Written evidence submitted by Professor Tony Crook CBE,  Hon Professor Vincent Goodstadt, Professor Mark Baker, Professor Nick Gallent, Professor John Henneberry, Hon Professor Janice Morphet, Hon Professor Kevin Murray, Professor Gavin Parker, Professor Malcom Tait, Professor Christine Whitehead OBE and Professor Cecilia Wong [FPS 131]

 

Introduction

This evidence is submitted by a group of chartered planners working in academic practice who have come together both to submit a response to MHCLG on its White Paper and to submit this evidence to the Select Committee. We have done so as we believe some aspects of the proposals lack a clear evidence base and we wish to draw attention to alternative ways to reform planning which we believe can achieve the government’s objectives of ensuring the development we need happens in a sustainable way in the places where we need it. 

As well as being in academic practice, the contributors (listed below) to this evidence have also served in public policy capacities, including as chief executives and chief officers of local authorities, as chairs or directors of planning, regeneration and housing companies and as advisers to government and parliamentary bodies. 

This submission is made by: Professor Tony Crook CBE FAcSS FRTPI (co-convenor of this informal group), The University of SheffieldHon Professor Vincent Goodstadt FAcSS MRTPI (co-convenor of this group and former RTPI President), The University of Manchester; Professor Mark Baker, MRTPI, University of Manchester; Professor Nick Gallent FAcSS FRTPI, UCL;  Professor John Henneberry, FAcSS FRTPI MRICS, The University of Sheffield; Hon Professor Janice Morphet, FAcSS FRTPI, UCL; Hon Professor Kevin Murray FAcSS FRTPI (and former RTPI President), The University of Glasgow; Professor Gavin Parker, FACSS FRTPI, University of Reading; Professor Malcom Tait, MRTPI, The University of Sheffield; Professor Christine Whitehead, OBE FAcSS HonRTPI ARICS, LSE; and Professor Cecilia Wong, FAcSS FRTPI, The University of Manchester.

 

Key points

 

We now answer each of the committee’s questions.

Q. Is the current planning system working as it should do? What changes might need to be made? Are the Government’s proposals the right approach?

 

In our view, the existing planning system has worked well over the years with a combination of government policy, local plans and discretionary development management.  Building on the foundations laid in 1947, governments and local authorities have been able to adapt and use this system to pursue changing policy objectives. The benefits of our discretionary planning system, which combines clarity on policy with sufficient flexibility to take account of the specifics of sites and of the complexities of context (including change over time) should not be underestimated. This is especially critical in terms of the wider impact of planning on investment in critical infrastructure (schools, roads, public transport) and its contributions to tackling climate change, promoting bio diversity and healthy living and ensuring that development is relevant to changing times.

 

Nonetheless, we accept the need for further reform. Although there are plans that are prepared and adopted in a timely manner, many do take  too long to prepare and update and too many are thus out of date as the basis for development management decisions and do not always address evolving requirements.  Casework on planning applications can be drawn out, creating uncertainty and adding to developers’ costs and risks. Evidence shows this does not have to be the case as there are local planning authorities that pursue good practice, although all of them have been coping with very substantial staffing cuts which have the potential to undermine good practice.

 

However, we believe the reform proposals to introduce an area-based approach and a rules-based system will not achieve the government’s objective of a simpler and speedier system.  This is because a planning system needs to be balanced with local discretion to ensure that decisions are appropriate to circumstance. The argument for the three-tier area approach or ‘zoning’ (e.g. a rights or rules-based planning system) ignores the need for a planning system to secure a balance of certainty and discretion. International evidence suggests that those with rights based systems then feel they need to look to achieve greater discretion and that those with discretionary systems argue for strong policy frameworks to introduce a degree of certainty

 

Zoning can work in a rules-based legal system but is more problematic in common law legal systems. The evidence is that zoning systems and discretionary systems tend to converge on a mixture of policy/strategy and case-by-case judgement.  Even in a zoning system there will always be the need for variations and mechanisms to scrutinise and sign these off, and to deal with the complexities of places and schemes that do not conform to the codes. Zoning could reduce risk or uncertainty for developers but may also results in other costs and lead to more litigation especially when developers seek to promote desirable development and need to secure changes to the area/zone rules. Oversight of such exceptions in those systems can lead to accusations of unaccountability or corruption.

 

Moreover, we will need ways of resolving cross boundary issues; especially where there are capacity and other constraints in local authorities that require development to take place elsewhere. Any reformed systems needs to capture, express and deliver on strategic policy, not only on housing, but also industry, employment, economy and infrastructure, carbon and climate resilience, heritage, nature and environmental protection. Improvements to the existing system are needed to align and better balance these. Most notably, if the system is to integrate the unequal economic and social geography of England better, we also need clear strategic spatial plans bridging from national policy to local plans.

 

A more straightforward reform, which we believe can achieve the government objectives would be to make the preparation and adoption of local plans mandatory so that they look ahead for ten years and subject to rolling (at least five yearly) reviews so that they provide an up to date framework for making development management decisions providing clarity and more certainty for developers.

Q. In seeking to build 300,000 homes a year, is the greatest obstacle the planning system or the subsequent build-out of properties with permission?

Claims in the White Paper that the planning system leads to less development are unsubstantiated. Evidence shows that more homes have been consented for development than are delivered; even allowing for consents that are not implemented (or stall because of market conditions or otherwise held back as a product of commercial decisions) and those held by land promoters/traders. The increased dependence on a limited number of volume house-builders whose business models have remained fundamentally unaltered since the global financial crisis and who build out in accordance with market demand for their ‘products’ is an issue.  As the Letwin review also suggested we think this is best addressed by increasing the diversity of housing supply (e.g. more SME builders, more affordable and social housing is needed for instance). Planning policies and procedures, including neighbourhood planning, can help with this (e.g. more identification of small sites for SME builders; addressing costs of securing planning consent especially regarding infill sites). There may also be a case for requiring those who have consents to build out a substantive proportion within a specific time period (or lose consent).  However, the wider evidence shows that substantive constraints and weaknesses largely fall in areas other than planning, notably in development finance, infrastructure provision, land ownership (both the total owned by a few landowners and also that held under ‘option’) and legal delays and not the lack of permissions.

Q. How can the planning system ensure that buildings are beautiful and fit for purpose?

We welcome the government’s commitment to good design but are not convinced that its approach to codes  will secure this desirable objective. Design codes only generally work for a single controlling landowner conveyancing plots over a long time scale; we do need a system of design guides for more complex circumstances to lever more quality and coherent place making from diverse developers and designers.  They provide coherence, co-ordination and certainly - and often underpin public confidence in outputs and outcomes either via Urban Codes (layout), or Architectural Codes (building design).  These can be nurtured through policies in plans (not zoning type ordinances) and importantly better integrate design and development management with building control regimes.  This is critical because well-designed new development must also be functional and meet space, internal layout and safety standards. Hence, these must be specified in any new rules-based system of ordinances (as is the case in many countries with these approaches to planning) if such standards are to be safeguarded.  However, international evidence also suggests that rules-based approaches requiring compliance with fixed standards can actually increase costs, reduce flexibility, and slow development.

Q. What approach should be used to determine the housing need and requirement of a local authority?

 

The changes to the standard method for assessing housing numbers recently proposed by MHCLG moves in the right direction but in many contexts will continue to penalise those authorities that achieve higher output levels.

 

We accept that a consistent standard model is an appropriate approach. However, given that consistency, it is even more important that the model is based on strong evidence.  The most important objective of the model is to identify an overall housing target and to allocate it between authorities. The implicit assumption is that building more will reduce house prices and make market housing more affordable.  Yet the government’s own model shows the impact on prices to be very limited – particularly given  demand side pressures (e.g. international investment patterns).  In our judgement, based on widespread experience of research, practice and policy these findings are sound. Simply building more new homes will not impact on house prices and rents, except at the margin and certainly not by enough to ensure low income households across much of the country can access these new homes. 

 

This implies the need to develop a clear national affordable housing strategy that addresses the need for genuinely affordable housing provision. Local plans must have the capacity to secure the new homes needed and have policies to secure more affordable housing, both owner-occupied and rented. To make a dent on the affordability problems in many areas requires a substantial number of new affordable homes.  This needs strong and clear integration of government housing policy and funding related to affordable homes within a strengthened national planning policy framework and related guidance on the use of planning obligations and their active and consistent implementation by local planning authorities. Unless local planning authorities seek substantial contributions of affordable homes from developers there is a real risk that new homes identified by the standard method will be built further up the price range. It is imperative therefore that NPPF and related planning guidance is strengthened on this matter if the new method is introduced.

 

A second immediate issue is that as currently specified the formula (entirely unsurprisingly) allocates new building to areas where capacity is not necessarily available to enable either the housing or the necessary infrastructure (such as water supply) actually to be achieved within the relevant timescales.    It also is inconsistent with the levelling-up agenda because it reinforces the difficult position of existing areas with low levels of output which lack both affordable and adequate standard housing.  

 

Q. What is the best approach to ensure public engagement in the planning system? What role should modern technology and data play in this?

We answer this question from the perspective of the use of ‘digital’ planning using IT and AI as suggested in the reform proposals. The White Paper makes big claims for the use of data. However, this will come with major transaction costs of data mining and data integration as well as the compliance of different data access requirements and regulations (and noting that government no longer collects much important data). We do need to move towards the digital age to complement existing forms of data and participation instruments, rather than replace them.   However existing research on the use of technology in managing urban processes shows that it puts power in hands of an elite and disempowers ordinary citizens and abandons argument and persuasion (and  democratic accountabilities) as the means by which we nurture and enhance the development we need. The White Paper implies that coding and automation are to go hand in and for many types of development, that the negotiative element of development management will be removed and replaced by a compliance checking process against a series of design codes and  rules. This is likely to strip out professional judgement and political oversight.

If IT systems are used to make the processing of paperwork more efficient this will release professional and support time to deal with decisions on casework and the preparation and adoption of plans.  However, it should not seek to replace professional and political input with AI driven decision systems.  We believe that the ability to exercise professional judgement is especially critical to securing planning policy objectives when examining applications for complex and large-scale planning proposals or indeed where exceptional circumstances may require such judgement coupled with careful democratic deliberation.

Any new approach to involving the public also needs to blend enabling IT and online technology with facilitation and support, using established methods in participation, some face to face, some online digital - with a degree of read across consistency, as well as cross checking/referencing responses from both - as they, but particularly online, may be susceptible to manipulation. It is also not enough to expect that public support can be developed in planning by relying solely on the frontloaded approach that the White Paper suggests. IT facilities and skills are unevenly developed in England and there is also a danger of using standardised off-the-shelf software packages that may not meet the needs of the community nor the purposes of the consultation.   The variable access to IT (technologically and demographically) could be highly discriminatory under the Equalities Act.  As a result, their use risks members of the public becoming passive in participation exercises.  The current approach with an emphasis on upfront consultation of the local plan as well as in the consultation of the major infrastructure providers has favoured the big players who have resources to understand and respond to the system but even they often struggle to get involved. Plan-based and application-based consultation should be therefore fair, ethical and accurate, and not loaded  advocacy with one-way answers (whether from applicants(schemes)  or local authorities (plans) and should be open to ethical and peer review scrutiny. Clearly, the use of new technology and platforms should be looked at, but we also need to strengthen their presence in traditional venues e.g. libraries to allow those without internet access and digital literate to participate.

 

Q. How can the planning system ensure adequate and reasonable protection for areas and buildings of environmental, historical, and architectural importance?

 

England has a strong set of protective planning policies and procedures for nationally designated natural, cultural and heritage assets. These work well and it is considered that they should be changed but strengthened by being fully integrated into local plans and link consistently and coherently with funding regimes for conservation. However, the protection of locally important resources needs to be given greater recognition

 

The safeguarding, management and enhancement of environmental and heritage assets are also are key to the delivery of sustainable development and the UK’s commitment to delivering the Sustainable Development Goals (SDGs) that the UK Government has signed up to. All recent monitoring shows the UK is falling short on meeting them. This needs to be built into any proposed change to the test of soundness for local plans.

 

It is also important that the current duty to undertake Sustainability Appraisals of plans and proposals should be retained. The proposed abolition of the current duty is of concern since the White paper implies a much more limited assessment of impacts in terms of the extent which plans or proposals satisfy ‘the requirements of UK and international law and treaties.’ This represents a potential threat to the ability of local planning authorities to have regard to the full impact of proposals on the environmental assets that lie within their area.

Q. What changes, if any, are needed to the green belt?

Green Belts were set up primarily to help contain urban growth and to ‘redirect’ what would otherwise have been constant outward urban extensions as the major conurbations grew and thus they also avoided towns merging into each other. They were set up alongside complementary policies such as overspill New and expanded towns which redirected growth to new settlements. Whilst they have provided green spaces and countryside ‘lungs’ for city dwellers the fact that some of the land is not ‘green’ does not mean it should not be part of Green Belts, given the primary function of containment.  However circumstances have dramatically changed since the original designations, not the least a much more substantial growth in population and demand for new housing and associated urban development.  Moreover, the hope that overspill locations would be self contained and balanced have been overcome by significant changes in employment patterns and the labour market so there is much commuting into the main cities and across the sub regions surrounding them. 

Nonetheless, Green Belts have been successful in achieving their original purpose.  There has been very significant growth in development within the major conurbations, partly as a result of policies to regenerate the inner cities from the 1980s onwards. As a consequence there has been much ‘densification’ of our towns and cities. Three in every five additional dwellings developed between 2001 and 2011 were accommodated within extant urban areas. However, in the context of the fragmented approach to the planning and management of urban densification, such containment has produced unexpected side-effects. Incremental residential densification has disproportionately affected the most densely developed neighbourhoods with the lowest space standards, lowering these standards further and increasing the level of inequality in the distribution of residential space between different social groups. Continuation of green belt policy in its present form needs to be matched by the application of more positive and proactive policies to address its effects on existing urban areas.

It is therefore right to review both the rationale of Green Belts and also to ensure that the current designations are fit for purpose.  It seems to us that we must be prepared to look at the whether the land within Green Belts is correctly designated. Political promises to ‘protect the Green Belt’ undermines discussion about sensible changes, such as modest development along the railway lines running through green belts (like beads along a string) which would promote both sustainable forms of development and promote access to the countryside within the Green Belts.  If we are determined to maintain them as Green belts, taking land out should run alongside policies to substitute what is taken out with additions elsewhere, potentially of higher environmental quality  Experience of this approach shows that this has been difficult to do: methods are inconsistent and often there is no cooperation between neighbouring authorities, making it impossible to really review how the green belt is functioning.  We need a basic set of guidelines and minimum review standards. One approach is to ensure that at least some land that is currently designated as greenbelt be put into trust to ensure that it remains ‘green’, as part of a strategy to enhance peri-urban green infrastructure and to provide associated environmental benefits (e.g. Colne Valley Park).

Hence we think that the way we plan for Green Belts needs to be changed.  The Green Belt is the one remaining and enduring strategic policy that has been bequeathed from former regional plans/guidance and county structure plans. It is not a local designation but strategic. There is need for a mechanism to allow the re-assessment of Green Belts to be strategic and not be left to incremental review by the separate constituent councils.   Green Belt policy should be subject to the same tests of soundness as any other local plan policy in a plan-led system. At present the Green Belt is treated as a separate policy from the development plan. It is taken as a ‘given’ in plan making. The designated boundaries are therefore often very dated, which for any other policy would reduce the weight that should be given to it in decisions. New approaches need to be brought forward to clarify policy for developments in the countryside related to brownfield land and isolated and sporadic developments to discourage ad hoc speculation in land that is most acute in peri-urban Green Belt land and capture the related betterment value. There is a need to tackle the lack of consideration to the management of the countryside; this is linked to the need to require a systematic assessment and review of how the stated objectives of the Green Belt should be interpreted and safeguarded. This will also help guide the review and release of Green Belt land by not treating all Green belt land as equally valued.

Q. What progress has been made since the Committee’s 2018 report on capturing land value and how might the proposals improve outcomes? What further steps might also be needed

Progress

 

In 2018-19, the latest year available, £7bn was agreed through S106 and CIL, of which £1.3bn was for infrastructure, £1bn for CIL and £4.7bn for new affordable homes (providing 44,500 new affordable homes).  We estimate that S106 and CIL captured approximately 30 percent of development value on greenfield sites from landowners/developers. Another 20 percent was captured by national capital gains and stamp duty land taxes.

 

The use of developer contributions to capture development value has been far more successful than the previous national taxation measures to help fund infrastructure and new affordable homes. A significant element of this success is the acceptability of this approach. In addition, as well as being locally determined, obligations are negotiated on a site by site basis, so vary with the extent of development value available, are hypothecated for local spending, benefit those in the vicinity of new development, and are enforceable private contracts, so that local authorities know developers must deliver and developers know infrastructure will be provided.

 

However, obligations have significant limitations.  What can be secured depends on the state of the market and in market downturns developments can stall and/or obligations are renegotiated downwards. Moreover, far more can be secured in London and the southern regions of England than elsewhere. Despite the existence of more tariffs for contributions, obligations often require complex negotiations, creating risks for developers (especially SME builders), and there are asymmetries between planning authorities and developers in skills and capacities.  What we can secure is also affected by the range of exemptions from s106 especially for smaller sites and for permitted development; the few obligations on commercial development (except large retail); and also by the wide variations in planning authorities’ obligations policies and practice. Moreover, CIL is not charged by many authorities because of viability concerns and because of exemptions. The levy has been subject to many changes, has not always been spent on infrastructure critical to development and does not work well for large and complex sites.  Finally, affordable housing is sometimes of low standard and tends to provide intermediate rather than the social rented housing that many local authorities would wish to be provided through S106.

Clearly, there is a need to improve the system to overcome these limitations despite its success in raising funds. Ensuring local plans are up to date and have clear and consistently implemented developer contributions policies would help. So too would limiting exemptions and fostering best practice across more planning authorities to help to speed up negotiations, thereby reducing developers’ risk, especially for SME builders. What we do know from the studies we have done for MHCLG is that success comes from local authority commitment to identifying needs, negotiating contributions and then also being vigilant in monitoring and enforcing delivery.

 

The principles for choosing policy

 

Arguably, three resource-based principles should guide policy:

  1. improving economic efficiency – by helping to ensure the productive use of land;
  2. improving equity mainly by capturing ‘unearned increments’ and using them to fund community needs; including new affordable homes;
  3. raising revenue consistent with taxation principles such as predictability, simplicity and vertical and horizontal equity between those taxed.

Developer obligations fail some principles. Obligations have been inefficient, involving delays and negotiation costs, impacting negatively on smaller builders. They have been unevenly implemented with many exemptions resulting in inequities but they have secured equitable outcomes at the local level, offsetting the costs of development and have benefited local people. They have not complied with all taxation principles such as simplicity and predictability. But importantly they have been politically acceptable and have raised very significant revenues for local areas.

 

The Proposed Infrastructure Levy (IL)

The IL aims to overcome many S106 and CIL limitations. It removes the S106 negotiating complexities.  It will be a charge on all development - so is far more broadly based – and will be levied on the final value of developments (i.e. gross development value). Conceptually, it is a simple sales tax unrelated to the principles of obligations such as S106 that are designed to make development acceptable in planning terms.

There is to be a threshold, based on average build costs per sq. metre and a small allowance for land value, up to which the rate will be zero. Below the threshold, developments will be exempt but all developments will benefit from a zero tax up to that threshold.  If the tax remains certain it should give a much clearer pass-through to land values – so it will be landowners who ultimately bear the levy. The amount to be paid, while agreed at the time of permission, will be charged on actual values at the point of occupation.  As a result, local authorities bear the risks or benefits of market volatility, while the developer pays on actual revenues. The LPA may borrow against the expected levy income – possibly expensively because of uncertainties about value and timing of such income. The IL rate, or rates, will be set nationally but the revenue will be collected and used locally. As many of the risks developers face will be less under the IL approach their cost of capital should be lower and provide a flatter playing field between large and smaller builders.

As well as First Homes discounts developers will be expected to provide on-site affordable homes if the LPA so wishes, with the difference between sale and market prices offset against the IL. Mayoral/Strategic CIL in London and the Combined Authorities will become an element within the IL.

The tax clearly has efficiency benefits distorting fewer development decisions, plus speedier development and lower costs of determining the tax. Nonetheless, as happened with previous national taxes some of the inherent uncertainties (e.g., how the threshold value should really be determined; when is the development occupied; who bears the costs if the infrastructure is not provided or is delivered late by the LPA) may well result in delays. Unless the yield of the levy, net of the costs of affordable homes, is ring fenced for specific expenditures, there are also limited incentives for the LPA to spend the money on the critical infrastructure required in a timely way. 

The situation with respect to equity is far less clear. There is no requirement to offset the costs of the development to local residents; affordable housing will be sacrificed to return a development to viability if the market value of completed development is less than projected at the time of planning permission. Handing this risk this may have implications for the size and standards – and costs - of some or all of the planned affordable homes.  The local authority (and therefore local people) bear market risks - which under S106/CIL are borne (and managed) by developers.  It will therefore be important in the detailed design and implementation of the IL to ensure that local communities do secure benefits including affordable homes and local infrastructure and that the IL is not used for other local authority spending.

In terms of taxation principles, the principle that unearned increments in land value should be taxed is followed. Whether there will be horizontal equity, notably in spatial terms, depends particularly on whether there are multiple rates; whether there are significant exemptions; and how cross-borough expenditures are determined; and most importantly –on whether and how areas with inadequate levy revenues will be compensated. It is consistent with vertical equity in that developers/landowners in areas with greater demand and values pay more – but the resulting income is also spent in the same areas, so IL will not help ‘leveling up’.  Simplicity and predictability will depend on the detail – and are unlikely to be achieved. 

Most importantly, will the IL be effective at raising revenue. The government expects more to be collected than under S106 and CIL.  However, this depends on how the rate or rates and the threshold are actually set: fundamentally political questions. If there is a single national rate and threshold there will undoubtedly be some areas where very little will be raised and other areas, notably in London, where the amounts received could be well below current levels, particularly on residential sites.  The overall total could be much larger – especially given that PD and commercial developments are included - but equally it could be whittled away as the details are determined.

One important practical question is how the system will ensure infrastructure is in place to enable agreed developments to be delivered. Under CIL this has worked badly. Under S106 there is a contract between the LPA and the developer – and this contract is one of the reasons that both developers and LPAs wanted S106 to be retained for large developments. No such relationship appears to be envisaged under the IL – which must be a matter of concern to everyone involved. 

Conclusion

The IL has the potential to address many of the limitations of S106 and CIL and conform somewhat better to our suggested assessment principles than S106 and CIL. However, whether it does will depend to a large extent on the detailed design of matters such as thresholds and levy rates. Whether it delivers the infrastructure needed and at the rate needed to keep pace with development also depends on whether the levy revenue is ring- fenced for the infrastructure needs of each local planning authority. It also depends on how far the revenue is sufficient to pay both for this infrastructure and for the new affordable homes required by local planning authorities in their local plan policies as well as the proposed First Homes discounts.

In other words, the IL complies with the principles of taxation in a relatively beneficial way – but this has been true of earlier national taxes. It is the practicalities that will determine whether it works. We fear that IL will go the way of earlier examples, such as the delays arising from the 1990 Act and the decision not to continue with Planning Gain Supplement because of the chances (certainties?) of long legal delays and inadequate capacity to realise the apparent benefits. Improvements/extensions in the operation of S106 and CIL would almost certainly produce more housing; more affordable housing; and more infrastructure at least in the next few years.  

 

October 2020