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

Valerie Vaz Excerpts

Wednesday 25th October 2023 General Committees

[The Minister of State, Department for Levelling Up, Housing and Communities (Rachel Maclean)]

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) Regulations 2023.

Good morning, Mr Robertson; it is a pleasure to serve under your chairmanship. Laid before the House on 20 July, the draft regulations amend the Town and Country Planning (Fees for Applications, Deemed Applications, Requests and Site Visits) (England) Regulations 2012 and, by increasing planning application fees by 35% for major applications and by 25% for all other applications, will provide much-needed additional income to local planning authorities. Importantly, the regulations introduce, for the first time, an annual inflation-related increase, so that fees retain their value in the future, year on year, and they give local planning authorities greater certainty.

The measures in the regulations are widely welcomed by the industry. They are designed to boost the income to local authorities. We expect local authorities, in turn, to invest that income in their planning services to improve the speed and quality of their decision making.

To state the obvious, it costs money to run the planning application service. At the moment, the cost of the service is more—by an estimated £225 million across England—than the income from the fees charged. That means that local taxpayers have to contribute to dealing with the shortfall, while those who stand to benefit the most could be paying a greater share. Planning fees have reduced in value over the five years since the last increase, in January 2018, while the costs and demands on local planning authority budgets have increased. The regulations will address the issue by ensuring that applicants for planning permission contribute a higher proportion of the estimated £675 million cost of the application service, reducing the burden on the local taxpayer.

As well as reducing the shortfall, the regulations will create greater sustainability for local planning authorities when the annual increase comes into effect from 1 April 2025. Local planning authorities will be able to use the additional income to procure more resources, including planning officers and other specialists, which will enable them to provide an improved service to applicants. That will benefit the whole of society as good planning decisions are made more quickly, enabling development to proceed without unnecessary delay.

Respondents to our consultation on proposals to increase fees were generally supportive. They acknowledged that local authorities needed more funding, and supported higher fees, with the important caveat that that should lead to improvements in planning performance.

I will now turn to the details. First, the regulations introduce a much-awaited national fee increase of 35% for major applications and 25% for all others. The maximum fee for a large planning application will be £405,000, up 35% from £300,000. Fees for householder applications will rise from £206 to £258, an increase of 25%. The regulations also introduce an annual inflation-related increase in fees from 1 April 2025. That will be at the rate of the consumer prices index from the previous September. To prevent the annual increases from becoming too onerous, they will be capped at a maximum of 10%. This measure will ensure that fees do not lose their real-terms value.

In addition, the regulations remove an existing fee exemption that allows applicants, in certain circumstances, to submit a second application without having to pay another fee—colloquially known as the “free go”. The removal of that exemption will enable local planning authorities to charge for repeat applications, which will help to fund their costs for dealing with the applications, which we know are a demand on their resources.

Furthermore, the regulations reduce the planning guarantee period for non-major applications from 26 weeks to 16 weeks. That means that, in most cases, if their application is not determined after 16 weeks and no extension has been agreed, the applicant will be entitled to a full refund of their planning fee. That measure is intended to encourage faster decision making, which applicants will expect as a result of paying higher fees.

Lastly, the regulations introduce a new prior-approval fee of £120 for the permitted development right for development by the Crown on a closed defence site. That right was introduced through an amendment to the general permitted development order in December 2021 and requires that a fee be paid for prior-approval applications.

We estimate that the fee increase will raise an additional £65 million for local planning authorities in the first year. In future years, from 1 April 2025, income will increase further, as the annual inflation-related rises take effect. That will provide much-needed income to local authorities. Some may consider that this is not the time to be increasing fees, since there are considerable financial pressures on businesses and householders, but if we do not increase fees, the planning application service will continue to deteriorate, to the detriment of applicants and the wider economy.

We need to find a way to get more resources into the system. The fairest way is for applicants, who stand to benefit the most from planning decisions, to contribute more toward the costs to local planning authorities of delivering the service. We consider our approach to be proportionate, with the greater burden falling on applicants for major developments, who, as I said, largely welcome these measures and are considered more likely to be able to bear a larger increase. That leaves householders and small businesses, who are more sensitive to higher fees, with a smaller increase. Together, the increases will provide additional income for local planning authorities.

The regulations do not introduce any new fees for applications for which there is currently no charge, such as applications for listed building consent, and they retain the existing exemptions, including for alterations to homes to provide facilities for a disabled occupant. I can reassure hon. and right hon. Members that we estimate that, in most cases, the cost of the planning application will still be less than 1% of the overall development costs, so we do not consider that it will be a burden or deter development.

The regulations do not contain any requirements for the additional fee income to be formally ringfenced. Hon. Members will note that we proposed in our consultation to ringfence the increase, and that proposal was strongly supported by some respondents. However, the primary legislation—section 303 of the Town and Country Planning Act 1990—requires a fee to be charged so that local planning authorities can perform the function of determining planning applications. As there is no surplus to planning fee income, there is logically no underspend that could be used to cross-subsidise other services. The Committee will note that there may be cases where other services are ringfenced. That is usually because they make a surplus; it is a different category of funding in this case.

We have made it clear to all local authorities that they are expected to retain the income from planning fees for direct investment in their planning services, and we will reiterate that expectation after the regulations are made. We recognise that the circumstances of each local authority are different. In line with our general approach to simplification of funding, which is widely welcomed by local authorities, we believe that our approach strikes the right balance.

[Valerie Vaz (Walsall South) (Lab)]

On a point of clarification, how many responses did the Government get to their consultation, as a percentage?

[Rachel Maclean]

I thank the right hon. Member for that point. I will have to write to her about that, if she will allow me.

As I was saying, local authorities have made it clear that they want and need this income so that they can build up the capability and capacity of their planning services and improve their performance. We expect them to do so, and we know that that is what applicants will expect in return for paying higher fees.

We need a planning system that supports appropriate development and functions effectively. The regulations will provide a welcome financial boost to local planning authorities, on top of the additional spending that we have already awarded to them through our planning skills delivery fund and other measures. These measures will generate additional income year on year. Local authorities will be able to invest the extra money in their planning services, including in staff and in digitising the service to make it fit for the present day and to improve their performance. Local authorities will be able to budget with more certainty and build up their capability and capacity.

I hope that Members will join me in supporting the draft regulations, which I commend to the Committee.

--- Later in debate ---

[Rachel Maclean]

I thank Members for their contributions to the debate, and I will respond to the questions raised.

I can tell the right hon. Member for Walsall South that the consultation received 495 responses.

The hon. Member for Greenwich and Woolwich asked me about ringfencing. I set out in my opening remarks how we have approached this matter. We believe that our approach is the right one. As I said, the response we have had from local authorities on our overall strategy of funding simplification indicates strongly that local authorities want to see a simpler picture for funding the essential services that they provide to their residents and businesses. That is why we have taken this approach. As the hon. Gentleman acknowledged, primary legislation already requires a fee to be charged so that local planning authorities can perform the function of determining planning applications. There is no surplus to planning fee income, so there is logically no underspend that could be used to cross-subsidise other services, which means that ringfencing is not necessary.

We have been very clear with local authorities that they are expected to retain the income from planning fees for direct investment in their planning services, and we will reiterate that direction once the regulations are made. It is worth observing that in my considerable engagement with local authorities, the Local Government Association and others, they have all been very clear that they need this funding, they must spend it on planning and they intend to do so. That is the clear expectation.

[Valerie Vaz]

I have two points to make. First, I would like the percentage of the number of consultations that were returned—was it 1% or 100%? Secondly, how will the Government monitor whether local authorities are actually using the fees for the purposes intended?

[Rachel Maclean]

I will be happy to respond to the right hon. Lady on that point, but can I clarify what she means by the percentage? I am not quite clear on her question.

--- Later in debate ---

[Valerie Vaz]

The civil servants have helpfully given the answer that there were 495 responses to the consultation. What was the percentage of returns? Was that a 1% return of the total number of people who were consulted, or was it 100%? Is it 495 of 495? What is the percentage?

[Rachel Maclean]

I think what the right hon. Lady is asking is whether it was a binary choice either for or against ringfencing. Is that right?

[Valerie Vaz]

No. There are two separate points. The point about the consultation is that there were 495 responses, but how many people were consulted? What is the percentage—was it a 1% return or a 50% return? On a separate point, the Minister helpfully said that local authorities have to spend the fees on planning and planning officers. How will the Government monitor whether they are doing that? The intention and the direction are there, but how can the public—my constituents—be reassured that that money will not be used for other purposes?

[Rachel Maclean]

I will respond to the right hon. Lady’s second point, as I understand that question very clearly. I think it is better if I write to her on the first question. My understanding is that there were 495 responses, but I do not know how many people were actually asked. I think she is asking for a response rate—

[Valerie Vaz]

indicated assent.

[Rachel Maclean]

We may be able to provide a further breakdown and further detail on those responses, and what they were in favour of and against. I am sure we can provide that information to the right hon. Lady and any other Committee member who is understandably interested in that.

The point about planning performance is really important. It is feedback I always hear from industry and householders, as my hon. Friend the Member for Central Suffolk and North Ipswich has mentioned. Planning performance is an issue that is raised time and again. My overall conclusion and response is that when people are applying for these services, although they expect to get a good service, they have not always had that, which has led to overall dissatisfaction with the system. It also has a knock-on effect on the public’s confidence in the planning system more generally, which leads to a lot of the other issues that we see time and again. I am sure all Members have messages in their inbox about these sorts of issues, which are common across the country.

We recognise that the current metrics on planning performance, including the use of extensions of time, do not adequately reflect the performance of local authorities. We recognise that they do not capture the consumer experience either. We have therefore recently consulted on proposals to measure performance across a broader set of quantitative and qualitative measures, providing greater transparency of service delivery and enabling early action where local authorities are not performing. We will come forward with further details on those measures in due course.

Separately to that, my Department and civil servants in the relevant team have very granular information on local authorities’ performance in this area—as well as a number of other areas, of course—on which they regularly report to me. On that basis, other Ministers and I are able, where necessary, to exercise our functions and powers to intervene and to remove planning powers from local authorities, although we obviously only want to do that as a last resort. However, we do expect local authorities to be providing these services to their residents, which we monitor.

Before I come to my hon. Friend the Member for Central Suffolk and North Ipswich, I will address the point about funding raised by the hon. Member for Greenwich and Woolwich. As he rightly said, we have made available to the profession additional capacity funds, amounting to £54 million, to enable more planners to come into the profession. Also, on the back of the Secretary of State’s long-term plan for housing announcement this summer, we made £24 million available to the planning skills delivery fund. Local authorities will be able to use that fund to speed up planning applications and ensure that services flow faster, and that any backlogs are dealt with.