The HFI View: Radical Planning and Local Government Reform: a recipe for holding back or boosting housing and infrastructure delivery?

Radical Planning and Local Government Reform: a recipe for holding back or boosting housing and infrastructure delivery?

Fast on the heels of major planning reform in December came another announcement – a Devolution White Paper which promises radical reform of local government in England. Taken together with the planning reforms, these are major structural changes to the way housing and infrastructure will be decided, planned, funded and delivered in the years to come.

Under the new system, county and district councils are to be abolished. There will be two different bodies: a Mayoral Strategic Authority, which will make strategic decisions and have strategic management powers, and new larger unitary authorities. There is provision for 'Foundation' Strategic Authorities, which include combined and non-Mayoral authorities. However, the Government's preferred intent is for universal coverage of full Mayoral Strategic Authorities over time. The unitary councils will be responsible for the everyday services affecting residents – everything from schools and adult social care through to bin collection.

The Mayoral Strategic Authorities will have considerable new powers and responsibilities for housing and strategic planning - from levy and tax raising for funding major projects through to setting up development corporations and calling in major developments.

The move back to regional and strategic planning has been widely supported by professionals and others involved in planning and delivering of housing and infrastructure. The overall outcome of the reforms, if it works as intended, should provide greater certainty in the planning process, more local control over delivery of infrastructure and less friction in the delivery of housing.

Planning Reform

Planning is being radically reformed alongside the changes to local government. The new National Planning Policy Framework (NPPF) was announced in December. There are also changes to be made as to how planning committees operate. In addition, the government has imposed new Local Plan housing numbers and land supply requirements on councils, in some cases cutting across existing Local Plans.

The timetabling and the extent of the planning and local government reform programmes will need to be managed very carefully. The development of Local Plans will be affected by these changes. It is currently expected that councils should continue to work on their Local Plans ahead of local government reorganisation taking effect and that those would roll over into the new arrangements until a new plan is set. When the new unitary authority is in place, it is anticipated that Local Plans will be started anew for the whole unitary area, with appropriate linkage to the strategic planning work of the Mayoral Strategic Authority.

In the short term, particularly in areas which are undergoing local government reforms, central government may use ministerial powers to ensure planning decisions continue to flow. That could involve 'calling-in' major housing applications for ministerial decision and likely to mean assessing decisions against a national, rather than a local, planning framework.

It is to be expected that some housebuilders and land agents will make the most of the window of opportunity for progressing 'off-plan' proposals while the new regime beds down in order to secure significant sites for future building programmes.

Show us the Money

The Devolution White Paper provides a glimpse of changes in the allocation of central funding and housing resource support. Part of the Affordable Housing Programme, which supports the delivery of government funded affordable homes, looks set to be allocated to the Mayoral strategic authorities. Meanwhile, Homes England could be significantly changed and aligned with Mayoral/regional functions.

Mayors are expected to get greater powers to raise finance for infrastructure delivery. This is expected to include tax raising powers – that could mean a renewed interest in financing through models such as Tax Increment Financing (TIF). The model of fund raising for infrastructure instigated by the London Mayor for the Elizabeth Line is an example of tax based funding which has been singled out in the White Paper. The London arrangement includes an additional Mayoral charge for business rates (non-domestic properties) together with a Mayoral Community Infrastructure Levy.

A wider range of financing and investment powers and specific devolution of current and future local tax streams for regeneration and housing infrastructure delivery may well feature in upcoming legislation.

Timetable

For those first areas who are placed on the Devolution Priority Programme, it is expected that planned county council elections which were due in May 2025 will be deferred. Instead, new Mayoral elections would be expected to take place from May 2026, with the new unitary authority elections taken place from May 2027.

Conclusion

There is considerable detail to be worked through in implementing these wide ranging local government and planning reforms, including two major new bills and a raft of secondary legislation and guidance.

The scale of the changes proposed is immense – at a time when local government is under sustained and serious financial and resourcing pressure. Any reorganisation – whether public or private sector – costs more in the short term to deliver dividends over the longer term and rarely are these expected financial benefits secured in full.

That said, successful delivery of these reforms could offer real opportunities for:

- Greater long term availability and certainty of housing supply

- More effective planning and delivery of infrastructure

- Focused skills, jobs and business development plans

- New opportunities for areas to create their own private finance and investment funds to support local investment and growth for their areas.

Detailed and realistic project delivery planning, collaborative working at local and national level and high-level technical support will be key to making the most of these opportunities if they are to deliver on local priorities as well as the Government's programme of devolution, growth – and the 1.5 million homes target.

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