Daniel Smyth.

Q12 The Chair: Welcome back, everybody, to the Built Environment Committee. Our second witness is Mr Daniel Smyth, who is the director and head of environment at Savills. In order to be able to get through the material, if Members could be brisk in their questions and, similarly, if our witness could be fairly brisk in his answers, that would be helpful.

We are speaking to you as the director of development of a company that, amongst other things, advises applicants for planning permission on planning law and the obtaining of planning permission. From that perspective, what environmental regulations need to be considered when undertaking development, and how are they recognised and prioritised by developers as they prepare themselves for an application?

Daniel Smyth: In preparing for an application, a whole range of environmental regulations need to be taken into account. We heard earlier about environmental impact assessments, and there are regulations that cover those and the processes to follow. There are regulations covering air quality, ecology, contaminated land and water quality, there are building regulations, and there are climate budgets.

Importantly, we have also heard about the habitats regulations, which is where things like nutrient neutrality and the protection of development around special protection areas come from. There are environmental permits for industrial processes, and now we also have things like biodiversity net gain.

Developers also need to consider the local policies in the area in preparing their applications, and information needs to be submitted to inform the decision-maker, whether it is for an ordinary planning application under the Town and Country Planning Act or for a more substantial development that is subject to an environmental impact assessment.

The Chair: Thank you. I remind the committee that, in order to keep our scope fairly focused, we will not be discussing building regulations or regulations of industrial processes. All the other regulations that Mr Smyth mentioned are very much in our remit.

Q13 Baroness Cohen of Pimlico: It almost makes one sorry for developers—just. When, during the development process, is anybody most likely to encounter the environmental regulations? What is the hierarchy by which developers will tackle them?

Daniel Smyth: These all need to be tackled at the application stage. The information that needs to be submitted to the decision-maker needs to accompany the application. I will say a bit more about the environmental impact assessment and then perhaps touch on what is required for a Town and Country Planning Act application.

There are two types of environmental impact assessment. Schedule 1 to the regulations sets out the types of project for which an environmental impact assessment is mandatory. Schedule 2 has a list of projects for which an environmental impact assessment is discretionary. There is some argument that the list in Schedule 1 is too long and that some projects are subject to an environmental impact assessment that do not really warrant it. One example is battery storage. That has been taken out of the regime now, for good reason, but an environmental impact assessment has been required for battery storage projects.

The Chair: When you say discretionary, you mean at the discretion of the applicant.

Daniel Smyth: At the discretion of the decision-maker.

The Chair: Right. I see. There is a big difference.

Daniel Smyth: It is not at the discretion of the applicant but at the discretion of the decision-maker, which will be the local planning authority for most discretionary environmental impact assessment projects.

The scope of the environmental impact assessment is usually agreed with the authority through a scoping exercise, and a scoping opinion is provided. The applicant will submit the scoping request to the authority, setting out what the applicant thinks should be covered in the scope of the environmental impact assessment. The authority will usually take a precautionary approach in relation to what is required to be assessed. That tends then to widen the scope of the assessment and to lead to disproportionate environmental impact assessments, which subsequently wind up assessing lots of insignificant effects rather than the likely significant effects that it is supposed to concentrate on.

The Chair: Does anybody read them?

Daniel Smyth: It is very difficult to read the whole thing. They are massive, costly, time-consuming, complex and subject to challenge, and they are voluminous documents, so they are quite difficult to read. They are accompanied by the non-technical summary, which should be straightforward, but a lot of scientific work goes into environmental impact assessments, so assessing it properly is quite complicated.

Secondly, where an environmental impact assessment is discretionary, again the authority will tend to take a precautionary approach and require assessment where there is any uncertainty. One example, as I mentioned, is the battery storage project for which, under the previous regime, an environmental impact assessment was required part-way through the process after the application had been submitted. That caused delay. Subsequently, permission was refused, causing further delay—and this is infrastructure that is urgently needed to balance the grid to deal with the intermittency of renewable energy generation.

Touching on another of your questions, delay at an advanced stage of a project is very expensive and can cause a project to fail on its own.

Q14 Lord Best: My question is about administering the range of environmental regulations.

Turning this around a bit, who exactly are Savills’ clients meeting and discussing these issues with? Who are they facing up? Do they ever see anyone from Natural England or the Environment Agency? I am sure they never meet anybody from the Office for Environmental Protection. How does it look from the perspective of your clients? Who are they dealing with, and how are they finding the planners, for example, who we hear are so badly underresourced?

Daniel Smyth: Resourcing is a huge problem, in statutory bodies as well as planners in local authorities. Probably the biggest problem facing developers is obtaining good feedback through the process from the statutory bodies, which have no incentive to respond, and from planning authorities. It is quite difficult to obtain that face time and good, meaningful interaction with the planning authority and regulatory bodies. When you multiply all that by lots of regulatory bodies, it becomes very difficult.

It is administered by the planning authority, so the planning authority is under a duty to consult with the statutory bodies, but often that means that you get the problem of a message being communicated accurately. Developers do want to meet the regulatory bodies and obtain that direct feedback. That is facilitated by an environmental impact assessment when the scoping exercise is done, but it is difficult. That is a major problem in the development process.

The Chair: And the difficulty of getting meetings, meetings being cancelled, people not being available.

Daniel Smyth: Absolutely.

Lord Best: Ninety-nine per cent of this is the local authorities in the middle, sometimes with the other statutory bodies behind them. That is where all the friction, all the issues, comes. The front line is the local authority planning officers, or lack of.

Daniel Smyth: And their experience and capability to make decisions. They tend to sit behind the regulations. Planning authorities are supposed to be able to balance the merits and impact of any development. It is quite difficult for them to do that in a number of cases.

In one example, in September 2021, Natural England issued a standing objection to development in and around North Horsham, West Sussex, for reasons of water neutrality under the habitats regulations assessment process. There is no question that we have water stress in parts of England, but that objection has halted nearly all development in Horsham, land north of Chichester and Crawley since September 2021. That is even down to the individual household level, unless they are able to prove water neutrality, which is virtually impossible to do under that process because it requires off-setting from existing sources and a mechanism to do that. That is the upshot of that objection.

Natural England has stated that it will not engage further in consultation on any individual application because of this standing objection. It is a bit like nutrient neutrality. The local authority is trying to come up with a system for administering water off-setting. In that case, the developers would say, like with nutrient neutrality, that it does not make sense to control the individual dwelling or the multiple dwelling level. Nutrient neutrality should be dealt with by water companies at a wastewater treatment works and by regulating run-off from agriculture more effectively. Water neutrality should be dealt with by the water companies and the Environment Agency, with licensed abstraction of water in accordance with development plans for growth.

Baroness Thornhill: For clarification, and to get this right, does that mean that those agencies do not actively engage in creating those solutions at any level—they just object? Is that what you are saying?

Daniel Smyth: That is absolutely what I am saying. In many respects, some of these agencies are best placed to come up with solutions because of the knowledge they have. Again, there is no real mechanism. It could be considered ironic, given that we now have the requirement for biodiversity net gain with development, that a body that is responsible for protecting the natural environment is objecting to development, which is good for the environment and leads to positive outcomes and solutions.

Baroness Cohen of Pimlico: Is some of this problem down to not having enough of the right staff in the right places? We hear a lot about the absence of well-trained people in local authorities and in all the other statutory authorities.

Daniel Smyth: I think that is the biggest problem.

Q15 Lord Berkeley: I am interested to know your views on how the environmental regulations change on a different type of development. You mentioned that EIAs were disproportionate, which is a fairly subjective comment. Then you went on to talk about a battery plant—I do not know what it is. To say that a battery plant does not need an EIA, which I do not think you were saying but you might have been, would be quite challenging, because batteries have a habit of catching fire and causing pollution. I would have thought that that definitely needs an EIA. The question is: what type of EIA and which authority should take the lead?

Daniel Smyth: An environmental impact assessment looks at likely significant effects, so whether things that are unlikely need to be considered depends on the type of development. Fire is normally dealt with under safety legislation rather than environmental legislation. Otherwise, it is quite difficult to see what the environmental consequences of batteries would be in terms of noise, contamination, transport, air quality, ecology, et cetera. By its nature, it is not something for which you would expect to need to undertake an environmental impact assessment. Perhaps you could remind me of the rest of your question.

Lord Berkeley: Let us go back to that one: I do not know what type of batteries they are, but they can cause air pollution, as can fire, and I imagine that they can groundwater pollution, depending on the type of batteries they are. To brush it all aside and say that you do not need to do an EIA because it comes under fire regs or something—

The Chair: Can we come back to that? That is a very particular point and I do not think we will resolve the question.

Daniel Smyth: You also asked how environmental regulation varies. Environmental regulation is environmental regulation; it does not vary, it is just a question of the degree to which it needs to be assessed. For example, if a development has no discharge to a surface watercourse you would not need to assess the impact on the surface water body. That is an example of where it would not need to be applied, but environment regulations are relevant for all development in the same way; it is just the degree to which it needs to be considered.

Lord Berkeley: The decision as to the degree to which it is applied, if at all, is basically between the planning authority, probably, and the environmental groups—the regulators—and the developer.

Daniel Smyth: In an ordinary planning application, it would be the planning authority in consultation with the statutory bodies. Very often they will require the same kinds of reports to be submitted to accompany a planning application to furnish them with the information they need to make a decision, as would be included in an environmental impact assessment.

I will say one other thing about environmental outcome reports that occurred to me. We are very familiar with the environmental impact assessment process. As I said, it is complex and expensive. The term “proportionate EIA” is very much in vogue in the industry and with decision-makers, because decision-makers do not want information that they do not need to make a decision.

It is difficult to see how you arrive at an environmental outcome report without having assessed what the impacts are in the first place. So although it might be possible to streamline the process to some extent, it is difficult to see how you would avoid going through that process to achieve your environmental outcome report. Quite a lot of environmental impact assessment leads to controls on the outcomes and better outcomes, so that is a great thing—a focus on better environmental outcomes achieved more efficiently—but I struggle to see how we will bypass the assessment process.

The Chair: Before we come on to the next question, on this question of variability, accepting that the regulations are not varied, is there any significant difference in the way the process works between an application made to a local planning authority and an application for development made under the Planning Act 2008 for a development consent order?

Daniel Smyth: The main difference is the pre-application consultation under the Planning Act, but the process of undertaking an environmental impact assessment is broadly similar. With the Planning Act application, there is a requirement to undertake statutory consultation on preliminary environmental information before the application is submitted, and then to explain in a consultation report how the application has had regard to, and to what extent it has changed as a consequence of, the consultation. The preliminary environmental information in most cases is a draft environmental statement—that is the outcome of the environmental impact assessment process, in draft, in its entirety, which is then consulted on. After that stage, the environmental statement is completed and submitted to the Planning Inspectorate.

The process of obtaining a development consent order typically takes a minimum of four years, often much longer. It is a much longer process. There is a much more formal way of consulting with the statutory bodies through that process, so that is built in and the developer can take advantage of that.

The sweetener associated with the NSIP—nationally significant infrastructure project—process was the prescribed periods for decision-making, but confidence in that has been quite seriously undermined by a number of examples where the Planning Inspectorate declined to accept applications for examination—there have been a number of those recently—and the decision-making process has been extended by the decision-maker. Developers are seeing nationally significant infrastructure projects be delayed on matters of little, or at least limited, significance. It would be quite fruitful to examine some of those, and perhaps to task the Planning Inspectorate with helping to facilitate these applications. The Act might need a modification to enable that to happen, because its hands are tied, and to incentivise resource and require statutory bodies to help facilitate development along the lines of what you said earlier.

Q16 Baroness Thornhill: Can we home in on costs? From the local government point of view, I have sat in many a meeting where we have talked about how much the cost of meeting all the upfront things is. We would have to delay a Section 106 agreement because of contamination of land, and things like that. What work has been undertaken to assess the real costs for developers, because there is a constant chorus of that? As you know, the viability issue has been a big battle between local authorities and developers; it has rumbled on, I have to say. Where do you sit on what it all costs—obviously with the emphasis on meeting the regulations—but also on the impact that has on developer contributions that ultimately come back to the community?

Daniel Smyth: I think developers would argue that they are bearing a lot of costs that probably should not fall to them. There are costs associated with nutrient neutrality and water neutrality, for example. The developers would properly argue that they should not fall to them at all. The residents of new property will be paying for their water services anyway. Some of these costs arguably ought to be socialised rather than placed on the developer.

The biggest uncertainty and cost headache for developers is delay, particularly, as I said, at a later stage in the process when they have committed a lot of their investment to the application. That uncertainty and delay is the biggest cost for them.

The Chair: The difficulty is quantifying the cost.

Daniel Smyth: I would need to look further into how much work is being done on this. I might be able to commit something further to you, but I do not think that a huge amount of work has been done to quantify the cost for development in its entirety. However, I will consider that further.

The Chair: It would be very difficult, and I appreciate that one is potentially going into commercially sensitive confidential information, but even an anonymised case study to demonstrate how, for a particular project, costs were added at different points and whatever could give us some sense at least of the proportion of cost that falls to the regulatory side, as opposed to building materials, acquisition of land and all the other things.

Q17 Baroness Eaton: Following on from the Chair’s excellent point about getting that information, quite a bit of attention seems to be drawn to the fact that a lot of housing development is done by the larger housing development companies. Do the costs that we have been discussing cause small companies to be moved out of developing houses, adding to the numbers we are trying to get in the housing population?

Daniel Smyth: There will be some of that. A lot of developments will not be viable owing to the costs associated with protecting the environment. It obviously depends on the issue, but contaminated land would be a classic example where the costs might prevent the development happening unless it is at the right scale.

Baroness Eaton: Presumably it is also delay, because that is pound notes being wasted, is it not? I suppose that is a big effect. Is that right?

Daniel Smyth: Yes, and delay associated with changing regulations and changing policy for developments that are subject to outline consent. Detailed reserved matters consents can then change the complexion and the commercial position for a development.

Q18 Lord Carrington of Fulham: The way you have described it, the environmental regulations are sometimes in conflict with the planning system. Is that right, or does the planning system manage to co-ordinate the environmental regulation effectively? Clearly there is a staffing problem, but if that problem was not there and the planning system was resourced in the way we would like it to be, in an ideal world, could the environmental regulations be made to work for the planning system as opposed to against it?

Daniel Smyth: There is work to be done in that regard. The habitats directive has had a profound effect on spatial development patterns. Essentially, there is an exclusion zone of 400 metres around the special protection areas for birds in the Thames Basin Heaths and the Dorset Heaths. The Thames Basin Heaths are a patchwork of 8,400 hectares. You can imagine the impact of a 400-metre exclusion zone around each of these locations. That means that there are very inefficient spatial patterns for development. There has to be a less blunt instrument that can be deployed than a 400-metre exclusion, which I understand is to do with the predation radius of cats.

The other pressure on birds is dog walking. Suitable alternative natural green space, or SANGS, aimed at protecting nature conservation sites of European importance have been effective but, again, they are assessed according to a set of fixed criteria. The planning authorities are able to exercise pretty much no discretion because of the requirement to prove beyond reasonable scientific doubt that there will be no impact on the European protected site.

Post Brexit, another thing that we might look at, as well as reform of the habitats regulations and the assessment process, would be the extent to which the protected European species listed under the legislation are relevant to UK species abundance, because that was set at a European level rather than a UK level. There is a conflict, particularly where the habitats regulations apply, and impacts related to nutrient neutrality, water neutrality, or on birds lead to this precautionary approach in decision-making and the need to adhere to proof beyond reasonable scientific doubt that there is an absence of an effect, which is rather a challenge, intellectually and in a scientific sense.

Lord Carrington of Fulham: You mentioned the Thames problems with the birds and the neutrality problems around Horsham with water pollution. One of the great problems is that the Government clearly have legislation to protect the environment but clearly have a desire to build somewhere over 300,000 houses a year, let alone all the big infrastructure projects such as HS2. Is it possible to reconcile building 300,000 or 400,000 houses a year with environmental protection, or are we asking for something that, given the structure and geography of this country, is an unrealisable dream?

Daniel Smyth: New housing is more energy efficient and has better water efficiency. In the right place, it has better patterns of transport and it is required to deliver biodiversity net gain as part of the development, so inherently it is an improvement of the efficiency of the stock. In that sense it is a good thing.

Water supply is the issue in Horsham; groundwater abstraction is the problem rather than pollution of water. That is water scarcity owing to climate change.

There is conflict in the patterns of where housing should go, and with the exclusion zones. We have environmental regulation, particularly with respect to habitats, that is acting against the targets for development set by the Government. There is certainly tension in certain parts of England and the UK.

Lord Faulkner of Worcester: On that, not so much on the supply of water to new housing but the risk of building housing in areas that are liable to flood, are sufficient regulations and rules in place to prevent the building on flood plains that leads to inundation of properties? Do you not think that the consequences of climate change make the problem much worse? I am a resident of the city of Worcester, which is on the River Severn, as I am sure you know, which floods every year.

The Chair: It does not need climate change to flood in Worcester. It has been going on for centuries.

Lord Greenhalgh: Since King Alfred.

Lord Faulkner of Worcester: Yes it has, but it is getting worse.

Daniel Smyth: Frankly, yes. The controls on building on the flood plain are very good now. Flood risk assessment is required for new development where it is relevant. There are zones that set the risk of flooding. You basically need to look at the future predictions for climate change to undertake that sort of assessment to accompany an application. Building in zones that are likely to flood is very difficult to do. The controls are in place for that. Clearly it will be made worse by climate change, because of the sort of rainfall events we are experiencing, which are much more intense and much more localised and lead to flash flooding. New development is also required to incorporate sustainable urban drainage systems, which positively contribute to managing flooding. Again, where it is allowed and it is not in the flood plain it actually helps.

Q19 Lord Goddard of Stockport: How much do interpretation and practice vary between local planning authorities? I speak from the perspective of Greater Manchester, where the 10 local authorities are connected either side. At times that can be problematic.

Daniel Smyth: As I said, environmental regulation is environmental regulation. It does not leave much room for interpretation, but the extent to which, for example, environmental impact assessment is required to accompany applications does vary. The scope of environmental impact assessment, where it is required, also varies. The same goes for planning applications that require environmental information to be submitted to accompany them. It is probably the scope of what is required, and the extent to which environmental information is required by authorities, that varies. That is quite inconsistent.

Lord Goddard of Stockport: As a practical example, in Stockport we resisted the development of 400 houses. Across the road, Cheshire East granted permission for 1,000 houses. Where is the logic and the fairness in that? If the regulations apply to one, they should apply to all. Who makes sure that they are implemented uniformly across the piece?

Daniel Smyth: Obviously I cannot comment on that example, but that is probably quite common. Clearly it comes down to the individual circumstances of the applications, what the environment is able to bear, and whether it is an appropriate development in that location, according to the local plan and policy.

Q20 Lord Greenhalgh: First, I declare my considerably long list of interests. First, I am vice-president for life of the Local Government Association. Secondly, I have considerable commercial and residential property interests, all properly set out in the register. Thirdly, I have spent a lot of money with Savills over the years. I would like some of that back, actually.

Daniel Smyth: I trust it was all good value.

Lord Greenhalgh: I think that Savills benefits from the most complicated system of regulation possible, because then you need more of your time. Pretend that you do not work for Savills: give us an idea of a world where we can protect the environment, which we all want, but also enable high-quality, sustainable development. What would that world be? It is not the current world.

Daniel Smyth: I think that is what the Levelling-up and Regeneration Bill seeks to achieve: high-quality design and beautiful places.

Lord Greenhalgh: Do you think the answer to the question is the LURB? If that is the answer to the question it is a bit like the Schleswig-Holstein question.

Daniel Smyth: I am not going to guarantee that that is the answer to the question, but they are probably quite good objectives. I said earlier that the biggest issue facing good-quality development is access to statutory bodies and the need for constructive feedback from them that is made consistent and allows planning authorities and decision-makers to balance matters to get the best out of a development. It comes down to a mechanism for providing an incentive for a process like that to happen.

The Chair: Mr Smyth, we are very grateful to you for your time and for what were very helpful and informative answers. This session has to some extent been a background session to give us the right frame of reference for the inquiry we are embarking on. Both you and the previous witness, Professor Liz Fisher, have been extremely helpful to us in that regard. Thank you very much indeed for your time. As I said, we are open to further evidence from you in writing. Anything you could supply, particularly anything that tended, however difficult it is, to an assessment of the quantification of costs as they fall on developers, would be helpful to us, but there might be other matters you want to bring to our attention.