Written evidence submitted by LSE London [FPS 139]

 

LSE London is happy to respond to the Select Committee’s Call for Evidence. The views expressed in this response are those of the LSE London team. In particular, the response has been formulated by Professor Christine Whitehead (LSE London, Deputy Director), Kath Scanlon (LSE London, Deputy Director), Dr Nancy Holman (LSE), Dr Alan Mace (LSE). We would like to thank those who participated in the LSE London roundtables on the Consultation which helped inform our response.

 

Questions

  1. 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?

The current system suffers from costly delays, and local-authority planning departments lack the resources to undertake the process effectively. The government proposes radical changes but we think these are overkill: there are ways of improving the current system (which is well aligned with the English legal framework) without overturning it completely.

The consultation document proposes a move away from the site-by-site decision-making system that has been in place since the late 1940s.  Under the proposals, land would be assigned to three main categories: growth, renewal, or protected. We are concerned that the proposals are very broad-brush and do not make clear how the functions performed in more traditional zoning /rules based systems would be carried out. Given the limited information about how the new system would operate, the proposals if implemented could be a recipe for non-planning and generate significant legal challenge. 

We note that the proposal is explicitly not zoning; rather, it would result in a simplified system relying--it is suggested--on only 4-5 pages of rules. But four to five pages would never supply enough detail what is meant by beautiful design.  In the USA, design (form) based codes are gaining popularity as a way to simplify traditional zoning codes and promote greener and more beautiful neighbourhoods--a key objective of the Government’s proposals.  The design code cited as an example runs to 1410pp.  Why is this? Land use and community creation is not as simple as creating a pattern book with the expectation that attractive green growth will develop.  Moreover, if the Government seeks to produce standards of green building these would have to be codified in some way. Combining this with other desirable attributes of sustainable new development would further complicate and increase guidance.  Additionally, as these would presumably be statutory instruments (if they were not, they would have little effect), the detail would have to precise. Local contexts differ so much across England that bespoke plans would have to be produced for each area.  Such codes could not be developed quickly or without great thought.

This type of simplification would not obviate political controversy: internationally, zoning (and by extension design-based) systems are the product of much political negotiation and are often subject to protracted legal challenges. The resulting statutory codes can be complex, arcane and difficult to understand. The flexibility and moderation of the British system, which allows for locally appropriate and adaptable planning, is no more prone to delay in the long run

We agree that local areas need strong, visionary local plans, but the requirement that these plans be produced within 30 months would place unsustainable pressure on already strained local authority resources – e.g. in ensuring land actually had the capacity to come forward - while legally required buy-in by the water companies likely could not be achieved in that time. A key input to these local plans would be the housing targets, currently expected to be over 300,000 nationally with 93,000 in London. The plans would need to identify adequate land and densities in growth and regeneration zones; failure to do so would mean local authorities would not achieve their targets—and then what? It is unrealistic to expect that adoption of a zoning-type system would have a transformational effect on build-out rates: in zoning based systems where build out rates are high, land is often readily available and when it is not, cities have the power to simply annex surrounding areas.

 

  1. 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?

We wholly support the government’s objective of bringing about a step-change in the delivery of new homes. We also accept that the planning system can generate uncertainties and delays which need to be addressed.  But this could almost certainly be done better by making incremental rather than wholesale changes, which will inherently slow the speed of delivery for some time. 

 

We agree that there should be a stronger emphasis on the build out of developments, as the Letwin Review made clear.  However, much delay has little to do with planning: it relates to provision of infrastructure, especially in the context of large developments, where installation of infrastructure and residential construction must follow a certain sequence. Achieving proper sequencing when many agencies are involved is extremely difficult.

To address delay requires clearer data on permissions and build-out, and a better understanding of the reasons for delay (other than demand).  These factors are overlooked in the proposals.

 

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

 

The Planning for the Future proposals listed in Second Pillar advocate integrating beauty into the planning process (as suggested by Sir Roger Scruton’s Building Better, Building Beautiful Commission) through changes to national policy and legislation. It goes without saying that we should strive for visual harmony and beautiful homes, but a ‘fast track for beauty’ would be difficult to implement in practice. The notion of beauty is highly subjective and could be a recipe for lobbying and a return to site-by-site assessment. In our roundtable, one participant suggested that the focus should be on high-quality design, which is part of the current system and might be easier to incorporate in a rules-based system through wider use of design guides. (As noted above, thought, the preparation of such guides is time consuming and complex as to be fairly applied they must be statutory instruments, which means they will not be short or simple). Another participant suggested that beauty in design could be rewarded post-construction through, for example, a small tax concession or prize. However, the fundamental questions remain: Who decides what beauty is? And how do we codify it?

 

We also note that earlier attempts by the government to speed up planning have resulted in some egregious examples of bad design.  These include many office-to-residential conversions under permitted development rights, which have produced unliveable, small units with inadequate lighting and safety measures.

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

We support the Government’s objective of increasing housing supply and speeding up the planning process, and accept that it was a political decision to calculate requirements centrally. However, we do not support the proposed formula. The consultation identifies a large number of objectives, all of which are to be achieved by one, poorly specified, formula. The household projections rely on data of variable quality and often make little sense at the local level.  The affordability measure is based on an out-of-date understanding of affordability that takes no account of current low interest rates, which are likely to be in place for many years. Meen and Whitehead (2020) suggest a simpler approach based on comparing population and stock. This includes no unnecessary thresholds, is less dependent on inherently inaccurate projections, and has a clearer conceptual basis.

We accept the target number of new homes as the primary concern but think that the proposed formula for allocating this number across authorities will almost certainly fail, as housing market areas do not coincide with local authority boundaries.  The proposals also remove the current duty to cooperate mechanisms without apparent replacement. This will make it even harder to build sub-regionally rather than within enclosed administrative boundaries.

Controversially, the formula would have the effect of concentrating development in high-demand urban areas. This would impose additional pressure on London and the South East, where constraints such as the Green Belt heavily restrict the availability of developable land. But in areas where land supply is less constrained, increasing land allocations would not necessarily lead to the construction of new homes, as developers will not build unless house prices at least cover their costs. That in turn Viability will depend significantly on how the threshold is specified in terms of land price and normal building costs. Neither of these are constant across the country. So even if the result of the formula is a high number (in this case more than 300,000), there is no guarantee that anything like this number of homes would actually be built.

 

 

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

We would support expanding the methods used to consult local people about planning decisions, but not the elimination of traditional notices. It is more likely that people will see notices on lampposts near their homes, and this traditional form of notification is inclusive of people who do not have computers. It is also a form of notification that does not need to be ‘sought out’ as it is visible in the areas where the development is occurring.

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

The current system works well.  It allows local authorities to adopt a range of local placemaking principles that can be applied to each site, taking into account its context and constraintsBuildings of historic value are very well protected by listing, as are many conservation areas, which have locally based Conservation Area Appraisals. 

 

The proposals for streamlining development management rely heavily on design codes. In theory these may appear to be quicker and simpler, but they are not. Earlier design codes or “pattern books” were based on received wisdom about what constituted good “architectural manners”. They therefore relied on a relatively homogenous population where heritage, culture and tastes were set out by elites and then implemented. Today, these codes need to be more democratically created and should be negotiated between the various local communities within a neighbourhood. This level of community involvement is implied in the White Paper, but with no specifics about how this would actually work. It is highly unlikely that consensus would be easily or quickly reached and when it was, the likelihood is that it would reflect the tastes of those residents with the most capacity to engage with the process. It is therefore hard to imagine how code creation could be anything other than slow and laborious, and the process could well produce results that would not be satisfactory for residents (as it often the case under neighbourhood planning). The resulting codes would likely be neither simple nor short.

 

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

Ruling out green belt reform is a missed opportunity. Arguments for green belt reform have been extensively rehearsed elsewhere. Therefore, we argue for reform in the context of the government’s White Paper proposals.

The government rightly wishes to ensure that price signals are taken into consideration by the planning system so it is more sensitive to the market. Yet green belt represents a significant distortion of the market by exempting 12% of land in England (around 22% of the land in London) from the market. Because green belt is proximate to cities it sterilizes the market for land where the demand for housing is likely to be at its greatest. This means development happens where it can (often at unsuitable densities), rather than where the market indicates it should.

Developers’ behavior is negatively impacted leading to fewer new homes being delivered. Aware that acquiring new land with the possibility of planning permission is difficult, developers choose to deliver a steady number of houses on less land, rather than increasing the amount of housing they build and using up their land. There is less scope to build beautiful when margins are squeezed by the cost of acquiring land.

However, at present releasing green belt land for housing promises significant windfall gains for landowners. We believe that green belt reform should be linked to changes in how we capture uplift. Permitting housing on former green belt land should not lead to windfalls for landowners. Capturing a significant proportion of the uplift could help fund essential infrastructure for green belt development. It could also fund significant improvements to areas of remaining green belt, making them more biodiverse and/or providing for public access. Green belt release might be treated in an exceptional manner and might be used to test alternative models for capturing uplift.

Opening up the possibility of significant green belt reform would signal a radical change in planning policy that could significantly impact behaviour in the market. However, it does not mean that a significant proportion of the green belt needs to be or would be built on. Moreover, reforming green belt has no impact on the protection of land with true environmental and/or public value (e.g. via the designation of AONB, SSSI, MoL etc), as independent protections could remain in place for such land.

  1. 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?

Since the Committees 2018 report there have been a number of important contributions to the debate about capturing land value. Of particular relevance is the report for the MHCLG on the value of contributions which finds it to be relatively buoyant source of revenues (Lord et al, 2020). Other publications include estimates of what proportion of land value is captured, suggesting that perhaps 50% is taken either through contributions/ CIL or through capital gains tax and stamp duty.

One approach towards simplification would be to use a tariff for smaller sites but to maintain S106 for larger, more complex sites where the benefits and costs are highly site specific. Using a tariff across all sites would almost certainly generate lower levels of land value capture than are achieved at present.

The government’s recent Planning for the Future consultation document proposes a shift from a S106 and CIL system to a nationally determined tax, collected and spent locally, which could incorporate strategic/Mayoral CIL. In effect it would be a simple sales tax (pace the threshold), which would bear no relationship to the costs of or need for infrastructure, whether physical or social. It would also be top sliced by central government for large scale infrastructure (maybe even HS2).

A nationally set tariff would inevitably be too high in many areas (deterring development) and too low in others (‘leaving money on the table’). The same applies to a national threshold.

An alternative approach in the White Paper sees each local authority able to set its own fixed rate through the local plan, as with CIL. London boroughs fear that a levy would produce less affordable housing than the current system.  The government’s new owner-occupation product First Homes would be the first charge on the new infrastructure levy, after which authorities could choose to use the funds to provide affordable housing, increase services or reduce council tax. This introduces uncertainty about the extent to which the revenues would be used for affordable homes.

Regional inequality is clearly a challenge, as a national levy would raise huge amounts in some areas and little in others. The proposal to increase local control over expenditure of levy funds will favour richer areas unless a form of equalisation were introduced, but this would go against the White Papers statement that funds would be locally raised and locally spent. 

We are concerned that permitting local authorities to borrow against the predicted GDV of a development would shift risk on to local authorities.

In principle, the government’s proposals could enable the capture of substantial additional revenue, overcome the inefficiencies of S106, include all types of development and reduce the number of exempted developments. On the other hand  the proposals are vague (the document called for input as to how the infrastructure levy should be implemented) and there is no clarity as to whether the percentage(s) should be set nationally or locally or whether all exemptions should be removed. At our roundtable, one participant (an observer of the planning system for many decades), said planning history teaches us that governments introduce new land-value capture systems at their own peril. The current system, though imperfect, is at least delivering a degree of affordable housing as well as contributions to make the planned outcome more acceptable to the local community.

 

November 2020