Ending the planning system’s rationing of homes is essential to end England’s systemic shortage of housing.
Centre for Cities is the leading think tank dedicated to helping UK cities achieve their economic potential and improve the life chances and opportunities they offer to people. Our research focuses on the UK’s 63 largest urban areas.
The Government’s White Paper proposes the most radical reforms to the planning system in decades. Dividing all land in England into “Growth”, “Renewal”, and “Protected” areas has significant implications for the future of local economies and the national economy. Centre for Cities welcomes the reforms, as they have the potential to achieve major improvements in housing outcomes by removing some of the most problematic elements of the current system.
Ending the planning system’s rationing of homes through its discretionary granting of planning permissions is essential to end England’s systemic shortage of housing, and the housing crises in the most unaffordable cities and large towns.
Q1. What three words do you associate most with the planning system in England?
Q2. Do you get involved with planning decisions in your local area?
Q3. Our proposals will make it much easier to access plans and contribute your views to planning decisions. How would you like to find out about plans and planning proposals in the future?
Q4. What are your top three priorities for planning in your local area?
Building homes for young people
Increasing the affordability of housing
Supporting the local economy
Q5. Do you agree that Local Plans should be simplified in line with our proposals?
Yes. The introduction of Growth/Renewal/Protected areas will substantially reduce the discretionary element in the planning system. This current case-by-case approach to making decisions about development rations the supply of new homes and causes a systemic shortage. Ending the housing crisis and making homes more affordable in requires that this discretionary element be reduced and minimised.
It is crucial that the Growth areas introduced apply to a larger area of land than the current site allocation process does at present. While it is necessary to improve the institutional design of the planning system to prevent it from rationing new homes, more land must also be made available for development to actually increase the rate of construction.
The two suggested alternative approaches are very different. The former combining Growth and Renewal areas into a single category (2.11) would be a more classical zoning system, similar to what we see in countries with better housing outcomes such as Japan and Germany. This could work very well, and Centre for Cities has explained how this should be done in our own “Planning for the Future” paper in June this year.
In practice, it would require national government to write a flexible zoning code for this combined Growth/Renewal area, similar to how the NPPF works today. No more than a dozen zones should be created under this approach, and with the exception of polluting industrial uses, should avoid segregating single uses into specific zones.
The latter alternative (2.12) combining Renewal/Protected areas and allowing local government to decide how this land should be used would be a wasted opportunity for reform. In practice, it would mean the introduction of Growth Areas would amount to a renaming of the current site allocation process, using Local Development Orders instead of planning permissions. This would be a small improvement, but would not be the radical shake-up of the planning system which the Government has declared as its ambition. The housing shortage and crisis would continue, as the vast majority of land would remain rationed for development by the planning system as it does today.
Q6. Do you agree with our proposals for streamlining the development management content of Local Plans, and setting out general development management policies nationally?
Yes. For the planning system to work well, there must be a strong distinction between central government as a “referee” and local government as “players”. That local government can currently write its own development management policies essentially turns local authorities into both referees and players of the planning system. This combined role creates uncertainty, waste, and arbitrary decision-making, which culminates in a deeper shortage of homes and a worse housing crisis.
Setting out general development management policies nationally is not anti-devolution, but consistent with the correct responsibilities and powers sitting at the correct level. The success of the NPPF shows that consolidation into a single, national rulebook, which is then used by local authorities as they make decisions in their local area shows the importance of this principle, and it should be strengthened.
Streamlining development management and setting out national policies for it will improve local democracy by focusing consultations on how local land should be used rather than debating abstract policies. National development management policies will strengthen the integrity of the local plan process and help rebuild trust in the planning system.
The original proposal is superior to the other two alternatives mentioned, which are weaker and would achieve less successful outcomes. They would risk replicating some of the worst elements of zoning in the United States, where cities as referees and players of their own zoning codes write them to stop new homes from being built.
A third alternative not mentioned is to make clear that the local plan process should set objectives and strategic outcomes for the local authority. Instead of, for instance, setting a policy on bike racks which is a condition of development, the local plan would set as an objective that the council wants to achieve a certain percentage of journeys conducted by bike. This would ensure that the local authority is guided to think about the zoning and planning process to achieve certain goals which are decided by local representatives, but cannot ration development in attempts to reach them.
Q7(a) Do you agree with our proposals to replace existing legal and policy tests for Local Plans with a consolidated test of “sustainable development”, which would include consideration of environmental impact?
Q7.(b) How could strategic, cross-boundary issues be best planned for in the absence of a formal Duty to Cooperate?
The most challenging issues will emerge in cities where the economic geography of the built-up area and nearby outskirts spreads out over multiple district local authorities. For those cities with a metro mayor sitting at that economic geography, there is a clear case for strategic planning and zoning itself to be done at the Combined Authority or Greater London Authority level to address this, while issues which are specifically local (such as design and compliance with building regs) could continue to be done by boroughs and districts below this tier.
Cross-boundary issues are more problematic in areas where this upper structure does not currently exist. Even with a Duty to Cooperate, it is difficult to see how any reformed planning system could handle these issues within the current local government framework. These issues are an artefact of local authority district boundaries not aligning with the geography of the local economy, and cannot be solved solely by reform of the planning system. This explains why the Duty to Cooperate has not met expectations.
However, if the Government was to release its Devolution White Paper and implement the changes set out in Centre for Cities’ devolution framework, Levelling up local government in England, most of them would disappear. Creating larger unitaries with boundaries based upon local economies for non-combined authority parts of England would ensure that local government has the capacity and the geography to tackle these issues.
Q8.(a) Do you agree that a standard method for establishing housing requirements (that takes into account constraints) should be introduced?
Yes. In the short and medium term, there should continue to be a standard method which establishes housing requirements and targets for local planning authorities. It is how our system currently works, and given the scale of the reforms proposed, disruption to its institutional framework should aim to be minimised. Before the standard method was introduced, housing supply was lower in part as housing need was more contested and complex under the old Regional Development Agencies.
In the long term though, the Government and civil servants should aim to build a planning system which does not need housing targets to operate effectively. There is already a single number for each place which indicates local housing requirements – the price. But within our current system, planning permissions handed out by local authorities determine development rather than prices. This rationing of development causes a mismatch between local supply and local demand, and very deep housing crises in certain cities.
Eventually, once this first reform is completed, the Government should evaluate its performance and consider whether the standard method remains necessary. But until then, it should continue.
Q8.(b) Do you agree that affordability and the extent of existing urban areas are appropriate indicators of the quantity of development to be accommodated?
Yes. It is crucial that the standard method contains a much heavier weighting for affordability and prices than it does currently. The housing crisis is fuelled by the mismatch between demand and supply of housing across the country. As the supply of housing cannot respond in the most prosperous areas, creating local shortages, prices and housing costs increase instead.
Solving the housing crisis requires institutional reform of the planning system, but beyond that it does also require that the supply of land available for development be increased. The easiest and simplest way to do that within the standard method is to give take the extent of urban areas into account for local authorities when calculating their housing target. This will automatically feed more greenfield land into the system, which is the easiest and fastest to develop at scale, as housing targets will adjust to the lack of physical constraints.
A presumption in favour of development within “renewal” areas and a fast-track for beauty will lead to greater redevelopment within built up areas. But it is not clear at present just how much it will do so, or what is reasonable to expect. If the standard method is to remain, then there should be a wait-and-see approach to see how reasonable it is to expect existing built up areas to contribute to a greater share of supply under the new planning system.
Q9(a). Do you agree that there should be automatic permission in principle for areas for substantial development (Growth areas) with faster routes for detailed consent?
Yes. This is the most important part of the proposed reforms, and must be carried through in any legislation which is passed through Parliament. The introduction of growth areas, which have automatic permission in principle, will weaken the dysfunctional discretionary element which is at the very heart of the housing crisis in England.
Centre for Cities has shown in its research that the case-by-case discretionary decision making which this reform would replace rations the supply of new homes and inevitably creates a shortage of housing. The discretionary element is out of step with international best practice, and is behind our unusually poor housing outcomes when compared internationally.
It will also be more democratic by ensuring that local consultations are focused on where development takes place rather than on the principle of development. By improving the certainty of local plan decisions, and the integrity of the planning system will be strengthened. Residents will have more confidence in the ability of the planning system to make decisions and trade-offs in the name of the public good and local economy.
It is crucial though that the “growth areas” cover a much greater area of land within local authorities than the current “site allocation” process does. Much more land needs to be made available for development without discretionary rationing of sites.
If growth areas covered broadly similar areas as the current site allocations, the reforms would lose a significant amount of their impact. They would in effect be a renaming of the existing site allocations, done through Local Development Orders rather than a reform from first principles.
Q9(b). Do you agree with our proposals above for the consent arrangements for Renewal and Protected areas?
Yes. Establishing a presumption in favour of development in renewal areas such that developments are granted automatic planning permission if they comply with a design code would be an improvement over the current system. It would increase certainty for redevelopment of brownfield sites, which Centre for Cities research shows is especially challenging in our discretionary system.
Protected areas being subject to the current planning process as today is the same recommendation as in Centre for Cities’ recent proposal for a new planning system. Discretionary decision-making can remain for those areas which are agreed in a local plan to be unusually sensitive, such as an Area of Natural Beauty or a Conservation Area, and thus deserving to be in a Protected area.
Q9(c). Do you think there is a case for allowing new settlements to be brought forward under the Nationally Significant Infrastructure Projects regime?
Q10. Do you agree with our proposals to make decision-making faster and more certain?
Yes – granting automatic planning permission to development which has not been determined within the statutory time limit would reduce the rationing of new homes. It would ensure that the costs of delays are borne not by applicants, but by the local planning authority.
It will be important though to make clear that this route must only grant planning permission conditional on compliance with national rules and the local plan which apply to development. In particular, automatic planning permission must be conditional on compliance with the building regulations that keep people safe.
Q11. Do you agree with our proposals for digitised, web-based Local Plans?
Yes. An additional benefit to those outlined in the consultation is it will make evaluation of planning policy much easier at a national scale. Instead of outcomes being decided by hundreds of PDFs each containing dozens of different policies, machine readable and geospatial data will in the long term improve our understanding of how well planning policy is working.
Q12. Do you agree with our proposals for a 30 – month statutory timescale for the production of Local Plans?
Yes. The proposals necessarily strengthen the role of the local plan, and as such, it will be more important than ever for local authorities to have a local plan in place.
The current process takes too long. For example, that York has been unable to agree a new local plan since the 1950s is unacceptable, and delays of this nature would sabotage the reforms and the new housing policy framework. 30 months is more than adequate given the simplicity of the proposals presented.
Nevertheless, it is important that central government remains as a “referee” in the process overseeing the local plans produced by local planning authorities. Self-assessment does not work in the United States where it is common for cities to write and implement their own zoning code, and it is unlikely to work here.
Q13. (a) Do you agree that Neighbourhood Plans should be retained in the reformed planning system?
Not sure. It is difficult to properly evaluate the impact of Neighbourhood Plans. A shift towards focusing on design codes could be a helpful way of implementing the Government’s suggestions on beauty.
But when integrating them into the reformed planning system, care must be taken to avoid them becoming bastions of opposition to new homes. Special powers for Neighbourhood Plans over the principle of development itself should be avoided.
Q13 (b) How can the neighbourhood planning process be developed to meet our objectives, such as in the use of digital tools and reflecting community preferences about design?
Q14. Do you agree there should be a stronger emphasis on the build out of developments? And if so, what further measures would you support?
Slow build out rates, where developers slowly ration out their supply of new housing are caused by how the current discretionary planning system rations the supply of land. They are a symptom of a problem which the “Growth areas” proposed in the White Paper should, if they work well, resolve.
As the planning system currently allocates a few large but specific sites into a local plan, developers have to acquire those specific sites. They pay major sums to do so, and then subsequently must acquire a planning permission for lawful development. Once planning permission is granted, the rational strategy for developers is to then build at a slow rate which maintains high prices for their product which can cover the high price of the land, and avoids swamping the local market with new supply.
Crucially though, this behaviour is only possible because every other competitor faces the same bottleneck on accessing land for development. As planning permissions are handed out by the local planning authority case-by-case, other developers are not able to swoop in, buy another piece of land, and quickly build and sell homes for a cheaper price.
There is little need for further measures beyond what is proposed in the White Paper. The Growth areas, by allocating land where development can proceed without a planning permission, should resolve this behaviour. But, this is conditional on “Growth areas” covering far more land than the current site allocation process. If only a few sites continue to be allocated, rationing elements which provoke slow build out behaviour will remain.
Q15. What do you think about new development that has happened recently in your area?
Q16. Sustainability is at the heart of our proposals. What is your priority for sustainability in your area?
Q17. Do you agree with our proposals for improving the production and use of design guides and codes?
Yes. A shift from comments on design for individual developments and planning applications to input being concentrated into frontloaded design codes would be an improvement. It would reduce the discretionary, unpredictable rationing aspects of the current system which cause bad outcomes.
It would also improve local democracy as it would better organise local consultation and reduce the uncertainty which fuels mistrust in the planning system. The Neighbourhood Defenders literature, which is currently the best evidence available on comments and meetings on individual housing developments, demonstrates this. Case-by-case consultation and decision-making systematically over-represents older, whiter, homeowning residents who oppose new housing at the expense of other groups and those who support new homes. Frontloading consultation and discussion into the beginning of the process is essential to achieve a more representative and democratic planning process.
Q18. Do you agree that we should establish a new body to support design coding and building better places, and that each authority should have a chief officer for design and place-making?
Yes. There are two additional recommendations Centre for Cities would make.
First, the Government should make clear what is not permitted within a design code. Evidence from the United States suggests that design codes can be used in bad faith to make development non-viable, even if the process is frontloaded. The Government should also monitor the creation of design codes to ensure that such behaviour does not creep into the new system.
Second, to ensure that the new design codes produced at a local level will avoid these problems, there will need to be a “referee” overseeing the creation of the design codes. This likely cannot be the local planning authority, as it would blur the distinction between “referee” and “player” of the planning system. The risk is that design codes which block new development would be allowed by local planning authorities.
The new national body proposed would be ideal for a “referee”, and which can provide support to chief officers for design and place-making on the ground and their teams.
Q19. Do you agree with our proposal to consider how design might be given greater emphasis in the strategic objectives for Homes England?
Q20. Do you agree with our proposals for implementing a fast-track for beauty?
Yes. If successful, the proposals on a fast-track for beauty will dramatically improve housing outcomes. A fast-track for beauty in Growth and Renewal areas will minimise the discretionary, rationing element which is at the core of the current housing crisis.
There will need to be a role for central government in overseeing the creation and enforcement of codes, and pilots should help inform exactly how it works in practice. But it is essential to improve housing outcomes by reconnecting local supply and local demand that any reform of the ambition set out in this White Paper end the current practice of rationing new development through planning permissions.
The general principle of reform should be that, if something is proposed which complies with the rules which are set out in advance, then it should automatically be granted planning permission. That can include beauty and design if the design codes are overseen by a higher-tier jurisdiction (such as the proposed national body) to ensure that design codes are created in good faith and not to prevent development.
Q21. When new development happens in your area, what is your priority for what comes with it?
Q22. (a) Should the Government replace the Community Infrastructure Levy and Section 106 planning obligations with a new consolidated Infrastructure Levy, which is charged as a fixed proportion of development value above a set threshold?
Yes. A single, consolidated Infrastructure Levy would be a major improvement over the current Section 106 and CIL regimes. Section 106 in particular is a deeply inefficient form of taxation, which delays development by inducing trench-warfare negotiations between developers and local authorities over planning obligations.
A flat, fair rate across the country would give developers the confidence that the infrastructure needed to make their developments viable would be provided, and local authorities the confidence that revenues would actually be raised.
Centre for Cities research has shown that a 20 per cent Infrastructure Levy on suburban development within walking distance of stations in commuting distance of London, Manchester, Birmingham, Bristol, and Newcastle city centres could expect to raise between £93 billion and £116 billion for infrastructure from 1.7 to 2.1 million homes, while leaving plenty of space for parkland and designated, non-green belt countryside. This compares to £7bn raised across all of England in 2018/19 from developer contributions, when 241,000 homes were built (see MHCLG 2020, The Incidence, Value and Delivery of Planning Obligations and Community Infrastructure Levy in England in 2018-19)
Q22. (b) Should the Infrastructure Levy rates be set nationally at a single rate, set nationally at an area-specific rate, or set locally?
Nationally at a single rate. The value which can be raised will vary across the country, but the benefits of having a single national rate are significant.
A single national rate will make development most viable in the areas which currently have the highest land values and the worst housing shortages. It would therefore help reconnect the local supply of housing to local demand, and provide the funding for the infrastructure those new houses need. By having a single rate, it would avoid beggar-thy-neighbour behaviour from local authorities and costly negotiations and bargaining from developers to lower the rate of the Levy.
One alternative would be to have a single national rate which is paired with a formula that distributes a share of all revenues raised across local authorities, set by a taper according to their land values.
So, a local authority with land values substantially above average land values would see a higher share of their Infrastructure Levy revenues collected this way than those with land values that are only slightly above the national average. These collected revenues would then be distributed to local authorities through the national formula to local authorities with lower land values to support their infrastructure development.
Q22. (c) Should the Infrastructure Levy aim to capture the same amount of value overall, or more value, to support greater investment in infrastructure, affordable housing and local communities?
Not sure. This is a difficult question – it is unknown exactly how much value is destroyed through Section 106 and CIL, which could either be raised or utilised in a new Infrastructure Levy regime. Aiming to raise explicitly more revenue per development could though end up making numerous developments unviable, especially in areas with lower land values
The strategic aim of any Infrastructure Levy should be clear though. Enough revenue should be raised through it to provide sufficient money for the infrastructure which is needed.
Q22. (d) Should we allow local authorities to borrow against the Infrastructure Levy, to support infrastructure delivery in their area?
Yes. An Infrastructure Levy raised at point of sale will be able to fund the infrastructure required to unlock new development, but the infrastructure itself will need to be financed. This can be done by allowing local authorities to borrow prudently against their future Infrastructure Levy revenues.
Q23. Do you agree that the scope of the reformed Infrastructure Levy should capture changes of use through permitted development rights?
Not sure. Section 106 and CIL rates as a percentage of the value of the development are in practice very different between residential and commercial property. The rate for commercial property is much lower, as the market is softer and much less development is viable.
If the Government extends the Infrastructure Levy to encompass changes in use and by extension apply to commercial property as well, the implication is that the Infrastructure Levy itself will need to be set at such a rate that both commercial and residential development are viable.
Q24. (a) Do you agree that we should aim to secure at least the same amount of affordable housing under the Infrastructure Levy, and as much on-site affordable provision, as at present?
Not sure. Evidence from the United States (Emily Hamilton’s paper for the Mercatus Center) on subsidised, affordable housing (“inclusionary zoning”) is associated with higher house prices overall.
However, affordable housing does have particular benefits for those on low incomes. The housing crisis is a problem that is decades in the making, and the costs of it fall heaviest on those with the lowest incomes and least ability to cope.
Additional subsidised, affordable housing will need to be provided to protect those on low incomes in the most expensive cities for the foreseeable future. Partly this is because it will take time for the additional housing provided under this new system to translate into permanent and substantial reductions in housing costs for those on low incomes.
Whether affordable housing will need to be provided at the same scale in the long-term future as today depends on how successful the White Papers’ proposals are at improving overall supply within the most expensive cities. If the reforms are bold enough that they dramatically improve local supply in places of high demand, the need for affordable housing will decline.
Q24. (b) Should affordable housing be secured as in-kind payment towards the Infrastructure Levy, or as a ‘right to purchase’ at discounted rates for local authorities?
A right to purchase would be preferable. In-kind payments would induce protracted negotiations over valuations and the specific properties which would be secured. A “right to purchase” would be simpler and reduce the incentive for developers to provide segregated or distinct dwellings or amenities for those in affordable housing.
Q24. (c) If an in-kind delivery approach is taken, should we mitigate against local authority overpayment risk?
Q24. (d) If an in-kind delivery approach is taken, are there additional steps that would need to be taken to support affordable housing quality?
Q25. Should local authorities have fewer restrictions over how they spend the Infrastructure Levy?
Yes. Allowing local authorities more freedom over how they spend their Infrastructure Levy would advance fiscal devolution, help instil fiscal discipline among local authorities, and encourage local authorities to take decisions that support economic and housing supply growth.
If local authorities raise money through the Infrastructure Levy which is adequate to provide the infrastructure needed for their developments, but then spend it on something else, this is a local failure and not the responsibility of central government. That such local irresponsibility is possible is not a good enough justification to prevent local authorities which do behave responsibly from using extra Infrastructure Levy revenues to fund other projects and services.
Q25 (a) If ‘yes’, should an affordable housing ‘ring-fence’ be developed?
A single national ring-fence for affordable housing would be a mistake. Requiring local authorities which have low land values and inexpensive housing to spend their limited Infrastructure Levy revenues on unnecessary subsidies for affordable housing would be a misallocation of resources. Cities and towns with less successful economies have other policy priorities, especially in skills, education, and commercial property in their city centres.
Places that have expensive housing should and will by contrast spend some of their Infrastructure Levy on subsidising affordable housing without any such ring-fence because that is the local policy priority in the short-medium term.
Q26. Do you have any views on the potential impact of the proposals raised in this consultation on people with protected characteristics as defined in section 149 of the Equality Act 2010?
 Breach, A., 2019, Capital Cities, Centre for Cities https://www.centreforcities.org/publication/capital-cities/
 Breach, A. and Magrini, E., 2020, Sleepy Suburbs, Centre for Cities https://www.centreforcities.org/publication/sleepy-suburbs-housing-crisis/
 Breach, A., 2020, Planning for the Future, Centre for Cities https://www.centreforcities.org/publication/planning-for-the-future/