Planning system 'not working well' says NAO report

The government’s planning system is underperforming and cannot demonstrate that it is meeting housing demand effectively, according to a report by the National Audit Office.

The Planning for New Homes report, part of a NAO series on housing in England, finds that as of December 2018, only 44% of councils had an up-to-date local plan setting out their strategies for meeting the need for new homes, despite it being a legislative requirement.

"Historically, the supply of new homes has failed to meet demand. In response, the Ministry of Housing, Communities & Local Government (The Department) has set out a challenging ambition for 300,000 new homes a year from the mid-2020s, together with supporting infrastructure. The planning system is a key element in facilitating this. However, looking across the landscape, from the setting of the need for new homes, to the reductions in local authority capability, the under-performing Planning Inspectorate and failures in the system to ensure adequate contributions for infrastructure, it is clear that the system is not working well. Given these problems, we cannot conclude that the planning system currently provides value for money in terms of delivering new homes effectively."

"The Department understands the shortfalls in the planning system and its new planning policy framework aims to address some of these, such as the system for contributions from developers. However, it is too early to say how effective the new framework and proposed reforms will be in bringing about the level of change needed. The Department and government more widely need to take this much more seriously and bring about improvement if they are to meet their ambition of 300,000 new homes per year by the mid-2020s."

NAO head Amyas Morse said: “For many years, the supply of new homes has failed to meet demand. From the flawed method for assessing the number of homes required, to the failure to ensure developers contribute fairly for infrastructure, it is clear the planning system is not working well. The government needs to take this much more seriously and ensure its new planning policies bring about the change that is needed.”

Responding to the report, Cllr Martin Tett, Local Government Association’s Housing spokesman, said: “Planning is not a barrier to housebuilding. Council planning departments are doing an incredible job with extremely limited resources, approving 9 out of ten applications, with the majority processed quickly.

“Councils are committed to ensuring homes are built where they are needed, are affordable, of high-quality and supported by adequate infrastructure and services, but it is vital that they have an oversight of local developments.

“We remain clear that the Government’s housing needs formula does not take into account the complexity and unique needs of local housing markets, which vary significantly from place to place, and imposes unfair and undeliverable targets on communities. This risks leading to a housebuilding free-for-all which will bypass the needs of local communities and could damage public trust in the planning system.

“By lifting the housing borrowing cap the Government has accepted our argument that councils must play a leading role in solving our national housing shortage. With hundreds of thousands of homes in England with planning permission but yet to be built, it also needs to give councils powers to make sure developers build out approved homes in a timely fashion, and use the Spending Review to adequately fund planning departments and allow them to set planning fees locally so they can cover the cost of processing applications.”