Planning and the broken housing market Contents

1Oversight and assurance

1.On the basis of a report by the Comptroller and Auditor General, we took evidence from the Ministry of Housing, Communities and Local Government (the Department).1

2.The Department’s objective for housing in England is to “support the delivery of a million homes by the end of 2020 and half a million more by the end of 2022 and put us on track to deliver 300,000 net additional homes a year on average.” The average number of new homes built from 2005–06 to 2017–18 was 177,000 a year.2

3.The planning system is vital to providing new homes as it helps government and local authorities to determine how many, where and what type of new homes are built. The planning system also helps to identify which geographical areas need to be protected or enhanced and to assess whether proposed development is suitable and will benefit the economy and communities.3

4.The Department is responsible for setting national policy for the planning system. In July 2018, the Department published its revised National Planning Policy Framework. Implementing planning policy is largely devolved to local authorities that perform two functions: producing a local plan that sets policy for the location of and types of homes to be built in their areas; and ‘development management’, which is the process for considering applications for developments. Local authorities dealt with 7,997 applications for major residential developments, usually meaning 10 or more houses, in 2017–18.4

Achieving the target of 300,000 new homes

5.Achieving the target of 300,000 new homes a year by the mid-2020s will need a significant step-up in house building. The number of new homes has increased every year since 2012–13, with 222,000 new homes in 2017–18, but the average number in the period 2005–06 to 2017–18 was still only 177,000 a year. Compared with the average number of new homes per year between 2005–06 and 2017–18, the Department would need to oversee a 69% rise on this to meet its target from 2023–24 onwards.5 The Department told us that the level of house building needed is unprecedented and on levels not seen since World War Two. It acknowledged that achieving the target would be “very challenging”.6

6.The Department accepted that it will need to transform the housing market to get more new homes built as well as continuing with current initiatives such as affordable housing programmes. It pointed to some indicators that it considered positive such as the increase in the numbers of new homes that are built to rent. The Department believed that other elements needed include reforms to the planning system to help affordability, more planning permissions granted, increased numbers of small builders in the market and more investors in building homes to rent, and housing associations.7 The Department told us that it has several projects to help achieve that target, such as the small builders guarantee scheme, reforms to the planning system, the affordable homes programmes, and development strategies across areas including Milton Keynes, Cambridge and Oxford. However, it acknowledged that it did not have all the mechanisms needed to achieve the 300,000 new homes, in particular it lacked information on capital budgets beyond the current spending review period.8

7.The Department does not have detailed calculations as to why the target of 300,000 new homes was chosen. It also told us that it did not have year-by-year projections on how it will achieve that target but had ‘illustrative projections’ which look at different ways of meeting the target and are not in the public domain. While the Department does not have detailed calculations as to why the target was chosen, it told us that the figure was based on a number of studies including Kate Barker’s work of 2004 and the Lyons review, which suggested 250,000 new homes and above and close to 300,000 are needed to stabilise prices. The target does not align with the Department’s new method for calculating the need for new homes which shows that just 265,000 new homes a year are needed.9

Local plans

8.Local plans are required by planning legislation and should be the key way that local authorities demonstrate how they will help meet the need for new homes in their areas. The Department stressed the importance of a ‘plan-led system’ for development, with local authorities responsible for producing the plan and determining how they want development to be shaped in their local area.10 As of December 2018, only 149 (44%) of local authorities had an up to date local plan, 143 (42%) had a plan that was more than five years old, and 46 (14%) had no plan at all.11

9.The Department told us about the findings of the Local Plans Expert Group which gave reasons why local authorities were struggling to get plans in place. This included the absence of a standard methodology to calculate the need for new homes—a key part of local plans.12 Without a standard method, local authorities used various ways to calculate the need for new homes in their area. The Department estimated that it cost £50,000 per local authority to calculate this need. The Department has supported local authorities to develop plans, including a Planning Delivery Fund of £16 million (2017–18 to 2018–19), and support from the Planning Advisory Service. Recently, it has also introduced policy reforms such as the standard method for calculating the need for new homes, which aims to simplify, speed up and give transparency as to how local authorities calculate this need in future.13

10.The Secretary of State, through the Department, has powers to intervene if a local authority has not produced a local plan. These powers range from making local authorities produce an action plan, to the Department producing a local plan for a local authority on behalf of the Secretary of State. In November 2017, the Secretary of State wrote to 15 of the local authorities which did not have a local plan to challenge them on their lack of progress. In January 2019, he made more direct interventions in two local authorities.14 The Department told us that taking local planning away from a local authority would be “a very significant decision”, particularly as it considers some local authorities are making progress, and not one that Ministers have yet wanted to take.15

The Planning Inspectorate

11.The time the Planning Inspectorate has taken to determine housing appeals (other than via written representations) has increased significantly since 2013–14. Between 2013–14 and 2017–18, the Planning Inspectorate estimated that the time it took to determine a housing appeal through an informal hearing or inquiry increased from 30 to 38 weeks. During this period the number of appeals fell from 833 to 703 a year. The Planning Inspectorate’s slow decision-making delays the building of new homes and creates uncertainty for local authorities and communities.16

12.The Department was aware that the Planning Inspectorate needs to significantly improve its performance and told us that the senior team in the Planning Inspectorate was also alive to this need. In June 2018, in response to concerns about delays, the Secretary of State commissioned a review by Bridget Rosewell CBE of how the Planning Inspectorate deals with appeal inquiries. The Department told us that her report concluded there needs to be changes in the Planning Inspectorates’ processes. It expects that the Planning Inspectorate will develop an action plan promptly in response to the review’s findings.17

13.We asked the Department for details on what it was doing to improve the Planning Inspectorate’s performance. The Department responded that reforms need to focus on improving business processes with some investment in new technology and told us that it had agreed a £13 million performance recovery business plan. It gave us an example of a new portal to enable people to know whether their appeal had been accepted and was being looked at by an inspector.18 The Inspectorate is also recruiting more inspectors to help it deal with the backlog of appeals and has been running regular recruitment campaigns throughout 2018. The Department expects that the Planning Inspectorate will improve its performance by the end of 2019 and be able to decide appeals within 18 weeks on average but did not stipulate targets for other areas of the Inspectorate’s performance.19

1 C&AG’s Report, Planning for new homes, Session 2017-19, HC 1923, 8 February 2019

2 Q 9; C&AG’s Report, paras 1, 6, 1.3-1.4

3 C&AG’s Report, para 1.5

4 Q 50, C&AG’s Report, paras 3, 12, 2.4

5 C&AG’s Report, paras 16, 1.4

6 Q 6

7 Qq 6 - 7

8 Qq 6-12

9 Qq 3, 9; C&AG’s Report, paras 8, 1.19

10 Qq 62, 63; C&AG’s Report, para 1.9

11 C&AG’s Report, paras 7, 1.10, Figure 6

12 Q 53

13 Qq 38, 50, 62; C&AG’s Report, paras 1.9 1.15

14 Qq 56-62; C&AG’s Report, para 1.11

15 Q 62

16 C&AG’s Report, paras 14, 2.11

17 Qq 75-80; C&AG’s Report, paras 14, 2.10

18 Qq 75-85,108; C&AG’s Report, paras 23, 3.14

19 Qq 76-79, 87, 90; C&AG’s Report, para 3.14

Published: 26 June 2019