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Don’t forget the high street?

Don’t forget the high street?

Daniel Gregg & Edward Clarke 28 Jun 2024
With less than a week until polling day, Lichfields’ manifesto coverage turns to town centres. Given the ground needed to be covered in Electoral Manifestos, and the common across-party focus on the delivery of new homes, pledges for the high street do not feature significantly. However, town centres continue to face significant structural and economic challenges, with change coming quicker than any taxation or policy developments designed to support them. Insofar as there are measures proposed to protect town centres, we have delved into these below.
Finally action on business rates?
The most significant ‘call to arms’ of the major parties is for business rates reform. Pushed for by the industry for many years, the Conservatives have pledged to enable local authorities to retain business rates locally, whilst Labour have called for a full review and reform of the business rates system in a way which is revenue neutral but implemented in a fairer way. The Liberal Democrats have proposed to go even further by replacing business rates with a Commercial Landowner Levy. However, whilst full of good intentions, these pledges are so far light on detail. We know, more widely, that there is clearly currently limited scope to reduce tax receipts overall if government spending is to be maintained.
The Labour Party have stated that they want business rates reform to ‘level the playing field’ between bricks and mortar shops and online shops. As shown in Figure 1, whilst the rate of growth in online spending has slowed since the pandemic – and it should be acknowledged that a proportion of this spending is taking place through physical retail outlets, it is still significantly higher than, for example, at the 2017 or 2019 elections.
Figure 1 Online sales as a share of total (rolling annual average)

Source: ONS 2024 Retail Sales Index time series (DRSI)

Business rates have compounded the challenge presented by online retailers for town centre stores. Research undertaken in 2022 by real estate advisory firm Altus Group suggested an eight-fold difference in business rate costs between high street and online shops. It is therefore vital that the manifesto pledges on business rates are followed through in a proportionate and supportive manner.
Other measures
Labour are also proposing to bring in measures such as a “right to buy” community assets on empty high street premises. Their manifesto also acknowledges the benefits to town centres of addressing ‘side issues’ such as tackling anti-social behaviour and shop lifting, as well as supporting a roll out of banking hubs and working with post offices to offer local services. Whilst unlikely to deliver significant investment in themselves, these proposed measures should be welcomed, as key to maintaining town centres’ attractiveness and relevance.
Alongside their pledge to reform business rates to support small businesses and the high street, the Conservatives also pledge to increase the number of places covered by their “long term plan for towns” to over 100, which would all receive £20m of levelling up funding, although it is unclear how much of this funding would be focused upon the high street.
High Street Improvement Plans
Alongside talk of the election manifestos, it is worth mentioning that the High Street Improvement Plans Bill, which benefits from cross party support, had made quick and positive progress through both Houses before parliament was dissolved. Before the dissolution, the Bill was facing a third reading in the Lords, before being returned to the Commons for any amendments and, finally, Royal Assent. Subject to support from the new Government, this could be taken forward after the Kings Speech, if it passes within a year of the First Reading (i.e. before 6 December 2024).
As covered by in our previous blog, if successful, the Bill would require each Local Planning Authority (LPA) to designate at least one ‘High Street’, with an ‘Improvement Plan’ to be prepared for each one. LPAs would need to consider the High Street Improvement Plan when exercising its planning functions and carry out periodic reviews of the condition of those high streets.
Policy making post-election
The Labour Party have talked a strong game on the planning reforms they intend to deliver in their first 100 days in charge, should they form the new Government. Whilst much of this will focus on housebuilding and cutting ‘red tape’, as economic and social hubs, it is important that the high street remain central to planning policy. Town centres need to adapt to survive and thrive, be it through re-purposing buildings for new uses or through evolving their offer. This requires political will to drive policy change and, where applicable, new/additional funding.
As suggested in our previous blog, one intervention that could be enacted quickly by the new Government (whichever colour they may be) would be to require the use of Area Action Plans (AAPs) to provide a more tailored approach to planning policy in town centres. Such document would form part of the adopted development plan, bringing weight and certainty, both of which are key for investment decisions. They could also bring together all key stakeholders in a town centre to form an ambitious but deliverable plan for their area.
The political recognition of high streets and town centres in both the manifestos and the passage of the above bill is welcome. However, the lack of detail on these measures reflects the focus on the more eye-catching issues of housing delivery and reform of the planning system more generally. For retailers and other stakeholders, some of the reforms proposed, alongside the potential enactment of the High Street Improvement Plans Bill could offer much-needed support, helping to revitalise town centres and local economies. It is essential that policy makers do not forget the high street and grasp the mettle post-election.

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Silver Linings? How is the planning system addressing the needs of our ageing population?

Bethan Haynes 27 Jun 2024
It’s certainly not news that as our population ages, the importance of providing suitable housing for older people becomes increasingly crucial, and with over 65s making up 80% of all household growth[1] it is vital they are given proper consideration when planning for housing and other needs. Five years ago our original research looked at how the planning system was addressing the needs of older people, finding that the vast majority of local plans did not clearly engage with older people’s housing needs. It made a series of recommendations about how this could be improved.
Our updated research provides a refreshed and more in-depth look at how local plans, both adopted and emerging, address the housing needs of older people, to see what has changed. In short, things are moving in the right direction, but there is still a significant way to go.
This time, we looked at three key parts of the plan-making process:
  • Evidence base – our research looked at whether the evidence base for housing included a reference to the needs of older people, and if so whether this referred to care homes;
     
  • Local Plans – our research looked at whether the local plan quantifies the need for older people’s housing, either within a policy or in supporting text, so that the overall scale of need is clearly identified. It also looked at whether the plan’s general policy on housing mix refers to the needs of older people and whether the plan contains a standalone policy addressing the needs of older people (and if it did, whether this includes reference to care homes and whether it requires there to be evidence of need). Recognising the role that accessible housing more generally can play, our research also looked at whether the plan includes a policy requirement for wheelchair accessible housing. In terms of affordable housing, we also looked at whether plans were clear on whether affordable housing contributions for elderly housing are required. Finally, we considered site allocations; firstly, if the plan contains strategic allocations, whether these refer to the needs of older people, and secondly whether the plan contains standalone allocations for housing for older people; and
     
  • Monitoring – our research looked at whether the local authority monitored delivery of housing for older people (for example, in the Annual Monitoring Report) and if so, did this include care homes.
For these, we compared plans adopted pre-2012 NPPF, plans prepared under the 2012 NPPF, plans prepared under the 2018 NPPF and emerging [submitted] plans (all of which are being prepared under the 2018 NPPF[2]), shown in Figure 1 below.
Figure 1 Summary of research findings – percentage of local plan fulfilling assessment criteria based on plan age
By all measures, plans are moving in the right direction, with:
  • More authorities assessing needs within their evidence base;
     
  • More plans quantifying need, including standalone policies for older people’s housing, and requiring wheelchair housing; and,
     
  • More reference to older people’s housing in both strategic and standalone allocations.
However, significant progress still needs to be made in order for the planning system nationally to begin delivering the scale of older person’s housing that is likely to be needed, with the evidence base still not fully translating into a suite of policies which would support significant scale specialist housing delivery.
With only 20% of emerging plans making allocations for housing for older people (up from 8% prior to 2012), it could take decades for all (or even the majority of) plans to make allocations for housing for older people. Current guidance sends a somewhat mixed message, stating that it is “up to the plan-making authority” to make allocations but also that allocating sites “may be appropriate where there is an identified unmet need for specialist housing” – which is the case for virtually all authorities, as shown in their evidence base. A significant change in guidance could be necessary to place much greater urgency on the need for allocations and rapidly increase the number of plans making allocations.
Our findings and key recommendations across each of the areas of plan-making are shown in Figure 2.
Figure 2 Key findings and recommendations – Solutions to an age old problem research

Source: Lichfields

Final thoughts

Understanding how older people’s needs are being addressed in plan-making is key to assessing the effectiveness of national policy and guidance, and helping identify areas for future change and improvement. In short, whilst we have found that older people’s housing need almost always now features in the evidence base in plan-making (albeit in varying levels of detail), the way this is fed through into policies in the plan varies considerably, with significant scope for improvement still remaining.
So, are things likely to continue improving in the future? Whilst the 2023 NPPF includes additional references to the types of housing older people may require (retirement housing, housing with care and care homes), the overall thrust of paragraph 63 – to “assess and reflect needs within planning policies” – remains the same as it was in the 2018 NPPF. Although emerging plans that we assessed (prepared under the 2018 NPPF) suggest trends are slowly moving in the right direction, without any change to underlying policy and guidance it is still uncertain  whether the 2023 revisions to the NPPF will result in any material shift in how plans address older people’s needs.
The challenge of providing adequate housing for an ageing population is significant but not insurmountable, and the insights and recommendations from our research could lead to substantial improvements in housing provision for our ageing population. By strengthening the evidence base, providing greater clarity and direction within local plan policies, and ensuring effective monitoring, local authorities can better meet the needs of older people, but this must also be met with engagement from other stakeholders. An imminent potential change in government – and potential change in NPPF – could represent an opportunity to bolster older people’s housing needs and make an important contribution to the aim of significantly boosting housing supply in the next five years.
 

[1] ONS 2018-based Household Projections here (see Table 1)
[2] This is because the transitional arrangements set out in the December 2023 NPPF (para 230) only require the 2023 NPPF to be taken into account for the purposes of plan-making for plans that reach Regulation 19 after March 2024.
[3] Planning Practice Guidance: Housing for older and disabled people Reference ID: 63-013-20190626

 

 

 

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Sequential Test – Staying Afloat Amidst the Uncertainty

Sequential Test – Staying Afloat Amidst the Uncertainty

Max Kidd-Rossiter 25 Jun 2024
The Mead/Redrow High Court Judgement has caused a splash across the development industry over whether or not a Sequential Test needs to be applied, and when it does, what it should entail. This has been compounded by a recent tide of appeal decisions that, whilst not all consistent, demonstrate that decision makers’ interpretations have shifted in respect of when and how the Sequential Test for flood risk should be applied.
The Mead/Redrow Judgement is to be considered by the Court of Appeal, which may address some of the uncertainty that has arisen from the Judgement. However, the Court of Appeal Judgement is not expected until 2025. Therefore, amidst the ongoing uncertainty, this blog provides some practical tips on how to navigate the current state of play until matters are clarified, either through the courts or maybe with a change to the PPG. 
So, what is significant about the Mead/Redrow Judgement and why has it ushered in a new era for the Sequential Test?
The Judgement held that Planning Practice Guidance (‘PPG’) has the same legal status as the National Planning Policy Framework (‘NPPF’). This is significant because the PPG on Flood Risk and Coastal Change includes much more detail than the NPPF when it comes to the Sequential Test. In particular, the PPG is clear on two key points:

  1. The Sequential Test should take account of all sources of flood risk – this means fluvial (river and tidal) and surface water flood risk.

  2. Flood risk management infrastructure should be ignored initially. This means that a Sequential Test cannot be avoided on sites that are at risk of flooding from any source, even if a site-specific FRA concludes that there is a low risk of flooding due to existing flood defences or proposed development mitigation measures.

On the first point, you might be wondering – how is this so different from the NPPF? Well, it’s not. The NPPF §168 states that “the aim of the Sequential Test is to steer development to areas with the lowest risk of flooding from any source”. However, the PPG is more explicit that other forms of flooding need to be treated consistently with fluvial flooding, and that all sources of flood risk are to be taken into account through the Sequential Test.
When is a Sequential Test required?
If your site is at risk of flooding from any source (including surface water flooding), then the Sequential Test needs to be satisfied. The PPG states [1] that the exceptions to this are:

  • The site is allocated in the development plan and was subject to the Sequential Test at plan-making stage for a use consistent with the development that is being proposed.

  • The site is at low risk from all sources of flooding (fluvial and surface water).

The local planning authority’s Strategic Flood Risk Assessment (‘SFRA’) should be the first point of reference to check if either of the above is satisfied.
Failure to undertake the Sequential Test, if one is required, has the potential to cause issues later down the line, even if it is not raised by the local planning authority or statutory consultees during an application’s determination. As an example, a speculative scheme goes to appeal with a reason for refusal that is unrelated to the Sequential Test. During the appeal process, the risk from surface water flooding is raised by an Interested Party.  Failure to satisfy the Sequential Test weighs against the proposals.  This is a scenario that has already played out in recent appeals.
Let’s consider another scenario – a planning application on an emerging allocation at risk from surface water flooding, which has already been subjected to the Sequential Test in the SFRA. Technically, the planning application will still need to satisfy the Sequential Test until the local plan is adopted and the site is allocated for the use proposed – at which point one of the PPG exemptions listed above would be satisfied. However, it would seem reasonable to also have regard to the stage of the Local Plan and how well advanced it is.  If, for example, the draft Plan has been through the EiP and this has not been raised as an issue, then it would follow that greater weight can be given to that allocation and the fact that it has been subject to a Sequential Test.  This is perhaps an area where clearer guidance would be beneficial to clarify whether applications on well advanced emerging allocations can rely on SFRA Sequential Tests.
Now let’s consider a speculative application on a site in Flood Zone 1, where only 0.1ha of the 10ha site is at risk of flooding from surface water. Again, technically the decision maker will need to be satisfied that the Sequential Test is satisfied. This is another area where updates to guidance are necessary to ensure that the Sequential Test is proportionate to risk.  In the meantime, as a way to avoid the Sequential Test, consider whether land at risk from flooding can be easily excluded from the application redline.
What about a reserved matters application on an unallocated site at risk from surface water flooding, where the Sequential Test was not satisfied at outline planning stage? The purpose of the Sequential Test is to steer development towards sites at lower risk from flooding. Thus, it would be reasonable to assume that this would be satisfied at outline stage as that then establishes the principle of development. As such, it could be argued that this should not be revisited at reserved matters stage. However, there will be outline planning consents granted prior to the Mead/Redrow Judgement that have not satisfied the Sequential Test (but are at risk from flooding) and we think that this is another area where clearer guidance would be beneficial to clarify that the Sequential Test does not need to be satisfied at reserved matters stage.
A Sequential Test is required – what next?
Another key issue arising from the Judgement is that ‘reasonably available sites’ need to be carefully considered and agreed. The PPG[2] states that:
‘Reasonably available sites’ are those in a suitable location for the type of development with a reasonable prospect that the site is available to be developed at the point in time envisaged for the development.
These could include a series of smaller sites and/or part of a larger site if these would be capable of accommodating the proposed development. Such lower-risk sites do not need to be owned by the applicant to be considered ‘reasonably available’.
The Mead/Redrow Judgement considered what makes a reasonably available site. Firstly, it was held that there must be a relationship between the ‘series of smaller sites’ for them to be a reasonable alternative. It may also be appropriate for the applicant to put forward a case that the specific type of development proposed is necessary in planning terms and/or meets a market demand.  This means that, by clearly defining the criteria of what should be considered a reasonably available site, the number of alternative sites to consider through the Sequential Test can be reduced.  Consider the following:
  1. Does the development need to be in a specific location or catchment? For example, where a proposed development includes a school that is responding to a specific local need.

  2. Does the site need to be a certain size, or will the development comprise a mix of land uses that are interdependent and cannot be split across a series of smaller sites?

  3. Does the development need to be a certain scale or density? For example, a 200 dph town centre apartment block might not be considered a reasonable alternative for a 35 dph edge-of-settlement scheme.

Where possible, at the outset, agree the parameters for identifying reasonably available sites with the local planning authority. This will reduce the risk of issues down the line, as it will ultimately be a matter of judgement for the decision maker as to whether the Sequential Test has been satisfied.
The Sequential Test shows that there are reasonably available sites which are sequentially preferable – is this the end of the road for my development?
No.
Where there is an unmet need for the development being proposed, the Mead/Redrow Judgement held that this should be weighed in the overall planning balance against any factors pointing to the refusal of permission (including any failure to satisfy the Sequential Test). This means that if the capacity of all the sequentially preferable, reasonably available sites is less than the unmet development need, then there is a requirement for land which is not sequentially preferable to come forward too.
So, what next? Watch this space.
The Mead/Redrow Judgement has been challenged and will be heard by the Court of Appeal. However, the outcome of this will not be known until 2025.
In the meantime, guidance needs to be, and can be, updated to explicitly state that a failure to satisfy the Sequential Test does not preclude granting planning permission; it’s only one consideration in the overall planning balance. This will help to provide clarity for decision makers. At the very least the PPG needs to (and could be) revised, so that it is consistent with, and does not add in an extra requirement to, what is in the NPPF.

 

[1] PPG Reference ID: 7-027-20220825
[2] PPG Reference ID: 7-028-20220825

 

Image credit: Chris Gallagher via Unsplash

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Time to turbo-charge economic growth

Time to turbo-charge economic growth

Richard Coburn & Ciaran Gunne-Jones 21 Jun 2024
We have had the manifestos and the General Election looms.  In light of the opinion polls, the prospect of a change in government brings with it an opportunity to address a long overdue reboot of the planning system’s function as an enabler of national and local economic growth.
Whilst economic growth and wealth creation feature centrally in manifestos, behind the political messaging stands a stark fiscal reality. The pandemic and cost-of-living crisis has led recent governments to spend and borrow on an unprecedented scale, and with the tax burden now higher (and rising) than at any time since 1950. But with the main political parties committed to reducing the ratio of public debt to GDP by the end of the next parliament, and promising no further increases in headline taxation levels, there is essentially only one option if debt levels are to be reduced and public services paid for – to turbo-charge the UK economy, and to do it quickly.
Much analysis and debate has been devoted to the subject of planning reform, particularly in the development of solutions aimed at significantly increasing housing delivery.  However, the critical role that planning has in facilitating economic growth has been largely overlooked; yet business leaders are increasingly citing planning as holding back their investment.[1] Indeed, the policy framework on planning for economic development has remained largely unchanged since the first iteration of the National Planning Policy Framework (NPPF) was published in 2012. Produced by a Coalition Government grappling with huge economic problems and a budget deficit worth 5% of national income, the first NPPF was candid: “the Government is committed to ensuring that the planning system does everything it can to support sustainable economic growth.”[2] (our emphasis)
But times move on – and several versions of the NPPF later – the sense of urgency which characterised that moment in time has arguably been lost. Furthermore, considerable changes have occurred in the economy, many of which have wide-ranging implications for commercial property market drivers, spatial planning and land-use requirements. These include the rapid growth in logistics, booming demand for data centres, gigafactories, creative industries and on-shoring of manufacturing and supply chains.

What are the barriers?

The broad nature of commercial real estate and the range of different industrial and service sectors which occupy it mean that it makes a significant contribution to the national economy. A recent report by Lichfields for the British Property Federation (BPF) estimated in 2023 this amounted to 2.5 million jobs, 5% of total UK economic output, and with £60 bn of capital investment annually.[3]
The diversity of the sector means that, relative to some other property sectors (particularly housing), it can be more difficult to measure the impact of planning blockages or under-delivery. Rather the ‘opportunity cost’ is the business investment that is delayed or does not take place at all, and the jobs and economic activity that this could otherwise have created. For example, Figure 1 illustrates that construction output in the private commercial and industrial sectors has been subdued and over time has been flat-lining at best.
Figure 1: Value of Construction Output in England by Sector, 1997-2023

Source: ONS / Lichfields analysis. Note: seasonally adjusted, 2019 prices

 

At a time of rapid economic and technological change, and set against a competitive market for global investment, the planning system is arguably not sufficiently alive to economic and business needs in spatial and land-use terms.  As a bare minimum, planning should perform an enabling role in supporting economic growth through the provision of market-suitable land for uses which support job creation and economic output.  It also needs to be agile to respond to rapid economic changes which cannot always be anticipated in local plans which typically look 15 to 20 years ahead, and proactive to provide clear investment signals to businesses. 
The absence of an informed and future-facing planning policy framework for economic growth has been compounded by a number of factors including:
  1. The slow pace of local plan preparation, holding back the identification of market-suitable land for commercial development.

  2. Out-of-date methodologies and guidance to inform planning practice have not kept pace with rapid changes in industry and business needs. For example, techniques used to predict land and property needs which must align with the needs of the new economy and embrace market signals. 

  3. The effective withdrawal of the national industrial strategy and linked local strategies means that there has not been a clear and consistent mandate to plan for economic sectors and clusters over the lifetime of most recent local plans.

  4. A patchwork of place-based planning ‘freedoms’ such as Enterprise Zones, Freeports and Investment Zones have been variable in their application, duration and extent which may have impacted on their main aim of creating or accelerating net additional economic development. Some have been ‘off the shelf’ regeneration projects identified by local authorities rather than necessarily being business or economic need led. 

  5. The introduction and continued extension of permitted development rights (to residential uses) has gradually eroded controls of many commercial premises and caused some local pressure points on the availability and affordability of business premises at a time when businesses are facing many other cost pressures.

 

How to turbo-charge growth?

If the political ambitions to rapidly stimulate economic growth are to have any prospect of success, it is clear that some fundamental changes to planning, and linked policy initiatives, will be required to put the system on a growth footing.
We set out below five proposals for how this might happen:
  1. Putting in place a clear and up-to-date national industrial strategy, something that Labour has already announced they will do should they form the next government. The merits of ‘top-down’ industrial strategies are often debated, but the reality is that the UK urgently needs a clear blueprint for how it will drive up productivity and meet the needs of priority economic sectors and clusters in different parts of the country.

  2. Giving greater weight to economic development including making it a statutory function of local authorities – as the Institute for Economic Development (IED) has been calling for[4] – and immediately putting in place a presumption in favour of development for economic uses where there is no up-to-date local plan in place. This would also go some way to ensuring a minimum level of resource and budget is provided for economic development functions within local authorities, at a time when many are facing tough budget choices.

  3. Updating the NPPF to provide a clear mandate for plan-making and decision-taking on the weight to be attached to economic growth considerations. There is also a need to refresh associated guidance and methodologies so they are primed to support key sectors in line with the national industrial strategy, and allow more flexibility to respond to unforeseen opportunities such as large, bespoke inward investment demand such as the gigafactory facility in Somerset[5].

  4. Reflecting the operational characteristics of business markets, introduce more effective planning for functional economic market areas. For example, a new industrial strategy should provide the economic rationale for a series of new spatial economic development plans which would be driven by business needs and therefore be flexible in terms of geographic coverage (ranging from city-regions to cross-boundary partnerships).      
     
  5. Ensuring area-specific economic growth mechanisms are fit for purpose. Current and past governments have had a chequered history when it comes to designating locations for national and international inward investment. However, the principle of having a network of strategic sites across the country that are readily deliverable and attractive to the market remains a sound one. These could offer the flexibility to quickly respond to footloose investment in key sectors.  Importantly, such sites need to be embedded in a clear economic rationale and equipped with the necessary infrastructure and delivery mechanisms to achieve their stated growth objectives. 
These measures represent a starting point, but the urgent need for planning to play its part in unlocking economic growth cannot be understated. The central challenge for the incoming government is that UK economic growth has now been languishing below trend for some time, and has not achieved sustained annual growth in excess of 2.0% since the 2003-2007 period before the global financial crisis.  While it will naturally take time for policy reform to translate into faster growth, it must be at the top of the next government’s in-tray whichever party wins the election.

VIEW MANIFESTO COMPARISON BLOG

 

[1] ‘Planning the number one growth issue’, CityAM, 17 June 2024
[2] National Planning Policy Statement, March 2012, https://webarchive.nationalarchives.gov.uk/ukgwa/20180608095821/https:/www.gov.uk/government/publications/national-planning-policy-framework--2
[3] UK Commercial Real Estate Economic Footprint, Lichfields for British Property Federation, May 2024 https://bpf.org.uk/media/7602/cl16688-01-bpf-economic-footprint-final.pdf
[4] ‘Grow Local, Grow National’, IED manifesto, November 2023, https://ied.co.uk/news_events/grow_local_grow_national_ied_launches_manifesto/
[5] Gravity welcomes Agratas Gigafactory as first site occupier (thisisgravity.co.uk)

Image credit: Matteo Roman via Pexels

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