Funding for local authority planning functions

Neighbourhood Planning Bill – in a Public Bill Committee am 3:15 pm ar 27 Hydref 2016.

Danfonwch hysbysiad imi am ddadleuon fel hyn

(1) The Secretary of State must consult local planning authorities prior to the commencement of any new statutory duties to ensure that they are—

(a) adequately resourced; and

(b) adequately funded

so that they are able to undertake the additional work.

(2) In any instance where that is not the case, an independent review of additional cost must be conducted to set out the level of resource required to allow planning authorities to fulfil any new statutory duties

This new clause would ensure that the costs of new planning duties are calculated and adequately funded.

Brought up, and read the First time.

With this it will be convenient to discuss new clause 15—Ability of local authorities to set planning fees—

(1) A local authority may determine fees relating to planning applications in its area.

(2) Subsection (1) applies, but is not restricted to, fees relating to—

(a) permitted development applications, and

(b) discharge of planning conditions.

Photo of Jim McMahon Jim McMahon Shadow Minister (Communities and Local Government) (Devolution)

The new clauses are linked: they both relate to resources and funding. New clause 10 would ensure that we carry out a thorough review to understand the situation in local authorities, while new clause 15 would give local authorities the ability to charge more realistic fees for the services they provide.

We have heard a great deal in Committee about resourcing—it was a key feature of the oral evidence sessions—and about how local authorities have been affected by central Government cuts to the revenue support grant and how that has affected planning services. Despite that, local authorities are still subsidising planning services, because they are not able to get enough money from planning fees to cover the cost of those services.

It is worth spending some time to remind ourselves of the evidence that was given by industry professionals. We heard representations from Andrew Dixon from the Federation of Master Builders, who said clearly:

“Under-resourcing is a major issue that causes numerous hold-ups within”––[Official Report, Neighbourhood Planning Public Bill Committee, 18 October 2016; c. 11, Q6.]

the planning system. Roy Pinnock from the British Property Federation reinforced that point. He said:

“There is a general consensus, particularly among commercial development investors, that you get what you pay for. There is a completely profound lack of resource in authorities to deal with the situation in which we find ourselves. It is the single biggest brake”— we must heed that—

“on development, in terms of applications and starts on site”.—[Official Report, Neighbourhood Planning Public Bill Committee, 18 October 2016; c. 12, Q9.]

That is someone who is in the industry and representing the industry saying, “Look, we recognise that if we want a decent service, it is going to cost, but it is worth paying that cost, because that will speed applications up, we will get a better quality service and the industry will benefit overall.”

We heard evidence from Hugh Ellis, who said that research that the Town and Country Planning Association had carried out

“showed that planning teams had fallen below the critical mass”.—[Official Report, Neighbourhood Planning Public Bill Committee, 18 October 2016; c. 26, Q34.]

Those teams cannot even keep their heads above water. We heard from the Minister only the other day that conditions were being used as an “abuse” and were being put in place because planning teams did not have the resources to administer conditions in a way that developers would find realistic and reasonable. I think “abuse” is pushing it. That is an understandable reaction to where planning teams find themselves. They cannot deal with the mountain of planning applications that are coming through. If the economy goes and we see the number of houses being built that the Government and communities want, those teams’ workload will increase. We need to ensure that we have the capacity to deliver those houses.

On sustainability, witnesses also told us that there is evidence that authorities do not have enough people to deal with complex sites, particularly where flooding is an issue. Mr Ellis said that when the Town and Country Planning Association visited some such authorities, it

“found 1.2 full-time equivalent members of staff were working on a local plan process”—[Official Report, Neighbourhood Planning Public Bill Committee, 18 October 2016; c. 26, Q34.]

let alone administering planning applications.

Most people would recognise that the number of staff that are needed is not fixed. That will always be a matter of local discretion and ensuring that demand is matched with the resource to administer that demand. We are therefore not prescribing numbers, but we are reflecting the fact that we need to ensure that there is a “critical mass” in the planning system—a point that came through strongly in the evidence.

We heard from Councillor Newman, who represented not just his own council—although he described quite a lot of first-hand experience of the real difficulties that local councils face—but the cross-party LGA. This is not a party political issue; it is just a practical reflection on the position local councils find themselves in. He offered a solution on behalf of the LGA: to have locally set planning fees. He highlighted that it would then

“be for the local authority to justify both the fees it charges and the outcomes of the service it offers.”—[Official Report, Neighbourhood Planning Public Bill Committee, 18 October 2016; c. 27, Q35.]

Effectively, there would be a direct contract between the developers who pay for that service and the local authorities that provide it—a relationship of equals, I hope. That is a realistic and reasonable proposal. We also heard evidence from Tim Smith, who said:

“Successive proposals to change legislation have all brought about additional burdens on local planning authorities without a consequent increase in the resourcing available to them.—[Official Report, Neighbourhood Planning Public Bill Committee, 18 October 2016; c. 67, Q118.]

Evidence from the Minister, who pointed to the White Paper and discussions that are taking place, was reassuring, but we need to reassure our local authorities. We have been debating expectations and pressures on local authorities, and it is fair to say that there is nervousness about that. Councils are not unwilling to do what is proposed—I think most accept that a well run planning system based on plans and evidence is the way to go—but there is very real concern about those proposals.

My hon. Friend the Member for City of Durham mentioned in a previous sitting the British Property Federation report published in October last year titled, “Key findings—a system on the brink?” That may be a leading title. Members might be able to guess what the report is going to say. It says that the system is on the brink, but there are lots of data in it about how the industry feels about navigating an under-resourced planning system. The BPF did a review and deep-dived in a number of areas, including Greater Manchester—it has been held up a few times in our sessions as an area of best practice—but even there it found a system on the brink. It also expressed concern about the future for local government finance. It said:

“However, with further Government cuts looming, the risk is that down-sizing (rather than investment) could top the agenda. This is worrying news for all involved in, and dependent upon, planning activity in England. Development activity is critical for our economy”—

I think we can all agree on that—

“not least in order to tackle the urgent housing crisis; but the planning system appears to be hovering dangerously close to the edge. Our findings suggest that more resourcing is needed…and quickly.”

That “and quickly” bit is important. It is not necessarily about the new burdens coming forward. The current planning system under the current rules with the current demand is struggling to keep up. Just imagine what the added weight of expectation and demand will do.

The report also asked developers and local authority planning departments:

“Is the planning environment now better or worse than it was in 2010?”

Among local authorities, 11% said it was much worse and 39% said it was worse. Only 25% said it was better. That broadly reflects that greater clarity is coming through on expectations, but resources are not being provided to ensure that local authorities can deliver on those expectations.

The report also asked about the challenges to local authorities in delivering on developers’ ambitions. Unsurprisingly, the biggest challenge was under-resourcing: 55% of local authorities said it was a significant challenge and 86% said it was a challenge. Only a small minority of authorities believe that under-resourcing was not an issue. We know that under-resourcing affects not only applications and the administration of applications, but partnerships. As we have discussed, when the system works well, we have ambitious planning departments, communities ambitious for their future and ambitious developers working together to the same end and pooling resources to ensure they have the best quality communities and housing being developed. That relationship is put under strain if there is frustration within the system, and that is a pity.

We see planning officials who have spent a long time being trained in their profession and have a genuine desire to see quality design brought through. We see developers that have sometimes gone through a long period acquiring land and working with their architect to develop something that they believe will add value. With neighbourhood plans, communities will have had real involvement in designing the communities they will live in. It would be a real shame, with that mix and after trying to get the framework right, not to ensure that the resources are there to deliver on the plans.

From the evidence that was given, the best thing to do is not necessarily to ask Government to write a cheque. Perhaps the Chancellor will be pleased about that; I am sure many Ministers come knocking on the door asking for more cash. As far as I can see, the measure that would make the most difference would be for local authorities to have the freedom, autonomy and ability to decide for themselves in the local context the appropriate fees to be levied on a development, both at application stage and to discharge conditions.

New clause 15 is not a probing amendment. We have heard the assurances on the White Paper and what we might be able to expect from that. The new clause is so important that we will want to press it to a vote. Hopefully a vote will not be needed; the measure makes sense to me. Local government is putting it on the table as an option. Perhaps we can agree, and the consensual spirit we have been working towards will not be spoiled by what is a very logical amendment.

Photo of Chris Philp Chris Philp Ceidwadwyr, Croydon South 3:30, 27 Hydref 2016

It continues to be a great pleasure to serve under your chairmanship, Mr McCabe. As I said in an evidence session, I completely accept the principle we just heard described: that planning departments are woefully under-resourced, which is a significant inhibitor to development and to planning consent being granted, and that the most appropriate way to remedy that under-resourcing is for applicants—the developers—to pay higher fees. I agree with the spirit of what has been said. This is a point I raised in the Housing and Planning Bill Committee in this very room a year ago and with both the current Housing and Planning Minister and his predecessor, my right hon. Friend Brandon Lewis. I am completely on board with the principles being described. However, the two new clauses have some deficiencies.

New clause 10 simply says that where there is inadequate resource, a review must be conducted to set out the appropriate level of resource. Setting it out does not provide it. That is simply a statement that there is inadequate resource, so I do not think new clause 10 addresses the problem; it simply highlights the fact that the problem exists, which we all know already.

New clause 15 is very generally worded. It gives local authorities complete discretion to set their own fees. I have three concerns about it. First, there is no limit on how high the fees might go. I accept that the fees are currently too low, but as drafted the new clause would mean that some local authorities might set fees that are unreasonably high and in fact deter development. There is nothing in the new clause to address that concern. Secondly, there is nothing to ensure that the money raised by higher fees will be ring-fenced for the provision of additional planning services, nor, in a similar vein, to ensure that the existing level of service being provided by general taxation is maintained. There is nothing to ensure that the extra money raised leads to extra—that is to say, incremental—levels of resource in the planning department, which is what I want. Thirdly, the new clause does not place any performance obligations on the local authority planning department. It is essential that if a developer or applicant is paying higher fees, they receive improved performance in return—for example, a decision made within a certain period.

While I fully support the principles articulated by the hon. Member for Oldham West and Royton, I am afraid to say that the details do not quite pass muster. I could not support a new clause unless it had those three things: reasonable fee levels, ring-fenced money to ensure incremental service provision and a link to performance. I am deeply sorry that I will not be able to support the new clause, despite the fact that I support its spirit.

I listened carefully to the Minister’s evidence and what he said about the coming White Paper. I very much hope to receive satisfaction when that White Paper is published—I hope in the near future. Should these measures not find their way into the White Paper, I will be an energetic and active advocate of those principles in due course. I would be happy to discuss this further with the Minister.

Photo of Gavin Barwell Gavin Barwell Minister of State (Department for Communities and Local Government) (Housing, Planning and London)

Let me start by reiterating what I said during previous Committee discussions and in the evidence that my neighbour and hon. Friend the Member for Croydon South just referred to. The Secretary of State and I have heard the concerns of developers, local authorities, professional bodies and hon. Members about stretched resources of planning departments and the calls for an increase in planning fees. We absolutely accept that there is an issue here and we are looking closely at it. I want to ensure that planning departments have the resources to provide the service that applicants and communities as a whole deserve. However, for many of the reasons that my hon. Friend eloquently set out, I do not believe that new clauses 10 and 15 are the answer.

Taking new clause 10 first, we already have robust mechanisms in place to ensure that local authorities are funded to undertake any additional work arising from new statutory duties placed on them by the House. The new burdens doctrine clearly sets out that when the Government introduce new responsibilities and statutory duties on local authorities, they must be properly assessed and fully funded. That has been the convention for many years, including when Labour was in government. I do not see a need for legislation on that now, and Labour certainly did not do so.

Rather than the wider principle to which the hon. Member for Oldham West and Royton referred, the Government have published a summary of impacts of the specific measures in the Bill. In short, we do not believe the Bill will have a significant impact on local government. The summary document is available in the Library if hon. Members want to study it. If they wish to critique it, I will be happy to listen. For those reasons, new clause 10 is not necessary.

New clause 15 is more substantive, as the hon. Gentleman himself suggested. Localising fee setting is not, on its own, the answer to the resourcing problem. It brings a number of problems, as my hon. Friend the Member for Croydon South suggested. Instead of a debate on political values and beliefs, let me give a concrete example to illustrate the point: pre-planning application advice, for which local authorities can change their own fees on a cost-recovery basis. I frequently get letters saying that the fees that local authorities charge for such advice are highly variable between authorities, and that the level of service does not always match the cost that potential applicants have to pay.

We are clear that changes in fees need to go hand in hand with improvements in resourcing and performance, to ensure that they deliver a better service for applicants. There is no guarantee that additional income generated through locally set fees would go into planning departments, particularly against the backdrop of local decisions in recent years to prioritise the funding of other services. As my hon. Friend said, the way in which the new clause has been drafted does not even provide a cap on full-cost recovery and would allow local authorities to set fees at levels above full-cost recovery. Far from having the effect that the hon. Member for Oldham West and Royton is trying to achieve—that local planning authorities are better resourced, leading to more development in our communities—the risk is that the fees could be set at penal levels that would deter the very development that we are trying to encourage.

We have to balance what is a fair contribution to the cost of processing planning applications with not dissuading people from taking forward development. Local fee setting may risk fees increasing in a way that discourages homeowners and small developers from bringing forward schemes. We do not want to create uncertainty for developers at a time when we need them to step up the number of homes they are building.

I do not want to break the consensus that this problem exists. I have been clear that I accept that it does, but we need to be clear that when we get evidence it tends to come either from local authorities themselves, expressing the genuine pressures they face, or—and mainly—from larger developers who have the means to pay much higher fees. Indeed, many of the large developers say to me, “We would be happy if local authority planning departments offered a standard service and a premium service. Our members would pay for the premium service to get faster approval.” We need to remember that the fees we set are paid by everybody, down to householders paying the application fee for an extension to their property. They may not quite share the enthusiasm that developers have for paying more to get a quicker service.

Photo of Chris Philp Chris Philp Ceidwadwyr, Croydon South 3:45, 27 Hydref 2016

Could we not have a graded scale of enhanced fees, reflecting the size of different applications?

Photo of Gavin Barwell Gavin Barwell Minister of State (Department for Communities and Local Government) (Housing, Planning and London)

There is already a grading of the fees, but the general presumption is that fees increase by a similar percentage. We could consider increasing some fees and not others for larger schemes, with the caveat that although developers with large applications pay very significant fees, the majority of people who pay fees are individual constituents wanting to put an extension on a domestic property.

The hon. Member for Oldham West and Royton and I may have different views on the issue, but it is worth pointing out that we already have the powers to achieve what new clause 15 proposes. The Secretary of State can already provide in regulations for local planning authorities to set their own fees, at least up to the level of cost recovery. I would be surprised if the Opposition believed that fees should go beyond full cost recovery. Earlier this year, we consulted on several proposals for the resourcing of planning departments; we shall publish our response shortly, as part of the White Paper.

Before I resume my seat, I should like to add one other caveat, which does not detract from the central importance of getting the resourcing right. This is about not just money but ensuring that sufficient people enter the profession. In the last year, we have provided the RTPI with funding for a bursary scheme for students undertaking postgraduate planning studies. I very much agreed with the hon. Member for City of Durham when she spoke passionately about the important contribution that planners make with regard to new settlements. Raising the profile and status of the profession and ensuring that planners are seen as not obstructing or stopping development but ensuring that we get the quantity and high quality of development that we need is important in getting enough people coming into the industry.

Money is an issue—I hope I have provided sufficient reassurance that the Government are looking at that—but we must ensure that we have the human resources as well as the financial resources. I ask the hon. Gentleman to withdraw the new clause.

Photo of Jim McMahon Jim McMahon Shadow Minister (Communities and Local Government) (Devolution)

I am willing to withdraw new clause 10 on the basis that there is universal agreement that local authority planning departments are under-resourced. If there is no need to carry out a review to establish that, it is not an issue that is worth falling out over.

I do want to press new clause 15 to a vote, though, because we need to focus minds. It is all very well saying that there will be jam tomorrow—there is a White Paper coming and it will all be milk and honey—but our planning departments want more.

Photo of Gavin Barwell Gavin Barwell Minister of State (Department for Communities and Local Government) (Housing, Planning and London)

Clearly the Opposition can test that issue with a vote, but may I press the hon. Gentleman on the point I raised? Regardless of the wording of the amendment, do the official Opposition believe that planning authorities should be able to charge fees beyond full cost recovery?

Photo of Jim McMahon Jim McMahon Shadow Minister (Communities and Local Government) (Devolution)

That has never been a suggestion in any of our debates, or from any of the people who have given evidence. The proposal is not to profiteer from developments that enhance the local community, but to reflect the true cost of administering planning applications. Taxpayers should not subsidise applications through their council tax, and developers should get the service they require. I agree with the hon. Member for Croydon South that there is a need to ensure good performance, as there is a contract between developers and the local planning authority. We would be open to that, as would councillors—Councillor Newman was clear that a better relationship would be created between local authorities and developers through the increased fee and through developers’ expectations being managed.

Photo of Roberta Blackman-Woods Roberta Blackman-Woods Shadow Minister (Housing)

My hon. Friend makes an important point. Does he agree that if the Government do not like the wording of the new clause, they can table another proposal on Report that makes it clear that only full cost recovery is being sought, and that it is about hypothecating for planning any additional money raised?

Photo of Jim McMahon Jim McMahon Shadow Minister (Communities and Local Government) (Devolution)

That is an important point. I am a localist at heart. I want to get away from the idea that central Government determine absolutely every fee, charge and activity at a local level. We should be far more inclined to push back and say that if people have an issue, they should take it up with the local authority concerned and have that direct relationship, holding to account locally. It is interesting that we are giving developers a facility that we do not give to members of the public, for example when they are having a relative cremated—we do not determine in Parliament how much those fees should be. We should be a bit more realistic and accept that councils are grown up and mature and that they do such things on a daily basis. That relationship with developers can be done to a great extent.

No one in the Opposition will say that the wording of the new clause absolutely achieves everything we have set out. That was not the intention; the intention was that we put a marker down and that we push the issue, because people have pushed us to push the issue—we heard that in the evidence sessions—and we would be absolutely delighted to see alternative wording come forward at a later stage to tie things down.

Photo of Gavin Barwell Gavin Barwell Minister of State (Department for Communities and Local Government) (Housing, Planning and London)

I understand that the Opposition want to test the issue with a vote, but I repeat that the law already provides the exact power being sought; it is already in law that we could charge at full cost recovery.

Photo of Jim McMahon Jim McMahon Shadow Minister (Communities and Local Government) (Devolution)

It could well be that between now and our next sitting that legislation is used, that the regulatory power of the Secretary of State is enforced and that local authorities are given that ability, in which case we might have a very different debate at our next sitting. As it stands, however, that power is not used, which is why we suggested the new clause. I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

New Clause 11