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Reforms to Five-Year Housing Land Supply: A Recipe for Fewer Homes?
Earlier this year, Government signalled its intention to remove the requirement to maintain a ‘Five Year Land Supply’ (‘5YHLS’) where an LPAs plan is up-to-date. My previous blog looked at the implications of this change (see here). Now the Government want to go further as detailed in a Ministerial Statement. Focusing on 5YHLS, the four changes proposed are:  The obligation to maintain a rolling 5YHLS will end for LPAs with up-to-date plans (i.e. implementing the previous proposal); There is to be a consultation on removing the 20% buffer applied to the five-year requirement;  There will be transitional arrangements for certain LPAs whereby they only need to demonstrate a four-year supply instead of a five-year supply; and  The protections afforded to Neighbourhood Plans (Para 14a of the National Planning Policy Framework (NPPFF)) will be extended from two to five years. The wording of the Ministerial Statement is not precise, instead it sets out a direction of future travel despite it being a material consideration now. We will therefore need to wait until a revised NPPF is published for consultation and, in the meantime, observe how it is considered by Inspectors/LPAs. Notwithstanding, the overall direction of travel could clearly result in fundamental changes to how 5YHLS works in combination with how plan-making is conducted. The Government has given into internal political pressure, putting us on a policy path that may result in fewer homes being planned for and thus built. Trying to read between the lines, I have a number of questions for Government – that must be clarified – and wider observations:   The four-year supply: part of a get out of jail free card for tough decisions? The four-year supply transitional arrangement (i.e. reducing the requirement from five to four years) is one part of some much wider plan-making changes. This is how the proposal appears to fit in:  LPAs will likely have greater scope to take account of certain factors to reduce their housing requirement. The factors identified in the Statement are broad and unprecise, but include Green Belt, National Parks, the ‘character of an area’ (hugely subjective but is set to include rurality and density) and heritage assets (seemingly ubiquitous in many areas). LPAs with such constraints that are “advanced” in plan making (Regulation 19 stage? Submitted? At examination?) will be able to revise their advanced plans, plans which presumably began to tackle some of the key housing issues, such as Green Belt release. Through this process they could redefine the amount of land their plans release, potentially releasing less land commensurate to a lower housing requirement. This has much broader implications for the delivery of housing in constrained areas with poor affordability.  LPAs undertaking this process would have a period of two-years to revise their plans, during which time they will only need to demonstrate four years’ worth of supply, not five. This means that areas with the most pressure to deliver homes combined with highest levels of constraints will have greater scope to reduce the number of homes they need to plan for . They will also not be required to maintain higher levels of house building; foreshadowing (prejudging?) a reduced future local housing requirement. Focusing on the 5YHLS issues, who determines which LPAs benefit from these transitional arrangements due to local circumstances and an advanced plan? Is it the LPAs themselves? If so, on what basis is it considered reasonable that the given LPA can revaluate its future local plan to engage the transitional arrangements? There are many unanswered questions with this proposal and how the policy is written will be key.   Will LPAs with an up-to-date plan still need to calculate what their developable land supply is? It is stated that the Government will end the obligation to “maintain” a rolling 5YHLS where the plans are up-to-date. The word “maintain” is interesting (which while consistent with the previous policy paper is something I didn’t previously consider). It does not say that the requirement to ‘monitor’ or ‘update annually’ a 5YHLS will be dropped; simply that it will not need to be maintained. Of course, the question of 5YHLS it is not only whether it exists but also the shortfall of supply is also material.   Are there any exceptions to a plan being up-to-date and the tilted balance being engaged via a lack of 5YHLS? The Ministerial Statement says: “Therefore for authorities with a local plan, or where authorities are benefitting from transitional arrangements, … the ‘tilted balance’ will typically not apply in relation to issues affecting land supply.” “Typically” acknowledges that there may be atypical situations where the ‘tilted balance’ could be engaged via a lack of 5YHLS even where a plan is up-to-date. For example, where the Council both fails the HDT by more than 75% and doesn’t have a 5YHLS? Albeit, later in the statement its noted: “Places with existing plans will benefit from the changes above, as they will be free of five-year land supply obligations provided that the plan is up to date.” The words “free of” here does not suggest exceptions as the word “typical” does earlier in the statement, but this could simply be the result of a rapidly emerging policy, the details of which are not yet clear.   Removing the 20% buffer reduces the harms of failing to deliver homes At present, the 20% buffer is engaged where an LPA has recorded an HDT measurement below 85%; requiring said LPA to deliver more homes in the future to make up for its previous shortfalls. The proposal is for this 20% buffer to be removed (pending the outcome of a consultation). If the 20% buffer is removed, it will result in a greater number of LPAs being able to demonstrate a 5YHLS and thus less ‘speculative’ development will come forward. There would also be less direct mechanism to increase future supply to account for past shortfalls in the 5YHLS calculation. If the buffer is eventually retained, then in combination with the above changes, the 20% buffer would only apply to LPAs that both do not have an up-to-date plan and are not delivering sufficient numbers of homes. The implication being that fewer authorities would still have the tilted balance engaged or have any shortfalls substantially reduced. Either way, areas failing to deliver enough homes are the precise locations where more homes are needed; which the 20% buffer helps boost.   Conclusions Overall, these changes seek to water down the 5YHLS test further than earlier Governments originally planned. It is currently a policy which results in more homes being built. Albeit these homes are on developments seen as ‘speculative’; without noting the fact that they were only ‘speculative’ because of poor and slow plan-making. If these changes to 5YHLS were brought in ahead of any plan-making reforms, they will cause fundamental issues in bringing forward housing supply in the places that need it most. In combination with the wider changes proposed, if adopted as one package, we may well see both more plan making and more constrained LPAs being able to demonstrate a 5YHLS, but conversely less homes built. This is because:  Constrained LPAs may have greater scope to supress housing requirements; reducing the perceived political pain of advancing a plan. Once adopted they will be protected from 5YHLS challenge. While these plans are prepared, we are also likely to see less development under Para 11d (NPPF) coming forward because of the transitional arrangements requiring only four, not five, years’ worth of supply to be demonstrated. The result of which will be that despite more plan-making, fewer homes will be planned for and delivered in the areas of most acute need. This will affect overall housing delivery in the absence of an effective mechanism to redistribute unmet needs (which does not appear to be something on the cards). In addition, where plans are out-of-date the removing of the 20% buffer will result in fewer homes coming forward as LPAs are less likely to have a supply below either four or five years’ worth than if the buffer did apply. We will be keeping an eye on the publication of a revised NPPF and PPG for consultation. If you would like advice on the potential implications of the changes or want to consider representations then please contact your local Lichfields office.  

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“Staycations” here to stay?

“Staycations” here to stay?

Ian York 01 Dec 2022
At last week’s Confederation of British Industry (CBI) conference the tourism and hospitality industry was mentioned as having the potential to “light a fire” under the economic revival. Back in May the World Travel & Tourism Council (WTTC) forecast that the UK’s travel and tourism contribution to GDP will grow at an average rate of 3% annually between 2022-2032 equating to a net worth of £286 billion (10.1% of the total economy)[1], noted as nearly twice the forecast 1.7% annual growth rate of the overall UK economy. Such is the world we live in at the moment that much has changed since May and current economic volatility means that any industry growth predictions should be treated with caution. Certainly in the years leading up to the pandemic there was much cause for optimism. Over 2010 to 2019 travel and tourism was the fastest growing sector in the UK in employment terms and its contribution to GDP reached 9.9% (£234.5 billion) in 2019 before collapsing to just 4.3% (£93.8 billion) in 2020[2] – a huge 60% loss. The rolling back of COVID-19 restrictions in 2021 saw the beginning of the “recovery” for travel and tourism with GDP climbing 40% year on year to reach £131 billion, still significantly below 2019 levels. Oxford Economics has predicted that the UK tourism sector as a whole may not recover to 2019 levels until 2025[3]. The are many influencing factors that will determine the industry “bounce back” but one aspect that could see sustained growth is domestic tourism, often referred to as “staycations.” Beleaguered airline operators that have had to (and are likely to continue to) reduce overseas flight numbers during peak trading months, rising flight costs, inflation generally and the cost-of-living crisis, changing weather patterns, and a more competitive domestic holiday sector in terms of experience, value and service means there is a significant opportunity for staycations to become more and more popular. The Government’s Tourism Recovery Plan (2021) highlights that domestic tourism is good for UK businesses and the levelling-up agenda, with domestic visits typically being spread more evenly around the UK compared to inbound international visits that disproportionately benefit London. A survey by Barclays of British holidaymakers and the regions they planned to visit in 2019 demonstrates the wider geographic spread of domestic tourism (Figure 1). One positive of the pandemic has been that it has led to many UK tourists exploring various parts of the UK for the first time so this “spread effect” is likely to have become even more pronounced.   Figure 1 Barclays Survey: UK Regions Holidaymakers Planned to Visit in 2019 Source: 'The Great British Staycations - The growing attraction of the UK for domestic holidaymakers, January 2021 Another really interesting infographic referenced by Skift (below) considered a hypothetical analysis from April 2020 during the pandemic looking at the “winners and losses” from a staycation boom if all international travel demand for a full year was redirected to domestic markets (this considered the current tourism market – domestic travel plus inbound, inbound travel lost and outbound travel gained). Extending the analysis to 37 countries showed that the UK had more to gain than all its overseas competitors, with the exception of China, in converting outbound visitors to domestic visitors.   Figure 2 Total $ gain/loss from all travel going domestic Source: The Winners & Losers of a Staycation World Ahead (skift.com) The aim of the Government in its Tourism Recovery Plan is clear – it wants to “build back better” from the pandemic by promoting innovation and creating an “accessible” and “resilient” tourism industry. Domestic tourism can be the kickstart for the wider UK tourism industry recovery that if successful will naturally encourage international visitors to return, and in greater numbers than before. To this end, the Tourism Recovery Plan recognises “…that whilst London is crucial to the fortunes of the UK’s tourism sector overall, we want the recovery to be swift in every nation and region, and in both urban and rural areas.” So what can the planning sector do to help the domestic tourism sector reach its full potential and drive growth across all parts of the UK in the face of continued economic uncertainty? In my previous tourism research piece in 2020 - Tourism: Retrench and Rebound - I outlined a number of ways the Government needed to act to address pre-existing issues in the tourism sector at the time. Many of these remain and are relevant to boosting domestic tourism; tellingly quite a few were identified in the more recent de Bois Review in August 2021[4] along with a range of other recommendations. The following are key to addressing current inadequacies: Raise the profile of the visitor economy within national government: the de Bois Review is clear that there is insufficient appreciation of the importance and promise of the visitor economy at the top of government which is undermining the success of the tourism industry. For too long the Government has assumed that the tourism industry is relatively successful and will look after itself which has meant the UK has lost ground to other countries. New funding, policy engagement and delivery is needed.  Improved partnership working: more coherency and structural reform is needed across central Government, Local Planning Authorities, Local Enterprise Partnerships (LEPs), Destination Management Organisations (‘DMOs’) and other public bodies. This should identify clear lines of responsibility and accountability to ensure the various bodies are clear on their remit and efficient in delivering outputs. Engaging private and public sector investors is also important to ensuring tourism initiatives are workable and meet the needs of the market. Early engagement with investors and developers is key and, in turn, investors and developers need to promote their plans and roles in the area and be a “voice” for tourists. Establish positive, flexible planning policy: too often at Lichfields we see draft emerging Local Plans or newly adopted Local Plans where the basis of economic growth is disproportionately reliant on more traditional forms of business development (e.g. office and industrial). Often tourism is seen as a secondary source or in some cases is not mentioned at all. It is essential that emerging planning policy and guidance at national and local levels provides a firm and clear basis for the industry to flourish. This should recognise (and support) that more and more tourist destinations, Resorts and Parks are investing to encourage visits spread across the year, building into the “shoulder” months and increasing guest numbers in the more traditionally “off-peak” periods, to make them more attractive throughout the year. This is critical to remaining competitive. Also, a concerted effort is needed to create more bespoke Destination Management Plans (DMPs), establishing current and future priorities for tourism in areas and clear actions to achieve them.The success of regular investment in tourism is evidential in our planning work with Bourne Leisure and Merlin Entertainments, where regular and new investment in facilities, accommodation and in the case of Merlin, new rides and attractions has allowed sites to flourish and encourage visitors to return.  Spread the opportunities: government support (policy, financial etc.) should be common across all areas of the UK where tourism can make a contribution. This will assist the “levelling up” agenda and play an important role in placemaking and economic regeneration.  Improve data: to assist decisions on how best to develop the visitor economy in local areas, the Government should improve access to quality data. In this regard, the de Bois Review suggests introducing the proposed Tourism Data Hub as a matter of urgency. Opportunities provided by the domestic tourism industry are vast and if managed correctly these have the potential to embed domestic travel as a sustained customer behaviour that drives economic growth across all parts of the UK. Here’s to the staycation! [1] News Article | World Travel & Tourism Council (WTTC)[2] Travel & tourism's total GDP contribution UK 2021 | Statista[3] Oxford Economics ‘UK Tourism Scenario Forecasts – A report prepared by Tourism Economics for the Department for Digital, Culture, Media and Sport (DCMS), March 2021[4] The de Boise Review: an independent review of Destination Management Organisations in England, Nick de Bois for the Department for Digital, Culture, Media & Sport, August 2021  

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