Written evidence from the House Builders
Association (ARSS 69)
SUMMARY
Abolition of Housing Targets
the effects of revocation of RSSs are of more immediate
concern to housebuilders than the abolition of regional targets;
short term, the effects of the credit crunch are
more significant than target numbers; and
longer term, guidance is needed on how to produce
policies with housing numbers that are not maxima and which allow
them to be exceeded if proposed development does no "harm".
Planned numbers will probably be reduced in many places, requiring
this compensating flexibility in policy.
Revocation of RSSs
the abrupt revocation of RSSs has left a planning
vacuum, which will obstruct viable planning applications in many
places; and
the new planning system will not be operational for
four years, so interim guidance is needed to prevent a lengthy
hiatus in planning for housebuilding.
New Homes Bonus
it is difficult to judge the impact of the New Homes
Bonus until the scale of grant reduction is known; and
it is equally important that Ministers address development
viability in addition to incentivise local authorities. If houses
cannot be built profitably the bonus will not be achieved by local
authorities.
Local Enterprise Partnerships
there should not be too many LEPs and they should
be sufficiently strategic in scale;
they currently seem to be driven by concerns about
local authority groupings rather than their purpose and goals
determining their geographic boundaries; and
They should be statutory consultees on cross-border
matters, particularly infrastructure.
THE IMPLICATIONS
OF THE
ABOLITION OF
REGIONAL HOUSEBUILDING
TARGETS FOR
LEVELS OF
HOUSING DEVELOPMENTS
In the short term, the policy vacuum left by the
revocation of RSSs is of greater concern to housebuilders than
the longer-term effects of the abolition of regional and other
targets. Discussions about housing numbers at RSS level and the
work done by bodies such as the NHPAU have changed the terms of
the debate significantly over the last decade and the need for
substantial numbers of additional houses is now widely accepted
across the political spectrum; even if not in the locations where
it is most needed.
It would be easy to claim that the abolition of regional
targets will result in lower housebuilding levels, but that would
be to ignore market realities in which, at present and, for the
immediate future, housebuilding levels are determined by the effects
of the credit crunch, economic uncertainty and mortgage shortages.
It is, therefore, fair to claim as Ministers have,
that planning targets do not build houses. However the absence
of adequate targets can, and has in the past, restricted housebuilding
output to below market demand levels. Thus targets are important.
The issue for the future, without top-down targets, is to ensure
that artificially low figures cannot simply be substituted at
local level without proper evidence and without any sanction.
The Coalition Government, as well as introducing
new planning legislation, intends to seek Parliamentary approval
for National Planning Guidance.
We hope this will determine how far local authorities
will be free to reduce numbers, the evidence required to justify
numbers and whether housing numbers are to be the sole criteria
for policy in local plans and for testing planning applications,
or whether other more flexible, criteria-based policies will be
encouraged as well (eg whether a particular planning application
involves sustainable development and it does no harm to the objectives
of the plan).
While it seems very likely that the policy targets
in many high demand areas will be reduced, it will depend on the
nature of planning guidance issued whether those numbers are absolute
constraints (i.e. a ceiling not to be exceeded) or just one measure
amongst others for determining planning applications and hence
housebuilding output.
THE REVOCATION
OF RSSS
The revocation of RSSs was clearly foreshadowed in
the Conservative Party's policy documents before the General Election
and is also set out in the Coalition Agreement. It was therefore
not a surprise. However what has surprised and greatly concerned
housebuilders is the way revocation occurred, with seemingly inadequate
attention being paid to the need for transitional guidance.
The result has been an abrupt withdrawal of adopted
and emerging plans by some local authorities, which has created
a planning vacuum in many places and left housebuilders without
the planning framework or plan backing required to make planning
applications. This will both disrupt medium-term flows of land
in the development pipeline and also block opportunities for smaller
sites that could come forward for development now.
There is a wealth of evidence of the range of local
authority responses to revocation. Tetlow King carried out an
initial survey for NHF and DPDS (planning consultants) have published
a further survey of local authorities in the South West. Through
its members, published sources and other contacts, HBA has compiled
a short summary of responses from a range of local authorities
across the country (attached).
These sources reveal four broad categories of response
by local authorities:
1. business as usual; continued support for Core
Strategies based on RSS has tended to be the response in areas
seeking regeneration mainly, not but exclusively, in the Midlands
and North but including areas such as Dover while, in the same
county, Ashford has suspended its Core Strategy;
2. existing approved or emerging Core Strategies
suspended, without any indication what the result will be or when;
3. suspension in order to change policy—generally
assumed to mean a reduction in housing numbers; and
4. suspension whilst waiting for guidance from
Ministers.
These last three are not mutually exclusive, often
two are cited.
In order to provide, insofar as possible in this
difficult market, confidence that the planning system still supports
the development of much needed homes, as well as the economic
and employment benefits of building new homes, housebuilders had
expected that Ministers would have provided:
a smooth and effective transition to the new system;
and
instructions as to the evidence base and process
required to make change.
The lack of effective interim guidance has two particularly
important consequences. First, housebuilders will lack the confidence
to make planning applications during this hiatus and for as long
as there is no enforceable timetable to end it.
Second, the transition to a new system could last
for at least four years, if local authorities, in the absence
of anything to force their hand, continue to suspend local plans
until the proposed new planning system completes its Parliamentary
process and comes into effect (April 2012). This would then be
followed by at least two years to produce a replacement plan.
Planning for housebuilding cannot be left in limbo for that length
of time.
To enable the plan-led system to function and to
provide a framework for planning applications, Government needs
to provide local authorities with an indication of:
the timescale, preferably short, in which to make
whatever changes they want to their plan;
in turn, Government should remove any doubts about
possibly redundant work due to subsequent policy changes in eg
the "Localism Bill";
the evidence base that will be required for any proposed
reduction in numbers previously in policy;
other tests of soundness eg, if reverting to old
or saved plans, how out of date can they be; and
sanctions if the local authority keeps the plan in
suspension.
It is, of course, apparently in conflict with the
freedoms the Government intends to allow local authorities under
its localism agenda to impose any such requirements.
However, allowing a hiatus which could possibly to
last a considerable period, is also totally at odds with the Government's
own stated aim of securing high levels of housebuilding. Regardless
of Ministers' dissatisfaction with the target-led system, this
cannot be switched-off overnight without effective and workable
arrangements, leading into the new system which will only start
to be fully operational in 2014.
NEW HOMES
BONUS
We note and welcome the publication of the Government's
letter of intention to incentivise local authorities to build
new homes. This is their proposed long-term antidote to the likely
NIMBY-ism that would result from unchecked localism. We understand
that local authorities can start to accrue the bonus from the
next financial year which, in theory, should encourage them to
start granting planning permissions now for building completions
next year.
We understand that the system is intended to be financially
neutral, being funded from an overall reduction in grant funding
to local authorities (the penalty), such reduction acting as an
incentive to build homes to secure the bonus.
However, although we can reasonably estimate the
size of the bonus (eg if a local authority allows 500 homes to
be built with a community charge averaging £1,500, it will
receive £750,000 in year one and £4.5 million by year
six; a total of £15.25 million in six years), we do not yet
know the scale of the penalty. Thus it is impossible to judge
its likely effectiveness at this stage although the views of local
authorities will be more relevant than ours.
However two points need to be made, reflecting matters
of direct concern to housebuilders. First, Ministers will need
to make clear in discussions with local authorities that the New
Homes Bonus is part of a package of financial arrangements attaching
to new homes, including CIL and S.106, if they are to understand
the scale of incentive on offer. Second, in the current climate,
with new house prices still 20% below 2007's peak, the value of
that package cannot be made too great or development viability
will be further damaged. This requires that development viability
be put at the heart of planning and that local authorities are
issued with viability toolkits.
So, while incentivising local authorities is one
side of the coin, the other must be to reduce the burden of costly
regulation which has been placed on housebuilders in recent years
and which is now an obstacle to development. Incentivising local
authorities by reducing their grants will be deeply unpopular
with councillors and local communities if housebuilding does not
increase, because homes cannot be built profitably. Government
must therefore give as much attention to the problems of development
viability as to the New Homes Bonus scheme, if it is to work in
the marketplace.
A consequence of abolishing regional level planning
is the possible impact this could have on planning for the type
of sustainable, low carbon energy supply that is critical to the
achievement of zero carbon homes. Our work on this with major
energy suppliers has highlighted this question and we believe
that the loss of this aspect of regional level planning is deeply
regrettable and that it is unlikely to be replicated under localism.
We therefore believe that emerging Government proposals, as outlined
in Grant Shapps Statement of 27 July, on the definition of zero
carbon and to create carbon buy-out mechanisms, could also usefully
incentivise local authorities. By supporting new build, local
authorities could also obtain funding from this source to help
them meet their own carbon reduction targets, either eg by retrofitting
existing stock or building up funds for district level or other
large scale energy schemes.
LOCAL ENTERPRISE
PARTNERSHIPS
Too little is known about LEPs to comment sensibly
at this stage but it is worth noting the wide variety of responses
by local authorities (some of which are appended) and the pertinent
comment in LGC which said that, "in recent weeks it had become
increasingly clear that in some regions councils were involved
in increasingly fractious disputes about who they ought to partner
with as they put LEP proposals together ahead of the 6 September
deadline". It was concerned that, the more they became bogged
down in arguments about geography, the less time they were spending
on thinking through what a LEP should be for.
Generally, LEPs should not be single authorities
as that will result in too many to be effective: they should have
a key role in advising on cross-boundary problems, particularly
infrastructure and large scale development, and that the LEP should
be a statutory consultee on development plans and major planning
applications, which have cross-boundary impacts.
September 2010
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