New new towns

We were immensely proud to win the Planning Law Firm of the Year Award a fortnight ago.  The award recognised both the contribution that we have made to the new legislative and policy framework that within which the next generation of New Towns will come forward, as well as our practical work on emerging new garden communities.

However, even if the foundations for good progress are in place, with public and private sector communities being proposed there are still several big issues that remain unresolved:

  • how do we make sure that proposals which are “best in class” when first proposed and commenced continue to meet those high standards over a decades long build out?
  • how do we encourage development and delivery throughout the economic cycle?  Any decently sized New Town will face two or three recessions as it evolves;
  • how do we make sure that the present and future communities play a full part in the creation of the new place?

The answer to these questions is work in progress and may be different in different places.  Whatever the answers we will all need to avoid the temptation to be too prescriptive.  Good communities will not emerge from within a legal straitjacket.  We need instead to develop a new form of partnership between land owners, developers, public bodies and communities that focuses on collaboration, quality, delivery and participation.  If Dentons can continue to contribute, and can help find a sensible and workable approach, that will be a further reward.

Consenting New Towns

Development Consent Orders are a great way to draw together the consents necessary for a piece of infrastructure.   As the locally led garden towns movement grows there are siren calls to use the DCO process to help deliver some of the housing that is needed. Could a DCO could be used for a new town or major urban extension?

Building a windfarm and creating a community are very different. Any new town worth its salt will evolve over time – both during initial development and beyond. Having the ability to evolve is crucial.  What we imagine now as the community of the future is, almost inevitably, wrong. People will live differently. They will travel differently.  Education will be delivered differently. Health and well-being will be part of daily life, to prevent the cost of medicine and elderly care becoming a national millstone.  Shopping will have undergone several revolutions. The nature of jobs, and the balance between jobs, homes and social life will probably be unrecognisable. New communities will also need be actively curated. Success will depend as much on the relationships that are created as upon the bricks and mortar. The built form of all communities will have to change, and adapt over time, to reflect these processes.

The present breed of DCOs is probably ill-suited to this type of long-term social engineering. At the moment they suffer from inflexibility.  They work well where the proposal is clear, neat, tidy and fixed – like a windfarm.  New towns are not so neat and tidy.  DCOs to date have also largely been governance free exercises – aside from a few controls on “reserved matters” and security for CPO compensation.  Delivering new towns will need the active participation of the public and private sector, as well as both existing and future communities. It will need both active and passive governance. None of this has been addressed, so far, in the DCO process.

One of the hardest lessons for those delivering new towns is that they are, and should be changeable, iterative, complicated, exercises in trial and error, buffeted by markets, politics and people. There will be many different ways to deliver them, from private sector schemes going through the traditional planning process with negotiated long term quality partnerships through to development corporations, both nationally and locally led. And there will be numerous variants in between.  A common factor to all will be the need to facilitate and encourage change.   We need to ensure that the benefits of variety and the capacity to evolve is not straitjacketed by the using DCOs if they remain as rigid as they are at present.  Remember that the sirens called ships to ruin on their rocks.

The new New Towns Revolution

In May we wrote about Lord Matthew Taylor’s clause in what became the Neighbourhood Planning Act 2017 introducing provision for locally led new towns. The clause provided a skeleton framework.

Flesh is now being put on the bones. Draft regulations have been published by DCLG setting out the way in which local authorities will step into the place of the Secretary of State and oversee locally led new towns. With the exception of the power to confirm CPOs, local authorities will be responsible for guiding and monitoring the new New Towns.

Building on the experience of the old New Towns, local authorities will be required, from the outset, to plan for the long term stewardship of the assets of the new town for the benefit of the community. As described in the consultation paper this should ensure that the powers are used to create places “that are sustainable for the long term, with the resources to reinvest both in the renewal of the physical place and support a thriving and diverse community“.

The only false note in the draft regulations is a requirement for Treasury consent if the outstanding borrowing of a development corporation is in excess of £100 million. Almost any genuine new town will, at least potentially, need more debt than £100 million. The “risk” that the Treasury may refuse consent or impose conditions on it makes it far less likely that the development corporation model will be used. Having committed capital to acquire the land and provide infrastructure, no sensible local authority would want to take the risk of not being able to complete the development and secure a return on that investment.

Since the Chancellor explicitly endorsed the idea of five new towns, without financial recourse to the Treasury, it is assumed that this “hangover” from the old New Towns will be lifted.

Planning TV: Planning for Healthy New Towns

In more recent times, there has been a refocus on health in planning and how the built environment can encourage better health outcomes. NHS England’s Healthy New Towns Programmes is looking at how the planning and design of communities could be done in 10 demonstrator sites across England, as well as rethinking how health and care services can be delivered. Associated with the programme was an international design competition to visualise how this could be done, which Citiesmode submitted the winning entry.

Philip Liu at Citiesmode talks about some of the ideas from the bid. Andre Pinto from Public Health England explains some of the challenges of delivering health and care services and what solutions that the built environment could provide. They are both joined by Jamie McKie from Dentons Planning and Public Law team.

Brought to you by Dentons and Citiesmode it draws on the knowledge of a core panel of experts from across the sector, supplemented with special guests hand picked for their particular expertise. From Greenbelt to Brownfield, national planning policy to local plan-making and everything in between, Dentons Planning TV provides a unique insight into the thoughts of those involved at the sharp end.

The new New Towns Agenda

The third reading of any Bill in the House of Lords is normally fantastically dull. That was not true of what is now the Neighbourhood Planning Act 2017. Lord Mathew Taylor introduced a new and apparently innocuous clause that allows a completely new and parallel way of bringing new towns forward. It authorises the rewriting of the existing new town legislation, by regulation, to allow local authorities, or groups of local authorities, to ask the Secretary of State to designate an area as a new town and for a development corporation to be set up.

If agreed by the Secretary of State, then the local authorities will, effectively, step into the role that the Secretary of State occupied in the old new towns. They will control the way in which their new town development corporation is governed, operates and delivers new communities.  They will be accountable for successes.  They will be responsible for failures. Some powers will, inevitably, be retained by the Secretary of State, at least in the short term – the power to confirm CPOs and to authorise Local Development Orders. In time, with true devolution, even these powers could be left to the parent authority.

What will this mean? Many authorities are already exploring the possibility of new towns and particularly garden communities. One of the real difficulties is educating landowners that the cost of developing the necessary community and social infrastructure up front is significant, and that the legacy costs of stewardship will eat into land values, as much as if not more than the traditional enabling costs. This means that the normal landowner model of a minimum land value + a share of net proceeds or overage does not really work.  There is also a need to ensure that all land is bound into the same broad vision and programme. If that is not the case then the allocation of costs can be unfair.  The first phases will have to bear significant infrastructure costs that then increase the value of the land in later phases. If the later phases choose to develop independently then it may be problematic making sure that they bear their fair share of the initial place-making investment. A development corporation model helps to solve this. It allows early and extensive acquisition. It also ensures that the underlying “scheme”, the new town, is more completely disregarded for valuation purposes.

In practice, development corporations should rarely be necessary. Local authorities already hold most of the appropriate powers. However, the use of, or the threat of the use of, a development corporation may well be a helpful bargaining tool. It should allow local authorities to reach agreements with reluctant landowners. It should ensure that all parties contribute and benefit equally. It should be a weapon of last resort.

New Towns Act 2015?

Dentons sponsored the TCPA to produce a new version of the New Towns Act, updated to make it fit to deliver the cities that we need today.  Why is it relevant?  Because we have all talked about increasing the delivery of housing and found it difficult to achieve in the present planning system.  And because the legislation is already available to deliver several new towns like Milton Keynes if there is the courage to do so.  This could be done quickly, and we would all benefit.

One benefit of a new Act would be to force the present cross-party rhetorical commitment to new homes into legislative form.  It would allow the law to be modernised.  It can bring in duties in relation to good design, sustainable development and dealing with climate change.  Importantly, it could also start to bring back to life the real vision that lay behind the original 1946 Act – of creating better places for people to live and work.  We should seize the opportunity to do so.

Magic Bullets? Why Value Capture Should Be Kept Simple

The House of Commons Housing Communities & Local Government Select Committee Land Value Capture Inquiry report is great, but dangerous. It is a welcome reminder that the planning system can, and should, do more to capture the cost of the infrastructure required to support development. It is also problematic because it suggests a range of new “toys”, including a review of CPO compensation provisions, that is politically unworkable, a distraction and unnecessary.

Right Price

The report is clear that landowners, and developers on their behalf, already make significant contributions towards infrastructure and affordable housing. The combination of planning obligations and CIL can work effectively. With more local authority resource, greater transparency and a stronger emphasis on the local plan, even more can be achieved. As the report indicates, proper planning requirements should be viability tested and reflected in planning policy and a reformed and simplified CIL. Those needs will then, perhaps slowly, be “hardwired” into land prices. Land will be “right priced”.

No end to hope

A number of witnesses, and the evidence, emphasise that using planning policy is not a panacea. It will not fund all infrastructure requirements.  It will not solve the housing market problem.  Markets in different parts of the country are very different. The planning system can be used to secure a full contribution to infrastructure in parts of the South East, in a way that is simply impossible in parts of the North West.  Local planning processes can reflect those differences better than any sweeping national change.  Similarly, right pricing also requires some market sensitivity and testing. The aim should be to maximise the contribution that landowners make to infrastructure, whilst still allowing the land market to function. That means developing policies in a way that still leaves a sensible market value.

In urban areas that market value will, often, reflect the existing use value plus a sensible margin and an incentive to bring land to the market. For greenfield sites, the market value will need to reflect an amount needed for landowners, or promoters, to bring forward development and recycle value themselves into infrastructure delivery and place-making. However, landowners need to recognise that any existing “hope value” is not a permanent or fixed part of market value. As the market, planning policy and CIL levels change hope value necessarily also has to adjust. Any balancing exercise should diminish, but not dash, hope.

Thin Ice

Perhaps the more important Select Committee issue is the suggestion that the 1961 Land Compensation Act should be changed. In broad terms, the Committee recommend that land being compulsorily acquired should be acquired at existing use value instead of market value. That would be resisted. It would create a two-tier land market – with different values applying to adjacent plots depending on whether it is being sold on the open market or being publicly acquired. How would that work? Would that meet one of the tests that the Committee set for itself – fairness?

It is also unnecessary. The Committee attributes the success of the first generation of new towns to there being a different CPO compensation code, and suggests that the same result would not be achieved today. That is just wrong.  If a site for a new town is compulsorily acquired, the valuation will disregard the “scheme”.  In most cases, that will mean the land is acquired at something close to the existing use value – most sites would not be developed in the absence of the new town proposal. Even if, in the absence of the new town proposal, there would a development value to the site then a properly constructed planning policy framework will require any new development to fund the necessary infrastructure and the cost of doing so will be reflected in the land value.

Keep it simple

Why is there a need to change legislation to do something that can, largely, already be achieved without burdening the system with more complexity and change? It should be a fundamental principle of CPO compensation that landowners receive a proper market value for their land. The Parkhurst Road case has made it clear, quite rightly, that market values should reflect planning policy. If that happens, then the hope value component of market value will, properly, be adjusted by the proper attribution of infrastructure costs.   If, after the proper deduction of those costs there is still a margin and a residual hope value, what is the justification really, for amending the compensation code to take that?  If there is a justification for taking that capital gain then the tax system should be used to do so rather than playing games with compulsory purchase compensation which are ultimately likely to slow down development and unhinge investment.

Muscular Authority

A late amendment to the Neighbourhood Planning Act 2017 amended the New Towns Act 1981 to allow locally led new towns to be designated and for development corporations to be set up to deliver them. Kept to a single section, the 2017 legislation needed regulations to put flesh on the bones. The regulations arrived yesterday. They are supported by guidance that sets out when the Secretary of State will be willing to designate a locally led new town.

In very broad terms if a local authority wants to promote a new town then it will normally do so through a local plan process, securing an allocation. A request will then be made to the Secretary of State who, after consultation, will consider whether it is in the national interest for a new town to be designated. He will need to be persuaded about issues of community participation, deliverability, potential alternative delivery vehicles, and the adequacy of controls on design, sustainability and stewardship. If the application is successful then the Secretary of State will appoint the local authority or authorities as an oversight authority whose primary responsibility will be to control the designated development corporation and make sure that it delivers a high quality sustainable community with proper stewardship arrangements.

The development corporation will promote masterplans and Local Development Orders, both approved by the oversight authority, that set the planning framework. It will have CPO powers, to be confirmed by the Secretary of State, to acquire land within the new town area. The board of the development corporation has to be majority non local authority members. The emphasis, as with the old generation of new towns, is on delivery, this time however with an additional statutory focus on community participation and stewardship.

There has been a long campaign to update the 1981 Act to make it fit for purpose. The government has done a large part of the necessary work, and local authorities now have a powerful new mechanism to help deliver, and control, large scale development. There are some interesting future challenges and opportunities. How will future development corporations work alongside landowners and developers?  How will Local Development Orders be framed to secure consent for a masterplan in a way that can be properly environmentally assessed?  What approach will be taken to CPOs, where development corporations may want the security of early ownership of the entire new town area from the outset? An anticipated update to MHCLG guidance on CPOs may address this latter point.

The government has moved quickly and efficiently to put new powers in place. Local authorities now need to rise to the challenge.

Note: Dentons are advising the North Essex authorities who are promoting three new garden communities through their local plans, and are considering the possibility of a locally led new town development corporation as a delivery vehicle.

Planning and the General Election: keys to long term success

With the General Election drawing ever closer, planning forms the battleground for a several controversial issues close to voters’ hearts, such as fracking and safeguarding the greenbelt. In particular, persistent difficulties in delivering new housing and infrastructure unite the parties in a common cause. More homes are needed, quickly, together with greater certainty around delivery of supporting infrastructure.

The extent to which the next Government succeeds in solving these problems will be determined by its appetite to grapple with a host of underlying difficulties. These include devising an effective model for land value capture, making the CPO process fit for purpose and addressing the chronic shortfall in local authority resourcing.

Despite obvious distractions elsewhere during this campaign, housing delivery still sits atop the planning agenda, with the manifestos all setting targets and the broad route needed to reach them. The Conservatives will point to steps already taken along this long and winding road – most recently through the Neighbourhood Planning Act 2017 and its predecessor the Housing and Planning Act 2016. Similarly, the Housing White Paper affords us the rare luxury of a detailed annex to the aspirations commonly found in (deliberately) loosely drafted manifesto commitments. Whilst less “radical” than badged, it establishes a framework of policy changes aimed at speeding up housing delivery, through measures such as diversifying the market, getting local plans in place and holding the public and private sectors to account for delivery.

Housing delivery at scale is recognised as being paramount. This requires a commitment to supporting the growth of new towns and garden communities – where the worlds of housing and infrastructure collide most spectacularly. The Liberal Democrats propose at least 10 new garden communities whilst Labour also underline the need to start on a “new generation” of new towns. The current system already supports that drive with the introduction of a potentially significant power in the Neighbourhood Planning Act 2017 allowing Regulations to facilitate the designation of areas as new towns and for development corporations to be established.

Whichever party emerges victorious on 8th June, there is a sense that the keys to long-term success are not entirely in their hands. We are witnessing a shift in emphasis towards the increased role of the public sector as an enabler of development. The extent to which they are willing and able to embrace that role will go a long way towards determining whether the same issues – and proposed fixes – will remain on the planning agenda in 2022.

Housing needs a must

At last there is a political consensus that there is a massive housing shortage in this country.   Three-quarters of the British public now agree. Only a minority of MPs believe that the solution is out of the Government’s hands – credible solutions to the shortage may well win votes.  This is the first in a series of posts that looks at the housing policy platforms of each main party, starting with Labour.

Lyons Roar

The NPPG has been a convenient tool to grab headlines for the Government.  The general thrust of most recent changes has been that so-called “red-tape” is being cut to facilitate housing delivery.  A couple of weeks ago, as some Councils grappled with how to calculate Vacant Building Credit and lamented the loss of affordable housing contributions, we learned more about the Labour proposals to deliver housing floated in the Lyons Review.

Labour want to recapture the post-war spirit for building new homes, matching that renewed ambition with a drive to build high quality homes and great places for new communities.  This has been a consistent message from the Shadow Housing Minister since she stepped into her role.  Easy to say, more difficult to deliver.  NIMBYs have not disappeared. Nevertheless Labour propose the construction of 200,000 new homes each year by 2020.  They propose doing this by:

  • Making tackling the housing crisis a national priority;
  • Giving local communities stronger powers to build the homes needed in the places people want to live;
  • Giving first time buyers priority access rights in new Housing Growth Areas;
  • Creating a major new role for local government in commissioning and delivering housing developments;
  • Building more affordable homes;
  • Increasing competition in the housing market and boosting small builders; and
  • Building a new generation of New Towns and Garden Cities.

Larger than local – mind the gap

No return to regional planning is proposed. In fact Labour see an increasing role for local government in assembling land, delivering infrastructure and commissioning housing development, with powers to prevent land banking.  Labour propose addressing the fall in housing delivery by small and medium size builders by providing access to low cost loans. Delivery of designated housing growth areas “at pace” and a new generation of new towns and garden cities are seen as the proposals most likely to deliver the significant housing numbers required.  Much of this builds on the Lyons Review, the most comprehensive recent review of the housing crisis and how to solve it.

Something still to give

Unfortunately, the announcements to date do not fully embrace all of the Lyons recommendations and it remains to be seen whether, for example, the measures on CPO and land value will be taken forward.  We will find out in May if Labour will get the opportunity to implement their plans.

With thanks to Janine Shaw for assistance with this blog