Abolition of Regional Spatial Strategies: a planning vacuum? - Communities and Local Government Committee Contents

Written evidence from Levvel Ltd (ARSS 118)



The purpose of this note is to respond to the Government's consultation in respect of the decision to abolish Regional Spatial Strategies. In particular, it is intended to respond to the implications of devolving the responsibility for setting overall targets in respect of house building to local planning authorities. Whilst we support this policy, we consider that it would be helpful to provide guidance on the manner in which such targets are to be set.

In general, we consider that it is logical for local authorities to be given responsibility for determining their own targets for development. However, given that development often faces local opposition, it would be helpful if the devolution of this responsibility could be accompanied by a statement of principles from the centre:

Central government should make clear its view that there is an acute shortage of housing in this country which has immense consequences for homelessness, for people's quality of life and for economic competitiveness;

It should make clear that it expects to see this shortage addressed and that it considers that all new supply mitigates rather than exacerbates the affordability problem;

Local Planning Authorities should be required to base their targets for housing delivery on robust estimates of the level of local need and should take into account demographic changes—both in terms of population growth and the decline in household size;

The current proposal to incentivise housing delivery by matching 100% of Council tax receipts for new homes for six years should be formalised;

The relationship between CIL and S106 obligations should be clarified in order to make clear that affordable housing is not given a lower priority than all the infrastructure items sought through CIL;

It should be reiterated that, although the level of infrastructure and affordable housing that can be sought from development is limited by consideration of viability, the allocation of additional development will deliver additional affordable housing; and

Local Planning Authorities should consider their relationship with neighbouring authorities who constitute part of the same housing or employment market and should develop appropriate mechanisms to collaborate with them in order to ensure that the total quantity of development required is allocated.


Over the past 15 years the supply of housing in England and Wales has fallen far short of the targets set out centrally. In the face of constricted supply, prices have risen sharply and far faster than incomes. Addressing the shortage of housing in all tenures and easing the consequent pressure on affordability will require a flourishing housing industry and an adequate supply of land upon which to build. Moreover, in recent years, the development of new housing has become an increasingly important source of both affordable housing and infrastructure as well as providing crucial, skilled jobs.

Despite these facts, the provision of new housing is generally unpopular at the local level. There is therefore some concern that the decision to devolve the responsibility for setting overall housing targets to the local level will hand an effective power of veto to those who object to the development of housing at a time when house building needs to be encouraged. Whilst we acknowledge that this is a potential risk associated with this policy we also note that decisions about the provision of infrastructure and affordable housing and the capacity of new development to bear that burden are already made at the local level. Since the overall volume of development will be the biggest single factor in determining the level of such benefits that can be provided, it is logical that the two issues should be considered together.

In moving towards such a system, we consider that it will be important to ensure that the system:

Makes it possible to put forward a positive case for growth;

Is transparent, consensual and encourages early engagement; and

Does not impose large additional costs on local planning authorities.


The principal reason for our confidence that the revocation of RSS should not lead to the adoption of far lower targets at the local level is demographic. The ONS continues to predict substantial increases in population whilst average household sizes are falling. These facts have long been recognised. As far back as 2002, the Joseph Rowntree foundation concluded that, if house building rates continued at their then current level, the country would face a shortfall of over one million homes by 2022.

In 2003, the Barker report noted that the rapid run up in house prices was at least in part a price signal pointing to a shortage. She estimated the level of increase in overall housing delivery required in order to stabilise prices at 1.1% in real terms would be an additional 145,000 homes per annum. To stabilise prices at zero growth in real terms would require an additional 240,000 homes per annum on top of the 155,000 homes for which RSS then made allowance.

Since then, national targets have increased; most notably when Gordon Brown committed the government to the delivery of three million homes by 2020—an annual rate of around 240,000 per annum. Despite the fact that this target remains far below the level identified by Kate Barker as being necessary for the stabilisation of house prices, it was never reached during the housing boom up to 2007 and housing delivery since the market turned in the third quarter of that year has been far lower.

Even if house building were to recover quickly, years of under-supply relative to targets set at the regional level mean that, notwithstanding the fact that some authorities have exceeded their targets, the national picture remains one of massive under-supply.

At the local level, estimates of the overall need for housing have tended to find that the demand for housing has been generally larger than the RSS target. We have certain reservations about the findings of Strategic Housing Market Assessments—in particular about the scale of identified need for affordable housing relative to the need for market housing. Nevertheless, in many cases, the overall need for housing is found to exceed the quantity planned for by RSS policies.

Thirdly, we would point out that the steep run up in house prices over the past 15 years is a clear price signal that demand has outstripped supply. Even though prices have fallen considerably from their peak in 2007 the relationship between house prices and household incomes is less affordable than it was during the majority of the Twentith century. This is an important issue for the economy and the international competitiveness of the UK in world markets.

Since local planning policies must rest upon a robust evidence base, we are confident that any such robust assessment of the need for housing at the local level will, in the majority of cases identify a need for more housing rather than less. Whilst it would be desirable for the Government to give a clear signal that it recognises the shortfall in housing supply at the national level and expects to see it addressed, what is essential is that local assessments of the need for housing are robust and take into account the factors cited above.

We recognise that the forecasting of demographic trends is not a precise science—either at the national or local levels. However, it would certainly be possible to identify the upper and lower bounds of a range. Where a local authority wished to position itself within that range could then be determined by other considerations, as we will consider below.


Local Opposition

As regards the first of these points, it is certainly the case that, when invited to comment on proposals in Local Plans and Local Development Frameworks members of the public have tended to be opposed to, rather than supportive of, development. If the target for house building is to be set at the local level, where opposition is sometimes fierce, it would be helpful if Government could provide incentives to plan for growth. In this context, we welcome the proposed amendments to current Council tax arrangements which will provide some incentive to allocate additional residential development through the plan process. At around £7,000/dwelling,[147] the proposed incentive payments associated with new development are considerable in proportion to the scale of housing delivery and may be a substantial motivator for local authorities but members of the public may see them as comparatively modest in relation to the scale of the entire Local Authority budget and thus a limited motivator.

Secondly, and in our view more importantly, in winning over public opinion current system provides little incentive to support development. Circular 05-2005 and its predecessors explicitly prevent developers from being asked to provide benefits beyond the mitigation of their own impact through S106 agreements. It is scarcely surprising to find that local people are not motivated to support development which is officially prevented from providing benefits.

The move towards a Community Infrastructure Levy ends this principle and allows local planning authorities to seek contributions towards the provision of any infrastructure that would "support the development of their area". We have seen no reason to assume that its replacement by a Tariff, as announced in the document Open Source Planning, will revert to the status quo ante. The regulations which govern the introduction of CIL made it clear that the process is to identify the total level and cost of infrastructure required and then to divide it by the overall quantity of development (assessed on a per square metre basis).

However, because the overall quantity of development is assumed to have been decided at a prior stage, through the RSS, the impression was given that the amount of new infrastructure that could be delivered via planning gain is entirely independent of the overall level of development envisaged by the plan. This is not the case. In practice, delivery is constrained by the economic viability of development in the local area and it therefore follows that a higher level of development will allow the local planning authority to meet a higher proportion of its objectives. Linking the allocation of new homes to the benefits they will provide thus helps to make the case for new development. We will dwell on the means of doing so in greater detail below.

In the meantime, it is worth considering the current system. With the introduction of CIL, residential development is required to contribute towards planning gain in three distinct ways:

Through the Levy towards infrastructure required for the development of the area—which may include making good existing deficiencies;

Through Section 106 agreements towards infrastructure necessitated by the development itself; and

Through Section 106 agreements towards affordable housing;

Of these three items, only the second is limited by the nature of the development itself. If a development creates a need for a certain number of new school places, it can, and will, be asked to contribute towards the provision of those places.

However, the first and last items are limited by factor other than the nature of the development itself. If the schools in a particular area are already overcrowded or in need of replacement, the local planning authority may seek a further contribution towards new schools through CIL and this contribution would not need to bear any relation to the number of schoolchildren who were likely to move to the new development from other areas. Similarly, if the area has a pre-existing need for affordable housing, the local planning authority may seek new affordable homes—despite the fact that the development itself does not create that need.

However, although the amount of planning gain which may be sought from new development is not limited by the nature of the development, the maximum contribution that developments can afford to make is limited by the financial viability of that development.

In recent years, planning authorities have recognised that the amount of infrastructure and affordable housing that is needed in their areas often far exceeds the quantity that can be delivered from the amount of development envisaged by the RSS whilst retaining viability. Under the present CIL regulations, the functioning assumption is that, where need exceeds capacity, the gap will be filled by public subsidy—as previously. Whilst this is perfectly proper—there is, after all, no reason why developers should be expected to meet the whole cost of any infrastructure that the local planning authority deems desirable, guidance should recognise that central government funding is, itself limited.

Where there are insufficient fund (public and private) to deliver all the necessary affordable housing and infrastructure, it is surely sensible to consider whether the allocation of more development would deliver more funding for more benefits.

Moreover, as we noted above, an analysis of the overall need for housing in an area might reasonably produce a range of possibilities. However, where local authorities are able to consider their overall need for housing in light of their need for infrastructure and affordable housing, an incentive will be created to deliver a larger volume of affordable housing in order to secure the maximum level of contribution towards infrastructure.

In summary, we would suggest that, in setting the target for overall delivery of development, consideration should be given to the likely levels of infrastructure that can be secured from different quantities of development.

Complexity and Expense

The process of developing a robust and credible evidence base in support of local planning policies is already complex and expensive—it comprises a host of technical documents and financial appraisals which are not only difficult for the public to understand but can be difficult to integrate with one another.

It is not uncommon to see financial appraisals of the effects of two different aspects of policy, carried out on very different bases, in the same local authority evidence base. The justification is often that values and construction costs have changed but, since the Core Strategy upon which those studies are based is intended to last for 15 years, it is worrying if the evidence underpinning them struggles to remain pertinent for the length of time taken to adopt them.

It might be argued that adding a further variable—the overall level of development—to this situation would create further confusion. Taken in isolation, it might.

However, we would argue that the evidence collected to inform local policy could usefully be reformed in any case. The nature of the evidence that is now generally deemed to be required has emerged gradually in a piecemeal fashion. For example, since Circular 6-98 established the possibility of seeking affordable housing through planning policy, it has been necessary for Planning Authorities to demonstrate a need for additional affordable housing. Typically, this was done by means of a Housing Needs Survey. The publication of PPS3 in 2006 made it clear that Housing Needs Surveys should be replaced with Strategic Housing Market Assessments and Strategic Housing Land Availability Assessments. It also established the need for affordable housing policy to have regard to the economics of development. Even so, it was not until the decision in the case of Blyth Valley that this was universally acknowledged to necessitate a District wide assessment of the financial viability of sites in the Borough. Then, in February 2010, the emergence of CIL and the regulations which govern its use made it clear that Planning Authorities would need to draw up a schedule of all the infrastructure required in their area and then assess the impact on viability. This has added further to the confusion, which has, in turn, created further delay in the adoption of policy

Where policies have already been designed to seek an ambitious level of affordable housing, the impact of a potential CIL has been confusing. It is not clear whether new studies of viability are required or how relative priority should be ascribed to different forms of planning gain sought through different mechanisms. For example, many districts consider affordable housing to be their top priority and that some of the items on the charging schedule prepared for the CIL are of far less importance. However, CIL cannot be reduced on a case by case basis in order to account for scheme viability, but affordable housing can. In effect, this gives all the items paid for through CIL a priority over affordable housing.

Clear guidance on this matter would be welcomed by both planning authorities and developers and would help local people to get involved in consultations.

At present, assessments of viability tend to take the form of a single study conducted at a late point in the policy development process, when policy is largely fixed. If the assessment then reveals the policies to be unrealistic (especially in the short term) it can be very difficult to change direction.

In our view, greater stress should be given to questions of financial viability from far earlier in the process. This would allow it to be assessed iteratively and would prevent unrealistic expectations from becoming entrenched. As matters became known their impact on the appraisal could be included and tested, developers seeking to challenge specific assumptions could do so and land owners would be less likely to form unrealistic expectations about the "hope value" of their land.

We recognise that few local authorities are starting with a blank sheet of paper in respect of their planning policies. Nonetheless, for the sake of simplicity, we would suggest that the following would be an appropriate sequence for evidence gathering.

Identify the overall need for housing of all tenures—drawn from demographic data and identifying a range.

Identify the sites available to deliver the housing requirements through the SHLAA as at present.

Identify the overall infrastructure requirement including any "triggers" for single large items (so many additional homes in settlement X would require a new school, Y new homes would require an additional bus route etc)

Distinguish necessary infrastructure (such as water mains and sewerage) from desirable infrastructure (such as improvements to town centre).

Carry out an initial assessment of the ability of development to provide affordable housing and infrastructure.

Having carried out an assessment of the viability of developments it will then be possible to show not only what level of contribution towards infrastructure and affordable housing will be delivered by all of the planned development but also what levels would be delivered by higher or lower levels. This form of consultation is currently all but absent from policy formation.

This approach would also allow local authorities to test strategic decisions like the balance of greenfield/brownfield allocations. It is often argued that, since greenfield sites should be cheaper to acquire, they should be able to deliver more infrastructure and affordable housing. In practice, the balance between greenfield and brownfield sites is often set as much by guidance as by a consideration of their relative merits. Moreover, the presumption against greenfield allocations creates an artificial scarcity which may push land values higher than otherwise.


To advocate more consultation and more research at a time when planning departments face financial pressures is, of course, difficult. However, whilst both can be expensive, we do not consider it a given that such a finance based approach would be more expensive.

First, many of the elements of the research (including research into the number of homes required) are already being carried out at present—the problem is that they are isolated from one another. The cost of bringing the studies together may be marginal. Second, although such appraisals might seem to be more complex than those undertaken at present, this may be misleading. Because such appraisals are currently carried out at a single point, a large part of their cost is scenario or sensitivity testing. However, if they were carried out iteratively, the number of options tested would tend to fall as stakeholders were able to submit their own data and improve estimates.

Finally, it is possible that the Local Planning Authority would not need to shoulder all these costs itself—developers currently spend considerable sums of money in making representations to local planning policy—if a mechanism could be found for those resources be directed at the development of the evidence base rather than at the identification of its flaws then the cost of the evidence base would be reduced and its robustness increased at the same time.

Such a mechanism may vary from place to place: an area where development is characterised by a large number of small developments will need to adopt a different approach to developer engagement than one where the majority of development will fall on a single large site or indeed one where there are several large sites in competition. Moreover, as we have acknowledged, few local planning authorities would respond to a new approach with a blank slate. The route forward for each authority will depend on the nature and robustness of the evidence already available to them. Whatever the situation, it is clear that where developers have a say in both the volume of development and the distribution of affordable housing and infrastructure burdens amongst that development, they have far greater incentive to engage constructively than when they are simply competing for inclusion among a limited set of allocations.

Another reason why it will not be possible to suggest a single, prescriptive formula for the manner in which local authorities should develop their evidence base in respect of overall development volumes is the range of different relationships between different authorities. Housing and employment markets do not necessarily follow local authority boundaries and this has been reflected in a variety of different approaches to the co-ordination of policy in at the local level. It is entirely right groups of authorites which consider themselves to constitute a single housing or employment market should wish to co-operate more closely with one another than those which consider themselves to be more self-contained. This fact is reflected in the range of cross border initiatives and, in some cases, joint working and commissioning arrangements. Such arrangements would not be encouraged by the adoption of a single blanket approach and the imposition of one could lead to aborted work.

Whilst we do not consider it appropriate to define the nature of the relationship that local authorities should have with their neighbours, it is essential that all planning authorities should consider their immediate context when developing policy. It would certainly be disastrous if all the local authorities which made up a particular employment market were to assume that their neighbours would make provision for all the housing required.

Local Authorities should be encouraged to collaborate and innovate in order to find ways of involving those with an interest in securing new development whether they are developers, landowners, or members of the public keen to secure the benefit new development brings. Such innovation may be the development of methodologies to which all developers can contribute data—thus reducing its cost, it may involve the acceptance of discrete elements of research from the developers themselves or it could even be that the local authority and its major stakeholders commission work jointly and agree to abide by the findings. Whatever approach is adopted, it is clear that, when setting the overall volume of development, consideration should be given to the simple fact that where desirable benefits are delivered from new development, more development brings greater benefit.


Local Authorities are enjoined to seek early engagement from developers but developers find it difficult to respond early where the evidence upon which they are being consulted is fragmented or non-existent until a late stage in the adoption process. Moreover, developers who are in competition with one another to see their sites adopted have little incentive to point out that infrastructure or affordable housing burdens are unrealistically high for fear that they may lose their allocation.

Whilst the decision to consider housing and other development targets at the same local level and at the same time as infrastructure and affordable housing requirements undoubtedly presents a challenge, it also presents an opportunity to resolve this dilemma.

September 2010

147   Assuming match funding of 100% of average UK Council tax receipt for six years. (£1,100 x 6) Back

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