Abolition of Regional Spatial Strategies

Memorandum from the National Housing Federation (ARSS 146)

1. Introduction and summary

1.1 The National Housing Federation represents 1200 independent, not for profit affordable housing providers in England. The Federation's members include housing associations, co-ops, trusts and stock transfer organisations. They own and/or manage more than 2.5 million homes provided for affordable rent, supported housing and low cost home ownership, and offer an increasingly diverse range of community and regeneration services. Our members currently develop approximately 40,000 new affordable homes per annum.

1.2 We have marshalled our submission according to the headings set out in the Committee Terms of Reference.

2. Summary of evidence

2.1 The Federation welcomes the Government’s commitment to increased levels of housing delivery and sustainable development. However, we are concerned that the abrupt revocation of the RSS has created a vacuum which our evidence demonstrates has led to the loss of thousands of planned homes.

2.2 The Federation’s evidence shows:

· Independent research by Tetlow King Planning demonstrates that local authorities have reduced housing targets by 139,589 dwellings when not adhering to RSS figures. A high proportion of this derives from authorities on the edge of major urban areas scrapping urban extensions designed to meet demand and needs substantially generated by the neighbouring authority.

· Immediately the revocation has created a damaging policy vacuum. In the longer term it could result in a significant reduction in housing provision and lead to less sustainable patterns of development.

· Housing need is acute and growing with 4.5 million people in England on social housing waiting lists and 258,000 new households formed every year.

· There is a continued need for strategic planning to facilitate the delivery of housing and vital infrastructure across local authority boundaries.

· Local authorities require guidance and data from Government to help them effectively assess housing need and plan to meet it, including through ensuring a five year land supply.

· The ‘New Homes Bonus’ is unlikely to result in significantly more homes if the incentives it offers remain at the level originally envisaged.

3. Summary of recommendations

3.1 In light of our evidence, the Federation believes the government should act quickly to attenuate the loss of housing caused by the current policy vacuum. Specifically, we are recommending that:

· Government should introduce a national definition of sustainable development on which the presumption in favour of granting planning permission can bite immediately.

· CLG should prepare and publish a list of submitted Option 1 figures for each local authority to be used on an interim basis as the measure against which five year land supply for new homes can be tested.

· CLG should urgently establish a clear methodology for how housing need (rather than demand), including for affordable housing, can be robustly and consistently assessed.

· The New Homes Bonus should be introduced as soon as possible. Its financial incentives, especially for affordable housing, will have to be significantly more generous than initially outlined for the policy to be effective.

· Local Enterprise Partnerships (LEPs) should be charged with developing a planning and housing strategy for the area they cover.

· Government should make clear that it expects to see civic society and social enterprise representation on LEPs.

· CLG should publish online, and update periodically, data and research on housing need previously collated Regional Leaders’ Boards to assist communities and councils in preparing new local plans.

4. The implications of the abolition of regional house building targets for levels of housing development

4.1 Government commitment to house building

4.1.1 Government ministers have repeatedly stated their commitment to building more homes, including affordable homes. As Housing Minister Grant Shapps MP has stated, for this Government, ‘Success will be more homes, failure will be less homes.’ Furthermore the Government is committed to creating ‘a presumption in favour of sustainable development.’

4.1.2 This commitment is very welcome as the current rate of house building, at 123,000 homes per year across England, is at its lowest peace-time level since 1924. Chronic undersupply of new homes is worsening already acute housing need. More than 1.76 million households, or the equivalent of 4.5 million people, were on social housing waiting lists in 2009, a 23% increase in the last five years. Housing need will continue to rise steeply. Government projections suggest nearly. 258,000 new households will form every year in England from 2006 to 2026.

4.2 Revision of local authorities’ housing numbers

4.2.1 The revocation of RSS has already had a very significant impact on local authorities’ house building targets. The National Housing Federation initially commissioned Tetlow King Planning to investigate the impact of the letter sent by Eric Pickles MP to council leaders on 27 May 2010 intimating the imminent abolition of RSS. The research, conducted in July, concluded that 84,000 dwellings had been lost from housing targets as a direct and indirect consequence of the letter as well as refused planning applications.

4.2.2 A partial update of this report was produced on 3 September 2010 for Channel 4 News which concluded that the figure had since increased to around 100,000 dwellings. As part of the Federation’s evidence gathering for this inquiry, a fuller update of the research has been commissioned [submitted as an appendix]. This concludes that the figure now stands at 139,589 dwellings and this is expected to rise still further. The scrapping of large unpopular urban extensions such as around Stevenage accounts for a high proportion of these reductions. The rest of this section looks at the short, medium and long-term effects of the revocation and eventual abolishment of the RSS.

4.2.3 In the short-term, the revocation of RSS has created a vacuum in planning policy except in London, where the Regional Plan has been retained. Outside London there is now no tier of planning policy between the local and national levels. In many cases the extant local policy is very dated. The coverage of adopted Core Strategies in England stands at 17%, meaning that 83% of local authorities are still relying on Local Plans prepared pre-2004. Indeed many were adopted more than ten years ago and are approaching or even past their end dates. In such cases, the RSS until recently provided the up-to-date policy basis.

4.2.4 For example the Teignbridge District Local Plan was adopted in 1996 with an intended end-date of 2001. Not only are the overall housing numbers and allocations effectively superseded but it has no justified affordable housing target within it. With the South West RSS now revoked, the Council can no longer rely on the 35% minimum target as a base for their planning policy. With the adoption of Teignbridge’s Core Strategy still a distant prospect, the Council has been forced to issue a Supplementary Planning Document (SPD), but the SPD approach does not conform to PPS3 requirements and is likely be challenged at appeal by developers, frustrating affordable housing delivery.

4.2.5 Local authorities will now have individually to produce evidence to replace what was provided regionally through the RSS process. With severe public spending cuts imminent, many will not have the resources to do this effectively, further slowing the delivery of adopted Core Strategies or new-style Local Plans.

4.2.6 The medium and longer-term impact of the abolition of RSS is much harder to assess. Housing demand and need is certain to continue to increase in coming due to factors including people living longer, staying single for longer and a growing population.

4.2.7 Clearly RSS were unpopular in many parts of England. However they did provide a framework for developing strategic planning and housing policies, including facilitating:

· Debate and mediation on the quantum and broad distribution of development;

· Co-location of new jobs to match new housing; and

· Enabling major development and infrastructure across district authority boundaries.

4.2.8 The most pressing issues facing the nation, including the housing crisis, cannot be dealt with effectively solely at a local level. Communities often need action at a ‘larger than local’ level to deliver many of the things they want, such as t ransport links, new homes and flood protection. Strategic planning can help facilitate such action through formulating solutions to problems that must be addressed beyond neighbourhood or district boundaries. Importantly this can provide certainty to investors such as the infrastructure providers local communities are dependent on to provide the development they want and need.

4.2.9 There are real dangers that recent policy changes, including the rushed dismantling of strategic planning, will exacerbate the chronic undersupply of new homes for the foreseeable future. This might potentially lead in a few years time to ministers issuing instructions to local authorities to increase their housing targets, as the national imperative to deliver new homes becomes ever more pressing.

4.2.10 As discussed, in general it is the significant urban extensions, each with the potential to deliver large numbers of homes, that are no longer being planned for. Such schemes normally take five to ten years to deliver, requiring much coordination and infrastructure planning. Having halted work on such schemes, when councils realise that some urban extensions or new settlements may be necessary after all, there will be a long lead-in time to delivering these strategic schemes. In the interim housing need will continue to escalate.

4.2.11 For a detailed description and assessment of the impact of the abolition of RSS across England, please refer to the attached Tetlow King Planning research.

4.2.12 With the likely reduction in development caused by the abolition of RSS, the pro-development aspects of the Government’s vision for planning should be introduced as soon as possible. In particular there is a clear need for a national definition of sustainable development on which the presumption in favour of granting planning permission can bite. Ministers have stressed that the proposed presumption will be at the heart of the planning system and will be a counterweight to those who object to development. However if the definition is left to be decided locally as part of the plan framework then there is a real question about what happens in the period until new style local plans emerge. There is also a risk that a locally controlled definition will significantly restrict development in many areas.

4.2.13 RECOMMENDATION: It would be straightforward for Government to publish in revised planning policy a definition that can be used as a framework for the presumption in favour of development until replaced by a local plan version. [This should be based on the Brundlandt definition.] It will also provide a context for local plan definitions, ensuring that they take proper account of the housing needs of future residents.

4.3 Ensuring effective assessment of housing need and adequate land supply

4.3.1 For the new localist planning system to deliver sufficient new homes in the right places, it will be essential for housing need to be robustly and consistently assessed by local authorities (this will be particularly important in aiding any housing and planning role LEPs assume). Once housing need has been effectively measured, it will also be vital for councils to have an adequate five year land supply to meet the identified housing need.

4.3.2 Strategic housing market assessments (SHMAs) and strategic housing land availability assessments (SHLAA), coupled with guidance from the NHPAU, provided a relatively clear context within which housing targets were set under the last Government. Open Source Planning indicated that ‘best practice’ guidance would be issued on housing land supply. It is assumed that this means that the existing guidance on both SHMAs and SHLAAs will be reviewed and reissued.

4.3.3 Government has made it clear that it believes that local planning authorities have a responsibility to maintain a five year land supply, for housing. What has been less clear is the foundation that should be used for assessing whether there is an adequate five year land supply.

4.3.4 As Regional Spatial Strategies were revoked, local planning authorities were offered guidance on the approach that they should take to housing figures. It was noted that they could retain the RSS figures, use the Option 1 figures or identify an alternative. It noted that an alternative would have to be robustly justified. This guidance was of limited practical assistance.

4.3.5 Prior to the election, Conservative spokespersons indicated that the so-called Option 1 figures were the best proxy for long term needs. They suggested that these represented the ‘true view’ of local planning authorities about the levels of housing that they could properly accommodate. While there is a reasonable relationship between Option 1 figures and housing need, the match is clearly imperfect.

4.3.6 RECOMMENDATION: CLG should be tasked with preparing and publishing a list of submitted Option 1 figures for each authority. That should be used on an interim basis as the measure against which five year land supply can be tested. Either as part of a local plan, or as a separate examined policy document, local authorities should be encouraged to bring forward alternative proposals.

4.3.7 RECOMMENDATION: CLG should urgently establish a clear methodology for how housing need (rather than demand) can be robustly and consistently assessed. Assessment should have clear and separate figures for overall levels of housing, affordable housing, specialist and rural housing (where relevant). New guidance is needed to assist local authorities in preparing new local plans.

4 The likely effectiveness of plans to incentivise local communities to accept new housing development – the ‘New Homes Bonus’

4.1 The Housing Minister, Grant Shapps MP, wrote to local authorities on 10 August 2010 to outline the proposed New Homes Bonus. The letter confirmed that a mechanism will also be developed to incentivise development. Previously it was suggested that there will be a matched payment from central Government for all council tax arising from new homes being built for a period of six years. There has, previously, been discussion of a further premium for new affordable housing through the Bonus.

5.2 Government ministers believe that the proposed New Homes Bonus will provide a powerful new incentive to local authorities to build more affordable homes. The Federation welcomes the policy of providing incentives for house building and believes that if set at an appropriate level, the New Homes Bonus could help increase housing supply.

5.3 However the level of potential reward for local authorities originally proposed is unlikely to be sufficient to convince many local authorities to accept more homes. We have particular concerns that affordable housing may be disadvantaged relative to open market housing by the New Homes Bonus. The proposed premium for affordable housing is welcome, but the additional 25% envisaged will not be enough to encourage financially squeezed local authorities to develop affordable rather than more expensive, higher council tax band open-market housing, which will produce more revenue due to the council tax ‘taper’.

5.4 Initial modelling by the Federation indicates that even with a 25% premium, councils would have to build two affordable Band A homes to generate as much income from the council tax and additional incentive than what they would generate in council tax alone from just one Band F executive home. Band F homes will also provide a better long-term income stream, because when the incentive bonus runs out after six years, the Band F executive home will generate more income than the two affordable homes put together.

5.5. Potential revenue generated through New Homes Bonus for new affordable homes will also constitute, at least initially, a tiny proportion of local authorities’ overall potential income, making it unlikely that it will prompt them to deliver many more affordable homes. Although the potential incentives are more significant as a proportion of overall local authority income for district than unitary authorities, they will not be particularly attractive for either. Many councils will prefer to forgo income or make savings elsewhere rather than lead in the delivery of new, and potentially locally unpopular, affordable housing.

5.6 RECOMMENDATION: As the New Homes Bonus is intended as a primary means of increasing the delivery of new homes, it should be introduced as soon as possible and certainly no later than the start of the next spending review period in April 2011. Further delay could perversely result in a decline in new homes as councils postpone planning permissions to ensure they get maximum benefit from the New Homes Bonus. The incentives will also have to be made more generous than initially outlined. In particular the premium for affordable housing should be significantly increased to reflect the higher potential revenues councils can earn through more expensive open market homes.

5 Local Enterprise Partnerships (LEPs) and the duty to co-operate

5.1 Government’s has abolished Regional Spatial Strategies in line with its manifesto commitment. However as discussed there remains a need for a ‘larger than local’ strategic planning function if a wide range of community and local authority aspirations are to be fulfilled.

5.2 The letter sent by BIS and CLG to local authority leaders on 29 June set out the potential role of Local Enterprise Partnerships (LEPs) in providing strategic leadership in their areas and determining local economic priorities. The letter suggested LEPs’ remit would include planning and housing, local transport and infrastructure priorities and employment and enterprise.

5.3 The Federation is pleased that Government envisages LEPs developing a strategic housing and planning role. This has the potential to help deliver many of the Government’s objectives relating to economic development and related housing provision, as well as the environment, infrastructure and sustainable development.

5.4 Although there is little detail on how the proposed duty for local authorities to co-operate would be framed, the Federation supports it in principle for its potential to assist in facilitating joint strategic planning and action.

5.5 RECOMMENDATION: LEPs should be charged with developing a planning and housing strategy for the area they cover. This strategy should make an assessment of housing need, including for affordable housing, across the LEP area and set out how the partners intend to meet it. Such strategies need not result in any loss of local control – they would be agreed on a consensual basis between LEP partners – but once agreed should be binding. The LEP should have some powers to aid cooperation over implementation once the plans are agreed.

5.6 Whilst the Federation agrees that strong business support for LEPs is essential, we also believe that civic society and social enterprise should be represented on LEPs. It would be inconsistent with the Government’s stated aim of building a ‘big society’ if such organisations, which include housing associations, were not included in these partnerships, not least because they have a leading role in delivering housing and other key objectives.

5.7 RECOMMENDATION: Government should make clear that it expects to see civic society and social enterprise representation on LEPs.

6 Research and data collated by Leaders’ Boards

6.1 Open Source Planning proposes that a ‘truly local plan, built out of a process of collaborative democracy’ should be the ‘centrepiece of the local planning system’. It promises that local people will be empowered to shape these plans as Government mandates all local authorities to use collaborative democratic methods in drawing up these local plans.

6.2 To ensure new local plans are based on sound evidence, Open Source Planning advocates a requirement for ‘the provision of good data by the local planning authority to the electors in the neighbourhoods, so that they can develop their vision for their community on a well-informed basis (this will need to include analysis by the council of the likely need for housing and for affordable housing for local people in each neighbourhood).’ However local authorities will not be able to adequately equip local communities to effectively plan to meet their housing and other needs without the provision of good data.

6.3 RECOMMENDATION: CLG should therefore make freely and easily available data and research on housing need collated by the now-abolished Regional Local Authority Leaders’ Boards. Publishing this information online for local authorities and anyone else with an interest would be consistent with the Government’s commitments on transparency and accountability. CLG should also commit to updating the data and research that could help communities and councils develop evidence-based new local plans.

September 2010