Planning matters

The concept of productivity has undergone something of a renaissance in the past few years, to become an overriding theme in government economic policy and a popular topic in mainstream media and political debate.

The reason is simple; productivity – defined simply as the amount of work produced per working hour – is widely acknowledged as the main driver of long-term economic growth and higher living standards. Yet growth in productivity has fallen sharply over the past decade as the UK economy has recovered from the recession triggered by the 2008 financial crisis. In fact, the UK has recorded the most acute slowdown in output per hour worked of any leading western economy, and the national picture is complicated by a high degree of variation across different parts of the country (see figure below).

Productivity is not the most straightforward of concepts and the reasons behind this stagnation are complex. It can also be difficult to relate this problem to our everyday lives and pinpoint exactly how productive (or not) a worker, company or industry is.

Nevertheless, a national imperative to boost productivity runs through various strands of government policy, manifested most recently through the national Industrial Strategy which is framed around ‘5 foundations of productivity’ (see Lichfields summary).

It isn’t surprising therefore that government aspirations to boost productivity have made their way into the world of planning policy, with the revised National Planning Policy Framework (published in July last year) now making explicit reference (at para 80) to the planning system doing what it can to help the cause (see more in our recent Insight). Those areas already supporting high levels of productivity (as shown in the map above) and innovation will be expected to lead the way, and areas with lower productivity will need to consider how to close the gap.

Yet productivity is a concept rarely explored in any great detail in plan-making or decision-taking, so planning policy-makers and decision-takers will be asking questions about how this translates into tangible measures and interventions at a local level, in a way that is relevant to local circumstances and growth challenges.

At Lichfields, we are increasingly advising our clients on this key matter and offer the following insight into what planning policy and decision making can do to respond to the productivity challenge, framed around the Industrial Strategy 5 foundations:

Please get in touch to find out more and to discuss how we can help.

The draft London Plan was submitted for Examination in Public (EiP)^[i], and is currently being assessed against the policies included in the original NPPF (as per revised NPPF paragraph 214). This means that the Mayor of London does not have to comply with new requirements to prepare Statements of Common Ground for his draft London Plan; he had indeed provided none, despite undertaking informal working with Local Authorities outside London.

Whilst the Greater London Authority’s (GLA’s) current housing need assessment highlights a shortfall of just over 1,000 dwellings per annum (1,065, specifically) when compared to the identified annual housing target (65,000 homes/year), the way the GLA plans to address such shortfall is mostly through further windfall sites rather than through more structured approaches.

Virtually all the participants to the M16 ‘Wider South East and beyond’ hearing session^[ii] dismissed this narrow margin – one describing it as ‘the difference between two arbitrary figures’. Others (including the Home Builders Federation) believe that the housing shortfall will be closer to 30,000 dpa in view of the need to double or triple past windfall delivery rates, meaning that additional delivery outside London will be necessary. However, the real battle on housing number will be fought over the next two-three weeks.

During the hearing session, the GLA also referred to the Brandon Lewis’s 2014 letter on Strategic Housing Market Assessments^[iii], which recommended Green Belt councils to consider opportunities to collaborate with neighbouring planning authorities to fully meet their housing needs. The former Housing Minister’s letter openly acknowledged the local constraints that affect housing delivery (such as Green Belt), supporting a case-by-case approach and effectively endorsing voluntary strategies to meet additional housing needs between neighbouring authorities.

In London this means that Wider South East (WSE) Local Planning Authorities will be expected to effectively volunteer to meet London’s annual housing shortfall, on top of their own housing needs; the degree of unmet need that each Authority will take would thus come out in the wash rather than be planned for through upcoming EiP discussions. Hence the expression ‘working with willing partners’ as identified through draft Policies SD2-SD3.

Whilst there were a variety of opinions on how to ‘effectively’ deal with such situation, most of the participants to the hearing session felt that a separate South East Technical Secretariat (to include MHCLG, GLA, and WSE Local Authorities) should be established. The Secretariat would be in charge of coordinating the general evidence base collection and assessment for the wider geographical area, while also assisting decision-making by coordinating housing market assessments, land capacity and practical delivery. The EiP Panel was urged to make a side commentary about this potential approach.  

At the hearing session it was also highlighted how some Local Planning Authorities are effectively stepping up and coming forward to volunteer as ‘willing partners’; the Oxford/Cambridge Arc Authorities, Waverley, Ipswich and Arun are among these. On the other hand, other local authorities are staying more quiet, such as the Gatwick Diamond ones, in view of the intense local and environmental pressures they are exposed to.

There were also concerns about the ‘Strategic Infrastructure Priorities’ highlighted by the Mayor at Figure 2.15 of the draft London Plan (see Figure above), as linking strategic infrastructure with potential growth areas was considering straying beyond the GLA (and London Plan) remit. Suggestions on this matter focused on the London Plan just indicating certain strategic infrastructure priorities within/outside London, while leaving decisions on housing and employment-related growth to the interested local authorities and/or other strategic bodies.

Finally, few additional takeaway points from the WSE hearing session are listed below:

1. Housing intensification was not welcomed by Outer London Authorities, as considered locally undesirable;
2. Intensification potential is also considered relatively limited in view of other local pressures;
3. The willingness of WSE Authorities to review their green belt land should be matched by a similar commitment in Greater London;
4. The draft London Plan should seek to quantify likely housing shortfall and openly address specific Plan review trigger points;
5. The urgent need for a new London Plan means that the planning and development sector cannot wait for greater clarity to be provided;
6. Some willing partners will come forward, possibly backed by the Growth Fund, but these will need greater support via a more structured and planned Secretariat approach (see above); and
7. There is a ‘ripple effect’ risk on house prices expanding from London to the near South East, and then to the Outer South East (and beyond), leading to few people being able to purchase most of the new homes, effectively exporting housing unaffordability.