Why planning reform is essential if we are to solve the UK’s housing crisis

In December the House Builders Federation (HBF) published its latest Housing Pipeline report, showing that the number of planning permissions granted for new homes has continued to decline and is predicted, in coming years, to fall to record-low levels[1]. The UK is one of the most expensive places to buy or rent a home with among the fewest dwellings per capita in Europe and over 50% of people in the UK live in households that spend more than 40% of their income on housing costs.[2] It is no surprise that housing is high on the priority list for all political parties, yet successive governments have failed to solve the problem, setting, but not delivering targets to build new homes.

Orbit is a not-for-profit organisation, committed to building quality, affordable homes and thriving communities. For over 50 years we’ve been a force for positive change, investing in our communities and working to deliver over £100 million in social value by 2025. We believe everyone is entitled to a good quality home that they can afford, in a place they are proud to live. As one of the UK's largest developers of affordable housing, we have ambitions to build over 5,700 new homes by 2030 and work closely with Local Planning Authorities (LPAs) to deliver this vision. However, the system is failing, a lack of capacity within LPAs, political interference, and inconsistency in decisions mean that planning permission is rarely delivered on time. Additional costs are incurred, and decisions frequently get challenged and the high level of risk means that some smaller businesses are deterred from entering the market. If we are to meet the demand for new homes, planning reform is essential: -

Affordable housing should be given enhanced status as crucial infrastructure within the planning system.

The UK's social housing shortage is a severe and deeply rooted problem. Recent research shows that there is a need for 145,000 affordable homes each year, yet only 52,000 were built in 2020/21, leaving a shortfall of almost 100,000. In 2022, Lichfields analysed the impact of delays in housing supply and the corresponding economic consequences across 11 LPAs. Their findings revealed that the delays in providing 70,000 homes in these LPAs, with an estimated construction value of £10.14 billion, would result in the loss of thousands of direct and indirect jobs, with an annual economic output of £1.9 billion (GVA). Additionally, the Local Authorities would miss out on a significant amount of Council tax, amounting to nearly £146 million per year[3]. The socio-economic benefits of affordable and social housing are clear, therefore, planning policies should prioritise the development of affordable homes, and applications should be expedited through the decision-making process.

Increase capacity and resources of Local Authority planning teams.

The government has acknowledged the pressing need for more resources to support LPAs. According to a survey of 108 local planning authorities, 80% have reported a shortage of officers to address their workload.[4] The recent announcement of additional funding for the Planning Skills Delivery Fund in the Autumn Statement is a positive step forward. However, the main concern still lies in the loss of experienced planning officers within LPAs. Many local authorities lack the necessary knowledge and expertise to handle complex applications. While the funding for training new planning officers is appreciated, it is unlikely to solve the capacity issues in the near future. To tackle this problem, one potential solution could involve ring-fencing planning fee increases and allowing developers to contribute towards funding independent consultants employed by LPAs. This approach would be instrumental in ensuring the efficient processing of planning applications within specified timeframes.

Further delegation of application determination to planning officers.

The overall strategy in planning is determined by planning committees, but the authority to assess and make decisions on applications should be given to officers. Within the English planning system, community representation is a crucial principle that aims to ensure a diverse range of voices are heard and prevent powerful stakeholders from exerting influence. This approach guarantees that decisions consider the well-being of all residents. Planning committees have a vital role in upholding this principle by developing the overall strategy for an area and ensuring it is relevant and sensitive to local needs. However, when it comes to Reserved Matters applications (RMA), the responsibility to evaluate and determine compliance with national and local policies should be delegated to planning officers who possess the necessary technical expertise. This streamlined process would reduce the likelihood of legal challenges arising from inconsistencies with planning policies at the national or local level.           

The National Planning Policy Framework should be amended to include a standardised S.106 Mortgagee in Possession clause.

The Section 106 Mortgagee in Possession clause is included in every Section 106 where there is affordable housing. The Clause ensures that if a Registered Provider (RP) defaults on loan repayments, the affordable homes they manage are still provided. Each LPA handles this clause differently, which causes delays and extra costs. Having a consistent national rule would free up resources allowing planners to focus on other tasks.

The potential for transformation in the UK’s housing landscape is immense. The ‘size of the prize’ is not just about solving the housing crisis, but also about creating thriving communities, boosting the economy, and improving the quality of life for countless individuals. The journey towards this future may be challenging, but with the right reforms and a collective effort, it is a prize well within our reach. We must seize this opportunity and make strides towards solving the housing crisis and other development-related challenges. The future of housing in the UK depends on it.

If you're interested in learning more about the CBI's work on planning policy or would like to join the planning policy working group, please get in touch with Nicky Williams at nicky.williams@cbi.org.uk.

[1] HBF: International Housing Audit

[2] HBF: Housing Pipeline Report - Q3 2023

[3] Lichfields: Counting the cost of delay: The economic impact of Local Plan delay to housing delivery

[4] RTPI (2022) Planning Enforcement Resourcing: The scale and nature of resourcing challenges faced by enforcement teams