A government climbdown on a new formula to determine housing need looks inevitable in the face of Tory backbench revolt. Will it now also have to backtrack on its wider planning reforms, asks Joey Gardiner
Last month’s debate on government proposals for a new formula to determine local housing need saw a procession of Conservative MPs line up to berate their own government, including senior Tories such as Theresa May, Jeremy Hunt and Chris Grayling. Indeed, so many had put their name down on the order paper to speak – 55 according to one Labour MP – there was not time for all of them to get their turn.
The centrally set “mutant algorithm” – as Conservative MP Philip Hollobone dubbed it – proposes huge increases in housing numbers in many leafy shire district councils in the South-east, while recommending lower numbers in many northern cities. The contradiction set against the prime minister’s flagship “levelling up” agenda has presented critics with an open goal.
Given the response of housing minister Chris Pincher, and the extent of the rebellion – easily enough to overturn the government’s majority – it now seems inevitable that the government will significantly revise the formula before bringing it into force – even if there is not an out and out U-turn.
The algorithm used to decide where the 300,000 homes the government proposes will be built is actually only one small part of an ambitious planning agenda, laid out in a white paper published in August, on which the consultation ended last month. Planning for the Future proposes huge reforms, seen as game-changing by some in the development industry, in which existing local plans will be replaced with slimmed-down documents whose principal function is to allocate sites and identify “growth” zones to benefit from automatic outline permissions.
The current system of developer contributions, via section 106 agreement and the community infrastructure levy, is also to be replaced with a nationally set tariff.
So, while a backtrack on the algorithm now seems a foregone conclusion, the much bigger question for the development industry is whether the backlash will translate into opposition to the government’s more significant structural reforms. And, if it does, whether the government will again be forced to give ground.
Less than a year into this parliament, and the government is already well used to backbench discontent and rebellion, from covid-19 restrictions and free school meals to the summer exam algorithm fiasco. It will have known that its planning white paper and associated reforms, which had been in train for over a year but which became explicitly more radical following a Dominic Cummings-inspired revamp during the coronavirus crisis, will have been controversial with grassroots Tories. Nevertheless, it seems unlikely that the government was prepared for the groundswell of backbench opposition that greeted one part of the reforms: its consultation on the technocratic “standard method” by which local housing need is determined.
While numbers thrown up by the formula do not explicitly set local housing targets, they mean that authorities have to come up with very good reasons to propose anything lower – and hence are a huge issue for affected local authorities. By tweaking the existing formula and – vitally – removing a cap on increases, the new algorithm delivers huge increases in many areas. Local authorities such as Wokingham, which covers Theresa May’s Maidenhead constituency, see housebuilding targets double.
Other than covid restrictions, this is the most unpopular policy with Conservative backbenchers at the moment
Chris Rumfitt, Field
While Conservative council leader John Halsall threatened to stage a naked protest in Westminster if his concerns were not addressed, May seemed to enjoy wielding the knife in the House of Commons, describing the changes as “mechanistic” and “ill-conceived”. “I might have thought the government would have abandoned algorithms by now,” she deadpanned.
“The government is very shaken by the backbench reaction,” says Chris Rumfitt, director of public affairs consultancy Field. “It’s looking at all options to dial down tempers on this right now. Other than covid restrictions, this is the single most unpopular policy with Conservative backbenchers at the moment.”
Backbench opinion is key, despite the fact that the size of the government’s 80-seat majority means only that a sizeable amount of Tory opposition can prevent Boris Johnson’s administration getting its business through. And of course, Labour opposition is a given.
Rumfitt, along with most political observers, thinks a backtrack on the policy is now a matter of time, even if housing secretary Robert Jenrick is so far non-committal. “Obviously we will listen to the views expressed in the consultation or whether there are different ways to achieve that,” he told the BBC last month. “But are we going to move away from our objective to build more homes? Absolutely not.”
Eminent planning lawyer Christopher Katkowski QC, one of the government’s tight circle of advisers on the white paper changes, is more straightforward. “I’d be very surprised if the changes to the standard method which have been consulted upon in the government’s proposals for changes to the current planning system are not tweaked,” he says. Another source close to the government’s planning agenda says: “My expectation is that the government will give ground on the numbers. It just has to happen at this point.”
However, that does not mean the whole edifice of the government’s planning reforms will come tumbling down. In fact, many maintain that active backbench opposition is likely to melt away if given an acceptable backtrack on the standard method.
The source close to government says: “At the moment I sense no particular pressure to give ground on the white paper; there is certainly no pressure from MPs.”
Field’s Rumfitt says this is not quite right – there are concerns – but admits that they are right now of a “different order of magnitude” from those expressed over the housing formula.
This assessment fits with last month’s debate in parliament: among nearly 30 Tory MPs to speak against the standard method, only a handful expressed any concern about the broader white paper proposals.
Obviously we will listen to the views expressed … but are we going to move away from our objective to build more homes? Absolutely not
Robert Jenrick, housing secretary
Martin Curtis, associate director at public affairs firm Curtin & Co, says: “My gut instinct is that if MPs get the change to the standard method that allows them to save face with their constituents, then the government will have enough support to get the white paper through.”
Nevertheless, this is by no means certain. Firstly, it is possible that MPs, having got the scent of victory over the reforms, could be more tempted to be disloyal again. After all, last month’s debate followed a much less widely publicised climbdown by Jenrick over plans to extend permitted development.
One source said the announcement of reforms to the plans came after a delegation of backbenchers informed the secretary of state that they planned to vote against the government on the issue.
Curtin & Co’s Curtis, a supporter of the white paper reforms he argues are necessary to deliver housing numbers, says it may come down to the government’s appetite for a fight on the issue. “The evidence suggests the government hasn’t necessarily got the strength of character to drive reforms through – they could back down when things get difficult.”
White paper main measures
Growth zones - Local authorities will have to bring forward stripped back local plans zoning all land in their areas for “growth”, “renewal” or “protection”. Areas zoned for growth will benefit from outline permission
Renewal - Areas zoned for renewal will benefit from a statutory “presumption in favour” of development, with schemes that accord with locally-drawn up design codes accessing a “fast-track for beauty”
Stripped back local plans - Local authorities will have 30 months to produce new-style stripped back local plans, which will allocate sites and zones but lose the ability to set local policies.
Section 106 scrapped - Section 106 agreements will be scrapped, while the existing Community Infrastructure Levy will be morphed into a nationally-set levy on development value
Top down housing targets - The government plans to reimpose top-down housing targets, created by formula, on local authorities, a decade after the coalition government’s first communities secretary, Eric Pickles deriding them as “soviet-style tractor targets”.
“Duty to co-operate” ditched - With a top-down target, councils will no longer have a duty to co-operate with each other over the drawing up of local plans, leaving no strategic planning layer
In addition, there is still much uncertainty about what the reforms will actually look like when the legislation comes forward. Clive Betts, Labour MP and chair of the housing, communities and local government select committee, says the white paper has “significant green edges”, and “doesn’t set out how it will operate”. He adds: “The real test is the wording in the bill.”
Hence, Rumfitt says: “It may be simply that they’re not in rebellion about it because there’s nothing yet to rebel against. There are still fundamental questions that need answering.”
One potential warning sign on this is the extent of scepticism expressed in last month’s debate over the idea that giving developers more planning permissions will get more homes built. Bob Seely, Conservative MP for the Isle of Wight, was one of many to cut against the core logic of the white paper, by suggesting developers were not held back by planning.
“Is the way to stop building firms from landbanking to give them more land with which to landbank?” he asked. “I am not quite sure that that makes sense.” Certainly, even if MPs are not expressing direct opposition, others in the party are. Conservative councillor Paul Bartlett, deputy leader of Ashford council, is equally concerned about the standard method and the wider white paper. His anger over the white paper proposals, which he sees as an attempt to override local democracy, is palpable. “It beggars belief,” he says. “My only presumption is that Jenrick didn’t see the white paper before publication. It’s extraordinary these changes have been allowed to see the light of day.”
Like something from North Korea
The white paper proposes that central government sets both binding housing numbers for local authorities and the vast majority of local development policies through central guidance. Meanwhile, proposals to grant automatic outline permission in growth areas would take away the traditional role of council planning committees in controlling what development gets to go ahead.
A government spokesperson said the reforms were designed to “deliver the high-quality, sustainable homes communities need” and had “environmental protection, community engagement and sustainability” at their heart. However, critics dismiss the promised beefing-up of local consultation and engagement for the new-style local plans as window dressing.
Field’s Rumfitt says: “The Conservative Party has spent 20 years arguing for a more localist approach, and this seems like a reversal of that,” while David Scane, associate partner at public affairs firm Newgate, says: “The concern is over the taking-away of power from planning committees. If you’re a local councillor, that’s your power and influence.”
Hence Ashford’s Bartlett says Conservative MPs should “stand up and be counted” when the proposals finally do come before parliament. “This [white paper] completely disenfranchises the community. It’s a system more akin to something you’d find in North Korea.”
Conservative MPs speaking out against the white paper
Bob Seely, MP for Isle of Wight: There is good stuff in the white paper, but I fear the government has not made the case for why the current system should be scrapped, as opposed to reformed. What are the unintended consequences here, and is the way to stop building firms land banking to give them more land with which to land bank? I am not quite sure that that makes sense.
Jason McCartney, MP for Colne Valley: That is why I have deep concerns about the Planning for the Future white paper. We need more local control and democracy when it comes to developments. We need more protection for green spaces—not just green belt, but the green fields that give my village communities the much-needed green lungs.
My constituents and I are fed up with the wrong houses in the wrong places. The White Paper should give local people a bigger say in the future of their communities.
Geoffrey Clifton Browne, MP for the Cotswolds: The real flaw in the white paper is that all it does is concentrate building in the South-east and central south of England, and does not use the prime minister’s wish to build more infrastructure to level up the rest of the country. It is really important that a planning system is led by a well-executed local plan.
Laurence Robertson, MP for Tewkesbury: Councils, as I understand it from the white paper, will be given the opportunity to designate certain land as protected, but will that protected land take precedence over the housing numbers when they are handed down by the government? I do not think that it will. As things stand, I think that the housing numbers will take precedence.
That is wrong and it goes against what we stand for as a party. We want more affordable houses, we have to redefine what “affordable” means and we have to build them in the right places.
Theresa May, MP for Maidenhead: We need to reform the planning system. We need to ensure that that planning system sees the right number of homes being built in the right places. But we will not do that by removing local democracy, cutting the number of affordable homes that are built and building over rural areas. Yet that is exactly what these reforms will lead to.
“The government need to think again, and they need to understand the impact that their proposals will have throughout the country.
It is hard to guess how widespread this level of anger is but, with the likes of the influential countryside charity CPRE lined up against it, opposition is likely to build as time goes on.
Hugh Ellis, policy director at the Town and Country Planning Association, which has been highly critical of the government’s policy direction on planning, says: “The only way the government could really have done this would be to bundle it over the line very quickly before people worked out what it meant.”
This, he says, is not now going to happen, in part because of the opposition already encountered, and in part because of how much work still needs to be done to flesh out policy proposals in the white paper.
The government had originally promised legislation before Christmas, but few now think that is likely, with Ellis saying that officials are privately admitting as much. “They’re very clear it won’t be delivered on the timetable originally indicated – it’s not going to happen as quick as the cadre around No 10 want it to. Getting it through becomes harder the longer it goes on.”
The government will also be concerned about the bumper set of local elections due next spring, which include cancelled polls held over from this year due to the covid-19 crisis, three wholly new councils and a slew of mayoral polls.
This [white paper] completely disenfranchises the community. It’s a system more akin to something you’d find in North Korea
Paul Bartlett, Ashford council
Newgate’s Scane says it seems very unlikely the government will now publish the bill in advance of those, given how potent an issue planning has been at recent local elections. “Many Conservative councils are threatened by residents groups,” he says. “This bill will basically give them the text of the manifesto they will run campaigns on. The government will wait until after May.” A government spokesperson, when asked whether the intended bill will be delayed, declined to say.
Aside from all the political problems, there are also huge technical and practical problems to overcome. While many developers are supportive of the white paper, other parts of the industry – notably the RIBA – are opposed, and have raised many concerns.
In particular, the proposals for a nationally set infrastructure levy to replace the existing system of section 106 agreements is seen by many as highly problematic, however welcome an end to section 106 negotiations would be. Social housing groups have raised concerns over the implications of the new system for the delivery of affordable homes, despite the government’s assurances it will be calibrated to ensure no reduction.
Betts says the extent of issues still to be fully developed makes the reforms “an obvious case for draft legislation” prior to publication of the final bill. Government adviser Katkowski says he now expects the government to “flesh out the details needed to make the changes proposed in the white paper” prior to introducing a bill to enact them.
Even the most optimistic timetable, assuming legislation passes next year, envisages the new planning system coming into effect around the end of this parliament in 2025, because of the 30 months needed to create the new-style local plans. Hence many see delay and dilution of the plans as the most plausible outcome. Developers, Rumfitt says, are not holding their breath. “The view is that it’ll be great if it happens, but they’re betting it will be watered down. There’s scepticism as to whether the government will follow through.”
Scane says: “It’s all a long time in the future and goodness knows if we’ll even have a Conservative government. There’s always scepticism in the industry about what will come forward and, in the meantime, anything that increases uncertainty is not welcome.”