Communities and Local Government Committee - Minutes of EvidenceHC 1526

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Oral Evidence

Taken before the Communities and Local Government Committee

on Monday 10 October 2011

Members present:

Mr Clive Betts (Chair)

Heidi Alexander

Simon Danczuk

George Hollingbery

James Morris

Mark Pawsey

Heather Wheeler


Examination of Witnesses

Witnesses: Dr Adam Marshall, Director of Policy and External Affairs, British Chambers of Commerce, Jessica Bauly, Head of Infrastructure, Confederation of British Industry, and John Rhodes, Director, Quod Planning, gave evidence.

Chair: Before we invite the witnesses to begin answering questions, I ask Members to declare their interests for the public record.

Heather Wheeler: My husband is the leader of South Derbyshire District Council.

George Hollingbery: I am a shareholder in Thompson Sowerbutts, a very small-scale developer and restorer of out-of-use buildings in Stroud, Gloucestershire.

Simon Danczuk: My partner is a councillor in Rochdale who sits on the planning committee.

Q1 Chair: You are our first witnesses in this initial evidence session in our inquiry into the draft National Planning Policy Framework. All of you are most welcome. I say at the beginning that if all of you absolutely agree with what somebody else has said there is no need to repeat it. You cannot nod your agreement because that is very difficult to note in the records, but certainly indicate briefly your agreement. Thank you for coming and for the written evidence you have given to us on a topic that has provided quite a bit of interesting press so far, to which no doubt some of you have already contributed.

One of the key issues that the Government have identified in indicating that the planning system is in need of reform is that economic growth needs to be increased and the planning system as constituted is an impediment to that. Can you give us some examples of why you think that is the case and how you think changes to the NPPF might remove it? For our records, as you answer the first question perhaps you would say who you are and the organisation you represent.

Jessica Bauly: I am Jessica Bauly, head of infrastructure at the CBI. The CBI represents the broad business voice of 240,000 businesses across the UK in all different sector sizes of the business community.

Our opening line would be that infrastructure investment is a key economic driver. During the summer we conducted a survey of 500 investors, users and providers of infrastructure both UK and internationally owned. The survey findings highlighted fresh evidence of how important infrastructure is to their investment decisions and that part of the UK’s infrastructure from the investors’ point of view was creaking and did not compare favourably internationally. Our conclusion is that investment in infrastructure is an absolutely key priority for rebuilding the UK economy. Of those surveyed, 98% responded that the planning system at the moment was a major barrier to growth. We think that the National Planning Policy Framework as drafted provides investor confidence to shift the planning system into one that is an enabler for growth and investment.

Dr Marshall: I am Adam Marshall, director of policy and external affairs for the British Chambers of Commerce. I want to talk about local planning and development control rather than just infrastructure. For so many of our members those are the issues that rate very highly on their agenda as being a block on their growth and development. Very often, it is the story of a small-scale manufacturer trying to expand an export line, or a regional services provider who is unable to get planning permission for a new building. That is where the frustrations lie. Our interest in the NPPF stems from that end of the spectrum first and foremost.

We decided to put our money where our mouth was earlier this summer and conducted a survey of members. Over 5,300 businesses responded to that survey. Looking back at your question on whether this is an impediment to growth, four things are particularly salient. The first is that there is some depressed or latent demand in the system: 11% of the companies answering that survey told us that they did not try to get planning permission because they thought it was too costly and difficult, and took the decision not to expand their companies. Second, they got conflicting advice from local authority to local authority: for relatively similar applications they received very different advice, which to me is good cause to support simplification.

The third was simply cost: 70% of them said they had to hire in some pretty expensive external support in order to get an application through, which is evidence of a system that is not simple enough for an individual business to navigate for a reasonable price. Fourth, on the question of certainty and politicisation, 54% of those who answered said they thought that councillors were overturning the experts, the local planners who had advised them, so there was a real issue for them in terms of knowing how their applications were progressing and whether something would change at the last minute. I think there is real evidence of frustration among many business people with the system as it currently stands.

John Rhodes: I am John Rhodes from Quod. I am a planning consultant. I was one of four members of the Practitioners Advisory Group on planning that helped prepare the draft document on behalf of the Minister. As a practising planning consultant, for a long time my perspective has been that planning has become more and more complicated. For instance, we now have nine volumes of the planning encyclopaedia containing planning guidance. Even for a full-time practitioner it is quite hard to keep up, whereas planning ought to be relatively straightforward. I think we all recognise good and bad planning when we see it. There are two consequences of the complexity. It is more and more costly to prepare a planning application; it takes longer, and in addition there are so many aspects to be met in a planning application that there is greater scope for legal challenge, which is becoming increasingly common.

If you are looking for hard evidence, probably the easiest thing to look at is house prices in the South East of England. We know that at the moment there are issues to do with the economy and mortgages, but if you look back over the past 20 years there is no doubt that the South East has presided over chronic under-provision of housing with a real cost not just to individuals but to the economy. There are many local authorities particularly in the South East that simply do not see it as their job to meet the housing requirements of their own communities, and planning is not sufficiently positive in that respect.

Q2 Chair: Dr Marshall, you might say that many of the small and medium-sized businesses who have problems with the current system do not submit planning applications because they want their developments on green space, which is so marked in the local plan and they are not likely to get permission, so why bother? But even if the NPPF is reduced from 1,300 to 50 pages, there will still be a local plan with all its supporting evidence on top of it. Those businesses will still have to go through a system where they look at the local plan and get advice from a consultant to help them. Most of them will never read the NPPF anyway or go anywhere near it, so how will changes of this kind in the document have any effect on them whatsoever?

Dr Marshall: A few members have said to me that they have already read the NPPF, which is a huge change from what John just referred to-that is, the nine volumes of planning guidance with which none of them had ever engaged. Our hope-it is a hope at this stage of the game-is that the NPPF will lead to greater transparency for businesses so that they can engage with the system in a way that is more on their terms. You are right that they will still have external help. Hopefully they will not face the same levels of cost and complexity that they do now, but I think they will be able to engage with the system on their own terms a little bit more easily.

On your point about whether they are frustrated simply because they are trying to build on a piece of greenfield land, when we did our survey work we asked that particular question. The thing that came up most was extensions to existing premises or new build on land they already owned that was not in any way designated. Those were the frustrations that we decided to present, because they would be the areas where you would think they would be able to secure permission for development.

Q3 Chair: John Rhodes, it struck me in what you said about the South of England that you were advocating a return to the Regional Spatial Strategies, where local authorities are given targets that they have to meet, not the brave new world where any local authority can decide what it wants to build in its area and then maybe we don’t see quite so many houses built as in the past. Is that a fair point?

John Rhodes: That is an interesting take on what the NPPF says.

Q4 Chair: I was commenting on what you said.

John Rhodes: I am sorry if I misled you. The NPPF is not just a condensation of policy into 50 pages; it has some important characteristics, one of which is an expectation that development requirements are, first, understood and, second, met where they can be, up to the point where they cause adverse harm. That is not saying to a local community that the RSS will tell it how many houses it has to build but that it has to work out how many houses it must build for its community, and it is expected to meet that requirement for both housing and employment, or whatever it might be, up to the point where adverse effects outweigh the benefit of doing so. But it contains a presumption which expects planning authorities to plan positively to meet development requirements. It may not sound that radical, but that is not actually a requirement of the current planning system.

Q5 Chair: Finally, isn’t the planning system the system that everyone wants to kick as an easy solution to getting economic growth? Compared with the present problems of credit for businesses and households, surely that is one of the big issues in lack of growth. There is plenty of land out there with planning permission or designated for planning permission to be applied for. Isn’t that the real position?

Dr Marshall: Possibly in terms of house building, but not necessarily in terms of the business extensions I was referring to earlier. One thing John said is very important. I think businesses want the system to get back to a positive role. They feel that the original purpose of the 1947 Act is no longer at the heart of things, they feel the system as it stands now is not about planning positively for where things should go and where development should be allowed, but rather it has become a tool to object, or for the culture of no, as I like to call it, to rear its ugly head.

Jessica Bauly: To follow on from that, which I agree with, explicitly on house building we understand that at the moment there might be plots next year for 200,000 homes. Actual demand will require that amount every year for the next 10 years. That is one example of the pressing infrastructure needs for the UK. The same goes for transport needs and the ability to deliver the low-carbon economy and renew all the energy infrastructure over the coming years. We like the draft NPPF because it encourages the handing down of powers from national to local level. We would like to have a planning system that also includes handing over the responsibilities to take what might be quite tough decisions on meeting national needs to that local level.

John Rhodes: As to whether or not there is enough house building at the moment, we have to be very careful not to take a very short-term view. The economy is in a particularly difficult position at the moment and mortgage availability is difficult, but I don’t think any commentator would suggest, if you look back over the past 10 or 15 years, or look forward to what we hope will at least be a stable economy, if not a recovered one, that there is not clear evidence of housing shortage over a prolonged period of time.

Q6 James Morris: Mr Rhodes, intuitively reducing the number of pages of the planning guidance or framework sounds a good idea in principle. Do you see any potential danger, in that by reducing it to a 50-page document it becomes subject to a lot of subjective controversy about meaning and definition of terms, which could lead to legal challenge and so on and so forth?

John Rhodes: We were very conscious of that when we were trying to prepare the draft document. As we read the PPGs and PPSs again in this light, we found they were immensely repetitive, and they tend to tell you things that you know already without telling you what you really do want to know. For instance, PPG13, which is transport guidance, is a great document in many ways. I forget how many scores of pages it is, but you can read it without knowing whether or not you should grant planning consent on transport grounds. It tells you everything you want to know about transport without necessarily helping you with decision making. I agree there can be that danger-the words have to be very carefully written and the guidance should not say more than it needs to say. The words have to be carefully crafted and contain the important protections for the environment that certainly everybody on our group wanted to see, but also provide help with decision making, rather than just a discussion about the topic.

Q7 Heidi Alexander: I have two very quick questions, one for Mr Rhodes and one for Dr Marshall. Mr Rhodes, you talked about the planning system being a brake on housing development in the South East of England. In London 170,000 homes have been given planning permission but have not started to be built, so is it not more about the availability of developer and mortgage finance than the planning system? Dr Marshall, you spoke of some of your members not putting in planning applications because they feared they would be refused. You referred to 54% of respondents to your survey saying they were concerned about politicisation and inconsistency. Isn’t it more about getting private companies and small and medium-sized enterprises to work better with local authorities and their planning departments so they understand the process better, as opposed to this complete change of the planning policy framework moving to the NPPF?

John Rhodes: In the short term, I agree that it is more about mortgage availability than planning, but we are not talking about a short-term planning policy framework but something that should endure. You can look back through the last one, two or three economic cycles and identify a chronic under-provision of housing; otherwise, why do we have unaffordable housing? Why is there so much need for affordable housing and homelessness? We have not built enough houses where people want to live. You may be right in the very short time, but for a framework that is meant to endure, and also help the country recover from the current economic situation, you need a positive framework. All the NPPF asks is that local authorities identify and try to meet the requirements of their communities, which seems to me ought to be the fundamental basis of any sound planning system. One of the things in relation to business is the other way round as well. What we have tried to say in the NPPF is that, instead of relying on complex forecasting to look at employment requirements, why not talk to business and planning authorities? You are right; both sides need to come together, but it needs to be a practicable and workable framework.

Dr Marshall: That is a good start for my response. I think there is a lot of positivity among businesses in terms of working with planning officers and their local authorities where possible. They tell us that they are keen to do so. When we did this survey we also asked questions about preapplication advice and the quality of advice given. There was a level of positivity among businesses about what they were hearing at pre-application stage and when they could get that engagement. But bits of what John said also concern me. Three-quarters of applicants said they had never been consulted by local authorities about their experience in using the system. It is very definitely a two-way street. If 75% of business applicants tell us they are not getting a survey or telephone call from a local authority to ask, "How was the system for you? How can we work better together?", I think we have a brake and a problem that leads to undermining of confidence among many companies that otherwise might have started to engage with the process.

Q8 George Hollingbery: I am getting slightly lost here. I am struggling to understand whether your objection to the current system, particularly those representing business here today, is about the process or principles. It seems that most of what we have heard is about process. I would like to develop that theme a little further. I ask you to address whether it is about scale as well. Lots of the evidence where it isn’t working seems to come from smaller business. My experience as a councillor and Member of Parliament is that bigger applications tend to get through and dealt with. They might happen slowly, but they tend to get there in the end. Is it about scale? Why will the NPPF help? It seems to me it stresses principle rather than process. If that is the case, why do you welcome it?

Dr Marshall: I think it is a bit of both principle and process. The NPPF simplifies some of the principles and encourages us all radically to simplify the process, which is definitely businesses’ biggest bugbear. Planning and development control processes, especially around the time it takes to process an application, is of particular interest to smaller businesses, but there are some things on principle. A lot of them have said to me they welcome the notion that you can plan for places, prosperity and people in the same document but in a way that is legible to them. They see the NPPF not as a massive change of principles but something that consolidates, and in some cases simplifies, those principles. For many businesses this will probably be a marginal improvement on processes and principles that have existed up until now but they still see it positively. The important thing is that more confidence will result. If businesses can start to engage positively in both principles and process, you will start to see more applications coming through, especially from those I talked about in my previous answer as representing latent or depressed demand.

Jessica Bauly: I would agree that it is a mixture of both process and policy. An example of the policy is just the sheer number. We have over 1,000 pages of guidance as of now being cut down to 60-odd pages, which makes it a much simpler process overall. As to scale, the NPPF as drafted helps to drive forward the existing plan-led system, which we very much support. It is a system that is much more strategic and is to be taken forward at local level, but it incentivises and encourages a positive approach to planning that does not look at infrastructure in isolation but works for businesses and across local boundaries, for example through the duty to co-operate with other local authorities. That is better for the local communities who know their localities best to have a say in the development that takes place round them over a number of years, and it also gives more certainty for the investor community.

John Rhodes: I completely agree that it is principles as well as process. One of the things that the advisory group did fairly early in its existence was to write to the Minister-it is on our website-suggesting that process as well as policy needed to be looked at, so you can change policy but you will achieve only so much. The planning system is bogged down by a great deal of guidance that tends to suffer from the same problem; it is very repetitive. For instance, we looked at PPS12, which is about preparing plans. It is a pretty good document, but the guidance that sits behind it is the reason why seven years after the 2004 Act we still do not have a network of up-to-date plans across the country. The planning system is too slow.

Therefore, in addition to policy you need to look at process and also engage with the very important third limb of money, for instance getting CIL to work properly. You can start to see an accessible, positive planning system that people can understand with a process that is not longer than it needs to be and generates real local benefits. Then you can really start to see something that can work very locally but which is also positive in driving outcomes.

Therefore, the NPPF is not just about condensing policy; it is also about reminding planning that it is about being positive. It exists not as an industry in itself but to deliver the homes, communities, places and environment we want to see. One of the things it says is, "When you are preparing your plans, presume that you will meet your needs. If you are considering an application and you cannot decide whether it is good or bad, it is probably a development that ought to be allowed, particularly in this economic climate."

Q9 George Hollingbery: Dr Marshall, can you quantify in percentage terms as best you can where your members’ objections sit in relation to process versus principle?

Dr Marshall: It is always a dangerous thing to ask. I would say it was probably 60% process and 40% principle.

Q10 Mark Pawsey: Dr Marshall, you introduced the three pillars of place, prosperity and people. The NPPF brings in those as economic, social and environmental aspects of sustainable development. I know we will go on to talk a lot about what is sustainable development, but we heard a lot from you about the economic aspects and the need to get the economy moving. That is an issue right now, but the NPPF is intended to last for a much longer period than the economic position in which we find ourselves right now. In your view, does the content of the NPPF have sufficient regard to the other two issues, namely the environmental and social aspects? You are very concerned about the economy, but what about the other bits?

Dr Marshall: I am very concerned about the other bits, because if I look at chambers of commerce up and down the country they are hugely involved in the local economy, local wellbeing and the preservation of the local environment in many cases. Therefore, there is a great degree of concern about all three among our members and chambers. When I look at the NPPF and the three elements, prosperity comes first in terms of the ordering, but I do not think that it is to the detriment of the other two, quite frankly. When you look at the section on planning for places, for example, you see the extraordinary safeguards built into the British system partly as a result of domestic law and partly as a result of European law. Those are things that are not going to change, whether it is greenbelt designation, which we know will not be affected by this, or European directives on birds and habitats, the SEA directive, etc. All of these requirements are in place to make sure you have regard to the local environment no matter what happens as part of this process.

The other thing that is not affected remotely by the NPPF is the involvement of statutory consultees. There are many statutory consultees on both the social and the environmental sides of planning, all of whom will express an opinion about the viability or rightfulness of a particular application. Their role is not affected either. Therefore, you see a partial consolidation of what is a strict system. When I see objections to the NPPF that would characterise it as bringing us close to the planning regimes in countries like Spain, Ireland and Greece, or suggest that we are about to turn into Los Angeles tomorrow, I find that very difficult to believe.

Q11 Mark Pawsey: Perhaps I may ask the views of the other two witnesses.

Jessica Bauly: I would absolutely concur with Adam Marshall’s comment. We like the draft NPPF precisely because it provides certainty that development for infrastructure will go ahead as long as environmental and social considerations are fully taken into account. It states very clearly that, for example, environmental protection must continue, and ultimately it places those decisions in terms of the balancing of those three pillars at local level while providing a helpful framework to help guide those decisions.

John Rhodes: For me, one of the key reasons I was so keen to be invited to address you was this point, because the debate nationally has tended to polarise the NPPF between concrete mixer and greenbelt. Neither of us who were involved in the work of the advisory group saw himself as being at either end of that extreme. We all wanted to achieve a positive planning system that created real benefit all round. One of the things that enabled a group of four very different people to arrive at a consensus on a document was recognition that the right development could enhance the environment and you could use development to enhance the environment.

They are not just protections. It is important to understand the way the document works. It seeks to achieve an enhancement of the environment as well as meet development needs. Therefore, at its very base is a presumption. The words that you do not see on the front page of The Daily Telegraph are those you see in that bit of paragraph 14, which says "unless the adverse impacts of allowing development would significantly and demonstrably outweigh the benefits". Therefore, if you can show that the adverse effects of development outweigh the benefits, planning consent is refused, even without a local plan. Once you have a local plan you can put in place whatever policies you want to reinforce that, if you need to, but the presumption is not one to be afraid of if you are a planning authority.

Throughout the document there is an expectation of high-quality design; to take the least environmentally sensitive land first; and to mitigate and compensate for environmental impacts is a requirement of the document. The NPPF takes environmental policy further than existing policy because for the first time it requires planning authorities to plan positively to enhance the environment and use the proceeds of development to do that. We wanted it to be seen, and I think it can be seen, as an integrated document to achieve multiple wins.

Q12 Mark Pawsey: Given the substantial protections that still exist and the massive need for economic growth, is there a case for saying that the NPPF does not go far enough? Perhaps you would like to take out the word "sustainable" and get more growth into the economy because we face very dire economic times.

Dr Marshall: I agree with John that we need to take a long-term view on this. The NPPF needs to be ready to plan not just for the next five years but, hopefully, the next 50, because one thing businesses value over and above everything else is a level of certainty and stability in the policy system. If this document, with whatever amendments are made to it, is in place for a significant period of time you will see an increase in confidence, business investment and engagement with the system. I would not like to see any one of the three pillars somehow discarded, because then we will not ultimately have the places that will last us for 50 years, or enable us to have the kind of economic growth we all want to see.

Q13 Mark Pawsey: But you would say there might be a case for some special measures currently in order to get the economy moving again?

Dr Marshall: If you have time for a very long list I can tell you about lots of special measures we would like for the economy. The planning system is one of many, and in this particular case it is getting the NPPF into policy and getting a positive notion back into the planning system, i.e. that development is a good thing to be nurtured and guided, not something to be opposed.

Q14 Mark Pawsey: Does the word "sustainable" mean that the right kind of development as far as each of you is concerned will now come forward and happen?

John Rhodes: I don’t think the planning system can do anything about making development happen. It can help but development happens only when it is viable for it to do so. That is always more a function of the economy than planning policy. It means that it may be easier for development to take place where there is a demand for it. There is almost a perfect correlation between where development wants to happen and where planning does not want it to happen. What this suggests is that those authorities that are the beneficiaries of demand for development really ought to try to meet that development priority if they can in an environmentally responsible way, subject to the safeguards I have identified. It should help to stimulate growth together with a package of other measures.

Jessica Bauly: I would concur with the comments of both of my fellow witnesses. In particular, one must not forget that the development that hopefully will come about as a result of a more positive planning system will help drive the economy but also meet the environmental needs of the low-carbon economy we are looking for.

Dr Marshall: The definition of sustainability is an issue of great concern to many who are involved in this particular debate. One thing that I like about the draft NPPF is that it says to the local area, "It is up to you to judge sustainability in this particular context and ensure that this meets economic, environmental and social requirements." Planning has always been an art, not a science. Over the years there has been a mistake on the part of those who have considered it to be more of a science, who have said you can create a policy or piece of guidance to cover absolutely every eventuality. At the end of the day, there are some subjective decisions involved, which are often tested through the legal system. That will continue in future. With the sustainable development concept as set out in the NPPF the onus is on local authorities, working with applicants, to try to ensure that developments are sustainable. I think that it is a more positive way forward.

Q15 Chair: I pick up one phrase Mr Rhodes used as an author, one step removed, of the document. He said "significantly and demonstrably outweigh the benefits". Can you define what that means? In practice, does it mean that if the disbenefits are greater than the benefits of a particular application, but they don’t "significantly and demonstrably outweigh" the benefits, then the development goes ahead, even though the disbenefits are greater?

John Rhodes: It is a good question. We had some slightly different words in the draft that we put to Government, but I am not unhappy with these words. In a sense, you might be forgiven for thinking that there is a lot of fuss-not about nothing because this is very important-but this is roughly how the planning system works at the moment, in that you weigh up the benefits and the disbenefits and come to a balanced judgment. What this is saying is that, if you can show the adverse effects outweigh the benefits, you can refuse planning permission, or you don’t need to allocate land to meet requirements in a local plan. People are concerned about the words.

Q16 Chair: But it doesn’t say that if they outweigh the benefits you don’t give permission. It says, "significantly and demonstrably outweigh", which rebalances the system, doesn’t it?

John Rhodes: I wasn’t trying to escape that at all. If you can demonstrate an adverse effect that is not significant-I don’t think the word "significant" can be objected to, because if it is not significant it is insignificant-why would it stop development happening? It seems to me that those words ought not to be controversial.

Q17 Chair: Ought they to be there?

John Rhodes: I think they need to be there, because the way in which the NPPF and planning have to work is that you can presume in favour of development, but nobody wants you to presume in favour of all development. You need to identify at what point that presumption comes up against an objection that would prevent that development happening. What is unacceptable development and how do you define it in national policy terms? That is at the heart of the NPPF and the intellectual process that we had to go through, and it is at the heart of preparing local plans. For instance, in the South East local plans will not be able to meet all of their development requirements, but at what point do they stop? If you accept there is a benefit in meeting development-put that way, many people do not-and ask whether there is a benefit in meeting the requirements of a community for schools, infrastructure, housing, your children’s housing and those sorts of things, people say, "Yes, of course," but at what point do you say you cannot meet them all because there is an adverse effect which outweighs the benefit of doing that? All that seeks to say is: at what point do you say you do not meet development requirements? When you want to be informed as to what that means, you look at the rest of the document and it tells you what is important in terms of sustainability, protecting green spaces or the historic environment, and you can use the rest of the document to identify what adverse effects might be important in outweighing the benefit of development.

Q18 Heidi Alexander: As to the three words "significantly and demonstrably", I think you suggested that they were not your first preference.

John Rhodes: We had a slightly different formulation.

Q19 Heidi Alexander: It would be interesting if you could tell us what your wording was. Equally, would you agree with me that those words in the document amount to a blank cheque for planning lawyers in terms of appeals going forward? In the Committee today we have struggled to articulate what that actually means. I just see planning lawyers fighting over those three words going forward.

John Rhodes: I suspect that any reform of the planning system will engage planning lawyers. This might be the least lucrative for planning lawyers because there is less to argue about. It is not a particularly complex document and it seeks to distil the planning test down to something that everybody can understand. Therefore, what it is really saying is that development ought to go ahead unless it is harmful. I don’t think it is a blank cheque either for developers or planning lawyers. Inevitably, if you change the planning system there will be debates about what it means and it will have to settle down; we will see how it operates in practice, but the simple tool everybody can understand is that, if there are real and significant adverse effects that you can identify, you are not the victim of the developer. You can readily refuse planning consent, even if you don’t have a local plan.

One of the things that I think the public debate has missed recently is the importance of the local plan to this process. If there was one change between the advisory group draft and the Government’s draft that I do regret it is that I don’t think the latter is as clear as it might be on the role of the local plan. Therefore, the local plan is law. Section 38(6) of the 2004 Act tells you that if you are contrary to the plan you should normally be refused planning permission. This does not change that at all. Once a plan is up to date and prepared then local authorities can refuse planning permission. The debate has been about whether they are naked until they have a local plan. The answer is absolutely not, because the NPPF is perfectly capable of operating as their local plan until they have their local plan in place, because it says, yes, they should try to meet developments requirements, and yes, there is a presumption in favour of development, but only if its adverse effects do not outweigh its benefits. It seems to me that, although as you say lawyers may get excited about it, it is almost the simplest way of expressing what is at the heart of planning.

Dr Marshall: Probably lawyers get most excited about the nine volumes of existing planning guidance that they are dealing with at the moment. On John’s point about the local plan, which I quite agree with, there has never been a better way to get local plans up to date and more authorities to consolidate their local plans than to say to them that, in the absence of a local plan, a slightly different regime will apply. I would foresee an enormous number of local authorities coming forward with finalised local plans much more quickly and thereby addressing some of the serious frustrations businesses have expressed over the years, in some cases waiting eight years before the plans were forthcoming.

Q20 James Morris: This debate has been characterised by quite a lot of bizarreness in a way. I sat on the Localism Bill. We had representatives from the business community who told me that the planning reforms in the Localism Bill were a charter for nimbyism and there would never be any development. We now have the NPPF. The same group welcome the new NPPF, and those in favour of quite a lot of the reforms in the Localism Bill are now screaming blue murder in the press about the fact that we will be concreting over the green belt. I am a little confused about where we have got to in this discussion. Mr Rhodes, do you think that some of the fears being articulated by English Heritage and other groups have any grounds in reality, or is this just a debate that has become horrendously polarised for political purposes?

John Rhodes: I don’t know the reasons, but the debate has become a little extreme in my view. A lot of the debate in the press or even on platforms where people speak does not seem to be based on an actual reading of what the document really says. People like to assume it says something that supports their point of view, but a lot of time and effort was taken to try to create a balanced system and a planning framework that genuinely produced what I call win-wins. For instance, there is clear protection for environmental and historic building and historic heritage assets within the document, which I don’t think English Heritage or others need to be concerned about. It is good to have this sort of session where you can examine what the document really says and focus on the issues.

Q21 James Morris: Do you think the NPPF represents a development of Government policy beyond the discussions around planning in the Localism Bill, or is it a shift in Government policy?

John Rhodes: I think it is a little bit of both. It would be interesting to talk about localism and how it works, but it contains within it a positive plan for development, which you may or may not think is what localism is about, depending on how you view it. A number of people would say, "Why would local communities not want to meet the requirements of their community?" which is all the document asks them to do. If you express it in terms of schools, jobs and homes for your children, that is all it seeks to do. You genuinely identify what those requirements are and try to meet them, but then locally you have no RSS telling you what to do; you do not have nine volumes of planning to wade through. You can say to yourself, "I understand planning now; I can create a plan for my community," and if you combine it with CIL and other financial incentives you can say, "What my town really needs is this. How am I going to pay for it? The only way I can pay for it is probably to support development, but that development planned in the right way will help my community." I think it begins to provide a manual for communities to start planning positively for themselves.

Q22 James Morris: Dr Marshall, do you think the extent to which the business community has leapt on the NPPF in such positive terms could arouse suspicions among other interest groups that this represents a shift in Government policy rather than building on what was in the Localism Bill?

Dr Marshall: I think there was a clear objective in Government policy from the beginning to make the planning process more positive and less obstructionist for good and, dare I say, sustainable development. There were elements in the initial versions of the Localism Bill, and in later amendments proposed for that Bill, which caused business significant concern. I shall name three. One was the over-extensive use of referenda with regard to individual planning applications, which would be a licence to say no to just about everything; one was proposals initially floated for a third-party right of appeal, which would basically have turned anyone into an interested party; and the third was about neighbourhood planning, until it was clarified that neighbourhood planning was about planning positively and adding to what was in the local plan rather than refusing development. That was a concern. It is very possible to be in favour of broad reform of the system while saying that some elements that are coming forward in a legislative agenda might not sit well with that.

Q23 George Hollingbery: There has been quite a lot of comment about the definition of sustainable development, which we have touched on a little. I think Dr Marshall said he liked the rather amorphous view of it. For example, today we are looking at evidence from the TCPA who strongly recommend that the definition of sustainable development in the NPPF accurately reflects the Government’s own 2005 UK sustainable development strategy. Why would the NPPF leave the definition so amorphous, open to interpretation and challengeable?

John Rhodes: Obviously, this was something we wrestled with as a group. Everybody has a different view of sustainability. It is possible I could give you any case study for a development proposal and we could all disagree about whether or not it was sustainable. Trying to identify what sustainability really means is almost the holy grail. While I think there is some good and mature text about sustainability within the document, it was not our intention to change the definition of sustainability. That is not the purpose of the document at all. The purpose of the document is to say: what does it mean when you try to apply it in a planning sense? There are very good definitions of sustainability out there that the NPPF does not have to touch. What it has to do is ask: how does the planning system operate in order to achieve sustainability? Interestingly, what it does not do is force every development to prove its sustainability. That may be controversial to some, but when you think about the practical implications of expecting a development to prove its sustainability when it is such an amorphous, difficult concept, you would end up with a much slower and more difficult planning system. It has to work the other way round, which is to say that the country needs development and it should be allowed unless it infringes principles of sustainability. It sets down what is important and what adverse effects might be, so you can deduce that a development that falls foul of those tests is not sustainable.

Dr Marshall: I like the fact that local communities will be able to determine for themselves to a certain extent what constitutes "sustainable". I have spent a lot of time in chambers of commerce around the country. When you go to many authorities in the North of England, for example, which have long taken a very positive approach to planning, for them sustainability at the end of the day is about jobs and economic activity. Many years ago one council leader said to me that the best thing in the world that could happen to him was that a B&Q shed should open on a piece of contaminated brownfield land, because it creates jobs and economic activity in the area. Southern local authority representatives have said to me, "The worst thing that could happen to me is the opening of a B&Q shed in this area, because it will create enormous amounts of traffic, pressure on local infrastructure, etc." Those two individuals’ definitions of sustainability and their areas’ definitions of sustainability will be quite different, so the fact that we now have the possibility, with safeguards in place, to make that determination at local level is I think a positive thing.

Q24 George Hollingbery: So, this is a business charter. A nice amorphous definition means you can justify almost anything, which is great for business.

Jessica Bauly: I absolutely agree with comments made so far. Particularly in line with the localism agenda and how it has been developing to date, it makes sense for the definition of sustainable development and the ins and outs of it to be dealt with at local level. The reason we like the draft NPPF is that it provides a very clear and succinct set of guidance. It will be the only policy guidance available to help guide those local decisions.

Q25 George Hollingbery: I take Mr Rhodes back to 1.17 of his evidence about the tension between section 38(6) of the 2004 Act and the local plan. Clearly, we have that tension between sustainable development and the definition of it and what is provided for in the local plan. The bit that really worries me is that, if you are a very large business with enormous corporate resources and you can hire some very expensive consultants and lawyers, you can create a new evidence base very quickly that will feed into what looks like an up-to-date local plan and show that it is not. You say that section 38(6), therefore, remains the law. The NPPF clearly will be a very important policy, but the law will still require planning decisions to start with the local plan where the local plan is up to date. But what does "up to date" mean in the context of sustainability? Will businesses be able to go out there and, through the use of very expensive consultants, show that their suggested out-of-plan development is more in keeping with sustainable development, and therefore should be allowed, than what is in the local plan?

John Rhodes: Maybe they will try, but you are describing the way the planning system works at the moment. Because it is so complex and there is so much of it, it is those with the resources who have better access to it. This tries to make the planning process easier to understand.

Q26 George Hollingbery: To stop you there, I accept that is the case. We have all dealt with it. Why does what is suggested in the NPPF signal the end of those days? Why is the change positive in this regard?

John Rhodes: Because there is less of it to bamboozle people with; it is a more accessible document, written in plain English. Planning should not be difficult. Anybody should be able to engage in the debate about whether development is good or bad. You will have developers with their own commercial interests trying to use the system to their advantage. That happens in any walk of commercial life, but this system makes it easy for everybody to understand the right approach to development and the important things that development should not do. It identifies the harm that development should not cause in a way that is easy to understand.

Q27 George Hollingbery: I am just worried about the tension between a big corporate interest being able to demonstrate its version of sustainability versus that in the local plan that has been widely inspected and thought about a lot locally, and one trumping the other, when what we are looking for is a locally driven plan that accords with the principles of sustainability.

John Rhodes: This document does what it can to maintain local plans at the absolute heart of the planning system. The group could have said you don’t need local plans, but they are and must be at the heart of the planning system. The law will always be more important than the policy. It encourages as strongly as it can the preparation of clear local plans with real strategy that is bespoke to the local area to meet requirements in the most environmentally responsible way that it can. Developers will be able to make their case, but there is nothing in this which makes it any easier for a developer to ride roughshod over a local community; rather the reverse.

Q28 Chair: Why isn’t there wording in the document that says there is a presumption in favour of sustainable development consistent with the local plan? Wouldn’t those words help to clarify the situation?

John Rhodes: It virtually does say that.

Q29 Chair: By virtually saying that it actually doesn’t say it, does it?

John Rhodes: No, it doesn’t say that, because there isn’t always a local plan in place. At the moment less than half the country is covered by plans, despite the fact that seven years have elapsed.

Q30 Chair: That would be the default position, but it would strengthen those authorities that had a local plan, wouldn’t it, which is the point you have just been arguing?

John Rhodes: I don’t resist what you are saying; it is just not necessary, because the policies of the local plan are more important than the policies of this document. Once the local plan is prepared and is up to date with the NPPF it has the law on its side. If you wished, the NPPF could be strengthened to reinforce that, but it does not need to because the local plan has the legal basis behind it; it is at the heart of the planning system.

Q31 Simon Danczuk: Perhaps I could have a quick yes or no answer to this question: do you really think that this document will significantly boost economic growth in England?

Jessica Bauly: Yes, in the longer term.

Dr Marshall: I hope so.

John Rhodes: Not by itself, but it should help.

Jessica Bauly: As an enabler rather than a barrier.

Dr Marshall: We have to be careful not to oversell single changes to the system. We have changes going on in terms of regulation and other mechanisms to boost the economy. They need to be seen together. A better planning system that gives businesses more confidence will certainly help.

Q32 Simon Danczuk: Consider the scenario where a local authority is already making significant cuts imposed on it by central Government; it is getting rid of planning officers; it is a very poor area; people are not very articulate; they don’t have much cash to throw around. Contrast that with a local authority area that is not making cuts imposed by central Government and the local residents have quite a lot of money and are very articulate. What will be the difference in applying this document to those two areas? As it currently stands, in terms of guidance, does that offer a safety net for those people who perhaps are not as articulate or who cannot put up as good a fight? Will it be an even playing field across those two local authorities?

Dr Marshall: I have been involved in the planning system for a number of years, and this is the first document I have read that I feel is more accessible, to be honest with you.

Q33 Simon Danczuk: In terms of reading it and things?

Dr Marshall: As a citizen I have been engaged with it and have asked myself some intelligent questions about how it applies to particular circumstances in which I find myself. As a local business person it is the same thing. I might find myself more able to engage than I was before. I can sympathise entirely with the point about loss of planners and planning expertise in a number of local authorities. I would not want our evidence in favour of planning reform to be misconstrued as somehow being anti-planner or anti-plan-led system. It is good to have a plan-led system. Planners are seen by a lot of business people as being a help in this process, and yet there are certain elements of the bureaucracy, process, and so on that really throw them. We don’t want to see a situation where local authorities don’t have planners any more, or don’t have the ability to engage with businesses positively on this. That is a concern.

Q34 Simon Danczuk: Generally, people in poorer areas are invigorated by this? They are going to be better represented, and it will be easier to stop development?

John Rhodes: I hope so, because it is written in plain English. If people are less articulate than others they should have more access to this planning system than to the current one, which is obscure to most people.

Q35 Simon Danczuk: A final quick question to you, Adam. A lot of your members are independent retailers in town centres. They will be happier with this than with what is currently in place, will they?

Dr Marshall: We have a lot of members who are in town centres; some are retailers and some are services businesses and so on. I think they will be happier with this because they will see greater clarity. A lot of them will say to us that they hope Town Centre First remains part of the process. I have been assured by the Department that the principle of Town Centre First remains part of this process.

Q36 Chair: Do you favour, therefore, taking the sequential test away from this development?

Dr Marshall: I will write to you on that.

John Rhodes: It is very clearly Town Centre First but, as you say, not for office development. What it really says to a local community is, if you want to plan your town centre to be as attractive to office investment as you can, that is great-you are positively encouraged to plan your town centre-but if you have an office investment that does not want to go to a town centre in this economic climate, are we really going to turn it away when it meets other planning tests? It does not mean it can go wherever it wants to-it has to be on the right land use allocation; it has to be sustainable and its design has to be appropriate, and everything else-but are we really going to say we can afford to turn away office development? I don’t think so.

Chair: It might be a case of not increasing economic growth but displacing it, but we will come to that in due course.

Q37 Heather Wheeler: That leads me very nicely to the area in which I am interested: the spatial strategy, having got rid of it or whatever. Do you think there ought to be perhaps a spatial dimension so that it can help to promote growth? You can say no if you like; I just chuck it out to get the debate going.

Dr Marshall: To be honest, no, for the reason that, if the NPPF is designed so that more things can be done locally, injecting some sort of top-down spatial element might go against that. Our concern would be that we end up possibly with a German-style system, where you have a hierarchy of development principles across geographic areas and it is the centralist position that predominates. That would constrain local decision making much more than just about anything else.

Jessica Bauly: We would agree that would obviously go against the localism agenda, and therefore it is right that at local level there is encouragement to think spatially bottom-up.

John Rhodes: I confess that I was not a particular fan of regional planning. My perspective of it was that it seemed to generate a huge amount of documents, take a great deal of time and achieve not very much. Obviously, cooperation between authorities is extremely important. The document deliberately has within it an encouragement, not directive, for authorities to work together to plan their area. It does not tell them how to do it, but says that you are unlikely to get your plan adopted unless you have demonstrated that you have worked with your neighbours. Therefore, if there needs to be a stick that is it, but it hopes and expects, and for that reason will effectively require, authorities to cooperate in areas of mutual interest.

Dr Marshall: The Greater Manchester plan being a very good example of that.

Q38 Chair: Jessica made a point at the very beginning about the importance of infrastructure to your members, and I am sure to other businesses as well. Some concern has been expressed about infrastructure that goes beyond an individual local authority area. We don’t have the Regional Spatial Strategies; indeed, I think the CBI minerals division has already put in some information about its concern over this. Sitting alongside the other changes, with the duty to cooperate, is there sufficient direction now in the planning system to ensure that those infrastructure issues-housing, energy, waste management, minerals-are really catered for, to ensure that we get the sort of development that is needed to make growth happen?

Jessica Bauly: We think that the draft NPPF, as currently drafted, would provide a critical piece of the jigsaw in the planning system, to answer that very issue. Together with the duty to cooperate which we are informing on via the Localism Bill, the middle tier of planning will be catered for and encouraged, be it for minerals, waste, water or transport.

Q39 Chair: So, is the NPPF together with the duty to cooperate as it currently stands sufficient, or do you want to see changes to improve the situation?

Jessica Bauly: There might be a few tweaks which we will be informing you on in writing, but in principle, as the draft is currently drafted, we see it as a positive start.

Q40 Chair: It would be helpful if you could come back to us on the tweaks in writing.

Jessica Bauly: Yes.1

Dr Marshall: I disagree with that ever so slightly. I have some sympathy with those who say that planning that goes above local authority level but below national level can get lost. Our hope is that Local Enterprise Partnerships will be able to play a more specific role in planning for transport infrastructure that crosses local authority or area boundaries. I am somewhat encouraged by some work that the Department for Transport is currently doing to look at ways to enable that and ensure that transport funding, for example, follows sensible geographic areas so you can effectively plan for those projects.

John Rhodes: I was never convinced that RSS was good at doing what you are talking about. What has always been more successful are informal groupings of authorities around areas of mutual interest. Working parties of joint authorities forming a natural area to talk about waste or energy have often been more successful. There is a sting in the tail of the NPPF that says if you don’t do it you won’t get your plan adopted. I won’t think you would need to invoke that very often because planning authorities naturally do want to plan what is required for their areas, including cross-boundary stuff. They do it very well.

Chair: Thank you all very much for coming to give evidence to us. It is appreciated.

Examination of Witnesses

Witnesses: Paul Cheshire, Emeritus Professor of Economic Geography, London School of Economics and Political Science, Dr Hugh Ellis, Chief Planner, Town and Country Planning Association, and Alex Morton, Senior Research Fellow, Policy Exchange, gave evidence.

Q41 Chair: Good afternoon to all of you. Perhaps for the sake of our records you would begin by introducing yourselves and saying who you are.

Paul Cheshire: I am Paul Cheshire from the London School of Economics. I am an economic geographer/urban economist, and I have been researching the economic impacts of land use planning since 1981.

Dr Ellis: I am Dr Hugh Ellis, chief planner at the Town and Country Planning Association.

Alex Morton: I am Alex Morton, a Senior Research Fellow at Policy Exchange, which has taken on the issue of housing and planning since about 2005.

Q42 Chair: Thank you all for coming to our second evidence session this afternoon. As I say to all our witnesses, if you agree with what has been said by another witness, you need not repeat it; you can just say you agree. Given the evidence that you have submitted, that is probably less likely than with other witnesses we have had before us.

To begin with, is the planning system as it stands in need of reform, or revolution, or neither of those two?

Paul Cheshire: First, I come at this as an applied economist who is interested in planning, so my take may be slightly different from that of a planner. I think that the planning system has very important things to do in regulating land markets, which have major endemic problems of market failure. How do we provide public goods like open spaces? How do we take account of the fact that what I do on my patch of land has an impact on the value and enjoyment of my neighbour’s patch of land? You must have a regulatory system. Planning does that and also coordinates patterns of land use with the provision of infrastructure and so on. I see it as an absolutely essential safeguard of environmental and amenity values of which markets on their own are incapable of taking adequate account.

However, many economists who have looked at this over the years have come to the conclusion that it has had extremely harmful economic effects in terms of distorting prices, increasing the cost of doing business, and on housing availability, quality and prices, making housing increasingly unaffordable. You asked a question earlier. It is a long-term issue; it spans two generations. What we build in any year is such a small fraction of the total stock of building that it doesn’t matter. It is when you add that up over five, 10, 30, now 60 years, that you get these big build-ups of things that generate economic inefficiencies, loss of welfare and unaffordable housing.

Dr Ellis: I think the planning system has made an outstanding contribution to the nation. As to whether it is broken at the moment, we are in an extremely difficult time. Planning has never been so deregulated or subject to so much uncertainty, certainly in the postwar era. Whether or not there was an evidence base for why planning needed reform is very difficult. Perhaps you can say that is an argument you cannot return to now. Certainly, England is not a nation you can run without strategic planning; it cannot be done. There are benefits in planning that deal with things that go a long way beyond price. Lots of issues to do with social welfare, the challenges of climate change, social inclusion and regional inequalities all need to be dealt with through strong planning.

But at the core of it the great shame about planning reform is that the big problem is about resources and culture, not structures. In England we are obsessed with changing our planning structures on an ever-increasingly speedy turn around. That has led to a system that is now in a very difficult state, but the case for evolution and reform and culture change was certainly there. The case for wholesale deregulation, which in many cases is what we are receiving now, is certainly not there.

Alex Morton: The planning system has two possible reasons for existing: one is to correct market failures. You could have an externality-based system, where if someone does something right next to you obviously it has an impact on you, and the planning system exists to mitigate that. There is a second reason why planning could exist. Planning as an overarching vision; it is a 1940s command economy with central planning. We would argue that the current planning system mostly resembles the second. Not only does that fail; it also means that the first objective, i.e. to account for externalities and changes, is lost.

We do not agree that the planning system is serving us well. Home ownership is falling for the first time in 80 years because we have built far too few homes for a very long period. This is wrong. We think the fact that £22.5 billion will be spent on housing benefit by the end of this Parliament and the fact that commercially we have six of the 50 most expensive cities in the developed countries is related to our planning system. The LSE has done lots of work to show how our commercial space, internationally, is very expensive. For example, Birmingham is as expensive, or more expensive than, San Francisco. There are a huge number of planning failures.

Finally, I don’t think many people think that what we build is particularly desirable or attractive. One of the problems of the planning system is that people are afraid of development because it is not of very good quality, and then we decide to get round that by creating even more regulation and planning, when it is bad regulation and planning that created the problems in the first place.

Q43 Chair: Some people might either credit or blame your organisation for having brought about the changes in the NPPF leading from the 2006 report Better Homes, Greener Cities. Are you pleased by what you see now? Do you take credit for it?

Alex Morton: We think all parties should want to build more homes. I think there should be a cross-party consensus that people who work and aspire to own their own homes should be able to afford that. I think most people also want to see in the next 10 years growth return and as many barriers removed as possible. In a sense we have tried to push reform but we are not sure this is the exact way to go about it.

If you look, the local authority planning system is at the heart of these reforms. That repeats the early 1990s reforms, which was the last time the Conservatives tried to reform planning. It started off by looking as if it would be looser, and then it returned to the idea of the local plan being central. We think that when you combine that with having planning inspectors, how much people will feel there is real localism is questionable. There is also the possibility of ‘planning by appeal’, where planning inspectors end up overruling councils, which creates a lot of hostility. Household projections remain inherent within the NPPF despite the fact that half of all householders under-occupy their own property, which cannot be taken into account very easily. Therefore, you underestimate demand.

Overall, what we want is a system where you get better quality and more homes. Whether or not this is going to do it is an interesting question. We would argue that the package of reforms at the moment probably won’t achieve the Government’s objectives.

Q44 Chair: You are producing a report, aren’t you?

Alex Morton: We are to produce a report in the next couple of weeks that argues for a more radical system to be introduced. We think that the Government have completely the right objectives and have been quite brave in taking on some vested interests. However, we think that they may need a slight steer. There are also some reasonable concerns from nimby groups that need to be taken into account, mostly about the quality of development. If we can come up with a system that creates a better quality development, a lot of other problems will solve themselves, in that you will have less of a fight and more agreement.

Q45 Chair: No doubt you can send us a copy of that report.

Alex Morton: We will happily send a copy to all members of the Committee.

Q46 Chair: Dr Ellis, I assume you have a slightly different take on the reforms. You are suggesting that they are not really dealing with the challenges that face the country over the next 20 years; they are a bit rooted in the here and now?

Dr Ellis: I think an extraordinary gulf is opening up, not least on demographics. I am sure we can share the sense of the need to meet demographic change. But the future of England is dependent on a strategic conversation that is not based solely on price. The world is much more complicated than that. By the way, I think the evidence about the benefits of planning is much more complicated than is being portrayed, sometimes for partisan reasons. When you look at the royal commission in 2002, the royal commission on the urban environment, the royal commission on environmental planning and the Foresight Report, which also talks to some degree about Paul’s agenda, those flag the extraordinarily serious nature of food and energy security, climate change challenges and coastal and demographic changes. If you are going to deal with those issues democratically you must have a sophisticated system of regulation to do it. There is no historical precedent for making that purely a market mechanism.

The very basis for the English land use planning system was not socialist command economy. It was produced by the commission headed by Sir Montague Barlow, who was a Conservative barrister. He put the planning system into place for pragmatic reasons about the management of the nation. On top of that, the TCPA would love to build a few garden cities and do some visionary utopian stuff round the edges, but, to be really clear, the planning system derives overriding benefit for this nation. It makes mistakes, but if you want the dystopia that would result if you concentrated development without any consideration of water resources, climate change, or any considerations about social inclusion, you can have it.

Q47 Chair: I gather you are not going to agree with that comment.

Paul Cheshire: The interesting thing is, there are surprising elements that I do agree with. My problem, coming to this as an economist, is that planning is many things but one of the most fundamental is that it is an economic mechanism; it is rationing a scarce resource, which is land for development, but it is then leaving it to the market to throw up the prices. The result is that, if you could get planning permission outside Oxford to convert agricultural land to housing, you go from about £10,000 a hectare to £6 million or £7 million a hectare. That is a quite extraordinary price distortion, almost on a level with that observed in the last years of the Soviet command economy in Poland and the Soviet Union.

I remember giving evidence of an economic nature to the Oxfordshire structure plan inquiry in 1991. I argued, I think cogently, that this would increase the price of housing in Oxfordshire and give monopoly power to local developers who owned particular patches of land where large proportions of development were being made available. After about a day of very detailed evidence and discussion the inspector said, "That’s very interesting. I’ve listened very carefully to what you had to say, but the price effects are not material considerations." I welcome the draft NPPF insofar as it tries to bring price effects back into the balance. It says in paragraph 19 that we should look at market signals and they should inform our decision making but not determine it. I agree with Hugh, surprisingly, that we always need to couple together the economic consequences of our decisions about land use with its wider environmental and amenity consequences, including the carbon footprint and global warming effects. They are absolutely vital. That is part of where the market would fail if we did not have regulation, but for 60 years we have had a system of regulation that has been failing the economy, so to speak, by not taking account of any prices.

Q48 Simon Danczuk: What do each of you think is meant by sustainable development?

Alex Morton: Do you mean the meaning in the document-obviously, that derives from the Brundtland Commission-or do you mean what we would like to see? Sustainable development is development that is sustainable, we would argue. Policy Exchange tends to argue that that is about technological change. For example, it is about supporting electric rather than petrol-driven vehicles, and renewable energy rather than trying to green every single new home at great cost. We would argue that in a planning system sustainability is a relatively peripheral product, and technology and other policy should be focused on that area.

Dr Ellis: There is a clear definition of sustainable development in the 2005 strategy. I think it is powerful and extremely important for the future of the nation. Brundtland is an interesting starting point, but it is now more than 30 years out of date. It is very surprising to see it represented in the NPPF. The 2005 definition is not a partisan one; it represents 25 years’ experience of what sustainable development is. I think the five ideas around sustainable development remain critical, but there is one very important principle that the NPPF deliberately ignores: the concept of environmental limits. That notion is critical because that is the bridging intellectual concept between allowing future generations some future prospect of life and our current consumption. That is most easily understood with carbon emissions.

But in a more positive way-because that is quite negative-there is the opportunity of sustainable development like building extraordinary, visionary places. You can reach out and touch sustainable development-bits of it called Freiburg. There are examples in this country as well, but we are not as ahead as we should be. Why? Because others have regulated to create markets in many of the products that drive sustainable development. But ultimately if you imagine that situation around carbon or water resources, the critical issue-this is ever so simple, isn’t it?-is whether it is sensible to build large amounts of new housing where you have no water resource. Sustainable development brings into planning the concept of environmental limits to take that forward. I did not make that complex in detail. It is quite complicated in detail, as you can understand with your water resources in the South East, which is why planning needed good, strong guidance, but sustainable development is clear. I am sad to say that, despite the TCPA’s best efforts-because it is here to generate consensus-it has not yet seen consensus about sustainable development in the NPPF.

Paul Cheshire: I support the general aspiration. Who could be against the Brundtland formulation of sustainable development? My worry is: how do you translate that into actual decision making about parcels of land? I think entirely consistent with sustainable development is the proposals essentially that underlay the Foresight Report on land use futures, to which I contributed, which is that you should look at the underlying widely defined value of land. We should compare that with what it is currently being used for. Clearly, Hampstead Heath or a national park is producing big environmental benefits and very important public amenities. The idea that you should build on those places is ridiculous.

What John Rhodes said earlier is consistent with my vision of how we should translate sustainable development into an actual decision-making tool. We should look at the price of alternative uses and compare that with the costs that development would impose in the wider framework. We should never decouple the market value of land in alternative uses from the wider environmental, social and amenity values of land in alternative uses. In the written evidence I submitted, I made a proposal about how one could translate that. You should not allow land to move into another use through the development and local-plan-making process unless you are satisfied that the change of use would create value in total for society.

Q49 Simon Danczuk: From this document it is hard to understand exactly what is meant by sustainable development. Do you think it is there deliberately as window dressing to confuse or fudge the issue?

Paul Cheshire: I don’t think it is there as window dressing. I think that if you read the entire document-again, I was impressed by what I heard from John Rhodes earlier-there is a real concern that planning should deliver good, economically viable and productive development in a way that is consistent with environmental values. Sustainable development is a good way of enshrining that. I think that view runs right through the report. For example, paragraph 19 or paragraph 165 says you should presume in favour of developing land that has the least environmental value in the first instance. It runs right through it, so I don’t think it is window dressing. My concern is more about how it would actually get translated into practical decision making for particular plans and parcels of land.

Dr Ellis: By the way, there are plenty of metrics for delivering sustainable development policy making. The BRE and lots of organisations have them. It is a myth to say it cannot be done; it can. There is no recognisable definition of sustainable development in the National Planning Policy Framework. The biggest loser in that is the social agenda.

Alex Morton: As to sustainable development, I don’t think the NPPF is very clear, but I don’t think the existing system does a very good job either. One example would be the policy on the green belt, 60% of which is intensively farmed. It is not green fields; it is quite different. Basically, it just exists as a giant piece of land around our cities. The relevant guidance says that: "The quality of landscape is not relevant to the inclusion of the land." The idea that our current system is about positive sustainability in any real sense is not the case. If you look at what is happening, our urban greenery is being destroyed quite rapidly so we can protect sites that are, in terms of biodiversity and greenery, relatively peripheral.

Policies that are undertaken in an attempt to try to make things sustainable often make things worse. For example, the desire to avoid building car spaces, which was pursued under the last Government, simply meant that people paved over their front gardens. That meant you got greater water run-off and the urban area became less attractive. The attempt at top-down planning for sustainability tends to fail. There are certain examples where that is not the case-urban greenery, parks and biodiversity-but the attempt to make everything completely sustainable often tends to lead to perverse consequences and things being even worse.

Q50 George Hollingbery: Some very technical arguments are going on. I think Paul Cheshire is talking about trying to price the externalities in the totality of the system, so every time you make a decision you have to price every externality. To summarise it, I think Dr Ellis wants us to try to project every single possible environmental consequence for the next 50 to 70 years, which is an entirely admirable desire and something we should all attempt to do. Is it not the Government’s right to try to put forward some sort of definition of sustainability in this document, however amorphous it may be, that gives all of us a picture we can all agree with: some jobs for people; green space and oxygen to breathe; and a forward vision we can all get a grip on so we can all begin to make judgments about individual developments at any time? We all recognise that coastal erosion, demography and pollution are serious issues. If we try to over-complicate these things, particularly in a national document of this consequence, are we not just confusing ourselves in such a way that we will never deliver anything?

Paul Cheshire: I think the consequence of my argument is that I deliberately would not end up trying to value every aspect of decision making. I don’t think that is remotely necessary. This is where I agree with what Alex is saying and is consistent with the argument that we should look at the value of land in alternative uses, not its designation. Much greenbelt land remains designated as greenbelt, so I do not think this document is flexible enough, but it has not just no environmental value but negative environmental value, because intensive agricultural land, according to the Foresight Report, has a negative net balance in terms of its environmental impacts. I am not in favour of concreting over the greenbelt either. We do not need very much land to satisfy our demands perfectly, but we should be focusing on land which has the least environmental value, and much of that is adjacent in terms of urban expansion.

Q51 George Hollingbery: Let me come back to the same point again. You are sitting in front of a planning committee of local councillors who are trying to make a decision. They understand we need jobs for the future, green spaces and housing for people who are socially disadvantaged. This document allows them to make a judgment on any planning application with those lights in their heads. I don’t believe that the planning system-I don’t know whether you agree with this-can adequately deal with the sorts of complexity that certainly Dr Ellis and Paul Cheshire are talking about. Is my argument unsustainable?

Dr Ellis: I think the planning system was dealing with it. I agree with you that it cannot deal with all the complexity. I have sympathy with that in a local planning committee, but that is why we moved to a local plan-led system. Planning is part art, part science and part politics, quite rightly, and there will be uncertainties, difficulty and argument all the time. My plea is not for perfect decision making but to ensure that planning is not degraded of some of the key information you need on the ground to make decisions, for example for your future. Ultimately, the way that you do the best you can-it is an imperfect world-is to get a strong vision with a community expressed in a strong local plan based on decent evidence.

Q52 George Hollingbery: Why doesn’t the NPPF make people do that? That is the bit I can’t quite get my head round.

Dr Ellis: The NPPF is capable of change to make things both clearer in terms of a loadstone of sustainable development and a good deal more workable. The irony is that it is not even a document that is particularly easy to work with.

Alex Morton: On complexity, local planning authorities had seven years to come up with a local development framework since the 2004 Act. Many of them have not. The problem is that at the moment we start from the basis that we need this all-compassing plan. What we should really do is look at what the planning system is for. There are certain cases, for example about change of use. If someone next to me wants to turn their house into a chip shop, clearly there needs to be a planning system so I can protect my property rights. If there needs to be development, there must be some way to ensure it is of decent quality. We think that is best handled by giving it to local people rather than council bureaucrats, but that is a point to be discussed.

The problem with the current arguments are that we end up in a situation where planning has to do everything. Because it has to do everything, it does not do very much very well. We argue that you should take it back to the core principles of what planning should be. I think Paul Cheshire’s point about working out the value of land is important. For example, as to greenbelt land, would it be better if we allowed some development on parts of the greenbelt and also created a levy that meant that you turn parts of the intensively farmed greenbelt into attractive parks and open spaces? That would be a way of positively planning in an area where there is a need for something other than just the market mechanism.

Q53 Mark Pawsey: Can I take it you are all very happy with the notion that what is sustainable in one part of the country may not be in another, so there is no uniform definition of sustainability, and what is right for the congested South East will not be right for the less populated North?

Dr Ellis: I am not happy with that as a principle. I think the core principle of sustainable development has some aspects that are distinctive. To be clear, inside the NPPF you begin with the goal of sustainable development and then it is instantly translated in the NPPF into individual objectives. Inevitably, that is the way it would go. But you have hit on a very important point. This document is not written with any spatial awareness, so the policies framed here, which are largely focused on circumstances in the South East, have some interesting perverse consequences for low demand northern areas. But that requires having a document that is longer than 54 pages and understands space.

Paul Cheshire: I agree with you, but I would not wish to push that too far. I agree that what is sustainable in one spatial context is not necessarily sustainable in another, for example access to sustainable transport. We know that some forms of transport are more carbon-friendly than others, but there are still basic principles that I think we can apply regardless of where we are, but there will be variations in how much that translates into decisions at particular locations.

Q54 Mark Pawsey: Is it desirable to have a common definition of "sustainable" and people would know where they stood in whichever part of the country they made a planning application?

Dr Ellis: It is certainly right that the principles of sustainable development would be clearly expressed and understood, and then there is always the art of interpretation, but at the moment you simply do not have a definition of sustainable development in the NPPF. It is set down in the UK 2005 strategy; it is clearly expressed, and certainly to the TCPA it is enormously valuable.

Alex Morton: Could one have a definition that did not lead back to all kinds of top-down targets? I think that if you have a national definition of sustainability, you instantly start to say, "Well, how do we enforce it?" In terms of sustainability in general, I think there is a difference between the environmental aspects, such as biodiversity, areas of outstanding natural beauty, where I think there is a role in national policy to set out, and then a lot of rather futile policies about density or car use, which mostly have proved counter-productive and have not fulfilled what we’d want. They have often turned local people against development by saying, "People would be happy to accept detached housing with gardens, but what we are going to do is cram in a load of not particularly attractive flats."

Q55 Chair: But haven’t the density requirements been quite successful?

Alex Morton: The density requirements nationally have been dropped.

Q56 Chair: But haven’t they been quite successful in ensuring we need less land to build a certain number of homes?

Alex Morton: Only 10% of England is built on. In one poll 69% of people said they thought the quality of the housing was more important than the quantity; 9% disagreed. We go again to the point about quality. One of the main reasons people object so vehemently to housing in their areas is that the quality is very poor. If we can fix that, we fix the root of many other problems without the need for a complicated top-down apparatus.

Paul Cheshire: People demand space in houses. Forcing them to live in very small houses with tiny gardens does not improve social welfare and certainly does not reduce the cost of housing, because people are simply paying more to get bigger houses with bigger gardens, which pushes up prices generally.

Dr Ellis: To mention one thing planning has achieved, we invented garden cities in the planning movement. They are some of the best low-density environments in the world. But I think I am beginning to lose the thread. The converse question to be thrown back is: if we are going to remove designations and make land use planning decisions purely on price, are we really saying we will remove green belt, AONB and national park designations? You shake your heads, but the logic is that it has to be about price. Since house prices and the value of houses is an enormously complex issue derived from all sorts of factors, not least credit as we have already heard, how much land do you think you would have to release in the South East to bring down the average house price? That is what planning would need to know from a price mechanism.

Alex Morton: Could I answer the earlier point about credit? The planning system works by rationing land. As it is released, developers try to grab it as quickly as they can. This bids up the price. It also involves them in land banking, which in effect is land speculation. What has happened is that developers have vast assets on their balance sheets. They cannot build even though house prices have tripled since 1995. The dysfunctional planning system forced them to land bank because it is a long and arduous process and they need a constant stream of sites coming on board. That is why, even though house prices have tripled, developers cannot build and keep saying they need more credit. Between 2000 and 2007 credit practically doubled and the amount of housing barely increased. Why? The restrictive planning system stopped houses being built. Because the planning system saddles developers with land banks, when credit goes down, even though prices are much higher than they were before, they still cannot build.

Q57 Heidi Alexander: Mr Morton, the planning system does not saddle developers with land banks. What they do with their land would be a choice by developers. The evidence given in the previous session talked about the availability of developer and mortgage finance. Do you accept that is one of the problems in terms of the provision of adequate amounts of housing?

Alex Morton: The National Audit Office found that it took 98 weeks to get through the planning system. Therefore, if you are a developer you need a long chain of sites coming through the system to make sure that when you finish you are not just left with a load of builders standing around with nothing to do. The point about credit is that the average cost of construction is massively below the cost of the house. To build a house it might cost at the very most £100,000 to £120,000. It could probably sell for £200,000. What is the difference? The difference is the value of land, so in that sense it is the planning system that is causing the dysfunctions. It means that the developers cannot build because they are trapped within a dysfunctional system. If you can build something at price x and make a profit on it, you should be able to increase supply until the price begins to drop. They cannot, because they have land banks and they are scared of land prices dropping, because they know their own asset sheets will be completely ripped apart.

Chair: I think we should move on. It is interesting how, if you put all the power back to the local communities, you are going to actually achieve that extra supply of land. That’s going to be quite an interesting concept.

Q58 Heather Wheeler: There has been an awful lot of debate on whether under the new NPPF there is a presumption in favour of development. Plenty of people say that we have really had that for the last 80 years. Surely, does not the necessity of putting in the words "sustainable development" strengthen the hand of development in future and also give people comfort that we are going to carry on building but it will be in a sustainable way?

Paul Cheshire: I think the thrust of the document is, so to speak, in a direction that I see as being appropriate. It is pushing people and local plan making into a position where they will have to look more favourably at development and allow enough land to come forward for development, and enough space and flexibility within the system. But I still worry that it does not go far enough and relies too mechanistically on the designation of land in particular uses and particular classifications, rather than its real underlying value in amenity and environmental terms, so I entirely disagree with you on what I regard as a false juxtaposition of prices or nothing. I say we need to combine both price information and the environmental and amenity considerations in the decision-making process. I think the document now goes in that direction to some extent-it is the first such document of which I am aware-by saying that, in making plans and releasing land, account should be taken of price signals from land markets. It is an important recognition. I would add it should be coupled with the environmental costs of building.

Dr Ellis: On the presumption, the situation is quite complicated. There has been a presumption in favour of development, but it has been redefined five or six times helpfully in planning law. It was finally and most forcefully expressed in 1985. Even then it was not as forceful as it is in the NPPF, because it did not contain the word "significant" in terms of what was demonstrable. That is a very significant change. I know TCPA bores the hell out of people in talking about planning history, but it is important. When that circular came into force in 1985, it down-rated the development plan and led by 1989 to 33,000 appeals in the system per year. The system was in gridlock and was hugely unpopular with the public. Consequently, in 1991 a Conservative Administration brought in a plan-led system under section 54A. That was when effectively it was heavily modified to say there was a presumption in favour of development described in the plan. That is quite right, and that is what the position should be.

What we are doing here is turning back policy very significantly, because a presumption in favour of development has never been expressed in law; it has always been expressed in policy. What we are doing here is turning that back. The NPPF is so poorly drafted in the first 10 pages that it is not even clear to what the presumption applies. It applies where the plan is not there, but it also applies as the founding principle of plan making. The presumption in favour of development, paragraph 15 and paragraph 20, is the founding principle of plan making. When we read the document and understand what the presumption means, which normally is to say yes to all forms of development unless the benefits significantly and demonstrably outweigh them, that is an interesting starting point on which to write a plan. Plans should be positive and forward looking. I entirely agree that they should meet the evidence-based needs of a community. That is the kind of positive planning we want. I do not think the presumption helps us with any with that but leads to a good deal of confusion.

Alex Morton: In some sense I agree with Hugh, probably for the first time, about the presumption of a plan-led system. It is rather unclear how they work together, and there is quite a possibility of planning by appeal. The point about pricing is interesting. I am guessing that the value of land in Medway, for example, is a lot less than it is in Royal Tunbridge Wells. If you had a price-based system you would have development almost entirely concentrated in more affluent areas, which I think will lead to some interesting political tensions in the years to come. Basically, you need to strip away a lot of the planning system and get back to the core of what it is there for: the point about externalities, not having some kind of grand vision for your area. The only bit where you might want a grand vision-this is the second time I agree with Hugh-is if you are to have new urban areas or new garden cities, which we think is a very positive possibility and something we are going to go into in our upcoming report.

Paul Cheshire: Contrary to my two colleagues, I think that the introduction of the presumption in favour of sustainable development into the plan-making process is one of the positive elements, and it may actually secure some change compared with what went before. As I see it, the problem is the transitional arrangements, and the way in which it will or will not ensure local authorities develop plans that are consistent with the new National Planning Policy Framework. But putting the presumption in favour of sustainable development one stage further back in the process, so it comes into the plan-making process, seems to me the real change in the system.

Q59 Chair: We had a discussion with the previous witnesses about the word "significant". Is the existence of that word a real concern to you in that it changes quite a lot of what planning is about?

Dr Ellis: It is hugely significant. What happens when you bypass civil servants-bless them-in the writing of very important national policy is that you introduce a whole series of words that will have to be tested in law. There are about five major areas of judicial review that are new-totally foreseeable and we could have got rid of them if we had wanted to-and that word is one of them. That is certainly very important. The principle of drafting used to be that you do it as if a high court judge is looking at every sentence. Despite what many people have said, this is not a document that is solely, in our plain English discussion, a walk through the park. I wish it was because planning at its core is simple. It is a document that will be tested rigorously in the courts on appeal, but that certainly shifts the balance of power in exactly the same way as removing some of the prescriptive words around Town Centre First, or in relation to climate change, car parking standards, brownfield or social housing down rate those policy imperatives. That is why the NPPF is a very significant change in planning policy.

Q60 Heidi Alexander: Dr Ellis, Mr Morton said earlier that planning was not about having a grand vision. What do you feel about that statement? In your evidence you suggested that a spatial vision was necessary for the UK. How do you see that spatial vision being incorporated into the NPPF given that it is a very concise document? This afternoon we have discussed a lot of things on which we disagree, but constructively how would you like to see the NPPF changed taking it forward?

Dr Ellis: We have done a track change version of it, which we hope will be the basis of compromise, even if we did not include the bit that I think is closest to our hearts, which is the vision section. Grand visions without any basis plainly are not desirable, but there are five or six powerful reasons why you need a spatial approach in England. Ironically, economics is one of them; infrastructure provision is another; climate change; food security; and energy security are others. In the past radical changes have been effected in this country by having such plans. The fact that we now find it so difficult even to debate the idea of a spatial plan I find extraordinary. I make few predictions in life because I am normally wrong, but the way things are with the kinds of pressures on this nation mean that we will have to have some kind of wider spatial approach for the sake of places like Liverpool. As the Foresight Report ably understands, 40% of our most productive agricultural land is at or below sea level-discuss.

If you want a pragmatic response, all I would like the NPPF to do is to have one paragraph that just understands that space is different in England. If you write a policy in the NPPF about six years’ supply of housing in one place, it has perverse outcomes in low demand areas. There must be some recognition that London is an extraordinary place in the life of our nation. There must be some understanding of the place of Liverpool or other cities in the North that require a clear future. You have to give investment certainty to those places. If the output is no investment certainty, you almost talk yourself out of the North of England if you are not careful.

If we take a paragraph of that kind, which suggests there is a clear commitment to making England work as a whole, and ensures, as one final important thing, there is no legal connection between big infrastructure planning in this country and town and country planning, how extraordinary is that? How do NPSs relate to the NPPF? We are about to publish a networks national policy statement that is not related to an understanding of housing provision. That is extraordinary. Therefore, the NPPF would set out clearly its relationships with that national policy framework and also include some vision. The idea hopefully is that we are producing a better world.

Q61 Heidi Alexander: You said there was quite a simple solution in terms of one paragraph, but you went on to talk about the contradiction between the policy statements and the NPPF. Do you think that a spatial plan is needed? In doing that, how difficult would it be to create it?

Dr Ellis: It is needed. Many aspects of Regional Spatial Strategies were of critical importance and losing them is desperately difficult for us. Their democratic accountability is unarguable. They were not democratic and they went the way of a non-democratic structure, but in terms of the data sets on climate change, energy and demographics-all of the issues we need to make the nation work properly-I find it extraordinary that major private sector interests believe this nation can be run without any sense of strategic planning. To be clear, the duty to co-operate does not provide that role at all. The duty to co-operate applies only to the public sector, 10 public sector organisations, as well as local government. It does not even apply to Railtrack or Grid Network.

The future of this nation based on the opportunity-I dearly hope it happens, but I suspect it will happen more in the North than the South-that local government will want to co-operate is great, but we already have instances where they do not want to do that. How do we deal with that? For example, the phrase "displaced demand" was used continually in the context of housing in the previous evidence session. How will we deal with displaced demand without that kind of spatial approach? The nation needs it. No doubt we will have it back. The art form is to make it humane, democratic, sensible and proportionate. I understand the point about it being proportionate and not trying to do everything, but we must have it.

Paul Cheshire: I agree with that in part, in that I think there is a role and need for a strategic view of how development occurs, but that must be in conjunction with a clear understanding of how land markets work and what they signal and what planning can and cannot do. We need a system where you have planning across boundaries. You cannot plan for your local community if your local community is a little island surrounded by many other local communities all of which interact in one housing market. You need something more prescriptive. Yes, we need planning across boundaries, but which boundaries, in which contexts and for what purpose? I think the point about how you will deliver local sub-regional infrastructure is not adequately addressed in the proposals.

On the other hand, I think it is profoundly to misunderstand how the space economy works to think that land use planning should or can redress the problems of less prosperous regions. It simply does not work like that, and experience over the last 50 years shows it does not work like that. But at a local level, surely places like Manchester or Birmingham can adopt planning policies that make their local economies more productive. Mention was made earlier of some work I have done to show the extraordinary impact that planning restrictions have had on the costs of doing business in Birmingham. It is the equivalent of a 250% tax averaged over a six-year period on the marginal costs of constructing office space. Office space in Birmingham was 40% more expensive than in Manhattan in the early 2000s. You can show that that is the direct result of planning policies adopted, and Birmingham can do something about that and I hope will do so under the new framework.

Alex Morton: I don’t think anyone would say there should be no spatial planning at all. If you are planning roads that are not going to be handled by the Highways Agency and need to cross boundaries, of course there is a need for some amount of spatial planning. The question is: what does that take us towards? Does it take us towards councils planning in a sensible way for clearly emerging demands, or an attempt to plan for everything for the next 30 years, now and forever, amen? Our view is much more the first and much less the second. I think that if you stop doing the second, you will do the first better.

To add one point to Paul Cheshire’s response, many northern cities are more expensive in terms of office space than southern cities, which I think is an interesting point. The planning industry is perhaps strongest in those areas, yet it has failed to create cheap office space, which would be one of the key drivers of managing to get regeneration. It is something that the report will look at and point out. The data does not show that this spatial template has worked; if anything, it shows the reverse-that it has failed.

Chair: I am always told that development takes place when rental values go up, but never mind.

Q62 Mark Pawsey: Dr Ellis, to move on to the democratic accountability of the planning system, you talked about the previous approach being fundamentally nondemocratic. The whole point about the localism agenda is that communities determine what is right for them. That works its way into a local plan and that provides a framework against which development proposals should be assessed. Does the NPPF in your view provide an appropriate context for people having their say in the future of their local areas?

Dr Ellis: It is very challenging to say yes to that, because a lot of restrictions are placed on neighbourhood planning. This is a difficulty for us. We think there are some issues over which there cannot be local control, or at least not solely, and I wish there could. Carbon emissions might be one of them. I think the interesting thing about the NPPF is that it sets out and highlights the contradiction with the localist planning debate.

If I were to return to the question of what the average neighbourhood plan would deal with now, it cannot deal with less housing; it can deal only with more housing than is set out in the plan. It cannot deal with waste or minerals and it cannot come up with local sustainability standards, which I was interested in. Again, it is very sad to see that the code for sustainable homes is not referenced in the NPPF, which is extraordinary.

My real concern about the neighbourhood planning process is that it is one of the most complex processes ever invented, and that is saying something for planning. But the amount of power you can use at the end of that as a local neighbourhood is quite restricted. I think the tension that exists between the proper desire for community participation and neighbourhood planning to happen versus what it can actually deal with is left unresolved by the NPPF. Finally, you will find lots of communities having to read it very closely because all their neighbourhood plans must be in conformity with the NPPF, which is an interesting localist position in which to find ourselves.

Paul Cheshire: I think that anyone who has ever had anything to do with planning knows there is conflict and you have to resolve it. The problem is that at the neighbourhood level the interests of the local neighbourhood may not be those of the wider community or the subregion. We desperately need to build more houses in the places where people want to live. That will impose costs on people. You have to resolve it. It seems to me it is not perfect, but how it is envisaged in the framework is a way of resolving it. You can have a bottom-up approach. What does a neighbourhood want? But the NPPF imposes on that a national set of rules or objectives that have to be delivered within the neighbourhood and in the local plan. It is a way of trying to reconcile what is a real conflict. There is no way of getting away from the fact that real conflicts exist. You cannot always do what the neighbourhood wants; you even cannot always do what the locality wants. There must be a wider community social and environmental interest.

Alex Morton: I think that the Government, very sensibly, are trying to address issues around antagonism towards new homes. This was previously attempted through a top-down mechanism. PPGs and PPSs were mentioned. For example, one in 2001 mentioned design 62 times. This did not really work, and this alternative is what the Government have come up with. There are quite a lot of difficulties with it. It has to come from within the community, which of course will be difficult because who will lead on it? They are a one-off. If the neighbourhood plan is rejected you cannot come up with a different one; you go back to local authority control.

There is the point about land prices. RIBA for example recently criticised new homes as being shoebox developments. The developers then said that of course they were; anything else would be unaffordable. Of course, if land prices are £1 million, £2 million, £3 million or £4 million in parts of the South East, once you have paid for that land you have very little left for quality and you try to cram in as much as you can. If you add land use allocation, you cannot really say no. You are almost put over a barrel because you have to have so many homes in your area, as your negotiating capacity is quite weak. We think you must have local people involved and there are better ways of doing it around statutory compensation, and those in the very immediate vicinity should be able to say yes or no. If half the people object to a development, it would not go ahead. The point about externalities can be quite clearly measured. If less than half do not object to it, then the design is probably good enough and it should be allowed to go ahead. You don’t need anything more than that.

Q63 Mark Pawsey: So, you are going straight to development control rather than a plan-led system? Isn’t not better that local communities have some say in their plan than no say in it, which is the present situation?

Alex Morton: They would have a say in it. If you want to get something passed, say in a village, or extending a suburb, people very close to the development-we are not talking of thousands of people, but those who are probably opposite it or maybe in the next street along-would have to say yes or no. If that development is good quality and it involves a park, shops and amenities they may say yes, particularly if you have statutory compensation on greenbelt and greenfield. In brownfield sites people tend to be in favour of development much more because underused, vacant or derelict land tends to be brought back relatively quickly if developers want to use it. It is very unlikely that, if there is an office building next to people that is only half used with the lights off and is starting to get run down, the neighbours will say they would rather it stayed in its current position than change to something more useful.

Q64 Mark Pawsey: But is it not proposed that local people have a say in the plan rather than the development control decision? Accepting the restrictions that Paul Cheshire and Dr Ellis put on community engagement within the neighbourhood plan, is that not better than where we have been up to now?

Alex Morton: Yes; it would be a small improvement.2

Paul Cheshire: I think it is better; it is coming from the bottom within a framework that tries to reflect wider national interests, so that is positive. You asked earlier whether it was process or the constraint, and I think the answer was 60% the constraint, but we must add to that the incentives. Alex has touched on that. The Government are also doing something about incentives. At the moment we have an incredible position where we fine local communities that allow commercial development. We do that because we have a uniform business rate, which means it all goes to the Treasury and no money comes back to the local community. They still have to provide the services for the development, so it costs them money. You have to put the whole system into the process, which is extremely complex and expensive to operate. There is some research to show that it is even worse when it comes to brownfield development than greenfield development, interestingly-it is even more expensive and protracted on average-by Michael Ball at the University of Reading. We need to get the three prongs right: a simpler process; a more flexible release of land where its value is maximised by development, plus the right incentives for communities to be compensated for allowing development.

Q65 Mark Pawsey: Dr Ellis, you drew attention to the restrictions on neighbourhood planning, but is that a better place than where we are now?

Dr Ellis: I certainly think that people’s rights in development are very limited. Even now my advice to many communities and parish councils who talk to me is to get involved in and get on with the plan-making process. The funny thing about that is that people should really get on with getting involved in their local plan process where they have a legal right to be heard. They do not have a legal right to be heard in neighbourhood planning, which is a bit odd. I think most people are interested in the slightly bigger strategic issues and most people should involve themselves in that process.

Planning as a profession has not done what it needed to do about community participation and planning. We are pretty good at it when we are given the opportunity, but very often we are not given the opportunity. There needs to be massive emphasis on planners being able to have rational, sensible conversations with people without them running to the hills. That was what I meant when I said at the very beginning that most of this was about culture and how planners worked with their communities, but certainly if it is plan-led it is beneficial.

Q66 Simon Danczuk: You touched on the issue of brownfield sites. Paul, I think I am right in saying that you are in favour of getting rid of the targets for brownfield sites, yet the British Property Federation want to reinstate them. That is one example. The North West where I come from has the highest proportion of brownfield sites. I suspect that if you asked the vast majority of residents in the North West or anywhere they would say that surely we should use brownfield sites before we start to use anything else. Why do you not agree with that? Why should not the Government say we should use up brownfield sites as a priority?

Paul Cheshire: It comes back to the issue of mechanistic designation versus trying to construe what the value of land is in different uses. It seems to me that the real underlying issue is that you use the environmentally least damaging land for development where it is available and is suitable and viable. One of the mistakes made consistently by the planning system over 60 years is that it has implicitly assumed that there is perfect substitutability between land in one location and land in another. Brownfield land in Hull is not remotely a substitute for greenfield land in South East England, say the edge of Reading or Cambridge. It is quite wrong to think that businesses are equally productive regardless of where they are located. There is very clear evidence that location is absolutely central to how productive businesses are. If you start to force businesses to go on particular sites that are classified as brownfield, you immediately have an economic efficiency loss. I am in favour of building on brownfield sites where they are available, but I think that is fully safeguarded in the existing draft in paragraphs 165 and 19, bullet point 5, where it says that plans and decision making should steer development to where the environmental costs are lowest and it is viable.

But the other side of it is that, because of the mechanistic designation, sometimes brownfield land has high amenity value; it has been open and undeveloped for 20 years and you have significant wildlife habitats in towns that would otherwise lack them. It is a sort of informal open space. There may be public access to it; it may be the grounds of a Victorian hospital comprising 35 acres in a relatively rural location; it may be Ministry of Defence land that has the only population of a particular species anywhere, so blanket designation simply does not capture what the value of land really is.

Q67 Simon Danczuk: But is it right that if we don’t have it as a principle set out by national Government we could end up increasing the proportion of brownfield sites around the country?

Paul Cheshire: I think it is unlikely.

Q68 Simon Danczuk: But possible?

Paul Cheshire: There is not much brownfield land that has low value in Cambridge, for example, or in London come to that, but there is plenty in other cities, and that is where you would expect development to occur.

Dr Ellis: I think it is very important because it goes to the heart of this issue about north/south. First, there are no blanket designations on brownfield land as if the planning system is blind to individual environmental quality. That is what the plan-making process is for. If you find the right kind of weevil on the brownfield site, very often statutory consultees are rather annoyed about trying to develop it, but in the North West, where you have an enormous challenge in relation to ex-industrial land right across the region, if you say to the development industry-this is all about development industry certainty in some senses-that there is now an open door, the development industry will go, quite rightly, to the most developable site; it might go to greenfield sites over and above brownfield sites.

The only question I pose back to economic rationalism on that point is: what does that do for regeneration, particularly where those sites are critical to regeneration policy? In particular, the brownfield target was not a perfect solution but it was very important for northern exindustrial areas. Without it the future for them is potentially bleak in two ways. Development disappears in those areas. Some told me a story related to Liverpool. I will not say who it was. Liverpool has a problem paying for its schools. Its planning policy is being rewritten to sell off its urban green spaces to build "silver sheds" and get in some money. That is not planning’s problem. You need strong policy to defend those areas.

One of the issues that makes that difficult for local authorities are three paragraphs on viability, because now local authorities are confronted with the idea that it is an acceptable return to the developer on which we are focusing. Don’t compromise an acceptable return, not even a reasonable one. For that reason I think the targets should remain. Like all things in planning, although it is a target it was used flexibly. The idea was that there was a monolith, no debate and the plan-making process did not examine environmental quality. Since planning is on it knees, let me say in relation to urban green open space just remember what movement put in place East London’s open parks after the war. It was the planning process.

Q69 Simon Danczuk: Town Centre First has been relaxed a little bit in terms of the new document. Are you in favour of relaxing it, or is there an argument for making it even stronger and encouraging even more development in town centres rather than unsustainable out-of-town shopping centres?

Paul Cheshire: It comes back to the point I made earlier. It is a complete fallacy to think that land in one location is a good substitute for land in another, even if they are quite close by. I favour the regeneration of declining regional economies, but to do that you have to get jobs and viable businesses, and therefore they have to be in viable locations. Where possible, that should be on brownfield locations because that has lower environmental impact, but in reality the choice may be between not getting jobs and forcing things to go into brownfield locations. Therefore, if you have a policy that it goes on brownfield locations nothing much will happen because it is not economically viable.

To come back to the Town Centre First policy, essentially it is the same. I have recently completed some research where we got data from one of the big supermarket chains. That concluded that as a pretty minimal estimate Town Centre First policies had cost the supermarket sector something like a 16% loss of productivity since 1996 because it forced supermarkets to go onto intrinsically less productive sites.

Q70 George Hollingbery: We come back to the same argument about externalities. What you are saying is that there are values in town centres that are not necessarily easily quantifiable; there is the social fabric.

Simon Danczuk: Exactly.

George Hollingbery: There are all sorts of things.

Paul Cheshire: I may be going on too long, but you have to put the benefits and costs together, as was said earlier. What I have demonstrated is that there are very clear and substantial economic costs, so what are the benefits? It is creating a significant barrier to entry for new shops. There is another piece of research by the LSE that shows that it has certainly caused a loss of jobs in retailing in town centres. What you have is a substitution of things like Tesco Metro and Sainsbury’s Local for smaller and more varied shops, so it has contributed to the homogenisation of high streets. What are the gains? What it is doing is separating shopping from where people live and extending supply chains because warehouses remain located relative to motorways, so it is quite likely-but the research has not been done-increasing the carbon footprint of the retail sector. In 1996 we introduced this very dirigiste policy with the twin purposes of protecting poorer households that did not have access to cars and sustainability. It is certain that it has reduced productivity in the retail sector and therefore increased prices in shops. In my judgment it is probable, but we are still doing the research, that it has increased the carbon footprint of the retail sector because it has separated where shops are from where people are.

Q71 Simon Danczuk: On the point you made earlier, I am fairly convinced that the public would prefer supermarket chains to lose 16% productivity and retain their town centre and the whole dimensions of the social aspects to which George referred. They are less concerned about the productivity within what is, as Heidi pointed out to me, a very lucrative, successful and profitable supermarket sector. Therefore, the public’s concerns are not that key in terms of supermarkets.

Alex Morton: If that is the case, surely people would choose to shop in their town centres rather than supermarkets out of town. I also add that this entire debate completely ignores the internet. 15 years ago this debate would have been impractical in the sense of productivity losses and diverting people from their first choice of shopping. It is now completely unworkable in that it will merely hasten the spread of internet shopping. If people are forced to choose between the place they don’t want to go and an internet click provider, you will just facilitate the spread of internet shopping.

Q72 Simon Danczuk: But the idea that people just want out-of-town shopping is a nonsense. It is not either/or that you want an American version of retail or the style in continental Europe. Other countries in Europe have limited development in out-of-town shopping. One of the reasons large supermarkets go out of town is that business rates there are much lower. The Localism Bill allows local authorities to reduce business rates but not increase them, so they could not increase them to discourage out-of-town shopping centres.

Alex Morton: In that case, we are not discussing using the planning system to block out of town. If we want to talk about change and change of use, we for example have said there should be much greater flexibility about change of use. We know it is something about which the Government are keen. That would be a way of saying we should remove lots of the burdens on brownfield development and lots of top-down planning on that. If that is how you want to help these areas, do that. It is a much more sensible approach than simply stopping development elsewhere.

Dr Ellis: We just need to correct something that is very important. Very often there is the idea that planning produces absolute designations. When the policy was changed in 1996 it was very important. Let me give you an example. If you want to take that free market approach, let’s be absolutely clear that it is a deregulatory view of England. How do you get Liverpool One to work? Liverpool is a triumph of that policy. Liverpool One is not a place on its knees; it has growth potential and there are plenty of big developers who want to go to Liverpool. You take away investor certainty from a place like that by saying you can do what you like anywhere out of town, those are the places that have more social issues to grapple with-but bear in mind the planning system. I wish it had not happened, but 60% has been out of centre since 1996. I want to ask this really important question: is that a Stalinist planning system at work?

Paul Cheshire: Hugh is posing a completely false dichotomy.

Dr Ellis: It’s funny, because I think that about you.

Paul Cheshire: It’s not a question of going from light touch regulation to something that is utterly free market. We may retain some discouragement-we certainly would through the principles of the National Planning Policy Framework-on the development of huge greenfield sites that are nonviable and extremely unfriendly in terms of global warming. However, we have the strongest and most dirigiste controls on the development of out-of-town large format efficient supermarkets and shops of any country in Europe.

Dr Ellis: That’s not right.

Paul Cheshire: Hold on. The Competition Commission in 2000 did a very careful bit of research on the cost of retail space, comparing Britain with several European countries. France have regulation, but they have viable town centres and the cost of retail space is one-tenth that in England.

Alex Morton: If you look at internal migration from our cities, starting with the biggest and then going to rural areas, there are very large internal flows away from our cities because we are not making them as attractive as they should be. The point about why inner cities have regenerated is that there has been a massive demographic shift. There has been a tripling of student numbers and a delay in family formation that means that now most people who are young and single want to live in city centres. Most of the regeneration that would have occurred was not because of planning but because of a huge demographic shift. People wanted to live in apartments and go there. Planning is not a massive success. Overall, our cities are in decline in the sense that people are flowing away from them to rural areas. Interestingly enough, this is what causes some of the pressure in rural constituencies. Our cities are not flourishing in the way we would want them to. I think that is something that the current debate is not addressing.

Dr Ellis: I think there is a real step choice between a planning system that I think has delivered real benefits and a new kind of economic rationalism. That economic rationalism is unproven. I dispute a tremendous amount of the data behind it. I would urge for the future of England that the NPPF represents all the complexity and difficulties of our varied nation and not one particular kind of economic analysis, which I fear will lead us into a very difficult, harsh place.

Chair: Thank you all for the very interesting, stimulating and sometimes differing evidence that you have given to us.

[1] See CBI briefing on Localism Bill House of Lords report stage.

[2] The witness has requested that it be indicated that he shrugged at this point

Prepared 20th December 2011