MPC attends “Budget 2011: A plan for city growth?” event

MPC recently attended an event hosted by the Centre for Cities, an independent, non-partisan research and policy institute committed to improving the economic performance of UK cities.

Entitled “Budget 2011: A plan for city growth?”, a panel chaired by James Crabtree of the Financial Times discussed the coalition government’s Budget, in terms of its impact on Britain’s cities.  Responding, panellists Rt Hon Danny Alexander MP (Chief Secretary to the Treasury), Mike More (Chief Executive, Westminster City Council) and Alexandra Jones (Chief Executive, Centre for Cities) offered their views on how the Budget will affect Britain’s cities.

There was certainly a lot in Budget this year for those of us in the planning sector to ponder.  MPC provides its analysis on some of the key points raised:

·         Announced in the Budget are 21 new urban Enterprise Zones, designed to stimulate growth in urban areas that lag behind in terms of growth.  Ten Local Enterprise Partnerships (in addition to one in London chosen by the Mayor) will be allowed to decide on a geographic area within their partnerships to locate an Enterprise Zone (ten further zones will be set up following a competition among other LEPs).   Firms setting up business within the Zone will be able to take advantage of substantial discounts in business rates, while manufacturing businesses will have access to new super-fast broadband services.  Crucially, the new Zones are to benefit from a simplified planning regime where applicants are not subject to the same bureaucratic hurdles as would normally apply.

o    MPC Response:  Discussion at the event raised an interesting point about how the simplified planning regime proposed for Enterprise Zones sits with the Coalition’s broader localism agenda.  On the one hand, businesses are being given much greater freedom to determine the shape of development (local authorities will have less room to scrutinise plans), yet under localism it is communities that are meant to be given more say on development (think Neighbourhood Plans).  In short, we may expect a very different flavour of localism within Enterprise Zones.

·         Beyond Enterprise Zones, George Osborne also announced that there would be a new “presumption in favour” of planning applications for so-called “sustainable development”. 

o    MPC Response: If, as the Chancellor says, the default outcome for such applications will be affirmative, then where does localism fit in?  Under localism, residents are meant to determine how development is progressed in their area (although not whether it occurs at all).  A built-in presumption in favour of ‘sustainable’ planning applications may simply override the idea of Neighbourhood Planning as touted by the DCLG.  This indicates how flexible the Treasury is when it comes to localism.  Developers will, of course, wonder what is meant by sustainable.

·         A theme that ran throughout the 2011 Budget was an effort to “re-balance” the economy, in which geography is identified as an important factor.  Re-balancing economic growth across the UK may seem like an obvious goal, but is it realistic? Responding to this provision in the Budget, Alexandra Jones raised some interesting points.  While growth in London and the South East may recently have far outstripped that in other parts of the country, it does not have to be this way moving forward, she argued.  It is reported, informally, that many business organisations choose to locate in London not only for its strategic location, but also because of a greater ‘certainty’ of outcome where planning and development are factors in their business models.  Local authorities are more likely to approve planning applications in densely populated London than many other parts of the country.  Objections by residents to applications are often less prolific within the capital.  By ensuring greater certainty in the planning process across other high-potential cities, some firms may be prepared to locate (and develop) in these regions instead, helping to redress this ‘imbalance’ in the process.

o    MPC Response:  It is indeed greater certainty that developers and the wider business community would like to see in the planning process.  MPC experience in recent months in fact points to less certainty, as some local authorities pause the advancement of Local Development Frameworks in the face of the announced dissolution of Regional Spatial Strategies.  Without the certainty of RSS, some councils are now questioning the basis on which their Core Strategies are founded, and with it, those Strategic Development Locations (SDLs) that had previously been a cause for optimism among would-be developers.  It remains to be seen when this sense of ‘certainty’ will return, and with it, a better chance of re-balancing growth in the way the Coalition would like to see.

·         From a planning perspective, one of more eye-catching announcements in the Budget was the decision to pilot Land Auctions.  Under the proposals, local government will be able to benefit from a purchase option on private land.  Local authorities would receive a future right-to-buy assurance at an asking price set by the owner.  The authority would then able to grant outline planning permission for the land, and subsequently auction it to a developer.  In so doing, it is highly likely to profit from an increase in land value derived from the allocation of planning permission.  Furthermore, this encourages development within the locale that is compatible with its Core Strategy.

o    MPC Response:  The government’s proposals are an interesting approach to promoting economic growth and provide greater certainty for developers.  They also appear to be compatible with localism, since authorities will have more power to shape development within the framework of Neighbourhood Plans.  The key will be if landowners are prepared to sell assets to local authorities at what may prove to be a below-market value.  Our analysis, however, is that there will be a nationally varied uptake, with some areas embracing the auctions, and others shunning them.  The auction approach is more likely to be rejected in areas where anti-development sentiment is high on the local agenda and Members prefer to play it safe.

o    The changes, as proposed, will certainly mean a (potentially) more proactive role for local government in promoting and enabling development.   Instead of councils simply reacting to planning applications received, they may now find themselves acting as speculators.  This will put planning centre stage in some local authorities, where Members will be held more accountable for the land they themselves select for development.