Planning matters blog | Lichfields

Planning matters

Our award winning blog gives a fresh perspective on the latest trends in planning and development.

Changes to the Welsh planning system and thinking ahead to support recovery
The latest changes to the planning system enacted by the Welsh Government on 26 March 2020 follow the rationale that all new development should be identified through the plan-making process, with only limited scope for windfall sites. These changes include the revocation of Technical Advice Note 1 (TAN1) and the removal of the requirement for a five-year supply of housing land. Instead, local planning authorities (LPAs) will monitor housing delivery against LDP housing trajectories. The new system is heavily reliant on the timely production of robust Local Development Plans (LDPs). In the context of the current COVID-19 crisis, this will be nigh on impossible to achieve. Full LDP reviews take at least four years to prepare, and delays are now inevitable, as Welsh local planning authorities (LPAs) are currently unable to fulfil the legal requirements for public consultation[1]. This will have implications for the majority of LPAs in Wales, 17 of which[2] have LDPs that are older than four years and so are currently subject to or due for review, whilst two have yet to adopt their first LDPs. In these extraordinary times, there is an urgent need to think ahead and put measures in place to support an early economic recovery and to ensure much-needed housing can be delivered in the short term. Commentators are now stating the  economic impact of COVID-19 will be  severe and longer than originally anticipated, so  there is a need to ensure that the development industry is supported to deliver quickly once the crisis is over. The construction of new homes (and other development) can play a key role in attracting investment and supporting jobs, and we simply cannot afford to wait years for the next round of LDPs to bring forward new development in Wales. Hence, we are calling on the Welsh Government to take immediate steps to facilitate a swift economic recovery by providing support for development on sustainable sites in the short term outside of the plan-making process, which could be in the form of a policy clarification letter. These sites will need to comply with the sustainable development and place-making principles of Planning Policy Wales (PPW). In this blog, we set out our initial comments on the changes, focused on the revisions to the Development Plans Manual (edition 3, March 2020, DPM). While this document represents guidance rather than policy, LPAs must have regard to it when preparing an LDP, as set out in the Planning and Compulsory Purchase Act 2004 (section 75). A number of the changes to the DPM will help to support the adoption of robust plans – and so are welcome. However, key concerns remain in relation to the lack of specified consequences for under-delivery of housing – concerns which are heightened by the current crisis. Setting the right housing requirement It is positive that the revised DPM now recognises the importance of providing the right balance of homes and jobs. In particular, it acknowledges that there is a need to consider both housing and economic needs together when assessing growth and setting a long-term strategy, with the aim of reducing the need for commuting. The DPM provides guidance as to how the need for homes and jobs should be assessed to inform requirements in LDPs. It states that the plan requirement should be based on the level of “unconstrained need” balanced against supply factors that limit the ability of the plan to deliver. For housing, it states that the unconstrained need should be calculated using evidence, which could include: The latest Welsh Government population and household projections – including a range of demographic scenarios; Housing Market and Local Need Assessments – setting out the need for different tenures and types of housing; and, Commuting patterns. This unhindered need is then compared with supply factors that could affect delivery, such as physical or environmental capacity, land values and infrastructure costs, and policy-based considerations such as affordable housing targets. While some of the need and supply factors seem to fall in the incorrect column (for example, “viability areas” and past build rates are cited as indications of need/demand), overall this approach is helpful as it distinguishes between the actual need for homes and jobs and the ability to deliver them in a particular location. Furthermore, it is encouraging to note that the DPM warns against simply rolling forward past build rates, recognising that they may have been constrained, for example, by economic factors. Improving deliverability Likewise, the changes to the DPM that increase the likelihood of allocated sites being deliverable are welcome. Viability The revised DPM takes forward the PPW focus on site-specific and plan-wide viability testing in order to support deliverability, and this is an area of significant expertise for Lichfields. Although the updated DPM does not specify a set model for viability testing, it does identify what are considered to be the key components to development viability, as listed below and discussed in our Components of Development Viability Summary Table. Table 1: Key components of development viability identified by the DPM Source: Development Plans Manual (3rd edition) It goes on further to require that these specific components and their costs are discussed and agreed by a Viability Steering Group which will include key partners and consultees who consider and agree the specific costs that affect development viability in the local area. These agreed costs should then be embedded into the viability modelling which will inform the policies and allocations within the plan. Rolling sites forward The revised DPM includes strong guidance relating to allocations forming part of a previous plan. It states that these allocations should only be “rolled forward” where it has been evidenced there has been a “substantial change in circumstances” which enables the site to be delivered and so justifies its inclusion. Ensuring that sites that have not been delivered to date and that are considered to be non-deliverable are not rolled forward will help to boost housing delivery and strengthen the plan-led system. Flexibility allowance Although the changes already set out will promote the allocation of more deliverable sites, the DPM recognises that it will be “extremely rare” for all of the sites within a plan to be developed within the anticipated timescales. The DPM therefore appropriately requires that flexibility is embedded within the plan to account for non-delivery and unforeseen issues. The recommended starting position for the flexibility allowance is 10% but this figure should reflect local circumstances. Non-delivery allowance for land bank commitments The DPM states that LPAs with a large number of sites with extant planning permission should apply a non-delivery allowance to this element of the housing supply. This allowance, which is separate and in addition to the overall flexibility allowance above, should be based on local evidence. As a guide, the DPM states that non-delivery rates in these circumstances have ranged from 20 to 50%. This requirement is welcomed as another measure to ensure provision is made for sufficient levels of housing over a plan period. Setting a robust housing trajectory The heightened role of LDP housing trajectories in the new system means that it is essential that they are robust and that they reflect the overall timing of development, from initial pre-application discussions through to on-site phasing. As such, careful consideration of the timing of site delivery and all of the relevant factors associated with build rates is crucial to ensuring that the housing trajectory is robust. Lichfields’ Start to Finish (2nd edition) research on the factors affecting build-out rates for large-scale housing sites provides a useful benchmark.   As recognised within the DPM, there is a need to collaborate with key stakeholders in the preparation of housing trajectories. The involvement of the private sector and developers in particular will be crucial in order to ensure trajectories are robust and deliverable. As noted by the DPM, it is also important that the trajectory provides a steady flow of sites throughout the plan period. Monitoring and consequences Under the new arrangements, LPAs will measure housing delivery against an estimated Average Annual Build Rate (AABR) for each individual year of the plan period as set out within the LDP housing trajectory. Hence, it is a forward-looking measure. The AABR should factor in phasing and delivery assumptions relating to individual sites, as described above. Housing trajectories are set to be updated each year as part of the AMR process; however, the AMR will not affect the AABR, which is based on the original trajectory in the adopted plan.  Interim measures LPAs with an LDP adopted prior to the publication of the revised DPM and those that are currently under examination should use their Average Annual Requirement (AAR) as their primary monitoring indicator against which to measure levels of delivery. The AAR is simply the total housing requirement for the LDP period divided by the number of years in the plan period (15 years). However, these LPAs should begin preparing AABR-type trajectories in their AMRs. Based on the AAR method, we note that a total of 17 of the 20 LPAs in Wales with an adopted LDP under delivered in the two consecutive years between 2017 and 2019 (see figure 1), and we note that all of the 20 LPAs under delivered in at least one of these years. Figure 1: Local planning authorities that have under delivered for 2 consecutive years (2017-2019) Source: Lichfields analysis of LDP housing requirements and Welsh Government New house building data This measure indicates a cumulative shortfall of almost 12,000 homes between 2017 and 2019 (a 51% shortfall) (see figure 2). Hence, there is a clear need for action to fill these gaps across Wales. Figure 2: Delivery against housing requirements for LPAs with adopted LDPs (AAR method) (2017-18 and 2019) Source: Lichfields analysis of LDP housing requirements and Welsh Government New house building data Consequences for under delivery LPAs are required to consider performance against all indicators collectively and to assess the magnitude of variance before deciding on appropriate actions to be taken. The DPM specifies that trigger points that relate to housing completions should relate to performance over two consecutive years. Hence, under delivery in a single year would not be sufficient to trigger an action. The DPM does not prescribe consequences for under delivery against the trajectory and, hence, there is no mechanism to ensure that new sites can come forward in the short term to fill gaps in supply. It is for each LPA to decide on its own remedial actions. Implications In order to function properly, the new system requires up-to-date LDPs that take forward the new standards in relation to housing requirements, deliverable allocations and the formulation of robust housing trajectories. However, plan preparation is an inherently slow process, and the current crisis means that delays are now inevitable. Hence, as things stand, there is no readily available avenue for new housing sites to come forward. This is a problem not just in terms of meeting the housing needs of people in Wales but it also represents a neglected opportunity to fuel up the economy while we await the starting flag of recovery.  We therefore recommend that the Welsh Government acts quickly to issue a policy clarification letter setting out that housing proposals that accord with the sustainable development principles of PPW should be supported in advance of the adoption of the next round of LDPs. It is also in the gift of LPAs to provide support for sustainable housing schemes in their areas by working proactively with developers. Both of these steps will be vital in order to support the Welsh economy after the Covid-19 crisis is over – which we hope will be very soon.  [1] The Welsh Government acknowledged this in its letter of 18 March 2020 to Chief Planning Officers , noting in particular that Monmouthshire, Torfaen and Ceredigion Councils would be unable to proceed with current or imminent LDP Preferred Strategy consultations. It also notes that, for those LPAs at the start of the LDP preparation process, this “may need to be postponed for several months”.[2] 17 of the 25 LPAs in Wales, including National Parks  

CONTINUE READING

Looking into the Budget tea leaves

Looking into the Budget tea leaves

Ciaran Gunne-Jones 05 Mar 2020
​See Lichfields' "Budget 2020 - getting it done" Economic outlook for  reactions and analysis of Rishi Sunak's first Budget speech.  Rishi Sunak’s ministerial red box was already overflowing when he took office last month – handed the keys to Number 11 at short notice following the resignation of Sajid Javid – and it has been a tumultuous three weeks since. With coronavirus now weighing down heavily on the global economic outlook, the early tetchy stages of the UK’s negotiations with the European Union on future trade underway, and speculation of interest rate cuts later this year, the Chancellor may well be turning to his preferred brand of Yorkshire tea leaves for guidance.   Given the macroeconomic uncertainties, HM Treasury officials are reported as saying that next week’s Budget will be the first installment in a “trilogy” of statements this year – something for the aficionados to relish. Some decisions on tax, spending and borrowing are likely to be pushed back to the autumn, a year after last November’s Budget was itself postponed due to the general election. However, the Budget is one of the key set pieces of the parliamentary calendar, and is particularly important in the context of a new government keen to deliver quickly on its manifesto promises. So what might the Chancellor’s red box hold in terms decisions on planning, infrastructure and regional economic policy? Here’s a round-up of 10 key points to look out for next Wednesday: Economic growth – tea leaves aside, the Office for Budget Responsibility (OBR) – the independent fiscal watchdog – will publish its latest UK economic forecasts alongside the Budget. It is widely expected that the OBR will downgrade their forecasts from those published in March 2019. This matters because it would result in higher forecasts for government borrowing and, in theory, give less bandwidth to increase public spending if the Chancellor also wants to limit tax increases in line with manifesto commitments. ‘Levelling up’ – the phrase that featured prominently in the Conservative election campaign, and is already permeating into the policy sphere (seemingly replacing the ‘rebalancing’ lexicon which became popular in the Osborne and Hammond eras). The Queen’s Speech in December referred to making investments, “in order to unleash productivity and improve daily life for communities across the country.” Following success in breaking the so-called ‘Red Wall’ in the North and Midlands, the government have been clear that levelling up will be a key factor in all future policy and decision-making, so we can expect this theme to be writ large. Practically, this could extend to creating a new hub for HM Treasury officials on Teesside. Revisions to the Green Book – the ‘Green Book’ (HMT’s guidance for appraising public spending decisions) was an unlikely media star over the quiet Christmas news cycle when it was reported that significant revisions are in the works aimed at boosting investment in the North and Midlands. We considered the implications in an earlier blog. The Budget will provide an opportunity for the Chancellor to set out the details on how this will work in practice, but clarity about how decisions on local infrastructure spending will be decided will be keenly sought from both north and south. Devolution White Paper – government has committed to publishing a Devolution White paper, promising a review of more directly elected mayors in the mould of the Metro Mayor, and the possibility of more combined authorities and unitary authorities. These policies reflect wider effort to devolve decision-making to the local level. The future of sub-national partnerships such as the Northern Powerhouse, Midlands Engine and Oxford-Cambridge corridor will also depend on any funding and powers devolved to them over the next few years. Planning White Paper – in the works since being first announced by Theresa May in March 2019, and now anticipated around the time of the Budget or shortly thereafter. A recent Ministerial Written Answer confirmed, “the purpose of the White Paper will be to make the planning process clearer, more accessible and more certain for all users, including homeowners and small businesses. It will also address resourcing and performance in Planning Departments.” It remains to be seen what influence Jack Airey’s (co-author of Policy Exchange’s report in January on ‘Rethinking the Planning System’ for the 21st Century’) recent appointment as No. 10 housing and planning adviser will have on policy proposals. Local Industrial Strategies – Mayoral Combined Authorities and Local Enterprise Partnerships (LEPs) across the country have been busy preparing their local response to the national Industrial Strategy since 2018 through the form of Local Industrial Strategies (LIS). So far, seven LIS have been agreed and published but some thirty remain in the pipeline still to be agreed with central government. At the very least, an extension to the deadline for nationwide coverage by March 2020 seems inevitable – or potentially a shift to something different as has been rumoured. The Budget could usefully provide some clarity. Big infrastructure – the recent confirmation of HS2 might signal that the government is moving towards funding big ticket infrastructure investment, relaxing its fiscal rules. Eyes will be on the Budget to see whether this is backed with investment for Northern Powerhouse Rail and an indication on the future of the Oxford-Cambridge growth corridor. A further indication of the priorities of this government might be its omission of major road investment announcements (so far transport infrastructure spending announced has been for trains, busses and cycling), but this will need squaring with the legally-binding target of net zero greenhouse gas emissions by 2050. Research and development – in the spirit of levelling up, the Prime Minister and his Special Adviser Dominic Cummings are looking closely at R&D funding nationally, pointing out that more than half of the national gross domestic expenditure on R&D is spent in London, the South East, and East of England. This might be through investing into nationally-significant hubs like the “MIT for the North” and the Midlands “Gigafactory”. Options include strengthening the existing Catapult Centres, National Productivity Investment Fund and Strength In Places funds, or through new initiatives. UK Shared Prosperity Fund – further detail on the plans to replace the £2.1billion EU structural and investment funding, the proposed UK Shared Prosperity Fund, is long awaited. A consultation period is expected before the fund kicks in. While the fund is committed to tackling inequalities between communities by raising productivity in areas of the country that are ‘furthest behind’, clarity is needed to ensure local authorities have certainty over long term funding arrangements in order to effectively plan for future interventions. Freeports – a key policy for government, given the aspirations for global trade following Brexit. They will operate similarly to enterprise zones but specifically for port areas, in which goods are only charged tariffs when they leave the freeport area. With a 10-week consultation recently launched by the Government aims to announce up to 10 new freeports across the UK at the end of this year to be operating in 2021. The Budget provides the Chancellor with the opportunity to say more about the potential funding and regulatory framework for this initiative. With a promised dose of new public spending, a significant parliamentary majority and a new phase of Brexit and global macroeconomic developments, next week’s Budget will be significant not just for the decisions made but how this sets the tone for policy and funding for the years ahead. Lichfields will be providing further comment on the Budget in due course. Click here to subscribe for updates (opens in email) Image credit: Rishi Sunak (@RishiSunak)  

CONTINUE READING