The Government consulted on this on 20th February. To follow up my earlier post on it here are my ten suggestions.
1 Amend s.106 to remove the restrictions on what a s.106 agreement can do, and particularly improve it for affordable housing
2 Revoke Reg 123 of the Community Infrastructure Regulations 2010 which restricts pooling
3 Revoke Reg 122 of the Community Infrastructure Regulations 2010, which has spawned at least eight cases in the less than five years since coming into force, in an area which was practically devoid of litigation. The cases are now even stopping planning authorities from recovering their legal costs, which in an area where the consultation acknowledges there is “limited legal capacity” is counter-intuitive.
4 Make the presumptions of due execution apply expressly to s.106 agreements and expand the rules on searches and priority periods so that they apply to s.106 agreements
5 Revoke that part of the Planning Inspectorate’s guidance on s.106s which discourages the use of counterparts; they considerably speed up the entirely uncontroversial task of executing and completing s.106s
6 Allow s.106 agreements to contract out of the requirement that all persons deriving title are bound by the agreement. It cannot be right always to make all successors liable.
7 Follow and enforce the long-standing policy advice to use conditions rather than s.106 agreements unless the matter cannot be addressed by a condition
8 Encourage applicants to appeal where a s.106 agreement cannot be agreed or is delayed. They are reluctant to do so because they fear the Secretary of State will open up areas of the planning application they have agreed with the local planning authority. But a well prepared application should have little to fear on that issue
9 Use twin-tracking positively – the practice of appealing while simultaneously negotiating a settlement of the dispute has fallen out of favour; planning authorities have seen as having a gun to their head. But it is no different from ordinary dispute resolution, where the parties can compromise up to the door of the court.
10 Recognise that s.106 agreements are complicated – fund and equip planning departments and their legal departments accordingly
The Government issued this consultation last Friday, 20th February. The period closes on 19th May, so a rapid response is necessary.
The proposals in brief are:
1 Issue new guidance emphasising the need for speed, early engagement and use of standardised clauses.
2 A system for resolving disputes about s.106 agreements.
It is good to see encouragement on the use of standardised clauses. The Law Society issued a model s.106 agreement in 2006, followed by a second edition in 2010. The 2006 edition was endorsed in Circular 5/2005. It would be good to see new official encouragement to use the model.
What about dispute resolution? I want to highlight two things – the consultation asks whether resolution of the planning agreement should include the grant of planning permission and which bodies would be appropriate to adjudicate.
Can you resolve the s.106 without resolving the application? The terms of the permission and its conditions are often affected by what is in the s.106. Some matters can be dealt with by either mechanism, for example a restriction on opening until a construction contract is let. That was in a s.106 in the case of Derwent Holding v. Trafford BC (1), but where demolition of listed buildings is concerned the statute says use a condition to ensure a construction contract is let. If it is needed it needs to be in one or the other and what we don’t want is inconsistent provisions in both. In complex developments, clauses in s.106s are used in combination with conditions to resolve difficult issues. So the two need to be settled together.
But more importantly, what is to happen if the permission issued is different from what the parties expect, or indeed is delayed, or not issued at all? The Law Society’s model is largely conditional on the issue of the permission in a form attached to the s.106, and also conditional on implementation of the permission which can help. But that is in the context of “agreement”. In a case where the planning authority “loses” the dispute resolution, there is a stronger possibility of a non-compliant permission, or delay, or refusal. The applicant has a right of appeal against refusal, whether express or deemed, but there will be delay and in the meantime circumstances may have changed. The s.106 agreement however will have been signed, perhaps many months before, and given that the parties have just fought an appeal, the desire to renegotiate it is not likely to be found on both sides.
If we are to have a dispute resolution mechanism for s.106s, who should adjudicate? There are two areas of conflict; content and legal drafting. Lawyers are used to addressing both. Planning solicitors draft s.106 agreements day in, day out, and we should recognise that some of the delays come from having to draft in the current unhelpful statutory framework. They should hold the necessary expertise, especially members of the Law Society’s Planning Panel, and be the first choice for dispute resolution.
Section 106 agreements are used much more now than they were 25 or so years ago, when s.106 was last given a fundamental overhaul by the Planning and Compensation Act 1991. Government needs to recognise that they are not simple documents. They affect the title to the land and need to be negotiated and drafted properly. The 1991 reform introduced quite unnecessary complexities which are still causing problems for practitioners (see my comments on Savage v. Mansfield (2) for a recent example).
Regulations 122 and 123(3) of the CIL Regulations 2010 making the policy tests law and restricting pooling have made matters even worse. The Planning Inspectorate has found it necessary to require confirmation that s.106s are properly executed, which reflects concerns about whether the presumptions of due execution lawyers rely on in sales and purchases apply to s.106 (there is no obvious “sale” particularly not of a planning permission). It is not possible to carry out a search of the Land Registry with priority either, as priority is not conferred where there is no purchase of land. And there are some problems which are not well known. These issues need to be addressed.
But as everybody knows it is the negotiation of affordable housing provisions which regularly delays and complicates s.106 agreements. The 1991 reforms limited what can be done in a s.106 and they make it difficult to draft for affordable housing. If these provisions could be turned into money payment provisions that would greatly speed things up. But that is not attractive to developers who when on-site can build more cheaply than an affordable housing provider. And as long as the State is not going to build housing itself, is not attractive to local or central government.
These documents secure important benefits for authorities, and if they are not right, the community will lose out, and the planning permission will become voidable.
The consultation is open until 19th March and can be read here.
(1)  EWCA (Civ) 832
(2)  EWCA Civ 4
Earlier this month, DCLG issued a “Plain English Guide to the Planning System”. It is only 20 pages long, including title pages, so it’s bound to be something of a summary. But on planning obligations is continues to misrepresent the position. It says:
“Planning obligations are used to mitigate the impact of proposed developments. They are commonly secured under section 106 of the Town and Country Planning Act 1990 (as amended). A developer may be asked by a local planning authority to enter into an obligation to, for example, undertake works, provide affordable housing or provide additional funding for services. Any planning obligation must meet the tests of being:
• necessary to make the development acceptable in planning terms,
• directly related to the development; and
• fairly and reasonably related in scale and kind to the development. “
There are three things wrong with this.
1 It confuses the desire to secure certain things with the tool used to achieve that. So the wish is to ensure that impacts are mitigated. There are several tools to do that. The first tool is conditions. Many impacts can be mitigated by imposing a condition. For example particular materials can be specified, or the construction of protection required as part of the development or before development occurs. Planning policy has for many years been to use conditions in preference to section 106 agreements. Other tools are the description of the development permitted, and of course s.106 itself. This distinction is important because the confusion fosters the now deep-seated tendency to call for “planning obligations” to secure extraneous benefits, or some sort of community gain.
2 It says that planning obligations can be secured under legislation other than s.106. “They are commonly secured under section 106” Let’s get this clear; planning obligations can only be secured by s.106. They are a creature of s.106 which defines them very closely. My post of a couple of days ago shows what happens when people go outside what s.106 allows – the promise is no planning obligation at all, and cannot be enforced against successors in title using the mechanism specifically designed for that purpose – s.106 itself.
3 It says that all planning obligations must meet the tests now found in Reg 122 of the Community Infrastructure Levy Regulations 2010. This completely ignores the fact that Reg 122 simply prevents a non-conforming planning obligation from being taken into account in the grant of planning permission. There is nothing to stop a planning obligation being given separately from the grant of permission, though that is rare. But also, it ignores Derwent Holdings v. Trafford BC EWCA Civ 832 and Savage v. Mansfield EWCA Civ 4 which clearly allow planning obligations which deliver the desirable and not only the necessary, directly related and reasonable.
Why is this important? Firstly, it leads to the sort of errors we saw in Savage v. Mansfield. Where planning permission is granted relying on a benefit which is not secured within s.106 it will mean that the planning permission is voidable, unless (as is rarely the case) it is enforceable under other legislation. Section 16 of the Greater London Council (General Powers) Act 1974 is one such example, but as it says on the tin, it doesn’t apply outside Greater London. This is a very easy way in for objectors to quash a valuable permission.
Secondly, it delays planning and gives planning obligations a bad name. It takes time to negotiate s.106 agreements, and conditions are much faster. By suggesting that planning obligations are the device of choice to secure mitigation, simpler solutions are ignored.
Thirdly it leads legislators and policy makers to focus on s.106, which is just a legal device to make promises enforceable against successors in title, rather than policy. Positive promises do not run with the land, and negative promises can only enforced by landowners who own land designed to benefit from them. So, planning authorities were given the statutory mechanism of s.106 to enforce these. But as long ago as 1991 John Gummer limited what old s.106 could do and imposed the current straitjacket on drafting in, it is reckoned, a desire to put an end to “planning gain”, the buying and selling of planning permissions. But this laudable policy objective is best controlled by the Secretary of State intervening where he or she sees abuse of the system. The call-in power is there for situations like that. But instead, the wide powers to ensure that promises can be enforced were cut down by the Planning and Compensation Act 1991 which required promises to fit within a narrowly drafted s.106(1) in order to be enforceable against successors in title. The result has been convoluted drafting of s.106 agreements ever since, and cases like Savage v. Mansfield.
Fourthly it leads to mistakes by legislators and Government legal draftsmen who in Regulations 122 and 123 of the Community Infrastructure Levy Regulations 2010 ban things from being done under s.106 which with a little legal ingenuity can be done under other powers. Regulations 122 and 123 ought to focus on the substance of the promise rather than the legal route used to enforce it.
And fifthly, it suggests the policy makers at DCLG really don’t understand the system. Which would be a shame because the rest of the guidance is very helpful and definitely clearly written.
The Expanding Universe
Ouch. My planning law colleague Stephen Ashworth of Dentons has put up a post today on their UK Planning Law Blog with this title. He reports that the Government’s changes last November to make development easier for small developers by reducing the thresholds for affordable housing and tariff style contributions are being challenged in the High Court by Reading and West Berkshire Councils with the support of a number of others.
One of the issues will be that DCLG did not carry out any analysis of the numbers of affordable homes or cash likely to be lost before promoting the policy. Stephen writes, “Whilst there may well be good public policy justifications for the changes, promoting new policy without at least some public understanding of the consequences is just daft. It is tantamount to faith based planning.” I hope that Stephen doesn’t mean that faith is daft. We do things by faith all the time. Presumably he – like me – takes Paracetamol when he has a headache and has faith that it works. And by faith I accept that the universe is expanding – scientists and astronomers I do not know tell me this but even they know that is only a theory to which they subscribe until there is a better one. And the Bible tells us that “Faith is confidence in what we hope for and assurance about what we do not see” – Hebrews Chapter 11 verse 1. At the risk of inviting Richard Dawkins to contribute, there is plenty of good evidence for the death and resurrection of Jesus, and as a practising Christian myself I do not regard it “daft” to believe and to have faith in God.
Here is a link to Stephen’s post. Thanks Stephen for giving me the opportunity to bring the important things in life into my blog.
The Court of Appeal issued its decision in Savage v. Mansfield EWCA Civ 4 on 15th January. The case is interesting for those involved in section 106 agreements for two reasons, both dealt with in a few admirably pithy paragraphs at the end of the judgment of Lord Justice Lewison.
The first is that the agreement contained a covenant by the landowner not to claim compensation if the permission was revoked. That provision was redrafted before the decision to say that the landowner would repay any compensation. That is because, though the judge refrained from pointing this out, the way it was originally put was simply not within s.106. The second formula is within s.106(1)(d) – a payment to the planning authority. There is earlier authority on just this point – R v. Somerset County Council, ex p Dixon  JPL 1030.
The second point concerns Reg 122 of the Community Infrastructure Regulations 2010 which enshrines the policy tests for s.106 agreements in law and says that a planning obligation which fails to meet the tests of necessity, direct relation to the development and reasonableness, may not be taken into account as a reason to grant permission. The provision was addressing the possibility that the permission which might have to be revoked under the Habitats Regulations, in which case in the normal run of affairs the planning authority would have to pay compensation. Lewison LJ held that because revocation could only occur to the extent the development was not built the obligation could not have been a factor which was taken into account in deciding to grant permission. It did not overcome a planning objection, and therefore Reg 122 was not engaged. Now this strikes me as odd, because the argument against the clause was precisely that – it did not overcome a legitimate planning objection, and was not necessary to do so.
Lewison LJ went on to point out that in the reasons for the grant of permission the clause was not mentioned, which sounds like pretty good evidence that it was not taken into account in the decision to grant. I am no fan of Reg 122, and it is spawning much litigation on an area which was previously quiet, but does not the other reasoning in this decision and Derwent Holdings v. Trafford BC EWCA Civ 832 undermine Reg 122, whose intent appears to be to outlaw all planning obligations which do not meet the policy tests?
In mid- October, The Lyons Housing Review published its report. Sir Michael Lyons, a former chief executive of three local authorities, was asked by the Labour Party to look into the causes of the shortage of new houses and suggest action to address the problem. One of the suggested solutions is “Use it or lose it”, actually a concept suggested by Ed Miliband, leader of the Labour Party at the time he set up the Lyons Review – see http://thedavidbrockblog.com/?p=697 .
The Lyons report explains that the market is dominated by volume housebuilders – “During the 1980s there were on average 10,000 active SME builders (those delivering 500 units or less) delivering around 57% of all output; last year there were only around 2,800 active small builders producing 27% of all new homes .” The report speaks of the “Big Six” housebuilders. It also records that mergers in the housebuilding industry actually reduced the number of houses built – see table 2 on page 104. Because it is easier to sell 100 homes from four sites than 100 homes from one site, mergers make it easier for housebuilders to achieve their targets. But in the introduction to the Use it or lose it proposal the report also adopts the observation of the Office of Fair Trading 2008 report on “Homebuilding in the UK” that “ Homebuilders deliver new homes as fast as they can sell them, not as fast as they can build them”. Anyone who has watched the release of houses on a large site will recognise this. Housebuilders will try to manage the sales so as not to put too many houses on the market at once, meaning that only a few houses are available at any moment in time.
Looking at numbers of houses with planning permission but unbuilt Lyons states that:
50,000 homes are on stalled sites
26,000 are on sites yet to start
54,000 are on sites that have started but have yet to finish
There are thus 130,000 unbuilt homes with planning permission. Some of these, it recognises, are on large developments which will take time to build out. They state that in addition they identify “270,000 homes on sites that have been in the planning system since before 2010 or which have not yet progressed to planning permission”.
Largely on the basis of that analysis, the Review suggests how Use or lose it would operate. “In response to the concerns about the slow build out of sites discussed above the review was asked to look at how a “use it or lose it” power would operate to ensure sites are built out in a reasonable timeframe.” They make four interlinked proposals :
1 Shorten the lifetime of a permission to two years
2 Require more substantial progress to preserve a planning permission than the current material operations
3 Where a site is allocated in a plan, or has planning permission, but development has not been begun within five years, the local authority should be able to charge the owners with council tax, annually, for the number of dwellings proposed
4 There should be streamlined CPO powers in extreme cases allowing purchase by councils either themselves or with another party who wishes to build out the land.
Items 3 and 4 are clearly the heart of Use it or Lose it.
The report says that item 3 will not deter landowners from putting land forward because they stand to gain from its allocation for housing. But on the other hand it would “incentivise them to deal with an agent or developer who is likely to ensure that the scheme is progressed promptly.” It is worth pausing to consider this. Firstly, it should be remembered that anyone can make a planning application over someone else’s land, and that it is not necessary to be a landowner, or even a developer or option holder, to put forward a site for the local plan. In fact, the local planning authority has the ability to include a site in a plan on its own initiative. Planning applications for large sites commonly include land not yet controlled by the applicant. I remember one such site where one landowner was implacably opposed to the development and refused to sell. The development as actually built simply surrounded his land. It would not be right to require a person who hasn’t actually promoted their site to pay this penalty council tax. There was a similar problem with Community Infrastructure Levy, now addressed somewhat unsatisfactorily by Reg 69A of the CIL regulations. Lyons suggests that the power should only apply where the landowner has volunteered the site. That will be an important principle and the detail of its implementation will need to be scrutinised carefully.
But is it right to assert that use it or lose it will incentivise landowners to deal with developers? That assumes that there are developers who want to deal. Perhaps that will not be a common problem. But the penalty council tax will put pressure on landowners and weaken their negotiating position. There will be an imperative to sell, because otherwise, the landowner will end up paying council tax on unbuilt houses. Small landowners in particular will be vulnerable; they are unlikely to appreciate the need the proposal creates to have a contract to sell before supporting the developer’s case for allocation of the land. And the contract will constrain the landowner’s power to deal with his land. Well-advised, the landowner might find a put option is desirable.
Should we not go back to those figures about unbuilt houses and the number of housebuilders? Do they really support “Use it or lose it”? First, the number of houses with permission but unbuilt is only 130,000. The target is to build 200,000 each year, so that is only 65% of one year’s supply. Of course, Lyons concludes that in addition there are “270,000 homes on sites that have been in the planning system since before 2010 or which have not yet progressed to planning permission”. But that figure needs to be interrogated; if the permissions predate 2010 and have not been implemented, then unless the normal commencement condition was amended, they will have expired. And houses “which have not yet progressed to planning permission” are just that; they do not have permission. So why are they being counted?
However it is the observations about the number of builders which seem to me to hold more interest and possibly the solution. The market is dominated by the “Big Six” volume house builders, who, we are told, release houses not at the rate they can be built but at the rate they can be sold. I suggest that is at the rate at which they can be sold consistent with achieving the return the housebuilders desire. That is simply commercial common sense, and is backed up by the sales behaviour on large sites. This suggests that the market lacks competitiveness. More housebuilders getting their houses to the market will provide better consumer choice, bring more houses to the market and keep prices in check. But if housebuilders are able to control the rate of release, the number of houses coming to the market will remain low and house prices will stay high. But there would be less tendency for that to happen if there were more players in the market and therefore more competition. Which suggests that we need more housebuilders. Having a large number of builders is rightly identified by Lyons as an important ingredient for a healthy housing market, and the report suggests various helps for SME builders in Chapter 7. But actually this all suggests that the time has come to look again at breaking up the large volume housebuilders, especially when we remember that housing starts go down the bigger they become. Isn’t that a better step than Use it or lose it?
I was very sad to hear last week that John Taylor passed away on Tuesday 6th May.
John was a great advocate and one of the most colourful members of the planning bar. He retired just over ten years ago after a splendid career in the course of which he not only had an influence on many barristers, solicitors, and planning professionals of every hue, but also of course on the landscape and townscape.
I first met John in 1985 when he was promoting the Centre Court development by Speyhawk at Wimbledon railway station, and I was acting for Greycoat who had a rival scheme designed by Terry Farrell. He was an opponent to be reckoned with. A couple of years later he was again on the other side from me, and inflicted on me my first ever defeat in a planning case. This time it was a minerals case.
John had great experience in minerals planning and had been a member of the Committee on Planning Control over Mineral Working (the Stevens Committee) which reported in 1978. I was next to encounter John and get to know him well on minerals cases. Quarries are controversial and rarely welcomed, but we were particularly successful in the case of Whatley Quarry, Hanson’s limestone quarry in the Mendips and the largest rail-linked quarry in Europe. Beginning in 1991, it turned out to be a nine year period of public inquiries and High Court applications. This time I had him on my side. The case and the ambiance suited John well, and during the public inquiries we were lucky enough to be able to stay at Mells Park, the Lutyens house nearby which belonged to Hanson. We were looked after tirelessly by Jill, the housekeeper. John too was tireless in entertaining the team and clients from a huge reserve of stories and anecdotes.
A few years earlier, in 1989 I instructed John on the A45 New Settlements Inquiry in Cambridgeshire, to act on the Great Common Farm proposal of 3000 houses and a 1 million square foot business park. It was one of seven competing proposals investigated at a six month long public inquiry, marked by extremely good relations between all the parties. The Inspectors recommended that permission be granted for Great Common Farm. It was then the victim of a General Election clear out when the Secretary of State reversed his Inspectors’ recommendation. But after High Court proceedings, a resubmission and a deal with a rival scheme, it became part of Cambourne, now built out and occupied. Ironically, South Cambridgeshire District Council, which had opposed the scheme, now has its offices in the business park. John enjoyed the case enormously. We had some meetings at his home, especially if there was a landscape issue, when he and the landscape architect Pauline Randall would also take a tour around his own well landscaped garden, John seeking advice from her himself. His prowess in landscaping was recognised in a cartoon drawn by David Mole QC, as he then was, of The Head Gardener, Great Common Farm, depicting John despatching a mole, and exclaiming “I’ve had enough of bunds actually”. It became document UM 101 in the inquiry. John’s bon viveur tendencies with the wine list at The Lamb in Ely where we stayed during the inquiry were instrumental in introducing me to Aloxe Corton, for which I have been grateful ever since.
John was a first rate advocate and like many at the planning bar was also active in the High Court. I saw him turn the Court of Appeal around one afternoon in the case of Durham County Council v. Secretary of State and Tarmac, a leading case on whether planning permissions can be abandoned. It had been obvious at the end of the morning that Durham’s advocate had convinced the judges of his case. As we walked back to John’s chambers at lunchtime he said to me, “I am going to have to give them a lesson in the planning system”. Deftly, fluently, with courtesy and firmness, and an encyclopaedic knowledge of planning law, he moved them from the view they had formed in the morning and in due course judgment was delivered for our clients, Tarmac.
John was of course famous for his probably unconscious verbal mannerisms. Sentences were peppered with “actually” and ”hmm, what”, and witnesses (whether on John’s team or from the opposition), clients and colleagues had their names recast (so guess what the Chief Planning Officer of South Cambridgeshire, Mr David Hussell became). And many of us heard the story of when “I stared death in the face, actually” when his Rolls Royce apparently drove itself forward and through the perimeter wall of a multi-storey car park. He did keep a smaller car – a Ford Escort at one time – which he called his “local authority car”. A keen wind-surfer, a hardy experience in Bedfordshire, he told me he kept his windsurfer on the roof of a BMW, so that he wouldn’t lose a moment when there was a suitable puff of wind.
Others will have their own cherished reflections on John. He was courteous, tenacious and kind; he was encouraging, hard-working and generous. I count myself privileged not only to have worked with him but also to have been able to have counted him as my friend.
His funeral will be on 22nd May at 2:30pm at All Saints Church, Clifton, Bedfordshire.
A few days ago the Labour Party announced proposed reforms of the rented housing market. In short there are three reforms. 1 – landlords would no longer be able to charge tenants the agents’ letting fees. 2 – rent increases would be limited – ceiling yet to be decided. 3 – the standard tenancy would be three years.
It seems to me that 1 is sensible, 2 could be very problematic and 3 is going to have a serious impact on the housing market.
I am going to share something from personal experience. About 23 years ago I moved from London with my family. Having found a buyer we couldn’t immediately find a house to buy, so we rented in our target area and searched. We took a six month tenancy, the shortest available, and found somewhere to buy. More recently, we sold that house last summer, and we did not immediately find a suitable house. Friends of friends were going away for a year and rented their house to us for six months, on the normal terms which enable the tenant to continue subject to giving one month’s notice, and the landlord to terminate on two month’s notice. We have found a house to buy within the six months.
What we did is very common. Estate agents were entirely familiar with what we did on both occasions and strongly recommended it. What we did, along with many others, unlocked the housing market. It puts buyers who do it in a strong position. Given the current shortage of housing, that is important. It is also practical, avoiding the need for long chains of buyers and sellers. But there is absolutely no way that we would have taken a three year tenancy in either situation, and nor would our most recent landlords have rented to us for three years. (As it is, they decided to come back after only six months, and the terms of the tenancy ensured they could have their house back.) Creating a three year norm would also require rent review provisions rather than allowing supply and demand to regulate rents.
These proposals are likely to reduce supply of rented housing, as landlords and potential landlords (those who are thinking of buying to let) realise that their tenants will no longer include those moving house. With these proposals, there is not likely to be much increase in buy to let properties as landlords and potential landlords weigh up the likelihood of Labour winning the next election. They may sell up into the owner occupied sector, which may be helpful in increasing the supply of housing for sale, but will make that market less liquid.
It is vital that we have a thriving market in housing for sale, with a good supply of houses coming onto the market and buyers able to be flexible. The current lack of supply is driving prices up. Our nation is heavily driven by the desire to own one’s own house, and whilst that may not necessarily be a good thing (other successful economies do not tie up so much personal finance in the family home), it is the way we are. A thriving market in housing to rent, which means having a good supply, is also vital, especially to the market in housing for sale. Good supply means there is plenty of competition, so that prices are naturally regulated, even driven down. But rent controls and three year minimum periods will limit the market. If rents cannot reflect the market price, who would be a landlord? With fewer properties available, the price ought to rise, but the rent restrictions will prevent that, making being a landlord even less attractive. If the minimum terms is three years, people like me will not be renting.
thedavidbrockblog is about planning law and policy, one of the aims of which is to secure a good supply of housing and avoid homelessness. I have posted about these proposed rent reforms as they seem to me to run counter to those (originally Labour party) aims.
Rookery South Energy from Waste Facility was the first case to go through the infrastructure planning system introduced by the Planning Act 2008, and it was my privilege to represent two of the parties, the local authorities. It is however also proving to be the slowest – perhaps it is inevitable that the first flushes out problems in the system. In this case the unexpected twist was the ability to refer the decision to the rarely used Special Parliamentary Procedure.
Last week, the High Court had to rule on a legal challenge arising out of the SPP; it was alleged that the environmental statement, drawn up in 2010, was effectively out of date for the purposes of the decision under the SPP in February 2013.
Mr Justice Mitting’s judgment includes a couple of wry comments which are worthy of a wider audience. I enjoyed this opener in paragraph 3, describing the new system:
“Recognising that delay in the execution of major infrastructure projects has the potential to cause significant harm to the national economy. Parliament enacted the Planning Act 2008 to speed things up. In section 14(1) it identified Nationally Significant Infrastructure Projects (“NSIPs”), thereby avoiding, by the ordering of the words, a neater acronym.”
More serious however is his comment at paragraph 11.
“A challenge is brought to the order and to the Secretary of State’s decision to refuse to revoke it. The informed observer of planning litigation will be unsurprised to learn that the challenge has nothing to do with the underlying merits of the case, but with two familiar issues:
(1) The adequacy of the Panel’s reasons for including provision for compulsory acquisition of the benefit of the restrictive covenants enjoyed by the claimants;
(2) A contention that the Environmental Impact Assessment relied on by the Commission was out of date when Parliament approved the order.
The underlying purpose of the claim is not to improve public understanding of the Commission’s decision, or to ensure that the habitats of species of birds and mammals is protected, but to protect the claimant’s commercial interest in waste processing sites, which it owns, which have been, or might be, brought into operation. Local authorities have not joined in this claim.”
Well we know what he is getting at, and indeed it can be frustrating that challenges are brought which have little to do with the actual merits, and concern commercial interests. But this surely misses the point. It is important that decisions are properly taken, in accordance with the rules and procedures which are set out. So challenge on procedure is quite properly available. As David Pannick QC pointed out in an article in the Times on 20th February this year, commenting on the changes in judicial review which would allow judges to refuse to grant a remedy if the decision under challenge would be the same when remitted for redecision : “Because judicial review exposes errors of law and abuses of power, it encourages high standards of government administration (national, local and in public authorities) and deters such defects in the future.”
The learned judge’s criticism is also that the case was brought to protect commercial interests. But most legal cases are there to protect some private interest. There are not so many altruists out there who want to bring cases just to ensure the lawful procedure is followed. Some planning cases are of course sometimes brought by bodies such as the RSPB solely to protect environmental interests, but, a significant number are brought by those who fear the economic and personal effects of a development on their lives and where they live. Whether that is a proper attitude depends on your philosophy, but it cannot normally be a misuse of the legal process.
FCC Environment (UK) Ltd v. Secretary of State for Energy and Climate Change and Covanta Rookery South Ltd.  EWHC 947 (Admin)
This is the review set up by the Labour party when Ed Miliband announced they proposed to introduce a “Use it or Lose it” provision to counter hoarding of development land. Brock Consulting’s response to the call for evidence has gone in and can be found here.
Strangely, the call for evidence opens with the statement that “the high cost of housing is largely driven by the high cost of land”. That goes contrary to how I understand residual land valuations are done (put simply, the landowner gets what’s left from the purchase price of the finished development after all the construction costs, financing costs, developer’s profit and professional fees are paid). There is a danger with Lyons’ assumption, because it would fail to apply the laws of supply and demand – the price of the finished development is influenced by the numbers of such developments in the market and the amount of money available to buy them. So easier lending to house-buyers is inflationary, and will give the landowner a better price. Once we understand that, we can see that if planning permissions are not granted for housing development that will also drive up the price of housing. (Of course, when times are hard, potential buyers tend to stick with the accommodation they have, so demand drops off and the price of housing ceases to rise, and in extreme cases, drops, leading to negative equity issues.)
I have blogged before on Use it or Lose it (here) . We already have Use it or Lose it powers – planning permissions expire, completion notices can be served, and there are powers to acquire land compulsorily for planning purposes. I hope Lyons will look into breathing new life into the rarely used completion notice and CPO powers before embarking on more legislation in the area. I have often wondered why completion notices are rarely served. Could it be that they just create the need for a new permission? If an authority has a housing shortage, revoking the permission won’t help. In which case, Use it or Lose it would need to focus on compulsory acquisition. But how will that be funded? And how will local authorities do the development? Selling back into the private sector doesn’t sound the way ahead – the new buyer will be driven by market forces and if it was better for the old owner not to develop (for example because the development was not profitable enough) how will things be different for the new buyer?
One of the questions Lyons asks is whether the system is fit for purpose. That is a wide-ranging question. The existing system was hammered out by a Royal Commission and three special committees, the last of which was the Uthwatt Committee. Its brief was to ensure that redevelopment was not held up. But it is difficult to say that a positive attitude to development prevails at the moment. Far from being a means of enabling development and providing homes, the popular attitude sees planning as a method of control, even prevention. And MPs are not immune from those attitudes, as January’s Commons debate on planning showed. If we could regain the positive approach, change hearts and minds, we might see an increase in housebuilding to the levels needed to meet the need.
Lyons is also asked to look at sharing the benefits of development with local communities. The history of post-war town planning is punctuated with attempts to do this. From betterment levy to DLT they have all been counter-productive, complex and eventually repealed. Now we have CIL, conceived by the last Labour government. This seductively simple levy (it would replace the need for complex s.106 agreements and their lengthy negotiations) is proving to be pretty complicated. It has been amended every year in attempts to correct errors in the original regulations. Even the final draft of those had to be amended at the final hour when DCLG and the Treasury at last woke up to what the Law Society had been telling it, that the regulations as drafted were retrospective and would catch planning permissions granted before the regulations were made. The basis for giving credit for existing development has proved to be a thorny problem. The latest amendments – passed on 23rd February this year – amend the very formula for calculating the amount payable. And CIL has not been, and will not be, the end of section 106 agreements.
It is popular to claim that the grant of planning permission gives the landowner a windfall. But this ignores the fact that but for legislation (notably the Town and Country Planning Acts 1947-1990) the landowner could develop without the need for planning permission. The 1947 Act nationalised development land rights, and whilst it originally created a compensation regime, that was effectively abandoned in 1953 (ironically by the Conservative government of the day) and finally abolished (again by the Conservatives) in the Planning and Compensation Act 1991. Little compensation for the expropriation of development rights has ever been paid.
We already have a tax on capital gains, Capital Gains Tax, introduced in 1965, by the then Labour government, and still going strong almost 50 years later.
We already have a well developed planning system, it would be sensible to explore whether its existing legal framework has tools to address the difficulties which have been identified. Sadly however, the Lyons panel contains no lawyers, let alone planning lawyers.