The new government will need to marry planning reform with other interventions in order to meet its housing targets, argues Rory Stracey
The new Labour government is not breaking new ground in identifying planning reform as the key to solving the housing crisis puzzle.
In the aftermath of fthe inancial crisis the Cameron government embarked on a path of liberalising the planning system, by using permitted development rights to allow certain types of existing buildings to be converted to residential use without the need for planning consent. The liberalisation of permitted development rights has had some success: between 2015/16 and 2022/23 just over 100,000 new homes were built under permitted development rights. This however was not enough to have a material impact on the housing crisis.
The boldest proposals for reforming the planning system over the last decade have come from the Johnson government, with its White Paper: Planning for the Future.
It went into battle with the status quo, proposing sweeping reform: demolition of the plan led system, and replacement with a zonal planning system that would resemble the kinds of development control systems that can be seen in parts of continental Europe and the USA. The White Paper proposed abolishing the system of section 106 developer contributions, and replacing it with a nationally set infrastructure levy.
But like any battle plan, the white paper did not survive first contact, with broad opposition, including from Conservative backbenchers, ultimately consigning the proposals to dust.
The history of planning reform then has been one of disappointment and failure. Nonetheless, the Labour government’s pledge to build 1.5 million new homes over the next five years rests on the promise of planning reforming riding to rescue.
Can the new Labour government succeed with planning reform where others have failed, and what might be needed to deliver mass housebuilding where others have failed?
The Kings Speech did not shed a great deal of light on what the new government’s planning reform will look like. However, the tone of the new Labour Government’s approach to planning is clear: “the planning system must be an enabler of growth – enabling democratic engagement with how, not if, homes and infrastructure are built”.
We can expect to see Keir Starmer’s government being far more interventionist than predecessors. The government will re-impose mandatory housing targets by changing the NPPF so that local plans must meet such targets. It is also likely that the NPPF will be amended to encourage pragmatic reviews of green belt boundaries, and in particular to identify “grey belt” that might be suitable for new housing: areas of low quality green belt land that does not have the character of greenfield land. The effect of these two measures could have a positive impact on the supply of planning permissions: encouraging developers to submit speculative applications where housing targets are not being met, or where “grey belt” can be identified.
It will be vital that the fees generated are ringfenced so that they can only be spent within planning departments, rather than to subsidise other local services.
The government also proposes new measures to increase the capacity of local planning authorities. Recruitment and retention of planning officers is a real issue for the planning system, as highly skilled planning officers are attracted to the salaries of the private sector. Reform when it comes is likely to involve allowing local authorities to charge developers higher planning application fees. If these measures allow local authorities to charge more for planning applications, it will be vital that the fees generated are ringfenced so that they can only be spent within planning departments, rather than to subsidise other local services.
By increasing the supply of funding to planning departments through fees paid by the private sector, local authorities may be able to use those funds to modernise systems and recruit and retain high quality and well trained planning officers. In addition to increasing funding through increased planning application fees, the government should consider ways of enabling planning departments to pay planning officers’ salaries that are much closer to those on offer in the private sector. The aim must be to improve the speed of the system, as well as the quality of decision making.
Planning reform under the new Labour government means increasing the supply of new planning permissions and expediting decision making.
However, while changes to the NPPF and increasing the capacity of planning departments will no doubt increase the supply of new planning permissions, there is a persistent question mark over whether that will in turn increase the supply of new homes.
In 2018 the Letwin Review was tasked to “explain the significant gap between housing completions and the amount of land allocated or permissioned in areas of high housing demand, and make recommendations for closing it”. Some of the conclusions and recommendations arising from the Letwin Review certainly chime with the tone of the new Labour government.
One of its recommendations included a greater role of compulsory purchase in housing delivery, encouraging developers to “use it or lose it” when planning permissions are granted. The government’s proposals to tilt the system of compulsory purchase law in favour of acquiring authorities, enabling authorities to acquire land without paying a premium for “hope value” may make acquiring authorities more inclined to intervene, by making such intervention viable financially.
The government could consider amending the Secretary of State’s guidance on the use of compulsory purchase powers to give more explicit support for an interventionist approach
The financial risks of the compulsory purchase process weigh heavily on local authorities when contemplating intervention. However, there is a question over whether the government will need to go further than pursing these limited objectives of reducing compensation payments. The system of compulsory purchase is slow, complex and expensive. The bar for the use of compulsory purchase powers is rightly high: there must be a compelling case in the public interest.
>>See also: A boost for housebuilding or an ill-defined gimmick?: Labour’s ‘grey belt’ plans explained
>>See also: In the rush to build 1.5 million homes how do we safeguard quality?
However, the government could consider amending the Secretary of State’s guidance on the use of compulsory purchase powers to give more explicit support for an interventionist approach to compulsory purchase where strategic housing delivery is at stake.
And the government could consider introducing new compulsory purchase powers aimed specifically at addressing build out rates, something the Letwin Review considered as an option.
The government clearly has the numbers in parliament to deliver the radical reform. But delivering reform to the planning system, and delivering new homes do not necessarily go hand in hand. It will need to marry planning reform with other interventions in order to meet its housing targets over the next five years.
Rory Stracey, partner, Trowers & Hamlins
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