How relevant will the Letwin report be for creating meaningful planning policy?

11 July 2018

This is a question that we are looking to answer on a national and regional scale, with more and more potential options offered up. Now, with the publishing of the Independent Review of Build Out Rates, it is clear that since his previous update, Sir Oliver Letwin has grown further convinced that the solution lies in variety and integration.

His view is that build out rates are fundamentally limited by the rate at which the market can absorb new homes without causing prices to decline, and the key to solving this problem would be for the major housebuilders to start offering more variations of housing type, design and tenure on large sites. This is based on homes that are either for open market sale, open market private rented, discounted rented and social rented being complementary, rather than overlapping, and this applies to specialist housing such as student and retirement.

Sir Oliver may be correct. But we need to take some care when thinking about how his research and findings are used to inform policy and decision-taking. In this regard it is important to note three things in particular:

First, the Review focuses on the build out stage of development projects, rather than the regulatory stage, although there is data on the latter in its appendices which is interesting. Accordingly, the Review doesn’t consider the full life span of major developments. This necessarily limits its value as a piece of research.

Secondly, the Review focuses almost exclusively on major housing schemes in ‘high value’ locations in the south east. It’s relevance to the Regions is, therefore, limited. This isn’t to say it is of no relevance as there are observations and recommendations that will be relevant wherever you are, but the conclusions reached by Sir Oliver are based on findings made in respect of just 15 developments, 14 of which are in market areas that are totally different to those found in large parts of the South West, the Midlands, and the North. Care should be taken therefore with the way in which the findings are used by Sir Oliver and Ministers in due course. I would prefer to see a similar study conducted in respect of major development projects in the south west, the midlands and the north before the Government commits to any material shifts in policy.

Finally, while the conclusion that we cannot rely solely on small sites is welcome, the analysis behind it is not. In recent years we seem to have witnessed local planning authorities (LPA) becoming ever reliant on a relatively small number of major SUEs, to satisfy their objectively assessed need for housing, whilst also increasing problems in respect of the delivery of housing in these SUEs and consequential impacts on housing land supply, such as a failure to maintain the 5 year supply required by national planning policy. The suggestion that it is ok for LPAs to continue to focus on very large site releases as a few big sites means a few larger planning battles, rather than lots of smaller battles is most unfortunate. Planning shouldn’t be about locating development where it’s likely to upset the smallest number of NIMBY’s, it should be about locating its where it deliver the most sustainable outcomes possible and where it will actually yield homes in a timely fashion. I am also not sure that the Review is right about infrastructure. Of course we need improved infrastructure to facilitate and support growth but I am not sure that there is evidence to suggest that only the large sites can unlock this. Indeed, the delays we are seeing in the delivery of large sites are causing delays in respect of the delivery of the necessary infrastructure.

Sir Oliver says that between now and the Budget, he will be looking at the overall speed at which ‘unconsented’ land can be converted into new housing on a sustained basis. It will be fascinating to see what he comes up with. The next phase of Sir Oliver’s review will look into the policy levers required to encourage more variety on large sites (1,000-15,000 homes) without damaging the economics of individual sites or the financial stability of the major housebuilders.