LDOs – stop waiting for others to do the planning

In thinking about the challenge of  just how much PLANNING has been done in Britain in the last 20 years;  I think that it’s over due to consider how development management can get to be doing more PLANNING or more specifically managing, so that development gets built.

In the past 10 years councils have gone from having Development Control teams to Development Management teams – sometimes simply changing the name on the door and sometimes more successfully with a culture shift from ” What’s wrong with this scheme; is it bad enough to refuse?” to “What do we like about this and how can we bring in other ideas to solve problems and to make it better still?”

But the fact is that when nationally 89% of major applications are granted, good schemes that would contribute to housing delivery just aren’t coming forward in many parts of the country.  Many housing permissions are outline consents.  Others no longer meet the conditions that the market requires in order to successfully raise the development finance. The reasons are well rehearsed.  The Lyons report has confirmed the collective feeling in our waters about this.

So how can councils do more than they are to get managing so that development gets built?  Even the voices of the HBF are now pleading to have no more big changes to planning post elections.   Using the underappreciated tool of local development orders (LDO) seems to me to be, if not the silver bullet, then at least a convenient and efficient way to turn the planning process around where it suits specific sites without another jump to the side for the whole planning system.

Think of local development orders as a kind of enhanced planning brief or masterplan that actually delivers a locally acceptable planning permission and it becomes clearer how these fit the development process.  The big advantages are that:

  1. the material considerations relating to use or operational development for a site or area can be considered without a detailed plan having to be drawn up first,
  2. the permission doesn’t become a straight-jacket that prevents  the developer being able to respond to the current market circumstances without going back through the planning permission loop, and
  3. the council can incentivise the build out by setting a time limit on the LDO’s provisions.

Another potential advantage in putting permission (with conditions) in place before a fully designed and worked up scheme is required relates to the structure of the housebuilding market. We know that many  smaller sites, delivering fewer than 50 homes at a time, contribute a significant proportion of new homes in aggregate – especially in urban areas – but also in smaller towns and villages where the grain is such that developments of this scale is more likely to be acceptable to the existing community.  These firms have often had a local employment profile and there is evidence that they also have a slightly different take on viability to the large house builder model.

We know that there are approximately 70% fewer small house builders than there were in the 1980s. We know that the decline in numbers has at least, in part, been attributable to the difficulty in raising funds for development to proceed.  For smaller developers with shallower pockets there is huge benefit in being able to raise finance on the basis of a surer, more clearly defined planning context and not having to bear the cost going through a planning application process on spec.

What does it take to create a local development order?  There are few, if any, examples of LDOs to cover housing developments, although the 60 odd LDOs in existence (mostly in employment areas or allowing house extensions) provide good experience to learn from.  Swindon Borough Council, for example, have nine LDOs at the moment and more planned.  They can work with stakeholders and communities to reach a consensus on the scope of the LDO and go right through the legal processes in four months.

Aside from encouraging SME house builders to become more active in housing delivery, LDOs can also help to de-risk the planning process for co-operative housebuilding groups and for the custom/self-build sectors.

There will be LDOs for housing sites coming forward as a result of the government’s incentive schemes to bring forward large brownfield housing sites and housing zones.  PAS is managing a complementary project with four pilot councils who have proposed small sites (between 15 and 90 home capacity) on which to test the approach.  We will be capturing some real time experience on how these projects  with the first two pilots in Teignbridge and Welwyn and Hatfield District Councils, so that there will be less need to reinvent wheels and hopefully support more councils to be as slick as Swindon.  To this end we have created a special housing LDO we platform where we will be collecting all the comments, experiences and useful documents. You will be able to go there for more detail about the projects. We’ll advertise the address via our website in the next week or so.

LDOs will take some additional up front resources for the LPAs to develop and in the cash-strapped world inhabited by councils, this is a major issue.  When I was phoning councils up to talk about our pilot scheme, there were two frequent responses both of which deserve some thought here.

Firstly:  “We are not a negative authority – if we can, we give planning permissions.  But they simply aren’t being built out.”

Secondly: “We don’t have the resources to put into doing the work up front and then lose fee income later down the line.”

I see these two issues being linked.  Planning permissions aren’t being built out and that gives the LPAs a double (at least) problem.  The deficit in housing completions against housing need means that year on year the pressure grows to make more land available to comply with the NPPF.  Also, no new homes built – no new homes bonus for the council.  As I set out above, I think that LDOs could help with de-risking the planning end of the development process.  So maybe taking something of an invest to save approach, it’s worth councils thinking about proactively investing some money up front to create an LDO with the improved chance of a payoff when the houses get built.

Or another option: what about setting up a PPA arrangement with the landowner to deliver a LDO rather than a planning permission?  The council could negotiate a cost sharing, or full cost recovery agreement on the basis of an agreed project plan for delivery of the LDO.  In that a LDO drawn up in collaboration with the landowner or developer is something akin to a Development Consent Order, but with the advantage of having the council on board with the scheme, there is a good up-side for landowners/developers to get engaged.

The option exists to use current planning powers to open up new opportunities for delivering housing completions. Local development orders play into what we know about the structure and challenges of the house building market.  They make PLANNING much more about driving housing delivery (or place making too). LDOs are so much more about active management of the planning system:  a willingness to take a managed risk while looking towards the longer term benefits.

PS:  Regarding the “think of the application fees we will lose!” argument – worth remembering that though you won’t get the fees, you equally won’t have to do the work at the application stage – so it’s not a complete loss.