As civil servants are urged to press ahead with infrastructure projects, the government is radically shaking up the planning system. Matt Ross examines how planning reform is likely to affect the task facing Whitehall departments.

see news). Nonetheless, departmental officials developing infrastructure will now be placed under greater pressure to keep projects moving: the Lib Dems have invested political capital in their pledge to keep schemes on track, and the civil service is by far the strongest tool they have at hand.

So civil servants are likely to find themselves facing some pretty inflexible deadlines, causing concern among those who know that major capital projects often face challenges that are just as inflexible. One such challenge is the planning system, which for decades has slowed the construction of public infrastructure in ways that are both unpredictable and, often, intractable. The energy department, for example, has struggled to hasten wind farm construction in the face of opposition from local communities and planning committees; the environment department has long since given up trying to persuade councillors to accept waste incineration plants; the transport department has for years seen road schemes tangled up in interminable public inquiries.

If the coalition is placing greater expectations on civil servants’ shoulders, however, it is also attempting to remove some of the obstacles facing them: the government is deep in the biggest planning shake-up in decades. With planning structures, laws and guidance changing on almost every front, the combined effect is unpredictable – but it is likely to be substantial.

PIns up
Frustrated by its inability to push through major infrastructure schemes such as power plants and transport networks, in its last years the Labour government shook up the system for approving them. Rather than leaving the final decision to departmental secretaries of state – who sometimes balked in the face of media opposition or noisy public campaigns – the government would produce ‘national policy statements’ (NPSs) setting out the country’s infrastructure needs, then create an independent Infrastructure Planning Commission (IPC) to judge applications against them. Democratic oversight would be ensured by seeking parliamentary approval for each NPS – allowing individual planning decisions to be passed from politicians to impartial commissioners – and the approval system would be streamlined. The new process “puts much greater emphasis on getting the pre-application work done”, says Sir Bob Kerslake, permanent secretary of the Department for Communities and Local Government, which oversees the IPC. “Once the application is in, it will move much more quickly; that’s the intention here.”

The coalition hasn’t radically changed Labour’s plans, although – in accordance with its desire to bring quango functions back into the direct control of departments – it is merging the IPC with the DCLG’s Planning Inspectorate (PIns). Kerslake is quick to calm fears that the reorganisation itself will lead to delays in processing applications. “We’ve spent a lot of time working with the IPC to make sure they keep the pace going to the current timetable,” he says. “We’re acutely aware of the importance of processing the infrastructure applications because of their links to the growth agenda, so for us making sure the new system works is a high priority.” Continuity of management is being assured, he notes, by appointing IPC chair Sir Michael Pitt as the chief executive of PIns, and making him the head of the new agency.

Pitt too sounds confident about the merger, which is scheduled for April 2012. “We’ve been planning it very carefully for at least nine months,” he says. “One of the very clear directions given by ministers was that there should be no disruption to the programme of national infrastructure projects.” He does, however, offer a gentle nudge to the two departments that haven’t yet produced approved NPSs. “Having designated NPSs in place makes the job of commissioners much easier, because there is a recent and clear statement of government policy that they will take fully into account,” he says. “We strongly support the Department for Transport and the Department for Environment, Food and Rural Affairs in wishing to get their NPSs progressed as quickly as possible.”

The risks in the red box
Along with the merger, the coalition is making one other key change to the system for approving major infrastructure: the Localism Bill reintroduces the requirement for the relevant secretary of state to sign off IPC decisions. “The government wasn’t comfortable with the way the system works around the role of ministers and Parliament,” explains Kerslake. This change has raised concerns that crucial infrastructure decisions will once again be derailed by short-term political considerations. “The issue is whether the transfer from an independent body to one where ministers have the final say is likely to slow matters up because of the electoral cycle,” says Dominic Williams, a director of planning experts Hewdon Consulting and a former DCLG adviser. “In the early years of a Parliament, ministers are willing to take robust decisions; the nearer you get to a general election, the more difficult they find it.”

On the whole, though, Williams believes that the new system will provide a big boost for major schemes – and Kerslake defends the reinstatement of ministerial sign-off. Ministers often take other planning decisions “in a fair and balanced way, so I don’t see why that couldn’t continue with the new model”, Sir Bob says. “And this change ensures that at the final decision point you’ve had a democratically-elected person making that decision. You could argue that the absence of that could have created more difficulties, in time.”

For his part, Pitt points out that ministers won’t lightly reverse the commissioners’ findings. “If the secretary of state is minded to overturn a recommendation there would have to be a good reason, and that reason would have to be explained and there would be a possibility of legal challenge,” he says. Any court appeal would revolve around “the reasonableness of a decision”, he explains. “Remember that there will be NPSs endorsed by the relevant secretary of state and Parliament, which set very clear guidelines about the framework within which decisions should be made. The courts would pay attention to the degree to which any decision is consistent with that NPS.”

Trudi Elliott, chief executive of the Royal Town Planning Institute, told a Lib Dem conference fringe event this week that “when the decisions were taken away from ministers, all sorts of safety valves were put into the process”. These extend timescales and remain with the return of ministerial sign-off, she says, so “the Localism Bill as currently drafted will slow things down and it won’t be the civil servants, frankly, that are slowing it down.” However, Pitt notes that ministers have repeatedly promised “that they’ll not be delaying decisions, and that they plan to make their decisions within three months of receiving the recommendation”.

All in all, the new system is likely to hasten major infrastructure planning. “The introduction of the IPC has support across the board because it promises to simplify the whole process of getting consent,” says Williams. “And I’ve yet to meet anyone who thinks that the merger with PIns will fundamentally alter that.”

Further down the chain
For the infrastructure necessary at a regional or sub-regional level, however, the picture is less clear. With the abolition of regional spatial strategies and regional development agencies, responsibility for planning public infrastructure will rest with local authorities and the sub-regional public-private Local Enterprise Partnerships (LEPs) – and they’re only now getting off the ground. “At the moment, LEPs have some way to go before they can fill that gap,” comments Farshid Kamali, the director of regeneration and development at engineering and design consultancy Atkins. “They’re still finding their feet and we need to give them time – but I don’t think they have that facility at the moment.”

Eventually, LEPs may well grow into the role; and they have been built around coherent local economies, giving them a sensible scale for infrastructure planning. Last year, then-transport permanent secretary Robert Devereux expressed concerns that most LEPs are too small to pursue substantial road or rail projects – but Dr Simon Pemberton, a senior lecturer in urban geography and planning at Birmingham University, says that’s under control: “It is already apparent that consortia of LEPs are coming together to link sub-regions in order to provide a regional basis for considering transport infrastructure requirements, such as in the West Midlands.” He does, however, argue that LEPs will need help to research and demonstrate the need for coordinated action, while success will rest on developing “sufficiently strong political leadership and technical capacity within each LEP”.

By the time the emerging LEPs find their feet, they’ll probably discover that at the local authority level the planning system is rather more welcoming to public infrastructure projects – at least those likely to facilitate economic growth. Although the National Planning Policy Framework is still in draft form, it’s clear that the government wants to use this radically slimmed-down planning guidance to push councils into approving projects that will give businesses a boost. “The NPPF has quite a lot of emphasis on facilitating economic development,” comments Roger Hepher, the head of planning at real estate service provider Savills; under the revised guidance, when planning committees scrutinise applications, the proposed project’s contribution to growth is, he adds, “one of the most important considerations to be taken into account”.

The NPPF’s controversial ‘presumption in favour of development’ could also be powerful: if it is adopted, councils will have to approve applications unless they can find compelling reasons to refuse them. One such reason might be that the development is out of synch with a DCLG-approved ‘local plan’ – the council’s own development strategy – but most councils don’t currently possess approved local plans, and future plans will have to conform to the very pro-development NPPF. In an attempt to push councils into producing local plans quickly, the DCLG has included provisions in the NPPF which would require councils to approve any NPPF-compliant application where a “local plan is absent, silent, indeterminate or where relevant policies are out of date”. Kerslake admits that this passage is indeed designed to put pressure on councils to put local plans in place. “This does provide an incentive for them to get these plans done – but you’ve got to look at how long it’s taken them to get this far,” says Kerslake. “Okay, there were rightly some criticisms that the [previous plan production] system was over-engineered. But there is a case for creating some incentive for local authorities to get with their local plans.”

The battle around the NPPF is far from over, and it’s getting nasty. “There are accusations of hypocrisy flying around, with some people accusing various ministers of taking a pro-development approach in principle but resisting developments in their own constituency,” comments Williams; both DCLG minister Greg Clark and chancellor George Osborne have been the subject of such criticisms. Other commentators fear that the slimmed-down NPPF is ambiguous and imprecise: property barrister Anne Harrison told the environmental audit committee last week that because it lacks a definition of ‘sustainable development’, the NPPF will “lead to more appeals, more inquiries, more legal challenges.” So it’s far from a silver bullet; it does seem, though, that the NPPF is likely to ease the process of approving infrastructure that supports economic growth.

The micro – and the money
At the very local level, there’s another change to the UK planning system. The Tories have trumpeted the idea of ‘neighbourhood planning’, under which communities would have a greater say in the planning process. “In the post-election period, ministers gave the impression that neighbourhoods would have carte blanche to produce these plans and, once produced, they would reign supreme,” says Roger Hepher. “But the reality is turning out to be quite different. It seems that the council will have control over the process. It’s for them to decide that a neighbourhood group is legitimate and can produce a plan; plans have to be in-keeping with the local development framework [or LDF, the predecessor to local plans]; they have to support sustainable development; and they can’t set out plans for any less development than exists in the LDF.”

It’s possible, then, that local groups might be able to create new planning rules that encourage the provision of additional public services such as schools or healthcare facilities. But neighbourhood plans will not present an obstacle to infrastructure provision: “Most communities will prefer less development rather than more, and neighbourhood plans are seemingly not a tool for these people,” comments Hepher.

Taking all these planning changes together, the regulatory environment for new infrastructure is clearly improving – but there’s a big problem: money. Central government capital spending is down, and the property crash has wrecked infrastructure budgets; much local infrastructure, traditionally subsidised via ‘section 106’ charges on the businesses building major new developments, cannot be funded while housebuilding rates are on the floor.

To the surprise of many observers, the coalition has persisted with Labour’s planned ‘community infrastructure levy’ (CIL), and this may help fill the gap. “It requires local authorities to identify the infrastructure requirements of their area and to spread the costs of infrastructure [between developers]. So that should force authorities to plan infrastructure, and deliver money to enable it to be provided,” explains Hepher. “Having said that, in a good many cases viability considerations will prevent the local authority from charging what it would like”. Williams too warns against expecting too much from the CIL: “It’s a useful weapon, but it can’t possibly meet everyone’s expectations,” he says, arguing that the government’s proposals to allow local authorities to keep council tax from new properties, and its ideas about new funding flexibilities for councils, are likely to provide more lucrative sources of infrastructure cash.

The test has not yet begun
The government clearly has big ambitions on infrastructure. It hopes soon to update last year’s National Infrastructure Plan; it’s dramatically altering the planning environment to make it easier to bring forward big new schemes; and Danny Alexander will be watching key projects carefully to make sure departments do spend their meagre resources as scheduled. But very little infrastructure is being built at the moment, simply because the private development, property and construction industries – which both fund and make necessary much new public infrastructure – are struggling with low land values and the scarcity of investment capital. The coalition’s planning policies, then, will only be tested when business picks up; at that point, it should become clear whether the planning system really has been streamlined.

“We’re not seeing growth at the moment, but we don’t know whether it’s because of all the changes in the planning system or the lack of funding in the market,” concludes Atkins’ Kamali. “Most of these developments are ultimately funded by the private sector, and it’s short of funds. I suspect that we’ll only find out whether the new system is really much better when growth returns to the economy.”

The prospects for affordable housing
Social housing fared badly in the comprehensive spending review, suffering a massive 60 per cent cut; the government says housing associations should push up rents to compensate, but meanwhile the chancellor plans to drive down housing benefit payments. Another source of affordable housing has also been slashed: for years, the government has been using ‘section 106’ rules to force developers to sell a proportion of new homes to keyworkers and housing associations at knock-down prices – but the squeeze on house prices and home construction rates has put paid to that.
Even where housing is built, section 106 requirements will in future be competing with the new Community Infrastructure Levy payments to take up any financial slack in a development – so a planning change designed to fund other forms of public infrastructure is likely to starve affordable housing. “The amount of affordable housing that’s delivered is going to be less than we’ve seen in recent times,” says Roger Hepher, a director of land services firm Savills. “And for many years now we’ve not been delivering the total amount of housing that’s required.”

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Written by Matt Ross, CSW