We consider how the scope of the NSIP regime has evolved and examines the role that it could play in delivering large-scale developments.  In November 2018 the Planning Act 2008 will celebrate its tenth birthday. Through the Planning Act a new regime for the consenting of nationally significant transport, energy, water, waste water and waste infrastructure projects was born.

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This article was first published in Property Law Journal (April 2018) and is also available at http://www.lawjournals.co.uk/

We look at a local planning authority’s duty to give reasons, in light of recent case.  In September 2016, the Court of Appeal ruled that Dover District Council had failed to give legally adequate reasons for its decision, against the advice of its planning officers, to grant planning permission for a controversial development partly in an area of outstanding natural beauty (AONB) (R (on the application of Campaign to Protect Rural England) v Dover District Council [2016]). This was one of several recent cases which have dealt with, and have generated some uncertainty about, the duty to give reasons.

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This article was first published in Property Law Journal (March 2018) and is also available at http://www.lawjournals.co.uk/

The Letwin Review is considering why there is a significant gap between the number of planning permissions being granted and the number of homes built.

Initial findings are due to be published with the Chancellor’s Spring Statement 2018 in March (with the final report in the Autumn Budget).  There are a few things to think about before engaging in another orgy of Plan-Shaming and policy overload.

Apples and Pears

There is a need to be careful about how sites are looked at in the first phase of the Review:

• Treating outline consents as if they are, or should be, immediately implementable is wrong. Outline consents can require significant work to reach detailed approval, let alone readiness for mobilisation and delivery.
• Care is needed too, on what is treated as ‘delivery’.  Site mobilisation (for example enabling infrastructure) takes time and pre-dates construction of homes.

Defining what delivery and success look like is therefore important to avoid categorising sites that are being invested in – but have not yet yielded homes – as dormant. This will be significant in the context of the emerging Housing Delivery Test, which should be a fundamental part of the Local Plan system.

90% of percentages are wrong…

Various figures are bandied around on how many consents are ‘unimplemented’. Even adopting the higher level figure of 423,000 unimplemented homes with consent:

• that is a tiny proportion of total supply – roughly 12-14 months of planning approvals
• it illustrates the need for a deeper stock of permissions to achieve the heroic build out rates the Government is now committed to.

A Local Plan system which made more (and more detailed) site allocations, with clarity about infrastructure requirements, would make a big contribution to closing the gap between in principle approval for development and the detail needed for delivery. Likewise, a Local Plan system that sniffed and snuffed out unrealistic assumptions on delivery rates when trajectories are being examined would help ensure the right number of consents are granted in the first place to create the stock needed.

Diversification

Businesses will generally develop at the rate they are best able to achieve and which reflects the overarching price/demand relationship.  Rather than blaming the private sector for the speed it can – prudently –  build at, it would be more productive to look at how to achieve an increase in direct delivery (or directed delivery) by public bodies which have historically made up at least 100,000 of the gap to the Government’s 300,000 homes per year commitment.

In some cases that will involve more assertive use of land assembly and policy tools in a way that creates greater certainty about land values up front so that builders can build and sell more quickly.

Planning blame-fest?

Evidence from the sector on the non-Planning constraints to delivery is important.  Is there a skills gap, what will Brexit do to it and if Government is sponsoring Brexit how will it sponsor the solution?

From the frontline, a few of the  Planning matters that do slow things down are:

• Length of time taken to deal with highways works agreements. The absence of a standard template agreement is a real blight on the development process.
  Constant reinvention of the wheel and imposition of poorly drafted and unreasonable requirements does have a real impact on the site mobilisation process. Government could sponsor a standard form and issue guidance recommending its use.
• The bloat and general time-soak associated with unnecessary use of planning obligations. Our ‘speeding tickets’ blog flagged ways to speed things up without scarce Parliamentary time being needed.

As the need for housing gains increasing traction, to what extent are neighbourhood plans having to take a back seat? Six years after they were introduced by the Localism Act 2011, neighbourhood plans have surprised many commentators with both their level of take-up by communities, and the importance afforded to them by the government. We look at some recent decisions.

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This article was first published in Property Law Journal (February 2018) and is also available at http://www.lawjournals.co.uk/.

From 23 February 2018, an LPA will be able to grant itself planning permission and sell the relevant land with the benefit of that planning permission. This small statutory change has the potential to significantly bolster LPAs’ role in facilitating development and ensuring that it is comprehensively planned.

The Town and Country Planning General (Amendment) (England) 2018 (the Amending Regulations) will remove Regulation 9  from Town and Country Planning General Regulations 1992 (the 1992 Regulations), with the effect that planning permissions granted by LPAs to themselves  will now run with the land.

Currently, Regulation 9 provides that a planning permission (where applied for by an LPA on its own land) will be personal to the LPA and where applied for jointly, only for the benefit of LPA and the named applicant. This has severely impeded the ability of an LPA, having secured planning permission to then sell the land on with the benefit of that planning permission. This has had cost implications requiring more complex land structures to be put in place before applications for development proposals could be made.

Oddly, the Regulations do not apply to any planning permissions granted before 23 February 2018. Given that future consents will run with the land it is strange that past consents have not been similarly “liberated”.

The removal of Regulation 9 was proposed in last year’s Housing White Paper on the basis that it will save time that developers would otherwise spend securing planning permission in relation to land which they purchase from LPAs.

It should achieve this. Now the Government needs to make sure that the best consideration requirements are changed so that land can be sold on for the best use for the area rather than just for the best price.

Michael Gove has published a 25 year plan to improve the environment. It is wide-ranging, comprehensive and aspirational. If delivered, and the lack of a real delivery programme is problematic, the plan aims for us to leave the environment a better place than we found it.

The plan contains three themes that might lead to a profound change in planning. The first is a principle that development should have a net environmental gain. On a project by project basis this could mean a development having a natural capital account setting off the environmental costs against a compensating balance for either on-site or off-site benefits. If so there will need to be a proliferation of environmental land banks and habitat improvement schemes that development can use to ensure a net gain.

The second theme involves looking at how to improve the environment. Much of the plan focuses on managing, maintaining and enhancing the natural environment.  It is clear that we should be seeking opportunities to remedy past mistakes.  It might be worth thinking about how this could change attitudes to, for example, brownfield sites. It might lead to a move away from the lazy assumption that brownfield sites in the countryside can simply be replaced by less ugly development.  It might, instead, just mean saying “no” to the replacement of development that would never be permitted nowadays and a focus on sites that, although green, can make a better contribution to sustainable growth if carefully planned, designed and developed.

The final theme relates to the Green Belt. The language of the plan talks about making these areas more accessible, almost envisioning them as country parks. That has never been a Green Belt purpose.  With changes due to the NPPF it might, however, become a future factor when changing Green Belt boundaries or when designating new Green Belts.  Tying back to the first theme it might lead on to a scheme where, in exchange for planning permission, new development has to secure rights of access to Green Belt land as part of the environmental benefit offer.  And where that increase in accessibility is itself part of the balance to be struck in release of other Green Belt land.

If the plan follows through on these themes it could reshape the foundations of the planning system.

The November 2017 Budget announcement on developer contributions, promised in the Housing White Paper, decided not to ditch the Community Infrastructure Levy but to tweak it instead.

Last January we suggested 6 reforms to make CIL more transparent and ensure it complements, rather than confuses, the development process. Here are the top 5 for 2018.

Reform #1 – deal with the small stuff, quickly

The recent amendment Regulations are welcome.  The Government should look to implement another set of amendment regulations by the summer, to deal with identified problems on indexation and give effect to the simplification on pooling restrictions promised in the Budget. It should reconsider the current proposal to use house price indices to inflate CIL.  Although transparent, there is no relationship between the change in values and the cost of delivering infrastructure.

There are better alternatives and consideration should be given to capping indexation rises where they exceed modelling assumptions at the CIL setting stage, giving a discount to the rate equivalent to any excess. That would encourage regular charging schedule reviews and ensure the charge remains within bounds of the original viability work.

Reform #2 – Free up strategic sites

The Budget committed to allowing a partial review of charging schedules. Among other things, that will allow charging authorities to look again at genuinely strategic sites and fix some of the problems that CIL-setting has created where errors were made or assumptions were not held to account in the examination process. The reform will allow zones to be set for these sites, with rates that reflect an agreed viability position including factoring in affordable housing delivery.

This can and should be implemented by the summer.

Reform #3– Free up strategic sites, again

For all the benefits of CIL recognised by both the CIL Review and the Budget, it is horribly complex for large, phased development.  The Review will need to grapple with how much flexibility can be created for genuinely ‘Strategic Sites’. CIL agreements should be allowed for these sites, which preserve the overall value of the infrastructure contribution (so that CIL is still a tool of value capture rather than mitigation management) but escape the complexity of the Regulations in terms of triggers, offsets and reliefs.  That will require careful thought on procurement issues, in terms of the point at which liability arises, and a more sensible approach to works in kind than the Regulations currently allow.

This can and should be implemented this year.

Reform #4 – Exemptions, distractions and diversions

There should be a proper debate about the sense in the reliefs, exemptions and offsets that plague CIL. If we want the system to be simpler, simplify it by removing these. As long as the charging regime ensures the charges adjust to reflect that, it will be neutral in many cases but far less complex.

Reform #5 – Spend It

One of the main gripes on CIL is the lack of certainty about its use (and the delay this is said to cause). In truth, many S106 contributions are subject to long clawback periods. In truth, too, CIL is only a drop in the ocean for infrastructure funding – it is unreal to expect it to be spent before match funding has been assembled or for it to deliver big bang projects on its own.

That said, two things need to be fixed:

• CIL is meant to support the Local Plan. That is not always clear and the Government needs to consider tilting the balance from discretionary use of CIL, where it can be drained away from investment in new infrastructure to support Local Plans, to a slightly more prescriptive framework for some of the really big ticket items used to justify CIL setting in the first place.
• Allowing CIL to be spent on maintenance of existing infrastructure is a mistake and undermines the benefit and legitimacy of the value capture it was designed to achieve. The changes made by the Localism Act 2011 to allow this were regressive and going back to the 2010 position – that CIL should fund new or upgraded infrastructure – would help concentrate spending and minds.

After an absence, the tradition of new year Community Infrastructure Levy Amendment Regulations is back in the form of the draft Community Infrastructure Levy (Amendment) Regulations 2018, published on 14 December 2017.

The amendments are another sticking plaster ahead of a full overhaul of the CIL Regulations, this time to deal with difficulties that some authorities had got into on the application of indexation to CIL charges for S73 permissions.

Section 73 so simple

If a S73 permission is granted where no CIL charging schedule was in place at the time of the original permission, the CIL Regulations are intended to only charge the ‘top up’ change in CIL. That is entirely clear from Ministerial statements in the run up to the implementation of the Community Infrastructure Levy (Amendment) Regulations 2012 which introduced the regulation 128A regime (and various other changes) for such transitional cases.

A quirk of the drafting meant that – taken in an inappropriately literal way – the difference between indexation values for the original and the S73 consents would result a charge based on the application of the indexation change across the whole of the consented floorspace. So, for example, a S73 permission that in floorspace terms should have either zero, negative or minimal change in CIL chargeable value was being treated as having a charge relating solely to indexation change.

The Valuation Office rejected that approach on an appeal against the resulting chargeable amount in March 2017, which remains subject to stayed judicial review claim by the collecting authority.

No change

The amendment regulations now address this point by clarifying that the same indexation base value should be used for working out the chargeable value of each consent.

Although they will only come into effect later this winter, the Explanatory Memorandum states that they are clarificatory.

What lies beneath

That is important, because the ‘fix’ is partial and does not address all the mischief in the Regulations for S73 applications. By making it clear that the changes are ‘clarificatory’ we now know the Government agrees with the common sense interpretation of the Regulations the Valuation Office Agency has taken on appeal.

The Government should be commended for having listened and acted wisely. They should now make a habit of that on CIL – our next blog will include our New Year’s wish list for simplifying CIL.

In the meantime real care is still needed when dealing with S73 applications, indexation and abatement applications.

The Court of Appeal has clarified the meaning of ‘deliverable sites’ in the key housing land supply provisions of Paragraph 47 NPPF (5YHLS).  As well as emphasising the need for pragmatism when applying the NPPF, the judgment confirms the need to get timing right if challenges are to be made to the assumed rate of housing delivery.

Supply test in question

In St Modwen v SoS CLG, the developer challenged the housing trajectory put forward by the authority to satisfy the NPPF 47 requirement to show specific deliverable sites sufficient to provide five years worth of housing against objectively assessed need. NPPF Footnote 11 confirms that ‘deliverable’ means available now, offer[ing] a suitable location for development now, and […] achievable with a realistic prospect that housing will be delivered on the site within five years and […] viable.

The Inspector disagreed that sites without permission should be excluded.  She accepted that the rate of consents was likely to increase in light of the draft plan.  She acknowledged a distinction between deliverability and likelihood of delivery: ‘…it may well turn out that not all allocations currently identified as deliverable will in fact be delivered’. The submitted HLS figures were robust, because ‘the assessment of supply is distinct from that for delivery’.

The Secretary of State accepted the Inspector’s finding that there was a 5 year HLS and dismissed the two linked appeals.

Courts insist on common sense

The High Court and the Court of Appeal dismissed the argument raised in seeking judicial review of the decision that the SoS had misunderstood and misapplied the concept of ‘deliverability’.  He should, it was claimed, have considered what would ‘probably be delivered’.

The Court of Appeal disagreed that Ouseley J’s judgment in the High Court suggested that assessment of ‘what probably would be delivered’ is part of, not separate from, the assessment of deliverability.

Ouseley’s judgment – that the assessment of “deliverability” … is an assessment of the likelihood that housing will be delivered. [It] does not require certainty that the housing sites will actually be delivered’ (emphasis added) – simply reflected the distinction between the HLS figure required under the first part of NPPF47 and the ‘expected rate of delivery’ required for the trajectory under the second part.

The Court of Appeal once again went out of its way to criticise ‘unreal’ arguments on the meaning of NPPF policy, holding that:

• there is a consistent and intentional distinction in the NPPF between ‘deliverability’ and the ‘expected rate of delivery’;
• deliverability in footnote 11 concern sites’ capability of being delivered – not the certainty/ probability of delivery;
• the appeal decision was being taken in light of NPPF49, engaging the question of demonstrable 5YHLS, not a question about the ‘the expected rate of housing delivery’.

So what?

The judgment serves to emphasise that:

• there need only be a ‘realistic prospect’ of delivery for sites to be relied in within the 5YHLS;
• challenges to the assumptions around the expected rate of delivery generally need to be taken up at the Local Plan examination stage;
• ‘Local planning authorities do not control the housing market. The NPPF recognises that.’

The last point underlines the fact that LPAs play a critical role, but are only one part of the housing delivery jigsaw. It is also illustrates how important the Housing Delivery Test will be, as a sense check on assumptions and progress, if it is introduced as promised in the Housing White Paper.

Community Infrastructure Levy liability is determined by the point at which development is notified or deemed to have commenced. The point at which that actually occurs is not crystal clear and a recent Planning Inspectorate decision suggests that care is needed by collecting authorities and developers.  At the moment there is a risk that a planning permission that has not been implemented for planning purposes (and which could, indeed, lapse for a failure to start in time) has been implemented for CIL purposes creating a CIL liability.

CIL Triggers

CIL liability is not triggered by a material start: it is triggered by the date given in a commencement notice (unless the notice is withdrawn in advance) or, in the absence of advance notice, the deeming of a commencement date by the collecting authority.

A material start without serving a commencement notice means that CIL liability is accelerated (losing instalment and other deferral benefits) and inflated (losing some reliefs).

What constitutes a material start for CIL purposes can therefore be a million dollar question.

False Starts

The CIL Regulations require the chargeable development to have been commenced:

• that means (under reg.7(2)) the date “any material operation begins to be carried out“
• material operation has the same meaning as under Section 56(4) TCPA 1990. Care is needed, because the Courts have confirmed that the list in Section 56(4) is not exclusive – other operations could therefore trigger CIL where material
• reg.7 does not refer to Section 56(2), which is clear that for the purposes of meeting time limit conditions, material operations have to be “comprised in the development”. Nonetheless, the Regulations are clear elsewhere that it is the chargeable development that must be commenced.

For time-limit purposes, the law is clear that operations done without discharging genuine pre-commencement conditions are not referable to the relevant planning permission (FG Whitley & Sons v SoS Wales(1992) 64 P & CR 296: “if the operations […] contravene the conditions, that cannot be properly described as commencing the development authorised by the permission“). The operations are unlawful and at risk of enforcement, unless recognised exceptions apply.

Logic suggests that the same legal authority – and outcome – should apply to early starts for CIL purposes. CIL should not be triggered but there may be enforcement consequences and CIL consequences associated with any use of retrospective permission under Section 73A TCPA 1990.

Inspectorate disagree

CIL practice and logic have been bad bedfellows. In a recent CIL appeal decision, the Planning Inspectorate was asked to determine the correct deemed commencement date where development began without complying with a pre-commencement (noise protection) condition.  The appellant claimed that the development was not referable to the planning permission and so not chargeable. The authority contended – probably rightly – that the condition was not a genuine pre-commencement condition for Whitley purposes. The Inspector took a more purposive approach, finding that:

• The CIL regime is not concerned with whether or not a development is lawful, it is only concerned with whether it has commenced.
• The date of commencement of development is a separate matter from the date upon which development could be said to be authorised.

It is not the first decision to adopt this approach (also applied on appeal in 2014). Then again, two wrongs do not make a right.

Common Sense?

Care is needed by developers and reliance on the Whitley principle is risky, not least because at one level the relevant law is about the extent to which enforcement would be perverse.  The other side of the coin is that some of the findings noted above are arguably perverse: the CIL regime is (explicitly) concerned with the question of whether the chargeable development has been commenced. If the Courts would not recognise commencement for planning purposes in reliance on the chargeable permission – and would instead uphold enforcement – it follows that the ‘date for commencement of development’ is not a separate matter from the point at which that commencement could properly be said to be lawful.

The two appeal decisions do not, in that sense, recognise that:

• the Regulations require a different approach: although reg.7(2) does not require the commencement to be referable to the chargeable permission, every other part of the Regulations that relies on reg.7(2) does so clearly.
• this avoids otherwise perverse outcomes: for example:
  (1) service of CIL stop notice (for development taking place under the chargeable permission) where an enforcement notice could be served against development being treated as unauthorised by that permission;
  (2) CIL payment being required despite the Courts determining that the permission itself has not been implemented and so has lapsed.

In the application of Planning law, common sense tends to rise to the top, eventually. There is no reason why the CIL regime should be interpreted in any less sensible way but until there is clarity through further reform or guidance on this point, care is needed.