Growth and Infrastructure Bill

Memorandum submitted by CBI (GIB 34)

1. The CBI is the UK’s leading business organisation, speaking for some 240,000 businesses that together employ around a third of the private sector workforce. With offices across the UK as well as representation in Brussels, Washington, Beijing and Delhi the CBI communicates the British business voice around the world.

Executive summary

2. The Growth & Infrastructure Bill includes a number of important measures that will streamline the planning system for both local projects and major infrastructure. Despite policy change in recent years, planning is still regarded as a barrier to infrastructure delivery for almost all businesses, and the Bill includes important reforms that address some specific concerns of businesses.

3. We welcome the attempt to improve the speed and quality of local planning decisions and to get stalled projects off the ground by enabling the affordable housing element of Section 106 agreements to be renegotiated. Action to streamline the Planning Act regime by reducing the scope of Special Parliamentary Procedure is crucial and we also support moves to give project promoters of new categories of development the option of going through this fast-track process.

4. However we believe that the business-wide benefits of the delay to commercial property revaluation have been overstated by government and we have concerns about the lack of consultation or impact assessment on this measure before its inclusion in the Bill.

5. Employee-owner status may be of mutual benefit to some businesses and their employees, but it is a niche idea and will not impact the vast majority of businesses. If the government wants to boost job-rich growth by making it less risky for firms to take on new staff then the focus should be more radical reform of employment tribunals.

CBI submission

Urgent improvements to infrastructure are needed to encourage business investment and growth

6. Infrastructure plays a crucial role as both a driver and an enabler of economic growth. Businesses rely on good infrastructure to get closer to their customers and supply chains, and the strength of their networks influences their ability to export and innovate. Four in five businesses cite transport and digital infrastructure as significant to their investment decisions.

7. But companies have concerns about the state of key parts of the UK’s infrastructure – 61% believe our networks compare unfavourably to those of EU countries according to the latest CBI/KPMG Infrastructure Survey. We have welcomed a wide range of infrastructure policy announcements from government but now need to see more action on the ground to support business confidence.

8. The CBI has urged government to focus on project delivery and tackle barriers that are preventing development from being progressed. The same infrastructure survey revealed that 97% of firms regard planning as one of these barriers and the CBI believes that government is right to continue to press the case for reform.

9. This bill includes a number of important measures that will speed up planning for both major projects and local development and will help to build business confidence and encourage investment.

Action to streamline the regime for nationally significant projects is essential

10. Businesses see the benefits of the fast-track planning system for major infrastructure projects introduced by the Planning Act 2008. The front-loaded system ensures there is extensive consultation on proposed major development before examination and decision making take place within stringent timeframes.

11. However, it is right that the regime should be continually reviewed to ensure that it is fit for purpose and encouraging companies to come forward with their proposals for major projects.

12. We welcome the provision in Clauses 19 and 20 of the Growth and Infrastructure Bill to reduce the circumstances in which Special Parliamentary Procedure (SPP) kicks in. The CBI has argued that the scope of SPP within the Planning Act regime should be reconsidered to ensure that the fast-track nature of the system is not undermined. This will increase confidence among project promoters and investors.

13. While the bill goes a long way to allaying businesses’ concerns about SPP, CBI companies suggest it could go a stage further. SPP will still apply to the compulsory acquisition of open-space land unless specifically exempted by the Secretary of State. We believe that this represents a duplication of activity that takes place in the development consent process itself. SPP could satisfactorily be removed for these cases too, without damaging the fairness or transparency of the system.

14. It also makes sense to explore whether new categories of development could be brought within the scope of the Planning Act regime (Clause 21). Early representations from the minerals sector as well as large commercial property developers have indicated that there would be some appetite to take up this option where projects are of sufficient scale. It is important that these developments are truly nationally significant or sufficiently complex to justify using this central process. We agree with the government’s intention to make this provision optional, so project promoters will be able to choose whether to apply centrally or locally for planning permission.

Fast-tracking the delivery of digital infrastructure is crucial to support new business activity

15. We also welcome reforms that will speed up the delivery of crucial broadband infrastructure across the country. Digital infrastructure is of growing importance to businesses, who recognise that networks have improved markedly in recent years. But to realise the government’s ambition of achieving the ‘best superfast broadband network in Europe’ it is essential that the pace of investment is maintained.

16. The private sector is investing heavily over the next five years to make the UK’s mobile and broadband networks world-beaters. It is encouraging to see the government’s high-level ambition now being matched with a focus on rolling out infrastructure that will ensure fast-growing firms can make the most of new technologies.

17. Many local authorities have taken a constructive and proactive approach to the development of digital infrastructure. For instance, Surrey County Council has invested £20 million to deliver superfast broadband across the county – far in advance of the standard ‘match funding model’ that is typically used.

18. Relaxing planning controls for this type of infrastructure shows that government understands the significance that businesses attach to fast and reliable broadband networks and is willing to remove barriers that prevent it from being rolled out across the country.

The local planning system must be streamlined to promote growth

19. The CBI supports the local plan-led system and recognises that local authorities, their communities and businesses should be primarily responsible for decisions on how and where development takes place. The newly-published National Planning Policy Framework (NPPF) solidifies this approach; it outlines the pro-growth principles that should underpin planning and, crucially, provides an incentive for authorities to create and update their local development frameworks.

20. However, these changes must now be implemented quickly at a local level and the planning process itself should be reviewed to ensure it is upholding the principles of the NPPF. The bill includes a number of reforms to streamline local planning and incentivise efficient and effective decisions.

The CBI welcomes the measures aimed at increasing transparency and accountability in the planning system

21. CBI companies have welcomed the provision that will give developers flexibility to apply directly to the Planning Inspectorate in cases where local planning authorities have shown consistent underperformance (Clause 1).

22. Authorities that consistently reject applications, often disregarding the advice of their own planning officers only for these decisions to be overturned on appeal, act as a drain on public and private resources and prevent crucial and sustainable development from taking place. Similarly, almost half of major applications are not determined within the 13-week target, restricting the speed at which projects can be taken forward.

23. Improving the transparency of planning performance will act as an incentive for authorities to improve, making evidence-based decisions quickly. It may also shine a light on areas where planning departments are under-resourced and encourage local authorities to prioritise this part of their work.

24. The assessment criteria for judging the performance of local authorities is the key to whether this policy is successful. We support the suggestion that assessment is based on objective data indicating the speed and quality of planning decisions. Businesses also think it would be beneficial to include cases where development has been refused against officer recommendation in the measure of quality.

25. The CBI also sees merit in the reforms that will restrict the amount of information they are required to provide to a proportionate level (Clause 4). Introducing a ‘reasonableness’ test for this information will ensure that planning authorities only request that which will be a material consideration in the application. Furthermore, increased powers for the Planning Inspectorate to award costs will encourage timely and positive decision taking (Clauses 2 and 3).

26. Action to reinvigorate housing projects that have stalled due to changing economic circumstances is another necessary reform that promises to kick-start development on projects that have been rendered unviable. Businesses favour a collaborative approach in which they can renegotiate previously agreed Section 106 agreements with local planning authorities. But where this is not yielding results, the ability to appeal to the Planning Inspectorate will provide another route to ensure important schemes can go ahead.

Amending the review procedures for mineral planning permissions will provide greater flexibility and reduce costs for the industry

27. Clause 8 of the bill amends a specific set of rules for the minerals industry dealing with periodic reviews of planning permissions. At present, mineral planning authorities must conduct reviews of their permissions every 15 years, regardless of the effectiveness of the conditions in place. This creates substantial costs for businesses in the sector and inflexibility for the authorities themselves.

28. The bill will ensure that reviews are only conducted when absolutely necessary and not more frequently than every 15 years – a change that is welcomed by the industry. To improve on the legislation, government should set out more clearly the grounds on which planning authorities will be able to call for a review.

The business-wide benefits of changes to the business rates regime are overstated

29. The announcement of the two-year delay to the revaluation of commercial property for business rates received a mixed response from business. Where property values have decreased, companies would have reasonably expected their rates bills to fall after revaluation, with the burden shifted to businesses occupying properties that have maintained or increased in value.

30. Five-yearly revaluations provide a level of certainty for businesses, who can be assured that their rates bill accurately reflects the value of the properties they occupy. The government’s claim that the delay to revaluation will increase certainty for business is therefore overstated as companies may lose confidence that they can plan their investments according to this predictable timeframe in the future.

31. In addition, the CBI has concerns about the lack of consultation and impact assessment that has taken place on this policy. Ministers themselves admit that the assumptions behind the change are based on ‘limited rental market evidence’ and we would question whether this is the best foundation on which to make such a change. Government has justified the delay by saying that many businesses would have faced unexpected hikes in rates after revaluation. But there has been no evidence to show how this situation would be any different two years later.

32. We would urge government to publish an honest assessment on the impact of the policy to give businesses greater confidence in the solidity of the revaluation system.

Employee-owner status must not distract from wider Government deregulatory agenda on employment

33. The CBI believes that employee-ownership will be of interest to some businesses and their employees, but it is a niche idea and not relevant to the majority of workplaces. We would be concerned if the development of this idea held up progress on other essential parts of the government’s deregulatory agenda on areas like employment tribunals, which is a key concern for all employers.

34. In developing employee-owner status, the government should ensure that firms have security against any future claim that the staff member was an employee, not an employee-owner. Having the informed consent of the parties entering into such an arrangement is a necessity for this reason. It is also necessary because both parties would be exposing themselves to immediate and longer-term financial liabilities. Complications arising from difficulties in determining the valuation and taxation of shares also need to be addressed for the new status to be effective.

November 2012

Prepared 22nd November 2012