Draft Town and Country Planning (Fees for Applications, Deemed Applications, Requests and Site Visits) (England) (Amendment and Transitional Provision) Regulations 2026
(6 days, 1 hour ago)
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The Committee divided: - Ayes: 11 / Noes: 4 - Question accordingly agreed to.
The Minister for Housing and Planning (Matthew Pennycook)
I beg to move,
That the Committee has considered the draft Town and Country Planning (Fees for Applications, Deemed Applications, Requests and Site Visits) (England) (Amendment and Transitional Provision) Regulations 2026.
It is a pleasure to serve with you in the Chair, Sir John. The original draft regulations were laid before Parliament on 16 July. Following the identification of omitted text affecting the calculation of two fee categories, they were withdrawn, corrected and re-laid on 1 September.
Local planning authorities are integral to delivering the new homes and infrastructure that our country needs, and the Government appreciate fully that, to do so, they require sufficient capacity and capability. Yet for too long, local authority planning departments across the country have wrestled with significant financial pressures that have constrained their ability to recruit and retain skilled planners, invest in modern systems and make timely, high-quality planning decisions.
For that reason, the Government have invested significant sums to boost capacity and capability in local planning authorities. At the 2024 autumn Budget, the then Chancellor announced a £46 million package of investment into the planning system as a one-year settlement for 2025-26. At the Budget on 26 November last year, she announced a further £48 million of investment over three years to support local planning authorities to attract, retain and develop skilled planners over a sustained period. Of that funding, £28.8 million has been allocated to the Ministry of Housing, Communities and Local Government’s planning capacity and capability programme, equating to an additional £9.6 million per year for the next three years. That allocation will supplement existing budgets.
In total, the programme now aims to deliver around 1,325 planners by the end of this Parliament, significantly exceeding our original manifesto commitment to deliver 300 new planning officers. Wider cross-Government recruitment and investment in planning capacity and capability will increase that figure further to approximately 1,400 planners. That new funding will support both graduate and mid-career entry routes into planning, including by expanding the Pathways to Planning graduate scheme.
For local planning authorities, fees are an important contributor to resourcing requirements. Planning application fees are set nationally and are intended to cover the cost to a local planning authority of processing and determining a planning application. However, as things stand, the fees do not fully cover the costs of providing the service. Based on the most recent local government spending data for 2024-25, that has led to an estimated funding shortfall of £330 million per year, which means that local planning authorities are not adequately equipped to deliver an efficient planning service. That is why the Government acted through regulations to increase planning fees for householders and introduce fees for certain minor applications from 1 April last year, and why our landmark Planning and Infrastructure Act 2025 included powers to allow local planning authorities, subject to safeguards, to set their own planning fees through a local variation model.
The draft regulations amend the Town and Country Planning (Fees for Applications, Deemed Applications, Requests and Site Visits) (England) Regulations 2012. Their objective is twofold: first, to reduce funding shortfalls and improve the financial sustainability of local authority planning departments, which they will achieve by providing a significant and immediate increase in funding for planning application services; and secondly, to establish a more robust baseline for the operation of future local fee-setting arrangements, which will be implemented through separate regulations later this year.
Lewis Cocking (Broxbourne) (Con)
Will the new planning fees be ringfenced so that councils have to spend them on their planning departments?
Matthew Pennycook
I will address that more fully in my closing remarks, but we do expect the fees to be ringfenced. The hon. Gentleman may recall that we took powers in the Planning and Infrastructure Act to ensure that that is the case.
The draft regulations will establish that baseline by providing for a national default fee that will continue to apply unless a local planning authority chooses to set a different fee to reflect its costs.
Earlier this year, we carried out a consultation on fees for planning applications, seeking views on a proposed national default fee schedule, including in respect of the appropriate level of fees, whether structural changes should be made to specific fee categories, and the wider framework for local fee setting. The feedback indicated broad support across the sector for increasing fees, provided that the additional income is reinvested in planning application services and results in improved performance.
The Government are clear that the additional funding should support measurable improvements in performance. We expect authorities to use the additional income to strengthen their planning application services, reduce delays and provide a better service to applicants. We will of course continue to monitor performance through planning statistics and the existing planning performance regime.
In general terms, planning application fees typically account for less than 1% of overall development costs, while delays and uncertainty in the planning process can impose far greater costs on development and investment. Ensuring that planning authorities are properly resourced is therefore in the interests of applicants, communities and the wider economy. However, it is of course important that any changes to planning fees strike the right balance, ensuring that authorities can recover their costs while remaining proportionate for applicants and supporting continued investment and development. Having considered the consultation responses carefully, we think the revised schedule does just that.
Let me briefly set out the main changes made by the regulations. First, they introduce a revised set of national fees, which we refer to as a national fees schedule. Fees will increase by varying amounts across existing application categories, with the aim of recovering approximately 90% of the estimated processing costs for each application type. The increases are informed by benchmarking work undertaken by the Local Government Association and the Planning Advisory Service, which showed that every application category operates below cost recovery.
Increasing all fees to approximately 90% of estimated costs will provide a significant and immediate increase in funding for planning application services. We are not moving to full cost recovery through a nationally set fee schedule because the cost of processing applications varies significantly among authorities. A uniform national fee set at 100% of estimated average costs could therefore lead to over-recovery in some areas.
Secondly, the regulations simplify and restructure selected fee categories. This includes aligning the household fee thresholds with the medium-sized development category introduced through the national planning policy framework, and simplifying the fee bands applying to certain agricultural, minerals, waste and other operational development. These changes will make the national fee schedule clearer and easier for applicants and local planning authorities to operate.
Thirdly, the regulations introduce a standard fee of £310 for prior-approval applications that currently attract no fee. Prior-approval applications require local planning authorities to devote time and resources to their assessment, so it is right that applicants contribute towards the costs. As part of this third change, the regulations also enable the £310 fee to apply where prior approval is required for larger electricity substations. The separate statutory instrument introducing that prior-approval requirement was laid before Parliament on 30 September and comes into force on 21 October.
Finally, the regulations correct omissions in existing indexation provisions. This will ensure that mixed-use outline application fees and the new standard prior-approval fee are subject to annual inflationary increases in the same way as other planning application fees. Subject to parliamentary approval, the regulations will come into force on 8 December 2026.
To conclude, the regulations will provide an immediate increase in funding for local planning authorities, support the Government’s wider programme of planning reform and establish a stronger baseline for the future operation of local fee-setting powers. In return, applicants should expect improved performance, more timely decisions and greater certainty across the planning system—a better resourced planning system that is better able to deliver the homes, infrastructure and growth that this country needs. I commend the regulations to the Committee.
Gareth Bacon (Orpington) (Con)
It is a pleasure to serve under your chairmanship, Sir John, as always. I welcome the opportunity to sit opposite the Minister again, and I appreciate the remarks he has made. I also welcome the opportunity to speak to the draft regulations on behalf of His Majesty’s Opposition.
British house building is being buried by cumbersome and expensive regulation. Layers of protocol regulation and fiscal burdens are stifling house building and inhibiting economic growth. The industry needs relief, not red tape, so I am concerned to find the Government proposing to increase planning fees and add yet another straw to the camel’s already broken back. I have reminded multiple Ministers of the excessive costs and regulations that developers already find themselves saddled with. I will keep on doing so for as long as the Government fail to relieve the industry.
According to the Home Builders Federation, house builders already face more than £7,000 in taxes and levies, including £2,000 in landfill tax, £2,320 from the forthcoming building safety levy, £2,055 in other taxes and £985 from inflationary increases on existing charges such as section 106 agreements. Moreover, developers face more than £23,000 per property in regulatory costs, including £7,770 for building regulations, £5,700 for biodiversity net gain and £10,200 in costs linked to the future homes standard—and that is not the end. Indeed, under this Government’s watch, house builders will have seen material and labour costs reach heights of £37,000 per property, alongside costs of up to £7,000 in additional potential site-specific elements, such as nutrition mitigation requirements.
Taken together, the cumulative impact of the policy, taxation and regulatory pressures on home building means that it is so costly to build that for many companies it no longer makes economic sense to do so. This has been evidenced recently by Taylor Wimpey’s decision to stop building new homes in London. Its chief executive, Jennie Daly, attributed this decision to the fact that in London:
“Baseline viability is…fundamentally broken”.
She said that reward for development has “just evaporated” in some cases.
It is clear that the greatest barrier to unleashing a new wave of house building in England is viability. It is even clearer that the biggest damage to viability comes from state regulation and taxes. The Opposition therefore oppose efforts to increase additional up-front costs for developers. We will seek to divide the Committee on that point.
It is not just the Opposition who recognise the disproportionate impact of the policy on developers: the Government’s own impact assessment estimates an increased fee revenue of £143 million to £190 million a year if fees are increased to 90% cost recovery, as proposed by the regulations, with average undiscounted impacts amounting to costs of £141 million for businesses every year. It is also not businesses alone that are affected, with another £3 million of additional costs for householders as a result of the fee increases.
The fact that house building is already so expensive rather begs the question of why the Government are doing this. What defence can the Minister possibly present? In both the explanatory notes and in the other place, the Government have claimed that increasing fees will strengthen capacity and capability across the planning services for a more efficient and speedier system. The Minister also made that claim in his speech. Why? Local authorities all over the country are increasingly hard pressed financially, not least those that are the victims of the Government’s malicious so-called fair funding review.
It would be no surprise to find the extra money funnelled elsewhere as the Government try to keep up with funding cuts, increased taxation and social care costs. After all, the money the policy will raise is not ringfenced. In answer to my hon. Friend the Member for Broxbourne, the Minister said the Government “expect” that the money will be ringfenced and spent on planning. Those of us who have been in this place for a little while know that is classic Government-speak; it is not the same as requiring local authorities to do what the Minister wants them to do. We therefore cannot guarantee with any certainty that this change will benefit the planning system or that the money raised will even go towards planning applications.
A system that is not working does not need more barriers, such as hiked-up costs; it needs streamlining and simplifying. It needs fixing, not taxing. The Opposition would welcome a simplified system, clearer fee categories, improved planning system performance and speedier decisions, but we believe the policy does not deliver on any of those targets, because greater cost to developers means further weakened viability.
Before we seek to divide the Committee, I hope the Minister will take the time to address our concerns and answer a few of the questions they generate. Most importantly, will the Minister commit to a full review of building regulations to identify the most burdensome costs and red tape to cut before bringing into force any additional layers of expense? We on the Opposition Benches would be more than happy to help. As my hon. Friend the Member for Weald of Kent (Katie Lam) announced in Birmingham a couple of weeks ago, we have a plan that, all in all, will cut the cost of delivering and therefore buying a new home by up to £50,000.
Will the Minister also commit to a planning system that supports rather than restrains the market, by exploring how we can avoid even more red tape in the future and end the culture of regulatory layering that currently pervades Whitehall? I look forward to the Minister’s answers to those questions. I encourage all Members present to vote against this cost to business and householders, and to back British house building instead.
Matthew Pennycook
I thank the shadow Minister for his response and the questions he put to me. Before I address each of them in turn, I want to reinforce a general point that I made concerning the rationale for the regulations. As it stands, based on the most recent local government spending data for 2024-25, councils are facing an estimated funding shortfall of £330 million per year, as a result of the gap between the fees they are able to charge and the cost of processing and determining planning applications. It is entirely reasonable, on the principle of the matter, that we seek to close that gap so that local authorities are able to deliver a timely service.
The shadow Minister spoke at some length about viability pressures and the role of regulations in those pressures. I gently say to him that lots of the regulations either that we are bringing into force or that were in force were introduced by his Government—the requirement for second staircases is a good example. We recognise that developers must meet a range of costs when bringing forward development. We are acutely aware that viability pressures remain pressing in many parts of the country—London is a good example—and that they have become, in many cases, more acute over recent months as a result of the conflict in the middle east. The shadow Minister will know the statistics when it comes to the increase in, for example, building materials costs that all developers are facing.
I come back, though, to the point I made in my opening remarks. Planning application fees are typically a very small proportion of overall development costs. The purpose of the regulations is to ensure that planning application services are properly resourced so that they can process applications efficiently, because there is a cost to delays resulting from planning application services that are not efficient. I argue that by ensuring that local planning authorities can make high-quality and timely decisions we can support viability and investment, just as much as by keeping application fees proportionate.
Gareth Bacon
I do not doubt the Minister’s sincerity on that point but, to take him back to what I said in my speech, the Government expecting something to happen is not the same as their requiring it to happen. If that does not happen, what steps will the Government take to make sure that it does?
Matthew Pennycook
I will come to that, and I will answer the specific point on ringfencing as well, because I think the shadow Minister slightly misrepresented my response to the hon. Member for Broxbourne.
On a related point about viability—the shadow Minister tempts me to stray way beyond the the regulations before us—it is important to say that we consulted on the fee schedule that we are discussing. We received 173 responses to that consultation and, overall, 59% of respondents supported the proposed national fee schedule. The support included 68% of local planning authorities and 52% of developer respondents. There is, then, support out there for the fee increases, provided, as I said, that they result in an improved service.
On ringfencing, the Government are clear that planning fee income should be invested in planning application services. I slightly take issue with the shadow Minister saying that we are just relying on moral suasion to ensure that planning departments do that. The Planning and Infrastructure Act 2025 introduced a statutory ringfencing requirement to ensure that fee income is retained and applied to the delivery of the planning function. The ringfencing measures will come into force through separate regulations at the same time as the local fee-setting measures I mentioned earlier are introduced.
The ringfencing duty will apply regardless of whether fees have been set nationally or locally, so the shadow Minister can be assured that, in due course, as soon as we have commenced those regulations, the ringfencing will apply. While those provisions are not in force, the Government expectation remains that planning fee income should be reinvested into planning application services. Once we have commenced those regulations, that will not be an option for authorities.
On general planning performance, the shadow Minister will know that we monitor through planning statistics and our planning performance regime. Many of his colleagues have squirmed at their local authorities being put on to that performance regime for not making timely decisions and not performing as required. We will continue to monitor where we need to intervene using the powers available for us in respect of individual local authorities.
To conclude, the regulations are a key step towards improving local planning authority resourcing, thereby enabling faster decision making, higher service standards and stronger overall performance across the planning system. As I have said, they will facilitate an immediate funding uplift for all local planning authorities and, by providing for a new national fee schedule, provide a more robust baseline for the operation of future local fee-setting arrangements, which we will debate in respect of a future statutory instrument. A fast, effective and reliable planning service is essential to support housing delivery, economic growth and the provision of infrastructure. The regulations will ensure that local planning authorities are sufficiently resourced to determine applications in a timely and high-quality manner. I commend them to the Committee.
Question put.