Growth Plan 2022 – Investment Zones, planning reform and housing targets

The post below was first published on our Real Estate Development notes blog:

It’s been a busy couple of weeks for the future of planning. On 23 September, the Chancellor announced the government’s Growth Plan 2022, and last week has seen Conservative Party Conference speeches from the new Levelling Up Minister, Simon Clarke, and the Prime Minister putting (limited) flesh on the bones on the future of levelling up and planning reform. However, with the government’s almost immediate U-turn on tax cuts at the forefront of collective memory, and seeming division within the Conservative Party itself, what confidence can the development industry have that the government’s Growth Plan reforms and new Investment Zones will in fact be implemented, never mind successful? And what is meant by “cutting EU red tape” in the name of achieving growth?

Investment Zones

A prominent feature of the Growth Plan is the government’s ambition to accelerate planning applications, as well as more promises to “streamline” the current system. A major element is the creation of Investment Zones (IZs) – designated development sites that will benefit from tax incentives, “planning liberalisation” and wider support for the local economy. The Growth Plan tells us that a lighter-touch planning regime will apply to IZs, and that the government will work to disapply legacy EU “red tape” and streamline planning applications. However, other than possible relaxation of environmental regulations derived from EU law (on which see more below), little detail is included in the Growth Plan itself, or the factsheet on Investment Zones published with it, about what “planning liberalisation” will look like.

More detail was forthcoming on 24 September 2022 when DLUHC published Investment Zones in England Guidance. Subsequently, on 2 October 2022, DLUHC published the Investment Zones expression of interest form and Investment Zones expression of interest guidance for England. Mayoral Combined Authorities (MCAs) and Upper Tier Local Authorities (ULAs) have been invited to submit an Expression of Interest (EOI) for one or more sites in their area to become IZs. Freeports can also apply. Site selection will be done on the basis of “EOI criteria” and “prioritisation criteria”, with the aim of ensuring “broad geographic distribution of Investment Zones, and/or a balance of urban and rural areas“, a “proportionate balance of housing and commercial sites” and “readiness to deliver“.

EOIs must be received by 14 October 2022, a mere 12 days after the guidance was published on 2 October. The government will in due course (quickly, we are told) select which sites will be given IZ status. We’ve been told that there has already been great interest from local authorities, who are asked to provide information on how they would accelerate delivery by streamlining post-permission approvals or using other existing tools such as Local Development Orders, and how they intend to source funding necessary to deliver IZ sites and assess their impact. They are also asked to confirm their support in principle to use the “new, faster, and more streamlined consent to grant planning permission … for development on sites which do not have existing planning permission, or are not expected to have planning permission by Summer 2023“, despite the fact that such details are not yet available. It remains to be seen whether the creation of these lighter-touch planning zones compounds fragmentation of the planning system, the very thing the Growth Plan has been quick to criticise.

Local consent

In his conference speech, Simon Clarke told us that:

“[Investment Zones] must be led by the people who know best what their area needs and what it does not. There will be no top-down imposition of these arrangements on anywhere that does not want them … ultimately if local people decide an investment zone isn’t for them – then that will be the final word “.

The term “local consent” also appeared in the context of encouraging more brownfield housing development.

However, there is no detail on exactly what the newly coined term means. There seems to be an implication that incentives for local communities to accept development on their doorstep may be involved, whether by developer contributions or otherwise, but we shall have to wait and see.

Infrastructure acceleration

The Growth Plan announced that a new Planning and Infrastructure Bill will “accelerate priority major infrastructure projects across England“, promising to prioritise the delivery of NSIPs and listing priority projects that will be accelerated as fast as possible. HSF’s Ian Mack and Charlotte Dyer have written more about the potential impact on infrastructure planning in our latest Monthly NSIP Newsletter, September 2022. As they comment there at section 1, “Taken at face value, it all sounds fairly positive and promising“, however “it’s difficult to believe the Government have the political capital or conviction to deliver on elements which require some inevitable ‘trade-off’“. Whilst the Growth Plan indicates that acceleration may happen through planning reform, regulatory reform, improved processes or other options, the suggestion of a separate, albeit potentially faster, planning process for certain projects further fragments the current system, which seems inconsistent with the government’s aim of streamlining planning.

Legislative change and cutting EU red tape

The details of the Planning and Infrastructure Bill are yet to be announced, but we are told it will include measures to reduce the burden of environmental assessments, reduce bureaucracy in the consultation process, reform habitats and species regulations and increase flexibility to make changes to a DCO once it has been submitted.

How will this be achieved? Legacy EU red tape is blamed for long delays in the delivery of infrastructure. The day before the mini-budget, the government published the Retained EU Law (Revocation and Reform) Bill. More information on this is in HSF Corporate Notes here but, put simply, if enacted this legislation will end the special status of all retained EU law by a sunset date of 31 December 2023.

The government’s intention is to enable the UK government to create their own tailor-made regulations thereby cutting red tape in the planning process. The Growth Plan suggests that this will reduce the burden of environmental protections such as environmental impact assessments and habitat regulations. However, the extent of environmental deregulation will have to be balanced to ensure that environmental outcomes are protected. Any environmental deregulation is likely to be controversial and challenged, especially among the traditional voter base of the Conservative party, so it will be interesting to see how the government will manage this in light of their most recent U-turn. The government will also have to manage environmental deregulation with their net zero strategy promises.

The future?

The announcement of the Planning and Infrastructure Bill raised concerns that the Levelling Up and Regeneration Bill (LURB) will be side-stepped. However, Simon Clark has re-affirmed government commitment to levelling-up and the new Housing Minister, Lee Rowley, has also confirmed that the LURB will continue to progress through Parliament. The House of Commons Committee Stage for the LURB has been extended to 13 October, so we may expect to see further information on the Bill imminently. Once details of the Planning and Infrastructure Bill are published, the full extent of the government’s proposals for planning reform will be revealed, when we can assess the likelihood of success in achieving a more streamlined and accelerated planning system.

We need these announcements soon if developers, local planning authorities and communities are to have confidence that the proposed reforms can bring about the changes that the government promises. Little was said in the Growth Plan on how the government’s ambitions will be achieved and therefore it is questionable whether these promises are merely headlining grabbing buzzwords or whether they will translate into meaningful reform. So far there has been little detail on how the provision of affordable housing and developer contributions will be treated within IZs. Also, the level of investment and funding which will be provided to implement changes to the planning system has not been disclosed. The system as it stands currently is under-resourced and under-funded, so increasing investment and providing adequate resources at a local level will arguably lead to quicker planning decisions. However, this is at odds with the current request to government departments to look at “efficiency savings”.

Time will tell as to how this will play-out. Planning and politics have always been close relations, but perhaps never more so than now.

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