What’s in the Levelling Up and Regeneration Bill

The demise of section 106 and everything else you need to know

The Levelling Up and Regeneration Bill, announced in the Queen’s Speech started its progress through Parliament with its first reading on 11 May.

This is one of the flagship bills of the Parliamentary session and, of all the bills announced in the Queen’s Speech, it is likely to be one of the most controversial, enshrining into law the 12 missions of the Levelling Up White Paper to drive local growth, empower local leaders and regenerate areas.

The Bill’s 4 broad objectives are to:

  • boost productivity, pay, jobs and living standards by growing the private sector
  • spread opportunities and improve public services
  • restore a sense of community, local pride and belonging
  • empower local leaders and communities

There will be no standalone Planning Bill and planning reform will instead be framed around the Levelling Up programme with the Levelling Up Bill taking forward some of the planning reform outlined in the earlier Planning for the Future White Paper (August 2020).

Six ways the Bill will change planning

  1. PLAN-LED – Strong reasons required to override Local Plans
  2. BEAUTY – Design codes will have full weight in decisions on development
  3. INFRASTRUCTURE – Section 106 replaced with a locally set Infrastructure Levy
  4. REGENERATION – New types of Development Corporations and powers for using compulsory purchase
  5. LAND SUPPLY – Dropping five-year housing land supply requirements
  6. NEIGHBOURHOODS – Street Votes on local design codes and obligation to consider neighbourhood priorities.

This briefing outlines the main provisions of the Bill of relevance to NHC members, and describes the impending shake up to the planning system.

Delivering the levelling up missions

The Government announced in February 2022 that it would introduce a statutory obligation to report annually on the progress towards meeting the Levelling Up missions.  Enshrining the missions into law is the strongest message the Government could give on its intention to deliver the package of proposals.  The missions include plans for housing decency, home ownership, regenerating towns and extending devolution.  With requirements to specify target dates for delivery and report annually on progress, with missions cutting across the whole of Whitehall, the Bill makes a significant statement of intent.

Local Democracy and Devolution

Part 2 of the Bill takes forward the mission for every part of England that wants one to have a devolution deal with powers at or approaching the highest level of devolution, and a simplified, long-term funding settlement by 2030.

It sets out models that will allow bespoke devolution deals, giving local leaders the powers to meet their communities’ needs. The aim is to achieve more joined up services and decision making, greater flexibility over funding and more inward investment. Alongside these new powers, the Bill includes measures to increase the accountability and transparency of local leaders. This will include supporting attendance at overview and scrutiny and audit committees through amending remuneration provisions.

A new type of combined authority model is proposed – ‘combined county authorities’ (CCA) – to be made up of upper tier local authorities (county councils and unitary authorities) only. Upper tier local authorities will be expected to work closely with their district councils, who will be able to be ‘non-constituent members’ of a CCA.

Improving the Planning Process – a plan-led system

The whole thrust of the planning reforms is that applications will be genuinely plan-led.

Clause 83 of the Bill gives Local Plans more weight when making decisions on applications so that there must be strong reasons to override the plan, with the emphasis being “unless material considerations strongly indicate otherwise”. The same weight will be given to other parts of the development plan which are given full legal force.  Some plan policies (such as general heritage protection) will be set out nationally with no need for local replication.  There will be a new power to prepare supplementary plans to replace the ‘supplementary planning documents.’  A new duty will be placed on infrastructure providers to engage in the process. A series of ‘Gateway’ checks during production will help to spot and correct any problems at an early stage.

The ‘duty to cooperate’ will be repealed and replaced with an ‘alignment test’ across groups of local authorities set out in national policy to collaborate to produce a voluntary spatial development strategy, where they wish to provide strategic planning policies for issues that cut across their areas. Groups of authorities will be able to collaborate to produce a voluntary spatial development strategy, where they wish to provide strategic planning policies for issues that cut across their areas.

The Bill will remove the requirement for authorities to maintain a rolling five-year supply of deliverable land for housing, where their plan is up to date. The intention is to limit speculative development.

Local plans should be produced within 30 months and new Local Plan Commissioners may be deployed to support or ultimately take over plan-making if local planning authorities fail to meet their statutory duties.

The process for producing the plans will be supported with new digital powers to allow more standardised data to inform plan-making.  The Bill includes a new power to prescribe the use of specific types of planning data software and require that electronic planning applications comply with “particular technical standards or specifications.”

Neighbourhood plans will be given greater weight in planning decisions and the Bill introduces a new neighbourhood planning tool called a ‘neighbourhood priorities statement’ which the local authority will be obliged to consider when preparing its local plan. Residents will be able to take part in new ‘street votes’ to make proposals to extend or redevelop their properties in line with their design preferences.

Infrastructure Levy

The Bill follows through with the proposal to replace the current system of developer contributions through section 106 with a mandatory, and locally determined Infrastructure Levy.

The rates will be set as a percentage of gross development value rather than based on floorspace, as with the Community Infrastructure Levy at present. Going forward, the Community Infrastructure Levy will be restricted to Greater London and Wales.

Infrastructure delivery strategies prepared locally will determine where and how infrastructure spending is allocated.

Following responses to the consultation on the 2020 White Paper, the Bill confirms that charges will be determined locally by local planning authorities who will be able to set different rates within their area. For example, different rates could be set for brownfield and greenfield sites within a local authority boundary to help boost development in certain areas.

The Bill includes a framework in Schedule 11 committing to the Levy securing at least as much affordable housing as developer contributions do now.

Local authorities will be able to determine the portion of the levy they receive in-kind as onsite affordable homes using a ‘right to require’ thereby removing the role of negotiation in determining levels of onsite affordable housing.

Further regulation will also consider how the levy will be applied to registered provider-led schemes and will detail a ‘retained role’ for Section 106 agreements to support the delivery of infrastructure on the largest sites.

While the Bill provides the framework for the new levy, much of the detail will be set out in future regulations.  The new non-negotiable and locally set Infrastructure Levy will be introduced through a phased ‘test and learn’ rollout and a consultation will be coming soon on the detail.

Beautiful places and environmental outcomes

Environmental impact assessments (EIAs) and strategic environmental assessments (SEAs) will be scrapped and replaced by a new “outcomes-based” approach to examining the likely environmental impact of proposed projects and plans.

A consultation will be issued shortly on changes to the National Planning Policy Framework to improve environmental outcomes. This will include changes to embed the Environment Act’s reforms into plan-making.

The Bill will require every local planning authority to produce a design code for its area. These codes will have full weight in making decisions on development. The ‘Office for Place’ will support local planning authorities to deliver design codes and better design outcomes.

Measures in the Bill will also strengthen the role the planning system plays in protecting the historic environment and puts Historic Environment Records on a statutory basis, placing a new duty on local authorities to maintain one for their area.

Regeneration

This Bill will make provision for a new type of Urban Development Corporation, with the objective of regenerating its area and accountable to local authorities in the area rather than the Secretary of State.  It also updates the planning powers available to development corporations, so that they can become local planning authorities.

Part 7 of the Bill on Compulsory Purchase puts beyond doubt local authorities’ powers for using compulsory purchase for regeneration.

Measures will be introduced to reform land compensation to ensure that fair compensation is paid for the value attributable to prospective planning permission (‘hope value’).

The Bill will also give local authorities an important new power to instigate high street rental auctions of vacant commercial properties in town centres.

Local Planning Capacity

The package of reforms will require an increase in skills for local authorities, for example digital and design skills and Government is carrying out work to assess the need for sufficient skills, capability and talent for the new system to run effectively.

To improve capacity in the local planning system, the Bill announced that planning fees will increase for major and minor applications by 35% and 25% respectively. This will be consulted on in the summer before changes are made through secondary legislation at the earliest opportunity following the consultation.

The Government has stated that increasing fees must lead to a better service and the existing planning performance framework will be expanded to measure performance across a broader range of measures.

DLUHC has committed to continue to work with sector experts to develop a planning skills strategy for local planning authorities.  A sector working group is discussing capacity issues now that the package of proposals is available.

NHC View

We welcome the provisions of the Bill to strengthen and add to the tools that can be used to deliver regeneration and make good use of brownfield land. The Bill will enhance compulsory purchase powers, make it easier to establish locally-led development corporations and improve transparency about the ownership and control of land. Housing on brownfield sites can deliver on many of the Government’s levelling-up priorities: restoring pride by tackling eyesore sites, creating opportunity through jobs in remediation and construction, and boosting living standards by creating new homes for sale and rent that cost less to run.

Reforms to section 106, and the creation of a locally-set non-negotiable levy will need careful assessment.  While not without its flaws, the existing system allows for flexibility and greater certainty on securing affordable housing.  It is good to see that the new Infrastructure Levy will be set at a local level – this is something we pushed for when the levy was first proposed.  Land values and development costs vary significantly across the country and therefore a mechanism that levy’s contributions to infrastructure and other planning obligations must be response to local conditions if it is to be part of a levelling up programme.

The focus remains on delivering affordable homes and there is a concern that the levy will be less prescriptive than section 106 in its requirements for affordable housing on site. In the North, 31% of all units completed since 2015/16 were achieved from developer contributions and there is still a question about how in practice the number of genuinely affordable homes currently provided though section 106 will really be ensured, particularly in low value markets. We welcome the phased ‘test and learn’ approach to the introduction of the levy to ensure the system delivers for all parts of the country.

Local planning authorities must be provided with the resources to manage the levy and ensure that obligations are delivered.  It is encouraging that work is underway to develop a skills strategy, but we know that Northern local authorities have been disproportionately impacted by reductions in spending since 2010. This could undermine their capacity to undertake the planning and housing reforms and support for skills and new roles will become more pressing. Upfront support will also be required during the transitional period where there would have to be two planning systems running simultaneously.

There is still some way to go for the Bill and there could be amendments following various consultations. Changes to regulations, guidance and wider support for councils, and ways to involve residents will be just as important as the new legislation. Also, we will need to wait to see what is covered by national development management policies.

With the Bill just starting its journey through Parliament, a significant amount of detail remains to be worked through and the NHC looks forward to working with Government and our Members to help shape the detail.

Next steps

Government will be consulting on:

  • Changes to the National Planning Policy Framework including the removal of the requirement for authorities to maintain a rolling five-year supply of deliverable land for housing, and on the National Development Management Policies
  • Detail of the Infrastructure Levy and changes to compulsory purchase compensation
  • Consultation on the new system of Environmental Outcomes Reports
  • Consultation on the quality standards that Nationally Significant Infrastructure Projects
  • Proposals for changes to planning fees.

Transition plans will be set out but in broad terms changes to planning procedures will begin to take place from 2024.

Book your place at the Levelling Up Conference: Housing at the Heart of a Rebalanced Country – Thursday 14th July at Hilton Leeds City.  The conference will include keynote speakers, good practice case studies, and a core focus on networking and collaboration.