Chapter 5: Housing, planning and rural working spaces
Introduction
305.Along with digital connectivity, the most prominent theme we heard in much of the evidence was on the need for sufficient housing and affordable workspaces to help underpin the rural economy while respecting the distinctiveness and appeal of the countryside.
306.Although housing affordability is a challenge across the country, statistics indicate that it is a particular issue in rural areas. For example, in 2017 the average lower quartile house price was 8.6 times the average lower quartile earnings, compared with 7.4 times in predominantly urban areas (excluding London).270 In 2018, average rural house prices in rural areas were £329,700, nearly £90,000 higher than those in urban areas excluding London.271 While price-to-earnings ratios vary considerably across rural England as they do in urban areas, it is clear that affordability is a serious challenge.
Figure 19: House prices as a multiple of earnings: ratio of lower quartile house prices to lower quartile earnings (residence-based), by Local Authority Classification, in England, 2008 to 2017
Source: Department for Environment, Food and Rural Affairs, Statistical Digest of Rural England, March 2019: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/787699/03_Statistical_Digest_of_Rural_England_2019_March_edition.pdf [accessed 15 April 2019]
307.This creates a challenge for the progress of the rural economy because, if rural areas are less affordable than their urban counterparts, people of working age are inevitably less likely to choose to live and work in rural areas. This creates a knock-on effect with regard to employment opportunities, skills shortages, business growth and the sustainability of rural services and amenities. It is clear, therefore, that tackling the rural housing challenge is a key part of addressing the wider challenges of rural economies.
308.We also heard, however, that new housing often met community resistance because it lacked sensitivity to its surroundings or because it was not perceived to meet local need—exacerbated by planning rules which, it was argued, failed to provide for appropriately designed housing of the right types and tenures.
309.A related challenge is the availability and affordability of rural working spaces, particularly for smaller businesses. We heard that rural SMEs often started in private homes, but that when they attempted to pursue ambitions to expand would often find that there was little appropriate workspace available in rural locations. This would often either constrain those businesses’ ability to grow or lead to their relocation to urban areas, in both cases having a damaging effect on rural economies.
310.Underlying these challenges is the role of the planning system in rural areas. Planning rules have a fundamental role in all rural development and where there are deficiencies in the system they can often be resolved by planning reform. Shortly after we began our inquiry, the Government published a revised National Planning Policy Framework (NPPF), which sets the national-level policies by which local authorities are required to abide in drawing up local plans and deciding on planning applications.
311.We heard that, while some changes to the NPPF were welcome, there were still policies that did not reflect the interests of rural areas. Similarly, we also heard of challenges with local planning policy, especially with regard to village housing development and workspace shortages. We also heard evidence on the recently published Raynsford Review, which proposes wide-ranging reforms to strengthen the English planning system.
312.Neighbourhood planning has been identified as a significant move forward in terms of community participation and engagement. It is also, however, not without its limitations and challenges, in particular with regard to consistency of implementation and interactions with the wider planning system. We discuss these issues below. We will also reflect on the important role of Community Land Trusts in bringing forward appropriate new housing in rural communities.
313.In considering the question of how a place-based rural development policy should work, we first need to consider what it is intended to achieve. We take the view that no-one should be unreasonably disadvantaged by choosing to live or work in a rural area, and that—so far as possible—no one should be forced out or prevented from locating to rural areas by constraints that do not apply in an urban context.
314.We believe that the development aspect of a place-based rural strategy should be designed with this in mind, so that some of the issues set out above can be addressed in a more consistent and systematic way and help ease some of the constraints on rural economies. In this chapter we will deal with each of the issues set out above, and make recommendations for how they may be addressed in the context of a rural strategy.
Housing in rural areas
315.As noted above, the average house price in rural areas is just over £90,000 more than other areas outside of London (Q2 2018 figures). This gap widened somewhat over the course of a year, having been just over £26,000 in Q2 2017.272 This clearly points to a large and growing affordability challenge for rural housing, particularly in light of lower average earnings from rural employment.
316.As well as overall cost, evidence indicated that there is also a wider challenge relating to the supply of housing of the right types and tenures - including owner-occupied, private rented, and affordable housing - in the right rural locations to support the working age population. For example, the Rural Housing Alliance informed us of research findings that a family with one child, earning one full time and one part time median wage in a mainly or largely rural area would spend 31 per cent of their income in rent, which is notably higher than in urban areas outside major conurbations.273
317.The Rural Housing Alliance also told us that the working age population in rural areas is projected to decline by 75,000 people between 2014 and 2038. It stated that “the key to ensuring viable, mixed communities in rural areas is building more affordable housing” but that “all too often, young people are forced to leave rural areas they grew up in because they cannot afford housing costs”.274 This clearly raises a significant challenge to rural economies.
318.Debate over housing policy in England has often viewed as being polarised between those who believe in the urgent need for new housing and other development in all locations, and those who resist all new developments as a blight on their localities. The evidence we heard confirmed that this polarisation is far from the reality of rural opinion on new housing; most recognise the need for it to take place while believing that it can be brought forward in a way that reflects local need and is designed and planned in a way that respects and engages with local communities while protecting designations such as Green Belt. Sensitively developed new housing can also have a positive impact on rural economies by helping to make services and amenities viable.
319.For our purposes we will consider the challenges of provision of all tenures of housing in rural locations, including market and affordable housing. The evidence we heard suggests that successive Governments have not properly attuned their housing policies to rural needs, which has helped exacerbate the challenges of affordability, availability and sensitive growth. In this section we will discuss the evidence we heard with regard to both private and affordable housing as well as on the need for new homes to be brought forward with the engagement and participation of existing communities.
Housing delivery issues in rural areas
320.We heard a range of evidence on overall delivery of new housing in rural areas. Issues of particular focus included housing in small village settlements and on smaller sites, support for small and medium sized building firms, and on the need for new homes to be adaptable and energy efficient.
321.At present, the Government does not record the level of housing completions in individual settlements of fewer than 3,000 people, although figures are available in aggregate. Some evidence suggested this was reflective of the Government’s lack of interest in housing in small settlements, which has been matched by a lack of attention to the rural consequences of wider housing policy.
322.Simon Gallagher of MHCLG told us that data was available at aggregate level but acknowledged there was an absence of information on “the granularity in those areas”. He added that “the bit I am always careful about is putting burdens on local authorities or local communities in collecting information. There are always balances to be struck. If we can find efficient and effective ways of gathering data, I am very keen on that”.275
323.Chris Carr of the Federation of Master Builders, an association representing small and medium sized building firms made reference to a survey of builders which had been carried out by his organisation. This found that the top five constraints on their ability to deliver new homes were a lack of available and viable land, the planning system, a lack of developer finance, a shortage of skilled workers, and the cost of Section 106 contributions.276 He argued that new housing development was often oriented towards larger sites of 200 units or more, “which causes more disruption to that village than anything else”. He added that “we need to look at breaking those parcels down and, through the local plan, delivering smaller and more sustainable sites”.277
324.The National Trust made reference to the Government’s Housing Delivery Test, which will trigger a presumption in favour of sustainable development where delivery has been found to be below 75 per cent of the housing required in an area. In the words of the National Trust, “this means that there is an incentive to developers not to build, but to wait until delivery is below the required level to drive the release of additional green field sites, as a cheaper option than developing on more difficult brownfield sites”.278
325.The Rural Housing Alliance noted the rapidly ageing rural population, referring to a report from the Housing and Care for Older People All-Party Parliamentary Group (APPG) on housing for older populations. Recommendations of the report included that MHCLG should “strongly encourage all homes to be built to the Lifetime Homes standards of accessibility that serve the needs of people of all ages”, that local authorities should ensure specific sites are allocated for older people across all tenures, and that all masterplans for new settlements should incorporate a proportion of housing of different kinds specifically for older people.279
326.The Rural Housing Alliance also noted that rural households are more likely to be in fuel poverty than urban households, and that to combat this “Government should support the very highest standards of energy efficiency for new homes (or at least those built with Homes England funding)”.280
327.For the rural economy to thrive, there needs to be an adequate supply of new housing in the right places and of the right types, brought forward in a sensitive way which respects and engages with local communities. We heard evidence that this is not enough of a priority for the Government, and the rural economy risks falling behind as a consequence.
328.The absence of data on new housing in settlements of fewer than 3,000 people is a significant weakness in the ability to assess the success and sustainability of rural communities. The Government must explore means of gathering this data, make greater efforts to identify housing shortages in smaller rural villages and, where possible, work with local authorities and housebuilders to identify opportunities to develop new homes in village locations. This will help ease the burden on larger settlements where large schemes are being proposed, improve the sustainability of smaller villages, and ensure that development is more sensitive to local scale and context, minimising local community opposition.
329.Government must also review the rural impact of the Housing Delivery Test and particularly whether it is incentivising developers to seek to build on greenfield sites over and above brownfield sites that should have priority in the planning system. The review should focus on whether the test acts as a disincentive to brownfield development.
330.Government should also introduce stronger policies to support the sustainability and adaptability of rural housing for older populations, including making provision for new homes to be constructed to Lifetime Homes standards, and supporting energy efficiency measures to reduce the cost of heating and ease fuel poverty. Local authorities should also ensure that sufficient housing for older people is allocated through local plans.
Rural affordable housing
331.In addition to the question of housing delivery, we received a considerable amount of evidence on rural affordable housing, and the greater challenges of delivering and maintaining it in recent years.
Box 14: What do we mean by ‘affordable housing’?
|
Affordable housing is a specific form of housing defined in the National Planning Policy Framework (NPPF) as “housing for sale or rent, for those whose needs are not met by the market”. The NPPF divides affordable housing into four categories, namely affordable housing for rent (rented homes below market value, including social rented homes such as council housing); starter homes, which are discounted homes for first time buyers; other discounted market sale housing; and other affordable routes to home ownership, such as shared ownership. New affordable housing is delivered through two main routes: direct construction, often by housing associations and to a lesser extent by local authorities; and through affordable housing contributions from private developers, known as “Section 106” contributions. These might include a proportion of homes in a new privately constructed scheme being designated as affordable or, more rarely, a financial contribution made to the local authority to subsidise new affordable housing in a different location. Owing to the legacy of past decades of large-scale council house construction, many affordable homes are still owned and managed by local authorities, particularly those for social rent. This stock has been depleted somewhat by the “Right to Buy” policy by which tenants are entitled to purchase their council home at a discounted rate. |
332.Our evidence focused on the distinct challenges of supplying and maintaining an adequate supply of rural affordable housing, and the policy changes that could be made to assist this. The key issues that recurred in our evidence were:
- The inability to secure affordable housing contributions on new sites of 10 units or fewer;
- The absence of a rural housing target from Homes England, and inadequate grant rates to support affordable housing on small rural sites;
- The shortage of affordable land for new affordable housing, and challenges around the supply of “rural exception sites”; and
- The depletion of stock caused by the Right to Buy for local authority homes, and the constraints on replacing the homes sold with new affordable housing; and
- The challenges of the emerging Housing Association Right to Buy policy.
333.We now deal with each of these challenges in turn.
334.In 2014 the Government announced a new policy to prohibit local authorities from seeking contributions to new affordable housing where new housing developments comprised fewer than 10 units. There are partial exemptions in ‘designated rural areas’, where policies may set out a threshold of 5 units or fewer.281
335.Much of the evidence we heard on this policy argued that it had been introduced with a disregard for rural settlements, where a considerable proportion of new homes are on smaller sites, and that it had had the dual effect of reducing affordable housing and increasing community opposition to new schemes.
336.Jo Lavis of Rural Housing Solutions pointed out to us that development sites in rural areas are small; that there are often no opportunities to spend income from affordable housing contributions in the same locality; and that the “designated rural areas” exemption covers less than 40 per cent of rural parishes.282
Box 15: Designated rural areas
|
There is a partial exemption to the 10-unit affordable housing threshold for ‘designated’ rural areas. The National Planning Policy framework defines designated rural areas as “National Parks, Areas of Outstanding Natural Beauty and areas designated as ‘rural’ under s157 of the Housing Act 1985”.283 In these areas, local authorities may seek affordable housing contributions on developments of between six and nine units, though these may only be in the form of a financial contribution. As well as National Parks and AONBs, other areas may be designated by the Secretary of State as ‘rural’ for the purpose of affordable housing contributions. At present, however, this covers less than 40 per cent of rural parishes, meaning many rural parishes are not able to seek affordable housing contributions on such small sites.284 |
337.Jo Lavis added that the policy would have a consequential effect on land prices, noting that “without an affordable housing requirement these small sites will attract a higher land value which, coupled with the rolling need for a five year land supply, will result in landowners holding on to potential rural exception sites in the hope they will be allocated”.285
338.The Rural Housing Alliance noted that in 2012/13 66 per cent of affordable housing built in settlements of 3,000 or less was through Section 106 contributions, “so this 10-home threshold has cut off a key flow of affordable housing in rural areas”.286 Hastoe Housing Association argued that thresholds should be set locally to suit local circumstances.287
339.A contrary view was expressed by the Countryside Alliance, which stated that requirements for affordable housing contributions on small sites “had the effect of making some developments financially unviable and worsening the housing crisis”.288 In defending the threshold policy, Simon Gallagher of MHCLG told us that “the background … has always been the need to strike the balance between enabling smaller housebuilders and developers to come into the market, and getting the affordable housing that we want. There is a balance to be struck there”.289
340.It is clear from most of the evidence we have received that the affordable housing unit threshold policy does not work for rural areas. As well as severely limiting the supply of much-needed rural affordable housing it is also likely to increase the hostility of communities to new development, in the knowledge that small housing schemes may no longer meet genuine community need. There is little evidence that requirements for affordable housing contributions made small housing sites unviable for development in the past.
341.Government should provide a full and comprehensive exemption for all rural areas from the policy to limit affordable housing contributions on small sites. Local authorities should be free to work with developers to seek the necessary level of affordable housing contributions on all new housing sites to help meet the fullest range of rural housing needs.
342.We also heard evidence on the limitations of the Government’s wider ambitions on rural affordable housing delivery, and in particular the role of Homes England, a non-departmental public body sponsored by MHCLG which supports the funding and delivery of affordable housing across England.
343.Among others, East Riding of Yorkshire Council stated that “greater emphasis from Government needs to be placed on rural housing needs”, with a specific Homes England target for rural housing delivery, and higher grant rates to reflect the additional costs of delivery in rural areas.290 The Rural Services Network stated that such a rural homes programme must be “designed to boost delivery at small rural settlements” and should aim to meet the shortfall in delivery identified by the 2014 Rural Housing Policy Review.291
Box 16: Cornwall: good practice in affordable housing delivery
|
Cornwall Council told us that it “has the ambition to be the top provider of affordable homes across English councils” and noted that land value uplift can support the provision of infrastructure. It gave the example of its Growth and Investment programme, which is seeking to deliver 1,000 affordable homes over four years “with an additional focus on care and specialist housing provision which could increase this number”. Delivery is through partnership with the Local Enterprise Partnership, housing associations, health colleagues and the private sector. The Council stated that “this partnership approach has resulted in Cornwall benefiting from commitments from housing associations to deliver 8,000 homes (of which 6,000 will be affordable) over the 2016–21 period, levering a total investment of £600m”. |
Source: Written evidence from Cornwall Council (REC0039)
344.Simon Gallagher of MHCLG told us that “we have asked Homes England to build up its strategic partnerships with the housing association sector, so it can have different providers in different places … Homes England is working not just with the big guys to deliver but with the smaller providers, which can work differently in smaller communities”.292 MHCLG Minister Jake Berry also informed us that the Government’s Housing Infrastructure Fund was free for rural areas to bid to, and would help enable infrastructure to be delivered before new housing development comes forward, easing the strain of new housing on local areas.293
345.Defra noted that Homes England had spent £142.3 million on rural schemes through the Affordable Homes Programme from 2012/13 to 2016/17 and that it was seeking to support community-led development through the Community Housing Fund, with rural areas having received £60 million from this fund in 2017–18 and a further £163 million being made available in the next two financial years.294
346.Homes England should restore its rural housing target, and this target should reflect the rural population of England. The Government and Homes England should also work more closely with rural affordable housing providers to ensure that grant rates reflect the higher cost of development on small rural sites. Government should also ensure that a fair share of the Housing Infrastructure Fund goes to rural areas to help aid the viability of new development of all types.
347.The availability and cost of land for new affordable housing was also a frequent theme of evidence. Jo Lavis of Rural Housing Solutions observed that market value for housing land is substantially influenced by planning policy. Where sites may be for market housing, this has the effect of raising landowner expectations of price (“hope value”) reducing housing affordability as developers seek to build higher value housing and minimise or exclude affordable housing to ensure viability and protect profits.295
348.Jo Lavis argued that the Land Compensation Act 1961 should be reformed so that land that is purchased under compulsory purchase orders is bought at its current use value, not its potential value, to enable more widespread affordable housing delivery on rural sites.296 The Royal Town Planning Institute (RTPI) stated that “there should be a fairer way of sharing land value uplift between landowners and the community, to fund the housing and infrastructure the country needs”.297
349.The Housing Association Karbon Homes argued that “we believe that land owners want to see affordable housing built for social and business reasons. However, understandably, many have expectations of land values that make it economically unviable to develop affordable homes”. It added that “the National Planning Practice Guidance should not rely on the use of current, inflated land values to evaluate costs and look to provide a fair approach that balances land owner and developer profits with meeting affordable housing need”.298
350.Jo Lavis also cited a paper from the Royal Institution of Chartered Surveyors (RICS) which included recommendations for incentivising the release of land for affordable housing. These included conditional exemption from Inheritance Tax and extending Capital Gains Tax business asset roll over relief.299 Somerset County Council also argued that “private land owners need to be incentivised to bring forward housing land at an affordable price”.
351.Rural exception sites can be a key mechanism for delivering affordable housing in rural areas. These sites are brought forward outside local planning allocations on the basis that they will provide affordable housing in perpetuity. As the sites would not otherwise be granted planning permission, rural exception sites avoid the problem of inflated land values of potential market housing sites and enable landowners to support thriving rural communities and economies.
352.The Campaign to Protect Rural England stated that “successful schemes built through the rural exception site policy demonstrate how the use of strict planning rules can help to hold down land values and support the development of truly affordable homes”.300
353.The Rural Housing Alliance stated that rural exception sites are “a tool that aren’t used enough”. It cited data indicating that only 1,071 homes were built on rural exception sites in 2016/17. It also noted that some local authorities, such as Cornwall, are very proactive, and that just five local authorities built 45 per cent of all affordable homes on rural exception sites since 2011.301
354.In order to address the under-use of rural exception sites, the Rural Housing Alliance recommended that the Government should exempt sales of land for such sites from Capital Gains Tax when they are developed to meet a proven need for affordable homes. It also proposed that there should be guidance or a best practice guide illustrating how the more proactive local authorities such as Cornwall are using them to deliver new housing.302
355.Jo Lavis noted that other planning policies might militate against the introduction of rural exception sites, including the requirement for a rolling five-year land supply of deliverable sites within local plans. She stated that “while this is helpful, it does also mean that landowners are likely to withhold release of rural exception sites in the expectation of their land being allocated, triggering a higher land price”.303
356.Jo Lavis also argued that the requirement in the NPPF that affordable housing landlords must be Registered Providers should be widened so that private landowners were able to develop and provide affordable housing on their own initiative. She stated that without this opportunity, landowners are “likely to only offer affordable sale housing”.304
357.Rural exception sites are an important contributor to rural affordable housing, but evidence suggested that they are not yet meeting their potential, with delivery being heavily concentrated among a small number of local authority areas. In addition, wider Government policy may disincentivise landowners from bringing forward rural exception sites for rural affordable housing.
358.The Government should publish best practice guidance for the incentivisation and delivery of rural exception sites, drawing on the example of authorities such as Cornwall which has particularly high delivery rates. The Government should also undertake further research to understand why rural exception site delivery is so concentrated and so poor across much of the country.
359.Government should also amend policies which restrict private landowners from becoming registered providers of affordable housing. The Government should consider taxation reforms to incentivise the availability of rural exception sites, including Capital Gains Tax, Inheritance Tax and Business Rate reliefs where appropriate.
360.There is also a wider challenge of land values in relation to affordable housing delivery. Because the grant of planning permission can be so lucrative, rural housing sites often command very high prices which leads to the exclusion of affordable housing as the cost of the land makes it unviable.
361.Increasing the supply of affordable housing in rural areas will continue to prove difficult unless fundamental action is taken which either reduces the jump in land values typically arising from development permission or which captures and apportions that gain. This is a complex issue which requires serious study. Government should establish an inquiry to examine this question within the next six months and should ask that enquiry to report back with policy recommendations within the following twelve months.
362.We also heard evidence on the important role of Community Land Trusts (CLTs) in the provision of affordable housing in rural areas.305 The National CLT Network informed us that there are currently 100 active CLTs in rural England and at least another 100 communities setting CLTs up. Across England, at least 69 CLTs have completed schemes providing 868 homes, of which 85 per cent are affordable and most are rural. Some CLTs work on their own, while others partner with housing associations.306
363.CLTs were cited positively by a number of witnesses including Jeremy Leggett of ACRE who said they were “seeing huge enthusiasm from local people to have the housing they want as long as they can be in control of it” through such a mechanism. Margaret Clark of the Rural Coalition stated that they “are playing a much bigger role in a number of rural areas” but that they need “certainty of funding”.307 MHCLG Minister Jake Berry stated that CLTs were “novel schemes” and cited the example of a project in Cornwall where 20 homes had been built in an area with “an acute affordability crisis”.308
364.Martin Collett of the Rural Housing Alliance said that CLTs may be “disruptive” to housing association programmes but that they work well when in partnership with housing associations, although he expressed scepticism that they would be able to deliver homes on the same scale as the housing association sector.309 By contrast, however, the National CLT Network cited other views from housing associations including the Aster Group which had stated that CLTs are “extremely effective at unlocking smaller parcels of land for development” and that “involving the community in a project also ensures they are at the heart of the development”.
365.The National CLT Network praised the Government’s £163 million Community Housing Fund (CHF), which is intended to permanently increase the size of the sector and its development capacity. It stated that “the continuation of this fund will be critical for the growth of our sector”. It also noted that development finance was difficult to access for new entrants and called for a Government guarantee scheme to complement CHF funding.310
366.Community Land Trusts play an important role in the provision of affordable housing in rural areas and have the potential to play an even bigger role in the future. We urge the Government to ensure that the funding provided through the Community Housing Fund is consolidated in the long term. Government should also introduce a guarantee scheme to support development finance for CLTs.
367.Finally, we heard evidence regarding the impact of the Right to Buy on local authority housing, and some concerns about the impact of the ‘Voluntary Right to Buy’, a policy agreed between the Government and the National Housing Federation by which Housing Associations would offer the Right to Buy to tenants on similar terms to those offered to Council tenants at present. The policy has yet to be implemented but is currently being piloted in a number of areas.
368.Some evidence included calls for the suspension of the Right to Buy in rural areas, on the basis that it depleted rural affordable housing and that replacement affordable homes were very difficult for local authorities to secure in the same locality where homes were sold.311 The Rural Services Network stated that sales had reached one per cent of the housing stock between 2012 and 2015 but that only one replacement home was built for every eight rural homes sold in this period, with these homes rarely being in the same location..312
369.Defra stated that:
“The Right to Buy scheme has always sought to balance the benefits of helping social tenants into home ownership with the need for rural affordable housing. Where homes are sold in rural areas, landlords can require owners to resell only to people who have lived or worked locally for at least three years, or to sell them back to the landlord. This allows tenants to become home owners and keeps homes available for the local community”.313
370.The National Housing Federation gave some details in written evidence with regard to the operation of the Voluntary Right to Buy and existing pilots. It stated that Housing Associations would be able to designate homes that would not be sold and give the tenant the ability to “port” their discount to another home. It added that it expected different housing associations to take different approaches in rural areas, and that rural exception sites would be excluded as they were required to be affordable in perpetuity.314
371.The Right to Buy for council tenants has enabled home ownership for some, but has caused a significant depletion of affordable housing in rural areas. The problem is particularly acute in rural locations where it may be difficult or impractical for homes sold to be replaced by a new affordable home in the same locality.
372.Current replacement rates for rural council homes sold under the Right to Buy policy are woefully inadequate. The Government should therefore consider suspending the local authority Right to Buy or making it voluntary for local authorities in specific locations, to ensure that much-needed affordable housing is not lost where it would be difficult or impractical to replace it.
373.Regarding the operation of the ‘Voluntary Right to Buy’ for Housing Associations, we welcome the assurance that there will be exemptions where housing is designated as affordable in perpetuity, such as rural exception sites. Nevertheless, questions remain over how the policy will operate in practice in rural areas.
374.The Housing Association Right to Buy is inappropriate in many rural areas as it will often be impossible to provide a replacement home in the same locality. The policy must not be implemented in rural areas unless and until clarity is available on how it would ensure adequate local replacement of affordable homes sold, or comprehensive exemptions are in place where replacement is not possible.
Sympathetic housing design
375.We also heard evidence on another key question in the rural housing agenda—that of the quality of housing design. Hugh Ellis of the TCPA told us that “the standard of domestic design in this country is shockingly poor… it is a very curious idea that, as a nation, we have a very strong sense of particular regional identities in literature but very, very little attempt to express it through what we design … Beauty in design should be a statutory obligation. Since you can have areas of outstanding natural beauty, why can you not have areas of outstanding beauty in the built environment?”.315
Figure 20: The need for housing design sympathetic to existing local vernacular was identified as being very important for rural communities
Source: Alan Walker, ‘Village Scene, Bempton, East Riding of Yorkshire, England’: https://commons.wikimedia.org/wiki/File:Village_Scene_-_geograph.org.uk_-_1778553.jpg [accessed 3 April 2019] (CC BY-SA 2.0)
376.MHCLG Minister Jake Berry noted that neighbourhood plans gave local communities “the ability to come up with local design standards, which enables people to protect or encourage the local vernacular when seeing development in their area”.316 The Rural Affairs Minister also told us that “most of the rural housing associations I see are very conscious of design, because that is how the parish council will actively approve a bid. They want to see buildings filled by people who want to remain in the community”.317
377.The Secretary of State told us that the Prime Minister has “set up an advisory body, working out of MHCLG, to look at precisely these questions … the critical thing to do is to think about fitting in with the existing environment and using, exactly as you say, aesthetic judgements as part of what is important”.318 The new Commission, named “Building Better, Building Beautiful”, had its draft terms of reference published in November 2018.319
378.It is to be welcomed that the Government has established an advisory body within MHCLG to consider aesthetics in new developments. This body must fully rural proof all of its proposals and ensure that, in developing its ideas, distinctive rural vernacular is considered in full, to help win community support for future development. Government should also consider how such proposals might be reflected in future national planning policy and guidance.
Planning in rural areas
379.Planning policy is the driver of all development in rural areas and is intended more widely to identify land use priorities and address competing interests. Any successful planning system should be one which enables rural economies to grow and thrive, while helping preserve and maintain those distinctive aspects of the countryside that make it so appealing, such as landscapes, open spaces and local amenities. The National Planning Policy Framework stresses the need to secure “net gains” for economic, social and environmental objectives in new development,320 and the Government recently announced that it would use the forthcoming Environment Bill to mandate biodiversity net gain for development in England.321
380.We heard evidence that, despite positive intentions among many local authorities, the planning system was not currently working as it should in rural areas. We now turn to these challenges and how they may be addressed.
Figure 21: Recent changes to planning policy and guidance in England
Source: TCPA, Planning 2020: Final Report of the Raynsford Review of Planning in England (November 2018): https://www.tcpa.org.uk/Handlers/Download.ashx?IDMF=30864427-d8dc-4b0b-88ed-c6e0f08c0edd [accessed 15 April 2019]
The new National Planning Policy Framework
381.Following its introduction in 2012, the National Planning Policy Framework (NPPF) has been the foundation document of all planning policy in England. A revised version was introduced in July 2018, just as our inquiry was beginning, and Defra stated that its policies “are now up-to-date and do not currently require any further revision”.322 The NPPF sets out that in rural areas, planning policies should be “responsive to local circumstances and support housing developments that reflect local needs”.323
382.Margaret Clark of the Rural Coalition told us that “the words in the NPPF are positive. It says some very positive things about the rural economy and rural housing, and the new definitions of affordability are quite helpful… the fundamental problem with the NPPF is delivery”.324
383.As noted above, one criticism of planning policy in England has been that it is perceived to discourage development in smaller rural settlements. A recent report by the CLA, “Sustainable Villages”, notes that:
“Local authorities use ‘sustainability assessments’ to score settlements on the range of services available there or in close proximity. Villages are then placed in a hierarchy according to their score, with the Local Plan allocating new housing to those towards the top of the hierarchy. Settlements where development is allocated by the plan are deemed to be sustainable, while those with fewer services are deemed unsustainable”.325
384.East Lindsey District Council informed us that “whilst the NPPF states that housing and employment should be near services and facilities, it is not clear what this means… therefore, for the decision maker (in terms of the NPPF) it is more appropriate to place rural housing in settlements which have a range of services and facilities leaving much smaller settlements with little or no growth”.326
385.Matt Thomson of CPRE cited national policies introduced in the 1990s which stated that, in his words, “if a village is remote and does not have transport links, development in that village will therefore be unsustainable”. He added that, “people are still applying those planning policies, even though they are not in national planning policy any more”.327
386.This point was also supported by Martin Collett of the Rural Housing Alliance, who said that “local planning authorities too often look at sustainability in a traditional sense. They do not look at changing culture and working patterns, connectivity and broadband… it looks at a village from perhaps 10, 20 or 30 years ago and considers sustainability in those terms, which are no longer suitable”.328
387.The new NPPF was welcomed for its commitment to earlier and more transparent ‘viability assessments’ by which the cost of affordable housing and other contributions were tested earlier in the process to ensure that they did not render development unviable.329 Such tests have been criticised in recent years for the perception that they favour developer interests, with developers being able to argue that certain contributions would make developments unprofitable and local authorities lacking the resources to challenge their claims. Guidance accompanying the new NPPF makes clear that viability studies should inform local plans instead of being used to challenge them retrospectively.
388.Some concern was expressed about the new policy of “entry level exception sites” (ELES) contained in the NPPF. Operating on a similar basis to rural exception sites, these would offer affordable homes per the statutory definition that would be suitable for first time buyers, including shared ownership and starter homes. Hastoe Housing Association stated that “although the ELES policy was amended in the final NPPF to remove open market homes and limit their use in Green Belt/AONBs,330 the policy is still likely to raise land values compared to traditional rural exception sites … the Government must monitor the policy to ensure it does not damage the delivery of rural affordable housing on rural exception sites or significantly raise land values in rural England”.331
389.The National Planning Policy Framework makes some welcome changes to support the rural economy, particularly with regard to viability assessment reforms, and in its new references to the rural economy and rural housing. It is also welcome that the document states that planning policies should identify opportunities for villages to grow and thrive, making clear that housing in smaller villages without local services is not necessarily “unsustainable”. There may still be scope for stronger support for new housing in small settlements as a means of supporting rural economies, however.
390.The Government should revise national planning practice guidance to clarify that sustainable development should be supported in rural villages, to ensure their survival and appropriate growth. Guidance against the designation of villages as “unsustainable communities” should be enforced more strongly where appropriate.
391.The Government should also monitor new NPPF policies on viability assessments and entry level exception sites to ensure they are operating as intended and helping the supply and maintenance of new rural affordable housing. It should bring a report to Parliament on the outcome of its monitoring within three years.
Other planning reform issues
392.Towards the end of our inquiry, the Raynsford Review of Planning was published. This review, initiated by the TCPA and informed by a task force chaired by former housing and planning minister Nick Raynsford, was set up “to identify how the government can reform the English planning system to make it fairer, better resourced and capable of producing quality outcomes, while still encouraging the production of new homes”.332
393.Recommendations included a new legal duty to deliver sustainable development in England, a cross-sector compact on the values of planning, a strengthened legal status for local plans, an expectation for local authorities to be “master-developers” to ensure plans are delivered, powers to control the conversion of office and commercial buildings to housing, stronger mechanisms for accountability and community participation in the planning system, a duty to local planning authorities to plan for high-quality and affordable homes, effective land assembly and land value capture powers for public authorities, and reforms to Section 106 and Community Infrastructure Levy contributions.333
394.Describing the Raynsford Review to us, Hugh Ellis of TCPA stated that “involving people in national or regional planning questions is very difficult, but we have not tried to do that … national policy statements, for example, which have been issued successively over the last six or seven years, feature hardly any community debate”.334 He added that “we need a much more comprehensive planning system that can deal with issues that arise in rural areas beyond economics and housing. That is a question … that the country has never wanted to address”.335 He also told us that “in the Raynsford Review final report, we are recommending a very strong duty on sustainable development with a very important caveat: that it is also focused on the health, safety and well-being of individuals and communities”.336
395.Hugh Ellis also referred to the work of the National Infrastructure Commission and in particular its proposals for a growth corridor between Oxford, Cambridge and Milton Keynes. He stated that “the NIC’s projects, whether they are good or bad, do not relate in any clear way to local planning and do not have any relationship with it … as to how we could organise it better, it would be easy: by giving the NIC a clearer role and repurposing Homes England, for example”.337
396.The Raynsford Review makes an important contribution to the debate over planning reform in England. Although not specifically rural proofed, many of its recommendations are much-needed in a rural context and would lead to much better and consistent outcomes in rural development, helping strengthen rural economies more widely.
397.We take particular note of the proposals in the Raynsford Review to enhance the ability of local authorities to plan for the needs of their localities, and to ensure a higher level of community participation and engagement in the planning process. We recommend that the Government gives serious and urgent consideration to these proposals in particular, with a view to adopting them as policy, and that it should also give full consideration to how they may be applied and implemented in rural contexts.
398.Government must ensure that the work of the National Infrastructure Commission complements, rather than displaces, the role of local planning. Projects such as the proposed Oxford-Milton Keynes-Cambridge corridor must be developed with this in mind.
Spatial planning in rural areas
399.We also heard evidence on the legacy of the withdrawal of regional spatial plans in England, and their replacement with a legal “Duty to Cooperate” (DTC) on strategic planning matters that cross administrative boundaries. The DTC requires local authorities to work together to ensure that strategic priorities are properly coordinated and to address development requirements which could not be wholly met within a single authority’s boundary.
400.The new NPPF strengthens the DTC by requiring strategic planning authorities to prepare statements of common ground, setting out cross-boundary matters being addressed and progress in cooperating to address these.
401.Hugh Ellis of the TCPA stated that “without communities knowing what strategic priorities are out there, they are constantly undermined. For me, a national spatial plan is essential. Almost every other advanced economy has one. Would it be putting lines on maps? No, it would bring all the data together; it would understand threats, risks and opportunities; it would lay them out clearly so local planning could respond to that agenda”.338
402.Matt Thomson of the CPRE stated that the withdrawal of spatial planning had meant that planning had lost its role of balancing land use priorities. He said that “we have completely forgotten the ‘managing competing demands’ bit, to the extent that the current NPPF just talks about the achievement and delivery of sustainable development. All it is talking about now is development; it is not talking about managing different interests in land. We really need to go back to that”.339
403.Neil Parish, Chair of the House of Commons Environment, Food and Rural Affairs Committee, expressed interest in spatial planning, stating that “at some stage we probably need to sit down and ask, ‘what is our land for? What are our priorities?’ You know very well that in some areas pressure is much greater than in others. Around areas of large conurbation, you are going to see a lot of pressure for development … we need affordable homes; we probably need more homes. It is just about where we need to build them”.340
404.Although not formally committing to a regional spatial plan, the Secretary of State told us that “one thing that we are doing in the Environment Bill is working on the provision in the 25–year Environment Plan to do just that and to think spatially … a critical thing is that the Bill will, we hope, provide mapping and other tools that will be the vehicle by which some of these other concerns can be appropriately met”.341
405.Government should revisit the merits of a spatial plan for England, particularly as it relates to rural areas, to ensure that planning policy operates in a framework where land use priorities are properly considered above the local level. This will help ensure that the right type of development is brought forward in the right places, enabling sustainable and growing rural economies and communities. Government must carefully consider how such a plan may be developed at a local and regional level, focusing on how groups of local authorities may be encouraged or required to work together to develop and implement the plans.
Neighbourhood planning
406.Among the most significant planning reforms for rural areas in recent years has been the advent of neighbourhood planning, by which parishes and other neighbourhood groups can work together to identify priorities for development in their area. If agreed by referendum, neighbourhood plans become part of the statutory plan, and must be adhered to when new development proposals are brought forward.
407.Locality, which supports communities in developing Neighbourhood Plans, stated that almost 600 neighbourhood plan referendums have been held across England and that a majority of neighbourhood plan groups have been established in rural areas.
408.Locality also noted that “for many which set up neighbourhood forums independent of parishes, this represents their first foray into local democracy, and setting up a neighbourhood forum and developing a neighbourhood plan leads to further community-led action. This process can be the catalyst to unlock the power lying latent in communities”.342 Lewes District Council stated that all of its “made” neighbourhood plans in rural areas identify the need to protect and/or encourage provision for the rural economy, including employment opportunities.343
Figure 22: St Ives in Cornwall helped ensure new housing would be protected for full time residents through a provision in its Neighbourhood Plan
.png)
Source: Ruben Felgenhauer, ‘St Ives, Cornwall’: https://commons.wikimedia.org/wiki/File:St_Ives,_Cornwall_(32197869646).jpg [accessed 3 April 2019] (CC BY-SA 2.0)
.jpg){kind=link}
409.It was also noted that neighbourhood planning could facilitate innovative and radical solutions to local challenges, for example the provision in the Neighbourhood Plan in St Ives, Cornwall, to ensure that new homes could only be sold to people who would use the property as their principal dwelling. The Royal Town Planning Institute noted, however, that “smaller rural communities in remote areas, or without the necessary skills base, can lack the capacity to develop an effective Neighbourhood Plan. Continued support and resourcing will be needed to enable all communities to benefit from this opportunity”.344 Matt Thomson of CPRE also stated that there should be more focus on “upskilling and resourcing communities” to deliver neighbourhood plans in areas where regeneration is needed.345
Box 17: Neighbourhood Plans and support for the rural economy: Lewes District
|
Lewis District Council informed us that all six of its ‘made’ Neighbourhood Plans affecting rural parishes identify the need to protect and/or encourage provision for the rural economy. Many of these Neighbourhood Plans have also identified that there are clear constraints in this respect, with lack of high-speed internet, access to parking and limited public transport services currently limiting growth. All of the ‘made’ Plans contain policies seeking to improve—or at least retain—employment opportunities and in so doing, guide development proposals within their respective areas. The Council noted that these Plans demonstrate both the positive influence of local communities and of the way they have identified challenges to rural economies that could be addressed in part by more proactive local planning. |
Source: Written evidence from Lewes District Council (REC0021)
410.Joint evidence from South Hams and West Devon District Councils also expressed concern about the representativeness of Neighbourhood Plans, stating that “the experience in this part of the world is that these groups can become dominated by the affluent, educated retired people who have a vested interest/personal preference in resisting development… the Government could help make NPs more inclusive by improving funding and rewarding an innovative agenda; and requiring (and funding) greater involvement by all local agents/service providers/LPAs”.346
411.It was also noted that neighbourhood planning—and by extension community confidence in the planning system as a whole—could often be undermined where policies were overridden by the Presumption in Favour of Sustainable Development, for example where the principal authority was found not to have an adequate supply of future housing sites. ACRE and Jo Lavis of Rural Housing Solutions argued that ‘made’ neighbourhood plans should have five-year protection against developments that would otherwise be triggered through the presumption.347 Changes to the NPPF made in 2018 provide some protection for Neighbourhood Plans made in the last two years, but these are still subject to minimum requirements in relation to past local authority housing delivery and supply of future housing sites. If these requirements are not met, Neighbourhood Plans may still be overridden by the Presumption in Favour of Sustainable Development.
412.Simon Gallagher of MHCLG expressed sympathy with this view, stating that it was a “big question” as to “how to ensure they continue to have validity where there is a local authority that does not have a plan in place or a five-year land supply … where communities put a lot of investment into producing a neighbourhood plan, which takes time, resource and a lot of social debate in the community, to discover that the plan has very little planning weight is really damaging for that community”.348
413.Professor Gavin Parker told us that:
“ … the emphasis on the number of plans being produced and the overriding emphasis on housing has meant that neighbourhood planning has severely underperformed its potential. If we started from a wider perspective, thinking about the needs and the issue of, in this case, rural areas and rural communities, and worked forward from that, we would have a far better-quality plan”.349
414.Neighbourhood planning is of crucial importance in a place-based approach to rural economies. While it is a valuable tool, however, its take-up has been patchy, often in ways which reflect existing economic inequalities. It also risks being undermined where local authorities do not have adequate housing sites in place and so Neighbourhood Plans may be overridden in favour of the Presumption in Favour of Sustainable Development.
415.Government should proactively encourage uptake of neighbourhood planning, particularly in areas with lower levels of civic engagement. This should be done through support to local authorities, and engagement and training for community leaders and organisations through bodies such as Locality. Those local authorities that have promoted neighbourhood planning across their geographic areas could be treated as exemplars and encouraged to share good practice.
416.While recognising the need for sustainable development and adequate housing land supply, the overriding of neighbourhood plan policies in planning decisions where there is found to be a shortage of local housing sites can undermine faith in the development system. There should be a five-year protection of ‘made’ neighbourhood plans which presumes against their being overridden in all but the most exceptional circumstances.
Rural workspaces
417.Finally, the issue of affordable rural workspaces and their relationship to the planning system was raised in evidence. It was noted that individuals who launched businesses from home often found it hard to find affordable rural office space if they were looking to expand their businesses. It is not clear that the planning system or the market has kept pace with changing working patterns and with increasing demand for flexible and rural affordable working spaces, and this is placing constraints on rural economies.
418.Professor Michael Dower stated that “a crucial need, in many rural areas, is for the provision of workspace in order to enable existing enterprises to grow, to accommodate new locally-grown enterprises, and to attract companies from elsewhere and inward investment”. He added that 30 years ago, new rural workspaces would often be provided by local authorities or the Rural Development Commission. Now, such developments were largely left to the market, but despite the fact that land was allocated for commercial use, “this land is very often left undeveloped, because landowners often prefer to get a higher or easier return from residential development, or the infrastructure costs are too high and the return on investment is uncertain”.350
419.Prof Dower proposed that there should be “unambiguous zoning of land for employment use”, to remove the ‘hope value’ element offered by residential use and that there should be proactive liaison between local authorities and potential commercial site developers.351
420.During our visit to South Yorkshire, it was noted by attendees to our roundtable event that, in poorer areas, property developers were not interested in smaller floorspace developments for SMEs because additional costs are not reflected in the rental value and they are therefore seen as being risky and unviable.
421.Arts Council England called for the creation of “digital enterprise hubs” in rural towns “which business can use or visit for better connectivity, start-up workspace, hot-desk space and digital training”.352 Swindon and Wiltshire LEP informed us that Wiltshire Council had sought to increase affordable workspace through an initiative named The Enterprise Network, which “provides a network of rural and urban based Enterprise Centres, providing start-up and grow-on space for micro and small businesses as well as light industrial units”.353
422.Class Q Permitted Development Rights, which enable the conversion of barns to residential use without the need for planning permission, are another example where planning legislation has been skewed in favour of development without regard for other economic consequences. We agree with Professor Gavin Parker who stated that as a result of these rights “there is a potential net loss of possible future employment sites, which is key within the rural economy”. Not only may the rural economy suffer, but these rights can lead to inappropriate development in rural areas. 354
423.The Government should take proactive steps to support the delivery and maintenance of affordable rural working spaces. In particular, it must review incentives and planning rules in relation to smaller floorspace developments and promote good practice initiatives such as flexible workspaces at rural enterprise hubs. It should also undertake an urgent review of the impact of Class Q Permitted Development Rights on the availability of rural employment space. In addition, Local Enterprise Partnerships should be tasked with ensuring economic development is not constrained by the lack of available work places and should work closely with planning authorities to facilitate this.
270 Department for Environment, Food and Rural Affairs, Statistical Digest of Rural England: February 2019 Edition: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/782147/02_Statistical_Digest_of_Rural_England_2019_February_edition.pdf [accessed 5 March 2019]
271 Department for Environment, Food and Rural Affairs,Rural Economic Bulletin for England, December 2018:https://www.gov.uk/government/publications/quarterly-rural-economic-bulletin/rural-economic-bulletin-for-england-december-2018 [accessed 5 March 2019]
272 Rural Economic Bulletin for England, December 2018 [accessed 5 March 2019]
274 Ibid.
277 Ibid.
280 Ibid.
281 Ministry of Housing, Communities and Local Government, National Planning Policy Framework, CP 48, February 2019: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/740441/National_Planning_Policy_Framework_web_accessible_version.pdf [accessed 15 April 2019]
285 Ibid.
290 Written evidence from East Riding of Yorkshire Council (REC0034). This point was supported by the Hampshire Alliance for Rural Affordable Housing (REC0120) and the Rural Housing Alliance (REC0053).
296 Ibid.
304 Ibid.
305 Community Land Trusts (CLTs) are “a means by which local communities can take ownership of land and other assets for the social, economic and environmental wellbeing of their local area”. (written evidence from the National CLT Network (REC0208). They have mostly been used in rural areas to develop and manage affordable housing.
311 For example written evidence from Campaign to Protect Rural England (REC0140) and Chartered Institute of Housing (REC0154).
312 Written evidence from Rural Services Network (REC0031). The same point was made by Martin Collett, Q 138 (Rural Housing Alliance).
319 Ministry of Housing, Communities and Local Government, ‘Building Better, Building Beautiful Commission: draft terms of reference’ (3 November 2018): https://www.gov.uk/government/publications/building-better-building-beautiful-commission-draft-terms-of-reference [accessed 20 March 2019]
320 Ministry of Housing, Communities and Local Government, National Planning Policy Framework, CP 48, February 2019: https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/779764/NPPF_Feb_2019_web.pdf [accessed 26 March 2019]
321 The Rt Hon Philip Hammond MP, Spring Statement 2019: Philip Hammond’s speech, 13 March 2019: https://www.gov.uk/government/speeches/spring-statement-2019-philip-hammonds-speech [accessed 26 March 2019]
323 Ibid.
325 CLA, Sustainable Villages: Making Rural Communities Fit for the Future (November 2018): https://www.cla.org.uk/sites/default/files/FINAL_CLA%20StrongFoundations%20Sustainable%20Villages%20lo%20res.pdf [accessed 14 March 2019]
330 Areas of Outstanding Natural Beauty
332 TCPA, Planning 2020: Raynsford Review of Planning in England (November 2018): https://www.tcpa.org.uk/Handlers/Download.ashx?IDMF=30864427-d8dc-4b0b-88ed-c6e0f08c0edd [accessed 5 March 2019]
333 Ibid.
335 Ibid.
339 Ibid.
347 Written evidence from Rural Community Council of Essex (REC0117) and Rural Housing Solutions (REC0080)
351 Ibid.