Planning: untying the knot

While pressure groups want to rein developers back, many in UK Plc see the planning system as slow, bureaucratic and hostile to business. A Government report on whether it is actually stifling economic growth is expected soon. Can a fast but fair process be devised?

by Nick Loney
Last Updated: 31 Aug 2010

Visitors to London arriving at King's Cross or St Pancras can hardly fail to notice the host of cranes and prefabricated buildings that clutter the wasteland to the north of these stations. The area, in the capital of Europe's most crowded island, is home to one of the continent's largest building projects.

In 2000, development company Argent won the right to rebuild the derelict 67-acre site, now being prepared for a new Eurostar terminal. But its plans, fiercely opposed by local lobby organisation the King's Cross Railway Lands Group (KCRLG), weren't approved until March this year, after negotiations so tortuous that company CEO Roger Madelin joked that he'd been physically aged by the process.

This September, KCRLG said it was considering a legal challenge to the decision. Six years after the contract to develop the site was awarded, it is impossible to say with confidence when this scheme might be completed.

Eighty or so miles to the south, residents of Portsmouth are still awaiting the start of work on a new shopping and leisure facility on the site of the former Tricorn shopping centre. Centros Miller bought the site in 2001 and demolished the 40-year-old Brutalist centre, said to be Britain's ugliest building. But even though the developers won support for their scheme from the local council last November, work is not due to start until late 2007, with completion in '09. Rome wasn't built in a day ...

The experiences of Argent and Centros Miller reinforce a popular complaint among British businesses: that of a planning system beset by labyrinthine procedures and glacial decision-making processes, with the odds stacked against them. Developers, house-builders and business lobby groups have complained loudly and consistently that the UK's method of dealing with applications is slow, bureaucratic and bad for the economy.

As long ago as 1998, a McKinsey report cited planning as one of the UK's chief causes of poor productivity. Its view was supported earlier this year by the Organisation for European Co-operation and Development, which argued that UK local authorities should 'give greater weight to economic considerations in planning decisions'.

Also this year, a CBI survey found that 69% of businesses were 'dissatisfied' or 'very dissatisfied' with the record of local government in improving the planning system.

The Treasury, which has long suspected that the planning system is bad for business, seems convinced of the need to make the system more business-friendly. Its problem is that incontrovertible proof that planning has acted as a brake on the economy has remained elusive.

To rectify this, the Treasury appointed Kate Barker, a Bank of England economist, to investigate the land-use planning system in England. Explains one insider: 'The Treasury's mind is made up, but it doesn't have the evidence. So it appointed Barker to find that evidence.'

And at first it looked as though she would do exactly that: just ahead of the publication of her interim report in June, an internal policy paper bearing the official logo of Barker's team was leaked to the press, which revealed that 'refused or discouraged' applications 'effectively stalled' Ikea's £1 billion investment programme, 'put under threat' a £160 million Center Parcs development and caused 'problems' for a proposed GE Healthcare campus.

The leaked report also revealed that US drugs giant Pfizer had abandoned plans to locate its European marketing HQ alongside its existing facility in Walton Oaks, Surrey. The move would have required planning permission for extra offices, but Pfizer's UK management was unable to guarantee that the facility would be delivered in line with the timescale laid down by the company's New York bosses.

A spokesman for Pfizer confirms: 'The business planning required a commitment from the UK management that they could deliver the required facilities in due course. However, experience of the timescales and uncertainty in planning applications meant the UK management was unable to give such an undertaking in the required time, and the opportunity was declined. Instead, the company decided to distribute the jobs across EU countries, and the opportunity to develop a genuine EU-leading role for the UK site was lost.'

Things seemed set for Barker to launch a major assault. But she surprised many by raising questions rather than providing answers. In it, she tentatively concluded that the planning system has 'negative effects' on productivity and that improving the system's performance 'could help to close the productivity gap between the UK and other countries'. She observed that the time taken to get planning consent is lengthening and the proportion of applications refused is rising, leaving Britain with some of the highest occupancy costs for business in the world. Planning was one of the top six concerns of foreign companies considering investing in the UK, she noted.

But Barker diluted these findings by admitting that there is little evidence to prove that planning is a major restraint on productivity. The significance of planning's effect on competition and enterprise was 'hard to evaluate'.

She acknowledged that there are 'complex sets of trade-offs to be made in planning' that could not be solved by 'simple magic bullet solutions'.

Significant progress had been made in speeding up the decision-making process, she said, with 80% of applications now decided within their eight- or 13-week deadlines.

She concluded cautiously, promising merely that her final report would 'consider how and whether planning can improve the efficiency and effectiveness of sustainable economic development while protecting or enhancing wider sustainable development goals'.

The report sparked off a comical round of spin among lobby groups, with both sides claiming their respective positions had been vindicated. It was left to the Campaign to Protect Rural England (CPRE) to pinpoint the seemingly Janus-faced pose Barker had struck.

'It is as if the report was written by two people facing in opposite directions,' said CPRE spokesman Nicholas Schoon. 'One of the writers appears to recognise the critical role of our planning system in protecting the environment for us all, and moving us to sustainable development.

The other appears to be a Treasury apparatchik hell-bent on weakening the planning system in order to deliver a development boom for footloose international capital.'

The only thing uniting all parties is that nobody seems quite sure what to expect from Barker's final report, which is due alongside the chancellor's pre-budget report later this month or in early December.

Quarrels between businesses and planners are, of course, nothing new.

After the Great Fire of London in 1666, Christopher Wren submitted an elaborate plan for a city full of grand boulevards and glorious buildings.

His ideas were quickly rejected. People may have lost their businesses and homes, but they still owned the land and were determined to hang on to it or sell it for the highest price. Mercantile interests prevailed and the City's medieval street plan remained intact.

Fast-forward to the present day and the detail may have changed but the tensions between planners, developers and the wider community remain acute. Local authorities, particularly in the south, are under pressure from the Government to approve the building of hundreds of thousands of new homes while simultaneously meeting tougher targets for building on brownfield sites and driving up design and environmental standards. In addition to the constant pressure applied by local residents, pressure groups, campaign bodies and quangos, representing a huge range of concerns, regularly submit objections to planning applications. Says Paul Morrell, a partner at consultants Davis Langdon and a commissioner at the Commission for Architecture and the Built Environment (CABE): 'The fundamental issue is what people want to be built - and most of the time they want nothing. There is no way of preventing objections to development without dismantling local democracy.'

Given planning's capacity for evoking violent emotions in even the most sanguine members of the populace, any attempt significantly to reduce the influence of local objection to development could be politically disastrous.

The same is true internationally. Justifiably or not, the UK has carefully cultivated an image as one of the world's most environmentally concerned nations. If the country were to suddenly adopt a Dubai-style, laissez-faire approach to development, this image would be destroyed in an instant.

So despite the frustration felt among business leaders and Treasury officials with the current planning system, it was never likely that Barker would recommend dropping it in a giddy fit of free-market abandon.

But although most people in the private sector accept that democratic procedures are important and necessary, there is a feeling that the timescales for their implementation in Kings Cross and Portsmouth (to name but two examples) are too often ludicrous. Ironically, almost everybody seems to agree on the kind of system Britain needs: one that is democratic, efficient and delivers buildings that meet high design, environmental and construction standards. The problem is that few believe this ideal resembles the system actually in place.

So if Barker's final report is unlikely to recommend wholesale changes to the current system, what, if any, measures can we expect to help planning work more effectively? According to the CBI, the Government should introduce a more flexible system of Planning Timetable Agreements between developers and local planning authorities (LPAs). This, it argues, would 'allow more meaningful timescales for decisions to be agreed between applicants and LPAs and ensure LPAs are not penalised in terms of performance targets'.

Any measures that are likely to lead to speedier decisions or even to more approvals will have to contend with strong public feeling, especially in the leafier and more affluent parts of the Home Counties and beyond.

Fears over the 'disappearing countryside' are particularly potent among the middle classes, and are regularly fuelled by Daily Telegraph scare stories about the Government's plans to 'concrete over the south of England'.

But these fears are based partly on myth: 20 years ago, a survey revealed that two-thirds of the population believed 65% or more of the UK surface area is urban, whereas in fact only 8% of England is urban. Says Gideon Amos, CEO of the Town and Country Planning Association (TCPA): 'Nobody wants tin-shed sprawl, but we need to be open to out-of-town development as part of carefully planned urban extensions and new, mixed-use communities.'

But although businesses are clearly irritated with certain areas of planning policy, there is much greater frustration at the sheer time and expense that submitting an application incurs. Says Sir Stuart Lipton, former chair of CABE: 'We don't need to change the system much; we just need to make it work. The City of London planning authority is very good - they've got excellent people and they make it work. And if they can do it, so can other local authorities.'

Many leading business figures agree with Lipton's assessment that it is not the planning system that causes most problems, but its implementation.

If Barker concurs (and her interim report would suggest that she does), her final report is likely to focus on how to make the existing system work better.

She has many areas to choose from. One question she is almost certain to ask is whether local authority planning departments are adequately resourced to do the job asked of them. And the answer, almost everybody seems to agree, is no. Richard Kauntze, chief executive of the British Council for Offices, summarises a near-consensus: 'The problem is that the agencies responsible for delivering the planning system are under-resourced. There aren't enough of them and they aren't paid enough.'

A drive to increase the salaries of planners, combined with more freedom for planning departments from central Government, could help to address this problem.

But even if substantial funds were available to enable local authorities to recruit and retain enough planners, other problems remain. At present, most planning applications submitted to local authorities are for very small developments. Most are approved, but officers have to spend a substantial amount of time assessing them. This prevents them spending time on larger, strategic applications, so developers feel starved of vital consultation with planners.

'Many officers can't or won't see you,' says Lipton. 'So you spend a year working alone on an application that they then reject out of hand because you've got it wrong.'

There are several ways in which the workload of planning officers could be reduced to allow them to spend more time on large applications. One would be to widen significantly the definition of 'permitted development' (building work that does not require planning permission). Currently, only a tiny proportion of household-related work is classified as permitted development, but Kelvin MacDonald, CEO of the Royal Town Planning Institute, thinks this could change. 'We'll be arguing the case for business-permitted development,' he says. 'Are there areas in which businesses could undertake development without needing local authority approval? We believe there are.'

Another way of easing the workload would be to introduce design codes.

These would enable planning departments to give developers a much clearer idea about the kinds of development that are likely to be approved by offering architectural guidance at the outset. CABE is already exploring the potential of design codes but they have yet to be introduced on a wide scale. MacDonald, however, would go one step further. 'We want Barker to push for much wider use of Local Development Orders,' he says. LDOs, which are permissible within current legislation, set out exactly what a local authority wants from a particular development site - for example, 30% office space, 30% private residential housing, 20% affordable housing and 20% leisure facilities.

If a developer submits a proposal that meets all the criteria, they get automatic approval. 'LDOs are very powerful tools but hardly ever used,' adds MacDonald. 'Barker could change that.'

A frequent complaint from businesses is that planning departments simply don't have any incentive to promote economic growth. This seems strange: local authorities, you might think, would be highly motivated to attract new businesses, create more jobs and improve living standards. But a 2004 report from the then Office of the Deputy Prime Minister confirms: 'Planning for economic development has a lower profile compared to other major areas of the planning system. A culture of positive proactive planning for economic development is not embedded.'

Barker is likely to examine ways that local authorities can be given stronger incentives to promote growth. It's unclear what these might be, but according to the TCPA's Amos, Barker's first step should be to recommend the removal of disincentives. 'A local authority doesn't reap any council tax from a new development until years after it grants approval, but it still has to pay for infrastructure upfront,' he says. 'This is expensive and isn't sufficiently recognised within the block grant system. If local authorities know they are going to be worse off after approving an application, you can hardly blame them for being cautious.'

One way to avoid this would be to change the way infrastructure is funded.

Currently, local authorities negotiate developer contributions to infrastructure and other community facilities through section 106 agreements. But this system is regarded by many as too ad hoc and excessively dependent on the whims - and negotiating skills - of individual local authorities. Barker herself has already proposed an alternative to section 106, the Planning Gain Supplement (PGS), which would impose some uniformity on the process and allow central Government to redistribute developer contributions across a wider area than that covered by the application. But despite having the backing of Government, PGS is despised by many others and faces an uncertain future.

Milton Keynes is experimenting with a radical alternative, dubbed the 'roof tax', through which national regeneration agency English Partnerships (EP) has agreed to fund infrastructure upfront and recoup the money from developers as their projects progress. The main drawback with this system is that EP does not have anything like the funds to replicate the experiment across the whole country.

An even more radical solution would be to take decision-making powers over large-scale schemes away from local authorities. There is some precedent for this. Canary Wharf in east London was a wasteland less than 20 years ago. Its transformation within a decade into one of the country's main economic engine-rooms was made possible by removing planning powers from the local councils in the area and forming a dedicated strategic planning body, an urban development corporation (UDC), to drive through the project.

The UDC achieved its aims at a price: it was considered anti-democratic by locals and caused much resentment.

In the past few years, three more UDCs have been formed, with more democratic accountability, to provide strategic planning in key growth areas. There are also plans to extend the planning powers of the Mayor of London at the expense of local boroughs. The boroughs are passionately against this idea, but it is an attractive proposition for developers, who are reassured by the prospect of a strategic body with the power to approve projects offering benefits for the whole of London but which might be rejected by local councils.

Outside London, unelected regional assemblies set the eight regional spatial strategies, but decision-making power resides with local authorities.

A rebalancing of this relationship in favour of the regional assemblies would be difficult without reform of local democracy, but theoretically possible as long as appropriate lines of accountability were introduced.

More strategic planning might also help to solve one of the UK's greatest enigmas: why, despite so many checks and balances, does the planning system consistently deliver development that falls way below the standards not only of other countries but also of most periods in our own history?

Says Lipton: 'The Romans built better buildings in Britain than we are building now.' This is not mere hyperbole: in September, CABE revealed in its annual report that just 6% of new housing is either good or very good. The Thames waterfront offered a great opportunity for developers in the 1980s and 1990s, but the quality of architecture delivered has been deeply disappointing and the riverside is regarded by many people today as one long, winding monument to failure. There are fears that the Thames Gateway will go the same way.

Prince Charles highlighted this problem in his famous 'monstrous carbuncle' speech, but his solution left much to be desired. Poundbury, his model village in Dorset, is an idealised pastiche of an Olde Worlde English village based on a deep-seated fear of modernity. It is unclear how much of the UK's population, most of whom presumably no longer regard themselves as squires or yokels, actually want to live in a museum. And although there is no doubt that striking examples of well-designed, beautifully constructed buildings can be found all over the UK, they are the exception rather than the norm. Most ordinary people live in towns and cities full of new buildings that fail to inspire the imagination or even demand attention for more than a few seconds.

Which brings us back to the question: is it possible to create a planning system that is democratic, promotes economic growth and delivers high-quality, lasting development? Barker's final report should give us a clearer answer. She may conclude that the dissatisfaction with the current system is an inevitable product of trying to balance so many competing interests.

If so, expect little to change. But if Barker succeeds in identifying ways of genuinely improving the system, it won't just be Argent and Centros Miller that celebrate. The rest of the country will join them.

THE PROBLEM WITH PLANNING

The principal legislative framework for the current planning system is the Town and Country Planning Act 1990, as modified by the Planning and Compulsory Purchase Act 2004. Both are based on the comprehensive planning legislation of 1947. Planning in England is based on a hierarchical structure of guidance and plans at national, regional and local level, against which planning applications are assessed. At its core is the principle that permission is required for the development of land. Most applications are dealt with by local authorities, but the Secretary of State is able to determine applications through 'call-in' powers.

National planning is mediated via 13 national planning policy guidance notes. These notes, each defined as either a planning policy statement (PPS) or planning policy guidance (PPG), set out the Government's polices on planning. The CBI is calling for a review of these, in particular PPS6 (which covers town-centre development) and PPS10 (covering waste), both of which it says were published 'without full and necessary supporting guidance - creating uncertainty'.

PPS6 is controversial because it makes it difficult for companies to build out-of-town developments - a common cause of complaint for businesses, particularly among retailers such as Ikea, Asda and the other major supermarkets.

Companies face considerable pressure to locate their premises on brownfield land for two reasons: first, because of a perception that the countryside is scarce and needs protecting at all costs; and, second, because of fears that too much out-of-town development will lead to the decline of traditional city centres.

Nobody denies that the planning system puts constraints on development.

The question is whether the restrictions are just and appropriate. The 'problem' for developers seeking quick decisions is that the UK is a democracy and is full of residents notoriously hostile to development when it takes place near where they live. While people in other countries launch mass protests at low wages and political corruption, in Britain nothing is more likely to get citizens onto the streets (or up a tree) than a proposal to build a supermarket in a nearby field.

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