Town and Country Planning (Fees for Applications, Deemed Applications, Requests and Site Visits) (England) (Amendment) Regulations 2023

Motion to Approve

Moved by

That the draft Regulations laid before the House on 20 July be approved.

My Lords, these regulations were laid before the House on 20 July 2023. They amend the town and country planning regulations of 2012 and deliver on our commitment to increase planning application fees by 35% for major applications and 25% for all other applications. Significantly, they also introduce an annual inflation-related increase so that fees do not lose their value in the future. The measures in the regulations will provide much-needed additional income to local authorities, and we expect them to invest this additional income in their planning services to improve the speed and quality of their decision-making.

I will start by providing some context and background to these regulations. We last increased planning fees in January 2018. Over the last five years, the costs and demands on local planning authority budgets have increased. Currently, the income from planning fees does not cover the cost to local planning authorities of determining the applications. The cost of the planning application service is around £675 million annually, but, overall, there is a funding shortfall of approximately £225 million. The burden of this funding shortfall is currently borne by the general taxpayer.

It is therefore vital that we increase planning fees to reduce this funding shortfall and to create greater financial sustainability for local planning authorities. With our fee increase, local planning authorities will be able to use the additional income to procure more resources and therefore provide an improved service to applicants. This will benefit householders, businesses and developers, and ultimately all of us, as the economy grows and more homes are built.

We consulted on proposals for a fee increase in February this year. Respondents were generally supportive of our proposals, recognising the need to boost the funds available to local planning authorities, particularly if this leads to improvements in their planning performance.

I now turn to the detail of the regulations. First, they introduce a national fee increase of 35% for those major applications and 25% for all other applications. This means that householder applications will increase by 25%, from £206 to £258. The maximum fee for the largest and most complex applications will rise by 35%, from the current £300,000 to £405,000. The regulations also introduce an annual inflation-related increase in fees from 1 April 2025. The increase will be at the rate of the consumer price index from the previous September, capped to a maximum of 10%. This new measure will ensure that fees do not lose their value in future, and it has been widely supported by the sector.

In addition, the regulations remove the existing fee exemption, which allows applicants, in certain circumstances, to submit a second application without paying a fee. This is commonly known as the “free go”. By removing this exemption, local planning authorities will now be able to charge for repeat applications, which are a known demand on resources.

My Lords, I shall speak briefly on the Motion to approve this regulation. I welcome it and support it. I remind the House of my registered interest as chair of the Cambridgeshire Development Forum. A number of people in the development community to whom I have spoken thoroughly endorse the view that local planning authorities are underresourced and that there is a need to secure additional resources for them. They welcome the fact that there is to be a significant increase in planning fees, but also that there is to be an annual indexation. I think that gives some certainty to developers, as well as confidence to local authorities.

My noble friend described the proposals very well and referred to some of the issues. I will pick up on three of those issues, and I would be grateful if she would either respond to them or perhaps even take some of them back to the department for further work.

First is the question of ring-fencing. In government, we have been resistant to the idea that local authorities should be too constrained in how they spend their money but, as my noble friend said, the provision of these fees to local authorities for development management purposes is in statute. However, since there is a significant gap, presently of £225 million, between the cost of planning services and the revenue from planning fees, there is a risk that, as planning fees and the resulting income are increased, local authorities may take the opportunity to reduce the subsidy they presently give to planning services. That is neither in our interests nor what this planning fee increase is intended to secure.

As illustrated in the impact assessment, through monitoring and evaluation of this, the department has an opportunity to see in the data returns from local government whether an increase in income from planning fees is leading to an increase in expenditure on development management. That is what we are looking for. I hope the department would take action if local authorities used the increase in income to reduce their subsidy and we did not see the improvement in service that we are looking for. Through the digitisation in the levelling-up Bill, which is in the other place at the moment, and the efforts being made to require local authorities to undertake their work expeditiously by reducing the planning guarantee, which is very welcome, I hope we see an improvement in those services.

My second point is about the so-called “free go”. I am not sure that many developers understood—certainly, I could not find much evidence for it—the proposition that any significant number of them used the mechanism of a second application, with no fee being charged, to escape the cost or complexity of an original application. I am not sure I understand why it is thought that they would do this to any great extent, but let us say for the sake of argument that, as this goes ahead, we should at least look at the consequences. Arguably, one consequence will be that, where a new fee is to be charged on a new application, if there is a problem—maybe quite a modest one—with the original application, instead of withdrawing the application and making a new one, the developer might seek to persist with the original one and, if necessary, go to appeal. We should check very carefully whether this leads to a reduction in the number of withdrawn and new applications but an increase in the number of appeals, because that does not help developers, the Planning Inspectorate or local planning authorities.

Thirdly, I ask the department to continue working positively with the development community on developing planning performance agreements and service level agreements with other statutory consultees. If we are to move forward on major developments, we need them not only to be resourced, and for developers to understand and accept that, but for developers to feel that they have to respond on a timely basis with a service level that can be relied on. Planning performance agreements can do that. There have been problems— I will continue to correspond with my noble friend the Minister and my noble friend Lady Scott of Bybrook about these issues and make some suggestions about how we can improve PPAs—but we should not confine PPAs just to local planning authorities.

There should also be service level agreements, for example, with highways authorities and others because they are central to the process. Highways authorities look at this planning fee increase and say, “It’s all very well for local planning authorities, but we don’t get anything out of that”. Service level agreements and planning performance agreements could well encompass some financial compensation for other statutory consultees if they do their job according to a service level agreement, but it needs to be very clear what the statutory bodies are being committed to and that there will be sanctions and, if necessary, the return of fees if it is not complied with, just as the planning guarantee does for local planning authorities.

All told, I am very glad to have the opportunity to welcome these government regulations.

My Lords, I remind the House of my relevant interests as a councillor and a vice-president of the Local Government Association. I thank the noble Baroness, Lady Swinburne, for her detailed explanation of the content and purpose of the changes proposed to planning fees. She obviously thought that at least someone in the Chamber today would raise the fundamental concerns about full cost recovery; I will raise that issue because it is vital that it be considered.

There are two big issues of principle to raise, the first of which is why planning fees are set nationally for England. We have spent many months in this Chamber discussing levelling up, and part of that was a discussion about devolution to local areas of England. Surely, if we are serious about devolution, one aspect would be to devolve responsibility to set fees and charges for planning locally, as indeed it is, I think, for nearly every other fee and charge that a local authority can levy. The Government worry that varying fees will lead to inconsistencies across the country, but that is the very essence of devolution: that local fees are set according to the area in which they are made and the area a council represents. I suspect that there must be varying costs to planning applications—for instance, in London boroughs compared to some other parts of the country where costs are not as high.

My second major concern is the failure of these proposals to enable full cost recovery. The Government’s own assessment estimates that, currently, council tax payers are subsidising the planning service to the tune of £225 million a year. For me, it is totally unacceptable that council tax payers, who are often very hard pressed, are funding, for example, major developers who are making vast annual profits. The cost of a planning fee against the total cost of even a so-called minor development is very small as a proportion of the total, so surely full cost recovery must be not only fair but justified in not requiring council tax payers to subsidise developers. These regulations provide the opportunity to remedy that unacceptable situation, so perhaps the noble Baroness can think again about not enabling full cost recovery.

Is it not to do with the removal of the “free go”, which I think is worth about £25 million in itself? However, the other changes, not just the fee changes, are the reason.

I thank the noble Lord; that probably is the explanation. However, it would be good to hear the Minister to confirm that.

The issue I still have is that if we do not have full cost recovery, local planning authorities will not be able to appoint all the planning officers that they need to provide an efficient and effective service. We know that the Local Government Association and other professional bodies have indicated that 58% of councils overall and 83% of county councils have trouble filling planning posts, and the RTPI reckons that one in 10 planning posts are currently not filled. Therefore, unless the fees are increased more than is proposed here, that challenge will remain, which will then lead to a less efficient and effective planning service. I hope the Minister will be able to respond to that, because it is at the heart of what is proposed today.

The other significant issue I have is with the way the planning guarantee works in practice. Of course, it is right to have a requirement to fulfil confirmation of planning applications in a timely way, but the starting point of a planning guarantee is that an application is “valid”. This can mean that the applicant has supplied the relevant information, but it does not mean that the content of the information is of the necessary standard. Herein lies the problem.

I have personally seen major applications that have done a cut and paste job—for instance, on a traffic assessment—from another application in another part of the country and put it into a major planning application; it was a commercial planning application, as it so happened. It was therefore valid in the sense that a traffic assessment had been included, but the content of that traffic assessment or any other part of the planning application had to be resubmitted because it was failing in what it should have done. If the planning guarantee is to be meaningful, it must surely be a requirement not only that an applicant fulfils the tick-box of having put in all the relevant parts of an application but that the content of those elements of a planning application are fulfilled properly. Again, I would like to hear from the Minister how that can be resolved, because some applicants play games with the planning process and game the service in that way.

I support annual indexation. That is a positive move by the Government which I welcome. It does, however, set in stone the subsidy from local authorities to the local planning service, and that has to change, because it will mean that council tax payers are subsidising the service for ever.

The only other point I wish to make is about the removal of the “free go”. That is a good move, and I am pleased that the Government are doing it. Again, there was a bit of gaming going on by some planning applicants to put in an application as a trial, see what happened and put in a free go when they thought they knew which direction of travel would be acceptable. So that is right. If we are going to have an efficient and effective planning service, the requirement on the applicants as well as those determining the application has to be of a level playing field of honesty and trust. With that, I look forward to what the Minister has to say and urge her to think again on full cost recovery.