Memorandum submitted by Confederation of British Industry (PB 23)

 

CBI Written Evidence for Public Bill Committee

 

8th January 2008

 

 

Introduction

 

1. The CBI is the UK's leading business organisation, speaking for some 240,000 businesses that together employ around a third of the private sector workforce - all of whom stand to benefit from the reforms of the Planning Bill.

 

 

Summary

 

2. The CBI supports many of the aims and principles of the Planning Bill, particularly those to rationalise and streamline the planning system for major infrastructure projects. The CBI has long argued that shortcomings in the planning system have undermined the delivery of many important infrastructure projects. The CBI also accepts that the proposed new Community Infrastructure Levy is a fairer and more workable mechanism for securing contributions from applicants to support local infrastructure needs compared with the planning-gain supplement. Overall, the CBI considers many parts of the Planning Bill to have a clear potential to improve planning process by providing a more efficient and fairer service for the benefit of both applicants and local communities.

 

 

Meeting infrastructure needs: the strategic context

 

3. The UK will need to undertake an unprecedented amount of investment across all its core infrastructure networks over the coming decades. Capacity across the UK's infrastructure networks is being stretched due to increased demand resulting from a period of sustained economic growth. Many core infrastructure facilities, particularly in the energy sector, also need upgrading or replacing.

 

4. Demand for each core mode of transport has risen significantly in the past ten years and is projected to increase substantially over the coming decades:

 

The demand on the UK rail network has increased by 40% over the past 10 years and this trend is expected to continue - between 2009 and 2014 investment (by Network Rail) is planned to treble to over 10bn;

Across our strategic road network demand has increased by 26% in the past decade with congestion increasing by 10% over the last three years - over 1.3bn of targeted investment is likely to be spent each year until 2014 to ease capacity constraints;

The Department for Transport has predicted that there will be a 29% increase in port traffic demand by 2030 which will require a substantial expansion of existing port facilities;

The demand for air travel has risen significantly and will continue to do so. There are 100 million more passengers passing through UK airports than there were 10 years ago - by 2030 this figure is projected to increase by an additional 260m

 

5. In the energy sector the UK will soon become a significant net importer of gas, and by 2025 over 30% of our national energy generating capacity will need to be replaced due to the decommissioning of a number of nuclear and coal fired power stations. There is a pressing need for a secure and reliable future energy mix which supports the Government's target to cut CO₂ emissions by 60% come 2050 and avoid any 'dash for gas'.

 

6. Without a more expeditious decision-making process there is a real risk that the UK will develop an infrastructure deficit which will pass damaging costs onto the economy, undermine our ability to achieve a number of environmental objectives and have a detrimental impact on peoples' quality of life.

 

Shortcomings in the planning system: the impact on scheme promoters

 

7. The CBI believes that a reform of the planning system is long overdue for major infrastructure projects. Current shortcomings in the planning system frequently impose unnecessary uncertainties on promoters of major infrastructure projects, to the cost of both the applicant and the wider economy.

 

8. The difficulties facing scheme promoters are compellingly detailed in the respective independent reviews of UK transport policy and land use planning undertaken by Sir Rod Eddington and Kate Barker. These include:

 

lack of clarity over Government strategic policies and priorities - the examination of an application can often be delayed where there is no strategic context detailing the 'need' for any project;

complex and overlapping array of consent regimes - applicants invariably need to submit multiple applications under a number of separate legislative instruments in order to receive all necessary consents;

lengthy and open-ended inquiry processes - planning inquiries last many months with a repetitious dependence on the cross examination of evidence;

multiple Ministerial accountabilities following inquiry inspector's report - for large projects it is likely that more than one Government ministry will be involved in determining an application;

risk of legal challenge on the merits of strategic policy statements and the process by which a decision was made on any given project.

 

9. The CBI would also contend that the preparation and determination of planning applications are often frustrated by difficulties in receiving timely responses to consultations on an applicant's development proposal. Such delays are frequently caused by an inadequate level of resource within key statutory agencies to provide comment and input on project proposals within a reasonable timescale.

 

10. Taken together these shortcomings pass often significant costs onto applicants that delay and deter investment in the UK's infrastructure networks.

 

 

National Policy Statements (part 2)

 

11. The CBI supports the Government's decision to separate policy making from decision taking for nationally significant infrastructure projects with the latter delegated to a newly established independent Infrastructure Planning Commission (see below). The CBI believes that establishing a clear, coordinated policy framework at the national level for each key sector has numerous potential benefits:

 

it would ensure that important decisions concerning the strategic need for infrastructure are debated openly and decided nationally rather than on an ad hoc basis through individual planning inquiries;

it would provide a clear framework - including clear timescales - within which decisions on individual projects can be taken;

it would ensure that the diffuse national benefits of development that extend beyond local or regional boundaries are appropriately balanced with local impacts;

it would provide greater clarity and certainty to the private sector on the Government's policy objectives;

it should facilitate improved public engagement in the policy-making process;

Government would be under pressure to demonstrate upfront how particular policy approaches were consistent with all its key objectives (e.g. economic growth, productivity, climate change, sustainable development).

 

12. An effective framework of national policy statements will however be dependent upon the establishment of a robust national consultation process. When undertaking consultation Government departments ought to ensure that they abide by the Cabinet Office's Code of Practice on Consultation and adopt best practice techniques to maximise publicity amongst the public (including the private sector) and stimulate a wide debate on the balance of interests and priorities outlined in each national policy statement.

13. Parliamentary scrutiny will also fulfil an important role in testing the Government's objectives and contributing to the wider national debate on infrastructure policy which delivers - and is seen to deliver - proper accountability for (often controversial) Government policies.

 

14. However one issue about which the CBI remains concerned is how objectives established in UK-wide national policy statements (e.g. energy policy) will then be delivered in areas of the UK where planning powers are devolved.

 

 

Infrastructure Planning Commission (IPC) (part 1)

 

15. The CBI is convinced that the establishment of an IPC to take decisions on nationally significant infrastructure projects based on their own merits within a well-established nationally policy framework is a positive step. An expert independent decision-making body should ensure:

 

more effective engagement with affected communities and local stakeholders - replacing the array of consenting authorities with one decision making authority would enable all affected communities to consider projects holistically, therefore significantly reducing complexity and improving the accessibility of planning inquires for all affected parties;

faster decisions and less uncertainty - a single tier decision process (that does not depend upon an inspectors report prior to a ministerial decision) would significantly streamline the overall decision-making process;

that decisions on major infrastructure projects are not used as a vehicle for setting national infrastructure policy outside of a wider more inclusive national debate;

rigorous scrutiny by a number of experts from a variety of professional backgrounds.

16. There has been some criticism that such a system would be less democratic than at present since decisions would no longer be taken by (democratically-elected) Ministers and, as such, affected parties would have fewer opportunities to make representations. CBI does not accept that this would be the case. Under the current system, Ministers taking such decisions are required to act in a quasi-judicial manner: as such they are restricted in the issues they are able to take into account and ultimately are accountable to the courts. The CBI believes that the system proposed in the Planning Bill would ensure that ministerial responsibilities are exercised at the most appropriate level - i.e. setting national policy.

 

17. The success of the IPC will, however, be heavily dependent upon it having members with a high level of knowledge across a wide range of areas (legal, environmental, planning etc). This will be essential if it is to command respect and if we are to avoid a situation where decisions are routinely subjected to legal challenge.

 

 

Application and Inquiry Processes (parts 4, 5 & 6)

 

18. The CBI accepts that project promoters have a responsibility to engage in a positive and proactive manner with affected communities when developing project applications, and would contend that the proposals included within the Planning Bill to formalise the pre-application process have been overlooked by many commentators. The CBI expects that the pre-application process will act as an important opportunity for interested parties to influence applications for development. It should not be overlooked that Local Planning Authorities will fulfil important roles in negotiating specific planning obligations in the interests of their local area before the application is submitted to the IPC for a decision.

 

19. The benefits of rigorous and open pre-application consultation will however need to be delivered within framework that provides certainty to applicants on what is reasonably required of them. Where applicants have fulfilled their responsibilities it will be important that interested parties and statutory agencies adhere to specified deadlines to ensure that applications can be submitted and validated without unnecessary delay.

 

20. In terms of the inquiry process, the CBI supports the inquisitorial approach to the examination of project applications through the use of written evidence. Representations about the strategic need for particular types of development should be established and discussed nationally, not in connection with individual projects. If this is established, the public inquiry can properly focus on the merits/impacts of individual projects. Clearly affected parties must have the opportunity to make their case, but we do not believe the current (costly) adversarial approach benefits anyone.

 

21. In taking its decisions, the CBI believes it is absolutely essential for the IPC to be able to grant all the development consents needed for a particular project. The complexity of the current system is such that scheme promoters face submitting applications across multiple consent regimes: for example BAA submitted 37 separate applications across 7 pieces of legislation to secure development consent for Heathrow Terminal 5.

 

 

Project Thresholds (part 3)

 

22. The CBI is broadly supportive of the project thresholds put forward in the Bill, however would make the following comments:

 

thresholds for aviation infrastructure should be set in such a way as to take account of effects on air freight as well as passengers - using Air Traffic Movements as well as passenger numbers might be a way of achieving this;

the thresholds for port infrastructure are high and we urge the Government to consider (in conjunction with private sector operators) a lower level;

we do not consider it necessary to have separate thresholds for onshore and offshore energy generation projects.

 

 

Transitional Arrangements (part 2)

 

23. The CBI is concerned that where Government strategic policy is, or is in the process of being, developed there should not be the need to start again from scratch in producing a national policy statement. Therefore we support the powers to enable the Secretary of State to designate existing Government policy documents as national policy statements - though it is important that designated statements meet all the required standards to ensure that they are sustainable and are not subject to challenge through the courts. Such flexibility should ensure that policy and consultation work is not unnecessarily duplicated.

 

 

 

 

Community Infrastructure Levy

 

24. The CBI welcomed the Government's decision to legislate for a Community Infrastructure Levy (CIL) rather than the Planning-Gain Supplement (PGS) on the basis that it would offer greater predictability, transparency and certainty about costs and timescales for the delivery of infrastructure. We share the Government's hope that this mechanism will help developers and local authorities achieve ambitious housing growth targets through providing genuinely additional funding for new infrastructure. However we also continue to be concerned about the cumulative impact of the CIL alongside other new local charging mechanisms such as road user charges and supplementary business rates as well as challenges associated with the Government's Code for Sustainable Homes. We therefore urge the Committee to consider the CIL proposals in the light of this wider regulatory context.

 

25. While broadly supporting the CIL as set out in the Bill the CBI continues to believe that any new mechanism should not:

 

restrict the supply of land for development,

remove the incentive to develop, or

penalise general business interests where businesses seek to expand or enhance their premises without a significant increase in land value or impact on local infrastructure.

 

26. Despite this broad support we are concerned that clauses on the CIL do not give sufficient detail to assess its true impact. Key areas on which further detail would be beneficial include:

 

Basis for charging - The CBI is concerned that the Bill allows for charging on the basis of value uplift which was one of the biggest obstacles with PGS and which could detract from the intended certainty and simplicity of the CIL. While there may be a case for reducing or waiving a levy on the basis of viability the CBI strongly believes that the CIL should be set according to local infrastructure need not value uplift.

 

Liability - The CBI understands that the Government wants to apply the CIL as widely as possible but is concerned that this may have a negative impact on general business interests for whom development is not an end in itself and as a result of which there may be little additional requirement for local infrastructure. One solution could be for the levy only to be charged on net increases in development space. For similar reasons we believe there is a strong case for a lower rate for developments on previously developed land and an exemption for 'green' developments to encourage low carbon initiatives.

 

Planning - CILs should be based on a fully-costed assessment of the local infrastructure need, the full details of which should be set out in a Development Plan Document so that they can be scrutinised by the local community, stakeholders and the Planning Inspectorate. Local authorities should be required to have an adopted DPD in place before having the power to introduce the levy but should not use the lack of a valid plan as grounds for refusing planning permission.

 

Section 106 - The Government will need to issue clear guidance on how section 106 should be used alongside the CIL to ensure that businesses do not end up paying twice for the same infrastructure and to avoid confusion. The Bill and future regulations may help clarify this relationship by stating clearly what type of infrastructure may be provided by the CIL. In addition the Bill should explicitly allow for offsetting i.e. a reduced CIL liability if infrastructure that would otherwise have been funded through the CIL is provided through a section 106 agreement.

 

Regional level - The CBI agrees that in practice the CIL may need to be used to fund projects that cross local, regional and possibly even national boundaries, and in such situations local authorities may need to co-operate to share the cost and deliver the project. Clearly there will be a role for regional bodies in this process, however we remain unconvinced that Regional Development Agencies should become charging authorities in their own right.

 

Delivery - The CBI is concerned that the Bill does not demonstrate how infrastructure will be delivered. Clarification on the following issues will be vital:

which institutions may be permitted to act as 'banker' for the funds,

how infrastructure might be 'forward-funded',

how authorities might be prevented from using CIL to thwart development, and

how businesses may be involved in the scrutiny and management of the process.

 

Exemptions - The CBI continues to believe that there is a case for the exemption from this levy of the minerals industry and those organisations which are directly involved in the provision of infrastructure such as the energy sector.

 

27. In recognition of these issues the CBI would welcome early publication of the Government's draft regulations so that interested parties may have an opportunity to comment on their content before they are laid in Parliament.

 

 

Conclusions

 

28. The planning reform proposals - particularly those associated with Major Infrastructure Projects - contained within this Bill are essential to ensuring continuing economic success and to delivering a number of key Government commitments. Whilst the CBI has some concerns about some of the detail - as outlined above - we are strongly supportive of the Bill as a whole and are keen that it receives Parliamentary approval.

 

 

January 2008