Written evidence submitted by Walsall Council [NPP 32]

Introduction

1              This submission comes from Walsall Council.  This is an abridged version of a report to Walsall Council’s Planning Committee on 7th January 2016 on the NPPF Consultation, and it concentrates on the main issues raised in the interests of brevity.  The full details can be found on the Council’s website[1].  The Council is currently preparing its response to the Government’s consultation based on the committee report, which was unanimously approved by Members.

2              We have made this submission for two main reasons.  Firstly we consider the housing proposals to be ineffective in achieving their aims.  Secondly we argue that they will have adverse impacts on the plan making process, employment and regeneration overall. 

Summary

3              Walsall is a large, comparatively deprived Borough forming part of the West Midlands Metropolitan area, specialising in a wide variety of manufacturing industries.  The proposed changes to the NPPF would harm the Borough’s social and economic prospects, as well as undermine the rebalancing of the UK economy, given that the area’s manufacturing is export-orientated, and manufacturing provides for more than half of the UK exports by value.  Indeed, they will encourage speculation in the housing market and the industrial land market.

4              The housing delivery test could lead to suitable land being held back by developers while they wait for alternative more profitable sites, especially those in greenfield and Green Belt locations.   It risks also wasting Local Authority time and resources by the promotion of unnecessary and time-consuming Local Plan Reviews.

5              The proposal that the 20% discount will only apply to sales of Starter Homes that take place within 5 years of construction is highly likely to distort the housing market, as people could buy these units purely to achieve a profit after 5 years when the discount retention/clawback falls away.  Furthermore Starter Homes are also likely to be unaffordable for many of Walsall’s residents and could result in a reduction of affordable rented housing. 

6              The Council strongly opposes the proposal to release what it considers to be underused commercial and employment land for Starter Homes if market interest has not been forthcoming after two or three years.  Why is the housing land supply given a 10-15 year lead in time but the industrial land supply – a precious resource – is effectively limited to 2-3 years? No clear definition of unviable or underused land is given, and there is no evidence that supports the proposed three year period of grace.  Conventional speculative viability assessments are based on the rental return to a landowner, but in Walsall, and other places, the typical way that industrial land has been developed is through an occupier acquiring an option subject to planning approval and then developing it.  Relying on conventional valuations as regards viability assessments could result in missed opportunities for industrial investment.

7              The proposal also ignores the reality of the industrial land market, where land can come forward many years after it is allocated and safeguarded (see our Appendix 2).  Indeed, given that local authorities cannot know the full extent of interest on industrial sites, it would be up to an interested party – the landowner – to furnish the appropriate evidence about a supposed lack of evidence.  Landowners could simply hold the land back and tell local authorities that there is no interest, in the pursuit of a higher value use than industrial.  The proposals would also offer the incentive to landowners to throw their industrial tenants off the site and tell local authorities that it is underused.  Vacant industrial land in the middle of industrial estates could be marketed for housing, causing uncertainty and investment flight from surrounding industry.  All this would not only have a pernicious effect on local employment opportunities but also inhibit the growth of export-orientated companies, at a time when the UK needs to rely more on manufacturing industry and the areas, such as Walsall, that have the long term industrial land supply to support it.

Main Submission8              Walsall, one of the four Black Country Boroughs, has a population of 270,000.  It is industrial in character, though with around one third of the area as Green Belt, and is disadvantaged.  According to the Nomis Local Authority Profile, the median gross weekly wage is £442 compared with the national figure of £524 in 2014.  Benefit claimants constitute 17% of the working age client group compared with 12.2% nationally.  A disproportionate amount of residents are in low paid and relatively insecure employment and are likely to struggle to afford housing, even assuming discounts on starter homes.  It is essential that the supply of affordable rented accommodation is maintained.

9              According to the NOMIS, 15% of Walsall’s workforce worked in the manufacturing sector compared with 12% in the West Midlands Region and 9% nationally in 2014.  Walsall, and the Black Country, forms the major manufacturing heartland of the UK.  Its manufacturing stock is highly export intensive, and, as manufacturing provides more than half of our exports according to the UK trade statistics, the area has a crucial and under-appreciated role in the re-balancing of the UK economy.

10              In view of this it is very important that planning policy provides for a good supply of genuinely affordable housing accommodation to suit local characteristics, and also provides for industry’s needs, including a balanced portfolio of sites that could be used by expanding local companies or for inward investment, while ensuring that the industrial market functions effectively.  It should not constrain the operation of the industrial market.

11              Currently Walsall is delivering housing ahead of its targets and we have an identified more than a five year land supply for housing.  The issue in Walsall, given its dependency on manufacturing industry is the need to provide more land to meet identified industrial needs.  The Borough is currently struggling to supply demand for industrial land.  Our monitoring indicators are showing a consistent reduction of supply, with a gap having emerged in relation to demand (see appendices 1, 2 and 3). 

12              In this context we are very concerned that this consultation does not take into account the needs of industry, merely viewing industrial land resources as potential housing sites.  The changes proposed would actually be conflict with other parts of the NPPF that ask us to meet the identified needs of housing, business and other development needs of the area.  The proposals would effectively shut down most of the remaining vacant industrial land supply, which needs more than two or three years protection before it comes forward Furthermore, the proposals conflict with the West Midlands Devolution Deal and our emerging development plan for the Borough. 

13              The rest of this submission deals with firstly the housing delivery related proposals and secondly the implications for industrial land and regeneration. We have focussed on the proposals we feel have the largest implications for the sake of brevity.  A set of recommendations follow.

Housing Issues

14              We support the expansion of home ownership where feasible and desirable.  The proposal to broaden the definition of affordable housing is not considered damaging on its own; However it risks constricting the supply of rented accommodation.  In a deprived borough like Walsall it is crucial that people have access to affordable rented accommodation.  There is a need for flexibility to allow local authorities to deliver the housing that is required to meet their community’s needs.  

15                            The proposal to strengthen support for new settlements must be considered in conjunction with the other proposals especially the housing delivery test (see below).  There is a need for further consideration by the Government of the cumulative impact of all the proposals within this consultation on Green Belt land release.

16              In relation to the housing delivery test the proposals are vague and do not appear to be based on a real understanding of why sites are not delivered.  Indeed paragraph 32 of the consultation suggests it is a failure of the planning system if consented sites are not delivered, rather than wider economic circumstances.  The proposals could lead to sites being held back by developers, so that additional sites have to be identified by local authorities which might be more profitable for them.  It could simply undermine local plan making if the prospect of a review to progress additional sites is in the frame.  Moreover the review itself could take much longer than the Government anticipates.  This is in a context where Local Authorities are under pressure due to cutbacks and could amount to a waste of time and resources.  Walsall is currently meeting its housing trajectory but there is a risk that delivery could slow down, especially as financial support and resources in Local Authorities are reduced.  Many sites in Walsall that have planning permission for housing take years to come forward.  Also many have constraints such as contamination from Walsall’s industrial legacy that have an impact on their viability.  If too much weight is given to the time taken to deliver sites it is possible that Walsall will come under pressure to release further land, including land needed for industry and the Green Belt.  This will only result in difficult sites remaining undelivered whilst developers argue that other ‘easier’ sites should be released.  For these reasons it is vitally important not to rush into changes to the NPPF in this respect.  The housing delivery issue needs to be further explored in a careful, objective and unbiased manner.

17              There are a number of proposed changes with the aim of supporting the delivery of Starter Homes.  A prime concern with the drive towards Starter Homes is that it is not proposed to retain affordability in perpetuity, as it is currently proposed that the 20% discount will only apply to sales that take place within 5 years of construction.  This has the potential to distort the housing market, as people could buy these units purely to achieve a profit after 5 years when the discount retention/clawback falls away.  This is a particular risk where Starter Homes are proposed on previously developed Green Belt sites because landowners and developers will have significantly more scope for development with less control on the impact on openness on attractive Green Belt sites. 

Viability and underused employment land issues

18              The consultation proposes that what is considered to be unviable or underused commercial and employment land is released for starter homes if market interest has not been forthcoming after two or three years.  (From the consultation it is not entirely clear which).

19              The first point we would wish to make is that there is no definitive site-based measurement of viability.  The commonly used ones (for example the RICS) are tailored to speculative development (ie development proposed without an agreed end-user), to provide a rental income to the landowner.  In this area, because there are abnormal ground conditions issues, such appraisals are likely to show marginal or unviable values.  Indeed, site viability testing that we have recently carried out as part of our evidence base for the Site Allocations Document Preferred option confirms this.[2] But other considerations apply for an industrial occupier that needs space to expand.  In these cases, conventional value assumptions related to rents and yields are irrelevant, but revenue foregone from lost output if the development does not go ahead can be a consideration.  Typically, an option is agreed subject to planning, then the site is acquired and gets developed.  Appendix 4 shows that occupier-led rather than speculative schemes have in fact been the mainstay of industrial development in the Borough since the late 1990s.  Roughly, for every 1ha that was developed speculatively, 3ha was brought forward through an occupier-led solution, and this would almost certainly have taken place on land that a conventional speculative based assessment would consider unviable.  It is highly unlikely that Walsall is a special case in this regard.  Moreover, since the market plunged in the recession in 2010, speculative development has not been forthcoming in the industrial market (as opposed to warehousing). 

20              In view of this it is important, with reference to planning policy guidance, not to view conventional speculative viability assessments as the hinge point of the decision whether to release land – otherwise good quality development opportunities that could be taken up would be squandered.  The track record and character of industrial development that the area attracts is more important (aside from the overall suitability of the site for industrial development in land use terms). 

21              Secondly, the Government offers no clear practical definition of underused land.  Much industrial stock includes expansion land, and, though not currently used, is often needed for incremental expansion.  13.5 hectares of expansion land has been developed in Walsall since 1998 (see Appendix 4 below). Moreover, underused sites, far from being unviable, often denote development opportunities.  According to Appendix 4, 28.41ha of land has been redeveloped for industrial use between 1998 and 2015 in Walsall – around 1.5ha per annum (this does not include extensions in situ).  A large chunk of this entailed the redevelopment of the previously underused Sterling Tubes site for the UK HQ of TK Maxx, a site of 6.4ha in 2004.  The site now provides an estimated 800 jobs.  This would have been at risk had the proposals to change the NPPF been in place.  We are also concerned about the lack of a clear definition of underused retail, leisure and non-residential brownfield land.

22              Evidence about market interest on any given piece of land is problematic.  Such information is generally confidential between the site owner and the potential buyer or leaseholder.  Therefore there is no way of Local Planning Authorities knowing the full extent of interest on the site in question.  Only the land-owner - clearly the interested party in any application for the release of employment land for higher value and higher yielding uses, such as housing - would know.  Basing important decisions affecting the land supply on partial and incomplete information from an interested party would be in conflict with the need to deal with objectively assessed needs in the public interest.

23              The Council is strongly against a fixed time limit on the retention of land for industry or any other uses, for the following reasons

• The Government has produced no evidence to back up its proposal to retain employment land for a three year period only.  Authorities are encouraged through the existing NPPF to plan for 10-15 years ahead for housing but the ability to provide for economic growth to supply the economic needs of the resident population would be undermined by changes to the guidance. The economic cycle in industrial land varies and is far more extensive than is commonly appreciated.  There needs to be a choice of sites available at any one time to provide for market requirements.  In Walsall, our records show that there is on average a 15 year gap between a brownfield industrial site becoming vacant and it being taken up (see Appendix 5).  Almost no sites are vacant for only a two or three year period.  Some sites have been vacant for more than 30 years. One long standing contaminated site, vacant since the 1980s, Anglesey Bridge, was developed in 2011 by Castings, an auto component manufacturer and exporter.  The investment in the JLR car plant at the I54 site (close to Walsall on the edge of the neighbouring City of Wolverhampton), which was vacant for some time before it was taken up, would in all likelihood not have happened had the proposed changes to the NPPF been in operation.  Incidentally this is likely to lead to 5,000 new jobs at its full extent (not to mention those in the supply chain) and much needed increased exports[3].
• The proposals would cause a serious deficiency in the portfolio of industrial land.  Virtually all vacant employment land would have an in-principle housing allocation, no matter where it might be, such as in the middle of industrial areas.  There would be very little land left for expanding companies and for inward investment.  As a consequence, local job opportunities would be lost and companies would have to turn away orders, which could, in a globalised manufacturing environment, go out of the UK.  This would in consequence be adverse to the UK’s net trade position, which is already a serious drag on economic growth.
• It will also offer a clear incentive to a landowner to throw industrial tenants off the site and run it down, then claim it is underused.  Again, there are no safeguards to prevent this.
• Following on from the previous point, we would point out that it is vitally important for industry to have access to sites that provide for 24/7 operation.  Consequently companies will avoid locations that are close to residential areas for fear of becoming a bad neighbour and causing complaints, which could seriously jeopardise their operation. Most of our vacant land supply is within industrial areas.  If a vacant site that forms an integral part of the industrial area is given in-principle permission for housing through these proposals, it could have a serious effect on the functioning of the whole area, causing uncertainty and promoting blight. It is just such a situation that development plans are put in place to avoid. 

• Many vacant sites have been held back from industrial development because of ‘hope value’ - that is, the hope that housing will be allowed.  The Council has previously fought planning appeals against housing proposals on good quality industrial sites that have been kept back from industry by their owners[4].  Imposing a time limit on the retention of employment land with a view of turning it over to housing in two or three years would simply encourage the landowner to keep the land off the market or refuse expressions of interest for industrial use, and then claim to the Local Authority that there have been none.  At the moment we have a case where a landowner has submitted proposals for the reallocation of his land from employment to housing under the Site Allocation process.  His planning agent has claimed that that the land is unattractive and unviable for employment development, and that the only interest is from residential.  But the Council is aware of correspondence between representatives of the landowner and a local company that wishes to buy the site and develop it for industry; this would create 40 more jobs in a deprived area with high unemployment.  The company has provided detailed designs to show how the industry could be accommodated on site.  It is clear that the landowner has been stonewalling industry in favour of housing, while implying to the Local Authority that there is a lack of industrial interest on the site in question.  Given that commercial interest in a site is not always known to the Local Authority, There are no safeguards in these proposals to stop this happening. Indeed, the proposals as currently set out will facilitate it. 

24              Furthermore, Walsall also forms part of the forthcoming West Midlands Combined Authority.  The Authority has recently agreed a ‘Devolution Deal’ with the Government.[5] Paragraph 34 commits the parties to work together on an appropriate portfolio of investable urban regeneration projects which the Government could help promote to appropriate international investors, potentially as part of a new Midlands Engine proposition.  Paragraph 43 states inter alia that ‘The government will work with the Combined Authority to support the West Midlands Land Commission. The West Midlands Land Commission will ensure there is a sufficient, balanced supply of readily available sites for commercial and residential development to meet the demands of a growing West Midlands economy. It will create a comprehensive database of available public and private sector land, identify barriers to its disposal/development, and develop solutions to address those barriers to help the West Midlands meet its goal to deliver a significant number of additional new homes over the next 10 years, and to unlock more land for employment use. The Combined Authority will also be able to use their proposed Land Remediation Fund to support bringing brownfield sites back into use for employment and housing provision (emphasis added).

25              The proposed changes would be in conflict with both the overall aim of the NPPF (in regard to the promotion of sustainable economic growth and the need to provide for industrial units) and the Devolution Deal, as it would impose a quixotic national planning policy-related constraint on the functioning of the industrial market, while also vitiating regeneration.  Indeed, if the employment land supply is cut off and re-orientated towards housing, by Government planning policy guidance, Local Authorities would fail to provide for economic needs, as the NPPF advises.  This situation would be counterproductive to the Government’s wider objectives, both in relation to rebalancing the country geographically and economically (ie the proposals would tilt economic activity further away from productive and export intensive industry towards housing-based speculation).  Given that local industry supports other jobs, the constriction of the supply of land for industry to grow would steadily impoverish the Borough instead of regenerating it and facilitating its essential role in providing for UK exports

26              In the recommendations below, we propose revised wording to paragraph 22 of the NPPF.  This would have three beneficial effects.  Firstly it would remove the current sentence ‘Land allocations should be regularly reviewed’ which is ambiguous and could be taken to imply that any change regarding unsuitable employment land should wait until the next Site Allocations Review, rather than a more frequent Employment Land Review, even if it has become clear through the publication of an interim ELR, which provides a major consideration in a planning application, that the land is no longer suitable for employment development.  The current wording is actually more inflexible than it needs to be, given that land allocations typically last for ten or fifteen years. 

27              Secondly, it would encourage clear evidence to support the matching of supply and demand in relation to employment land, which is badly needed and would be consistent with the other relevant aims and paragraphs of the NPPF, notably the need to provide for all objectively assessed need and for economic growth.

28              Thirdly it would encourage the speedy release of an industrial site becomes vacant where it is clear, because for example it is surrounded by other non-employment uses such as housing, that its release is in the interest of improving the residential environment.  These cases are prevalent in some of the country’s older industrial areas, where fragmented industrial developments were originally built cheek-by jowl with surrounding housing for the then workforce, with poor highway access. (The Government’s proposed wording would imply that this land remains protected for three years). Together these changes would help authorities that need to re-engineer the supply of employment land to meet the needs of modern industry while ensuring that unsuitable land is released as speedily as possible.

29              It should be noted that our wording would imply the production of timely employment land surveys that focus on demand as well as supply in relation to industry.  Given the importance of industrial land as a long term resource, for the country’s overall good as well as locally, we consider the regular and timely publication of Industrial and Employment Land Reviews justified and in line with the overall aims of the NPPF.

Recommendations about the process

(1)                The six to twelve month transitional period to enable a review of local plans to incorporate the changes to affordable housing definition is far too short.  For each of the Local Plan documents it would seem necessary to identify the realistic available options and consult on them before consulting on a draft plan.  We consider the time period should only be guidance and that individual circumstances should be taken into consideration. 

(2)                We also consider that a transitional period may be needed to address the other proposed changes to the NPPF.  It is not clear what should happen in the light of the Housing Delivery Test and whether failure might require a review of the Green Belt, or what the implications would be if authorities such as Walsall could not maintain a supply of employment land (thereby failing to provide for business and economic needs as stated in the NPPF).

(3)                There should be a formal consultation on the proposed wording on the changes to the NPPF as this current consultation does not provide the detail needed to understand the issues and consequences in full. 

Substantive Recommendations

(4)              Starter Homes should be defined in the NPPF and the discount applied in perpetuity.

(5)              The decision over what is included on the Brownfield Register should be left to local authorities and that their decision is based on evidence such as the ELR and SHLAA.

(6)              The Government’s intention to strengthen the weighting of policy towards brownfield land for housing needs to make an appropriate safeguard in the NPPF along the lines of “unless it is identified by local authorities as needed to meet industrial or other identified land requirements.”

(7)              The Government needs to provide more resources to local authorities to support the delivery of housing sites which have stalled.  Developers should be made more accountable for the failure to delivery sites.  

(8)              The Government should consider carefully through empirical evidence what the delivery problems have been in relation to stalled sites that have an allocation or consent for housing.

(9)              NPPF paragraph 22 should be revised as follows:

‘Planning policies should provide, allocate and protect the best possible portfolio of industrial land and business development opportunities to meet business needs, based on a regular and up-to date business demand and land supply assessment in an Employment Land Review (ELR).  They should avoid allocating vacant sites for employment use where there is no reasonable prospect of the land being used for that purpose, or where it is in the interests of amenity that such land is released to another use.  Where up to date evidence in an ELR shows that there is no reasonable prospect of a site being used for the allocated employment use, applications for alternative uses of land or buildings should be treated on their merits, having regard to market signals and the relative need for different land uses to support sustainable local communities.’

January 2016

APPENDICES

Appendix 1 – Trends in the supply of vacant industrial land 2013-2016

Source: Walsall Council Monitoring

Appendix 2 - Trends in the supply of Industrial premises, 2012-2016

Source: Walsall Council Monitoring (nb the Borough of Walsall is made up of six towns: Walsall, Aldridge, Brownhills, Bloxwich, Willenhall and Darlaston)

Appendix 3 – Difference between supply and demand, Industrial premises, Walsall, Q4 2015

Source: Walsall Council Monitoring

Appendix 4 Industrial Development Walsall 1998-2015

Source: Walsall Council Monitoring

Appendix 5: Industrial Site Vacancy Time Span, Walsall, 2006-2016

Source; Walsall Council Monitoring

21 cases: average vacant time span: 15 years

Current known Industrial development interest:

Former PSL Site, Willenhall (vacant since 2008, planning application Jan 2016)

Adj Middleton Paper, South Walsall (vacant since 1992)

Adj Shaylors, Aldridge  (vacant since1970s)

Fryers Rd, Bloxwich (early 1990s, recent permission for gasification plant) )

Reedswood Way, North Walsall  (vacant since1996)

FMR Mckechnie’s, Aldridge (vacant since 2014)