The Town And Country Planning Environmental Sciences Essay

This paper is based on secondary research in to the justifications provided by the coalition government to support the introduction of the National Planning Policy Framework (NPPF). This research involved an analysis of the impact that the NPPF could have on major areas of debate such as: sustainable development, economic and social costs of the current system, business activity, and housing, benefits of Brownfield development, approval rates and non-planning consents.

The old planning system was extremely complex and cumbersome, “the system has become overloaded with central policy and guidance, with vast amounts of paperwork making it too cumbersome and unclear for councils, developers and local people to use effectively. The proposed new National Planning Policy Framework will consolidate over 1,000 pages of planning policy statements spread across some 40 documents into a single document of 50-60 pages – around 5 per cent of the current volume of policy. To support the new Framework, there will also be a fundamental review of all the supporting documentation (which comprise a further 6,000 pages across a further 160 documents)”.

The literature review looks at secondary sources and focuses on several topics that I felt would affect most people, namely: Sustainable development, is or was planning a barrier to growth, business activity, Impact of planning on housing and the economy, benefits and costs of Brownfield development and approval rates.

The research findings demonstrated that the old system was in need of reform and that the National Planning Policy Framework theoretically will help the economy to grow out of recession by removing obstacles that ultimately cost money – both for developers and local councils. The research also shows that the old planning system was a barrier to growth and resulted in unnecessary costs due to delays and uncertainty.

Introduction

Background

Planning systems set rules and guidelines that influence the level, location and pattern of activity. The ultimate goal is planning to promote a balance of environmental, social and economic welfare that meets the needs of current and future generations. Doing so inevitably involves trade-offs, so any planning system has both benefits and costs. An important issue for policymakers and the public is whether the current system imposes costs which reforms could avoid.

“The new Government has made supporting sustainable growth and enterprise, balanced across all regions and industries, one of its top priorities. This means creating the right conditions for private enterprise and business investment. A well-functioning planning and wider consents regime is an essential component of the overall attractiveness of the business environment in the UK and the Government proposes to reform the planning system, creating a presumption in favour of sustainable development and providing more opportunities for local communities to determine the shape of the places in which they live.

Reform of the planning system and of specific elements within it has been underway for some time, with the aim both of making it more efficient and effective and of ensuring that it is not acting as a barrier to investment and sustainable development…” Penfold Review of Non-Planning Consents 2010.

The ‘old’ System:

The Town and Country Planning Act 1947 established a comprehensive and universal system of land-use control. The system served the key function of balancing public and private interests and was based upon a fundamental principle which still applies today, notably that private interests would need to be sacrificed for the public good as far as land-use issues were concerned. The old system that existed was a ‘plan-led’ system where English local authorities determined land use plans in consultation with stakeholders with the resulting plans becoming the basis for determining planning applications. Development required permission, and development applications were considered with reference to the plan unless ‘material considerations’ (determined by law) indicate otherwise.

The old framework of local plans and binding national targets evolved over more than sixty years, and was subjected to considerable scrutiny and legislative change over the last two decades (The history of the English planning system in this paragraph was provided by the Campaign to Protect Rural England (CPRE)). National government dictated the overall structure and direction of the system by enacting legislation that outlined just exactly what needed consent and how local policy shall be produced as well as producing national policy guidance to set out more detail on acceptable forms of development. Thus, the national government enjoyed a detailed level of intervention to setting the system up which ultimately allowed the government to influence its outcomes.

The Town and Country Planning Act 1968 introduced a significant reform to the system of plan preparation, with the introduction of structure plans and local plans. These documents set out both strategic and longer-term planning objectives, such as major housing allocations or green belt identification and short term allocations for development on individual sites. This system was further consolidated in the Town and Country Planning Act 1971, in the Town and Country Planning Act 1990 and in the Planning and Compensation Act 1991. The only other significant statutory reforms introduced between 1971 and 2000 dealt with the delivery of the planning function in the reform of the local government restructure the evolution of the old system can be seen in table 1.

Unnecessary detail has resulted in a system which often contradicts itself and where important national policy is obscured by duplication. This has acted as a brake on growth, hindering rather than helping local communities to shape development in their neighbourhoods. This impact on the processing of planning applications causing confusion and delay within the system, and in some cases may discourage submission of planning applications (as a result of the direct costs of complexity that must be borne by developers and the indirect cost i.e. uncertainty associated with planning delay). Contradictions in policy often occur between policy documents and guidance. For example, Planning Policy Statement 5 (Planning Policy Statement 5: Planning for the Historic Environment) asks local councils to not validate planning applications where the impact of the proposed development on any heritage asset cannot adequately be understood from the information supporting the application. However, the Department for Communities and Local Government (DCLG) guidance on validation advises that inadequate supporting information is not grounds for invalidating applications (See Planning Policy Statement 5 paragraph HE6.3 and ‘Guidance on information requirements and validation’, paragraph 34). Duplication results in the same policy being unnecessarily repeated in a number of separate documents. One example of this comes from four different national policy documents (Planning Policy Statement 1: Planning for Sustainable Development, Planning Policy Statement 3: Housing, Planning Policy Statement 4: Planning for Sustainable Economic Growth and Planning Policy Guidance Note 13: Transport) which all contain similar policies which ask local councils to identify land which is accessible and well connected to a means of transport including walking, cycling, public transport and by car.

This mass of guidance forms part of a system of top-down targets, which has grown up in recent years. Enforcement of these ‘imposed’ rules or targets can be costly and/or ineffective. For example, the system of housing targets had to be policed by the Planning Inspectorate at a cost of approximately £1m per year. The Planning Inspectorate had the power to impose housing numbers on local councils, who can face lengthy and costly appeals if their plans were judged to be inconsistent with national policy.

The complexity and prescriptive nature of national policy has also led to local people becoming disengaged from the system. According to Ipsos MORI, only 15 per cent of people consider themselves to be involved in decision-making at a local level. Of those 15 per cent, the majority (9 per cent) consider themselves unable to influence decisions (Ipsos MORI (2010). Do the public really want to join the government of Britain?). Other research has shown that national targets decrease the attention decision-makers give to community groups (Murdoch, J. and Abram, S.). Studies also show that they were often presented with limited options, giving the impression that decisions have already been taken, or were consulted on ‘abstract’ strategies (such as Regional Spatial Strategies) rather than plans for their local area (Baker, M., Hincks, S. and Sherriff, G.)

Table 1: The English planning system since 1991: main reports, inquiries and legislation

Report or Act

Contribution

Planning and Compensation Act 1991

Embedded the plan led system by making the plan the primary consideration in development control

‘Driving Productivity Growth in the UK’, McKinsey (1988) report

Argued that the planning system was an important constraint on UK productivity

Housing White Paper (1995)

Introduced a 50 percent target for the proportion of new homes built on Brownfield land

Planning Policy Guidance 6 (1996)

Introduced the ‘town centre first’ policy

Urban White paper (2000)

Focussed on urban renaissance and provided stronger foundations for Brownfield first approach to housing

Planning Green Paper (2001)

Argued that the planning system was too complex, slow and disempowering for participants; proposed simplifying the hierarchy of plans, shortening local plans and closer public engagement in plan making

House of Commons ODPM Select Committee report on planning competiveness and productivity (2003)

Concluded that planning was not a significant determinant of productivity and that outcome could be improved through further resourcing and better implementation of the current rules

Barker Review of Housing Supply (2004)

Recommendations include transferring benefits of development from landowners to affected communities and using market signals as a trigger for the release of additional land allocated for housing

Planning and Compulsory Purchase Act 2004

Introduced statutory Regional Spatial Strategies and a sustainable development purpose to planning

Barker review of Land Use Planning (2006)

Numerous wide-ranging recommendations to improve the responsiveness and efficiency of the planning system and the efficiency of the planning system and the efficiency of land use

Planning Act 2008

Created the Infrastructure Planning Commission

Localism Act 2011

Abolished the Infrastructure Planning Commission and Regional Spatial Strategies; introduced Neighbourhood Plans and a new duty for local authorities to cooperate

The government is seeking to reform England’s planning rules which currently involve:

A hierarchy of planning policies – national planning policy statements, until recently regional strategies and local development frameworks.

Development control as the main mechanism for regulating local development.

Section 106 (S106) as the main means of local value capture, complemented in 2010 by the Community Infrastructure Levy.

Some national restrictions (e.g. Town centre first, Green belts, Sites of Special Scientific Interest (SSSIs) and Areas of Outstanding Natural Beauty (AONBs)).

Figure 1:

From Urban Planning & Real Estate Development

3rd Edition by John Ratcliffe et Al

The ‘new’ system

The National Planning Policy Framework was published with the main aim of replacing the previous system that had in some form or another been in place since the introduction of the Town and Country Planning Act 1947 whilst streamlining the actual planning process. This has been achieved through a number of methods such as: the removal of duplication from policy, the simplification of over 1,000 pages of planning policy statements spread across 40 documents in to a single document of 50-60 pages, the removal of unnecessary information that led to system that at times contradicted itself.

The planning reforms brought about through the Localism Act and changes in national planning policy will reduce the level of central control, simplify the level of guidance and hand back more power to local communities. As an example, in the Localism Act, the Government has taken powers to scrap Regional Spatial Strategies and their housing targets and introduced a bottom up approach that enables local communities to decide the level of housing that is required in their area and share in the benefits of development.

This is a fundamentally different approach based on councils being best placed to make local decisions, holding the knowledge and expertise of their area. Supporting and building on these changes, the Framework removes a large amount of central prescription, being clear about what is Government policy and giving councils greater discretion in those areas which national policy no longer covers. This will enable them to find innovative solutions and respond to the needs of their different communities. At the same time, local people will be encouraged to reengage in the planning process through improvements in collaborative democracy and new policy vehicles such as neighbourhood plans (NPPF Impact Assessment – DCLG).

The main elements of the Governments National Planning Policy Framework (NPPF) and associated reforms are:

Significantly simplified national planning guidance (National planning policy is currently set out in over 1,000 pages of policy guidance and statements, with more than 6,000 pages of supporting documentation, contained within a total of more than 200 documents.)

Devolved decision making, with local authorities drawing up local plans via community consultation, subject to the NPPF and fiscal incentives to encourage development.

A presumption in favour of Sustainable Development, where this accords with local plans. If no up-to-date plans exist, then the default answer to sustainable development should be ‘yes’.

Maintain all existing protected status – that is Green Belt, SSSIs, AONBs and also retail town centre first restriction for retail development.

In parallel with the NPPF, the government is also introducing:

A reformed Community Infrastructure Levy as the main means of value capture, while limiting use of S106.

Financial incentives for new housing through the New Homes Bonus, and for commercial development via the Business Increase Bonus.

A Localism Bill and wider proposals for reforming the local Government finance.

Aim

This research seeks to analyse the validity of the justifications provided by the Coalition Government to support the introduction of the National Planning Policy Framework.

Furthermore, this research seeks to investigate whether the claims made by the government that the old system was a ‘barrier to growth’ and whether the National Planning Policy Framework will help the economy to grow and if so how.

Objectives

To carry out an extensive review of available literature sources with a view to critically assessing the articles.

To investigate the claims made by the Coalition Government that Planning is a barrier to Growth.

To arrive at a conclusion, as to whether the claims and the introduction of the National Planning Policy Framework were justified.

To provide recommendations for further research that may be carried out that will provide a better assessment of how the National Planning Policy Framework has impacted the country and whether or not it can be deemed successful.

Dissertation Structure

The dissertation is structured in the following manner;

Chapter 2- Research Methodology

This chapter outlines and explores the methods utilised to conduct the research required to complete this dissertation. It explains the rationale behind the methodology of the research in detail.

Chapter 3 – Literature Review

This chapter explores the claims made by the government and where possible puts forward evidence that contradicts and supports the views expressed by the government.

Chapter 4 – Summary and Conclusion

This chapter provides a summary of the findings produced by this dissertation and also draws conclusions from the literature review, meeting the aims and objectives of the study as previously outlined. Additionally, the limitations of the research and data are explored.

Chapter 5 – Recommendation for further work

This chapter outlines further research that could be carried out in order to further understand how the National Planning Policy Framework has impacted the economy, and whether it has been successful in achieving the coalition’s targets.

Research Methodology

Research Strategy

Academic literature has prescribed research a vast number of definitions, descriptions and concepts (Punch, 2000). However, throughout these definitions there is a general theme and academic consensus, that research is a process of enquiry and investigation, which through a systematic and methodical approach increases knowledge (Amaratunga et al., 2002). Furthermore, Hair Jr et al (2007), suggests that the definition of research can be further summarised as the “discerning pursuit of the truth.”

In regards to the above, ‘pursuit of the truth,’ the research methodology usually entails a three stage process to provide a robust and accurate analysis. Stage one, involves an initial in-depth literature review of the publications, (e.g. Estates Gazette and Property Week) published journals and academic text books, to interrogate and integrate ideas, whilst linking together concepts to provide an enhanced and informed base in which to comprehensively approach the aim of the dissertation (Naoum, 2007).

The remaining stages of the research used a combination of both quantitative and qualitative approaches, with the aim of providing conclusions based on numerical findings which are based upon a natural and realistic environment. (Amaratunga et al. 2002).

Yin (1994), states that a research strategy should be chosen as a function of the research situation. As such the research objectives had a material bearing that strongly influenced the methodology used.

Adopting a predominantly quantitative approach to the methodology, provides a platform of scientific respectability, due to the way in which findings can be presented (Denscombe. 2000) and thus interpreted (Saunders et al, 2003).

Quantitative research is objective in nature and can be defined as an inquiry in to a social or human problem, based on testing a hypothesis or a theory composed of variables, measured with numbers, and analysed with statistical procedures in order to determine whether the hypothesis or theory hold true (Creswell, 1994). Quantitative data is therefore not abstract, it is hard and reliable; it is the measurement of tangible, countable and sensate features of the world (Bouma and Atkinson, 1995). To this end it must be noted that a purely quantitative approch to data collection would be used when: you want to find facts about a concept, question or an attribute OR when you want to collect factual evidence and study the relationship between these facts in order to test a particular theory or hypothesis.

In quantitative studies, the hypotheses, research questions and aims should be presented within a theoretical framework. A theory can be introduced as: A seried of hypotheses/sub-hypothesis in the form of ‘if…then’ logic statements OR a hunch (Naoum 2007).

It is argued that to a certain degree quantitative research, fails to understand the deeper underlying factors of the subject matters and inadequately transposes its findings by way of explanation, despite its level of accuracy and validity (Denscombe, 2000).

Qualitative research on the other hand is ‘subjective’ in nature. It emphasises meanings, experiences that are often verbally described through structured or unstructured interviews and so on. The information gathered in qualitative research can be classified under two categories of research, namely exploratory and attitudinal. Exploratory research is usually employed when you have a limited amount of knowledge about your research topic. The techniques utilised for the process of data collection are usually either structured or non-structured interviews. The purpose of exploratory is usually threefold: firstly, to diagnose a situation; secondly, to screen for alternatives and thirdly, to discover new ideas (Zikmund, 1997, cited in Naoum 2007).

Creswell (1994) writes: ‘one typically finds research questions (not hypotheses) written in exploratory research. These research questions assume two levels (1) one or two “grand tour” questions followed by (2) no more than five to seven “sun-questions”.’

Attitudinal research on the other hand is used subjectively to evaluate the opinion, view or the perception of a person towards a particular object (either an attribute, variable, factor or question). Through obtaining the attitudes of individuals towards an ‘object’ of choice, a process of interpretation can begin, enabling the findings to become ‘data’ (Denscombe, M, 2000).

As mentioned previously qualitative research doesn’t tend to have clear rules on the use or placement of theory. Any hypotheses or theories that may emerge during the data collection and analysis phase of the research tend to be placed at the end of the study which require more quantitative testing. It should be noted that the research methodology is not without limitations.

Data collection is split into two fields, primary and secondary, the latter of which involves the analysis of information that has already been collected within another study and is often referred to as desk study, it is aptly named ‘secondary’ because it is concerned with analysing data for the second time (Sarantakos, 2005). Unlike secondary which is predetermined and dated, primary data compilation, also known as ‘Fieldwork’ entails the collection of current up-to-date information directly from the source, first hand, which can be of a very specific nature.

Research design

Although various assessments of the planning system (both the NPPF and the ‘old’ system) have been undertaken previously, there is limited research into the validity of the arguments presented by the Coalition government that demonstrates that the benefits of the NPPF will outweigh the costs of introducing a new system. To this end, the methodologies used within the previous studies were considered as appropriate templates, however, two research design methods were considered from which one was chosen:

The first method considered was the analysis of data from local planning authorites, this method was deemed to be impractical as it was anticipated that obtaining actual data pertaining to major developments that could be used for case studies to assess the impact of the NPPF from local planning authorites first hand would be extremely difficult. Additionally in order to carry out the assessment thoroughly, the development would have to be assessed using both planning systems, only then would the benfits of the new system (if any) become apparent.

The second method that was considered was the analysis of secondary data sources, in meeting the research objectives, the analysis of secondary data sources was deemed to be the most appropriate method of conducting the research required for this dissertation. The methodology ensured that the main points raised by the governemnt that supported the NPPF were discussed and critically analysed and also allowed any information that opposed or contradicted the governments views to be presented.

Literature Review

Sustainable Development

National planning policy issued by central government sets out guidance to councils, applicants for planning permission and other users of the planning system, about the delivery of sustainable development through the planning system.

“Planning should help to contribute to the achievement of sustainable development, securing net gains against the economic, environmental and social elements of sustainable development.”

“The NPPF must set a clear framework for what development plans should contain and to this end the Localism Bill should be amended to ensure that sustainable development is at the heart of the planning system. Given the importance of the definition of sustainable development, we believe that the way in which it is expressed should be the subject of Parliamentary scrutiny, which would give the resulting definition greater weight than a policy requirement. We attach a draft amendment to the Localism Bill that would achieve this.” (NPPF Impact Assessment)

If this type of definition is not in statute then the NPPF will have to provide a clear focus for those involved in planning, drawing a distinction between how the term sustainable should be interpreted and evidenced in the development plan process and how it should apply when making determinations on applications. This is necessary due to the fact that development involves significant fixed costs that must be paid upfront and therefore it would extremely beneficial if the planning system could help to reduce or limit this level of uncertainty.

Furthermore, planning decisions can generate large sums of money for those gaining planning permission to build. For both these reasons it is imperative that decision making is transparent and governed by a clear and concise set of rules. The previous system was so complex that it did not meet these criteria. The NPPF achieves this by vastly simplifying the rules and by introducing a presumption in favour of sustainable development. Local bureaucrats and politicians will no longer get to say yes or no to development on a case-by-case basis. Instead the presumption means that they have to say yes to things that are consistent with their local plan, however, it must be noted that the presumption does not apply where the adverse impacts of development would “significantly and demonstrably outweigh the benefits”. Many other countries successfully run systems that are (at least) this permissive, but it is less clear that this principle can be brought in immediately, given that many local areas do not have up-to-date local plans.

The NPPF will need to make the balancing exercise clear because there will be some cases where there is an unavoidable trade-off between local and national interests, for example, the government wishes to increase housing supply in England and improve the strategic infrastructure within the UK, these are both national priorities that affect specific local communities. Another reason why the NPPF will need to make the balancing exercise clear is because all too often, the limb of sustainable development that relates to the meeting of basic human needs (and in some case human rights) is sacrificed because of environmental concerns.

By setting out a ‘presumption in favour of sustainable development’ as a central feature in the NPPF, it places more requirements on the council to be proactive in identifying and addressing the need for sustainable development. Of course there will be costs associated with reform, however, the precise impacts of the policies will vary by location and are dependent on how local communities respond to the changes outlined in the NPPF. Further, given the inherent uncertainty in the housing market, capital markets and wider economy, it is difficult to isolate the impact of the changes proposed here from those wider macro-economic factors.

Some of the benefits that will come from this presumption are reduced delays and uncertainty because where applications accord with the framework, there is likely to be some kind of impact on the speed with which decisions are made. As a result with more up to date plans adopted, the speed of obtaining planning permission (and therefore completing sustainable development) should be reduced. Even where up-to-date plans have not been adopted, the Framework provides a clear policy framework for investors and development control decisions, so that the benefits of reducing delays and uncertainty may to some extent be realised even before up-to-date, compliant plans are adopted by local authorities.

However, even modest improvements in scheme delivery times as a result of the certainty provided by up-to-date plans could produce significant effects in terms of the efficiency by which those plans are delivered and substantial benefits to society as a result of development taking place sooner.

There are other benefits associated with reduced holding costs land and other assets through the development management process; and land banks required by the uncertainty of development control and for sites that were rejected. For example, Ball (2010) notes that there are substantial holding costs associated with land banks required by the uncertainty of development control and for sites that were rejected. This could push financing costs from £1bn “to over £2bn”.

Social impacts of Old System

This section will aim to present a framework for thinking about the costs and benefits of the land use planning system. It will seek to outline how planning affects the wellbeing whilst summarising the evidence on the existence and relative importance.

To some extent, the planning system exists primarily to improve the wellbeing of humans and is achieved through the development and implementation of policies that influence land use. As with many markets, the existence of ‘market failures’ departures from ‘ideal’ market conditions which include perfect competition and fully informed participants), and concerns over the distributional effects of unregulated land markets, provide the rationale for the planning system, or to put the argument another way, create the opportunity for government or collective action to improve outcomes in terms of wellbeing. The main policy instrument used by the English planning system to achieve this goal is regulation of the supply of land available for different uses. Broadly speaking, this regulation gives the planning system the ability to control where development can occur, how much of it there can be and what kinds of development there are – although the powers of the system are asymmetric in the sense that planning can prevent but NOT ensure development.

Another way in which planning can impact upon wellbeing is through economical means.

“Economists tend to think of wellbeing as depending on the consumption of ‘goods’, where the definition of goods extends well beyond things which can be purchased from retailers. A ‘good’ is anything that contributes, positively or negatively, to human wellbeing, ranging from simple goods like an apple to the feeling of pleasure derived from knowing about the existence of a national park one may never visit.”

“Planning can influence the availability and price of many types of goods, including through reducing the amount of some things which lower wellbeing.” (Inexpensive Progress)

Goods can be classified to their characteristics: ‘externalities’ which can be positive (a pleasant-looking street) or negative (pollution) and are things that affect wellbeing but for which the affected person did not pay or receive compensation; ‘public goods’ are goods such as the atmosphere which are non-excludable (it is not feasible to stop someone consuming them) and non-rival (one person’s consumption does not affect another person’s ability to consume the same good). Public goods are generally under-provided by private markets because non-excludability means that a provider cannot recover revenue as compensation for the costs of provision; ‘club’ goods such as private parks are excludable, but (at least before they become congested) not rival; and ‘private’ goods such as housing are both excludable and rival.

“The opportunities for planning to improve on market outcomes come from two sources: first, market failures, or departures from ideal market conditions, mean that government policy can improve overall wellbeing.”

In land markets, these failures are so pervasive that all developed countries regulate land use to some extent (Barker 2006). The main types of failures associated with land markets are (Barker 2006:26):

under-provision of public goods such as open spaces;

negative and positive externalities such as traffic congestion and pleasant urban centres which will be over and under-provided by unregulated markets, respectively;

information asymmetries and the absence of coordination between developments which can result in incompatible land uses, reducing overall wellbeing (for example, heavy industrial uses near to residential areas);

Monopolistic behaviour which can arise when a single land owner holds the only suitable land for development.

There are two points worth making here. The first is that the planning system addresses multiple market failures, and this is one of the reasons that planning is a complex policy area. The second is to emphasise just how many valuable things are captured in the rather dry terms above. For example, being able to enjoy the sight of St Paul’s through a protected ‘view corridor’ or a sense of tranquillity in the Lake District, or not experiencing flood damage because a nearby floodplain offers protection are three of the many public goods facilitated by the planning system.

The second point is that planning can change the distribution of wellbeing both within and across time relative to the situation without intervention. In theory this means that, planning does not just provide goods such as public open space, which would probably not have been created otherwise, but can also influence the location of that open space, for example with a view to ensuring people on lower incomes have access to it.

As you can see from the information and literature sources above, the social impact of the previous planning system was both positive and negative, this was a positive aspect because the system recognised that by being able to see certain landmarks or by maintaining the ‘au natural’ appearance of areas of natural beauty, the wellbeing of humans increased. It also had a positive impact because it didn’t allow the distribution of wellbeing to be concentrated in the more affluent areas of the country such as the south.

Figure 2: How the Planning System affects wellbeing

Is or was planning a barrier to growth?

It was extremely clear that English development control had become cumbersome and dilatory and was in dire need of reform. What many people were unaware of though, is that this is not the first time and nor will it be the last time that the Planning system in this country will come under review, the previous government also recognised this issue and shifted the ratio of Greenfield building to urban from 50-50 to 20-80, but were not in power to carry out further reforms. In fact even as early as the 1960’s it was clear that there were problems with the planning,

“This question of how to get needed improvements accomplished in the most economic manner has ramified into most policy questions. Garden cities or new towns; for example, have found considerable justification on an economic basis” (Donald L. Foley).

It seems that “Every time there is a recession, or even a reduction in growth below trend, there is a call for more ‘structural reforms'” (Sir Gus O’Donnell in a speech to London School of Economics). With the planning system always at the top of the list being blamed for holding back growth and development

He went on to state that “The problem is, in fact, a classic outcome of not being clear about the outcome that is desired. If it is to boost gross domestic product (GDP), then the answer is simple: concrete over the South East. But of course that’s not what we want and that’s because you would have to be an idiot to want to maximise GDP.”

Planners need no reminding that the role of the planning system is to reconcile often competing objectives and that to gauge its success purely or even predominantly by its delivery of a single one of those goals will produce flawed conclusions. This view is supported by a report that was carried out by the Royal Town Planning Institute (RTPI) that identified the strengths and weaknesses of the previous system. The report acknowledged that statistics could be employed to measure procedural issues such as the percentage of planning applications determined within a particular time period. However, such methods could not be used to measure the quality of decisions made, as this was and still is a largely subjective matter. It is ironic that the more time a planning officer spends negotiating to improve an application, the less likely it is that the decision will be made within the eight week statutory period that constitutes the only measure of quality control. The study therefore found that effectiveness in the planning service does not necessarily equate with speed.

In 2003, the then ODPM Select Committee Inquiry into Planning and Competitiveness, said “Claims that planning damages the nation’s competitiveness seem to have been made without evidence. The evidence that we have received suggests that businesses generally support the planning system and seek a number of changes in implementation, which do not necessarily require legislation.” Many people believe that the claim made by George Osborne that planning “cost the British economy £3bn a year” was based on anecdotal rather than factual evidence, but this is not the case as it was in fact based on research carried out by Professor Michael Ball. It must be noted here that the statement made by George Osborne came about from the research that was conducted by Professor Michael Ball on behalf of the government and appears nowhere in comparative studies such as the World Economic Forum or the Global Competitiveness Report.

However, whilst there may be little evidence that could be considered as ‘unbiased’ to support the fiscal claims made by the government, there are elements of the planning system that if not constantly reviewed may impact on local economies. These elements include: Development plans not being in place or not being up to date – this particular element could result in inadequate land supplies being identified for development and uncertainty for developers and investors, Plans not catering to their areas needs – this could again lead to inadequate land being made available for housing, business and other uses and the final element is a lack of responsiveness – individual planning decisions do not respond to development needs and take in to account the benefits of growth. These small losses sustained on a local level would then be multiplied on a national scale that could then prevent any further growth.

There is evidence that the planning system is not performing effectively again these tests at present. The map below shows the number and proportion of local councils with Core Strategies according to the status of those strategies. Around half of local councils do not have a published Core Strategy, and less than a third have one adopted. This is an issue because up-to-date Local Plans are the keystone of the planning system. They provide a robust basis for communities to shape the development of their local areas and provide greater certainty for business. Without this, there could be costs associated with uncertainty and delay. This could mean less development (because of the costs to applicants associated with delays and uncertainty); or development which occurs later and which is potentially sub-optimal from the community’s perspective.

The intention of the Framework is to support sustainable development, which means balancing economic, environmental and social considerations and seeking to achieve positive improvements overall. Through its support for Local Plans, the Framework seeks to ensure more efficient delivery of sustainable development. This means reducing the direct costs associated with delays and uncertainty and reducing the wider costs associated with delays that mean the net benefits of sustainable development, in the absence of plans, are realised later than they should be.

Figure 3: LPA core strategy progress (As of 08/05/2011)

Core strategic for Alnwick,

Blythe Valley & Tyneside

Adopted and taken forward

By Northumberland Unitary

Council following 2008 local

Government re-organisation

N

Core Strategy submitted to SofS

Legend

Core Strategy not published

Core Strategy published

Core Strategy adopted

Core Strategy found sound

Core strategic for Salisbury

Submitted and taken forward

By Wiltshire Unitary Council

As South Wiltshire Core

Strategy following 2008 local

Government re-organisation

Chart 1: Number of applications granted / approval rate over time

Economic activity is the most influential factor in determining the level of applications received, this explains the decline seen in the above graph – due to the recession, however, probability of approval is also important – a developer only submits applications if he/she believes that there is a high chance of approval thus the number of applications received will, in part, reflect this probability, meaning that the presence of an up-to-date local plan is imperative, as the plan provides developers with concise information with regards to the suitability of the proposed development to the proposed area.

Business Activity

The impact that planning has on business is often undervalued, elementary economics teaches that there are three factors of production: land, labour and capital. Yet all too frequently the importance of ‘land’ is neglected, this is apparent in the UK system of land use planning, in which a scarce resource if allocated without any regard for markets or prices. Businesses are extremely sensitive to the impacts of the planning system; rationing land use in this way has a significant impact on efficiency and growth, imposing substantial costs on households and businesses. Planning legislation controls what development can occur in a specific area, therefore controlling the type of business that is allowed to open in certain areas, potential footfall that a business can expect as well as whether any rival business is able to open within the vicinity in addition to making sure that the said business has access to necessary local infrastructure and a capable workforce.

Whilst it is apparent that planning has an ‘indirect’ impact on business and therefore the economy, it is clear that,

“City size and diversity provide an economic payoff: a critical mass of people, resources and ideas help produce agglomeration economies” (Glaeser, 2011).

“Increasing that critical mass helps raise productivity, therefore: the consensus from recent studies is that doubling employment in a city raises average labour productivity by around six percent, although these effects are much more important for some types of economic activity” (Melo et al 2009).

While some have argued strongly that the link between size and productivity relies on density, the exact nature of the relationship remains contested (to be precise, the functional size of cities matters but it is not clear if density matters over and above that). There is also agreement that overly tight planning frameworks for cities also have financial implications, for example, restrictions which have historically prevented sprawl and maintained urban sightlines are likely to place constraints on urban growth in popular cities today – both outwards (via Green Belts) and upwards (via height restrictions). By raising development costs, especially in urban areas, planning restrictions lower levels of business investment in these areas. SERC evidence shows that these costs can be high in both the commercial office and retail sectors.

Cheshire and Hilber (2008) carefully document how planning restrictions in England effectively impose a ‘tax’ on office developments that varies from around 250% (of development costs) in Birmingham, to 400-800% in London. In contrast, New York imposes a ‘tax’ of around 0-50%, Amsterdam around 200% and central Paris around 300%. Such substantial implicit taxes on development should clearly affect investment in these cities. Koster et al (2011) show that in Holland, height restrictions specifically act as constraints on agglomeration economies from tall buildings, echoing analysis by Glaeser (2011).

At present there is no comparable evidence for manufacturing or wholesale distribution, but to the extent that factories and logistics centres tend to use more land than offices, it is anticipated that the effects would be much more pronounced for these sectors.

Current planning rules also negatively affect productivity in parts of the retail sector. In a recent SERC report, Cheshire et al (2011) demonstrate that planning rules reduced productivity in a leading supermarket chain by at least 20%. This is one study, for a single operator (albeit a large retailer represented across the UK). However, it does provide a measure of costs – and they are large. Opponents of planning reform have suggested such evidence does not exist. This is incorrect; there is evidence which suggests that planning negatively affects productivity – see Chart 2 below.

Chart 2: Productivity by year of opening – controlled for all other factors

From looking at Chart 2 it is clear that restrictions on retail development have tightened since 1988. Controlling for all other factors, productivity increased over the first 20 years from the oldest stores to those established in the late 1980s, however, for stores established after the late 1980s, productivity fell so that in the most recently established stores, productivity was actually lower than in the oldest stores of all.

The policy tightened further in 1996, when a ‘town centre first’ policy was introduced. The new policy forced would-be developers to show first that the local area ‘needed’ more shopping space (‘need’ being defined in legalistic not economic terms) and then to pass a ‘sequential test’. Developers had to demonstrate that for any proposed development, there was no ‘suitable’ site in the town centre (again with ‘suitable’ defined in legalistic terms). To be ‘suitable’, a site had to have been identified in the Local Development Plan (though only a minority of local authorities have such a plan) and to be in the designated town centre. A second route by which planning policies might reduce retail productivity is through overall restrictiveness. A local authority that restricts development more tightly may raise the price of all types of development, including the price of retail space. If land prices are raised, stores will tend to be smaller and so less productive.

Since the introduction of town centre first planning in the mid-1990s, the share of new retail development in urban areas rose from 14% (in 1994) to 33% in 2009 (BCSC 2006). While the policy may have increased the quantum of retail activity in cities – thus raising vitality – it also appears to have helped change the character of urban high streets. Specifically, evidence suggests that small and independent shops have been hurt by town centre first policies. Sadun (2008) and Haskel and Sadun (2008) find that town centre first rules have directly caused a reduction in smaller shops’ employment – mainly because big supermarkets developed smaller formats and moved into high streets. Thus, by restricting space and raising rents, town centre first rules may also have contributed to high street ‘cloning’. Again, planning has both benefits and costs and, despite claims to the contrary, there is evidence available on the costs of planning policies on independent retailers.

However, whilst there are many benefits of the NPPF, there are also costs involved in the reforming of legislation. One such cost (albeit one off) is familiarisation cost, because any change the reorganisation and amendments to planning policy that underpins how planning decisions are made will require those using it to update and refresh their knowledge (of specific items or in its entirety). This will mostly apply to those ensuring that decisions are made in line with national policy, such as those working in councils and the Planning Inspectorate. Others who consult the policy regularly, such as specialist consultants/lawyers and major developers, may also incur a transitional cost.

It is anticipated that costs of familiarisation will be small and one-off (i.e. once an agent is familiar with the new structure/policy no further costs are foreseen). They can be thought of as a ‘fixed’ cost for those whose job is determined. (See table 2 below – All assumptions are shown on appendix 1.)

Table 2: Comparison of estimated one-off familiarisation costs with baseline annual costs of development control (£m)

Selected estimates from Ball analysis (2006/07)

Baseline for annual costs of development control (2010)

Direct cost to local planning authorities

577

–

=

750

232

518

Admin Costs

Receipt of planning fees from applicants

Direct costs of development control applicants

1094

+

+

=

232

750

982

Planning application fees (to councils)

Staff Costs

Outlined below in table 3 are the ongoing estimated savings that could be expected from the implementation of the NPPF. (Please see appendix 2 for assumptions employed for the analysis over the 10 year appraisal period)

Table 3: Comparison of estimated average annual savings with baseline costs of development control (£m)

Selected estimates from Ball analysis (2006/07)

Baseline for annual costs of development control (2010)

Direct cost to local planning authorities

577

–

=

750

232

518

Admin Costs

Receipt of planning fees from applicants

Direct costs of development control applicants

1094

+

+

=

232

750

982

Planning application fees (to councils)

Staff Costs

“Other benefits through reduced transaction costs may also arise. For example, the Ball study highlighted other substantial costs to applicants associated with hiring professionals (legal and consultancy fees, etc) – estimated by Ball to be of the order of £750m (2006/07). By reducing complexity, there may also be an impact on these costs. It is difficult to estimate the extent to which such costs will be reduced as it is likely to vary on an application by application basis. As a baseline we outline the total costs involved in the planning process (as estimated by consultants, Arup) for a number of application types (which excludes the time of applicants themselves):

1. Householder development: range of total costs between £150 and £2,900.

2. Small housing development (10-15 units): range of total costs between £4,450 and £49,070.

3. Major housing development (c. 100 units): range of total costs between £59,990 and £152,310.” (NPPF Impact Assessment)

A summary of the impacts that the changes will have on key groups is provided in appendix 3.

Impact of Planning on Housing and the economy

While economic conditions have played a part in the decline in home building, the Government believes that the previous top-down, target-based approach to housing constrained new supply – there was only a net addition of 129,000 units in 2009-10 (see appendix 4). To this end, the process to translate the national target to build 240,000 new homes per year was severely delayed. By May 2010 only a fifth of local councils had brought forward local plans with up to date housing targets.

“It is clear that the country needs more new houses and the coalition government is committed to increasing the rate of house-building.” (NPPF Impact Assessment). The latest household projections for England estimate that around 232,000 new households could form each year between now 2033 as a result of increased life expectancy, net migration and a rise in the number of single person households (see appendix 5).

One of the tasks that face Government is rebuilding confidence in the development industry. There will be many facets to this, from continuing interventions in the banking market to the continuing evolution of the New Homes Bonus. A clear and workable planning system is fundamental to the return of a vibrant house building market.

SERC research suggests that planning restrictions substantially raise house prices, especially in popular areas. House prices react much more strongly to increased demand in communities where supply is more restricted. Specifically, SERC’s analysis suggests that an area moving from an average level of restrictiveness to having the lowest level of housing restrictiveness would see house prices fall by around 30% (Hilber and Vermeulen 2011). This is a considerable underestimate of the true costs because it ignores the effect on UK house prices overall, as well as any effects on the composition of housing (e.g. the fact that planning restricts the supply of land so that new houses are smaller, see Cheshire (2009).

Of course, physical constraints on land availability – scarcity of land, the presence of steep slopes or flood plains – have an effect on house prices, but in England the effect is generally very small. Land scarcity does raise prices in the most urbanised places, particularly Greater London. Even in London’s case, however, the evidence suggests that planning plays a much larger role (e.g. through height restrictions). Outside London, very few English local authorities actually face physical constraints on land supply (Hilber and Vermoulen 2010).

SERC research also shows that planning restrictions increase housing market volatility. At least until the recession, average house price volatility in the UK was higher than the most volatile single market in the US (Los Angeles). When house prices fall, supply is fixed in both the UK and US (unless you destroy houses). However when, as in the UK, housing supply is very unresponsive to increased demand, booms drive up prices rather than leading to more building. That means the UK sees more volatility on the up-side of the market and leads to more volatility overall (Cheshire 2009; Hilber and Vermeulen 2010).

“Several sources (Barker, 2006; Kim, 2010) outline a range of mechanisms through which planning affects the economy and Cheshire and Vermeulen (2009) have described an economic framework for analysing residential urban land use policy. However, there appears to be no pre-existing framework which systematically arranges all of the existing literature on the economics of planning.” (Inexpensive Progress)

Elementary economics teaches us that there are three factors of production –

Kate Barker’s Review of Land Use Planning estimates the cost of the associated planning delay to the economy at between £700m to £2.7bn. However, these figures do not differentiate between reasonable and unavoidable delay. More recently, a report for Department for Communities and Local Government by Michael Ball suggested that the transaction cost of development control for major housing projects development “may be up to £3bn a year” (see table 4 below). The major components of this relate to ‘more than £750m annually in consultant and legal fees’ and ‘financing costs of holding onto land and other assets whilst their projects are being evaluated’ (estimated at £1bn per year).

Table 4: Housing Supply and Development Control-Transaction Costs (major residential developments) (£m)

A reduction in the level of prescriptive national policy will also generate savings for applications and deliver better outcomes. The Killian Pretty review estimated that a 10 per cent reduction in the complexity of the national policy and secondary legislation could save applicants £75m per year and local councils £30m per annum

Research has shown that even allowing for the value produced by the system, in prosperous and tightly constrained south east England, the restriction of land supply for housing generates a substantial net loss for society – equivalent to a tax of nearly four pence in the pound (Cheshire and Sheppard, 2002).

Benefits and costs of Brownfield Development

Many opponents of the planning reforms think that development should be heavily focussed on Brownfield – i.e. previously developed land. This policy does protect previously undeveloped land, but at a cost.

Brownfield land is expensive to build on suggesting that there could be an effect on overall levels of development from the decision to prioritise Brownfield land. Findings on the negative effect of town centre first on retail productivity are consistent with this (Cheshire et al 2011). Further from the point of view of England as whole, lots of Brownfield land is in ex-industrial cities where – unlike parts of, say, London and Manchester – demand for housing and commercial development is low.

“During the 1990s and mid-2000s, the combination of a national Brownfield land target and a minimum density floor for development helped concentrate new development in urban areas – particularly core cities such as Manchester and Liverpool. These cities also benefited from a number of other important supporting factors – a benign macro environment, rising public spending, an expanding higher education sector, a growing consumer interest in city living, and readily available finance for building and buying” (Nathan and Urwin 2006)

The fact that national targets were met for Brownfield development could be construed as a positive argument for those that opposed the NPPF, however, qualitative research suggests that Brownfield policies that targeted the urban core may have helped to repopulate city centres and encouraged commercial activity to return, but somewhat surprisingly there is little evidence that rigorously assesses the causal impact of the Brownfield first policy on the pattern of development within cities or on the overall effects of the city as a whole. It may be possible that an alternative strategy of focussing on a specific area of a city might have brought higher overall development to the city, just with a different spatial pattern – skewing development towards the city centre may have come at the expense of less growth for the city as a whole.

Another issue with the Brownfield first policy is related to the spatial pattern of development in that large pieces of land become available (e.g. former MOD or NHS sites) that are often some way from existing settlements. “Worse, as highlighted by the coalition government, a small but increasing share of building on Brownfield land has been building 5 on private residential gardens – the share of new homes built on previously residential land rose from 11 percent to 23 percent between 1997 and 2008.” (DCLG (2010) ‘Clark – new powers to prevent unwanted ‘garden grabbing’, accessed 5 October 2011.)

Top down targets for Brownfield land haven’t always delivered the kind of development people want in the places where they want it. The combination of Brownfield targets and density standards has also tended to produce large numbers of small flats in urban areas – although there is a clear need for larger, family homes in these places (Unsworth and Nathan 2006, Silverman et al 2006).

Due to the fact that the previous national targets resulted in unwanted developments in the wrong areas, the NPPF has removed the national Brownfield target for housing development to encourage developers to develop in areas where they want to build houses so it is indirectly encouraging more development to occur. It is also the case that some Brownfield sites have a higher environmental value than Greenfield sites, for example due to their biodiversity.

By removing the national target for Brownfield development, councils will be able to make more sensitive local decisions as to the most appropriate land to allocate. It will be clear that the effective re-use of Brownfield land is the priority where this is of least environmental value, but they will have greater flexibility in allocating and bringing forward land to match their local circumstances. They will have greater discretion to make decisions that are right for them, weighing up the impacts and benefits of different land, without regard to an arbitrary central Government target, and may set locally appropriate targets if they wish. This is particularly important where some Brownfield land has higher environmental value than some other land. The removal the target will not place additional cost burdens on local councils, as in future it will be at the discretion of local councils as to whether they set their own local target, whereas they are currently required to do so having regard to the national target.

The impact of removing the national Brownfield target will vary by local council depending on their behavioural response to the change. There are benefits to developing Brownfield sites, including often having less adverse Impacts on the environment; the associated benefits of re-developing vacant or derelict Sites; and making effective use of existing infrastructure. However, some areas do not have large areas of Brownfield land available that are suitable for housing. In addition, Brownfield land often has high remediation costs to make it suitable for housing. For example, the average remediation cost of Brownfield for contaminated land is estimated to be around £250,000 per hectare (http://archive.defra.gov.uk/corporate/consult/contaminated-land/101215-contaminated-land-condoc-ia.pdf), thus reducing the potential of some Brownfield land for housing.

Approval Rates

A key failing in the previous system of top-down targets in Regional Spatial Strategies was the mismatch between the level of development provided for and actual delivery. This was especially apparent in relation to housing: although the strategies aimed to deliver 213,000 additional homes per annum in May 2010, and most adopted Core Strategies reflected these Regional Spatial Strategies targets for the councils concerned, the actual level of net additions to the housing stock in 2009-10 was just 128,680.

While no policy overrides the law, national policy can be a powerful influence on the pattern of decision-making (in particular because of the risk of local councils’ decisions being overturned at appeal, should they disregard national policy in their decisions)

Defenders of the status quo (opponents of NPPF) state that 80% of current planning applications receive planning permission, therefore no reform is needed. However, there