Draft Town and Country Planning (Fees for Applications, Deemed Applications, Requests and Site Visits) (England) (Amendment and Transitional Provision) Regulations 2025

Matthew Pennycook Excerpts

Tuesday 25th February 2025 General Committees

[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 2025.

It is a pleasure to serve with you in the Chair, Ms Jardine. The draft regulations, which were laid before the House on 13 January 2025, increase planning fees for householder and other applications, with a view to providing much-needed additional resources for hard-pressed local planning authorities. Alongside other steps that the Government are taking to support local planning authorities to build their capacity and capability, the regulations will help to ensure that our planning system is faster and more efficient, and equipped to facilitate our ambitious plan for change milestone of building 1.5 million new homes in this Parliament.

Let me start by providing some important context to the regulations. Planning application fees were last increased by 35% for major applications and 25% for all other applications in December 2023, yet when it comes to planning application services in England, we still face a national funding shortfall of £362 million. Moreover, the types of planning application with the greatest gap between the fees that can be charged and the actual costs associated with processing them constitute the majority of applications received by local planning authorities. In short, the arrangement that the Government inherited is simply not sustainable.

By increasing the level of fees charged for making those applications with the greatest funding shortfalls, we will ensure that local planning authorities can cover a greater proportion of the costs associated with processing them. That will provide an immediate boost to local planning authority resources. We estimate in the impact assessment that the changes will generate an additional £56 million annually for local planning authorities across England. I am sure that the Committee will agree that this is a substantial sum that will significantly enhance the capacity, capability and therefore efficiency of planning services in every part of the country, to the benefit of applicants of all kinds.

I will now turn to the detail of the regulations. The regulations 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. While I acknowledge that this is a large increase, it is necessary to meet the estimated costs to local planning authorities of determining such applications, and I hope that hon. Members on both sides of the Committee would accept, in principle, that it is right that those who seek and will directly benefit from the planning permission cover those costs rather than the taxpayer. The application fee represents a small proportion—less than 1%—of typical overall development costs. As I am sure you know, Ms Jardine, certain householder development can also be undertaken through permitted development rights without the need for a planning application, and so incurs no fee at all.

The regulations also increase fees for a range of other application types that are currently also 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 a 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 net 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 extant planning applications. That 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 December 2023. Taken together, the fee increases provided for by the regulations will reduce the current funding shortfalls for the various application types to which they apply, and will thereby enable local planning authorities to hire more staff, invest in better technology and streamline their internal processes, all of which will contribute to faster and more efficient decision making.

I want to be very clear that the Government expect local planning authorities to use the income from planning fees on their planning application services, so that they can build up their capability and capacity, and improve their performance. That is what applicants expect in return for paying higher fees. The fee increase is not made in isolation, but is part of our broader efforts to resource and streamline the planning system. As hon. Members will be aware, in the Budget the Chancellor announced a £46 million package of investment in the planning system as a one-year settlement for 2025-26. As part of that investment, we are working with delivery partners to understand how we can scale delivery and fund the recruitment and training of at least an additional 300 planners. That includes expansion of the Pathways to Planning programme, which has had significant interest from prospective graduates wanting to take up roles in local planning authorities and train while they work.

The Government have also announced our intention to introduce a measure in the forthcoming planning and infrastructure Bill that will enable local planning authorities to set their own planning fees to meet their costs. That measure will provide local planning authorities with the flexibility to adjust fees according to local needs and circumstances, ensuring that they can manage their resources sustainably and continue to deliver a high-quality service. As a result of those measures, we will ensure that local planning authorities are not only better funded but better equipped to handle the significant demands placed upon them.

As we progress measures for local fee-setting through the forthcoming planning and infrastructure Bill, today’s regulations will provide local planning authorities with an immediate boost in resourcing and greater financial sustainability. That will ensure that they are better equipped to boost housing supply and deliver economic growth. I hope that hon. Members from across the Committee will join me in supporting the draft regulations.

--- Later in debate ---

[Matthew Pennycook]

I thank both the Liberal Democrat spokesman and the shadow Minister for their contributions. I note that the shadow Minister does not feel strongly enough about the reforms to formally divide the Committee, but he makes a number of pertinent challenges and asks a number of questions that I will seek to answer.

Both Members outlined the problem we face, which is that local planning authorities are significantly under-resourced and hard pressed. On planning application fees, despite the increases made by the previous Government in December 2023, we have a funding shortfall across the whole of England of £362 million. That is the problem we are attempting to address with the regulations. Fees were consolidated in 2012 by the coalition Government and have been increased only twice since, in 2018 and 2023. Importantly, prior to changes in 2023 that will come into effect on 1 April, they were never index linked, so they have never risen with inflation. As such, the gap between the cost of processing an application and the fees charged has widened over time.

The Government propose, through the regulations, to increase the fees on certain types of applications, which as I said in my opening remarks constitute the bulk of applications to local authorities, where the funding shortfall is most acute. The current fee of £258 on householder applications—just to give the shadow Minister a sense of the shortfall we are talking about—covers less than half the cost of processing the application to the local authority. As I have said, we think it is right in principle that taxpayers should not bear that burden, but the people making the application who will directly benefit from consent once it is processed. The planning application fee represents a small proportion—as I said, less than 1%—of typical overall development costs and, through permitted development rights, certain types of applications incur no fee at all.

The shadow Minister rightly raised ringfencing. The Government are clear that they expect the income from planning fees to be retained and directly invested in the delivery of planning application services. Managing public money principles should ensure that planning fees are effectively ringfenced. We believe that they are in most instances, but I have heard anecdotal accounts of planning fees being used to cross-subsidise other council services. We are therefore considering ringfencing as part of the Government’s longer-term plans for planning fees, which will enable local planning authorities to set their own fees.

On performance, in return for increasing planning fees, we expect local authorities to invest more in their planning service to deliver better performance. We are able to monitor, and will continue to monitor, the performance of local planning authorities through the planning performance dashboard and the quarterly planning statistics seen by the Department. The planning performance regime ensures that underperforming local planning authorities are held to account. The previous Government took action in that respect and we stand ready to do so where necessary.

Both Members raised concerns about general funding for local authorities. The Government are under no illusions about the scale of the financial issues facing councils and the potential for continued instability as we work to fix the foundations of local government. That is why we have a framework in place to support councils in the most difficult positions and why we work on a collaborative basis to help councils to manage their financial challenges.

Lastly, let me say something about local fee-setting. As we have said, it is important that local planning authorities are well resourced so they can deal with planning applications efficiently and do not hold up the development necessary for economic growth.

[Lewis Cocking (Broxbourne) (Con)]

I draw the Committee’s attention to my entry in the Register of Members’ Financial Interests as a local councillor. The Minister proposes to increase fees, but from my understanding they will not go to full cost recovery. Will he set out why they are taking a leapfrog approach and not going to full cost recovery, if that is indeed where the Government want to get to?

[Matthew Pennycook]

We think we are striking the right balance between increasing fees on the type of applications outlined in the regulations and making it very clear that nationally set planning fees can never be set in a way that covers every local authority’s costs for their planning application service, because costs vary between local authorities. The hon. Gentleman will be fully aware of that in his role. We think the only way to do this is ultimately for local planning authorities to be able to set their own planning fees. As I said, we intend to introduce a power in the proposed planning and infrastructure Bill that will enable local planning authorities to set their own fees, so that they will be able to recover their costs for their planning application services.

The proposed increases in fees are necessary and timely. The changes address the critical funding shortfalls faced by our local planning authorities and will provide them with the resources they need to deliver improved services in the short term. I hope the Committee will welcome them. As I have made clear, they will help to ensure that our planning system is faster and more efficient, and better equipped to facilitate our ambitious plan for change milestone of building 1.5 million new homes in this Parliament.

Question put and agreed to.