Balance, imbalance and the politics of planning

I’m back at home but it is still August. Unless you take an unhealthy interest in Brexit (and, let’s face it, nothing about Brexit is healthy) there isn’t much else going on in domestic politics. But don’t worry, because here come Lichfields to brighten our week!

In their new report Refused for good reason? the planning consultants look at where planning committees have overruled planning officer advice to refuse an application and this has subsequently been appealed to the Secretary of State. To do this they’ve looked at every instance where this happened for middle to large size housing sites (>50 dwellings) in 2017.

This approach, it has to be said, leads to some major caveats. To their credit, each of these is covered in the text of the report. There are only 78 results, meaning all the subsets are also small-ish numbers and meaning we shouldn’t get too hung up on differences between outcomes in case it is just a statistical blip. It excludes appeals where councils haven’t made a decision in a set time and developers (as is their right) have chosen to go above their heads. Canny councils can do this to avoid such censure -although there is a financial penalty- and it can just happen as time and a developer’s patience runs out. The focus on 2017 is a snapshot, most of the original decisions will be from around the same time (2015/16) so there may be some underlying issues or similar conditions that come from that particular moment in planning- most notably this is before the government started talking seriously about forcing councils to have local plans at all.

There are some headlines they pull out from the numbers- firstly that where councillors have overruled planning officer’s recommendations they are more likely to be overturned at appeal. 65% of the 78 cases where councillors did their own thing against officer advice lost on appeal, compared to 40% when the advice was to refuse and councillors dutifully refused. In 71% of the cases at least part of the appeal was about a 5 year housing land supply, either because there was disagreement about whether the council had it or agreement that they didn’t. Decisions concentrating on technical matters like landscaping were more likely (although still less than even odds) to be successfully defended than highways (74% overturned). Councils without a post-NPPF local plan did just about as well as those with one- what seems to matter more is the 5 year housing land supply position- a requirement of the NPPF which means local plans can be seen as ‘out of date’.

All of that is helpful to know, but for me the report gets a little bit harder to understand when it starts trying to bring in an idea that this relates necessarily to the quality of decision making. Maybe it is worth taking a step back or two here and thinking about planning applications and the process they currently go through.

Let’s say a developer puts in a planning application for a large site. It might be on land designated for housing in the local plan or they might be chancing their arm and trying to get permission for the site outside of the plan. Or there might not even be a plan, certainly not one made since the NPPF came out in 2012 (do we call it NPPF1 now?) . A planning officer will sit down with the developer most likely a number of times, to bash out the scheme and see if it will fit with the local and national policies, including the infrastructure requirements that they think should be in place to facilitate it. Things like roads, medical services, school places or indeed a school. And if we’re really lucky, affordable housing.

The officer bundles all this up in a report and takes it to the planning committee composed of councillors. There are delegated decisions as well but we’re thinking a big scheme here, so let’s assume it is made by the committee. The committee is meant to look at all the issues, balance them against each other and come to a decision on the merits of the application. Key factors will include whether the council is seen to have a 5 year housing land supply and whether other policies in the local plan have been met. Inevitably design and infrastructure matters will be part of that discussion. The committee will then vote on the application.

If the application is refused the applicant has the chance to appeal. At it stands, no similar right exists in reverse- granting planning permission cannot be appealed (although it can go through judicial review). A planning inspector (eventually) swoops in and hears all the evidence again, takes all the factors and balances them on their own merits. They make a decision and then the secretary of state ambles by and decides whether to change that decision or leave it alone. Past this point only judicial review can change a decision.

So, first things first, there aren’t three distinct layers of public decision making. There are four. The secretary of state can and does overrule their own planning experts in much the same way planning committees do. This somehow gets shuffled out of the report, which makes it sound like the answer given on appeal is not only the final answer (which is true) but is also the right answer (which is debatable).

If planning committees are occasionally subject to whims, odd (but not necessarily unreasonable) balancing of factors, deciding an answer first and then writing a report to justify the conclusion and bringing electoral factors into something that should be free of them, then secretaries of state are also right there alongside them. This not only means we should be careful about giving reverence to appeal decisions, it also means we have to try and consider what planning committees were doing when they refused a decision against officer advice. Perhaps they thought the Secretary of State might somehow come to their aid? Perhaps they thought they had a good decision, even against officer advice- perhaps even the planning inspector agreed with them, but the Secretary of State used their power to make the very final decision.

It is also true that planning officers are likely to be more in tune with the financial costs of losing an appeal and less aware or interested in the political costs. I’ll reverse that- politicians (especially backbench politicians from non-majority parties) may not be overly interested in how much an appeal costs but hugely, massively interested in how voting for or against an application makes them look. That’s politics, it is the nature of the beast that members have constituencies that they need to either placate or impress in order to stay in their job. Spending money on a hopeless appeal is money well spent if it means that they don’t look like the bad guy.

There’s also an issue when it comes to the interaction of the local plan and individual planning decisions. The local plan is adopted by all the council members on a majority vote, but in reality it is put in front of them by the executive (whether this is a cabinet or committee system). So the local plan, through all of the consultations and discussions around it, up to an including the examination in public, is a document that the executive has signed up to and, in the final analysis, is the one that they can rally enough support to see it through the full council. Let’s be clear, majorities have waned, council leaders have fallen and all heck has broken loose trying to get local plans through to adoption. But when they achieve that it doesn’t mean that hell is back in its box. Members of a planning committee who didn’t like something in the plan, the housing targets (and therefore 5 year supply) most obviously, but anything else in reality, might choose to ignore the officer advice which is predicated on the plan. Again, this may be a way of making a specific development ‘someone else’s fault’- in this case the executive, the planning inspectorate and possibly the secretary of state.

I suppose the last two paragraphs come to the same conclusion. Perhaps appeal overturns of this kind are more about politicians being politicians than politicians being ignorant or untrained? Politicians manage risk and responsibility, they reflect, moderate (sometimes) and amplify community views. If planning is a political system, and our current system is deeply political, then this is one outcome.

Another point mentioned, but slightly glossed over in the report is that the types of applications may be very different in different areas. I’ve talked before about the principle of development and how in essence once this is confirmed it is very hard to lose it. You can achieve this for an individual site by getting it included in the local plan or by getting planning permission for it. You are more likely to get planning permission for an unpopular site when areas don’t have a 5 year housing supply. Take a developer or land speculator who has options on a number of sites in an area, some included in a local plan, some not. Which do they make an application for? They can bring the local plan site forward whenever they want and make a profit on it. But the site not in the local plan gives them an opportunity. This goes before the planning committee and the officer making a recommendation ruefully says it is probably acceptable given the 5 year housing supply position. The committee may refuse this and off it goes on appeal- where it will more than likely be overturned given the local housing supply position.

In an area with a 5 year housing land supply this is unlikely to happen, so the developer will bring forward a more acceptable site. Those going to appeal are likely to be where the developer is, in one sense or another, extracting the Michael so it is more than possible the appeal will support the committee’s view.

Nothing about these two outcomes can be solved by members undergoing additional training or by publishing outcomes. A more structural change is required, either to step back from the “5 year housing supply is the only important matter” ethos (which now combines with the housing delivery test) or to double down on it and make clear that when a 5 year housing supply isn’t shown there is simply no point refusing applications on anything but the most obvious grounds.

Maybe there’s a better way to put that- planning committee members feel that they can make individual decisions on individual applications, even when they don;t have a 5 year housing land supply. That is, at least theoretically, a lynchpin of our planning system. But the focus on 5 year housing land supply and now the housing delivery test effectively overrides almost all of the individual decision making. If that’s honestly the case then is it worth saying this outright in the NPPF or is there some merit in still being able to take out the worst applications? If it is the latter then we are going to keep seeing this outcome- planning committees not following officer recommendations and this being overturned at appeal.

Almost all the changes outlined by the report: better reasoning by committees, cooling off periods, better statistics and training are all fine, but don’t change the key issues I’ve outlined. Politicians and officers are in different roles and have different incentives, they will come to different views. The 5 year housing land supply and housing delivery test are tools of the government’s making specifically to increase housing supply. Some comeback on that is required and, if so, might be an unfortunate but necessary part of the system as it stands.

Two proposals are a little bit fractious. Firstly, Lichfields the independent planning consultant suggest that councils should use independent planning consultants to help them in hard cases. Well, they’ve got to pay for the report somehow! I’m not convinced, given what I have said above, that another view is going to make a huge difference in a large number of these cases. It could in some, but if an officer is already advising approval then another person coming along to check their working isn’t necessarily going to sway a committee.

Secondly, they suggest changing when a council can be in a form of special measures. That means the secretary of state can make decisions directly themselves without worrying about the whole rest of the planning system, local democracy or so forth. There’s a reason this is barely used in practice, it is cumbersome, undemocratic and time consuming and (coming back to politicians managing responsibility) means that they are the bad guy rather than the local planning authority. 7 years after the NPPF first came out and we are only just getting to the point where the secretary of state is intervening for a few authorities that don’t have a local plan. Changing the definition of what is an isn’t failure won’t change that political calculus.

Having a system reliant on individual applications, seeking to decide each case on its own merits against local and national policies sounds positive. But what Lichfields have done is tease out one of the messier bits of it. Local politicians, national politicians and officers at both national and local level are going to disagree. Once you lose the pretense that there is a “right” answer it gets even messier. My view is we need to either embrace the mess (knocking off sharp corners where possible) or change the system fundamentally.

A fundamental change will either mean shifting the balance towards democratic decision making (with all its foibles) or towards technical, policy based decision making. The former has the potential for exacerbating the housing crisis, the latter removing democratic controls. It is our choice.

The long tail of affordable housing and how it can wag again

How fast do you have to run to stand still? And do you really have to run twice as fast as that to get somewhere else?

It’s a question we’ve been grappling with ever since the Red Queen posed it and none more so than with affordable housing.

Well, that was a question I was going to try and look at in this post. But then I found out that not only are they susceptible to a bit of genial name-calling, Shelter also have access to a time machine and have gone back to 2014 to write essentially the same post.

What’s a naptime blogger to do then? Well, it would be helpful to see what has changed since then and maybe have a think about the current trends in net affordable house building.

But first we have to draw a pretty big distinction between affordable housing and “affordable housing”. You see, in most areas when you think about affordable you consider whether someone’s income can cover the cost of the item. Not so in housing, where the government’s definition of “affordable” relates to the market price- the definition of affordable rent is 80% of the market rent in the same area.

This might not seem like a terrible thing and in some areas it just so happens that 80% of the market price is within an affordable range for a relatively low income family. But in reality that’s more of a happy accident than an outcome of wise policy making.

It didn’t used to be wholly this way. Most social housing rents were traditionally set based on the actual costs of paying for the property and its upkeep, with landlords (local authorities and housing associations, in the main) given very broad parameters to set rents. Whilst in power Labour argued that this led to wildly different rents for what was in effect the same house and, through controlled increases in rent, tried to get all social providers to roughly the same rent for the same property- called a “formula rent”. This equation looked at the price of the house and also the median earnings in the area. But it was only a proxy to allow for equalisation in the medium-run.

And it didn’t get there, because Labour slowed down the process and then the Conservatives came in and chose to increase and then reduce social rents at the same rate for everybody. Only now are they looking to allow authorities to increase rents again. This means rents are still quite divergent between providers and between areas.

So, and I can’t be clear enough about this, neither social rent on older stock nor affordable rent really have any direct connection with affordability built in. Social rents are by and large lower (in many areas far lower) than affordable rents and are therefore more affordable. But there is no real mechanism to ensure that stays the case. New social rented homes (those few that are built) often have rent set at the formula rate, but then affordability is only one consideration among others.

When the new “80% of market” definition came along most providers didn’t immediately switch all of their properties to it when a new tenant moved in. What many did was make newly built homes (usually by developers as part of s106 agreements) available for affordable rent as a way to cross subsidise other, more affordable housing. Indeed, until recently building for affordable rent was required through the government’s affordable homes programme, meaning councils who couldn’t borrow (because of central government limits) had no other choice than to build homes for “affordable rent”. Collectively, although mostly for the legacy reasons, this means that the vast majority of affordable homes available today are at a social rent. That’s the good news.

The bad news is the number of new build social rented homes has fallen year on year, from nearly 40,000 in 2010/11 to 6,800 in 2015/16 (with even fewer provisionally accounted for in 2016/17). The number of right to buy completions has been edging up since 2011/12, both when the financial crisis was bottoming out (and when low income households were more able to get mortgages) and when the government significantly increased the amount of discount a household could receive to buy their home. What’s more, as most new affordable homes won’t yet have a right to buy discount, we can safely assume these were almost all social rent homes sold.

Screenshot 2018-01-23 at 3.28.16 PM

So in 2015/16 more than 3 homes at sold under right to buy for every social rent home that was built. Even if you add affordable rent into the mix there are only 1,358 more homes being built than lost. And what’s more, whilst there should be 1 for 1 replacement of homes sold under right to buy, that has never been the case, looks like it will be a very long time until it is the case and if it does happen it will by and large affordable homes replacing social homes, thus adding little to the mix of truly affordable homes.

Put that another way, since 1991/92 there have been 215,000 more homes sold under right to buy than new social rented homes built.  That’s more homes than there are in Bradford.

This is also the case with affordable housing in parts of new developments. Where “affordable homes” are agreed as part of s106 agreements, they often either become “affordable rent” or an intermediate option that is most likely shared ownership. More councils are starting to accept payments in cash for off site provision in lieu of affordable accommodation, which at least means councils can build what they want but does lead to worries about the ghettoisation of “rich areas” and “poor areas”.

Of course developers are hit and miss when it comes to actually providing affordable homes as part of their developments. As part of the planning process they are able to argue that they cannot make their scheme viable with the level of affordable accommodation set by the local authority. This means they are able to negotiate, often significantly or to zero, the amount of affordable housing on the site. Of course every single site can be just about viable at the same time as the heads of the developments earn £100 million bonuses.

In fact it is fair to say that there is something more than a cottage industry set-up to help developers argue their case for lowering affordable housing requirements through the viability process. Perhaps we could call it a 6 bedroom, triple garage industry?

The recent government consultation on viability (amongst other things) goes some way to address this, effectively saying that the local plan is the place to be clear about viability of individual sites and once agreed there is little reason to change it. There are however a couple of issues with this. This first is that councils will take time to update their local plans (remember it is a process that is measured in years) so the current system will remain in each area until they have (or are at least approaching) a replacement plan. The second is that there will still be flexibility in the system (for example by judicial review on the reasonableness of individual decisions) for developers to tease open a loophole or two that they can then drive a bus through. Followed inevitably by bus lane markings and an open highway. Perhaps this is the world-weary cynic in me, but I fear the approach laid out there will lead us back to the same situation in 3-5 years.

Given that developers see having lawyers on a retainer as part and parcel of the industry, I would rather something that looks more like a hard to avoid tax than an easy to evade agreement. Yes, that might mess with their business case and yes, that will meant hey might have to change their modus operandi to suit the new circumstances. Given that might have as many positives and negatives it is a risk I’m willing to pay.

So councils are at the limits of what they can build, when they and housing associations do build they often choose (when they have a choice) to go for affordable rent. When developers build they often try to limit their affordable accommodation and when they do build it what is made is usually “affordable rent” or another type of intermediate accommodation. So where does that leave those who genuinely need truly affordable accommodation?

I fear trying to create a new type of rent level will just lead to another competing layer in the market. Removing “affordable rent” from what counts as affordable rented accommodation, especially under s106, would help restore some sense. Whilst councils are free to set terms in their local plan I think it would make sense for discussion on affordable accommodation to be based on what proportion of people in the local area could afford to live in the agreed accommodation. So if “affordable rent” stays, it could be renamed “rent that X% of people locally could afford to pay”.

Local authorities and most housing associations truly do want to build genuinely affordable homes, so giving them the powers to do borrow and build will make a huge difference in building of new affordable homes. Central government continuing the move away from “affordable rent” will allow councils and housing associations to build homes at a rent they think is appropriate and needed in their local area.

Finally, without wanting to sound like a scratched record, the bath will only fill if you put the plug in. Right to buy is leeching away truly affordable housing, giving some households a cash injection (when they sell the homes) and giving a number of private landlords an unearned field day as they swoop in, buy a former council home on the cheap and move in tenants paying market price. In a way, it would be better to give the tenants the discount to buy another house, at least then the landlord wouldn’t have to go through the cost of building a new property, although it wouldn’t help take the steam out of the wider housing market.

It would take many years for the total supply of social housing to dry up, but if we don’t look to do something more about it now then it could still happen. Given the need that clearly exists for affordable accommodation, that would be a huge mistake.