked, and the broader costs developer funded. Bureaucracy and unnecessary regulation will be removed, and departments will be resourced up. 

QUICKER. The Local Plan process will be limited to a maximum of 30-months, community engagement will be streamlined, and automatic permission will be granted for high quality proposals. Timeframes for determination will be strictly applied at 8, 13, and 16-week deadlines, with penalties for exceeding these.

 

Who Are The Winners From This Change?

It is not difficult to deduce that simpler, clearer and quicker permissions will mean that applicants are the big winners from this reform. They will spend less time and cost in preparing planning applications, have greater certainty of outcome (sometimes automatic), and get decisions more quickly.

This said, there isn’t one single type of planning applicant. Homeowners, developers, landowners, agents (town planners, architects etc), each having a different experience and priority from the application process. It remains to be seen whether all applicants will benefit equally. Particularly it feels like developers / housebuilders with a focus on high end, high quality development will be the big winners. The proposals seek to provide a ‘fast track for beauty’ with developers securing automatic permission for high quality design proposals.

The reforms are also likely to see residential SME’s benefit with the potential for them to gain greater access to larger sites that are proposed to be split up between developers to accelerate delivery. The reforms also propose reduced and deferred developer contributions for this sector, as well as financial assistance through funds such as Home Building Fund and Housing Delivery Fund.
The proposals to publish new style digital Local Plans that will assist in the creation of a strategic national map of planning will be of great benefit to LPAs as they seek engage on cross-boundary issues and assess local infrastructure needs. This should also assist national property and land portfolio owners to better protect their assets, as it will provide them with greater ability to monitor and influence proposed policy changes across their extensive portfolio.

To balance what is a very pro-housing growth and development reform, the natural environment is also likely to be a winner. The reforms place a greater emphasis on design, particularly local character and types of buildings and places that have stood the test of time. This will include locally prepared design codes that are more binding on decisions and the introduction of a Chief Officer for Design and Placemaking. Net gains for gardens, parks and other greens spaces are also promoted, and changes via the NPPF are proposed to make all new streets tree lined. 

The planet also wins. In recognition of the impact of flooding across England greater controls/processes for flood risk are to be introduced, and in line with the Government’s 2050 commitment to bring all greenhouse gas emissions to net zero by 2050, new homes will need to produce 75-80% less CO2 emissions and be capable of adaption to become fully zero carbon.

Finally, in the short-term, consultants and lawyers will almost certainly benefit from the inevitable confusion in terms of interpreting change. 

 

...And Who Are The Losers?

The single infrastructure levy might be applied to capture a greater proportion of land value uplift from the grant of planning permission. This will put pressure on the value of land and reduce the incentive for a landowner to bring their land to the market. This commercial change could inadvertently slow down land release. The segmentation of land into 3 categories is also likely to have a massive effect on value, making the preparation of Local Plans more contentious than ever with landowners seeking optimum value to incentivise them bringing their land to market and LPAs and local communities seeking to maximise land value uplift for infrastructure and services.

Against this, the proposed changes to standard housing need methodology is a clear statement of top down government intervention as they seek to build their annual new homes target. The Government will directly determine the location of the 300,000 new homes and this will be binding and depowering of LPAs.

The flipside of simplification is over-standardisation. A more binary, logic-based approach removes the ability to take account of local market nuances or community wishes. It is likely to augment successful places and remove investment from weaker locations, exacerbating regional spending inequalities. Some point to concerning statistics that the North’s new housing calculation has been significantly reduced to 50,000, despite the North being home to 1 in every 4 people in England (25%).

 

Will The Reforms Create Unintended Consequences, And What More Could Have Been Done?

The White Paper makes a commitment to a comprehensive resource and skills strategy and an improvement to planning department resources that will undoubtedly assist in the profession in being able to implement many of the radical reforms proposed. This will not happen overnight though, particularly when LPAs are chronically underfunded and under resourced, in a profession that has been continually attacked by successive governments for being a block to positive growth. Considerable resource and funding are going to be required to produce the quality Local Plans required as the foundations of the new system.

A big step change in the profile of the profession, the education and training of existing planning professionals, and the education of future planning professionals is needed to provide the skill set and resource to effectively make the transition. The capricious political cycle is not typically supportive of long-term investment like this. A good example of the scale of the challenge is in the introduction of binding, locally prepared design codes. The city of Gothenburg operates a similar regime that requires 100 of their 250 planning headcount to prepare and manage them. 

The reforms propose that the planning system is to be predominantly funded by developer contributions, but on the other hand that planning application fees will be returned to applicants if their applications are not determined within set time limits or successfully appealed. The circular nature of the position feels untenable.

The reforms are very clearly targeted at the delivery of housing. There is little or no reference to other key sectors such as logistics, offices, energy etc, which all have a key role to play in the country’s economic recovery.

In the commercial sectors, the revision to the use classes may deliver unintended consequences. For example, good quality light industrial units that previously fell within the B1 use class, now fall into the new E Class. This puts future light industrial use in competition with convenience retail, changing the nature of established employment areas, and potentially acting as a drag to economic growth and small businesses. 

Under the proposed single infrastructure levy, LPAs are responsible for delivering infrastructure; however, they are likely to lack the embedded skills and resources to do so. This could lead to expensive outsourcing and procurement processes. LPAs may borrow against future receipts to fund this infrastructure; however, this creates financial risk if the associated scheme doesn’t complete, has to be amended, or local market changes mean the scheme is not as viable as initially forecast. 

Finally, a visible failing of the proposals is the lack of support for the creation of new sustainable communities which promote the health and wellbeing of our nation. If there is one major lesson from the COVID-19 pandemic, it is that greater focus is needed in this space. This feels like a missed opportunity. 

 

…And So, In Conclusion

There is no doubt that life has changed since 1947 and elements of the planning system need to be modernised; an example being in the digitisation and efficiency of its processes. Many of the proposed reforms, however, are more fundamental, shifting planning from being a discretionary process where professional judgement is applied, to a rules-based approach where outcomes are right or wrong, black or white. We must wait to see whether this translates to an improvement or a step backwards.

The real estate industry and the wider country should welcome the prospect of a simpler, quicker and more cost-effective system. However, if the new system is directed towards meeting short term targets, and in doing so dismantles the core principles that have been largely effective over 73 years, there is danger of the outcome being detrimental to the creation of prosperous, healthy, and vibrant communities of the future. We all now have a role to play ensuring that this is not the case.

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