Written evidence from Barratt Development
Plc
SUMMARY
1. House building has been hard hit in the last
few years with significant job losses, lost profits and dividends.
As housebuilders we wish to deliver and look for a planning system
that helps and a properly structured local approach has the potential
to do so.
2. Barratt Developments plc (BD) recognises that
the change is radical and like all such change is bound to create
some disruption. However, BD has previously expressed concern
about the planning system's failure to deliver over many years.
Thereby, BD is concentrating on the need for a successful implementation
of the new policy and that is the thrust of this evidence:
- It is vital that more detailed transitional arrangements
are put into place as a matter of urgency to create a smooth transition
between the old and new planning systems.
- The current position may lead to more decisions
by appeal which is not an efficient way forward.
- There is a danger that confusion about decision
making may hamper the objective of delivering more homes, so there
is a need for a clearer route map to quickly put the new system
in place.
- Incentivisation is an innovative approach but
may be insufficient so other incentives need to be considered
and a positive message should be issued to promote the benefits
of a package of measures resulting from residential development.
- Local Enterprise Partnerships are welcome and
offer the opportunity for focused investment and research that
should be reflected in future development plans.
MEANS OF
CHANGE
3. History shows that any major change to the
planning system through the passing of primary legislation has
led to disruption and delay; not least because the primary legislation
is insufficient guidance for local authorities to act without
further explanatory regulations, policy guidance and often other
advice and so adapting to change is not instantaneous. However,
this situation is different from the past.
4. Previously, new legislation has usually been
foreshadowed by consultation documents (Green/White Papers) and
the basis of planning decisions (development plans) have been
in existence for the most part of the country. Thus when the 2004
Act was passed to give effect to the Regional Strategy and Local
Development Framework (LDF) system most of the county was covered
in local plans/structure plans and unitary development plans that
were a basis for continued decision making until the new system
could be put in place. Indeed the legislation provided for a saving
of these adopted policies until the replacement plans were adopted.
Importantly, in the past, the old primary legislation was not
superseded until the new Act was put in place.
5. This time, the system is being structurally
changed in advance of new primary legislation and against a background
of little up to date development plan coverage. The 2004 Act envisaged
revised development plan coverage in the form of LDF's by 2007.
This was at best optimistic especially given that the context
of any Local Development Plan was an adapted Regional Strategy.
Consequently, as of today the main LDF document (Core Strategy)
coverage is very limited (about 15% of the country had an adopted
Core Strategy) and very little in terms of Allocations Development
Plan Documents, which identify sites for development. Consequently,
taking away the basis of the current planning system in advance
of primary legislation leaves a position of uncertainty.
6. BD are aware of the legal challenge to the
Secretary of State's decision of 6 July 2010 by CALA Homes and
so does not wish to make any comment on the legality of the revocation
of RSSs. However, the response of local authorities has been very
mixed:
- (a) some have opted to carry on as before;
- (b) some have put their Core Strategies on
hold pending further guidance;
- (c) some have resolved to reduce their housing
requirement figure; and
- (d) some have yet to declare their position.
7. Against the background there is a confused
basis for decision making. For those authorities that have resolved
to reduce their housing number and, in some cases, refuse planning
applications accordingly, there is a concern that this a legitimate
response. The CALA Homes challenge should resolve that question.
In the meantime, uncertainty prevails.
8. This uncertainty is apparent when the advice
produced by the Planning Inspectorate is examined. It makes clear
that RSSs are revoked and cannot be given any weight in decision
making. However, it also says the evidence that informed the preparation
of the revoked RSSs may be a material consideration. It is difficult
to draw a distinction between the housing number and the evidence
to determine that housing number.
9. It is relevant to note that some local authorities
appear to have stopped preparing their development plans on the
expectation of further information, which is not apparent will
be forthcoming, so this creates further uncertainty for any applicant.
In such circumstances there is a reluctance to undertake the risk
of incurring the cost of submitting a planning application.
10. The effect of the revocation is that the
basis of decision making is now adopted development plans, currently
saved policies and any old style development plans that have not
lapsed. Apart from adopted Core Strategies or other plans adopted
since the 2004 Act, these policies are very out of date, often
based on information that is 10 to 15 years old. Most allocations
in these plans are taken up and so there is very little opportunity
to promote a site which is in conformity to these plans and the
risk of refusal is high. There is therefore a risk of a substantial
increase in appeals. This is likely to be inefficient and costly.
11. BD do not question the clear desire of the
Government to abolish RSSs but feel that there has been an underestimation
of the position of such strategies in the planning system. In
his response to Westminster Hall debate on RSSs of 30 June 2010,
Robert Neill MP said that "Everybody wants to move as swiftly
as possible but, because the arrangements for planning regulations
under the previous Government were so complex, we have something
of a legal minefield to walk through to ensure we get it right.
If we make important changes we do not want to have any false
starts". We would fully endorse this sentiment and with the
myriad of local authority responses to the revocation there is
now a clear need for further detail on clear transitional arrangements.
TRANSITIONAL ARRANGEMENTS
12. The existing transitional arrangements were
provided in a letter of 6 July 2010 by the CLG Chief Planner attached
to a letter which referred the announcement of the Secretary of
State to revoke RSSs that day. This took the form of answers to
a series of questions. Also in July 2010, CLG published its Structural
Reform Plan setting out its programme to give effect to the Government's
policies. The Structural Reform Plan sets out the date for passing
of the new primary legislation the Decentralisation and Localism
Bill to be passed in November 2011 with the new national planning
policy based on "Open Source Planning" to be available
by April 2012.
13. For those authorities, who are delaying their
plans until there is clearer guidance they will not apparently
begin to be proactive until April 2012. For those who seek to
draw up new plans, based on a new number, in advance of primary
legislation there are a number of challenges not least of which
is their new number soundly based in evidence and is the revised
plan in conformity with European legislation in respect of Directive
2001/42/EC of the European Parliament and Council.
14. The requirement for evidence is dealt with
briefly in the 6 July 2010 letter and is further discussed below
but the question of conformity to the Directive is not addressed.
Briefly, the Directive requires the production of a Strategic
Environmental Assessment (SEA) for development plans. Under the
2004 Act system this was carried for the RSS and successive plans
(Core Strategies, etc.) were declared to be in conformity to the
RSS and so did not require a full SEA to be prepared. In the absence
of a RSS any new plan will need a SEA. Not only will this take
time but there has to be a concern that a new plan with a revised
housing number can satisfactorily demonstrate compliance with
the requirement of a SEA. Consequently, there is an unresolved
concern that in the absence of primary legislation authorities
will be able to produce plans capable of withstanding challenge.
15. These issues point to the clear potential
of the transitional arrangements being in place for some time,
probably two years at least. The question therefore arises as
to their sufficiency and detail to enable the planning process
to continue with an adequate basis for decision making in this
interim period.
16. The letter of 6 July 2010 deals with some
of the issues and the advice produced by the Planning Inspectorate
gives further guidance but there are important missing areas.
These are:
- (a) if housing numbers are re-determined
by a local authority in advance of a new plan being formally deposited,
what is the evidence base on which that decision is made and how
is that judged to be sound?
- (b) if reliance is placed upon old style
development plans and saved policies, which are clearly out of
date, to what extent is this a reasonable basis for decision making?
- (c) if housing numbers are re-determined
by a local authority in advance of a new plan being formally deposited,
does the recalculated five year land supply operate only from
the date of the resolution to adopt that re-determined number?
17. Without further clarity on these points,
disputes will arise which will need to be settled by appeal and/or
through the courts which as already stated is inefficient.
18. It may be considered that at a time when
housebuilding is at a low level then this transitional uncertainty
is inconsequential. Such a view would be mistaken as planning
has a lagged effect so that decisions taken today are not manifested
on the ground for several years ahead. It is to guard against
this risk that housebuilders maintain a land bank. Furthermore,
large housebuilding company is not a single business but a series
of businesses (in Barratt we call these Divisions) operating over
a defined geographical area. These businesses operate on the basis
of outlets providing for a range of local and varied market needs.
There is a need for a continual supply of outlets in order to
maintain the individual businesses. The total business is reliant
upon the continued viable operation of these divisional businesses.
19. Investment in land is a recognised risk and
involves considerable amounts of risk capital being employed before
there is a profitable return in the form of house sales. For this
reason, BD supports the primacy of the development plan in decision
making. If forward planning is uncertain then there will be a
reluctance to invest. Thereby, there is a prospect of extending
the constraint on dwelling production.
20. At a time when the effects of the recession
are being overcome and housebuilding could be growing significantly
then the consequence of current planning uncertainties will mean
a lack of sites coming through to enable growth. Whereas, future
planning post-April 2012 may be fit for purpose to deliver the
Government's objective of more homes, the effect of the interim
uncertainty will be to postpone the opportunities to immediately
reap the benefit.
21. In light of the above we consider that further
transitional guidance is necessary to ensure that planning decisions
are soundly based to enable continued housing delivery.
INCENTIVISATION
22. The Government's reform are a package, a
vital part of which is the incentivisation in the form of the
New Homes Bonus Scheme. This measure was outlined in the various
Conservative Green Papers and it was recently confirmed as a proposal
on 9 August 2010 in a letter to Council Leaders by the Housing
Minister. The precise details of the Scheme and its operation
have yet to be confirmed but the Government should be commended
for committing to introduce it with effect from April 2011.
23. It remains to be seen if this scheme is sufficient
to incentivise local authorities to give planning consents. However,
it understood that it will be payable only upon completions and
then at the rate of the equivalent of the Council Tax for the
next six years.
24. A payment for a 100 dwelling development
at average Band D Council Tax of £840,000 over six years
may appear as a substantial incentive. However, completions are
likely to be over at least a three year period the cashflow is
£50,000 in year one, £100,000 in year two, £150,000
in year three then the rest spread in three equal payments of
almost £220,000 per year, it is debateable if this will be
enough to provide sufficient incentive. There is also the potential
for a mismatch of time between a desire piece of social and/or
physical infrastructure and the completion of the development
which may bring the scheme into disrepute.
25. BD feel that whilst the Scheme is an innovative
proposition that should not be decried it may not be enough to
incentivise development. Therefore, further incentivisation maybe
required. BD suggest that local authorities ought to be allowed
to also keep the Stamp Duty Land Tax that is provided by new development
(land and dwellings). This could amount to an average of about
a further £2,000 per dwelling which together with an assumed
Community Infrastructure Levy of £5,000 per dwelling (CLG
assumption in 2009 consultation) would provide a total package
of £8,400 per dwelling which should be sufficient incentive
to bring forward development.
26. BD believe the Government should move quickly
to establish the precise workings of the New Homes Bonus Scheme
and to establish its alternative to Community Infrastructure Levy.
These items together with other funding sources (we suggest local
retention of SDLT) should then be presented as a beneficial package
which will provide funding for social and economic infrastructure.
However, in doing so it is essential that the package is economically
viable, viability should be central to planning otherwise development
will not be delivered and the Bonus Scheme will not fill the gap
in local government finance. There is no possibility of additional
funding coming from the housebuilding sector and so if the package
is insufficient the Government should be prepared to increase
the Bonus until it is effective.
27. BD consider that the Government should do
more to promote a cultural change that recognises the benefits
of housebuilding by both setting out the ways in which a full
incentives package will work and to emphasise the economic and
social benefit of housing development in itself. It is understood,
from an answer to a Parliamentary question on 22 June 2010, that
the Housing Minister understands that housing development is economically
beneficial. BD consider that every house will support 6 new direct
and indirect jobs into the local economy. The social benefits
of having a well housed population are obvious but a re-emphasis
of the Government's commitment to providing more homes through
a Parliamentary Green Paper would restate the point without dictating
the local level of provision.
LOCAL ENTERPRISE
PARTNERSHIPS
28. The Government have responded to the need
for a structure to replace the dismantling of the Regional Government
architecture significance by inviting Local Authorities to submit
proposals on 29 June 2010 to form partnerships to deal with matters
of a wider than local authority significance.
29. BD feel this is a welcome move. It is agreed
that such Partnerships could be effective in providing the level
of leadership necessary related to functional economic areas.
The equality of public private partnership is welcome and would
be more aligned the Barratt company structure based on Divisions
that operate across groups of local authorities. Therefore, Barratt
are keen to be involved in such Partnerships and believe that
we can play a role in seeking to ensure that housing, economic
development and infrastructure provision are aligned to enable
sustainable development. It is noted that such partnerships are,
according to the CLG Structural Reform Plan, not to be fully in
place until April 2012. Therefore, their role in shaping the necessary
development framework will be constrained unless their lack of
operational function is used as an excuse for development plans
to be further delayed. The Government should make clear that such
an excuse is not acceptable.
30. Consequently, BD does not believe that LEPs
should seek to fulfil a planning role except in the broadest sense
of establishing the relationship (falling short of determining
precise numbers) between authorities in terms of their development
role and where investment should be directed. However, once LEPs
have established the relative development role of localities this
should be published and regarded as a material consideration in
determining the soundness of development plan reviews. There is
scope, however, for LEPs to employ (or commission) researchers
to provide a sound evidence base for their constituent local authorities
to use in the monitoring and review of their plans. Using LEPs
in this way could be a cost effective service.
CONCLUSION
31. BD considers that the Government should move
quickly to remove uncertainty in the planning regime with regard
to housing. This should be done via further details of the transitional
arrangements and the New Homes Bonus and to establish the Local
Enterprise Partnerships so that there is a more considered basis
for planning decisions in the period until the enactment of the
Decentralisation and Localism Act and the publication of the National
Planning Framework. It is clear where the Government wants to
get to but BD are concerned that the route to that position has
hampered the desired outcome of delivering more homes.
September 2010
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