Localism Bill

Memorandum submitted by the Federation of Master Builders (L 57)

Executive Summary and Recommendations

1. The FMB supports the Localism agenda but believes that the balance of interests must be preserved in order to deliver the housing and infrastructure needed by local populations.

2. With around 5 million people on waiting lists for housing and house building at its lowest levels since 1924, it is essential that local democracy does not deprive those who do not have a home of their own of the chance to acquire the stake in society that comes with a secure place to live.

3. The provision for the creation of a register of land of community value is unnecessary and is likely to create greater administrative burdens for both local authorities and developers. As such we propose that the Chapter 4 clauses are removed from the Bill.

4. If this provision does pass into law, parliamentarians must ensure that the subsequent regulations make adequate and robust provisions for a land owners right of appeal and fair valuation of land as well as an obligation on those groups seeking to purchase community land to demonstrate that they have sufficient funds to do so within 12 months.

5. In order to protect the interests of those in need of a home, the FMB proposes that a clause legislating for a presumption in favour of sustainable development be the first clause of Part 5 on planning.

6. The Government’s decision to allow councils to ignore the regional targets has already resulted directly or indirectly in plans for around 160,000 homes being dropped.

7. The duty to cooperate which attempts to cover regional planning issues is too weak and must be reinforced by powers for the Secretary of State to intervene where local planning authorities are unable to reach agreement on regional planning issues within a reasonable time frame. These powers should be explicit in the Bill and details should be set out in secondary legislation.

8. The Clause 92 provisions regarding planning inspectors unnecessarily weaken a key safeguard in the system without delivering any additional benefit and should be removed from the Bill.

9. Given the history of failure surrounding development gains taxes, a clause revoking the Community Infrastructure Levy Regulations 2010 and the relevant parts of the Planning Act 2008 should be inserted into the Localism Bill and replaced with a provision permitting the secretary of state to make regulations providing for the single tariff promised in Open Source Planning.

10. Notwithstanding the inadvisability of proceeding with CIL the FMB recommends that the proposed new clause 213 (1C) be removed in order to preserve the ability of examiners to alter charging schedules where necessary.

Introduction

11. The Federation of Master Builders (FMB) is the largest trade association in the UK building industry, representing more than 10,500 building companies. Established in 1941 to protect the interests of small and medium-sized building firms, the FMB is independent and non-profit-making, lobbying continuously for members’ interests at both national and local levels.

12. The FMB is a source of knowledge, professional advice and support for its members, providing a range of modern and relevant business building services to save them time and money. The FMB also offers advice to consumers via its ‘find a builder’ and ‘check a builder’ websites.

 

Background: The Housing Crisis

13. With around five million people on social housing waiting lists and an accumulated housing shortage of around one million homes, the financial crisis could not have come at a worse time. Its immediate effect has been to reduce new house building to its lowest peacetime levels since 1924. The Localism Bill aims to strengthen local democracy and promote the "Big Society". The FMB supports the localism agenda but believes that the balance of interests must be preserved in order to deliver the housing needed by local populations.

14. The number of households in England is projected to rise by 5.8 million from 2008 to 2033, an increase of 232,000 per year on average and reaching a total of 27.5 million in 2033. (Department for Communities and Local Government)

15. Forecasts for new build housing completions in Great Britain are bleak with just 126,000 completions expected in 2011 and only another 132,000 expected in 2012. Should this transpire, between now and the end of 2012 we will be another 206,000 homes short: Assuming an occupancy rate of 2.36 (2001 census) this is enough to house the metropolitan population of the UK’s fourth largest city, Liverpool (2001 Census).

Parts 4 &5 of the Localism Bill

Covering Part 4: Community Empowerment

Part 4 Chapter 4 Clauses 71-88 - Land of Community Value.

16. This provision for the creation of a register of land of community value is unnecessary and is likely to create greater administrative burdens for both local authorities and developers. As such we propose that the Chapter 4 clauses are removed from the Bill.

17. The proposal for a list of land of community value is unnecessary as a means of protecting community assets as mechanisms already exist in the planning system for protecting public amenities and making provision for compensating local communities for any loss of amenity caused by developments that are approved. Local authorities can refuse planning permission for priceless community assets and Section 106 of the Town and Country Planning Act grants local authorities considerable power and flexibility in determining the level of compensation for loss of amenity required to make an application acceptable in planning terms. Total contributions under section 106 in the financial year ending March 2008 have been estimated to be worth around £9bn by consultants EC Harris.

18. The provisions are also unnecessary as a means of providing an opportunity for local community groups to bid to buy buildings or land as there is nothing to prevent them from doing so now.

19. The provisions will create an additional administrative duty for local authorities already struggling to meet their current obligations on drastically reduced budgets. The administrative duty is likely to be considerable as they will have to resource the maintenance of two registers, processing of applications for land to be listed, communication with applicants, management of the review process, monitoring, and enforcement. How the issue of compensating landowners will impact on local authorities is unclear at this stage.

20. The provisions will also have serious implications for owners of land listed as being of community value. While Chapter 4 does contain some provisions regarding review of decisions and compensation there is insufficient detail in the Bill to guarantee that safeguards are adequate.

21. The provisions are also susceptible to deliberate misuse by those seeking to obstruct development plans. Misuse of statutory provisions in this way is widely recognised in relation to tree preservation orders and registering of common land. These clauses have considerable potential to add to the legislative provisions that can be used to frustrate development at considerable cost to both developers and local authorities.

22. If this provision does pass into law, parliamentarians must ensure that the subsequent regulations make adequate and robust provisions for a land owner’s right of appeal and fair valuation of land as well as an obligation on those groups seeking to purchase community land to demonstrate that they have sufficient funds to do so within 12 months.

Covering Part 5: Planning

A presumption in favour of sustainable development.

23. Development provides more than just much needed new housing. Developments deliver a wide range of benefits to communities from decontamination and regeneration of derelict areas to financial support for local services such as health and education. Developments bring investment and create jobs, not just in construction but also in the wider economy as pay packets are spent on local goods and services. As such it is vitally important that there is a balance between the interests of the small number directly affected by a development and the interests of the wider community that benefits from it. In order to preserve the balance, there needs to be a clause in the bill that supports the rights of the wider community to enjoy the benefits of development.

24. In its flagship pre election planning policy document, Open Source Planning, the Conservative Party proposed

25. "….establishing a presumption in favour of sustainable development: the presumption will be that individuals and businesses have the right to build homes and other local buildings provided that they conform to national environmental, architectural, economic and social standards, conform with the local plan, and pay a tariff that compensates the community for loss of amenity and costs of additional infrastructure."

26. This was the right approach and the FMB believes that a clause providing for such a presumption must be included in the Localism Bill. This presumption in favour of sustainable development is essential if the new planning system is to be able to provide the supply of land required to meet the nation’s housing and economic needs and must be enshrined in primary legislation if it is to be effective. As such the FMB proposes that a clause legislating for a presumption in favour of sustainable development be the first clause of Part 5 on planning.

Clause 89 Abolition of Regional Spatial Strategies (RSS)

27. Although the Government’s decision to scrap the RSS and their house building targets has now been ruled unlawful by the High Court, the move has shown what is likely to happen in practice if this measure in the Bill becomes law.

28. The immediate effect of the abolition of RSS has been to dramatically increase levels of uncertainty and delay in a system already notorious for its slowness and unpredictability.

29. New research commissioned by the National Housing Federation, carried out by Tetlow King Planning, shows that the Government’s decision to allow councils to ignore the regional targets has already resulted directly or indirectly in plans for around 160,000 homes being dropped. Tetlow King expects that figure to increase to at least 280,000-300,000 homes by this time next year.  The FMB is concerned that despite the Government's decision to transform existing policy the basic evidence that we need more homes not fewer has not changed. If there is a hiatus in house building while the system is reinvented, the Government will struggle to honour its pledge to deliver the new homes the country needs.

Clause 90 Duty to co-operate in relation to planning of sustainable development

30. This duty is designed to replace the RSS system but is too weak to do so in its current form. The regional planning apparatus provided a neutral assessment of regional planning issues in the interests of the wider community and was adequately resourced to do so. A duty to cooperate is not sufficient to replace either the expertises or the ability to enforce potentially un-popular decisions for the wider good. Without the RSS system decisions on potentially unpopular but necessary issues such as housing allocations and infrastructure provision may be subject to considerable delays should discussions between authorities of equal standing become dead-locked.

31. As such the cooperation duty must be reinforced by powers for the Secretary of State to intervene where local planning authorities are unable to reach agreement on regional planning issues within a reasonable time frame. These powers should be explicit in the Bill and details should be set out in secondary legislation.

Clause 92 Adoption and withdrawal of development plan documents

32. This clause restricts the ability of planning inspectors to make recommendations. Given that it is widely accepted that many local authority planning departments are either short staffed or lacking relevant skills and experience, or both, it is unwise to weaken the ability of planning inspectors to make recommendations.

33. The effect of this clause in practice will be to allow local planning authorities in areas with strong anti development sentiment to pass development plans that only meet the statutory minimum requirements. In the absence of a presumption in favour of sustainable development, this is likely to result in plans that restrict levels of new house building below that required by the local population.

34. As such the FMB believes that Clause 92 unnecessarily weakens the system without delivering any additional benefit and should be removed from the Bill.

Clause 94 Community Infrastructure Levy: approval of charging schedules.

35. The absence of a clause revoking the Community Infrastructure Levy Regulations 2010 and the relevant parts of the Planning Act 2008 that made provision for them conflicts directly with the Conservative Party’s pre election commitment to scrap the Community Infrastructure Levy (CIL) and replace both it and large sections of Section 106 agreements with a single tariff. The original belief expressed in Open Source Planning that this "twin-track approach is unnecessarily complicated and does nothing to address the uncertainty and delays that currently exist in agreeing planning obligations" remains correct and the Government must reconsider its approach. Aside from the indefensible timing of an additional tax on new housing, the FMB believes that the CIL as a Development Gains Tax (DGT) will fail in the same way that all of its predecessors have.

36. Since the Second World War there have been four DGTs, all of which failed to an extent that necessitated their repeal. The 1947 Development Charge reduced the land coming forward for development and "the revenue raised was substantially lower than expected." [1] The 1967 Betterment Levy was overly complex leading to avoidance and also "raised far less money than was initially expected." [2] The 1973 Development Gains Tax was removed and revised due to rapidly changing market conditions and a change of government before it could have a significant impact on land supply, and the 1976 Development Land Tax that replaced it had to be reduced to 60% and then eventually repealed in the 1985 Finance Act due to its complexity and subsequent inequity. CIL will fail for similar reasons to those of its predecessors. It will reduce the amount of land coming forward for development as land owners will hold on to their assets and await more favourable conditions. CIL is also expected to add between £5,000 and £18,000 per unit to production costs, thus further hampering delivery.

37. As such the FMB recommends that a clause revoking the Community Infrastructure Levy Regulations 2010, and the relevant parts of the Planning Act 2008 be inserted into the Localism Bill and replaced with a provision permitting the Secretary of State to make regulations providing for the single tariff promised in Open Source Planning.

38. Notwithstanding the inadvisability of proceeding with CIL, Clause 94 is particularly problematic. It is widely recognised that local planning authorities lack the necessary skills to create viable and responsive charging schedules. This issue had been acknowledged and to an extent addressed by the ability of planning inspectors to make binding recommendations regarding them. Clause 94 removes the ability of the external examiner to correct even the most obvious problems by making their recommendations non-binding. This effectively removes the key safeguard preventing adoption of inappropriate charging schedules under CIL. As such, and without prejudice to the previous recommendation, the FMB recommends that the proposed new clause 213 (1C) be removed in order to preserve the ability of examiners to alter charging schedules where necessary.

Clause 102 - Consultation before applying for planning permission

39 This clause seeks to make pre application consultations mandatory on developments over a certain size. Although the threshold level for application of the duty has yet to be determined, what is clear is that it will increase administrative burdens for both local authorities and developers as both will have to dedicate time and resource to implementation.

40 What is not clear is how the duty to have regard to the views expressed during the consultation will work in relation to national and local policy. For example, compliance with the building regulations will increasingly require use of micro-generation technology as part of the drive towards zero carbon homes, and local authorities have historically required an enhancement on these standards via policies such as the Merton Rule. However, these technologies are often unpopular with local communities thus setting national policy at odds with local opinion.

41 If left unresolved this clash of policies has the potential to further inhibit already historically low levels of house building should the only designs capable of meeting Part L of the Building Regulations and local planning policy prove to be unacceptable to newly empowered local communities. If local communities are not to have the power to block such developments, then the credibility of the consultation itself must be called into question.

42 This issue illustrates the fundamental yet unanswered question of the extent to which small groups of unelected people in a local area will be empowered by the Localism Bill to inhibit achievement of goals set by democratically elected representatives.

Clause 96 - Neighbourhood planning

43 While the intent of this provision is clear, to whom the power is to be devolved is not. Neighbourhoods are easy to define in a legal way where there is a Parish Council. However, not all areas have Parish Councils. For example, the London Borough of Camden has no parishes and is the largest "defined" neighbourhood for that area. If Neighbourhood planning is to be successful and legitimate then a "Neighbourhood" must be defined more clearly and in such a way as to permit genuine accountability to the community for the decisions taken. In a London Borough or other built up area the power could be devolved to a level based on Electoral Wards.

February 2011


[1] Barker, Kate. “Review of Housing Supply. Delivering Stability: Securing our Future Needs. (Final Report – Recommendations)” HM Treasury, March 2004, p78

[2] Barker, Kate. “Review of Housing Supply. Delivering Stability: Securing our Future Needs. (Final Report – Recommendations)” HM Treasury, March 2004, p78