Planning and Infrastructure Bill

Debate between Baroness McIntosh of Pickering and Baroness Thornhill

Committee stage
Thursday 4th September 2025 Lords Chamber

[Baroness Thornhill (LD)]

My Lords, I shall speak to my succinct and simple Amendment 94G, and in doing so draw attention to an issue—planning fees—that might seem a bit techy on the surface and perhaps even boring, but in reality strikes at the very heart of fairness, opportunity and the future of our housing market. I recognise and acknowledge that this Government are trying to address the concerns of SME builders in different ways; thus I believe that this amendment is in line with their thinking. It seeks a simple fix to a gross unfairness within the planning fees regime.

The reality is that the way our planning fees are currently structured disproportionately penalises the very people we need most—the small and medium-sized enterprise builders, the SMEs who once formed the backbone of housebuilding in this country. Our high watermark was the 1960s and 1970s, when SMEs delivered almost 50% of our homes. But now, there are just 2,500 SME builders, down from just over 12,000 in the late 1980s.

When the large developers apply for planning permission, they can absorb the cost of these fees—dozens, or even hundreds of units. For them, the fee for a major scheme is just a fraction of their overall margin. It is, if you like, just one more line on a long spreadsheet. But for the SME builder, often working on only one site at a time, sometimes building just a handful of homes, usually locally in the community where they live, the same planning fee represents a very different calculation. Proportionally, it is far higher—sometimes eye-wateringly so—relative to the potential return. For some, it can make the difference between a scheme being viable or never getting off the ground.

Let us not forget that many SME firms operate on tight margins—it is just a fact of the market today—and have limited access to capital. They do not have the balance sheets of the volume builders, nor teams of in-house planners and consultants to smooth the path. They are nimble, creative and often willing to take on small and difficult sites—precisely the kind of brownfield or infill plots that larger developers might overlook. In that sense, they perform a vital public service, delivering homes in places where others cannot or will not. If the Government are serious about reviving the role of SME builders, whose share of new homes has plummeted to barely 10% today, we cannot afford to ignore the structural barriers that hold them back. Planning fees are one such barrier, and it is entirely within our power to address them in this Bill.

My amendment addresses this issue without costing the Treasury a single pound. I am not suggesting that planning departments should be starved of resources—quite the opposite: we all hope that they will be even busier in the future. We all know they need proper funding to recruit and retain skilled staff and to deliver timely decisions, but surely there is a case for a more proportionate, graduated system—one that recognises the scale of development, the number of units and the genuine impact on the planning service. Without such reform, we risk reinforcing the dominance of volume housebuilders, who are of course essential; this is not a downer on them but a recognition of the role that SMEs can play in increasing innovation and diversity. They bring local knowledge and understanding to their role. By ignoring this, we weaken our ability to deliver the variety of homes this country so desperately needs.

The reason for my amendment is that planning costs are probably the most significant disparity, with SMEs facing costs that are over 100% higher than their plc counterparts. In fact, planning fees at the moment are £626 per home for the first 50 units, and only £189 per home thereafter. Therefore, a 50-home scheme pays three times more per unit than a 1,000-home scheme. This is where it creates a real structural disadvantage for SMEs, deterring those much-needed smaller developments and slowing delivery on small and medium sites. Under the Bill, fee-setting powers are being devolved to local authorities and/or mayors, so there is a genuine opportunity to fix the imbalance.

This is not about special pleading; it is about fairness, proportionality and the kind of housing market we want to create. Do we want one dominated by a handful of big players, or one where smaller, local builders have the chance to thrive? I urge the Government to look again at the planning fees regime and at how it might better support our SME builders. Without them, our housing crisis will only deepen. My amendment would help ensure that SMEs are not burdened with excessive costs; and, over time, alongside other government measures, it might reverse their sad decline. I am pleased to note that it also chimes with Amendment 98 in the name of the noble Lord, Lord Banner. I hope the Minister agrees.

[Baroness McIntosh of Pickering (Con)]

My Lords, I am grateful to my noble friend Lady Scott for opening this small group of amendments and for lending her support to my Amendment 95, to which I will briefly speak.

As drafted, the Bill leaves out the question of enforcement measures being recovered from the fee. I put a very simple question to the Minister: was this a wilful omission or was it omitted by default? As my noble friend Lady Scott said, it would be helpful to know why the question of enforcement measures not forming part of the fee that can be recovered has been left out.