Court of Appeal restores policy exempting small sites from affordable housing

The Government has won its appeal to the Court of Appeal against the quashing of its policy that small sites should not contribute towards affordable housing.

In July 2015 West Berkshire District Council and Reading Borough Council succeeded in the High Court in challenging the written ministerial statement of 28 November 2014 made by Brandon Lewis ('the Statement'). The Statement, allied with changes to the National Planning Policy Guidance ("NPPG"), provided that housing developments of under ten units, or 1,000sqm, should not contribute to affordable housing or pay tariff style section 106 contributions. A lower threshold of five units applied to designated rural areas, albeit with a contribution in lieu attaching the schemes of six to ten units.

The challenge, motivated chiefly by the potential loss of affordable housing, was made by the Councils on several grounds, including those reflecting the general concern expressed by a number of authorities that the Government should not be able to make such significant changes to policy without going through a more robust and consultative process.

The Government swiftly appealed the High Court's decision. Following a hearing in March of this year, the Court of Appeal handed down its judgement yesterday, allowing the appeal on all grounds. The full judgement can be read here. The grounds on which the Councils had initially succeeded were:

1.  The Statement was inconsistent with the statutory planning regime.
2.  The Secretary of State had failed to take into account necessary material considerations.
3.  The Secretary of State’s consultation upon the proposals was legally inadequate.
4.  The Secretary of State had failed to properly discharge his duties under the Equality Act 2010 (by only carrying out an equalities statement after the Statement was issued).

The Court of Appeal's findings were as follows:

Grounds 1 and 2

The judgement sets out an interesting synopsis of the Secretary of State's power to make policy, and how it interacts with the statutory planning regime that governs plan and decision making. The Court of Appeal concluded that the Statement could lawfully be expressed in mandatory terms, without the need to expressly set out qualifications or exceptions. Or as the Court put it: 'The policy’s unqualified terms do not demonstrate that it was intended to countermand or frustrate the effective operation of the statute. The Secretary of State was not obliged to assure the reader that that was not his intention, nor to state that his policy was subject to the development plan'.

Therefore, the High Court had wrongly concluded that lawful planning policy must express its openness to exceptions.

Ground 2 addressed the parameters within which the Secretary of State should exercise his common law powers of policy making, and whether he was limited by the statutory planning regime. Again the Court of Appeal sided with the Government, concluding that whilst the statutory regime does to some extent constrain the Secretary of State, as it prevents him from:

  • forming a policy that countermands or frustrates sections 38 and 70 of the Planning and Compulsory Purchase Act 2004; and
  • introducing into planning policy matters which were not proper planning considerations at all.

Planning policy choices are for the secretary of state. Planning legislation 'does not lay down merits criteria for planning policy, or establish what the policy-maker should or should not regard as relevant to the exercise of policy-making'. 

Ground 3

The High Court was judged by the Court of Appeal to have carried out too forensic an analysis of the consultation documents in making his finding on this ground. A key argument here was whether the 'disproportionate burden' referred to in the consultation was confined by the terms of the consultation to viability issues only. The Court of Appeal found that this was not the case on a fair reading of the relevant paragraphs, and this was borne out by the consultation responses. The process was not therefore unfair.

The Appeal judges also gave relatively short shrift to the finding that appropriation consideration was not given to consultation responses, explaining that:

'we do not accept that that obligation [to give appropriate consideration to responses] translates into an obligation on the Minister to adopt the submissions made to him by respondents. In our judgment the Minister was entitled to consider the whole range of responses made to him … and to form his own conclusion…'

Importantly, the Appeal judges also concluded that it was not necessary for the Secretary of State in his response document to explain why he settled on a threshold of ten units instead of, say, three, saying that 'the requirements of a fair consultation do not require that sort of detailed analysis of options before the Minister'.

Ground 4

An equalities statement was only provided post the issue of the Statement (an omission on the part of the Government). The Appeal judges held however that this procedural breach was not of itself enough to justify quashing, which would by this stage be only a disciplinary measure.

What is the Government saying

The Housing and Planning Minister Brandon Lewis has wasted no time in issuing a press release, which can be read here. It applauds the decision as restoring:

'a government policy which means affordable homes contributions will fall to those bigger developers building the largest sites – while those smaller builders developing sites of 10 homes or fewer will be able to get work started on their sites, without facing charges that could leave them unable to build any homes at all'.

The release then quotes the Minister highlighting the importance of the policy in 'removing unnecessary red tape and bureaucracy that prevents builders getting on sites in the first place' - a bug bear of the development industry and an issue the Government has sought to address in earnest. No doubt the judgement will create a great deal of interest, with many smaller sites now been reappraised for development.

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