At the end of June just before the General Election we wrote here about the urgent economic and budgetary challenges facing the incoming government, and in particular what role planning reform could play in turbo-charging the economy. This included sharpening up the National Planning Policy Statement (NPPF) to provide a clearer mandate for economic considerations in plan-making and decision-taking.
The wait was short, as at the end of July we were presented with the consultation on proposed changes to the NPPF. Since then, new Chancellor of the Exchequer Rachel Reeves has stated that the £22 billion ‘blackhole’ in the public finances that Labour has inherited is greater than was previously known, whilst figures from the Office for National Statistics released this month also showed that public borrowing in June exceeded expectations. If the case for growth wasn’t already clear enough, Keir Starmer pointedly reminded us this week that growth is the government’s number one priority in order to ‘fix the foundations’ whilst also trailing ‘painful’ choices to be made in the upcoming Budget on October 30th.
In that context, at face value, the changes to NPPF chapter 6 (Building a strong, competitive economy) may have seemed modest, but on closer examination there are some important changes to consider.
Paragraph 84(b) (previously para 86) now requires planning policies to both set criteria and identify strategic sites for local and inward investment, where previously they were only required to do one or the other. That one-word change has significant implications in mandating local plans to specifically provide sites that are capable of meeting a range of investment needs – that might imply larger sites in accessible locations and well serviced (or capable of being) by quality infrastructure, and with policies that are sufficiently flexible to accommodate a range of potential employment uses. The concept of doing this might not seem particularly novel, but many recent local plans seem to have regarded this exercise as somewhat optional which will now no longer be the case.
Perhaps most significantly though is the introduction of what might be termed the ‘modern economy test’ – i.e. an new express requirement for policies to provide for the needs of a modern economy, “including suitable locations for uses such as laboratories, gigafactories, data centres, digital infrastructure, freight and logistics.” Many of these uses are comparatively land hungry, each have their own specific locational requirements, and are urgently needed. The government is, rightly, concerned about the opportunity cost of not adequately planning for them, which is the UK lagging well behind other leading economies. The commercial real estate sector has also been calling for recognition of these uses for some time, but while these are singled out as key industries it is also clear that this list is not intended to be exhaustive.
The government believes this change will create a “positive expectation” that suitable sites for these uses will be identified in local plans. Local authorities will need to actively demonstrate how they have considered and meet this test based on an assessment of the potential scale of demand and the locational needs of such uses in their area, and associated planning practice guidance might need to be updated to reinforce this expectation. There will also be a role for these industries to put forward their own their need and locational case.
Paragraph 85 (previously para 87) has also had an overhaul to support growth industries within both plan-making and planning decisions, by setting more explicit expectations about the commercial requirements that the government believes require particular recognition:
- 85 a) now provides support for proposals for new or upgraded facilities and infrastructure (including data centres and electricity network grid connections) that are key to the growth of knowledge, creative, high technology and data-driven sectors;
- 85 b) broadens the range of factors relevant to planning for storage and distribution operations – previously this related only to provision “at a variety of scales in suitably accessible locations”, but such operations can now also be justified where they would support decarbonisation, adaptation to changing patterns of global trade and supply chains (for example linked to port-centric logistics or important manufacturing clusters), and the adoption of new technologies in the transport, distribution and storage sectors; and
- 85 c) is a new clause which supports the expansion or modernisation of other key growth industries – i.e. outside of those already identified in paragraphs 85 a) and 85 b) above – by setting an expectation that additional commercial sites should be identified in plans and positively considered in planning decisions, when they are of local, regional or national importance, and to further support economic growth and resilience. In isolation this requirement may seem very broadly defined, but will start to come into focus when eventually read alongside the new national industrial strategy that Labour have promised and as Local Growth Plans (or indeed other refreshed local economic strategies) come forward. This provides renewed opportunity for economic strategy and planning policy to be working closely in tandem, and local areas can use this to their advantage to support future investment and to meet evolving business needs.
Collectively these are important changes, and of course, sit within the context of the wider NPPF measures proposed to accelerate growth, notably in relation to strategic planning and the intention to move to a model of universal strategic planning covering functional economic areas within the next five years, implementing a new mandatory standard method for assessing housing needs, and identifying grey belt land within the Green Belt to meet development (including commercial) needs. In parallel, the government is also consulting on the potential for data centres, gigafactories and laboratories to be prescribed as a type of business and commercial Nationally Significant Infrastructure Project (NSIP) and be directed into the NSIP consenting regime (potentially defined by scale).
Given the urgency of the growth challenge in the years ahead, could the proposed NPPF changes on economic planning have gone further? Maybe.
For example, more definitively signalling for greater weight to be placed on economic growth considerations, or introducing a requirement for a 5-year rolling supply of ‘market-ready’ commercial land would be helpful (sometimes it is not just how much land is allocated, but whether there is consistent availability over the life of a local plan to respond to market needs that matters).
These could be considered as part of future updates to guidance, and ultimately, planning is only one of a number of policy levers that the government will need to engage to support the economy. It will need to be matched with timely measures and incentives on infrastructure, innovation and skills just to name a few, and we can expect the Budget in October to give us further pointers in this regard.
The NPPF consultation closes on 24 September 2024.
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