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Two-tier local government is holding back housing
Replacing district councils with unitary county authorities will make it easier for new development to be delivered, argues Tom Follett
Last week, the secretary of state announced his intention to intervene in the local plan process of 15 local authorities. Ten of these were in two-tier areas – where the local district council is the planning authority, with an upper-tier county council.
Local planning is not the only area where two-tier authorities struggle, as our new report, Devo 2.0 – The Case for Counties, sets out.
As local authorities take centre stage in a housebuilding revolution, and with new approaches to planning and density promised in the Autumn Budget, we wanted to ask whether the current system is fit for purpose.
It is clear that where district councils are the planning authority, meeting population growth is a real challenge. In terms of providing homes for at least 95% of new households, 60% of single-tier county areas were able to meet demand, with average population growth of 5,100. However, just 30% of district councils in two-tier areas were able to meet the same target, despite having average growth of just 1,750.
These outcomes are caused by a number of dysfunctional relationships created by the division of key powers between the two levels of council in the two-tier areas.
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First, there is a fundamental lack of incentive for the collecting authority to ensure it is receiving the revenue needed to deliver infrastructure investment through the Section 106 process. Infrastructure is the responsibility of the top-tier (county) council, but it is the lower-tier (district) councils whose responsibility it is to collect contributions from developers for infrastructure projects.
“There are too many instances of planning committees approving developments with inadequate contributions.”
Every uncollected contribution means the top-tier authority has less available to spend on the vital infrastructure links needed to unlock sites.
But with no impact on district budgets either way, there are too many instances of planning committees approving developments with inadequate contributions.
Second, services needed for new developments are a major driver of cost. Integration of planning with services is therefore vital.
But once again, it is not the planning authority which has responsibility for ongoing costs as a result of development. For example, in the case of home-to-school transport, county councils must provide free bus travel for all eligible children who live further than walking distance, at a cost of circa £1,500 per head per annum.
“It is not the planning authority which has responsibility for ongoing costs as a result of development.”
Their incentive is therefore to ensure new homes are built close to existing schools. Yet, it is the district councils that decide on planning permission, meaning those who drive the cost have no responsibility for picking up the tab.
The result is too many homes built far from existing schools, and a negative impact on budgets and sustainability.
Third, where district councillors fear that their re-election prospects will be impacted by planning decisions, it is only rational that they respond to their electorate.
And where lower-tier councils have the power of veto over developments, but experience no negative outcomes from failing to build enough homes, it makes sense that they use that veto.
These examples speak to a the wider dysfunction in the structure of local government relations. While it is vital that all communities and stakeholders participate in their local plan process, we need to ensure that the correct incentives are in place.
“Decisions should be made at a level more removed from the immediate impact.”
So in deciding whether developments fit with the needs of the plan, decisions should be made at a level more removed from the immediate impact.
We would like to see contribution-collecting, plan-making and decision-making joined up, along with new strategic powers to write spatial plans. To achieve that, unitary local government at the county scale is the way to go.
Tom Follett, project and policies manager, Respublica
