Planning matters

The preparation of local plans in England has become a ‘little’ more complicated in recent weeks (if it ever needed more complexity?). A new planning system is on the horizon, following the publication of the planning White Paper ‘Planning for the Future’. Shorter term changes are also proposed to the Standard Method for calculating local housing need, which has received much publicity recently[1] and Lichfields has already crunched the numbers and considered the different figures at a local level. While some of the output figures are on the high side (i.e. Westminster), other figures are surprisingly low (i.e. Liverpool). For plan-making though, the combination of proposed introduction of a new Standard Method and a wholly new planning system really has thrown the cat amongst the pigeons. Each LPA will need to take stock and work out its next move. Will it be decided to have a ‘White Paper’ Local Plan, to try and rush through a NPPF (2019) Plan or even try to game the system? This blog maps out the ‘plan-making’ road ahead: considering both the transition to a new planning system in the long term and a new standard method in the short term. Inevitably, this is a complex topic and just the transition itself will be complicated. We look to cut through the complexity here and to consider how LPAs might react in response to their different circumstances. There is some background to the different transitional arrangements, but if you already have some knowledge then you might want to skip ahead:         Contents                01 The transition roadmap: from the NPPF (2019) to a new planning system     02 The scenarios - how LPAs may react where:       They have a Plan adopted since c. September 2018       They have not adopted a Plan since that date and the local housing need is set to increase under Standard Method 2       They have not adopted a plan since that date and the local housing need is set to decrease under Standard Method 2       They do not have a Plan adopted after that date and decide to wait it out…             The Road Ahead: White Paper Plans and the Standard Method 2 A new ‘White Paper’ planning system We know that a new planning system is coming, underpinned by new legislation. We have looked at the proposals in-depth here. For this blog, the key thing to know is that the Government wants to give each LPA a binding housing requirement to plan for. This will take into account both housing need in an area (i.e. what the Standard Method currently provides) and relative constraints (or lack of) – i.e. a ‘policy on’ requirement[2]. Crucially, there is also an expectation that at least some ‘White Paper’ Local Plans will be adopted before the end of this Parliament and the next election in May 2024[3]. There are proposed transitional arrangements in terms of moving from the current system to the new ‘White Paper’ planning system[4]. Under the proposals, each LPA would have a statutory duty to prepare a new ‘White Paper’ Plan: 30 months from new legislation coming into force for any LPA without a local plan adopted in the previous three years; 42 months from new legislation coming into force for any LPA with a local plan adopted in the previous three years; or 42 months from adoption of a current local plan that was submitted for examination prior to the new legislation becoming in force. Working backwards, the new planning legislation will need to be in force by the end of September 2021 at the very latest, to enable a ‘White Paper’ Local Plan to be adopted before the end of Parliament. This takes account of a 30-month statutory deadline for LPAs without a Local Plan adopted in the previous three years and pre-election Purdah (following the dissolution of Parliament on 28th March 2024). Standard Method 2 The proposed changes to the standard method are independent of the White Paper proposals and are described as ‘short term’. Looking back at previous changes to the NPPF (2018), a consultation commenced at the end of October 2018 and changes were published in mid-February 2019 – c. 4 months. On this basis, we could be looking at ‘Standard Method 2’ being in place before Christmas. However, to simplify our road map, we have assumed that the PPG is updated with the new ‘Standard Method 2’ on 1st January 2021 (a new year’s treat). Transitional arrangements are proposed in the plan-making context (key to note that similar arrangements are proposed for five-year housing supply) to move us from the current ‘Standard method 1’ to the ‘Standard Method 2’. These are: If an LPA has already undertaken a Reg.19 consultation, it has six months from the adoption of ‘Standard Method 2’ to submit its new plan for examination – by our timescales this would be the end of June 2021. If an LPA hasn’t undertaken a Reg.19 consultation by the adoption of Standard Method 2, the LPA has three months to do so (i.e. by the end of March 2021) and then has a further six months to submit the plan for examination – i.e. the end of September 2021.   The ‘plan-making’ road map: the transition from the NPPF (2019) to a new planning system The roadmap identifies a rough timetable for the adoption of ‘Standard Method 2’ and the new White Paper planning system. Obviously, this is based on a number of assumptions, including that the proposed transitional arrangements are implemented as proposed. View as pdf How might LPAs react The circumstances for each LPA will be unique with politics likely to play a large role. However, there are some clear groupings in terms of potential outcomes. Group 1: Those with a plan adopted within three years of legislation coming in to force Taking a White Paper legislation ‘in force’ date of September 2021, for LPAs who have adopted a Plan since September 2018 (or will likely go on to adopt a plan from now up until that date) we can assume that its next Local Plan will be in accordance with the new White Paper legislation. Some with Plans on the boundary of September 2018 may be a little nervous as they could just fall through the cracks.  In any case, these authorities will then have 42 months to adopt said ‘White Paper Plan’: c. March/April 2025. Currently, there are only 59 LPAs that fall into this category. A list of these is included at the end of the blog. Group 2: Those LPAs without a plan adopted within three years of legislation coming into force The vast majority of LPAs currently fall into this group. The LPAs with Local Plans not already at Examination will be under a pressure to progress with plan-making under the current system and may well already be deep into plan-preparation. These LPAs have an incentive to adopt an NPPF (2019) compliant plan ahead of the new legislation. The incentive being an additional 12 months to prepare and adopt a future ‘White Paper’ Local Plan following the ‘in force’ date. How each LPA will react in plan-making terms will most likely hinge on its proposed ‘Standard Method 2’ figure:   LPAs with a Standard Method 2 figure above the current standard method Similar to previous transitional arrangements from the 2012 to the then 2018 NPPF, the new standard method might be the nudge to get on with plan-making for LPAs in this situation. You may recall a flurry of LPAs submitting local plans just before the transitional deadline to the 2018 NPPF. Missing this deadline would have meant that these LPAs Plans would have to be assessed against the then new Standard Method 1 (subject to constraints) instead of their own assessed housing needs. These LPAs may, therefore, attempt to ramp up plan-making to adhere to transitional arrangements in order to submit a ‘Standard Method 1’ plan; thereby banking a lower housing requirement in the short term and buying more time to make a ‘White Paper’ Local Plan in the longer term. Many LPAs will already have spent many years investing in a new Local Plan with residents and businesses inputting throughout – so it only seems fair that they may take this route. Therefore, expect a flurry of Reg.19 consultations either side of the new year, with Plan Submissions to the Secretary of State following in the summer. It may take a year or so from Submission of a Local Plan to its adoption: c. Summer 2022. From that point on, each of these LPA would have a further 42 months to prepare a ‘White Paper’ Local Plan – likely to be some time towards the back end of 2025 or 2026. This would give plenty of time to work out how to tackle whatever requirement figure the Government will mandate and gives time for the new system to bed in. Of course, it is also worth noting that missing the ‘Standard Method 2’ transitional arrangements for these LPAs could have major plan-making implications. There is unlikely to be time to account and plan for a higher Standard Method 2 target, so many of these LPAs may have to wait for the White Paper system to come in to force and prepare a new Plan within the 30-month deadline.   LPAs with a lower Standard Method 2 figure As a starting point, there will be many – most likely northern – LPAs with, what would appear to be rather low Standard Method 2 figures, when judged against said LPAs ambitions for housing and the ‘Standard Method 1’ outputs. These LPAs may simply ignore the ‘Standard Method 2’ figure even if they miss transitional deadlines and plan for a higher target; akin to the ‘Standard Method 1’ or even go further above that to meet housing/economic ambitions. A cynic, though, could see a situation arise where an LPA is struggling to meet the Standard Method 1 figure, or is doing so begrudgingly (against local opposition) and, in such cases, these authorities may deliberately wait for the ‘Standard Method 2’ transitional arrangements to pass. That LPA could then subsequently submit a Local Plan for examination – using the ‘Standard Method 2’ as its basis of local housing need – just prior to the White Paper legislation ‘in force’ date. With examination of the Submitted Plan, plus a 42-month timescale to prepare a ‘White Paper’ Local Plan, these LPAs would buy themselves some breathing time to prepare for whatever the Government mandated requirement is further down the line. For these LPAs, they might adopt ‘White Paper’ Plans at the back end of 2025 or early 2026.   And for those LPAs willing to wait it out? The above has assumed that LPAs will mainly want to have an NPPF (2019) Plan adopted ahead of the new White Paper legislation. This is chiefly to buy themselves time in the transitional measures to adopt a new ‘White Paper’ Local Plan: i.e. having 42-months (the carrot) instead of 30-months (the stick). But what about those who, by design or circumstance, become the early adopters of the new planning system? For LPAs who are already struggling to plan for the ‘Standard Method 1’ figure, or where they are highly constrained, or where the Standard Method 2’ is also higher - waiting could, arguably, be in their favour. This would depend on the politics of the area, but it’s not hard to imagine an authority with Green Belt/AONB and vocal residents, where holding off plan-making under the current system would be a significantly less controversial option. Given that the White Paper proposes that LPAs will have a housing requirement dictated to them which specifically accounts for constraints, these LPA may decide to hold fire and chance a lower figure later down the line for its ‘White Paper’ Local Plan. There will also be some LPAs who are in early plan-preparation stage, with less time and money invested, who might just wait. Why spend lots of local authority money on a Plan now, when there will be a statutory duty to prepare one within 30-months - potentially starting from Summer next year? However, waiting for the new White Paper legislation also brings with it considerable risks and unknowns. A constrained LPAs housing number could well go up, as well as down. There could be delay in the legislation coming forward with legal challenges – leaving LPAs without an up-to-date local plan. This is also a new system after all, that is highly likely to have teething problems. Finally, there is also the December 2023 deadline for all LPAs to have an ‘up-to-date’ local plan to consider. There was nothing in the White Paper regarding this deadline, nor any recent comments regarding it by Ministers. Assuming it is still in place, waiting to prepare a ‘White Paper’ Plan would mean missing this deadline. We don’t know what measures the Secretary of State would take in these circumstances. Summary There are many unknowns and permutations in our roadmap set out above. The introduction of the ‘Standard Method 2’ arguably makes the transition to a new planning system more complicated but may also result in some LPAs working quicker to bring about emerging plans. For those LPAs who end up waiting for the White Paper legislation to make their next Local Plan, there are significant risks and unknowns and so the question is whether local politicians will be willing to take the risk of the unknowns? The only thing that is clear is that the transition from the current to the new plan-making system will complex. We will need to wait and see what comes out of the consultation process but in the run up to Christmas and over the next few years in general local plan life will be complicated. We will all need to be monitoring local circumstances carefully and consider how these interact with changes to national policy. Of course, who could be better placed than Lichfields to help in this regard. Follow our blog for upcoming updates on what the various consultations means for local regions across the country. Also, contact one of our local offices if you have a more detailed query. LPAs with a plan/review/DPD adopted since September 2018. LPAs that have adopted joint plans are individually listed below. [1] Housebuilding algorithm will lead to more developments in Tory areas, Johnson warned  https://www.bbc.co.uk/sounds/play/live:bbc_radio_fourfm[2] Lichfields: Grow, Renew, Protect: The White Paper - ‘Top Down’ Housing Requirements[3] Paragraph 6.3 of the White Paper[4] As detailed at Paragraphs 2.50 & 2.51 of the White Paper.

The current Standard Method for calculating housing need was introduced in 2018 and was intended to significantly simplify the process of establishing local housing requirements and improve the efficiency of the plan-making process. It was a step in the right direction but fell significantly short of the mark on a number of key points including reliance on authorities choosing to set a far higher requirement than their minimum figure to achieve the national 300,000 dwellings per annum (dpa) target and driving need into London and the South East whilst doing the opposite in the North – a point which is certainly at odds with the Government’s agenda to ‘level up’ the economic and social disparities between many northern and southern authorities. On the 6th August, the Government announced proposals in its Changes to the Current Planning System document which seek to remedy the shortfalls of the current Standard Method; setting a much higher bar for many Local Authorities and resulting in an uplift to the national housing requirement of 35% against the current Standard Method - from 250,550 to 337,307dpa. The recent blog published by my colleague Bethan Haynes explores the national implications of the Standard Method however, for the purposes of this blog, we consider what the new Standard Method means for the North East. An Improvement on the Current Standard Method Taken at face-value, the revised Standard Method has a positive outcome for the region – seeking to address some of the previous concerns raised about the impact of assumptions within the calculation on the North. Almost all authorities across the North East see an uplift against the current method (aside from Stockton-on-Tees, County Durham and Newcastle upon Tyne which see a 6%, 10% and 25% reduction respectively) resulting in an overall increase of 1,026dpa (from 6,262dpa to 7,288dpa) from the current Standard Method in the region - an uplift of around 16%. In theory this is a positive step and may see additional opportunities for land promotion in authorities where there is an uplift against the current Standard Method as Local Plans progress and/or are reviewed. Contribution to the National Target Delve a little deeper into the figures however and it becomes apparent that some of the issues with the previous Standard Method remain. First and foremost is proportionality of distribution; whilst the North East sees a 16% increase from the current to revised method this still falls well below the 35% national average uplift that the revised calculation brings and is in fact the third lowest proportional increase nationally (with only Yorkshire and the Humber at 9% and the East at 15% holding smaller proportions of the uplift).This shift also results in a reduction in the contribution that the region makes to the national total from the already inadequate 2.5% under the current method down to only around 2.2% - significantly below the region’s existing national household contribution of around 5%[1]. This is particularly concerning when measured against some southern regions such as London which will see a staggering 67% increase from the current method and which would constitute over 25% of the national total housing requirement alone under the revised method. Restraining the Market The revised method also still provides significantly fewer homes than recent delivery in the region – a clear spatial disparity for northern authorities compared with central and southern regions where the Method sets a need figure that is often far in excess of that which the market has been able to achieve. For the North East, the shortfall between the proposed new method and recent delivery is around 2,800 dwellings per annum – over 25% of the average supply delivered across the region in the last 3 years. Whilst it must be acknowledged that this is an improvement against the current standard method position (which sees a shortfall of around 3,800dpa) it still falls far short of the numbers currently being delivered in the region and would effectively restrain the North East housing development industry. At a Local Authority level only two of the 12 authorities see an uplift against average recent delivery (Gateshead and South Tyneside) with some others falling well below the mark – most notably, Newcastle upon Tyne would see a 66% reduction against recent delivery. Why does the Standard Method have these Impacts? The new Standard Method is more complex than the original, moving away from the Government’s intention to make the process simple, transparent and understandable for non-experts. Whilst we are still analysing its mechanisms, it is clear that   Step 1 of the proposed Method still results in a low starting point upon which Step 2 is applied. It has been widely acknowledged (including by the Government) that an over-reliance on population projections provides an inadequate basis for calculating housing need due to the way in which they continue patterns of historic undersupply in the region. Whilst the new Standard Method includes an alternative increase based on the size of the existing stock (if that is higher than the population projection), for most North Eastern authorities this isn’t enough (a 0.5% increase is used despite the Government acknowledging that annual growth is typically 1%) to overcome the constraints imposed by the baseline starting point for the Standard Method. The Government’s intention to use the Standard Method to address affordability problems means that, when considered nationally, the North East’s affordability problems appear relatively less significant. This means that the part of the equation that boosts supply based on unaffordability is heavily skewed towards the acute problems with this issue in some southern authorities. It therefore doesn’t lift the North Eastern authority’s figures high enough to recover from the baseline starting position earlier in the equation. In fact, housing need is based on a wide variety of factors, often with complex interactions. For example, the Government’s own consultation document refers to regeneration and stock mismatch due to insufficient homes of the right size, type and tenure at paragraph 19. However, the Standard Method largely disregards these factors and focuses solely on affordability, meaning North Eastern authorities’ ability to transform their areas, meet local housing needs and drive economic growth is constrained. Whilst each authority can choose to enhance its Standard Method figure, previous research by Lichfields has confirmed that in reality this does not occur sufficiently.       Conclusions There is therefore huge cause for concern; whilst the overall increase in housing need figures will bring opportunities in some areas, the revised Standard Method would actually lead to harmful impacts for the North East. The disparity with previous delivery and the reduction in proportional distribution (particularly at a national level) are key areas of concern and risk restricting growth across the region to a level well below that which the market has delivered in recent years. Far from ‘levelling up’ the country, the new Standard Method could actually exacerbate the problem. Opportunities however still exist - unless a dramatic increase can be achieved and sustained from the recent peak in delivery of c.40,000dpa the housing requirement set for London is likely to underdeliver by at least 50,000 units per annum . This alone would mean 300,000dpa nationally is not achievable without other regions delivering significantly more homes than the current and revised methods make provision for. The North East may hold part of the solution to this – if the revised standard method could ensure a more proportional distribution of the housing requirement across the country and seek to set much more ambitious minimum figures in authorities which have demonstrated they can deliver well in excess of the current and proposed methods (as many in the North East have) this would offer multiple benefits by reducing the over-reliance on London to achieve the 300,000dpa target and driving more clearly towards the Government’s ambition to ‘level up’ the country with all of the associated economic and social benefits that would bring for the North. Changes to the Standard Method to achieve this could involve tweaks and adjustments to the Government’s equation (a greater increase based on the existing housing stock or an adjustment to the affordability multiplier for example). However, the solution may lie in recognising that it simply isn’t possible to standardise such a complicated matter, which becomes many times more complex when the huge variations in conditions across the country are taken into account. A more nuanced and subtle approach is required linked to the specific circumstances of each authority. That could mean returning to the pre-Standard Method approach and introducing a lesser degree of standardisation but still allowing for the crucial adjustments needed to reflect local circumstances such as historic growth, economic growth and spatial strategies. Whilst that won’t be a (relatively) simple equation, it should produce far more appropriate outcomes for more authorities and prevent the extreme positive and negative results generated by the Standard Method. We are currently undertaking more research for various organisations to understand why the equation produces such negative results for the North East and how this can be rectified. The Government’s consultation on the proposed revised Standard Method closes at 11:45pm on 1 October 2020. Please get in touch if you are interested in making representations. For implications of what the New Standard Method means for other regions, see below perspectives: London   |   North West   |   Thames Valley   |   South West   |   West Midlands   |  Yorkshire and The Humber [1] ONS 2018-based household projections for local authorities and higher administrative areas within England, Table 406