Town and Country Planning (Fees for Applications, Deemed Applications, Requests and Site Visits) (England) (Amendment and Transitional Provision) Regulations 2025
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Baroness Taylor of Stevenage
That the Grand Committee do consider the Town and Country Planning (Fees for Applications, Deemed Applications, Requests and Site Visits) (England) (Amendment and Transitional Provision) Regulations 2025.
Relevant document: 15th Report from the Secondary Legislation Scrutiny Committee
The Parliamentary Under-Secretary of State, Ministry of Housing, Communities and Local Government (Baroness Taylor of Stevenage) (Lab)
My Lords, the Town and Country Planning (Fees for Applications, Deemed Applications, Requests and Site Visits) (England) (Amendment and Transitional Provision) Regulations 2025 were laid before the House on 13 January 2025. These draft regulations increase planning fees for householder and other applications. This will provide essential extra funds to local planning authorities and improve the efficiency of our planning system. This is vital to speed up decision-making and support the Government’s plan of building 1.5 million homes and delivering economic growth.
I will start by providing some context and background to these regulations. Currently, the income from planning fees does not cover the cost to local planning authorities of determining applications. Overall, there is a national funding shortfall of approximately £362 million, the burden of which is borne by the general taxpayer. By increasing fees for applications with the greatest funding shortfalls, we can cover a greater proportion of the costs associated with processing these applications.
It is estimated that these fee increases will generate an additional £56 million annually for local planning authorities. This is a substantial sum that will significantly enhance the capacity and efficiency of our planning services.
We consulted on proposals to increase fees in July 2024. Respondents were generally supportive of our proposals, recognising the need to boost the funds available to local planning authorities, if this leads to improvements in planning performance. Noble Lords will realise that the Local Government Association has long campaigned for increases in planning fees.
I now turn to the detail of the regulations. First, they increase the fees for householders who want to enlarge, extend or alter their home from £258 to £528 for a single house and from £509 to £1,043 for more than one house. I recognise that some may consider that, during times of economic pressures for householders, we should not be increasing planning fees. However, in light of the clear funding shortfall that exists, it is right that applicants should contribute more towards the costs incurred by local planning authorities in delivering a planning service, rather than the taxpayer funding it.
We estimate that, in most cases, the cost of the planning application is less than 1% of overall development costs. Furthermore, some householder development can already be undertaken through permitted development rights and so would not be subject to a planning application fee.
The regulations also increase fees for a range of other application types, which currently are set too low. They increase the planning fees for prior approval applications from a flat fee of £120 to £240 and from £258 to £516 where they include building operations, and for the change of use of commercial buildings to residential uses from £125 per dwelling to £250 per dwelling. The regulations also increase the fees for discharge of conditions from £43 to £86 for householders and from £145 to £298 for all other applications, including discharge of biodiversity gain plans.
Finally, the regulations introduce a new three-tiered fee structure for Section 73 applications that are used to vary or remove conditions on planning applications. This reflects the higher costs associated with Section 73 applications on major developments. The regulations also make corrections to two fees that were erroneously set too low when the fee regulations were last amended in 2023. These regulations do not impose a fee on listed building consents, which continue to incur no fee.
I want to be clear that the Government expect local planning authorities to use the income from planning fees on their planning application service, so that they can build up their capability and capacity and improve performance. We know that this is what applicants expect in return for paying higher fees. In addition to these fee increases, the Government have committed to a £46 million package to enhance the capacity and capability of local planning officers. This includes recruiting 300 additional planners. I recognise that there is no planning officer tree where we can go and pick them; this is going to take a little time.
The Government have also announced their intention to introduce a measure in the planning and infrastructure Bill that will enable local planning authorities to set their own planning fees to meet their costs. This comprehensive approach ensures that local planning authorities are not only better funded but better equipped to handle the demands placed on them.
To summarise, while we take forward our measures for local fee setting, these regulations will provide local planning authorities with an immediate boost in resourcing. This will enable local planning authorities to budget with more confidence and be better equipped to deliver the housing and growth that our country needs. I hope that noble Lords will join me in supporting the draft regulations, which I commend to the Committee.
Baroness Thornhill (LD)
My Lords, the Liberal Democrats wholeheartedly support this rise in planning fees, so I apologise now for repeating some of the very good points that the Minister made. She should not expect me to keep saying that for ever, but I do on this occasion.
We have all known for years that planning departments are underfunded; they are not covering their costs, and the position is simply unsustainable. I am interested that the Government have decided to go for an interim position rather than a full cost recovery. I can kind of understand their wanting it to be balanced, but I wonder whether the work has been done on what will be needed to get to that position, which we believe we should get to.
As the Minister said, planning departments have long been subsidised by the taxpayer through council tax; they have been bearing the burden of the costs of planning applications, which do not directly benefit them—particularly for individual householder applications. It seems completely illogical that everyone should contribute to an individual’s home improvements, which usually add value to just their property.
We welcome the change of emphasis from the last Government, who did at least increase the fees in December 2023—but I always felt that their agenda seemed to be to keep fees down. I note that a Conservative Member of Parliament in the other place described the rise as “eye-watering”. My riposte is that he clearly does not know what builders are charging these days, as the planning fee, which is an essential tool to getting the development right, is but a tiny fraction of the total cost. Two friends have recently had extensions to their homes, and when I hear how much they spent on the projects as a whole, I feel that £528 is probably the lowest in the grand scheme of their costs.
Major housebuilders are demonstrably making money, and their applications take the most time and expertise, so a rise to begin to cover costs seems entirely reasonable—more so given the financial challenges that local government faces. Some of the pre-app talks and site visits can be really extensive and time consuming.
If we have a concern regarding sustainability, it is about the recruitment and retention of planners. The ambition to recruit 300 new planners is laudable and welcome, and it seems churlish to point out the fact that it equates to just one planner per authority—but that is the reality. The Home Builders Federation pointed out, through a freedom of information request, that 80% of local planning authorities are operating below capacity.
The recruitment and retention problem is exacerbated by differential salaries. The best young graduates appear to be snapped up by the major housebuilders, as they can afford to pay significantly more than local authorities. Especially in areas of high house prices, that can make recruitment even more of a challenge.
The Minister will know that some local authorities are working together to look for solutions by co-operating rather than working against each other, competing for the same people and even poaching. Career opportunities can be better for an individual if they can work across several councils, especially with smaller districts.
The RTPI has pointed an important fact—that there is a lack of robust data on how many planning officers we have in each region and local planning area. Accurate data would help to pinpoint where resources and training are most needed, so perhaps the Minister could give us some more detail on the changes to the Pathways to Planning programme.
We think that all these increases are necessary and overdue, and accept that it is sensible to tie this to an annual increase. The fact that previous rises were not index-linked was part of the problem. The gap between the cost of processing an application and the fees charged has widened significantly over time.
There has been some talk of monitoring and ring-fencing of funds. Because of the parlous situation of local government funding, will local authorities rob Peter to pay Paul? In my experience, most councils will honour the intentions of government when money is handed out for specific needs, and we see no reason why that would not be the case here, without the need to mandate it or introduce checks. This Government are committed to decentralisation, so it is essential to let go and trust local authorities. Trying to micromanage budgets could be unnecessarily overbearing. We believe that councils should make all their own spending decisions. The Government already have mechanisms in place to monitor planning performance.
The Minister was right to point out that councils get no fees from the massive extension to permitted development rights, yet when there are problems with those conversions, the planners are drafted in to give advice and help to put things right. The key is that if there had been a need to obtain planning permission, the issues would have been sorted out right at the beginning. Will the forthcoming planning Bill be more helpful in this regard? We hope so, and in particular we look forward to allowing local planning authorities to set their own planning fees to meet their costs. A degree of flexibility to adjust to local circumstances and needs is essential.
Baroness Taylor of Stevenage (Lab)
I am very grateful to noble Lords for their helpful comments and overall support for this increase in planning fees. As I said, it is something that the Local Government Association and the local government community have campaigned on for some time. Before I go into some of the other specific issues, I too am glad that my noble friend from the Department for Education is here; the issue of skills and the development of skills in planning is critical to driving that key mission of delivering the 1.5 million homes that we know are desperately needed in the country.
The noble Baroness, Lady Thornhill, raised the sufficiency of the fee increase. These increases have been targeted to those applications with the greatest funding shortfalls, and that is why this interim measure has been structured in this way. Those applications constitute the greatest proportion of applications received by local planning authorities so, as I said in my introduction, this will provide them with an immediate and significant boost, then the planning and infrastructure Bill will set the wider framework when we come to it. As the noble Baroness said, planning fees represent only about 1% of development costs and we do not consider that burden disproportionate.
Both noble Lords raised the issue of capacity and capability in the planning system. It is worth repeating that we have put together a £46 million package of investment. My noble friend Lady Smith of Malvern set up Skills England so that we can try to attract more people to be planners, and that funding will provide the recruitment and training of 300 additional planners and the development of the skills needed. We have already recruited a cohort of around 20 senior built environment professionals, across a range of specialisms, to work directly with and advise local authorities, and with Homes England as our delivery partner. We are also developing a wider programme of support, working with partners across the planning sector, to make sure that local planning authorities have the skills and capacity that they need. I am very pleased that the Construction Industry Training Board has also stepped up and put some money towards this project.
The noble Baroness, Lady Thornhill, mentioned that accurate data is needed and asked me for an update on Pathways to Planning. We fund the Local Government Association’s Pathways to Planning and, on 27 February, we announced an allocation of £4.5 million for the Local Government Association’s initiative to fund salary bursaries for new planning roles in councils. I hope that gives her some indication of where we are going with that.
The noble Baroness mentioned ring-fencing. We are not specifically ring-fencing planning fees, but we have been clear that we expect the income from planning fees to be retained and directly invested in the delivery of planning application services. Ring-fencing will be considered as part of the longer-term plans that will enable local planning authorities to set their own planning fees, but the noble Baroness is quite right that, as local authorities face a difficult financial position at the moment, they should have the flexibility to decide where their funding is going.
The noble Baroness also mentioned permitted development rights. We know that national permitted development rights play a role in the planning system, but we acknowledge that there has been criticism of them, particularly those that enable a range of commercial buildings, such as offices, shops and agricultural buildings, to change use, including to residential use. There have been some good examples of that, but there have also been some pretty poor ones. We continue to keep permitted development rights under review.
The noble Lord, Lord Jamieson, raised the important issue of why this increase is focused on householders. We are increasing the fees for householders because these have the greatest funding shortfalls, as I said. The fees for major applications are estimated more closely to cover the costs to local planning authorities. It is not possible to increase fees for developers above cost-recovery levels in order to cover the costs of other applications. That is the reason for this measure. The forthcoming planning and infrastructure Bill will enable planning authorities to set their own planning fees, but we have to take action now to address the funding shortfalls. To support our measures to enable planning authorities to set their own planning fees, we will undertake a benchmarking exercise to establish the robust baseline that we need for full cost recovery of all planning fees.
The noble Lord mentioned the key issue of small builders and medium-sized enterprises. We recognise the need for a diverse housing market sector that can respond to local needs. SMEs are an indispensable part of our housebuilding sector. We know that they have a vital role in making the housing market more diverse and resilient and contribute to housing supply by building out the majority of small sites. I have had great personal experiences—as I am sure both noble Lords have had in their areas—of SMEs making a big contribution.
Through our planning reforms, we are committed to ensuring that the right support is in place for SMEs, and we have engaged extensively with the sector to better understand existing challenges. On 12 December last year, we published the revised NPPF, which makes clear the necessity of ensuring that sufficient small sites are made available to support SME housebuilders and to better enable authorities to support that community-led development. We are committed to strengthening small sites policy and providing additional support for SME housebuilders with further measures later this year.
Planning performance is a key issue, as mentioned by the noble Lord, Lord Jamieson. How do we ensure that increased fees result in better performance by local authorities? In return for increasing planning fees, we expect local authorities to invest more in their planning services to deliver better performance. We will continue to monitor the performance of local planning authorities through the planning performance dashboard and quarterly planning statistics. The planning performance regime ensures that underperforming local planning authorities are held to account; it is an important way of making sure that that happens.
The noble Lord referred to the new NPPF and to simplification and clarity in the planning system. It is a complicated system—I understand that. We attempted to simplify the system with the NPPF, and we will continue to look at what further measures are necessary. When we get the planning and infrastructure Bill, we will hopefully be able to clarify the system further for everybody who needs to use it. If I have not covered any points, I will look at Hansard and reply in writing.
In conclusion, the proposed increase in fees is a necessary and timely measure. It addresses a critical funding shortfall faced by our local planning authorities and will help provide them with the resources they need to deliver improved services. This will benefit householders, businesses, developers and, ultimately, all of us, as the economy grows and more homes are built. I hope the Committee will welcome these important regulations.