What next for planning under the coalition?

With the planning system in a state of paralysis, what opportunities exist for property developers? Ben Garbett explores the current planning environment.

The Decentralisation and Localism Bill is expected to be published in the next few days. This will bring an end to Regional Strategies and introduce other planning reforms designed to implement the coalition government’s ‘localism’ agenda.

Planning law specialist, Ben Garbett, surveys the current planning landscape and outlines the potential risks and opportunities for housing developers.

Abolition of Regional Strategies

On 6^th July 2010 Eric Pickles MP, the Secretary of State for Communities and Local Government, issued a parliamentary statement revoking Regional Strategies ahead of their formal abolition in the new "Localism Bill". This was confirmed in a letter to chief planning officers the same day, which stated that "New ways for local authorities to address strategic planning and infrastructure issues based on cooperation will be introduced."

Regional Strategies set the national framework for housing and other strategic development in the UK. It underpins the current unpopular system of determining housing numbers by reference to centrally imposed targets. The reaction of many local planning authorities to the announcement was to withdraw their draft core strategies, the plans designed to cater for future housing needs at local level.

Planning system in paralysis?

Many authorities have yet to adopt new housing targets, and some of them will lack the resources to do this in the wake of budget cut backs, and the recent scrapping of the National Housing and Planning Advice Unit. There is a mounting body of evidence that planning applications are being refused and site allocations are being put on hold whilst we wait for an alternative system to emerge. In this climate of uncertainty, developers are holding back from seeking additional strategic land options.

Housing shortages and the affordability gap will surely worsen, especially with a reduction in funding to the Homes and Communities Agency for public sector building schemes. The picture already looks bleak according to the latest statistics:

• house building is at its lowest level since the 1920’s; and
• plans for 160,000 new homes have already been shelved. This figure is expected to rise to some 300,000 by next year.

It would be wrong to blame continuing housing shortages entirely on the planning system. Land prices are still too high in many places with landowners unwilling to do deals at the sort of values which are needed to make development schemes viable. As one land manager for a national house builder commented to me recently, "build rates for new development will not speed up until the unreasonable expectations of landowners fall into line with reality."

Case notes: R (Cala Homes Ltd) v Secretary of State for Communities & Local Government [2010] EWHC 2866 (Admin)

The secretary of state’s decision to withdraw Regional Strategies has now been successfully challenged in the High Court by Cala Homes Ltd. On 10^th November Mr Justice Sales ruled that the secretary of state did not have power to set aside the statutory tier of regional planning guidance without primary legislation. The secretary of state should have also carried out a screening assessment to consider whether that change in the planning regime was likely to have a significant environmental effect.

The Cala Homes victory may only be short lived given the imminent launch of the Decentralisation and Localism Bill through Parliament. The government has moved swiftly to re-state its earlier advice that the intention to abolish the Regional Strategies is a material planning consideration. However, that advice is itself now the subject to a fresh challenge by Cala Homes. It is likely that any planning authority giving determinative weight to such advice in refusing an application for new housing may run into problems, given the need for SEA compliance prior to the abolition of Regional Strategies by primary legislation.

The White Paper on Local Growth

The Department for Communities and Local Government says it will give local people and communities "far more ability to determine the shape of the places in which they live by radically reforming the planning system." Funding will be made available for town and parish councils to adopt new "neighbourhood plans", which will guide local development priorities.

The fine detail on all this is eagerly awaited. There is a growing consensus amongst stakeholders that recognise the need for some sort of planning above the local level, or "larger than local" as the Royal Town Planning Institute calls it. The coalition government’s plans for a new national planning framework and a presumption in favour of ‘sustainable development’ will provide a welcome balance, but exactly how this will work in practice remains to be seen.

Developers are fearful that putting local communities in charge of planning will create a false expectation that they can simply reject proposed development that they do not want, irrespective of urgent national priorities. Local authorities could be deterred from granting consent for unpopular housing applications with key benefits ignored.

Much will depend on the effectiveness of financial incentives. £1bn has also been set aside for the "New Homes Bonus" to provide a financial incentive for new building. The government has promised to match council tax receipts on every new home built for six years out of existing grants, and this money will be available for councils to spend on new local services and facilities. A bill will be introduced to implement Tax Increment Financing by July 2011. This will allow local authorities to borrow against future property rates income, a potentially valuable tool for unlocking stalled commercial schemes. It has also been announced that the community infrastructure levy will be reformed. It is proposed that charging authorities will be required to give more of the money raised directly back to local neighbourhoods, for them to decide how they want to spend it.

Plan-led development

For now, local authorities must continue to deliver housing according to indentified needs, including the targets set out in approved Regional Strategies unless material considerations indicate otherwise. National guidance also requires planning authorities to maintain an up-to-date five year supply of deliverable sites.

Local authorities who sit on their hands, or who bow too easily to local pressure in refusing well-conceived development proposals, may face a difficult time justifying their actions and may even risk an adverse award of costs on appeal.

‘Planning by appeal’ could again become a potent weapon for developers against planning departments who will be suffering under the strain of acute budget cuts. How quickly this message filters through to communities and their elected members remains to be seen.