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WHERE ARE WE GOING? – IN 7 KEY POINTS
CHRISTOPHER YOUNG QC – NO5 CHAMBERS
This summary brings together information from
- recent developments in UK and European planning and environmental case law;
- the proposed changes to the National Planning Policy Framework and Planning Practice Guidance
- written Ministerial Statements, other Ministerial Pronouncements; and
- other Government statements such as MHCLG letters to Chief Planning Officers
1. REFOCUSSING ON A PLAN LED SYSTEM
Everyone knows that Section 38(6) of the Planning and Compulsory Purchase Act 2004 (“PCPA 2004”) requires planning applications to be determined in accordance with the development plan unless material considerations indicate otherwise. But for the last decade the plan-led system has been in disarray, following the introduction of the new split level Local Development Framework (“LDF”) system, abolition of Regional Strategies (“RS”) and the lack of political leadership to meet the development needs at local council level. Many development plans were not progressing at all.
So in March 2012, the Government published the NPPF to address that collapse in the development plan process by creating a presumption in favour of development if a local planning authority (“LPA”) had neither an up-to-date local plan nor a 5 year supply of housing land (“5YS”). That has resulted in an avalanche of appeals. 40,000 new dwellings were released by means of appeal decisions last year alone. That is an appeal-led system, not a plan-led system.
The key to this high level of success at appeal was the presumption in favour of sustainable development in paragraph 14 of the NPPF, and most especially the “tilted balance” which is the name given by the Supreme Court to the test in paragraph 14 which makes clear that when there is no up-to-date development plan or no 5YS of housing land “planning permission should be granted unless the adverse impacts of doing so would significantly and demonstrably outweigh the benefits”: Suffolk Coastal v Hopkins Homes; Richborough Estates v Cheshire East  UKSC 37 (see Lord Carnwath paragraph 12 of the Judgment).
But local councillors and MP’s do not like this “undemocratic” process and they have had enough. They complain to Government bitterly about the fact that they now have local plans in place and yet the housing appeals are still allowed. The Government is keen to appease them which was evident from the decision to issue the Written Ministerial Statement (“WMS”) on Neighbourhood Plans in December 2016 introducing on a whim a new 3-year supply requirement in NDP areas solely to address pressure from four backbench Conservative MPs over the progress of the Neighbourhood Planning Bill: see paragraph 10 the Judgment of Dove J in Richborough Estates and 24 others v SSCLG  EWHC 33. This is important because this is now a Government without a majority so it needs it to keep its backbenches happy, especially because in Brexit where it has a bigger issue to address than even the housing crisis.
So the Government is looking to row back from an appeal-led system to a plan-led one. It is introducing a new phrase into the heart of the revised NPPF which says “where a planning application conflict with an up-to-date development plan, permission should not usually be granted.” In the draft version of the revised NPPF this is to be found in paragraph 12. Be under no illusion this is very significant. This phrase is strikingly similar to the test found in the present NPPF at paragraph 198 (“permission should not normally allowed”). But critically the present test is restricted solely to neighbourhood development plans (“NDP”). The widening out of the test to now suggesting planning permission “should not usually be allowed” for any development proposal which conflict with any development plan (NDP or Local Plan). It is the reassertion of the primacy of the development plan. Indeed, a recent letter from Steve Quartermain of the DCLG to Chief Planning Officers revealed the Government’s generally negative view of speculative development. However, there are four things to note which will mean speculative development will remain alive and well:
(i) In the Woodcock Holdings v SSCLG  EWHC 1173 (Admin), the Government accepted that paragraph 198 of the NPPF could not usurp or diminish the significance of the legislative test in Section 38(6) PCPA 2004. The Government’s position (represented by Richard Honey) was recorded in the Judgment of Mr Justice Holgate at paragraph 24)
“24. Mr. Honey emphasised those parts of the NPPF which attach importance to neighbourhood plans and planning (e.g. paragraphs 183 to 185). Paragraph 198 provides that “where a planning application conflicts with a neighbourhood plan that has been brought into force, planning permission should not normally be granted”. However, the Secretary of State accepts through Mr. Honey, that paragraph 198 neither (a) gives enhanced status to neighbourhood plans as compared with other statutory development plans, nor (b) modifies the application of section 38(6) of the Planning and Compulsory Purchase Act 2004 (“the 2004 Act”). Moreover, housing supply policies in neighbourhood plans are not exempted from the effect of paragraph 49 and the presumption in paragraph 14 of the NPPF.
This judgment and the observations on paragraph 198 of the NPPF was endorsed by the Court of Appeal in R. (on the application of DLA Delivery Ltd.) v Lewes District Council v Newick Parish Council  EWCA Civ 58 at ).
This is reasoning which is directly applicable to the new para 12 in the revised NPPF. The “permission should not usually be granted test” does not stop unallocated development securing planning permission if there are material considerations which can outweigh conflict with the development plan. And on this, the Secretary of State and his inspectors have nearly always given significant weight to both meeting a shortfall in the 5YS of housing land and the delivery of much needed affordable housing at nil costs to the public purse. The latter is so important that it is being a good reason to call a dedicated witness to address affordable housing need and the wider housing crisis: see for example Welbeck’s successful speculative housing proposal at Oving Road, on an unallocated site outside the bypass near Chichester last year.
(ii) Paragraph 12 of the revised draft NPPF continues by quoting the statutory test as well, thereby highlighting in the same text the continuing and pivotal role of material considerations in the decision-making progress. That is no matter how much local MPs and councillors would like to think the development plan is the final word on the extent of the development they will tolerate in their area. This is in line with the view of the Supreme Court in the Suffolk Coastal/ Richborough case cited above, where the Court made clear that parliamentary legislation cannot be usurped by mere Government guidance such as the NPPF.
(iii) One can convincingly argue that a plan-led system which is designed to boost significantly the supply of new homes would not “normally” or “usually” see the LPA failing to have a local plan in place (or a strategy and allocation documents) a full local plan in place (full in the sense of having both a strategy and an allocations document) nor a shortfall in its five year housing land supply.
(iv) There remains a clear requirement to provide a five-year supply of housing land, and an adopted local plan full of large scale allocations will not deliver that (especially under the definition of deliverable – see below). So the tilted balance will still apply.
2. STRATEGIC COUNTY WIDE PLANNING
Ironically, having abolished county structure plans at the same time as abolishing regional strategies, the Government is now keen to progress strategic planning and to do so at a county level. This is because the duty to co-operate has failed spectacularly, nowhere more so than in Sussex where hardly any of the LPAs are meeting their needs let alone addressing the huge unmet need generated from Brighton. So there is a move now towards county wide planning, and in some instances a move towards county wide planning authorities (like Wiltshire) or a county divided into two (as in Cheshire) which is now being progressing apace as in the case of Dorset. The Government clearly hopes that operating on a large county scale means housing needs are more likely to be properly addressed. This is, of course, together with LEPs, Growth Deals and infrastructure funding (especially for roads) , all designed to get local political leadership to buy into the merits of housing growth by focussing on economic growth at a larger sub-regional scale. The problem with a lot of the present local authorities in England is they are too small, insular and driven by a largely elderly demographic in the very greenfield locations where much of the new development needs to take place.
3. STANDARD METHODOLOGY ON HOUSING NEED
Many planning inquiries have ended up taking two-weeks rather than one because of the need to present detailed evidence on Objectively Assessed Need (“OAN”). It slows the whole process down and is very cumbersome. The cause of this pain was the decision to abolish the Regional Strategies and replace it with an assessment of housing need at the local authority level. Which is fine if the LPA had progressed an NPPF compliant core strategy or local plan based on up-to-date evidence of housing need in their area. The complication has come in the very detailed and complex nature in which OAN is calculated, based on the methodology in chapter 2a of the Planning Practice Guidance entitled “Housing and Development Needs Assessment”. This has spawned a cottage industry in litigation over how to conduct the OAN process and when it can be used. In the last few years, there have been about a dozen court cases on this topic alone: see for example West Berkshire v SSCLG and HDD  EWHC 267 (Admin) – Mr Justice Supperstone upholding an Inspector’s decision to favour a developer-generated housing need OAN figure (833 dpa) over an LPA figure from a recently adopted Core Strategy figure (525 dpa).
LPAs, developers and the Planning Inspectorate (PINS) have all found the process too complicated and time consuming. The Government has decided to introduce a new standard methodology which involves three basis questions in terms of setting the level: one of which is the extent to which housing is unaffordable in terms of its relationship to local incomes. This approach was advocated by the Local Plans Expert Group (“LPEG”) who produced the standard formula approach. But because the numbers it produced where so high for the South East of England the Government watered down it down. The consequence is that the standard methodology produces figures which are higher than some existing local plan figures (as in much of Hampshire) but not always as high as the figures produced under the present OAN system in the NPPF and PPG. Whilst that is a zero-gain outcome for the south, spare a thought for developers in the north, where housing targets are set to come crashing down in most areas from Birmingham northwards.
4. THE NEW MEANING OF A “DELIVERABLE” SUPPLY OF HOUSING TO MEET THE 5YS
Much of the change in the new NPPF is driven by the litigation which has taken place over the wording of the document. None more so than the definition of “a supply of specific deliverable sites sufficient to provide five years worth of housing” and more specifically the word “deliverable”. (presently contained in paragraph 47 of the NPPF and defined in footnote 11). In St Modwen v SSCLG and East Riding  EWCA Civ 1643, the Court of Appeal suggested that the word deliverable did not require an examination of whether the site might actually be delivered in the next five years. The Court held there was no need to ask whether the site would or even might be delivered in that period. Nor even whether the delivery of housing in the next 5 five years was probable. In so doing, the Court relied heavily on the guidance in the PPG which suggests that allocations and sites with outline planning permission should all be automatically included in the five-year supply and even sites which are neither allocated nor have planning permission (see PPG chapter 3).
One might legitimately ask what is the point of an LPA being able to rely on a supply of housing land for the next five years when it is not even probable that houses will be delivered on such sites. The Government has recognised that the Court’s interpretation of the word deliverable is problematic, especially for a document which is designed to speak the language of delivery. So it has changed the definition of “deliverable” (now contained in the glossary of the revised NPPF and the guidance in the revisions to the PPG). What is now automatically included in the 5YS is limited to just sites which have full or detailed planning permission and small sites (windfalls). Sites with outline permission, allocations and permission in principle will only be included if the LPA can provide evidence that delivery will occur in the next five years. Many LPAs have responded to the consultation saying that will be near impossible for them. Which is good because what they need to do, to ensure a realistic 5YS of housing land, is grant a lot more planning permissions especially on oven ready small to medium sized sites.
The new definition rejects the approach of the Court of Appeal and is much more in line with the view expressed by Lord Gill in the aforementioned Supreme Court case Suffolk Coastal v Hopkins Homes: Richborough Estates v Cheshire East [ 2017] UKSC 37, where he highlighted “the futility” of local authorities allocating sites which will not deliver in the five year supply. The fact is that a lot of the new wave of local plans are about 10 years late. They should have been adopted well before the end date of the plans they are designed to replace. And adopting a plan with a new allocation will not ensure completions within the relevant five- year period. That only happens when planning permission has been granted with a signed section 106, the conditions discharged and the reserved matters have been approved. The new definition of “deliverable” is therefore a very welcome dose of reality. It is very bad news for some LPAs who have been inflating their supply with sites few believe will actually start delivering housing in five year. And very good news for developers.
Also, the new Housing Delivery Test will come into force in November of this year. It provides another route to the tilted balance test. It is not generating much excitement because the delivery rate required this year has been set absurdly low (25% of the expected level of completions over an average of the last three years). However, by 2020 the threshold for delivery over the preceding three years will have ramped right up to 75% which is rather more demanding. Many consultation responses to the revised NPPF, including to the newly formed Land Promoters and Development Federation, suggested the figure this year should start at 50% and be ramped up to 90% by 2020.
London has long been doing upwards since it has been unable to go outwards due to the Green Belt. Other cities have followed suit, with huge increases in city living numbers in places like Manchester and Birmingham. The Government thinks that this should be the case everywhere. It can clearly be seen from what is taking place in Bournemouth.
Politically it is certainly a lot easier to sell upward expansion than greenfield development. The Government firmly believe this is the way forward as is evidenced by the fact the revised draft NPPF has a whole new chapter dedicated solely to the issue of “Making effective use of land” (Chapter 11), when previously it was just a paragraph. There are no minimum densities unlike the old PPG3 issued in 2000. Instead the tests are that “as much use as possible” should be made of brownfield sites, there should be use of under-utilised land and buildings and LPA should be supporting opportunities to use the airspace above existing residential and commercial premises for new homes. Viability will come into this, especially in inner city areas, but the changes to viability testing especially at the local plan stage are worthy of a whole paper on its own and cannot be covered here.
6. NEIGHBOURHOOD DEVELOPMENT PLANS (NDP)
The spread of these are accelerating at pace across the country. It is estimates that there is scope for 7,600 of these in England of which over 2,000 NDP area designations have already been made. Most are in Conservative held areas and they are coming to dominate the map of rural England. Most are NIMBY plans seeking to stop development and allocate large areas of land as local greenspace. As noted above, under the present NPPF, development which is not in a NDP should not normally be allowed. There are ways to overcome that. But the message from Government is clear, that they want to encourage a plan-led system to local development in parish areas.
The key issue with NDPs is the protection afforded by the Written Ministerial Statement on NDPs, referred to above. Under the WMS, NDP areas benefit from there needing to be only a 3 year supply of housing land rather than the usual 5 years supply. Although it is the NDP area which is protected, the housing land supply still measured at the local authority level. The Government thinks this will encourage plan making and lead to more allocations being made through the NDP process. The problem is most NDPs do not allocate housing sites and those that do often allocate a completely insufficient number of sites, including sites which are not deliverable (existing and well used employment sites etc).
The WMS was designed to encourage more allocations. But it was drafted in a hurry to quell a backbench rebellion and was subject to no consultation. The WMS was the subject of the class action brought by 25 developers and housebuilders in Richborough Estates and 24 Others v SSCLG  EWHC 33 (Admin). As well as the lack of consultation, the Claimants made clear the policy would allow the 3 year protection to kick in even just two sites of 2 houses each had been allocated.
The Government has listened to that concern and in the revised version of the NPPF (which will replace the WMS when introduced and which plainly is the subject of consultation) the 3 year housing land supply requirement only applies to those neighbourhood plan area where the NDP “contains policies and allocations to meet its identified housing requirement” (paragraph 14). Housing need requirements are always done at the local authority or HMA level, as this is the method by which Government household statistics operate. There is no official mechanism for calculating household need at the neighbourhood level. So the three year test will not apply in most areas for some time because the parish council will not be able to identify, let alone show it has allocations to meet, its own parish level housing requirement. That again is good news for speculative development in rural areas.
7. EUROPEAN HABITATS DIRECTIVE – NEW EUROPEAN COURT CASE PEOPLE OVER WIND
This new ruling by the European Court decided that mitigation was not relevant to the decision about whether a development proposal was likely to have an adverse effect on European protected species and habitats. That is contrary to our own law: Hart DC v SSCLG (the Dilly Lane case). It has widespread implications for both plan making and decision taking, including all those areas close to the Dorset heaths. The likely solutions to this issue are uncertain. There is various possible outcome, some of which may depend on the path the UK takes after Brexit, albeit the Government has provisionally indicated we will abide by European Environmental Protections for the purpose of securing trade relations (i.e. to avoid the risk UK products could not be sold in the EU due to falling short of environmental protections). The implications of the case and the possible outcomes were covered in detail by Scott Stemp in his presentation.
CHRISTOPHER YOUNG QC
London – Birmingham – Leicester – Bristol
The author acted for the developers in Richborough v Cheshire East (Supreme Court), St Modwen v SSCLG and DLA Delivery v Lewes (Court of Appeal) and Richborough plus 24 others v SSCLG and West Berkshire v SSCLG and HDD (both in the High Court) and four successfully challenges to the refusal of planning permission by the Secretary of State in Neighbourhood Plan areas, including Verdin v SSCLG  EWCA.