According to Planning Resource
The controversial Clause 124, which would give material weight to “local finance considerations” when determining a planning application,
was brought up by peers several times during last week’s debate on the Bill
The Liberal Democrat amendment, which was the first proposed change to the bill in the Lords, was tabled by Baroness Parminter and Lord Greaves.
It reads: “The above-named Lords give notice of their intention to oppose the Question that Clause 124 stands part of the Bill.”
The amendment will be discussed when the bill moves to its committee stage in the Lords next Monday.
The whole issue of this ‘cash for permission’ or ‘cash for sprawl’ clause has been mishandled from beginning to end and created much misunderstanding.
The principle that planning permission cannot be bought and sold is fundamental.
For planning obligations this means that to be acceptable an obligation must be necessary for the proposal to overcome planning objections to gain planning permission.
If a local planning authority is considering a planning application for a housing estate or business park they can legitimately consider the economic benefits a project might bring.
One such factor could be whether a scheme made a settlement more fiscally viable. Such considerations have always throughout history and will always be a key factor for local politicians in determining optimum settlement size.
The problem came with the governments new fiscal incentive, the new homes bonus, and the hope that this would somehow encourage local authorities to allocate land rather than deallocate it which they have been doing hand over fist. Ministers wrote to LPAs asking them to take this into account immediately.
The concern was expressed that if this matter was determinate in a planning decision it could be unlawful. The CPRE and the HBF expressed concern over this in February.
The RTPI has issued a briefing paper. The RTPI is not disputing that financial consideration are material, rather the necessity test should be included in the definition.
This test from the CIL regulations makes the necessity test law not just policy – this effectively supercedes the Tesco case that it is lawful to take into account financial coonsiderations in excess of necessity.
[It] may only constitute a reason for granting planning permission for the development if the obligation is—
(a)necessary to make the development acceptable in planning terms;
(b)directly related to the development; and
(c)fairly and reasonably related in scale and kind to the development.
Now the issue is that New Homes Bonus is not directly related to the development and it is not ringfenced. It can be used by the LPA for any purpose. However the RTPIs position is not consistent in that CIL is not directly related to the development either. Indeed with the governments latest changes to CIL its can no longer to just not related to a specific development (as CIL applies area wide) but also need not meet the necessity test as a proportion of CIL – ‘Neighbourhoods will now get a direct cut of the cash paid by developers to councils – to spend how they wish to benefit the community, from parks and schools to roads, playgrounds and cycle paths.’
As in the Mr 50% you have to deal with in so many countries Neighbourhoods will now be Mr 20%.
In going down this route the government have opened a pandoras box about the legality of taking into account CIL as a material consideration.
There is a long-established principle in Alnwick District Council v Secretary of State (2000) 79 P&CR 130) that financial consequences for authorities that do not relate to the use or development of land are not capable of amounting to material considerations. But this has recently been challenged.
As S J Berwin have pointed out at L is for Localism
the Court of Appeal has also recently held that the financial impact for an authority of revoking or modifying a planning permission – in terms of its exposure to a compensation claim from the owner – can lawfully be a material consideration for the authority to take into account in deciding whether or not to make the revocation or modification order (Heath and Safety Executive v Wolverhampton City Council (2010) EWHC 71 (Admin)..– although this is currently subject to an appeal to the Supreme Court.
We now face the strange position whereby an unjustified financial offer from an applicant would be ruled off-side but whereby an equivalent sum of money available from central Government as a result of planning permission being granted or implemented would not just be able to be taken into account but would have to be taken into account by an authority in its decision making.
The risks are reinforced by a legal opinion published by the CPRE from John Hobson QC and Stephen Whale of 4-5 Greys Inn Square.
HSE, Alnwick …were all concerned with direct adverse financial consequences of planning decisions, whereas the NHB scheme is more a case of indirect positive financial consequences
two points in particular about the NHB scheme need very much to be borne in mind. First, receipt of the NHB grant is only indirectly the consequence of a planning decision in that it is to be paid not upon a grant of planning permission but upon a change in the number of dwellings on council tax valuation lists. Second, the precise amount of NHB grant to be paid will be a function of a number of factors unrelated to any particular application (or development). These factors include the number of council tax discounts and exemptions in the authority’s area, the total tax base and council tax requirement for England, the number of empty properties brought back into use and the number of demolitions.
These two points give rise to a good argument for saying that, whilst financial considerations may, in principle, amount to a material consideration, the NHB scheme and the grants made under it will not be a land use consequence of any planning decision or else they will not fairly and reasonably relate to any
particular application (or development).
So if the government wished to maintain its current NHB scheme and retain its efficacy as an incentive they were forced to legislate.
Unpicking the two obejctions raised in the Lords
The ‘cash above all else’ objection is that the localism bill clause will raise financial considerations above all else. The TCPA have promoted this idea. On the face of the bill it will do no such thing. As a matter of law the weight to be given to a material consideration will be a matter for the decision maker. There are risks that policy will do do, such as in Planning for Growth, and the NPPF, but not on the face of the Bill, which confines local financial considerations to:
(a) a grant or other financial assistance that has been, or will or could be, provided to a relevant authority by a Minister of the Crown, or
(b) sums that a relevant authority has received, or will or could receive, in payment of Community Infrastructure Levy;
It does seem very very odd though that out of the many material considerations this is the only one on the Bill. It is the only one that currently needs to be however as all others have been defined by common law.
Any consideration which relates to the use or development of land is capable of being a material consideration, but other circumstances such as personal hardship and fears of affected residents can be considered in exceptional cases (the House of Lords in Great Portland Estates v. Westminster City Council ).
The second objection is more serious – that it is ‘cash for permissions’
After the rigour in setting up and making law the necessity test a structure of incentives that bypass this test mean the charge is well aimed.
But there is a change the government could make to the incentives that would avoid the whole problem. It could integrate the NHB system with the CIL.
It would work like this. Where there is a gap between infrastructure required in a CIL assessment and what is affordable the LPA record the difference.
Every year each LPA applies to the government for the difference and the government distributes a fixed pot pro-rata, and possibly weighted on the basis of the needs formula.
The grant forms part of the ringfenced CIL pool.
Neighbourhoods could gain for a % of funds providing it was ringfenced for infrastructure purposes.
All the localism bill then would need is a clause stating that the provision of infrastructure funding through the CIL was lawful.
This would be much less controversial and much less of a hacked on addition to the planning system. It would not be cash for sprawl it would be cash for infrastructure.