Privatising the planning system?

One of the measures in the Housing and Planning Bill 2016 which has created the most controversy is the Government's intention to open up the planning system to competition. It is proposed, in pilot areas, to test the benefit of competition by allowing the processing - not determination - of planning applications other than by Local Planning Authorities ("LPAs").

The DCLG "Technical consultation on implementation of planning changes" (which closed on the 18 April) sought opinions on how the process should operate. The Technical Consultation promotes the benefits of competition including "giving the applicant choice, enabling innovation in service provision, bringing new resources into the planning system, driving down costs and improving performance".  

For a limited time, it is proposed that applicants in pilot areas could opt to have their application processed by an "approved provider", rather than the LPA. Regulations introducing pilot schemes would set out the eligibility criteria for approved providers (which may include other LPAs), as well as performance standards, and how conflicts of interest and complaints will be dealt with. 

The LPA would remain responsible for determining any applications processed in this way. The approved provider would process the application and make a recommendation to the LPA as to how the application should be decided. 

Various issues arise from the proposals. There is the question of how the system should operate. The logistics of who deals with what aspects of the application will need clarifying. For example, who is to carry out the requirement to advertise and consult on the application, and who will address any planning committee? Will this simply create duplication of effort for LPAs? There are also concerns that such outsourcing may also lead to a loss of skills and resource in LPAs. 

Questions have also been raised as to how conflicts of interest and matters of probity would be dealt with by alternative providers.  LPAs will want to ensure decision making is robust as possible to avoid potential judicial review challenges.   

How will the process work from the point of view of the alternative providers? Some planning application work is already outsourced to third parties, and other LPAs, under existing arrangements. Alternative providers may only want to take on cases outside of their geographical area, for example, to avoid conflicts of interest, and will need to ensure that the work is financially viable. 

Therefore, what will happen to planning fees? The technical consultation makes it clear that a competitive market for processing applications "would require the ability for providers, including LPAs, to set their own fees and service standards". The Housing and Planning Bill Impact Assessment suggests this could allow for the creation of a fast-track service with higher fees, and notes that some applicants may not be able to pay for such a premium service.  There are also issues relating to division of fees between the alternative provider and the LPA, as the LPA will still incur some costs where the processing is carried out by an alternative provider.

This leads to the issue of challenges to the validity of planning decisions. An aggrieved applicant or interested party would be required to challenge an unfavourable decision of the LPA. because it was the LPA that determined the application, rather than the alternative provider. However what if there was a procedural breach leading to a judicial review application? The LPA would surely look to recover any losses from the alternative provider. Alternative providers will need to obtain insurance cover accordingly, which will only increase their costs.

The DCLG is keen to draw a parallel between planning applications and building control and states that following the introduction of approved inspectors in the 1980s, some 80% of building control applications are now being dealt with by approved inspectors. However many in the industry question whether such a comparison between the two systems can be so clear-cut.  Developers are likely to welcome a solution to resource issues within the planning system, but not at the expense of robust decision-making. There are always different views on whether privatising any service improves that service for its users and planning will be no different.

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