House of Commons - Operation of the National Planning Policy Framework - Communities and Local Government Committee

Operation of the National Planning Policy Framework - Communities and Local Government Committee Contents

4 Land supply

58. The allocation of sufficient and appropriate sites for development is a crucial element of the plan-led system. In this chapter we will examine the NPPF provisions on land supply. We will look first at the requirement for a five year supply of housing land, which has emerged as a problematic issue. We will then consider the NPPF's policy on previously-developed (brownfield) land, before examining whether the NPPF is according the right level of protection to the green belt.

Five year supply of housing land

59. The presumption in favour of sustainable development in the NPPF states that when the development plan is "absent, silent or relevant policies are out of date" planning permission should be granted unless "any adverse impacts of doing so would significantly and demonstrably outweigh the benefits […] or specific policies in this Framework indicate development should be restricted".[148] Paragraph 49 of the NPPF states that "relevant policies for the supply of housing should not be considered up-to-date if the local planning authority cannot demonstrate a five-year supply of deliverable housing sites".[149] Therefore, if the local authority does not identify and update annually a five year supply of housing land, with an additional buffer of 5%- or where there has been a record of persistent under-delivery of housing 20%[150]-planning decisions have to be made in accordance with the presumption in favour of sustainable development in the NPPF.

60. The absence of local plans, combined with no five year housing land supply, was a major source of communities' disquiet with the NPPF. A large number of those raising concerns with us about the impact of speculative development came from areas where a full five year supply had not been identified. Kirklevington and Castleleavington Parish Council in the Borough of Stockton-on-Tees told us that as a result of this policy, developers had been allowed to "ignore brownfield sites and other areas in the Borough and instead to put in successful planning applications for excessive numbers of houses in the Yarm and Kirklevington area".[151]Birmingham City Council warned that a "mechanistic interpretation" of the policy "can result in perverse outcomes that could lead to the release of development land in inappropriate locations".[152]The Royal Town Planning Institute (RTPI) told us that the five year supply policy had created "a single-minded focus on one short-term criterion" that risked "placing the country in difficulty over the long-term horizon".[153]

61. Greg Clark, the Minister responsible for introducing the NPPF, pointed out that planning was about the future and "five years is not a terribly onerous timeframe to be considering for the future".[154] We accept this and fully share the view that local authorities should be identifying land in their local plans to meet their needs for five years and beyond. We have concerns, however, that the requirement, as it is phrased in the NPPF, may be leading to unexpected and negative consequences.

DELIVERABILITY OF SITES

62. A particular issue appears to be the qualification set out in a footnote to paragraph 47 of the NPPF. It states that to be considered deliverable and thus to be counted towards the five year supply "sites should be available now, offer a suitable location for development now, and be achievable with a realistic prospect that housing will be delivered on the site within five years and in particular that development of the site is viable". It adds that sites with planning permission should be considered deliverable until permission expires "unless there is clear evidence that schemes will not be implemented within five years, for example they will not be viable, there is no longer a demand for the type of units or sites have long term phasing plans".[155] This statement has given rise to two particular concerns.

Build out periods

63. First, some sites could not be counted because they would take longer than five years to build out. The RTPI referred to a proposed new town in East Devon, which the council had driven forward because it considered it preferable to the alternative, "a proliferation of small scale village extensions". The RTPI noted, however, that any housing built on the site after five years could not be counted towards the five year supply, "despite the fact that the settlement will take longer than that to be completed".[156] This situation gives us cause for concern. If councils have clearly identified substantial amounts of housing in their plans, it is unfair that their communities should be left exposed to speculative development just because these sites will take longer than five years to deliver.

Viability

64. The second concern was that sites with planning permission should not be considered deliverable if "they will not be viable" within five years.[157] We heard that some developers had challenged the inclusion of sites within an authority's five year supply on these grounds. Leeds City Council told us that "volume house builders […] persist in challenging the brownfield element of the [five] year supply, thus putting pressure on greenfield and safeguarded sites". It added that were developers to challenge successfully the five year supply through the planning appeals process, "the Council's housing supply policies will be immediately rendered out of date". It blamed this on paragraphs 47 and 49 of the NPPF.[158] From a very different part of the country, Kim Bedford, representing the Gloucestershire Association of Parish and Town Councils, said that within the Forest of Dean, developers were arguing that a site included within the district's five year supply was not suitable and were therefore claiming that the plan was unsound.[159] Birmingham City Council called for guidance to make clear that the "assessed contribution should be that that could be achieved in reasonably optimistic market conditions not simply those at the time the assessment is made". It said that within urban areas "the viability of sites is adversely affected in less favourable economic circumstances but this should not be an excuse for the fortuitous release of alternative easier to develop sites".[160] Indeed, we risk a situation where greenfield sites are brought into the five year supply but, by the end of the five years, brownfield sites have become viable too. In such case a case, developers would look first to the greenfield sites because they are cheaper and easier to build upon.

65. We wrote to the Home Builders Federation asking whether its members' challenges to viability were taking into account how house prices might change over five years. It replied that its challenges were based on "current prices and costs rather than attempting to gamble on future price changes". It added that this was consistent with the recently-produced National Planning Practice Guidance and that it avoided "any speculation on prices and costs which, as we are painfully aware from the recent recession, can go in both directions".[161]

66. Viability also gave rise to concerns beyond the question of the five year supply. Islington Council stated that "that the plan-led system is being undermined by [developers'] use of viability arguments to avoid meeting policy requirements such as the provision of affordable housing and providing infrastructure contributions".[162] It said that many of the viability reports submitted to the council had been found to be unreliable and that developers were able to "avoid proper analysis of their viability evidence in the name of commercial confidentiality".[163] It called, amongst other things, for guidance on how assumptions in viability appraisals should be presented and evidenced and a "presumption in favour of greater transparency" in the viability assessment process.[164] This call for more guidance echoes Lord Taylor's review of planning practice guidance, which said that "immediate attention" should be given to "appropriate guidance regarding Viability, to ensure planning authorities and developers have a good mutual understanding of what this test requires".[165] The National Planning Practice Guidance currently states that there is "is no standard answer to questions of viability, nor is there a single approach for assessing viability".[166] The Minister, Brandon Lewis, told us that viability was "not creating too many problems, in the sense that it is for the local authorities to make the case that that land can be viable and why".[167]

67. We accept that the future direction of the housing market is difficult to predict. Nevertheless, we consider that, if there is a credible estimation that sites will be viable within five years' time, they should be included within the five year supply. More generally, we are concerned that the question of viability is becoming a battleground between developers and local authorities. There is a perception amongst councils that developers are using the NPPF viability provisions as a stick with which to beat them, and a means of reducing their infrastructure and affordable housing contributions and getting more greenfield sites added to the land supply. In doing so, they potentially undermine the process of adopting local plans and create the delays we considered in the previous chapter. We consider that the keys to resolving these tensions are better guidance, greater consistency, and more transparency. We recommend that the Government issue guidance making clear that assessments of site viability should consider not only current prices and costs but projections of prices and costs over the next five years. The guidance should state that assessments should be transparent, that is 'open-book', so that the developers' finances in relation to the specific site are open to scrutiny, and consider developers' own projections for future viability. In addition, the Government should work with local authorities and the house building industry to agree the wording of new guidance setting out a standard approach to determining viability.

Deliverability of sites: conclusion

68. A number of participants at our discussion forum suggested that all sites with planning permission should be included within the five year supply.[168] Taking this approach would stop speculative developers challenging the validity of the five year supply on the grounds of viability or because sites with permission would take longer than five years to build out. It would therefore give communities additional protection. In our view, the footnote to paragraph 47 has had a disproportionate impact. By restricting when sites with planning permission might be counted, and thereby removing from some authorities the protection of a five year supply, it has opened the door to unplanned and unwanted development in communities across the country. This development is undermining confidence in the NPPF itself. It is important that the Government looks again at the wording of this footnote. We recommend that the Government amend the NPPF to make clear that all sites with planning permission should be counted towards the five year supply of housing land.

ASSESSMENT OF HOUSING NEED

69. The NPPF states that local authorities should "ensure that their assessment of and strategies for housing, employment and other uses are integrated, and that they take full account of relevant market and economic signals".[169] On housing need, it says that councils should use a strategic housing market assessment (SHMA), which "should identify the scale and mix of housing and the range of tenures that the local population is likely to need over the plan period".[170] We encountered much disquiet, especially from local residents and community groups, about the figures emerging from the SHMA process, which many considered to be inflated or otherwise inaccurate.[171] Richard Broadbent, an individual who attended our discussion forum, stated in written evidence that too much weight was given to the outcomes of SHMAs.[172] He pointed us to a decision made by a planning inspector on an application in Blaby. The inspector had noted that two SHMAs covering the same area had recently been produced: one by the applicant and one by the Leicestershire local authorities. Both had been conducted by independent consultants and claimed to have followed the National Planning Practice Guidance. They had, however, come to radically different conclusions: the applicant's SHMA had forecast figures for Blaby twice as high as had the local authorities' SHMA. The inspector described this outcome as "surprising, and a matter of considerable concern", and said that he could place "little or no reliance on either SHMA.[173] Mr Broadbent suggested that this case showed that "SHMAs should be treated with great caution".[174]

70. We are concerned about the widespread unease surrounding the results of SHMAs. Communities need to have confidence that the figures on which their local plans are based are accurate. There can be little reassurance about the SHMAs when two assessments of the same area, apparently based on the same guidance, produce very different results. Indeed, it is unhelpful that developers and local authorities should each be commissioning their own SHMAs in the first place. Lord Taylor, in his review of planning practice guidance, recommended "updating the Strategic Housing Market Assessment […] guidance, to underpin the delivery of the National Planning Policy Framework in plan making and ensure it is used effectively".[175] The SHMA section of the Planning Practice Guidance website[176] is, however, too vague. Moreover, the Government used to have more detailed guidance on SHMAs.[177] We recommend that the Government work with local government and the house building industry to revise its guidance on strategic housing market assessments and produce an agreed methodology. Inspectors should then be required to test SHMAs against this methodology.

Brownfield land

71. In our 2011 report on the draft NPPF, we expressed concern at the Government's proposal to remove the "brownfield first" policy that existed in the previous planning policy statement.[178] We considered that this removal, along with the removal of a target for the proportion of homes to be built on brownfield land, would lead to less emphasis being placed on the use of previously developed land.[179] In response, the Government amended the NPPF to clarify that "policies and decisions should encourage the effective use of land by re-using land that has been previously developed (brownfield land), provided that it is not of high environmental value".[180] In evidence to this latest inquiry, Greg Clark said that the Government had listened to concerns raised and had in the final NPPF "reinforced the importance of brownfield".[181]

72. It is hard to assess how effective the brownfield policy in the NPPF has been, because the Government has not published national data on building on previously-used land since 2011.[182]. We look further at this issue in Chapter 7. We nevertheless heard that, in spite of the encouragement in the NPPF, it was often proving difficult to bring brownfield land forward for development, in particular because of the costs involved. David Henry from the Royal Institution of Chartered Surveyors told us that, while "the priority ought to be brownfield first […] the difficulty is that sometimes those sites are the most complex, longer term and expensive to develop".[183] Richard Blyth from the Royal Town Planning Institute said that there had been a reduction earlier in the parliament in funding for brownfield remediation and bringing forward brownfield sites, and that this had "pulled the rug from some of the original plans that had quite a brownfield emphasis"[184]. Liz Peace, Chief Executive of the British Property Federation (BPF), said that the obstacle to building on brownfield was primarily a financial issue and called for "some sort of national brownfield remediation fund".[185]

73. The Government has recently given fresh stimulus to promoting development on brownfield land. In his June 2014 Mansion House speech, the Chancellor of the Exchequer, Rt Hon George Osborne MP, announced that councils would be "required to put local development orders on over 90% of brownfield sites that are suitable for housing".[186] DCLG subsequently said that councils would be able to use local development orders to "set out the amount and type of housing that can be built on sites and assist developers working up suitable schemes to get work started on site quicker".[187] It also announced that councils that consulted on local development orders would be eligible to bid for a share of a £5 million fund aimed at getting house building underway.[188]

74. We share the Government's objective to see more homes built on brownfield land, but we are unconvinced that, on its own, the Chancellor's local development orders policy will be enough. The biggest barrier to more building on brownfield sites is the availability of resources to remediate land. The £5 million the Government is allocating will encourage the preparation of local development orders but, as successful bidders would receive £50,000 per bid towards the costs incurred in delivering the local development order, it will not address the costs inherent in the remediation needed on many brownfield sites. We recommend that the Department for Communities and Local Government establish a fund to enable the remediation of brownfield sites. It should set out a prospectus for how this fund will operate.

Green belt

75. The NPPF states that the "fundamental aim of Green Belt policy is to prevent urban sprawl by keeping land permanently open".[189] It makes clear that new green belts should only be established "in exceptional circumstances" and likewise that, "once established, Green Belt boundaries should only be altered in exceptional circumstances, through the preparation and review of the Local Plan".[190] Data from DCLG would appear to suggest that, across England as a whole, there has been little change in the size of the green belt in recent years. In 2006, it stood at 1.63 million hectares; in 2013/14 at 1.64 million hectares. The only notable change in size since 1997 came in 2005 when some green belt land was designated part of the New Forest National Park and thereby afforded greater protection.[191]

76. Despite this apparent stability across England as a whole, our witnesses still expressed concerns that land was being lost in particular areas. Neil Sinden from the Campaign to Protect Rural England told us that "when you take into account additions to the green belt, as well as deletions to the green belt, you are seeing a changing location of green belt, which is hidden by those [England-wide] figures".[192] On the test that the green belt should only be altered in "exceptional circumstances", he said that "these exceptional circumstances are no longer exceptional".[193] Shortwood Green Belt Campaign said that, contrary to the NPPF, green belts surrounding strategic urban areas were "deemed to be merely local authority land banks, reserved for development, managed by the Local Planning Authority and available for release to speculators whenever appropriate".[194]

77. Other witnesses saw the need for some flexibility. Mike Kiely from the Planning Officers Society reminded us that green belt was "not green belt because it is nice attractive landscape" but that it served as a "strategic tool to stop sprawl". He said that if councils had to amend their green belts, this should be done as part of the strategic planning process, not at the detailed planning application level.[195] Dame Helen Ghosh, Director-General of the National Trust, said that "communities would be very concerned about big incursions into the green belt" but that "small adjustments made as a part of the local plan are okay".[196] Liz Peace said that BPF members favoured "a more serious and sensible examination of whether we have got the right green belt and whether […] we could not sensibly use some of it for meeting some of this housing need".[197]

78. In October 2014, the Government issued new planning practice guidance which underlined its "commitment to protect the green belt from development".[198]The Minister, Mr Lewis, told us that the guidance confirmed "exactly, word for word, what is in the NPPF [and was] not new in the sense of new policy or anything of the sort".[199] For the most part, the guidance does reiterate the wording of the NPPF. It adds, however, that local authorities should "take account of any constraints such as Green Belt, which indicate that development should be restricted and which may restrain the ability of an authority to meet its need".[200] This sentence goes beyond the wording of the NPPF, arguably increasing protection to the green belt. Following the publication of this guidance, The Planner magazine reported that Ian Tant, a senior partner at the planning consultancy, Barton Willmore, had said that it "was a 'licence' for districts to fail to meet the housing need and not worry about it".[201]

79. In our opinion, the green belt has for many years played an important part in preventing sprawl and ensuring settlements retain their distinct identity. The NPPF is right to say that it should only be altered in exceptional circumstances. Certainly, councils should not look to alter the green belt when making individual planning decisions. This does not, however, mean that the green belt should stick forever to its existing boundaries. Councils should amend their green belts if local circumstances demand it. In local plans, councils set out a strategic vision for their area. It seems to us sensible that, as part of this process, they examine their green belts and consider whether they are fit for purpose and whether adjustments to the size and boundaries should be made. We encourage all councils, as part of the local planning process, to review the size and boundaries of their green belts. They should then make any necessary adjustments in their local plan. The rigorous requirements of public consultation, examination by an inspector and adoption by the council will ensure that any changes have been subject to thorough consideration.

GREEN BELTS AND NEIGHBOURHOOD PLANS

80. Central Bedfordshire Council told us that green belt policy in the NPPF was "stifling the ability of Neighbourhood Plans to bring forward development (particularly housing) in places where it is needed and wanted" as communities within the green belt land were unable to allocate sites for housing through their neighbourhood plans.[202] It pointed to paragraph 89 of the NPPF which states that development in the green belt should generally be considered inappropriate and does not include a specific exception for development allocated in a neighbourhood plan.[203] As a result, some neighbourhood plans in Central Bedfordshire could only proceed to pre-submission stage; if they went further they would conflict with the green belt policy in the local plan. The council was seeking to address this through a policy in its emerging development strategy but there was a risk that the process could be delayed by up to three years while it conducted a comprehensive green belt review. The council suggested that paragraph 89 could be amended to "enable allocations for community-supported housing schemes and potentially commercial schemes to be considered as exceptions to inappropriate development in Green Belt when brought forward in Neighbourhood Plans".[204] We consider that, if communities wish to make small changes to the green belt through their neighbourhood plans with which the local planning authority agrees, they should be able to do so. When they have taken the proactive step of producing a neighbourhood plan, which includes sensible, pro-growth changes, they should not be held up while they wait for the local plan to emerge. As Central Bedfordshire Council states, the parish councils involved could be forgiven for thinking that producing the neighbourhood plan was not "worth the time and effort".[205] Moreover, the NPPF already states that some community led development overrules national green belt policy: it says that development brought forward under a community right to build order does not constitute inappropriate development in the green belt.[206] We recommend that the Government amend paragraph 89 of the NPPF to make clear that development on sites allocated in an adopted neighbourhood plan, and which has the approval of the local planning authority, does not constitute inappropriate development for the purposes of the green belt. In addition, where neighbourhood plans, ahead of the local plan, make proposals to change the green belt, local authorities should have a duty to consider them as part of the local plan production process.