The Government appears to be in negotiation with Tory MPs (46 of them at least) who may be prepared to wreck the Levelling-up and Regeneration Bill unless it includes a provision abolishing housebuilding targets for local authorities and abolishing the policy in the NPPF as to the maintenance of a five years’ supply of housing land. No doubt this will end up with some fudged solution adding further (1) uncertainty, (2) complexity and (3) hurdles in the way of housing provision.
But in another part of the forest, assuming they will overcome that local difficulty (aka huge chasm), the Government has brought forward a further set of amendments to the Bill to seek to address the nutrient neutrality problem which has amounted to a de facto veto on housebuilding in many areas of the country (see eg my 23 July 2022 blog post Neutrality: Government Clambers Off The Fence).
A new legal duty on water companies in England to upgrade wastewater treatment works by 2030 in ‘nutrient neutrality’ areas to the highest achievable technological levels.
A new Nutrient Mitigation Scheme established by Natural England, helping wildlife and boosting access to nature by investing in projects like new and expanded wetlands and woodlands. This will allow local planning authorities to grant planning permission for new developments in areas with nutrient pollution issues, providing for the development of sustainable new homes and ensuring building can go ahead. Defra and DLUHC will provide funding to pump prime the scheme.”
“The new legal duty on water and sewerage companies in England to upgrade certain wastewater plants will be introduced via a Government amendment to the Levelling Up and Regeneration Bill. We want these improvements to be factored in for the purposes of a Habitats Regulation Assessment.”
The nutrient mitigation scheme “will be open to all developers, with priority given to smaller builders who are most affected. Developers can also continue to put their own mitigation schemes in place should they choose. Natural England will work with, not crowd out, new and existing private providers and markets for nutrient offsets wherever they exist.
The scheme is due to open in the Autumn. All affected areas can continue to access practical support from the government and Natural England in meeting nutrient neutrality requirements. Natural England will deliver the scheme by establishing an ‘Accelerator Unit’, with the support of Defra, DLUHC, the Environment Agency and Homes England.
This announcement will support the delivery of the tens of thousands of homes currently in the planning system, by significantly reducing the cost of mitigation requirements. The mitigation scheme will make delivering those requirements much easier for developers.”
The possible bad news? Not so much bad news but an inspector’s appeal decision letter which confirms that the Habitats Regulations’ assessment requirements do not just apply when an application for planning permission is determined but, if an assessment was not carried out at that stage, at reserved matters/ conditions discharge stage. This is of course one of the huge current frustrations.
The decision letter, dated 24 November 2022, is here and is summarised by Landmark Chambers here.
Charlie Banner KC was for the appellant and his submissions were in line with an opinion previously provided for the HBF and widely circulated. The issues are not straight-forward and we wait to see whether the question will now come before the courts.
Short blog post this week – too busy, and to0 much football to watch.
Commentary about the Government’s adjusted direction for planning reform has been running on mist and speculation since Michael Gove’s return as Levelling Up Secretary of State on 25 October 2022, pending the Chancellor’s Autumn Statement on 17 November 2022.
But now it’s all systems go. As well as the Autumn Statement we now have:
The Secretary of State is due to appear before the LUHC Select Committee on 21 November and the Bill will have its report and third reading stages on 23 and 28 November before heading to the Lords.
The Autumn Statement itself contained little in relation to planning reform, other than to “refocus” investment zones:
“3.16 The government will seek to accelerate delivery of projects across its infrastructure portfolio, rather than focus on the list of projects that were flagged for acceleration in the Growth Plan. The government will continue to ensure that all infrastructure is delivered quickly through reforms to the planning system, including through updating National Policy Statements for transport, energy and water resources during 2023, and through sector-specific interventions.”
“3.25 The government will refocus the Investment Zones programme. The government will use this programme to catalyse a limited number of the highest potential knowledge-intensive growth clusters, including through leveraging local research strengths. The Department for Levelling Up, Housing and Communities will work closely with mayors, devolved administrations, local authorities, businesses and other local partners to consider how best to identify and support these clusters, driving growth while maintaining high environmental standards, with the first clusters to be announced in the coming months. The existing expressions of interest will therefore not be taken forward. The government is grateful to local authorities for their work to develop proposals.”
I recommend two good commentaries on the Autumn Statement:
The amendments tabled to the Levelling-up and Regeneration Bill are potentially significant. To quote from the 18 November 2022 press statement:
“Amendments being tabled will:
Tackle slow build out by developers to make sure much needed new homes are delivered. Developers will have to report annually to councils on their progress and councils will have new powers to block planning proposals from builders who have failed to deliver on the same land.
Improve our environment and enshrine in law an obligation on water companies to clean up our rivers by upgrading wastewater treatment works. Considering all catchments covered by the amendment, our initial estimates indicate that there will be around a 75% reduction in phosphorus loads and around a 55% reduction in nitrogen loads in total from wastewater treatment works, although this will vary between individual catchments. These upgrades will enable housebuilding to be unlocked by reducing the amount of mitigation developers must provide to offset nutrient pollution. This will be accompanied by a Nutrient Mitigation Scheme that will make it easier for developers to discharge their mitigation obligations.
Give residents a new tool to propose additional development on their street, like extensions to existing homes, through ‘street votes’. Planning permission will only be granted when an independent examiner is satisfied that certain requirements, such as on design, have been met and the proposal is endorsed at a referendum by the immediate community. Pilot Community Land Auctions – testing a new way of capturing value from land when it is allocated for development in the local plan to provide vital infrastructure, including schools, roads, GP surgeries, and the affordable housing that communities need.
Enhancing powers for mayors to support them to managing their key route networks and increase transport connectivity across their area.
Help Nationally Significant Infrastructure Projects such as wind farms and new major transport links be delivered more quickly, by enabling a small number of public bodies to charge for their statutory services to help them provide a better, reliable, quality of advice to developers and support faster planning decisions.”
There are some potentially controversial proposals here, for instance local planning authorities would be able to decline to determine an application for planning permission of any prescribed description if the application has been made by someone who “has a connection with” earlier development which “has begun but has not been substantially completed” and where the “local planning authority is of the opinion that the carrying out of the earlier development has been unreasonably slow”.
Begun but not substantially completed, unreasonably slow – sounds to me like the Government’s performance in relation to planning reform….
The press statement doesn’t mention an additional tabled amendment, which would empower the Secretary of State to make such amendments and modifications to existing planning, development and compulsory purchase legislation as in the Secretary of State’s opinion facilitate or are otherwise desirable in connection with their consolidation. That’s one hell of a Henry VIII clause! A Town Legal colleague commented to me that the Delegated Powers and Regulatory Reform Committee will certainly be interested in this one if it reaches the Lords.
More from me on a number of the proposals in due course. In particular, I had really hoped I would never have to tackle community land auctions (again) or street votes.
We still await any announcements about planning policy reform, including as to changes to the NPPF and the future of the standard method for calculating local housing needs. We were left to read between the lines of what was said by Levelling Up Under Secretary of State Dehenna Davison in a Westminster Hall 30 minute debate earlier in the week on housing targets (15 November 2022):
“I know I am preaching to the converted when it comes to the need to modernise our planning system, and I think all MPs understand and get that we need a planning regime that is fit for 2022. […] I also understand that Members are frustrated—they are right to be frustrated—that this has been under discussion not just for months, but for years. We need more houses, and that obviously brings with it an obligation on us in Government to be frank and straight with people that building more houses has implications, both positive and sometimes negative. In some places, it will cause tension, and in some places, it will be a source of relief, but it is our job to be willing to have that dialogue, regardless of how difficult it may be. I am not sure that Governments of all colours have always approached these kinds of conversations in the most productive way. The inconvenient truth is that, for the best part of two decades, demand has outstripped the supply of homes.“
“…If we can get our planning regime right, we can unlock a huge amount of economic growth locally. We want to help local authorities to adopt and implement the best planning approaches for their areas. To achieve that, local authorities will need to be able to better attract and retain planners […] and we want to work further with the sector on that. He was right to highlight that as one of the major challenges facing authorities at the moment.
To incentivise plan production and to ensure that newly produced plans are not undermined, the Government intend to make it clear that authorities do not have to maintain a five-year supply of land for housing where they have an up-to-date plan. As Members would expect, we plan to consult on that. The new measures should have a minimal impact on housing supply, given that newly produced plans will contain up-to-date allocations of land for development, but that will also send a signal that the Government are backing a plan-led approach, provided that those plans are up to date.
There is no getting around the fact that we are in a difficult economic time. We face headwinds from all angles—energy, inflation and interest rate rises—and those have knock-on implications for everything that the Government do, but to my mind, they only serve to underline the need to build more homes and to give generation rent the chance to become generation buy. That is why we have to stand by our commitment to dramatically ramp up housing supply and our manifesto pledge to build a million new homes within the first term of this Parliament”
For additional political colour (blue) see also Michael Gove’s keynote speech at the Centre for Policy Studies’ Margaret Thatcher Conference on growth (16 November 2022)
Resignation of Rishi Sunak as chancellor – 5 July 2022
Resignation of Boris Johnson as prime minister – 7 July 2022
Replacement of Boris Johnson by Liz Truss as prime minister – 6 September 2022
Death of Her Majesty – 8 September 2022
Mini-budget and publication of growth plan – 23 September 2022
Resignation of Liz Truss as prime minister – 20 October 2022
Replacement of Liz Truss by Rishi Sunak, Boris Johnson or AN Other as prime minister – October 2022
A lot has happened. Or perhaps, in our planning world, nothing has happened.
We briefly had a prime minister who talked of abolishing “top-down, Whitehall-inspired Stalinist housing targets” and indeed the Levelling Up Secretary of State Simon Clarke (who incidentally came out publicly today as a backer of Boris Johnson) spoke about those targets as if they had already been abolished. But of course, as we wait for the mythical NPPF changes prospectus (delayed to November even before the Truss resignation which could lead to further delay), formal policy remains as is. The only effect of the loose talk was to give cover to local authorities anxious for an excuse to pause their local plan making. Thanks Liz – it wasn’t just the markets that you spooked.
No doubt the change is on its way regardless but, honestly, how idiotic it would be to give up on having a methodology that identifies each local planning authority’s local housing needs, for which they should usually plan. The likely consequences of removing the targets are clear:
longer plan-making processes, particularly the examination stage
fewer homes delivered
more planning by appeal
plan-making increasingly largely driven by promises of funding to be provided and threats of funding to be removed. We can try to forget about that “pork markets” Truss quote but I suggest you retain at hand a much older phrase: “pork barrel politics”.
And what is wrong with top down targets anyway? Our health and education systems for instance are full of the things.
Away from housing, the announcements in the growth plan in relation to, for instance, fracking (pro – despite the planning minister Lee Rowley being strongly against) and solar energy (anti) have not get found their way into any formal policy changes.
I have scrolled through the amended Bill and aside from the detailed changes to schedule 11 (which relates to the infrastructure levy) mentioned by Nicola, and other minor tweaks, I would only draw attention to the following new provisions:
clause 111 – power to shorten the deadline for examination of DCO applications
clause 112 – additional powers in relation to non-material changes to DCOs
clause 152 – prospects of planning permission for alternative development [in the context of CPO compensation]
Next up will be Report stage and a debate on the Third Reading of the Bill and we shall see if any further amendments are tabled by the Secretary of State, whoever he or she may be at that stage.
“The government will look to introduce primary legislation in order to enable the offer on tax and simplified regulations. The final offer will be subject to the passage of that legislation through parliament.”
There really isn’t much clarity as to the nature and extent of any primary legislation that will in fact be required to deliver the regimes envisaged for each investment zone (potentially bespoke for that investment zone). When you add this to the wider confusion as to the relationship of the proposed Planning and Infrastructure Bill with the current Levelling-up and Regeneration Bill (with much of what was trailed for the former either already within the latter – eg environmental law reform – or shortly to be added by way of amendments.- eg amendments to NSIP processes – or able to be secured by way of secondary legislation), some clarity from Government is urgently needed.
Turning to the question of what amended planning regimes may be appropriate for some investment zones, people have rightly pointed to the potential use of local development orders, which for example the Government has previously encouraged in relation to enterprise zones and freeports.
However I’m wondering whether, instead of further primary legislation to set out some unspecified new procedure (which sounds slow and impractical), the Government has considered whether two provisions which are already on the statute book are in fact sufficient: simplified planning zones and planning freedoms schemes. Are ministers even aware of them? I would be interested in people’s experiences with either.
“Section 154: Planning freedoms: right for local areas to request alterations to planning system
441 This section enables the Secretary of State, by regulations, to make planning freedom schemes in England. Planning freedom schemes may only be made following a request from the local planning authority for the relevant area and only if the Secretary of State considers the scheme will lead to additional homes being built.
442 Before bringing forward proposals for a scheme the local planning authority must consult in their local area.
443 Such schemes will operate for a specified period (although subsection (7) includes the power to bring schemes to an end early, for example, where the local planning authority asks the Secretary of State to do so).
444 Planning freedom schemes will apply in relation to a specified planning area which will be the area of a local planning authority or an area comprising two or more adjoining areas of local planning authorities. The Secretary of State may restrict the number of planning freedom schemes in force at any one time.”
Is anyone aware of this, extremely open-ended, power ever having been used?
Planning legislation is full of these false starts and dead ends. I’m sure there’s plenty more that you can point to. Regardless of any substantive changes, a spring clean of the whole legislative framework is well overdue. Although who knows what we’ll find.
I hope people enjoyed listening to the clubhouse chat with Hashi Mohamed last week. If you missed it you can listen back here.
It’s good that this huge issue is attracting media attention – and I’ll come on to the Government announcement in a moment – but it is disappointing to see the usual “red tape” sneer.
The problem isn’t the rules or bureaucracy: we have specific areas designated of particular ecological importance and sensitivity, the integrity of some of which is under threat because of the existing levels of nutrients draining into them, from farming (eg fertilisers, animal waste) and from homes (human waste), and the integrity of others which is under threat due to the consequences of over-abstraction of water. These situations haven’t been adequately dealt with by the water companies or government agencies, meaning that even one more home being built in these catchment areas is considered by Natural England to be unacceptable without adequate mitigation in place (which can be difficult, particularly for smaller schemes). The problem isn’t the housebuilding, it’s the pre-existing precarious state of these areas.
It is a big problem, and it has been with us for a long time now (see my previous blog posts).
These are the main measures announced by the Secretary of State:
“In order to drive down pollution from all development in the relevant catchments, we will be tabling an amendment to the Levelling Up and Regeneration Bill. This will place a new statutory duty on water and sewerage companies in England to upgrade wastewater treatment works to the highest technically achievable limits by 2030 in nutrient neutrality areas. Water companies will be required to undertake these upgrades in a way that tackles the dominant nutrient(s) causing pollution at a protected site. We are also using feedback from the recent ‘call for evidence’ to water companies to identify where these upgrades could be accelerated and delivered sooner.”
Natural England is directed to establish a nutrient mitigation scheme. “Defra and DLUHC will provide funding to pump prime the scheme: this is intended to frontload investment in mitigation projects, including wetland and woodland creation. This will then be recouped through a simple payment mechanism where developers can purchase ‘nutrient credits’ which will discharge the requirements to provide mitigation. Natural England will accredit mitigation delivered through the Nutrient Mitigation Scheme, enabling LPAs to grant planning permission for developments which have secured the necessary nutrient credits…We will announce further details in the autumn when the scheme will launch, and in the meantime, Natural England will be in touch with local authorities and developers.”
“Longer term, we continue to progress proposals to reform the Habitats Regulations so that impacts on protected sites are tackled up front, focusing on what is best for bringing sites back into favourable status.”
“We will make clear in planning guidance that judgements on deliverability of sites should take account of strategic mitigation schemes and the accelerated timescale for the Natural England’s mitigation schemes and immediate benefits on mitigation burdens once legislation requiring water treatment upgrades comes into force. DLUHC will revise planning guidance over the summer to reflect that sites affected by nutrient pollution forming part of housing land supply calculations are capable of being considered deliverable for the purposes of housing land supply calculations, subject to relevant evidence to demonstrate deliverability. It will be for decision takers to make judgements about impacts on delivery timescales for individual schemes in line with the National Planning Policy Framework.”
Joanna Averley’s letter goes into more detail as to how the proposed new statutory duty on water companies will help:
“The majority of nutrient pollution from residential properties enters waterbodies via treated discharges from wastewater treatment works (WWTW). The performance of WWTW varies based on the limits in environmental permits issued by the Environment Agency, which in turn reflect the environmental requirements of the waterbodies to which the effluent is discharged. The performance of WWTW is therefore the central factor in the level of nutrient pollution associated with existing homes and new development. It is therefore logical that effort on reducing nutrient pollution associated with housing focusses on upgrading WWTW. The statutory obligation for upgrading WWTW, which will be introduced into the LURB, will ensure that WWTW in nutrient neutrality catchments are operating at the highest level of performance, rectifying nutrient pollution at source. This will reduce the pollution from not only new development coming forward, but also from the majority of existing dwellings in affected catchments, representing a significant decrease in overall pollution from housing.
The specific performance levels of the connected WWTW is a major variable when determining the amount of mitigation new development has to secure to achieve nutrient neutrality. Suitable mitigation measures might include constructed wetlands or land use change, which can be land intensive. Under Natural England’s Nutrient Neutrality methodology, the permit limit is used, or where there is no permit limit on nutrient discharges from WWTW, a standard precautionary figure is used (8mg/l for phosphates (P) and 27mg/l for nitrates (N)). The statutory obligation from 2030 will require WWTW to operate at the technically achievable limit (TAL); for phosphates this is 0.25mg/l and nitrates 10mg/l. This action will ameliorate nutrient pollution and significantly reduce the mitigation burden for developments.
The habitat regulations require that mitigation be secured for the lifetime of the development which Natural England consider to be 80-120 years. The obligated upgrades to WWTW required from 2030; will provide clarity from the point of the LURB measures coming into force. For developments this means that the current high level of mitigation will only be required up to the end of 2030. After 2030, the pollution levels via WWTW will be much reduced and so a lower level of mitigation will be required. This reduces the overall mitigation burden on housing developments coming forward in nutrient neutrality catchments.”
This should be welcomed (even if it is so belated and does raise questions as to whether water companies will actually be able to deliver – and at whose cost) but of course there is still the period to 2030 before these new permit limits apply and so it is important that the promised nutrient mitigation scheme is up and running as soon as possible. Housing Today have raised significant concerns on that score in their piece, Government’s nutrient mitigation scheme ‘years away’ (22 July 2022)
Finally, the ministerial statement sets out unambiguously the Government’s position as to whether the Regulations bite on reserved matters applications and applications to discharge pre-commencement conditions: “The Habitats Regulations Assessment provisions apply to any consent, permission, or other authorisation, this may include post-permission approvals; reserved matters or discharges of conditions.” Joanna Averley’s letter promises further planning practice guidance on this issue.
In the meantime, there is no Planning Law Unplanned clubhouse event this week but I am speaking at a clubhouse event arranged by Iain Thomson of Bellona Advisors for 6pm on Monday 25 July 2022 on the subject of Strategic Rail Freight Interchanges, alongside writer Gareth Dennis and Intermodality’s Nick Gallop – join here. And for a taster of what we may cover, here’s Iain’s recent SRFIs blog post.
I was left feeling that the nuances of how our wretchedly complicated, but still, at some level, functional system are lost in the political chatter. Of course, these sessions aren’t “debates” as such but in large measure a long succession of disjointed interventions and special pleading. Has anyone yet coined the term NIMC? There was certainly a lot of “not in my constituency” and very little discernible appreciation of the utter reliance of this country on private sector risk-taking and funding for most new homes (regardless of tenure) and employment-generating development. How can the development of 300,000 homes a year (confirmed by Michael Gove in Select Committee on 13 June 2022 still to be the target) be remotely possible in this political and fiscal climate? So many MPs assert the case for a lower target for their particular constituency: we know what underlies the clamour against centralisation of power (a theme we’ll come back to shortly). Development is held again and again to be the culprit for failing public services, lack of infrastructure, waiting lists at GPs’ surgeries and so on – ahem, it’s new development that ends up paying for much of this – existing residents should look rather at the ways in which the Government chooses to manage and fund the provision of health care and other services. And if the complaint is not that new residents are overwhelming local services (not true) it’s that developers are securing permissions and then choosing not to building them out (not true, although there are certainly unnecessary delays largely caused by the clunkiness of the planning system itself: you want to amend your development proposals to reflect the inevitable market changes or regulatory requirements since you first applied for planning permission years ago? Well that’s not going to be a simple process at all my friend). (Beauty as a way to securing greater acceptance of development? Despite the Government having alighted upon that particular agenda, driving the proposals around local design codes for instance, that issue seemed to receive little airtime).
The Bill entered Committee stage on 21 June 2022. The Public Bill Committee first heard evidence from various witnesses and then started line by line consideration of the Bill on 28 June 2022. They have not yet reached the planning provisions but the transcript of the discussion so far is here.
The Levelling-up, Housing and Communities Select Committee, chaired by Clive Betts MP, is holding a mini inquiry into the Bill. Michael Gove MP, Stuart Andrew MP and Simon Gallagher all gave evidence on 13 June 2022, which was slightly more illuminating. For instance, an exchange in relation to design codes from the session:
“Chair: Are we going to have the same level of consultation on the supplementary plans and design codes [as on the local plan]?
Simon Gallagher: Yes. One of the objectives of design codes is that they are locally popular, which is going to require a degree of engagement. Supplementary plans are created as one of the vehicles by which there would be opportunity for proper engagement, or legal force design codes. One of the problems with design codes at the moment is that they are often produced as supplementary planning guidance, which has no legal force.
One thing we have done in the Bill, subject to Parliament’s views, is to create something that is a legal device, a supplementary plan, which must be consulted on. Design codes must be provably popular and we are using the Office for Place to champion the best means of that community engagement.”
One of the themes that has dominated discussion of the Bill has been a concern that it could lead to a centralising of power, for instance by way of the requirement that decisions should be made in accordance with national development management policies (as well as local plans), unless material considerations “strongly” indicate otherwise – thereby putting this potentially amorphous concept of national development management policies (the extent of which is for the Government to determine and which can be added to or amended by the Government with as little prior consultation as it chooses) on the same level as statutory local plans.
“a) The Bill represents a significant change to the existing planning system. It undermines an important planning principle, the primacy of the development plan, by elevating national development management policies to the top of the planning hierarchy.
b) Unlike development plans, which are produced locally via a statutory process that involves considerable public participation, the Bill contains no obligation to allow the public to participate in the development of national development management policies.
c) The Bill also introduces two new development plan documents, spatial development strategies and supplementary plans. The Bill provides for very limited opportunities for public participation in the production of these documents.
d) The Bill introduces a new mechanism to allow the Secretary of State to grant planning permission for controversial developments, bypassing the planning system entirely. There is no right for the public to be consulted as part of this process.
e) Overall, in our view the Bill radically centralises planning decision-making and substantially erodes public participation in the planning system.”
Clive Betts pursued this theme with the witnesses on 13 June 2022:
“Chair: I am told that this is new in the way it is written into legislation. We have had very interesting legal advice from Paul Brown QC and Alex Shattock from Landmark Chambers, and it might be helpful if the Committee wrote to you with some of the questions that they have raised, which are pretty serious accusations of a centralisation that these measures are bringing about.
Michael Gove: Of course, I would be more than happy to explain the position and, indeed, any distance that these proposals place between themselves and the existing practice. I do not believe that they do significantly, but I am very happy to engage with the advice that the Committee has sought, and with others as well.
Simon Gallagher: Just to add to that, the Secretary of State referred a few minutes ago to the national planning policy framework prospectus that we were going to publish in July. We intend to set out in that how we can use these powers most effectively. That will give us the basis for proper engagement. I accept that, on the face of the Bill, it is a bit hard to read our intentions, so we need a little bit more detail and explanation out there, which will help.”
There was a further session on 20 June 2022, with evidence given by Victoria Hills RTPI), Hugh Ellis ((TCPA)and Chris Young QC.
Clive Betts’ has subsequently written to Michael Gove asking for his response by 4 July 2022 to a number of points in the “opinion” by Paul Brown QC and Alex Shattock (NB for what it’s worth, it’s not an opinion – barristers are careful in their use of language, it’s just a briefing note).
This month we can also expect to see the Government’s prospectus as to its intended approach to revising the NPPF as well as how it intends to draw up its national development management policies.
We are going to be running our own discussion on Clubhouse on the “who will have the power?” question, at 6 pm on 19 July. More details soon but do join here. Indeed, if you would like to speak do let me know – we would like a diverse range of voices and views.
I will also be speaking at the National Planning Forum event “The good, the bad and the beautiful – the Levelling Up and Regeneration Bill – a planning panacea?” on 5 July and hope to explore the issues a little further alongside an excellent panel of fellow speakers.
There has been much consternation in some circles about DLUHC’s 6 June 2022 consultation paper Compulsory purchase – compensation reforms: consultation which, amongst other things, proposes introducing an amendment to the Levelling-up and Regeneration Bill so as to “to allow acquiring authorities to request a direction from the Secretary of State that, for a specific scheme, payments in respect of hope value may be capped at existing use value or an amount above existing use value where it can be shown that the public interest in doing so would be justified.”
Key passages from the consultation paper:
“29. An option for the framework of seeking a direction might be as follows:
a. Before a public sector acquiring authority:
a. makes a CPO; or
b. applies for other types of Order seeking compulsory purchase powers,
it may apply for a direction from the Secretary of State in relation to a specific scheme.
b. The direction sought may, in relation to the proposed scheme, have the effect of:
a. taking no account of AAD [appropriate alternative development] in a valuation; or
b. limiting the payment of any effect of AAD to no more than a specific percentage over the existing use value.
c. In seeking a direction from the Secretary of State, the authority would need to:
a. identify the scheme;
b. provide details of the estimated land value that would be captured as a result of issuing a direction for the scheme; and
c. evidence how that land value would be applied to the scheme for the public benefit and/or how certainty over the level of compensation payments in respect of prospective planning permission will benefit the scheme.
d. In considering an application for a direction then Secretary of State may appoint a person with requisite expertise to make a recommendation as to whether to issue a direction.
e. Any disputed compensation that relates to AAD would be settled by the Upper Tribunal (Lands Chamber) on the basis of the terms of the direction.”
“…we would welcome views as to whether the proposals set out should go further and look to cap or remove hope value generally or in relation to specific types of schemes. “
“Should the government decide, following consideration of the consultation responses, to take forward this proposal, our intention is for the power to make such directions to be introduced as an amendment to the Levelling-up and Regeneration Bill.”
Land owners, wherever their land is in England and Wales, may find that it can be compulsorily acquired at less than market value. And, on the subject of market value, what effect will that risk have on the value attributed to land in the first place (above existing use value)?
“The Government agrees that there is scope for central and local Government to claim a greater proportion of land value increases. The Government’s priority is delivery, in line with the Housing Minister’s commitments to provide more higher quality housing more quickly.
Changes to land value capture systems can have profound impacts on the land market in the short term, even where they are sensible for the longer term. Accordingly, the Government’s priority is to evolve the existing system of developer contributions to make them more transparent, efficient and accountable. It will of course continue to explore options for further reforms to better capture land value uplift, providing it can be assured that the short-run impact on land markets does not distract from delivering a better housing market.”
“To further incentivise councils to build, the Conservatives also intend to reform compulsory purchase rules to allow councils to buy brownfield land and pocket sites more cheaply. At the moment, councils must purchase land at “market value”, which includes the price with planning permission, irrespective of whether it has it or not. As a result, there has been a more than 100% increase in the price of land relative to GDP over the last 20 years and the price of land for housing has diverged considerably from agricultural land in the last fifty years. Between 1959 and 2017, agricultural land has doubled in value in real terms from £4,300 per acre to £8,900 per acre, while land for planning permission has increased by 1,200%, from £107,000 to just over £1,450,000. Local authorities therefore very rarely use their CPO powers for social housing, leaving derelict buildings in town centres, unused pocket sites and industrial sites remain undeveloped.”
The proposals have grown over time – this is no longer simply about brownfield land and “pocket sites”.
What do we think? Will this be a workable tool that might enable authorities to secure development with reduced land costs such that affordable housing and other essential social and physical infrastructure can be provided? Or a proposal that will give rise to more heat (litigation) than light and that interferes unacceptably with the rights of land owners as against the rights of society more generally?
There are so many angles to this: political, economic, commercial and legal. Which make this an ideal topic for our next clubhouse session: 5pm on Wednesday 15 June 2022. We will have an array of well-known commentators, including Rebecca Clutten QC, Caroline Daly, Raj Gupta, Colin Cottage, Henry Church and Richard Asher. Link here.
And if you missed our webinar last week “Will the Bill deliver more or less housing? Yes or no?” featuring Simon Gallagher (Department of Levelling Up, Housing and Communities), Zack Simons (Landmark Chambers), Kathryn Ventham (Barton Willmore now Stantec) Meeta Kaur and myself, there’s a youtube link here.
8.1 Part 4 of the Bill introduces a charge to be known as the “Infrastructure Levy” in England. In addition the Secretary of State is given the power to designate the HCA a charging authority for the purposes of the Infrastructure Levy.
8.2 The Community Infrastructure Levy (CIL) is abolished in England, other than Mayoral CIL which continues to exist in Greater London.
8.3 CIL continues to apply in Wales.
8.4 Schedule 11 of the Bill inserts new sections 204A to section 204Z1 into the Planning Act 2008 (“PA 2008”) giving the Secretary of State the power to make regulations (IL regulations) providing for the imposition in England of the Infrastructure levy. The regulation-making power creates the framework for an IL regime that looks is strikingly similar to CIL in some respects, but with some significant differences. Key features:
(a) Like CIL, LPA to be IL charging authority and IL regulations can so designate other councils and bodies as well;
(b) Like CIL, a person will be able to assume IL liability before development commences, and becomes liable when development commences;
(c) Like CIL, the IL regulations must make provision for liability when no-one has assumed liability;
(d) Like CIL, the IL regulations may make provision about matters such as partial liability, apportionment of liability, transfer of liability and exceptions from and reductions in liability;
(e) Like CIL, IL to be calculated when development “first permits development”, and IL becomes due on commencement [but Regulations may provide for it to be paid on account or in instalments];
(f) Like CIL, “development” is a defined term and IL regulations must define planning permission, define the time at which the planning permission is regarded as first permitting development;
(g) Like CIL, IR regulations must make a charitable exemption where the building is wholly or mainly used for charitable purposes, and may provide for charitable exemption in other circumstances;
(h) A charging authority must issue a charging schedule and in setting rates must have regard to the level of affordable housing funding from developers over a given period, the economic viability of development, the potential economic effects of including land value increase of certain matters, the amount of IL received from developments over a given period and the charging authority’s infrastructure delivery strategy;
(i) Unlike CIL, the IL regulations may allow for a much wider variety of approaches to rate-setting: differential rates for different uses or zones areas; nil or reduced rates; rates calculated not just by floorspace but by numbers of units, buildings, or by allocation of space within units or buildings, or in any other way;
(j) Unlike CIL, IL is to be charged as a proportion of property value (this has not yet been fully fleshed out);
(k) Like CIL, charging schedules must be subject to public examination procedures;
(l) IL to be applied in the same way as CIL, to fund the provision (etc) of infrastructure to support the development of the charging authority’s area. “Infrastructure” includes affordable housing (as the PA 2008 did before that reference was removed by the CIL Regulations), and the regulation-making power still includes power to amend the definition of infrastructure for IL purposes;
(m) Unlike CIL, there is an interesting “relationship with other powers” paragraph (para 204Z1), under which the IL regulations may include provision about how the following powers are to be used or are not to be used:
(i) Part 11 of the PA 2008 on CIL;
(ii) section 70 TCPA 1990 (planning permission);
(iii) section 106 TCPA 1990 (planning obligations); and
(iv) section 278 Highways Act 1980 (execution of works).
8.5 The Policy Paper explains further that it is the Government’s intention indeed to reduce the scale of s106 planning obligations so that s106 agreements will be used:
(1) on the largest sites in place of IL (provided that the value of the infrastructure being provided in that way is not less than that which would be achieved under IL); and
(2) on other sites where “narrowly focused” s106s will be used to provide onsite infrastructure.
8.6 The Policy paper also makes reference to removing the role of negotiations in delivering affordable housing, suggesting that the Government’s intention is that AH will be delivered through the IL.”
As set out in the policy paper, when providing for the detailed regime by way of Regulations, the Government will:
• Introduce a new ‘right to require’ to remove the role of negotiation in determining levels of onsite affordable housing. This rebalances the inequality between developers and local authorities by allowing local authorities to determine the portion of the levy they receive in-kind as onsite affordable homes.
• Consider how the Levy should be applied to registered provider-led schemes.
• Require developers to deliver infrastructure integral to the operation and physical design of a site – such as an internal play area or flood risk mitigation. Planning conditions and narrowly targeted section 106 agreements will be used to make sure this type of infrastructure is delivered.
• Detail the retained role for section 106 agreements to support delivery of the largest sites. In these instances, infrastructure will be able to be provided in-kind and negotiated, but with the guarantee that the value of what is agreed will be no less than will be paid through the Levy.
• Retain the neighbourhood share and administrative portion as currently occurs under the Community Infrastructure Levy.
• Introduce the Levy through a ‘test and learn’ approach. This means it will be rolled out nationally over several years, allowing for careful monitoring and evaluation, in order to design the most effective system possible.
By way of IL the Government is attempting to extend the Community Infrastructure Levy, massively, in three directions:
(a) to make local planning authorities responsible for the delivery of affordable housing, using funds raised by the levy – meaning that the monies raised from development will be at many multiples of current CIL rates.
(b) to charge the levy on the basis of gross development value rather than floorspace.
(c) to make introduction of the levy compulsory.
I have now read the relevant parts of the Bill (sections 113 to 115 and Schedule 11), explanatory notes and policy paper many times and I must confess that there is much that I still don’t understand or which is still a blur pending further detailed work.
“The process for negotiating developer contributions to affordable housing and infrastructure is complex, protracted and unclear: as a result, the outcomes can be uncertain, which further diminishes trust in the system and reduces the ability of local planning authorities to plan for and deliver necessary infrastructure.”
“Securing necessary infrastructure and affordable housing alongside new development is central to our vision for the planning system. We want to bring forward reforms to make sure that developer contributions are:
• responsive to local needs, to ensure a fairer contribution from developers for local communities so that the right infrastructure and affordable housing is delivered;
• transparent, so it is clear to existing and new residents what new infrastructure will accompany development;
• consistent and simplified, to remove unnecessary delay and support competition in the housebuilding industry;
• buoyant, so 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.” (paragraph 4.5)
Now that we see what is emerging, I do not believe that anyone is suggesting that IL will be simpler than CIL. Undeniably it will be more complex (and indeed in London we will need to grapple both with CIL and IL – the work is doubled).
But I am concerned that it will be less predictable as well. Why does predictability matter? The main inflexion points in a typical development are as follows:
1. the contract to acquire the property, pricing-in likely development costs, including CIL/IL
2. scheme formulation so as to arrive at a proposed quantum and mix of development which is likely to be financially viable whilst working within likely planning constraints
3. negotiation of section 106 agreement and conditions such that permission can be issued
4. securing development funding and potential pre-lets and land parcel sales
5. letting the construction contract
6. sale of completed development, whether individual plot/flat sales or investment disposal.
If a reliable estimate of IL liability is not available for stages 1 to 3 and a concluded figure, which can relied upon as a final outcome, is not available for stages 4 to 6, development becomes much more difficult. How do you price, allocate risk and enable each party to the development to decide whether they are prepared to press the button?
The current proposals seem very blurred so far as to how and when gross development value, and therefore the amount of IL payable having regard to any relevant local thresholds, will be determined.
In terms of “how”, will it be for each developer to submit its valuer’s estimate of GDV for the completed development (or relevant completed phase), presumably prior to commencement of development? Or will there be some independent assessment? Or will there be any standardised values (for instance for development below a defined scale or value)? It is difficult enough with CIL where the moving parts are floorspace levels for each use plus the application of reliefs and exemptions. To these moving parts will now be added the inherent subjectivity that comes with valuation (accentuated where you have a type of development without readily available comparables, or subject to unusual restrictions or constraints?) and then the application of so far undefined thresholds – building costs for the area have been mentioned, but what about, for instance, existing pre-development land values (and will these be sufficiently site-specific)? The number at stake will also be much larger than is currently the case with CIL. Each process is going to be strongly argued over as the outcome will directly impact the financial bottom line of the developer and, ultimately, project viability.
In terms of “when”, will we be able to go “nap” on a figure at commencement of development or is the figure to be revisited on development completion or sale? Will any procedures for review or appeal carry on after development has commenced or will commencement of development be the cut-off?
If the authority subsequently requires affordable housing to be provided in the scheme by way of the “right to require”, how does this get taken into account in the calculation of GDV?
At what stage will a developer have certainty that a scheme is regarded as sufficiently large or strategic for IL not to apply? Can he opt in or out? Will there be local thresholds (which would inevitably influence scheme size, depending whether IL was regarded as a more or less advantageous mechanism than simply relying on section 106)?
It seems that “in kind” section 106 or other types of agreements will be required but the actual quantum of IL attributable to the development will not be known for certain at the stage the section 106 agreement is completed.
Will an authority’s targeted quantum of affordable housing, both borough/district wide and for particular areas or sites, be set out in its local plan, or infrastructure delivery statement? And will developers in future be bringing forward development proposals without reference to any anticipated affordable housing element? The local messaging is going to be complicated.
How rigorously will IL charging schedules be examined? The underlying valuation work and the thresholds to be applied will be critical.
How can we make sure that IL proceeds are used in the right way and that more affordable housing is indeed delivered, as well as the infrastructure needed to enable particular development proposals to come forward without delay?
Will the system be robust and workable in appeal situations where the developer and authority may not necessarily see eye to eye?
It is going to be fascinating to work through these sorts of issues as the proposals take shape. At this stage, what protections do we want to see in the Bill itself to safeguard against the detailed regime subsequently not living up to the Government’s promises? The Government’s commitment to a “test and learn” approach to the introduction of IL is welcome but of course risks adding to complexity by creating a patchwork of different processes dependent on geography and/or when schemes come forward – and accepts that there are inevitably going to be mistakes and unanticipated outcomes along the way.
I wasn’t particularly planning to run a clubhouse session this Tuesday but if anyone would like to join a discussion on these sorts of issues, let’s re-think that. Let me know!
Finally, another plug for the Town Legal/Landmark Chambers webinar at 5 pm on Monday 6 June back on the theme of housing: “Will the Bill deliver more or less housing? Yes or no?” Simon Gallagher (Department of Levelling Up, Housing and Communities) will join Zack Simons (Landmark Chambers), Kathryn Ventham (Barton Willmore now Stantec) and myself in a session chaired by Town Legal’s Meeta Kaur. Join us here.
My Town Legal colleagues have put together a fantastic (I think) 17 page summary of the main planning and compulsory purchase provisions of the Bill. Thanks Safiyah Islam and the following contributors:
• Part 3, Chapter 1 – Planning Data – Aline Hyde
• Part 3, Chapter 2 – Development Plans – Emma McDonald
• Part 3, Chapter 3 – Heritage – Cobi Bonani
• Part 3, Chapter 4 – Grant and Implementation of Planning Permission – Lucy Morton
• Part 3, Chapter 5 – Enforcement of Planning Controls – Stephanie Bruce-Smith
• Part 3, Chapter 6 – Other Provision – Stephanie Bruce-Smith
• Part 4 – Infrastructure Levy – Clare Fielding
• Part 5 – Environmental Outcomes Reports – Safiyah Islam
• Part 6 – Development Corporations – Amy Carter
• Part 7 – Compulsory Purchase – Raj Gupta
* Relevant clauses in Part 2 (Local Democracy and Devolution), Part 8 (Letting by Local Authorities of Vacant High-Street Premises), Part 9 (Information About Interests and Dealings in Land) and Part 10 (Miscellaneous) – Victoria McKeegan
If you would like to receive further detailed updates from time to time please email firstname.lastname@example.org.
I held a Clubhouse session on 12 May 2022 where I discussed the changes and their possible implications alongside Catriona Riddell, Phil Briscoe, Nick Walkley and Meeta Kaur. It is available to listen to here.
For a deeper dive into the compulsory purchase elements, do join our next Clubhouse session at 6 pm on Tuesday 17 May 2022, where my colleagues Raj Gupta and Paul Arnett will be leading a discussion with special guests Charles Clarke (DLUHC, previous chair of the Compulsory Purchase Association), Henry Church (CBRE, and current chair of the Compulsory Purchase Association), Caroline Daly (Francis Taylor Building), Virginia Blackman (Avison Young) and Liz Neate (Deloitte). Some line up! Join here.
Raj and Paul have also started a blog, Compulsory Reading, focused on CPO issues. The first post is here and, guess what, this will be compulsory reading if your work touches at all on the intricate and changing world of compulsory purchase law.
Phew! So what was I getting at in the heading to this post? Surely any fule kno that there was once a government white paper in August 2020 that, amongst other things, proposed a more zonal approach to planning – with local plans throwing all areas into three hoppers: protected, restricted and growth – but that the political lesson learned was that this would be a vote loser and so the zonal approach was abandoned by incoming Secretary of State Michael Gove in the wake of the Chesham and Amersham by-election?
The idea of growth areas (where allocation would amount to automatic development consent) has certainly been abandoned, but the consequence of a number of the proposals in the Bill in my view leads us more towards a system where there is much less decision making flexibility in relation to individual planning applications and appeals. Instead, planning decisions will need to be made in accordance with the development plan and national development management policies “unless material considerations strongly indicate otherwise”.
So developers will need to make sure that:
⁃ development plans (local plans, neighbourhood plans) etc allocate the necessary land.
– the associated mandatory local design codes are workable
⁃ they can work within the constraints of whatever national development management policies the Government arrives at.
If development accords with these requirements, planning permission should be a doddle. If not, you plainly need to overcome a heavy presumption against. Our current flexible system (sometimes good, sometimes bad) will take a big lurch towards being rule-based or, dare I say it, zonal.
This may be a Good Thing or it may be a Bad Thing. Much depends on whether development plans, local design codes and national development management policies are properly tested for their realism. There will be even more focus on testing the soundness of local plans.
However, when it comes to local plan making, there are some major unresolved uncertainties:
⁃ First, what housing numbers do local authorities need to plan for? The Government still aspires to a 30 month local plan preparation to adoption timescale but that is only going to work if you have a largely “plug in and play” approach to the numbers, as was envisaged in the White Paper. What will happen to the standard methodology? We don’t get know. The Government’s policy paper says this:
“The changes in the Levelling Up and Regeneration Bill will require a new National Planning Policy Framework for England. The Government continues to listen to the representations of MPs, councillors and others on the effectiveness not only of the formula but the surrounding policies. Alongside Committee stage of the Bill, it intends to publish an NPPF prospectus setting out further thinking on the direction of such policies.”
What numbers are we planning for as a country? Are we still targeting 300,000 homes a year? The Government’s response to the Select Committee report on the planning white paper says this:
“The Government is determined to create a market that builds the homes this country needs. Our ambition is to deliver 300,000 homes per year on average and create a market that will sustain delivery at this level. There is compelling evidence that increasing the responsiveness of housing supply will help to achieve better outcomes. There seems to be consensus that 250,000 to 300,000 homes per annum should be supplied to deliver price and demand stability. For example, a 2014 joint KPMG and Shelter report highlighted that 250,000 homes per annum were needed to address price and demand pressures.”
⁃ Secondly, what will replace the duty to co-operate, which will be abolished? What will the new duty to assist really amount to? Can authorities adjoining urban areas with high unmet housing needs simply turn away from meeting those needs?
⁃ Thirdly, what if the allocations in the plan prove to be undeliverable or do not come forward? The safety net/potential stick of the five year housing land supply requirement (and presumably the tilted balance) in the case of up to date plans is to be abolished according to the policy paper:
“To incentivise plan production further and ensure that newly produced plans are not undermined, our intention is to remove the requirement for authorities to maintain a rolling five-year supply of deliverable land for housing, where their plan is up to date, i.e., adopted within the past five years. This will curb perceived ‘speculative development’ and ‘planning by appeal’, so long as plans are kept up to date. We will consult on changes to be made to the National Planning Policy Framework.”
Much is to be resolved here before we can begin to work out whether the proposals in the Bill will be an improvement on the present position.
Of course, the Government recognises that more work is needed. The following forthcoming consultation processes are identified:
“Technical consultations on the detail of the Infrastructure Levy and changes to compulsory purchase compensation.
• A consultation on the new system of Environmental Outcomes Reports which will ensure we take a user-centred approach to the development of the core elements of the new system, such as the framing of environmental outcomes as well as the detailed operation of the new system.
• A technical consultation on the quality standards that Nationally Significant Infrastructure Projects will be required to meet to be considered for fast-track consenting and associated regulatory and guidance changes to improve the performance of the NSIP regime.
• Proposals for changes to planning fees.
• Our vision for the new National Planning Policy Framework (NPPF), detailing what a new Framework could look like, and indicating, in broad terms, the types of National Development Management Policy that could accompany it. We will also use this document to set out our position on planning for housing, and seek views on this, as well as consulting on delivering the planning commitments set out in the British Energy Security Strategy.”
I hope this serves as some sort of introduction to the Bill and a taster as to some of the issues which will be occupying so many of us as the Bill passes through its Parliamentary stages. I don’t expect it to be on the statute book before early 2023, with a fair wind, and most of its provisions will not be in force until 2024 at the earliest. Final health warning: Bills change – we can expect plenty of amendments, omissions and additions over coming months.
Aside from my earlier plugs for our newsletters and the Planning Law Unplanned clubhouse sessions, I would also recommend two other blog posts: those of Nicola Gooch and Zack Simons . None of us has come up with a satisfactory LURB pun yet but I’m sure we all have our teams working on it.