ResPublica Response to changes to the National Planning Policy Framework

20^th March 2018

The Government’s housing announcements on the 5th March were the first substantial change to the planning system since the Coalition reforms six years ago. The changes aim to respond to many criticisms of planning policy that have been made over the past few years. Much has changed in housing over that time, with devolution deals and more council-led building. So how do the Government’s proposals measure up? Researchers Tom Follett and Sara Gariban have looked into six key changes:

1. Unlocking small sites
2. Increasing urban density and better use of land
3. Neighbourhood design
4. Consulting local people on new developments
5. Coordinating planning across council borders
6. Developers payments for infrastructure and affordable housing

Key points:

1) Unlocking small sites

Currently, the three largest building companies – Barratt, Persimmon and Taylor Wimpey deliver more than a third of national supply. The lack of small and medium-sized enterprises (SMEs) in the market leads to distortions, uncompetitive behaviour, and lower capacity. Small building firms’ role in the housing market has been declining since the 1980s. There is evidence to suggest that more use of SME builders could increase capacity and supply, which we explored in our research Going to Scale (2016), and The National Housing Fund: Building the Homes we Need (2017).

The NPPF takes forward proposals from the housing white paper, which aims to encourage greater use of small sites. These proposals seek to diversify opportunities for builders to increase the number of schemes that can be built-out quickly. The draft text recommends that local planning authorities should ensure that at least 20% of sites allocated for housing are half a hectare or less (paragraph 69).

The acknowledgement of the importance of small sites and small building firms is positive. But the size of the allocated sites is only half of the answer to stimulating house building among SMEs. Proposals do not go far enough in countering the risks and vagaries of the housing market for SME builders. Opening smaller pockets of land will not insulate SME firms against these risks.

The proposals, along with additional funding to the Home Building Fund mentioned in the Prime Minister’s speech (£1.5 billion), will offer loans for development and infrastructure to all builders, including smaller firms. However, we believe that more will be required to boost SME builders.

Our National Housing Fund (NHF) proposal envisages that government and Housing Associations would work together to provide a guaranteed buyer for completed developments, which would counter the cyclical risks of the housing market. By structuring such a fund around SME builders, who have greater incentives to build and sell more quickly, we could boost supply by a minimum of additional 40,000 homes a year delivered.

Our proposal would do this by providing pre-purchase agreements, which remove sales risks and ensure that developers can build at a quicker pace. This would allow SMEs to enter the market because of certainty of income, and enable them to secure funding on more favourable terms.The result would be small sites that are actually developed by small builders, rather than large builders using their monopoly power to consolidate small sites.

2) Density, land use, and parking

A significant new section is included on density and use of land (paragraph 123). This includes a call for “minimum density standards for town and city centres”, and around transport hubs. It says that plans should contain policies to “optimise the use of land” in their area and “meet as much of the identified need for housing as possible”.

This could potentially be a radical addition, if taken seriously. Land use affects many aspects of cities. A key consideration in land use is land dedicated to parking. Where land is used for parking, it not only prevents more productive use but generates car journeys into the town centre to fill up the available spaces. This creates the negative externalities associated with car travel – air pollution, congestion, and urban design that prevents walking and cycling.

The NPPF leaves the mechanism through which the use of land is optimised, to councils.

Firstly, without being overly prescriptive, we would like to see specific inclusion of the need to comprehensively assess parking land in plans. This would be as we proposed in our report into air pollution, Air Necessities, where councils produce assessments of the potential value of parking land if used for other purposes. This could mean developing parking land for housing or preventing new car parks.

However, the draft text separately says that “Maximum parking standards… should only be set where… they are necessary for managing the local road network” (paragraphs 106 and 107). This would prevent councils being able to create sustainable urban environments. The fact that there is capacity on local roads does not mean demand for car trips should be encouraged until the roads are full. Maximum parking standards can ensure land is used for socially valuable purposes and developers do not preemptively provide unnecessary spaces.

Therefore, we would like to see this paragraph changed to instead require maximum parking standards in all developments near transport hubs, city centres and subregional centres, as a key tool in developing sustainable communities.

3) Neighbourhood design

Living in an attractive environment has been found to improve economic and social prosperity. Evidence suggests that an areas attractiveness is a crucial factor for high skilled workers who are considering moving to an area, while a close proximity to nature tends increase house prices. We developed these ideas in detail in our 2015 research Right to Beauty.

The new NPPF says that planning policies and decisions should be designed and made with local communities, to create high quality buildings and places with a clear vision, expectation, and local knowledge (paragraph 124). Overall, the new guidance is line with the previous (2012) version, with no substantial changes to the overarching messaging around the general principle of well planned, aesthetically pleasing spaces, which are created with local community consultation.

This is a missed opportunity, because the effect to date has been to submerge design, visual appeal, attractiveness and beauty beneath harder-edged considerations, such as functionality, viability and sustainability. While the current proposals gives a nod to the concept of beauty in its description of ‘high quality buildings and places’, we would like to see a fuller democratisation of beauty, and its placing on an equal footing with the ‘harder’ concepts. This would take the form of making beauty a material consideration for inspectors.

Practically, the securing of community agreement should include reference to recommended models for doing so, including citizens planning juries (based on the model in Australia). These juries would be a stratified sample of the local population, and would come together where there were particular disagreements, or where they could pull together a neighbourhood plan.

4) Consulting local people on new developments

Consultations on both public and private estates have often failed to provide the local community with a significant voice. During the re-development of one private estate in Leeds, residents, who privately rent properties on the estate, were invited to a consultation but found that it was a presentation about plans that were already underway. Last month, Sadiq Khan set out a best practice guide for estate regeneration in London. Where demolition is planned, the guidelines outline that there should be an increase in affordable homes and no loss of social housing, full rights to remain or return for tenants, and a fair deal for leaseholders and freeholders. This is a welcome step, but these guidelines do not extend outside of London, or address issues with demolition of privately owned estates. In order to give both social and private tenants the voice and input they deserve, we need a national policy on community consultation.

At present, NPPF retains messages around well-designed places in establishing a ‘strong sense of place’, adding to the overall attractiveness of an area, and creating safe and accessible environments (paragraph 58). The document builds on the idea of community consultation by arguing that ‘design policies should be developed with local communities so they reflect local aspirations, and are grounded in an understanding and evaluation of each area’s defining characteristics’ (paragraph 124).  

Likewise, the 2018 NPPF develops the idea that applicants will be expected to work closely with those directly affected by the their proposals to evolve designs that take account of the views of the community (paragraph 127). While the overarching message in the 2018 document is similar to 2012, the updated framework stresses the importance of consulting local communities about the design of emerging schemes to clarify expectations and reconcile local and commercial interests. The wording has also been developed to say that applicants who demonstrate ‘early, proactive and effective engagement’ should be looked upon more favourably, while in 2012 the idea was that applicants ‘who take into account the views of the community’ should be looked upon more favourably (paragraph 127).

While there have been some developments to the NPPF, our report ‘Great Estates’, which looks at examples of best practice in estate regeneration, goes significantly further in its recommendations around community consultation. For instance, the report puts forward a typology of estates and gives concrete examples of how community consultations can be effectively delivered to suit the needs and character of the local area. The report also recommends that there should be a residents charter with four principles: transparency, opportunity for participation, representation to have the final say on regeneration plan, and resident advantage through changes like improved conditions.

While the NPPF has a broader remit than solely estate regeneration, we believe that our recommendations could provide more practical ways to involve communities in the planning process. At present, the Government’s national strategy on estate planning (2016) outlines the following core principles: community engaged as partners, support and leadership of the local authority, and willingness to work with the private sector to access commercial skills and lever in investment. However, we believe that the NPPF should adopt and develop the core principles that we outline in our report, as these detailed recommendations would give communities significant agency and investment in developing and maintaining their local communities.

5) Coordinating planning across boundaries

Different levels of local government must coordinate between them to deliver homes. There are significant issues around different levels of council working together to deliver the homes and infrastructure needed. In terms of providing homes for at least 95% of new households, 60% of single-tier county areas were able to meet demand last year, with average population growth of 5,100. However, just 30% of district councils in two-tier areas were able to meet the same target, despite having average growth of just 1,750. With the upper-tier County council responsible for infrastructure and the lower-tier District council for planning and site allocation, the result is often sites allocated without any provision for infrastructure.

The NPPF seeks to enable inter-council coordination through publishing joint ‘statements of common ground’ (paragraph 29).  Statements of common ground are written agreements that “document the cross boundary matters being addressed and progress in cooperating to address these” (para 29). The Statements are used at inquiries to focus on the areas of disagreement over planning matters.  

We believe that as a means to align the infrastructure, housing, and plans of the different upper- and lower-tier councils, the proposed SoCG approach is woefully inadequate. Although the aims of the NPPF refer to the need for sustainable development and a focus on transport hubs, without a stronger strategic-level planning function, in most local authorities transport and spatial planning have little dependent connection. This is bad for housing delivery and bad for sustainable communities.

This role was previously provided by the ‘Structure Plans’, which were written by the County councils and abolished in 2010. With strategic planning now being undertaken in the city-regions by Joint Spatial Plans, it is vital that the County areas are similarly able to benefit. A statutory role for the county council as a joint signatory to a county-wide or Combined Authority Joint Spatial Plan would be the best way to achieve this. This would be an equivalent to the JSPs agreed as part of city-region devolution deals.

6) Developer contributions to infrastructure

Alongside planning guidance, the Government has published reforms to the contributions developers make to infrastructure and affordable housing.

Under the current system, there is a fundamental lack of incentive for the collecting council to ensure it is receiving the revenue needed to deliver infrastructure investment through the Section 106 process. Infrastructure is the responsibility of the top-tier (county) council, but it is the lower-tier (district) councils whose responsibility it is to collect contributions from developers for infrastructure projects.

Every uncollected contribution means the top-tier authority has less available to spend on the vital infrastructure links needed to unlock sites. With no impact on district budgets either way, there are too many instances of planning committees approving developments with inadequate contributions. Lower-tier councils often lack the capacity and skills to manage the financial risk.

To tackle this, our preference is for contribution-collecting, plan-making and decision-making to be joined up via unitary local government at the county scale. We have looked in detail at this in our research “Devo 2.0: The case for counties”. Prior to this, at a minimum county councils should be co-signatories to strategic spatial plans at the county scale.

In the reforms announced, it is envisaged that CIL becomes the main mechanism through which site infrastructure is provided. Infrastructure needed to deliver Local Plans is to be provided through Infrastructure Funding Statements. These will ”explain how the spending of any forecasted income from both CIL and section 106 planning obligations over the next five years will be prioritised and to monitor funds received and their use”.

The concern is that while these Statements will be published, they will be little more than statements of intent, and will not resolve the issues in two-tier areas. If lower-tier authorities decide to prioritise the list priorities, the infrastructure-providing county council will have no input. The current issues around inadequate collection of funds for infrastructure funding will therefore be recreated.

A better approach, which we would like to see in the NPPF, would be to agree the CIL rates at the same time as required CIL yield, led by infrastructure need. This would have to be done jointly by the infrastructure-providing authority (upper-tier) and charging authority (lower-tier)  

Conclusion

The planned changes focus on the correct problems, but the solutions proposed do not, in the main, deal with the structural issues between actors in the planning system that have led to current failings. Backwards-looking reporting measures are unlikely to drive the joined-up planning that is necessary to coordinate the different elements needed, between allocation, contributions, infrastructure, site design, and rapid build-out. A more functional means of coordinating planning at different levels is needed, and we believe this should be in the form of a Joint Spatial Plan to be agreed between county and district areas, and the Combined Authority, where one exists. On the other hand, reform of plan-making bodies through local government unitarisation could create incentives to join up these elements anyway.