Communities and Local Government CommitteeWritten evidence from Kate Barker

This is a short note on an issue which arose in the session of oral evidence taken before the Committee on 9 November, from a group including Trudi Elliott form the RTPI, and subsequently from the Right Hon Greg Clark MP, Minister of State for Decentralisation and Cities. (It is not intended as a full submission covering the wider questions which the Inquiry is considering).

The £3 billion Figure

In that evidence session, a query was raised about the source and reliability of the £3 billion number which has been quoted as the cost of planning delays in England. In particular, Trudi Elliott suggested that this figure was drawn from a paper by Professor Michael Ball, which in turn referred back to the Interim Report of the Review on Land-Use Planning which I led in 2006 at the request of the previous Government. I am aware of Professor Ball’s excellent response to the Committee in which he explains that the £3 billion in his paper was in fact his own estimate, published in 2010.

I attach to this note a scan of a page from the Barker Review interim report, which refers to two separate studies of the cost of delays. You will note that it is clear that these were out-of-date estimates, and that the Review further commented that the CBI study did not distinguish between avoidable and unavoidable delay, and was therefore not an estimate of undue planning costs. On a quick re-reading, little was made of this particular figure in reaching the conclusions and recommendations in the Review—and given the age of both estimates cited in the box it would not have been appropriate to place much weight on them.

However, it may be worth noting that the 1992 CBI estimate referred to the cost of delay for infrastructure and commercial projects, not the transaction costs of development control for housing, including the cost of delay, which is the subject of Professor Ball’s work. In addition, Professor Ball, as I understand it, is looking at the cost of delay by reference to the financing cost to developers of holding the land and other assets before being able to put them to use. The estimates in the land-use planning review seem (unfortunately I no longer have these references to hand) to be considering the cost of delay from being able to enjoy the economic (and other) benefits of new development. These figures are therefore attempts to measure something different from that considered by Professor Ball.

The costs of delay and the other costs associated with a planning application, are to some extent unavoidable. The issue is to what extent that they represent unnecessary delay, or are unduly demanding of documentation and detail. Since the Land-Use Planning Review I worked on in 2006, there have been two further reviews (the Killian Pretty review of Planning Applications in 2008 and the Penfold Review of Non-planning Consents in 2010). Both of these sought to reduce these costs and contained many sensible recommendations—which Government is following up. But of course these costs cannot be reduced to zero.

The Overall Costs and Benefits of Planning

The transactional costs of development control are however only part of the picture of the overall cost of planning. More significant is the role of planning in restricting the overall level of housing supply, increasing house prices and most clearly evidenced in rising residential land prices. In addition, there have been several recent pieces of work looking at the impact of planning restrictions on the cost of office accommodation, or the efficiency of retailing (much of this work is from Professor Paul Cheshire of the LSE, and I am aware he has given oral evidence to your Inquiry).

In carrying out the planning review, one of the questions considered was whether some plausible estimate could be made of the overall cost of planning in restricting development. This is a daunting task—for example, it is very hard to know how much development (commercial or residential) does not take place because potential applicants are deterred by perceived or real planning issues). However, the review did consider the various ways in which planning restrictions and complexities might add to the costs of doing business in England, or in some cases might reduce competitive pressures.

It is these rather wider costs which need to be set against the undoubted benefits of having a planning system. The English planning system has indeed delivered many benefits, most obviously in terms of preserving open countryside and in protecting business and households from having unsuitable uses made of neighbouring sites. Equally important is the more detailed work of good planning in striving to make our towns, cities and villages pleasant places to live.

The big question, however, is whether the present planning system permits enough development in the right places (taking account of the environmental costs) to meet economic and social needs. Both for major infrastructure projects and for housing there is evidence that planning has failed to deliver, or has not done so in a timely fashion. For commercial activity the picture is more mixed, although again there are instances where planning has not provided for business needs. The reasons for this lie partly at the level of plan-making and partly at the level of individual development control decisions. For these reasons I strongly support the direction of travel in the draft NPPF, although agreeing with some other commentators (I am signatory to the submission to the Committee from LSE academics and some others) that in some cases the final document may need to be clearer.

November 2011

Author: Barker Reviews of Housing Supply (2004) and of Land-Use Planning (2006) commissioned on behalf of HM Treasury and Communities and Local Government.

Presently a non-executive director of Taylor-Wimpey, but writing in a personal capacity.

Prepared 20th December 2011