Comment

COVID-19 and the development industry: crisis management and planning for recovery

We are living through unprecedented times as a result of COVID-19 and latest indications are that it may be some months before life, and business, returns to anything like normal. The Government’s efforts are properly focussed upon saving lives and we are all grateful for the dedication of those on the frontline in the NHS and other vital public services, including many in the retail and logistics sectors who are keeping the country supplied.

The lockdown and all necessary actions taken to slow the spread of COVID-19 are having a major short-term economic impact. The crisis presents a unique challenge for the development industry. Many construction projects are understandably being put on hold, property transactions are being deferred, and both planning decisions and plan-making are being understandably delayed for now.

Our clients are considering with us how they can ensure projects in the planning stages can be positioned to support a strong and speedy recovery as and when the crisis recedes.

In recent days and weeks, Government has shown willingness to take swift and decisive action to enable critical systems to function and flex in response to these extraordinary circumstances. Alongside the essential emergency response to the pandemic, Government can take steps now to minimise the longer term impacts on the economy and to lay the foundations for subsequent recovery, including in relation to planning and development.

This comment identifies some of the practical steps that can be taken by Government immediately and in the medium-term. These build upon our recent discussions with MHCLG, supporting the work of the BPF, and those suggested by other commentators such as Simon Ricketts, Sam Stafford, and the excellent work of No5, King’s and Landmark Chambers.

Immediate response: function and flexibility

The planning system depends on local government, which is also in lockdown, placing great strain on the processes that are not used to or even enabled to function in a virtual world.

With many construction sites temporarily closed and projects halted as companies take stock of the impact of the crisis on house sales, occupier requirements, and investment decisions, some flexibility is required to ensure that developments facing uncertainty and delay, but which are otherwise viable, are not permanently lost. New ways of working are also required to ensure that Local Plans – which are vital to the supply of development land and therefore economic activity across the nation – continue to progress.

We have already seen Government take some important practical steps. Most significantly, as explained in Simon Ricketts’ recent blog, the Coronavirus Act 2020 includes measures which will enable local authorities to hold committee meetings remotely or “virtually”[1] so that decisions on applications and Local Plans can still be taken. The secondary legislation required to enact these measures has now been published and is due to be in force on Saturday 4 April. These are encouraging measures.  Some local planning authorities have already adapted and held committee meetings virtually.

MHCLG is also considering measures to extend unimplemented planning permissions. Scotland is doing this automatically – the Coronavirus (Scotland) Bill proposes a 12 month extension of all permissions that would otherwise lapse within the next six months. MHCLG could do similar in England, but if it wants to avoid further primary legislation then it could consider a procedure for developers to apply to extend permissions. These could involve:

• Temporarily altering the existing S73 regime, which currently prohibits extensions, to enable time limits to be amended. However, this would require further primary legislation and may not therefore be achievable in the short-term;
• Utilising the S97 process, albeit this would require SoS sign-off on a case-by-case basis and would therefore need significant MHCLG resource; or
• Refreshing and reintroducing the bespoke and streamlined approval procedure that was launched in the wake of the 2008 economic downturn. MHCLG should consider making this ‘automatic’ to reduce the burden on local authority resources (e.g. automatic approval of a 12 month extension for permissions due to expire by 1 April 2021).

Practitioners from across Turley have identified other potential changes which MHCLG could action including the following:

a) Advice to local planning authorities on conducting robust stakeholder and public engagement during times of lockdown and longer term social distancing, including in respect of plan-making. Our Strategic Communications team has discussed this in a separate comment piece.

b) Allow a six month extension on the submission of appeals for applications refused up to 1 March 2020.

c) Reintroduce the Section 106BA allowances – introduced in the Growth and Infrastructure Act 2013 and expired in 2016 – which enabled the modification of unviable S106 Agreements to enable swift start/restart of development activity following the downturn.

d) Introduce legislation which enables agreed Community Infrastructure Levy (CIL) payments on approved schemes to be deferred/paused where development is on hold. The current CIL Regulations do not provide for this.

e) Require all authorities to introduce CIL Exceptional Circumstances Relief to mitigate the short-term negative impact on development viability that it will have in some cases, mindful that existing CIL rates themselves cannot quickly ‘flex’ in response to the rapidly changing market conditions.

f) Encourage authorities to take a pragmatic approach to applications which:

• Prioritises resources towards the timely determination of applications and activity which will stimulate economic activity and the provision of new homes.
• Takes account of desk-based surveys where on-site assessments are not possible. This is particularly important in respect of ecology, given that the important spring survey season is currently underway, and traffic where current conditions are abnormal and therefore surveys would not be credible.
• Encourages reduced requirements for application documentation in respect of non-EIA developments, focussing upon a concise list of core documents that are necessary (with others triggered by site-specific circumstances if necessary). 

Such measures could be used in tandem with conditions which require site inspections if necessary. If they are successful, they could pave the way for more permanent streamlining and harmonising of application requirements.

g) Enable “deemed discharge” for conditions without the need for prior approval by the authority (this could exclude certain types of conditions if needed).

h) Encouraging a pragmatic approach to the use of conditions, with pre-commencement conditions applied only where absolutely necessary.

i) Explore measures which can help to kick-start economic activity, including extending the present Help to Buy arrangements and introducing a Stamp Duty Land Tax (SDLT) holiday for all transactions below £500,000.

All these measures can be quickly introduced by amending Planning Practice Guidance and/or through Ministerial Statements where policy is required.

Medium-term: preparing for recovery

When social and economic activity can resume in line with health and scientific advice, it is becoming apparent that there will be a need for a sustained period of rapid recovery. Whilst the underlying conditions for our sector were broadly positive as we began 2020, the lockdown is already having consequences that will take some time to unpick. The planning system will have an important role in supporting and boosting economic activity; particularly nationally and regionally significant projects, supporting the high street which has taken a further hit, and providing much needed homes.

The previous Government took similar steps to prioritise economic growth in the wake of the 2008/09 downturn. Many will recall the Local Growth White Paper launched in October 2010 which recognised the “…major role…” that housing could play in leading the economy back to growth, and the Laying the Foundations policy paper from November 2011 which set out a strategy to get the market moving again. The Government’s stated intention at that time was to introduce reforms which “…make businesses see planning as a reason to invest, not a disadvantage…”. This culminated in the publication of the ‘pro-growth’ NPPF in 2012.

Similar steps must be taken in the near future. Government must launch a positive and proactive campaign with the industry to highlight how sustainable development is vital to economic recovery.  This must be backed by bold action to address challenges that existed before the crisis and will need even greater effort to address – slow rates of economic growth, growing regional disparities and a widespread housing crisis. The Government was already due to publish a Planning White Paper in the spring, which will clearly now have a different and much more important context. Our key “asks” of that White Paper include the following:

1. Stimulate economic recovery through accelerated introduction of measures to attract inward investment, encourage innovation and boost job creation, such as freeports, sustainable logistics supply chains and low carbon energy and battery production. Government should also:

• Expedite publication of a bold and ambitious National Infrastructure Strategy as a key part of plans for recovery.
• Reaffirm infrastructure spending commitments such as HS2 and Housing Infrastructure Fund projects which will be essential to support a recovery in economic activity and housebuilding and the ‘levelling up’ referred to in the Budget.
• Consider greater use of enterprise zones, simplified planning zones (SPZ) and other tools (e.g. LDOs) which enable faster planning and delivery of jobs and economic growth.

2. Immediately implement a revised standard method for housing need that contributes to achieving the national 300,000 homes per annum target, optimises the benefits of major investment in infrastructure, and provides stable figures for the long term. Detailed proposals have already been put to MHCLG, including by Turley, which could be quickly introduced simply by updating the Planning Practice Guidance. The Government should then make clear the expectation that local authorities should meet housing needs.

3. Influence the national conversation about the need for accelerated development to contribute towards economic recovery and meeting housing needs. This should be a proactive public campaign, aligned with the recent focus on beauty and quality, ensuring that streamlined decision-making delivers good growth.

4. Provide the necessary resourcing to local planning authorities through recruitment, outsourcing, investing in technology and utilising the current changes to remote decision making. Planning income should be boosted through ‘ring-fencing’ application fees and greater use of Planning Performance Agreements (PPAs).

5. Ensure up to date Local Plans are in place by December 2023 as stated in Planning for the Future, but with a clear roadmap to get there and tougher sanctions including where plans are not reviewed every five years.

So while we all take steps to protect health, adapt to remote working, and balance the challenges of juggling work and care responsibilities we planners must not lose sight of the steps needed to plan for and deliver a rapid recovery that can help address both the social and economic trauma that COVID-19 is causing.

Please contact Nick Graham or Mike Best for further information.

3 April 2020

[1] Subject to secondary legislation which is to be introduced imminently by the Secretary of State.