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Four reasons why cuts to planning are a false economy

By Dr Michael Harris, former Deputy Head of Policy and Research

As is well-known, local authority planning departments in England in particular have experienced some of the deepest cuts of all local services over the past few years. Perhaps it’s not difficult to understand why. Under significant and ongoing financial pressures, many local authorities have tried to prioritise, for example, adult and children’s social care over seemingly less ‘critical’, less visible planning and development functions. A policy environment critical of planning hasn’t helped either. But with government ministers reportedly “losing patience with planning”, here are four ways in which we can make a stronger case for why further cuts to planning are a false economy.

First though, the extent of the cuts. The National Audit Office’s November 2014 report on The Impact of Funding Reductions on Local Authorities found that the planning and development services of county councils and single-tier authorities, such as metropolitan boroughs, had seen the largest spending reductions across the whole of local government (see the graph below) – in part due to the end of a number of government regeneration programmes aimed at deprived communities. The NAO calculated that the budgets of planning departments in such authorities had nearly halved (46 per cent) since 2010; the authorities making the biggest cuts overall have cut 55.4 per cent from planning and development budgets from 2010-11 to 2014-15.

Source: National Audit Office.

In terms of specific functions, building control, environmental initiatives and economic development have generally been hit harder than development control, planning policy and community development, though all areas have seen significant reductions. Further, according to reported performance measures at least, the impact seems to have been mainly on ‘minor’ planning applications – the percentage of minor applications processed within 8 weeks fell from 75 per cent in 2010-11 to 70 per cent in 2013-14, despite a three per cent fall in the number of applications, whereas the share of ‘major applications’ processed within 13 weeks increased from 67 to 71 per cent over the same period.

As the NAO has also noted, the complexion of cuts has also been changing. While many local authorities initially focused cuts on planning and development (which bore 21 per cent of total local authority savings despite only representing four per cent of total spending in 2010-11), the scale of the savings required has increasingly meant that other (larger) budgets in largely protected services such as adult social care have now become the focus for reductions. It may also be that in many authorities there is little left to cut from planning (something I return to further below).

By May, government funding for councils will be 40 per cent lower than it was in 2010, and a further 13 per cent will need to be cut in 2015. The Local Government Association has predicted that the most recent Local Government Finance Settlement means that councils across England will receive 8.8 per cent less funding from government to run local services from April 2015, and that savings of £2.6 billion will need to be found from council budgets for 2015-16.

The upcoming General Election campaign is likely to see further debate (and disagreement) over the extent of the cuts still to come. This month, the Institute for Fiscal Studies warned that the “worst of UK spending cuts [are] yet to come”, and so it’s more than important than ever that we find the right arguments to defend planning.

1. Planning is critical to meeting local housing needs

Some commentators might assume that reduced resources in planning departments might – from their perspective at least – encourage a more ‘pro-development’ stance, even if this also has the effect of undermining local decision-making. But in reality, cuts are undermining development and growth.

This is not just planners’ special pleading. The recent GL Hearn/British Property Federation third Annual Planning Survey found that 71 per cent of developers are dissatisfied with the time taken to make decisions, but the report argued that further widespread reform of the planning system is not the answer. Rather, the critical issue is that local planning authorities are chronically under-resourced. Similarly, last month the Federation of Master Builders (FMB) urged national and local government to prioritise investment in planning departments in order to cope with rising housing demand.

What’s been largely missing then from the political parties’ various proposals to boost house building... is then their recognition of a corresponding investment in the planning needed to make it happen.

Moreover, there is the economic benefit from house building. According to Savills’ research, a substantial increase in house building of 100,000 homes per annum would not only deliver much needed housing, it would create jobs, boost tax revenues and cut government borrowing by £23 billion over the life of a Parliament.

What’s been largely missing then from the political parties’ various proposals to boost house building (let alone the numerous ideas put forward by think tanks and others) is then their recognition of a corresponding investment in the planning needed to make it happen.

2. Planning is critical to local economic growth

More broadly, starving planning of resources undermines its ability to contribute to long-term sustainable economic growth. Perhaps the most worrying aspect of the NAO figures is how economic development has been hit harder than most areas, and reduced capacity in planning departments means there is less time for the positive and proactive strategic planning by experienced teams that can shape and stimulate, rather than just react, to proposed development in areas. This undermines the extent but also the quality, integratedness and attractiveness of development, and so the economic potential of places.

Moreover, it is paradoxical that at the very time that policymakers have accepted the arguments for devolving more powers to cities, they are seemingly failing to recognise that cuts to local planning threaten the ability of cities to invest in their own future economic success and to reduce the spatial economic inequalities that drag down the UK’s overall economic productivity. As such, the economic dividend that proponents of city devolution claim would be released by Whitehall letting go of the purse strings – up to £222 billion by 2030 according to one recent report – are unlikely to be realised without also investing in the ability of these cities to plan effectively (other evidence on the 'devolution dividend' is much more mixed, though the argument for devoling power doesn't rest on the economic arguments alone).

3. Planning produces wider social benefits that save money

Then there are the social benefits of investing in planning that also produce economic benefits and save money. To take just one example, healthy places not only promote better individual health, they also reduce the costs of ill-health. A few illustrative facts:

  • In the UK it has been estimated that poor quality housing costs the NHS at least £760 million and society £1.9 billion annually.
  • Britain spends £6 billion a year on the medical costs of conditions related to obesity and a further £10 billion on type 2 diabetes, but the wider economic costs are much higher – an astonishing £47 billion a year, an annual loss equivalent to three per cent of GDP.
  • According to the National Institute for Health and Care Excellence (NICE), physical inactivity in England alone costs £8.2 billion per year, and accounts for nearly one-fifth of premature deaths across the UK.

The argument here is simple – investing in planning can be a preventative investment in healthy placemaking. Of course, planning for better health isn’t the only preventative approach that fails to receive the investment it should (we spend far more on treating illness than preventing it generally), but as the cuts continue it’s an argument we need to make more forcefully, lest we end up ‘investing’ only in failure (illness, worklessness and other social problems).

4. Less resource doesn’t mean more ‘efficiency’

Related to this, the fourth point is not so much an argument for the positive economic effects of planning but a question about the extent to which it is possible to ‘do more with less’.

Any system can be made more efficient, but the extent of the further cuts now facing local authorities means that the scope for efficiencies is coming to an end. Outsourcing, mergers, shared services and streamlined customer-focused processes have been introduced by many local authorities, and there may not be a huge amount more than can be done as resources tighten. A survey of LGA members has reported that nearly a third of councils now say they have very little or no scope to reconfigure services further.

In any case, ‘efficiency’ isn’t always efficient. As we’ve learnt from more than two decades of New Public Management, prioritizing efficiency over effectiveness – reinforced by traditional performance management measures such as targets and penalties or incentives – can be highly counterproductive. According to leading public sector management thinkers such as John Seddon, it’s often better (and better value for money) to focus on reducing waste and inefficiency by understanding what customers really want, getting things right first time, and on delivering outcomes rather than pushing through outputs. But such practices require time to think, to analyse current services and to test improvements – in short, improvement requires investment – all things that are increasingly difficult to do in the context of year-on-year budget reductions, when the ‘easiest’ response is to cut more staff posts.

Fundamentally, the need here is to stop seeing planning as a process to be conducted as rapidly as possible (despite the importance of time), and start understanding it as an investment in the economic future of places. This year we'll be doing more work on the cuts and pressures facing local planning departments. How, though, to find ways to invest in planning services? This is something I’ll consider in a following post.

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