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Regeneration - enabling a quiet evolution?

Edward Clarke 16 May 2022
As the Government’s top political priority, ‘levelling up’ has returned regeneration policy to centre stage. After the policy strategy of the White Paper and two rounds of funding allocations, The Levelling Up and Regeneration Bill set out the Government’s proposals for the new legal framework to support and enable regeneration. The ‘Regeneration section’ of the Bill proposes the legal structures that target one of the 12 missions set out in the Levelling Up White paper that: “by 2030, people’s satisfaction with their town centre and engagement in local culture and community, will have risen in every area of the UK with the gap between top performing and other areas closing”. To achieve this ‘mission’ the Bill takes forward three elements that set out the legal framework targeting regeneration: make important changes to compulsory purchase powers to give local authorities clearer and more effective powers to assemble sites for regeneration and make better use of brownfield land a new type of locally-led Urban Development Corporation, with the objective of regenerating its area High street flexibilities – pavement licensing and ‘high street rental auctions of selected vacant commercial properties’ Each of the three elements are tackled with evolutionary tweaks that, in the main: ‘streamline, enable and simplify’ rather than revolutionise. Both compulsory purchase orders (which uses Compulsory Purchase Act 1965, Acquisition of Land Act 1981, and Housing and Planning Act 2016) and Urban Development Corporations (originally introduced to manage the development of new towns under the 1946 New Towns Act) have a storied history. Their resultant complexity is evident in the case law and amendments which have followed ever since. Evolutionary progress that reduces this complexity, by modernising and streamlining these systems is both welcomed and necessary to encourage their use. 1.   Compulsory purchase of land reforms Streamlining Compulsory Purchase Order (CPO) powers is a goal supported by most who experience the system as it is infamously an unwieldly slow and inconsistent process with the added complexity of the system’s ‘jumble of different statutes’[1]. The Governments High Street Strategy (2021) also made clear that a key part of ‘helping councils’ to take on regeneration projects would be to encourage councils to use CPO powers for land assembly, specifically for long term empty properties. The latest changes follow reforms brought forward through the Housing and Planning Act 2016 and the Neighbourhood Planning Act 2017 aimed at making the process clearer faster and fairer. As is often too easy to fall back on when commenting on planning reform, ‘the devil will be in the detail’ but this is certainly the case with CPO powers. Changes to the legal framework are necessary, but this reform will continue to be an iterative process influenced by the boldness of use and support of Government tested through case law and clarified in regulations. Seasoned observers will confirm that ‘point gourde’ valuations of land without a proposed scheme are always difficult to establish, as is the task of pricing in ‘hope value’. It is therefore welcomed that the Government have suggested a potential review of compulsory purchase law with the Law Commission. Challenges with using compulsory purchases orders will surely endure (it is rightly a heavily regulated tool) but the Bill’s focus on streamlining and modernising the orders and explicitly enabling local authorities to use CPOs more widely for regeneration projects should make a clearer case for when and how they can be used. Subsequently, incremental changes are to be welcomed on this evolutionary path. 2.   A new type of locally-led Urban Development Corporation A new type of locally-led Urban Development Corporation (UDC) - with the objective of regenerating its area and accountable to local authorities in the area rather than the Secretary of State - is also proposed. The changes proposed enable UDCs to become local planning authorities for the purposes of local plan making, neighbourhood planning and development management. Effectively this aligns them with the Mayoral Development Corporation model. They will also now be accountable to local authorities rather than the Secretary of State. These amendments potentially change the status of some UDCs whereby locally difficult, but strategically important, decisions are now scrutinised by locally elected members, rather than central Government. It will be telling to see whether this will lead to strategic decisions becoming more easily passed to UDCs or their strategic powers neutered by the realpolitik of local decision making. The Government clearly see development corporations as a useful tool for delivering large or complex regeneration and housing schemes. The use of arm’s length bodies to co-ordinate and drive through strategic regeneration projects is not new but can be useful. The legislative changes to make their use more straightforward are welcomed. However, it remains to be seen whether making them more ‘locally led’ will lead to more use and / or diluted outcomes, but it is perhaps the Government’s backing of their use that will be the more significant shift. 3. Changes to the high street – ‘high street rental auctions of selected vacant commercial properties’ and pavement licensing To support high street and town centre regeneration, the Bill proposes a new power to instigate “high street rental auctions” of selected vacant commercial properties in town centres and on high streets which have been vacant for more than one year. Under this power, the local authority can designate a street or specified area as locally important because of the concentration of high street uses (including shops, offices, restaurants and light industrial but not warehouses). Once designated, if a unit on that street or within that area is vacant (unoccupied for a year) and the local authority considers occupation would be beneficial to the local economy, society or environment – then they can instigate a rental auction of the property. There will be further regulations that set out the auction process in more detail and secondary legislation which set out the terms of the letting contract. The initial industry response[2] has been one of concern, questioning whether this adds to risk for investors already reeling from multiple challenges to high street rental properties and in practice becomes a technical hurdle for landlords to consider rather than a ‘high street shake up’ . The Bill also makes permanent the existing measures that make pavement licensing more straightforward. These were first brought in as the high street reacted to COVID but their popularity and contribution to helping the centre vitality and viability has led to this Government endorsement of the measures. Likely Effects Much commentary and analysis about regeneration inevitably comes down to funding; in this context, the changes proposed in the Bill only paint part of the picture of the Government’s plans for regeneration. However, the proposals set out in the Bill provide the legal structures that the Government believe will enable more efficient, locally led decision making on regeneration to deliver local results. Taken together, these changes are evolutionary rather than revolutionary, they are designed to streamline, simplify and improve decision making. As our recent Insight[3] highlights, the importance of effective decision making should not be underestimated or overshadowed by discussions on the ‘size of the funding pot’. If these legal tweaks achieve their aim of enabling more local authorities to make more effective decisions on regeneration – then these changes should quietly help local areas in their efforts to ‘level up’.     [1] https://www.rics.org/globalassets/rics-website/media/knowledge/research/insights/compulsory-purchase_december-2021-corrected.pdf [2] https://www.thegrocer.co.uk/property-and-planning/plans-to-force-landlords-to-let-vacant-shops-dismissed-as-gimmick/667278.article and https://www.jdsupra.com/legalnews/uk-government-commits-to-controversial-9004117/ [3] https://lichfields.uk/content/insights/levelling-up-the-routes-to-growth/

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Today’s Queen Speech saw the Government set out its legislative agenda for the upcoming parliamentary year – the Levelling Up and Regeneration Bill took centre stage. The purpose of the proposed Bill is to “drive local growth, empowering local leaders to regenerate their areas, and ensuring everyone can share in the United Kingdom’s success”. In this ‘on the day’ analysis we briefly consider how it might meet its aims in two policy areas: (i) levelling up and (ii) planning reform. Levelling Up The Government have made levelling up a central platform of this parliament, while some observers have been quick to write off the agenda, the Prime Minister and Secretary of State have set themselves the ambitious timeline of 2030 to see results. Our analysis showed the geography of both the socio economic challenges that need to be addressed and the opportunities for investments to make a difference. Today’s announcement legislated for more of these areas to benefit from devolution and establish the institutions to make better decisions in two ways: Firstly, ‘empowering local leaders to regenerate their areas’, adding the legislative backing to the funding and policy proposals previously announced. The next steps for many local areas will be to get their ‘devolution deals’ (either county or combined authorities) over the line and established so they can deliver on the desired outcomes. Secondly, placing a duty on the Government to set Levelling Up missions and produce an annual report updating the country on delivery of these missions. The next steps here will be to set and monitor targets that ensure that ‘levelling up’ is rooted in the priorities of all Whitehall departments. In truth, the funding for ‘levelling up’ has been known for some time now, with bids for the second round of funding being prepared now. The aims and policy detail (including 12 national missions) has also been set out in the Levelling Up White Paper . Today’s Queen’s Speech legislated for the government to take the Bill through the house, and allowed for further devolution through the already trailed “county deals”. Planning reform The second part of this bill addresses the aim to “improve the planning system”. The Bill appears to support planning reform in a much changed form to that suggested in either the 2017 or 2020 Housing and Planning White Papers. Notably, one element that does survive these previous iterations appears to be the change to the infrastructure levy. Lichfields will comment more on this when further detail is available - however realising betterment values and land value capture has been an aim for Governments across most of the 60 years Lichfields has operated; therefore the challenge is getting the details right. The Secretary of State’s comments in the lead up to the Queen’s Speech, that “abstract housing targets should not be the sole measure of success[1]”  could be seen as a change in emphasis away from the long-standing aim of delivering “300,000 homes a year by the mid 2020’s” towards “making sure developments are beautiful, green and accompanied by new infrastructure and affordable housing.” However, there is an acknowledgement that “the current system cannot meet the national demand for housing”. The Bill at this stage does not go into detail, however, there is a stated aim for “Simplifying and standardising the process for local plans”. The focus here must be on improving both the quality and the coverage of development plans. Recent Lichfields research found that only 42% of LPAs had a fully up-to-date local plan[2] with 11 authorities stalling, delaying or withdrawing local plans in recent months. Our previous analysis of the reasons for this point mainly to uncertainty over housing need requirements, political challenges of meeting targets in constrained areas and the apparent change in ‘mood music’ from central Government away from a pressure to deliver housing numbers[3] and towards developments with local support. To meet its aims to improve plan making, and to deliver homes and infrastructure within the remaining parliamentary period, the Levelling Up and Regeneration Bill will need to be supported by non-legislative measures that address three issues that loom over plan making as it stands: Uncertainty. Proposed tweaks to the NPPF and a possible lower housing need target (in the South of England) that appear to be trailed need to be clarified to provide local authorities with the certainty of what their local plans will be assessed against. As it stands, the Government’s December 2023 deadline appears to be the lesser risk facing many local authorities compared with the political benefits of delivering a potentially lower number of homes under a mooted new standard method. Nitrate Neutrality. Additionally, 74 local planning authorities are affected by the so called “nitrate neutrality” effects, requiring authorities to stall housing development until they can guarantee schemes are ‘nutrient neutral’. These areas are in need of a comprehensive package of solutions to the nitrate neutrality problem in each catchment area – an estimated 100,000 homes are estimated to currently be held up in these areas[4]. Resourcing. Public sector planning is understaffed and under resourced, tasked with dealing with an increasingly wide range complex specialities, and balancing priorities from achieving ‘carbon net zero’ to health and active travel priorities, as well as viability and affordable housing contributions - the total expenditure on planning policy has fallen by 22% in England between 2010 and 2020[5]. This under resourcing delays decisions, leads to poorer plan making and poorer outcomes for communities. In conclusion, for the Government to succeed in its aims of delivering the aims of the levelling up and planning reform bill, many of the most important actions do not require legislative changes. Potentially the ‘biggest wins’ against these aims are in unlocking developments that are held back by uncertainty, by nitrate neutrality issues or by under resourced local authorities. However, the Bill will be successful if it can deliver on its aims to enable local areas to plan more effectively together and not add to complexity or uncertainty unnecessarily. In this sense, supporting combined authorities and county deals to address strategic plan making effectively, including making the joined-up decisions that the bill sets out could lead to improved outcomes both to levelling up and planning reform.    [1] Levelling up bill will include 'street votes' on local design codes, says Gove [2] Ten years of the NPPF: What do we have to show for a decade of plan making?As of the 27th March 2022. We interpret ‘up-to-date’ in this context as Local Plans that were adopted or reviewed within the past five years in the context that local plans have to be reviewed, and if necessary, updated every five years to remain up to date. This includes Castle Point and Eastleigh who although they did not have an adopted local plan at this date, did have a local plan which had been found sound. This also includes authorities who undertook a Local Plan Review and found the plan did not require updating including Reigate and Banstead and Woking. [3] Counting the cost of delay: The economic impact of Local Plan delay to housing delivery [4] 100,000 homes on hold due to 'nitrate neutrality' advice, housebuilders claim [5] Provide funding certainty for planning departments, RTPI tells government    

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