Planning policies: implementing sustainability

Flexibility is the best policy

13 March 2020

Sustainable development in a market economy requires trade-offs to ensure the needs of business and planning are balanced, writes Tony Mulhall

Reference to sustainable development is frequently made as if it were a discrete and absolute measure. In reality, it is a concept with economic, social and environmental dimensions and, more recently, a cultural one – all having their own measures, some of which are not easily comparable. Trade-offs must be made between these in pursuing an overall goal in very different places. Furthermore, in creating sustainable communities, governments increasingly rely on the private sector to provide more public benefits through the planning system. Achieving this in a market economy is about realising planned objectives while maintaining the business case for development.

All 167 countries that have signed up to the New Urban Agenda have committed to pursue its aims, embracing UN Sustainable Development Goal (SDG) 11, ‘Make cities and human settlements inclusive, safe, resilient and sustainable’. The development planning regulatory system is one of the main mechanisms through which governments implement this. The Office for National Statistics, for instance, is now tracking progress towards meeting these goals in the UK, and most other signatories are setting up similar monitoring systems.

England’s National Planning Policy Framework (NPPF) was originally published in 2012. A significant revision was published in 2018 with minor amendments in 2019. Through the different versions is woven the golden thread of sustainable development, aligning them with SDG 11 – meaning that, when planning decisions are made, they are done by reference to the NPPF’s entire content.

Keeping up standards

What standards are necessary to ensure that all the objectives of this SDG are met? Do the same standards apply internationally? Do they even apply across a single country? If other standards need to flex to maintain progress, which should they be, and how is this to be legitimate and transparent?

Because they are specific to their location, sustainable development policy objectives are often difficult to compare. But expectations for housing space represent something to which almost everyone can relate. Although certain countries or regions have residential space standards, others do not – which means the size of dwellings is determined by reference to market norms that reflect the availability of space and cultural acceptance of dwelling sizes.

The average size of typical accommodation in 2010 in the national housing markets of 4 developed regions – the USA, Germany, the UK and Hong Kong – ranges from floor areas of 45m2 in Hong Kong up to 232m2 in the USA. Germany and the UK were fairly similar at 94m2 and 90m2 respectively. But these metrics are not fixed; in the 1950s the average new house size in the USA was 111m2, that is about half the current size. Even within these national characteristics there may be considerable regional and urban variation. For example, in the UK, accommodation size norms that are acceptable in central London may be unacceptable in a provincial city.

Other considerations also have an impact on size. Increasingly stringent standards to improve socio-economic conditions or to mitigate social or environmental concerns usually have implications for construction costs and the land area required for development, and ultimately affect land values. Whether an adjustment in land prices takes place may depend on how prescriptive and non-negotiable these standards are.

Although national planning policy sets headline criteria for sustainable development, many of the detailed requirements are set at local plan level. This results in considerable differences and latitude for interpretation, resulting in uncertain outcomes in decision-making.

Affordable housing obligations

Countries are increasingly introducing planning policies for provision of adequate affordable housing as part of market housing developments. Some jurisdictions, such as France and many US states, set a fixed, mandatory proportion to be achieved through local plans.

The UK, which operates a discretionary planning system, instead leaves the level of affordable housing to the local authority based on evidenced need. It is in the application of this policy that the interplay between regulatory policy obligations and the land market can be observed. It also clearly demonstrates the trade-offs that occur between the social, environmental, economic and cultural objectives of the policy.

UK government policy from 2012 to 2018 has relied on viability testing to ensure that planning obligations, including affordable housing, are not set so high as to stop development being viable. The recent changes to the NPPF have sought to rebalance policy to ensure that objectives such as affordable housing are properly elaborated in the plan-led system and are not squeezed out through the normal operations of the land market.

In England, this plan-led system operates under section 38(6) of the Planning and Compulsory Purchase Act 2004 on the principle that decisions on planning applications should be made in accordance with the adopted development plan, unless there are other material considerations that indicate otherwise. One such consideration in adopting and implementing a development plan is national planning policies.

In accordance with the UK government’s 2012 planning policy, benchmark land value was a key metric in viability appraisals

Nevertheless, the system leaves considerable flexibility and opportunity for local interpretation in implementing these general requirements. Planning decisions are made on a particular application’s merits, which means taking into account what is relevant to the decision and omitting anything immaterial. There is considerable discretion for decision-makers who, ultimately, are elected members.

The view from the courts

The weight to be attached to a material consideration is a matter for the decision-maker, subject to public law review. Needless to say, the courts have given further guidance on this.

In Tesco Stores v Secretary of State for the Environment and West Oxfordshire District Council [1995] 2 All ER 636, Lord Hoffmann stated: ‘The law has always made a clear distinction between the question of whether something is a material consideration and the weight it should be given. The former is a question of law and the latter is a question of planning judgement, which is entirely a matter for the planning authority. Provided the planning authority has regard to all material considerations, it is at liberty (provided it does not lapse into Wednesbury irrationality) … to give them whatever weight the planning authority thinks fit or no weight at all’, where a decision is Wednesbury irrational if no reasonable person acting reasonably could have made it. The fact that the law regards something as a material consideration therefore involves no view about the part, if any, it should play in making decisions.

Further clarification on application in practice was given in Tesco Stores Ltd v Dundee City Council (Scotland) [2012] UKSC 13, where Lord Reed said: ‘Although a development plan has a legal status and legal effects, it is not analogous in its nature or purpose to a statute or a contract. As has often been observed, development plans are full of broad statements of policy, many of which may be mutually irreconcilable, so that in a particular case one must give way to another. In addition, many of the provisions of development plans are in language whose application to a given set of facts requires the exercise of judgement.’

In accordance with the UK’s 2012 planning policy, benchmark land value was a key metric in viability appraisals. The level at which this was determined, based on comparable market evidence reflecting planning policy considerations, strongly influenced the extent of developer contributions obtainable, including those for affordable housing. In effect it determined the trade-off between fulfilling one sustainable development objective and another, balancing the social good of affordable housing with the economic one of maintaining competitive returns for developers.

In a postscript to a judicial review decision on Parkhurst Road Ltd v Secretary of State (2018) EWHC 991 (Admin) on the matter, Mr Justice Holgate commented on the tension between the development plan and the land market. When estimating a benchmark land value for a site, the application of the market evidence should ‘reflect’ and not ‘buck’ relevant planning policies, he said, including those for affordable housing.

On the other hand, the proper application of planning policies should be ‘informed by’, and not ‘buck’, an analysis of market evidence that reflects those policies, or where appropriate, is adjusted to do so. Mr Justice Holgate went on to say that realism is needed when these matters are taken into account in decision-making. So, a judgement may need to be made on relaxing one or more planning requirements or objectives where that would render a development on the site in question non-viable according to a viability case using land values that have adequately taken planning policies into account. The policy context has changed since Parkhurst Road, with less emphasis on the economic returns to developers and landowners. The principles nevertheless bear remembering.

Although the law and national policy allow for flexibility at local level in formulation and application, it is not intended that local planning authorities take decisions that undermine the objectives of their plans. What is intended is that this way, over time, the land market will adjust to factor in the costs of achieving the planning policy’s aims.

Tony Mulhall MRICS is associate director, professional standards, land, at RICS

Further information

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