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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.

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.

A complex process

We look at the current approaches to assessing compensation in the context of CPOs. The promotion of nationally significant infrastructure projects such as HS2, Crossrail and garden cities, together with the recent (and continued) support in the housing white paper for the use of compulsory purchase to assist in delivering housing, confirms that the use of compulsory purchase orders (CPOs) will play an increasingly prominent role in the delivery of development. The inevitable requirement of exercising CPO powers is that those dispossessed of their land are entitled to appropriate and fair compensation.

Read the full article

This article was first published in Property Law Journal (April 2017) and is also available at http://www.lawjournals.co.uk/.

CPO – gentrification or regeneration?

The recent refusal by the Secretary of State to confirm Southwark Council’s CPO for the next phase of the Aylesbury Estate development demonstrates a meticulous adherence to  parts of the CPO Guidance which have largely been paid lip-service to in many previous CPO decisions.

The mantra that a compulsory purchase order should only be made in the “public interest” is often justified by the inevitable regenerative benefits of development projects.

And that should be good enough, should it not?  – when not a day goes by that the news is reminding us of our housing crisis, that our town centres are failing, of the social divides which exist within our local communities and, as we wait with bated breath, to see what long-term impacts Brexit will have on construction, funding and development, once that axe is finally swung.

Indeed, both the Secretary of State and Inspector agreed that the redevelopment of the Aylesbury Estate would provide social and economic benefits to the area.  However, it was concluded that these benefits were not so significant to justify the lawful interference with the Human Rights of those objecting to the Order.  This was largely based on the conclusion that existing leaseholders, without investing significant savings or taking out new mortgages, would not be able to afford to relocate into new properties provided by the redevelopment and therefore forced to move away from their local community.  He also reached the conclusion that not enough effort had been made to acquire the outstanding interests by agreement.

gentThe decision raises some real issues for the CPO industry.  It paints an uncomfortable picture of CPO being a tool of gentrification, driving residents and small businesses out of their communities on account of rising land values and rents; the polar opposite of what a CPO is intended to achieve, which should be to improve and restore vitality to a local area.

It also creates a real tension with the current reforms to CPO compensation, which essentially seeks to ensure that those subject to compulsory acquisition should not gain any benefit from any enhanced value created by the regeneration scheme underlying a CPO.

It raises the question of whether Council’s should wrestle back control from developers when seeking to engage with those affected by CPO.  Most CPOs are developer-led and their surveyors will be at the fore of seeking to negotiate acquisition of land by agreement, albeit with a duty of care to the Council.  This possibly creates the wrong perception that there is a lack of engagement by the Council.  Greater visibility of the Council promoting the CPO and a genuine strategy to engage will be important.

Whilst the decision is, in some respects, a breath of fresh air that reminds us the impact CPO and redevelopment can have on individuals and local communities must be given more careful consideration together with a thorough review of solutions which can be put in place to maintain the identity of the local community.  One does have to question how genuinely balanced the decision was when the majority of existing residents had raised no objection, the scheme was set to deliver over 800 new residential units and other benefits; yet the CPO failed on the back of only 8 outstanding objections.

Southwark Council has announced they will be judicially reviewing the decision; a sensible move given its ramifications.

Manifesto for Planning 2015: please don’t reinvent the wheel

However the new Parliamentary balance of power plays out, planning will be in the frontline of addressing housing needs. The Conservative manifesto remained focussed on Localism and subsidies for first time buyers/ landowners. Labour had proposed rent control, infrastructure investment, public sector housebuilding and delivery of the Lyons Review recommendations, including the doubling of housebuilding in five short years through a new generation of Garden Cities.

Our manifesto for progress on the ground is simple:

  1. No new planning legislation. There has been some helpful, and some genuinely radical, planning reform in the vast swath of legislative paperwork spawned by the Coalition (Localism Act 2011, Enterprise and Regulatory Reform Act 2013, Growth & Infrastructure Act 2013, Infrastructure Act 2015, and a set of CIL Amendment Regulations every year since 2010).  Please stop legislating, at least for one Parliamentary term. There is now insufficient public sector resource to do much with legislation as it stands, let alone more of it. (see 8, below)
  2. No changes to the Town and Country Planning Act. pic
  3. No changes to the NPPF. Broadly it works.
  4. CIL agreements for major sites. CIL breaks down when applied to big projects. It makes sense to put agreements entered into ahead of CIL setting and during the application process on a footing that prevents viability debates and creates certainty about land value and infrastructure delivery.
  5. A National Policy Statement for Housing which sets defined Broad Housing Market Areas and needs and a tiny change to the Planning Act 2008 to allow (but not require) DCOs for housing above the 5,000 units mark.
  6. Fiscal incentives for authorities to allocate land to meet needs. None of the manifestos tackle the issue that dogs what is meant to be a plan-led system – there are no local political incentives to plan for growth to meet needs. They are, in fact, usually perfectly aligned in the opposite direction. Failure to plan will be rewarded by re-election. A clearer relationship between land allocation and infrastructure planning and Government grants would clarify local decision making.  Funding that is tied to allocations, LDOs and authority-sponsored DCOs makes sense.
  7. A national template highways agreement and a national template planning agreement. So much time is wasted in unnecessary, cruel and unusual drafting that could be so much better spent on decisions about where, when and how we are going to build (not just approve) an extra 200,000 homes every year for the next Parliamentary term to meet the minimum of needs.
  8. Resourcing planning.  In many local authority legal departments the last person to leave has already switched off the lights and departed for a remotely operated shared services regime.  Planning officers are a endangered species. Highways teams have been outsourced en masse. Despite this there is some committed work done in challenging circumstances.  The development industry should look harder at how it can support the public sector.  Authorities in turn should recognise that delivery will now often require outsourcing to the most capable external advisers at developers’ cost, rather than holding onto what is seen as a revenue stream amidst unprecedented under-capacity.
  9. Sort out the CPO process.  It is too long winded and unfair.  The Law Commission did an excellent report on how it could be improved and that should be dusted off.  And allow the private sector to initiate the CPO process – after all if it is acceptable for CP powers to be given as part of the DCO process why cannot there be a similar ability to support housing and smaller scale development?
  10. Transparency and viability.  We need to make the viability assessment process less opaque and more open.  We also need to make sure that if viability is addressed as part of the local plan process then it should be rare for the policies to be challenged afresh application by application.  But where viability is raised as a reason for non-compliance with policy then the figures, in an appropriate form, should be available for the public to review.

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.

 

Difficulties of delivering major development

Delivering major development is difficult. One of the deterrents is often the need to assemble fragmented land ownerships. The availability of compulsory purchase powers is critically important to give developers some certainty that they will be able to deliver. The powers should be available and should be used more widely.

However, CPOs should only be used as a last resort. In some recent cases there appears to have been a move to treat negotiations and voluntary deals as an irritant rather than a requirement.  For example:

  • some CPOs are being made before any real approach to significant affected landowners by either the Council and/or the developer. Even if a CPO is inevitable, an early approach to those affected should be a pre-condition of the Order being made;
  • if negotiations have been started they have been pro-forma and tick box -designed mainly to ensure that there is a paper record of contact rather than because there has been a genuine effort to agree terms;
  • where efforts have been made to deal with landowners there is no real negotiation.  Too often sham terms are offered to landowners. They give, effectively, an option to the developer to acquire at a point in the future if the CPO is confirmed and they decide to proceed. That should never be acceptable. If a CPO is being sought, then the acquiring authority/developer should be willing to acquire the land now. After all, the land affected by the CPO is effectively blighted;
  • even worse, in some cases the “negotiations” have been limited to offering a present day fixed price for the land, to be paid only as and when the development commences.  No-one would accept that in a normal commercial arrangement so why is it thought to be acceptable in the context of a CPO?
  • sometimes the lack of negotiation may have, or may be seen to have, equalities complications.  Too often the evidence seems to suggest that some minority groups are not being dealt with properly.  All parties affected by CPOs should be dealt with equally.

These emerging practices are dangerous. If continued they risk undermining future support for CPOs. That would then undermine development. Everyone involved in a CPO process should treat it as imposing serious public law duties. Land should, if at all possible, be acquired privately; CPOs should, genuinely, be a last resort. Where it is needed those affected should be dealt with fairly and equally and on terms that are commercially sensible.

The Magic Section 237 Wand – or is it not quite that simple?

After the Heaney judgment in 2010 developers have had a clear need to address rights and restrictions at the outset.  Can they turn to the local authority for help in cleansing the development site of any right to an injunction?  What does s237 actually say?

…the erection, construction or carrying out or maintenance of any building or work on land which has been acquired or appropriated by a local authority for planning purposes (whether done by the local authority or by a person deriving title under them) is authorised by virtue of this section if it is done in accordance with planning permission, notwithstanding that it involves—

(a) interference with an interest or right to which this section applies, or

(b) a breach of a restriction as to the user of land arising by virtue of a contract.

Section 237(1A) applies this power to the use of the development.

magicwandSo, the authority acquires or appropriates for a planning purpose.  Magic, the consented development can proceed and any previous right to seek an injunction is reduced to a right to compensation on a favourable basis for the developer.  Not quite.

The effect of s237 is akin to compulsory purchase.  Compulsory purchase guidance emphasises the importance of seeking to acquire land by negotiation and provides that a CPO should only be made where there is a compelling case in the public interest.  In either case human rights implications are likely.

The Human Rights Act 1998 prohibits public authorities from acting in a way which is incompatible with the European Convention on Human Rights.  The use of s237 will often result in interference with rights such as the right to peaceful enjoyment.

Therefore, before invoking s237 a local authority must consider whether the interference is justified. Knowing whose rights will be interfered with and whether they are prepared to give them up, without the need for statutory powers, is important.  Unless the scale and complexity of the affected rights makes it infeasible to do so, attempts to extinguish the rights through private treaty negotiations will normally be needed.  The public interest must outweigh the interest of the private individuals whose rights are to be interfered with the interference with, rights must be necessary and proportionate.  A town centre redevelopment may well be in the public interest and justify interference with rights.  A new office block may not.

If an authority is satisfied that use of s237 is appropriate, it is an extremely useful delivery tool.  The development site is acquired or appropriated for planning purposes, ideally with a specific resolution explaining the intention that the rights will be subject to s237.  The site is then transferred to the developer, perhaps with a confirmatory resolution to make it clear, on the public record, that the authority is intending that s237 applies, maybe even tied to a specific planning permission or type/scale of development, and requirements about giving notice to and negotiating with those whose rights are affected.  Done properly, the listed bank next door (as in the case of Heaney) will not be able to obtain an injunction.

Where the developer owns the site, the land must pass through the local authority’s ownership. Considering how the transaction can be structured to reflect SDLT and to allow works to commence whilst the authority holds the freehold interest is crucial.  Where a site is being assembled by CPO it is prudent to acquire any necessary rights, avoiding, or at least minimising, the need to use s237.

DCO regime faces a real test

Better known as the super-sewer, the Thames Tideway Tunnel (“TTT”) Development Consent Order, granted on 12 September 2014, was a super-sized DCO application.  The scheme covers 25km from Acton to Abbey Mills and with 43 hearing sessions and 1246 representations is by far the largest application to go through the Planning Act 2008 process to date.  Based on recent news reports, it is also now set to be the most contentious DCO so far, with two judicial review challenges lodged.

The first challenger is, unsurprisingly, the London Borough of Southwark.  Thames Water may have been expecting a claim after the Leader of Southwark publicly branded the decision “ludicrous and evil“.

tunnelNothing has emerged yet on the grounds of their challenge but it is a safe assumption that it will focus on the use of Chambers Wharf as a site to drive the main tunnel to the Abbey Mills pumping station, and the impact of the drive site on residential amenity.  The Examining Authority concluded that the use of Chambers Wharf was not justified and weighed against the making of the Order.  The Examining Authority considered that if the option of driving from Abbey Mills (i.e. a reversal of the drive direction) were fully explored there was a good prospect that it would be found to be preferable in terms of overall environmental and community impacts.  While the Secretaries of State noted that the intensity and duration of impact on nearby residential occupiers during the 6 year construction period (including 33 months of night time working) weighed against the making of the Order, they considered that the mitigation package would substantially mitigate those adverse impacts and the selection of Chambers Wharf as a drive site was justified.

The crux of Southwark’s challenge is likely to be the extent to which the Secretaries of State are required to consider alternatives to the applicant’s proposals in the course of their decision making.  This is a fundamental question given that the National Policy Statement for Waste Water (NPS) approves the principle of a tunnel but leaves the specific route, design, layout and construction programme of that tunnel to be determined as part of the DCO application.  The answer will influence the future approach of applicants and objectors.

The second challenger is the Blue-Green Independent Expert Group (“BGIEG”) – an interest group formed by a broad coalition of independent experts.  News reports indicate that their challenge relates to the failure to comply with the public participation requirements of the EIA Directive and EIA Regulations.  BGIEG’s challenge is likely to focus on the precautionary principle (Article 191 of the Treaty on the Functioning on the European Union), obligations arising under the UN Aarhus Convention and the EU Public Participation Directive and criticisms of the robustness and adequacy of the Environmental Statement.

Whether BGIEG continues its argument that the case for progressing the scheme by way of a tunnel has not been proven remains to be seen. During the course of the examination, BGIEG argued that the NPS decision in principle to use a tunnel was made without proper testing of alternatives, including blue-green infrastructure solutions.  The starting point of the inquiry was that contained in the NPS, namely the Examining Authority and the decision maker in undertaking any assessment of the TTT application should do so on the basis that the national need had been demonstrated.  The NPS states that in reaching that conclusion the strategic alternatives have been considered and strategic alternatives did not need to be assessed by the Examining Authority or the decision maker.  If a court were to hear a challenge, let alone allow a challenge, on this ground it would deal a heavy blow to the sanctity of NPSs.

Despite being a long-standing objector, Hammersmith & Fulham has notably not challenged the decision.  They may be sitting back to watch the Southwark showdown first.

Muscular Action

The Bank of England is concerned that Britain is building half as many homes a year as Canada, despite having twice the population.  Planners are concerned about unplanned growth.  David Cameron’s support in early 2012 for a new Abercrombie Plan to protect the green belt and meet housing needs led to an RTPI/ Land Securities report.  But a Garden Cities Prospectus promised for high growth areas has not materialised.  Nick Boles’ confirmation in June this year that no resources would be allocated seemed to seal its fate.  But new towns are back on the agenda.  The Labour Party proposes to use five of them to double annual housing delivery until 2022 and the man they have appointed to come up with a blue print for 220,000 homes a year is calling for ‘muscular action’, including the compulsory acquisition of land subject to unimplemented consents.  The Policy Exchange, courtesy of Lord Wolfson, are also keeping the original commitment alive  – offering a £250,000 prize for a workable Garden City model. Now David Cameron’s key planning advisor has jumped ship to oversee it. Here is a short entry for the Prize.

Geographies

Where should new settlements go? In the absence of the RSS ‘Areas of Search’, LEPs should be empowered and incentivised to identify their own Garden Cities and Suburbs, where needs indicate they are required.  Business Rates, CIL and other fiscal tools can be used to make it worthwhile. An assumption that they will be built within range of London or on the line of HS2 needs care – the original Garden Cities were as much about where employment, not just houses, should go. ‘Muscular action’ is certainly needed, if only to make clear choices about the location and scale of major new settlements and their accompanying infrastructure.

Land powers and costs

‘Housing estate’ is a sullied phrase.  If there is going to be social licence to build, genuine placemaking is required.  Excellent masterplanning and design require land budgets and values that allow space for schools, parks and the like as a starting point, not an extra, ‘subject to viability’.  Compulsory purchase will be needed to achieve this, as the draft London Housing Strategy recognises.  The real question is how is it valued and who holds the land once assembled – LEPs, community trusts, Community Interest Companies or an arm of the Treasury?

Prime the pump

CPO valuation will reflect the public cost (or balance sheet risk) of forward funding significant new infrastructure. The TIF approach that has catalysed the Vauxhall Nine Elms Battersea Opportunity Area is a good starting point.  It needs a strategic body – such as the Mayor – to invest in infrastructure before planning payments, CIL and land receipts can catch up.  Labour envisage market borrowing backed by a UK plc guarantee.

City governance

garden city

Letchworth and Welwyn are characterised by communal ownerships and structures, which has allowed investment to be repaid and reused.   Milton Keynes had a different but effective model.  The lessons from these experiences – good and bad – need to be reflected in models of community ownership and reinvestment that provide an asset lock for crucial facilities and a base for social enterprises, releasing local authorities from management and revenue burdens associated with new infrastructure.  The Neighbourhood Share of CIL is a good model for endowing these vehicles.

The Prize winner should address these issues and more, not just design.