Considered in Grand Committee
My Lords, it is a great pleasure to see the noble Baroness, Lady Finlay of Llandaff, in the Chair. The draft Town and Country Planning (Fees for Applications, Deemed Applications, Requests and Site Visits) (England) (Amendment) Regulations 2017 were laid before the House on 19 October 2017—that is a relief. I had a feeling like when I passed my driving test and I was out for the first time: it is a feeling of great power, but as though I might need assistance. The regulations will increase nationally set planning application fees by 20% and introduce fees for new categories of development. If approved by the Committee and the other place they will come into effect 28 days after they are made. They are due to be debated in the other place a week today.
It would be useful to give some context to these regulations. We want to make sure that the planning system is valued, resilient and capable of providing the service that local people and planning applicants expect. We also want to provide local authorities with the capacity and capability to support the Government’s objective to build more homes more quickly. I recognise that planning fees have not increased since 2012; therefore, the increase in planning fees set out today is a significant step towards addressing the widespread concerns of underresourced local planning authorities.
The housing White Paper of earlier this year stated that we would increase planning fees by 20% for those authorities that committed to invest the additional fee income in their planning department. Ring-fencing the additional fees in this way will ensure that resources are directly invested to support the delivery of an effective planning system. I am pleased to say that all local planning authorities in England have accepted this offer. Based on current activity, this uplift in planning fees could generate more than £75 million of additional fee income annually for local authorities. This is equal to the average salary of approximately 1,600 planners and other professionals who play a role in the planning process. This should bring the total planning application fee income to approximately £450 million per annum. The 20% increase keeps planning application fees at a modest level for householders and developers compared to overall planning costs—roughly 0.25% of development costs, I think—while providing local authorities with the necessary resources to turn round applications efficiently and effectively.
In developing these regulations, we undertook a technical consultation in 2016 on proposals to increase planning application fees. The majority of respondents, from all sectors, supported increasing planning fees, often citing concerns about resourcing in local authority planning departments. We are also very grateful to the Local Government Association for its work to promote performance improvement. Local government authorities are our partners. Their research suggests that since fees were last increased in 2012, local authorities have been relying on local taxpayers to support the delivery of their planning services.
I turn now to the specifics of what the regulations do. They deliver the housing White Paper commitment to increase nationally-set planning application fees by 20% and to introduce other technical changes in relation to fees charged by local planning authorities. These changes deliver on previous government commitments.
Regulation 1 sets out the scope of the regulations, in that they apply only in England and will come into force 28 days after they are made. Regulation 2 provides for an increase of 20% for all existing fees for planning applications and advertisement consents.
In addition, the regulations bring forward four technical changes. Regulation 3 inserts a new fee of £402 per 0.1 hectare for applications for permission in principle. This will follow new powers that we intend to provide to local authorities to grant permission in principle to suitable sites on application. We will be doing that by regulation. In other words, this is a new fee for a new power that was not previously in the regulations. The same principle applies in Regulation 4, which enables any mayoral development corporation or urban development corporation to charge for giving pre-application advice. This provides the same powers to development corporations as already exist for other local planning authorities. Again, this is a new fee for a new process.
Regulation 5(2) provides for a planning application fee to be charged by local planning authorities for applications necessary because a permitted development right has been removed. The right may have been removed either through an Article 4 direction or through a condition imposed on a planning permission. Many noble Lords will appreciate that this delivers on a commitment I gave to my noble friend Lord True, and to others in the House, during the passage of the Bill that became this year’s Neighbourhood Planning Act.
Finally in relation to these technical changes, Regulation 5(3) introduces a new fee of £96 for requests for prior approval for the new permitted development rights introduced in April 2015 and April 2017. These include the rights for the installation of solar photovoltaic equipment on non-domestic buildings, the erection of click-and-collect facilities within the land area of a shop, the temporary use of buildings or land for film-making purposes, and the provision of temporary school buildings on vacant commercial land for state-funded schools. Again, all of those are new fees for new processes.
We continue to keep the fee resourcing of local authority planning departments at the forefront of our thoughts and to keep under review where fees can be charged. In the consultation document on local housing need, Planning for the Right Homes in the Right Places, we have consulted on the potential for increasing planning fees by a further 20% for those authorities that are delivering the homes that their communities need. Again, this was presaged in the White Paper. The consultation closed recently and the responses will help to inform our thinking on how to ensure that the framework for planning fees delivers the resources necessary to support high-quality performance. We are now analysing those responses.
In conclusion, I must reiterate that it is vital to have well-resourced, effective and efficient local authority planning departments in order to provide new homes and deliver economic growth. I pay tribute to the planning departments of our local authorities throughout England. We expect local authorities to match these recommended fee increases with an ongoing improvement of service when handling planning applications. In bringing forward these changes, we are ensuring that they have the necessary resources to take on and deal efficiently with the increasing demands being made of them. I commend these regulations to the Committee.
I draw attention to my registered interests as a councillor in Kirklees and as one of the many vice-presidents of the Local Government Association. As a local councillor and someone who is interested in planning, I welcome the 20% increase in fees across all types of planning application, although it has been a long time coming.
However, I note with some concern that the noble Lord, Lord Bourne, did not refer to the fact that the resultant gain in income will cover only around half of the current deficit in financing the planning applications processed by the local planning authority. Paragraph 7.3 of the Explanatory Memorandum draws attention to this. It says that,
“the Government is seeking to reduce the funding gap, and estimate that some £80m additional fee income will be raised annually”.
I also note that the Minister referred to an annual increase of £75 million. The paragraph goes on to state:
“Therefore, although the fee increase will help to address some of this shortfall, even taking this additional income into account, authorities’ costs will overall still be higher than the fee charged”.
We continue to say that the Government are expecting hard-pressed council tax payers to subsidise developers. Given that the interesting figure of 0.25% of planning costs is what the planning fee represents, it seems that we ought to be asking developers to pay the full cost of the planning application. My rough guess is that it would mean a 40% increase. It is not acceptable for council tax payers to continue to subsidise development, and the developers who will make considerable profits out of the projects they undertake.
I noted the new type of planning known as “planning in principle” referred to by the Minister. When I read it, it seemed to be outline planning consent, and I would like to understand what the difference is. In the explanation it talks about there being none of the detail but perhaps only access and considering the principle of building on a certain site. I take that to be outline planning consent and I should therefore like to know what the difference is.
The Minister went on to refer to the opportunity of a further 20% increase in planning fees which would be dependent on local planning authorities delivering on housebuilding targets. This is a bit of a punishment for those authorities that grant planning consent for applications in a timely way but then find that developers sit on them for years and keep coming back with requests for time extensions on their permissions. I cite my own ward in Kirklees, where we have 600 planning consents—that is just one ward, not a whole authority—waiting for development. No doubt my council would not qualify for the further 20%, regardless of the fact that it had granted all these planning permissions.
Perhaps it is because I am new to all this, but I want to comment on this business of the Government undertaking to define planning application fees. Planning permissions and the whole planning process are a local planning authority matter and I believe that planning fees ought to be determined by local government. I do not understand why central government wants to keep such a tight hold on this. If there was more freedom for local planning authorities to determine fees, I am sure that they would introduce innovative processes and be a bit more business-like. If you wanted to attract more development, maybe you would cut fees for development that was within the local authority’s strategic vision. I am not sure why central government has to keep a tight hold of planning fees. I look forward to the Minister’s response on that.
With those comments, in totality I welcome the increase in fees. Local taxpayers have subsidised development for far too long. I look forward to a further 20%, so that they do not subsidise it at all.
My Lords, I welcome the noble Baroness, Lady Finlay, to the Chair, as did the noble Lord, Lord Bourne. I draw the Committee’s attention to my registered interests as a councillor in the London Borough of Lewisham and a vice-president of the Local Government Association.
Like the noble Baroness, Lady Pinnock, I welcome the measure as far as it goes, in that it increases the fees that local authorities charge for planning applications. That is welcome, as are the fees for the new categories. The 20% increase will make a difference, but council tax payers will still be subsidising the planning process. As has been mentioned many times, that is regrettable. In paragraph 7.3 of the Explanatory Notes, that seems to have been accepted, although I do not think that these proposals go far enough. As the Explanatory Notes say, the last increase was in 2012, which highlights a problem—that is five years ago and costs have gone up since. I accept the point that the noble Baroness, Lady Pinnock, made in asking why the Government are still setting these fees nationally. If they are going to carry on doing that they should look at some way of inflation-proofing this, otherwise we will be sitting here in another five or six years’ time agreeing the fees again. Costs increase all the time for local authorities and waiting five years is far too long. As the noble Baroness said, these matters should be dealt with by local authorities, which will set fees connected to their areas.
The Explanatory Notes also mention applications for permission in principle. A new figure is being proposed, but the fee is set lower than it is for present applications. The justification is that less work will be involved, so you do not need a bigger fee. But of course the fee we have now does not cover it. There is a new fee to be charged but, again, it will not cover the cost of even that work. That is odd logic, unless you always want to set the fees at a lower level than the cost so you always have the council tax payer subsidising the payment process. I would have thought that we would want to get out of that at some point—if not today, certainly in the future. Having said that, I welcome the increase. It is going in the right direction.
We will be talking about pilots later but I have suggested before that perhaps at least one council in the whole of England should do a pilot on full costs recovery. I cannot see the harm of just trying it. At the end of the day it may not work, but if we could find one place to volunteer to do that it would give the Government useful information about whether that is something we could do. I have called for it, as have colleagues. Perhaps we should do that. Having said that, I am happy to support the regulations, as far as they go.
My Lords, I thank the noble Baroness, Lady Pinnock, and the noble Lord, Lord Kennedy, for their comments, their general support and, indeed, their constructive approach. I will try to deal with the points they raised.
First, in relation to whether we should have gone further, I appreciate that it is the Government’s job to bear down on costs and obviously there is a concern, which we all share, about ensuring that we build more. Having said that the planning fees represent only 0.25% of the development costs, we nevertheless have to be aware of the fact that there must be a level where it would begin to be a disincentive to development. That said, as I outlined and the noble Baroness, Lady Pinnock, referred to, we are looking at a potential 20% tied to housing target delivery and we are analysing the responses. I do not see this as punishing those authorities that do not make it. This is very much a carrot, not a stick. I expect that many local authorities will want to respond favourably to this.
However, I listened carefully to the noble Lord and the noble Baroness as I know they have lots of experience in local government. I realise they know what they are talking about—nearly always—particularly on these areas. They made a fair point. There have been gaps under previous Governments when the fees have not gone up as they perhaps should have. I liked the constructive suggestions from the noble Lord, which I will take away, about the index-linking and the pilots. Both are worthy of discussion so we will have a look at them. The current regulations do not provide for index-linking and I suspect that we would need primary legislation to amend the enabling power. That said, let us see if there is some merit in that suggestion because I appreciate that we need to ensure that planning departments are properly resourced. The noble Lord and the noble Baroness are as aware of that as anyone.
The fee for permission in principle—a new route to planning permission, as the noble Baroness knows, giving developers up-front certainty that sites are suitable for housing-led development—was not plucked out of the air, as it were. There was discussion with local authorities and others about fixing that fee, which we consider appropriate. It is a new fee but we have not had massive representations against it—I am right in saying that—in so far as there were any representations. I think it probably is an appropriate fee, as the others are. I appreciate the general point that this is new territory.
In relation to the point raised by the noble Baroness and the noble Lord about the national setting of fees, this has always been the approach under successive Governments. That does not necessarily mean that it is the correct approach, I know, but it has. There are a couple of issues concerning setting fees nationally. Allowing local planning authorities to set their own fee levels risks the principle of ring-fencing this. I suppose a ring-fence could be created but it would be a little clunky. But there is also a risk, which would be more of a concern to me and to the Government, that uncertainty in relation to fees may act as a disincentive to home owners and small developers in particular to undertaking development in a particular area. There might be a race to the bottom. We should be careful what we wish for because there is a risk that this could end up underresourcing public authorities by pushing them to charge lower fees than might be sensible. I shall need to look at this carefully but, as I say, my initial view is that it might be difficult and not achieve what we want.
That said, I take the points made about index-linking very seriously; it would save us the difficulty of passing primary legislation. We shall take the suggestion away and look at it for the longer view. The pilot is also a constructive suggestion. With that, I welcome the approach of both the noble Lord and the noble Baroness in their welcome of the fact that we are increasing planning fees.
I am pleased that the noble Lord is going to look at the suggestions. The general point to make is that we hear in our authority and from local government generally that there is a lot of pressure in many areas of service. If there is one area where you could get close to full cost recovery, it is this one, and that would be progress. I take the point that it might hamper development, but I am not convinced that 0.25% of the development costs would be the deal-breaker. If council tax payers are subsidising the planning process, it means that money is not being used for other services which are equally if not more important for the authority to deliver. We hear debates right around the local government sphere about the problems and pressures on budgets and the cuts that have been made in the past six or seven years. That is a serious point for local government, so I am grateful to the Minister for saying that he will take a look at this.
We are getting closer to full cost recovery with these regulations and I appeal to the noble Lord’s legendary patience to await the consultation on the other 20%. That will go a long way for many authorities which I know are trying and succeeding to meet their housing targets. However, the general point has certainly been taken on board.