The Wokingham Case – Is Applying a Lapse Rate and 20% uplift Double Counting FOAN

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Wokingham BC v SoS and Cooper Estates

On behalf of the Council, Ms Sheikh QC contended that the Inspector imposed both a 10% “lapse rate” and a 20% “buffer” unlawfully. Had the “lapse rate” not been applied, the Inspector would have found there to have been a five-year supply of deliverable housing sites.

Ms Sheikh contended that an Inquiry is a formal adversarial process: participants are entitled to know the case they have to meet and to adduce evidence and makes submissions in relation to it. If an Inspector is to take a line not explored at the Inquiry, fairness requires him to give a relevant party an opportunity to deal with it: see Hopkins Developments Ltd v Secretary of State for Communities and Local Government [2014] EWCA Civ 470[2014] PTSR 1145 (“Hopkins Developments“); Castleford Homes v Secretary of State for the Environment [2001] EWHC Admin 77, [2001] PLCR 29; R (Poole) v Secretary of State for Communities and Local Government [2008] EWHC 676 (Admin)[2008] JPL 1774.

In this case, so she submitted, no party or witness at the Inquiry contended that a lapse rate of any description should be imposed: its imposition was not in issue. The Inspector had given no indication that he was planning to impose a “lapse rate”. What the Inspector had done was not even what Mr Gregory Jones QC had ultimately suggested at the Inquiry that he might appropriately do but the crucial feature of Mr Jones’s closing submissions was the statement that he Second Defendant was not seeking the imposition of a “lapse rate”. Ms Sheikh submitted that the Council were thus denied a reasonable opportunity to adduce evidence and make submissions on whether any lapse rate should be imposed, what any rate might be and to what it might be applied. She denied that there was any agreement that, if a “lapse rate” fell to be applied, it should be at a uniform rate of 10%. Given its significance in this case, the Inspector’s failure to inform the Council that he might impose one and give them an opportunity to respond was unfair.

But, in any event, so Ms Sheikh submitted, (i) the “lapse rate” and the “buffer” both serve the same purpose, namely to compensate for the risk of under-delivery evident as a result of previous poor predictions. A “lapse rate” approaches the delivery of sites from the supply perspective; the “buffer” seeks to ensure a realistic prospect of achieving the planned supply by increasing the requirement for supply. The “lapse rate” and the “buffer” deal with the same issue from different perspectives. By applying both the Inspector double-counted that factor. The “buffer” is not imposed as a penalty for past failures. (ii) The Council had explained why they considered any application of both would involve double counting, referring the Inspector inter alia to a decision of the Secretary of State about land in Malpas, Cheshire endorsing that view. Ms Sheikh submitted that, if the Inspector could have imposed a “lapse rate”, he had failed to give any reasons for rejecting that case or for not following that decision. (iii) Ms Sheikh further contended that the Inspector’s application of the “lapse rate” was unlawful. The only possible distinction between such a rate and a “buffer” would be if the “buffer” is applied in a blanket manner but a “lapse rate” is applied to specified sites. That the Inspector did not do. To apply it to sites whose estimated supply he had specifically concluded was deliverable was unlawful. She further developed this complaint at various points in her submissions, pointing out, for example, that the Inspector had applied the “lapse rate” to sites with planning permission, notwithstanding footnote 11 in the NPPF, and that one of the reasons he gave for its imposition only concerned sites without permission….

If the local planning authority is required to address in evidence and submissions possible changes to its assessments that other parties are not themselves advocating, the additional time and costs involved will not be negligible and it may distract those involved from what is in issue. If an Inspector considers that an adjustment is one that ought to be, or might be, considered by him even if no party is advocating it, it is not unreasonable for the parties to expect him or her to indicate that to them. In the context of a focussed Inquiry fairness requires an Inspector to do so.

Whether the application of a “lapse rate” and the 20% buffer involved “double counting” (as the Council contend) may be thought to depend on what each is designed to achieve and why they are to be applied.

What has to be compared with the housing requirement is the “supply of specific deliverable sites”. As footnote 11 in the NPPF states, “to be considered deliverable, sites should be available now, offer a suitable location for development now, and be achievable with a realistic prospect that housing will be delivered on the site within five years and in particular that development of the site is viable.” The estimated supply is thus one that should be realistic.

The object that the “buffer” is intended to achieve is stated in paragraph 47 of the NPPF. Paragraph 47 indicates that in all cases the relevant housing requirement should be increased by a “buffer of 5% (moved forward from later in the plan period) to ensure choice and competition in the market for land”. It also indicates that the “buffer” should be increased “to 20% (moved forward from later in the plan period) to provide a realistic prospect of achieving the planned supply and to ensure choice and competition in the market for land”. In each case the buffer does not add to overall requirement for dwellings in the plan period. The identified additional purpose that a “buffer” of 20% (rather than 5%) serves in the immediate five year period is “to provide a realistic prospect of achieving the planned supply”. An increased buffer for that purpose is to be applied “where there has been a record of persistent under delivery of housing”.

The Council’s explanation of why it had not applied a 10% flexibility allowance as well as a “buffer” of 20% was that to do so would be to increase the housing requirement and to reduce the estimated supply for the same reason, namely to ensure that the estimated supply would in fact be realistic given persistent under-delivery (or consistent over-prediction of delivery). It referred to a decision of the Secretary of State in respect of a proposed development in Malpas, Cheshire in which he agreed with the Inspector’s reasoning on certain points including these. The Inspector considered the objective of the 20% “buffer” was to provide a realistic prospect of achieving the planned supply and to ensure choice and competition in the market and that “the buffer figure thereby allows for some uncertainty and slippage in the delivery of some sites”. He added:

“there is no evidence to support the arbitrary 6 month or 12 month slippage rate assumed by the Appellant across all developments. To apply such an assumption, or the alternative 10% discount (which is equally arbitrary), would result in double counting in that the 20% buffer would also allow significant slippage or non-implementation.”

It is for the decision-maker to determine in the first instance whether or not the application of a “lapse rate” to the estimated five-year supply of deliverable housing to reflect the Council’s “record of tending to over-predict delivery”[20] involves an unwarranted adjustment, given an increase in the housing requirement by 20% “where there has been a record of persistent under delivery of housing”, in each case in order “to provide a realistic prospect of achieving the planned supply”. Assuming that the Inspector thought it did not involve any such “double counting”, he has failed to provide any reasons for his rejection of the Council’s case on that point. If he thought it would have involved “double counting”, he failed to explain why he thought that the Council’s “record of tending to over-predict delivery” could still be a reason for applying a “lapse rate” to the whole of estimated supply as well as applying a 20% “buffer”. In my judgment, therefore, the Inspector failed to give reasons why the Council’s “record of tending to over-predict delivery” was a reason for applying a “lapse rate” to the total estimated five-year supply, given that a 20% “buffer” was also to be applied to the estimated housing need, notwithstanding the Council’s case supported by a decision of the Secretary of State that it involved “double counting”.

It may be noted that, although the arguments were by no means identical, a similar failure to explain why the combination of a discount of 10% to certain large sites and a 20% buffer did, or did not, involve double counting was one of the bases on which the appeal decision, which was the subject of Lindblom J’s judgment in Bloor Homes East Midlands Limited v Secretary of State for Communities and Local Government supra, was quashed: see at [128]-[130].

For these reasons in my judgment the Inspector’s use of a 10% “lapse rate” applied to whole of the estimated supply for the reasons he gave was unlawful, even if it would not have been unfair for him to have considered the application of a “lapse rate” (as Mr Jones had suggested was possible) to those sites that Mrs Mulliner had not specifically examined on the ground of persistent under-delivery (or constant over-estimating of delivery) of housing in Wokingham. In my judgment he failed to give reasons explaining why he rejected the Council’s case that application of a “lapse rate” to the whole of the supply for that reason was unwarranted given the application of a 20% “buffer” for the same reason. Had the Council been given the opportunity it could also have produced arguments why the other three reasons relied on by the Inspector (not suggested by Mr Jones) did not justify an application of a 10% “lapse rate” across the whole of its estimated supply.

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One thought on “The Wokingham Case – Is Applying a Lapse Rate and 20% uplift Double Counting FOAN

  1. So only double counting if a blanket lapse rate is applied. Makes sense. Why would you apply to sites that have started or the larger ones where a trajectory is agreed.

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