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RTPI response to the House of Lords Rural Economy Committee

This consultation explored various aspects of the rural economy. RTPI's response considered key planning-related issues including housing and transport policy. You can read RTPI's response below or download it in PDF here.

October 2018

What do you understand by the "rural economy"? How has it changed over recent years, and what has been the impact of these changes?

1. The rural economy is diverse, composed of agriculture, mineral extraction, fishing and forestry, tourism, professional services, manufacturing, science and technology. It forms a significant part of the national economy, with around 24% of all registered businesses in England located in rural local authority. When compared to urban economies, rural areas tend to incorporate more land-based sectors, along with higher rates of home working and small and micro-businesses. The interests of rural communities are also diverse, including affordable housing, healthcare, education, skills, jobs, transport and broadband [1].

2. The government's statistical methodology defines areas as rural if they are outside settlements with more than 10,000 resident population. Within this, variations in the rurality of settlements can be made according to different levels of population density and sparsity. Rural economies often also fall within wider functional economic areas which incorporate towns and cities. The importance of strategic planning across both urban and rural areas is a particular focus of the RTPI's work.

Could you give examples of notable success stories and good practice in the rural economy? How might rural successes be replicated and better promoted?

3. The RTPI champions good practice in rural planning through our annual Awards for Planning Excellence [2], our Better Planning projects[3], and our 'England's Great Places' competition [4]. We can also share success stories through our membership of the Rural Coalition, which is composed of twelve national organisations who have come together to call for a living and working countryside in England, along with our regional programme of events and training.

How do you see the future of the rural economy? Where is the greatest potential for growth, and what might be the impact of technological and other changes?

4. In addition to the sectors outlined in para 1, there is potential for rural economic growth in:

  • The provision of ecosystem services, such as carbon sinks, flood mitigation and biodiversity gains, supported by advancements in tools and methodologies for assessing and valuing natural capital [5]
  • Low-carbon and renewable energy generation and distribution, supported by their rapidly declining cost, advancements in energy storage and smart grids, and the need to achieve legally-binding decarbonisation targets

5. As the UK negotiates leaving the European Union it is critical that the voices and needs of rural communities are taken into account. Rural issues should inform both the terms on which we seek to leave the EU and UK/England laws, regulations and funding programmes that are subsequently put in place.

How can access to transport be improved in rural areas?

6. Rural housing and economic growth has to be coordinated with transport policy that delivers maximum accessibility by public, shared and active modes. This is a particular challenge in rural areas with dispersed populations and low-density urban form, due to the level of subsidy required to support viable and attractive bus networks, and the difficultly in maintaining viable local services. Local bus spending and route coverage has been declining in many rural areas, and while this has been replaced by community buses in some cases, it has generally resulted in reduced accessibility for those without access to a car [6].

7. National transport policy has tended to favour investment in the road network to meet rising demand and tackle congestion. However, this has paid insufficient attention to role of transport as a driver of land-use change. Induced demand can result from additional road capacity, as people to change their behaviour in response to improved traffic conditions, making more frequent journeys, travelling by car instead of public transport, choosing more distant destinations, or making new journeys. This generates additional traffic and congestion, which in turn creates demand for increased road capacity, improving accessibility to more peripheral areas. This can lead to car-dependent urban sprawl into rural areas, encouraging people and businesses to relocate to areas which are poorly served by public transport, and creating markets for new development in those areas. Over time this increases the cost of providing infrastructure and services (e.g. roads, utility lines, school transport, waste collection, policing and emergency response) across a more dispersed population. This can in turn decreases the level of funding available to rural public transport and other services.

8. Rural developments often come with residential densities and land use mixes which are too low to support a range of shops and facilities, which in turn limits options for walking and cycling. To support public and active travel within more rural areas, new development should be concentrated in a small number of strategic locations, prioritising brownfield sites within the larger existing rural settlements or immediately around them, before expanding smaller rural settlements [7].

9. Improving access to transport in rural areas in the context of limited revenue funding could be improved with improved digital connectivity, which can mitigate the need to travel, along with interventions like smart-ticketing and better real-time information, and the devolution of bus franchising powers to rural areas.

10. If current technological barriers can be overcome, then Connected and Autonomous Vehicles (CAVs) may also play a role in improving future rural accessibility where the absence of a human driver and greater route flexibility makes public/shared transport more affordable. However, this would also require preparatory investment from government in rural digital infrastructure (e.g. roadside sensors) and road maintenance which allows CAVs to 'read' the road (e.g. fixing potholes, painting white lines). Coordination by a strategic transport authority, dealing with both urban and rural areas, would also help to ensure that rural CAVs are integrated into the wider public transport network.

What can be done to address the challenges associated with an ageing rural population, such as social isolation and social care provision? What opportunities are there for the older retired population to help support the rural economy?

11. While the number and proportion of older residents is projected to increase in all types of settlement, the largest increase will be felt in small towns and rural areas. The most significant demographic change will be an increase of older people aged 70 and above. Within this, the over 85 age group is also projected to increase by 186% in rural areas as soon as 2028, compared to 149% in the UK as a whole. While part of this will be caused by natural population growth, it will also be driven by retirement migration.

12. While young people are less likely to own a car and drive less, owned cars are the most common mode of transport for older people, and there is evidence that road mileage from the elderly is increasing. For elderly people living in more rural areas, car use is difficult to replace with more environmentally sustainable modes of transport due to lack of public transport options, perceived or actual unsuitability of public transport, and difficulties accessing public transport stops. However, as people age, it also becomes harder to drive. Loosing access to a car or a driver can have serious negative impacts on wellbeing and health, which have been estimated as similar in magnitude to the loss of a job or spouse over the long-term.

13. Those living in more rural locations often struggle to find alternative modes of transport, especially as local bus spending and route coverage has declined in many rural areas. While this has been replaced by community buses in some areas, it generally makes it difficult for older people to access both preventative and critical healthcare. This harms individual quality of life and creates additional costs for the NHS. Those in the worst health and with the lowest incomes found it the most difficult to travel to health services. Social isolation is thought to affect between 7% and 17% of older adults, and is becoming more prevalent. Those in more rural areas are thought to suffer more from social isolation, although more research is needed. Social isolation is associated with higher rates of ill-health and mortality – for example people with a high degree of loneliness are twice as likely to develop Alzheimer's as people with a low degree of loneliness. Living in car-dependent locations also reduces levels of walking, and there is evidence that this is also linked to increased rates of cognitive decline and dementia.

14. The implications for public health infrastructure are also significant in terms of providing care at home for a more dispersed population. Care workers overwhelmingly use private cars to access patients, and often visit the same household multiple times in one day to provide services such as a morning wash, lunch, and help to bed in the evening. This means they spend a significant proportion of the day travelling, leading to high fuel costs and related transport emissions. The costs of these journeys accrue to local government adult social care budgets which are already stretched. If a growing proportion of older people live in more dispersed and rural communities, and fuel prices increase, then local authorities will face increased costs for the provision of care at home [8].

15. Through the Rural Coalition we have called on government to ensure that the extra costs of delivering services in rural areas are properly reflected in any funding formula, such as those used for local government, education and the NHS, and for the provision of a comprehensive community infrastructure support programme, which recognises the pressures on volunteers, helps those places with less capacity and spreads existing good rural practice[9].

How can the affordability of rural housing be improved? What are the other challenges associated with rural housing and how can these be addressed?

16. Rural communities are particularly affected by the lack of affordable housing, with house prices around 26% higher in rural than urban areas (excluding Greater London). This is due to a number of factors, including lower average wages rural areas, a lower proportion of socially rented homes, and fewer new affordable houses being built. In certain areas, especially rural coastal locations and National Parks, demand for second homes also plays a role in driving up house prices. This means that young people and families can become priced out of rural communities, which raises the average age and leads to services like shops and post offices closing down[10].

17. Planning plays a key role in delivering affordable housing of various tenures and in different locations, and is integral to capturing uplifts in land value for the public where there is new development. Where planning is strong and well supported, it can ensure that the right housing mix is developed, along with the social, physical, and environmental infrastructure needed to support it.

18. While better planning can help deliver social and affordable housing, it is crucial that the planning system is not seen as the main vehicle for funding this. Every UK Government in Westminster since 1990 has attempted to fund social housing primarily from developer contributions. This has put pressure on the planning system to deliver things it was never supposed to deliver and distracted politicians from the need to make larger changes to tackle the housing crisis (see para 24-26). It has also contributed to the tendency of Governments to focus on overall housing targets, believing that affordable housing contributions will solve the social housing issue.

19. Social housing was formerly properly built on council owned land by councils. There may have been problems with this approach, especially in terms of failing to integrate social housing with other types of housing. However, it was misguided to imagine this system could be replaced by requiring the planning system to extract contributions from developers to fund social housing, and to imagine that public grant could therefore be removed. Developer contributions like Section 106 agreements were never intended to fund affordable housing, instead being aimed at the infrastructure needed to support the developments. The following are some of the main failings of the current system:

  • Huge transaction costs in working out how much affordable housing will be delivered. The negotiations around developer contributions are a major cause of delays in planning, and thus make it harder for planners to do their more strategic work. Both developers and councils are forced to spend large amounts of money on consultants, surveyors, and lawyers. Making social housing provision dependent on developer contributions in the planning system have directly led to current issues around viability negotiations. This is a particular problem due to resource imbalances between councils and developers. Research from CPRE and Shelter found that, in eight rural local authorities between 2015 and 2016, the use of viability assessments led to a 48% drop in affordable homes delivered [11].
  • The need to secure contributions for affordable housing drives out other potential beneficiaries of developer contributions. This includes infrastructure, which developer contributions were originally intended to be for. This in turn contributes to the unpopularity of new housing developments. Communities have legitimate concerns that developments will not come with sufficient investment in local infrastructure.
  • The ability to provide a minimal amount of social housing from developer contributions allows attention to be drawn from needed reforms. Great attention is given to viability negotiations, and maximising affordable housing contributions. This attention would be better spent on achieving badly needed changes such as reforming council tax.
  • The provision of affordable housing has also been subject to viability tests which can be used by developers to lower affordable housing contributions, based on the argument that changing market conditions have made the original plan unviable.
  • In weaker housing markets, a lack of developer interest in building out the sites identified in their five-year land supply. This was particularly the case where Help to Buy schemes were operating successfully on sites in adjacent local authorities, and especially in rural areas where it can prove difficult to achieve development even on rural exception sites.

20. However, our recent research [12] on the direct provision of housing from local authorities found that 65% of local authorities are directly involved in housing delivery and that only 9% were not involved at all. This suggests that there is a foundation on which to expand local authority housing provision through the traditional mechanism of the Housing Revenue Account (HRA).

21. Local authority housebuilding typically includes a range of tenures and in some cases are being delivered in partnership with others, both on local authority owned land and sites which have been subject to CPO or purchased by agreement. An example is North Kesteven, a rural district council in Lincolnshire. One of its major housing concerns is homelessness, and it has consistently been building homes through its HRA to replace Council stock which has been lost under Right to Buy. The council has also purchased commercial property to provide rents to run services over a long period of time. Councillors of the authority have become frustrated that the HRA debt cap has inhibited it from providing more housing for rent, and established a housing company - Lafford Homes. The main issue for the council has been finding land for housing development although a site was purchased by agreement through a local land owner. The council has approved additional funds to purchase more land to continue their developments. A key focus of the council's delivery is on quality, building homes using both straw and Passivhaus design.

22. The government now plans to remove the HRA borrowing cap for all local authorities in the Autumn Budget should make it easier for other local authorities to follow a similar approach. If the Right to Buy policy is to continue, then local authorities should also be allowed to retain all receipts if they are using them to build replacement affordable housing. Government should review the relative weightings in the distribution of the £44bn housing subsidy to give more priority to social and affordable housing and less to market housing for sale.

23. It is also crucial to make the wider case for public subsidy of social housebuilding. This doesn't all need to be 'new money' – government could instead redistribute some or all of the funds allocated for Help to Buy, which does nothing to help those in most need, and further drives up demand and prices. It is short-sighted to simply look at grant for social housing as a cost, compared to seeing loan financing as money the Government will get back. By investing in social housing, the Government should save money in the long term by reducing the housing benefit bill.

How have recent planning policy reforms affected rural housing and the wider rural economy? What changes, if any, are needed to planning rules?

Comments on planning reform

24. The past decade has seen almost continual changes to English planning policy and regulation, especially in relation to housing policies and initiatives, as a way to address the affordable housing crisis. However, reforms have often focused on boosting housing supply at the expense of tenure, design, quality, and location. A survey of English RTPI members in 2016 found that 73% thought that constant changes to planning were hindering their ability to deliver good places, 53% thought that changes were holding back housing development, and 70% thought that they were less able to deliver the wider benefits of planning compared to a decade ago[13].

25. There are numerous complex reasons for the general failure of planning reform to deliver more affordable housing, including in rural areas. This includes:

  • The reduced role of local authorities in housebuilding
  • A weak relationship between land supply, housing supply, and rates of house price growth, and almost no relationship between land supply and the other factors that impact affordability such as transport costs, energy bills, food expenditure, and access to employment
  • The financialisation of housing, especially following the 2008 financial crisis, as quantitative easing has increased asset values and in relation to savings and wages, exacerbating inequality both between generations and between property owners and renters
  • An emphasis on owner-occupation, including state-sponsored and debt-financed expansion of individual owner-occupation of housing, and the privileging of home ownership in the tax system
  • A limited supply of land in optimal locations close to major employment clusters and transport infrastructure, amplified by the financial system and demand side policies, which means that land values tend to rise at a considerable rate over time.
  • A lack of mechanisms for capturing the gain in land values delivered by the granting of planning permission and public investment in infrastructure, which can encourage strategic land trading rather than development, and which can in some situations result in landowners being the greatest beneficiaries of residential development – not developers, communities, or central or local government.

26. Through the Rural Coalition, we have recommended the government introduce an ambitious annual target for the number of new affordable homes built in rural areas and a dedicated rural affordable housing funding programme. We also believe that current methods of land value capture are adequate, and that there should be a fairer way of sharing land value uplift between landowners and the community, to fund the housing and infrastructure the country needs.

Viability

27. Recent changes to the treatment of viability in the revised 2018 National Planning Policy Framework and Guidance is positive. This makes is clear that viability should be assessed at the plan-making stage using site typologies, and that there must be very good reasons (i.e. exceptional circumstances) to diverge from the developer contributions specified in the adopted Local Plan policy. Guidance also clarifies that the cost paid for land cannot be used as a justification for failing to comply with policy requirements, and that viability assessments will be subject to greater transparency. We will monitor how these changes play out in practice.

Permitted development

28. The RTPI supports the view that the planning system should not be the way to control minor development, and we have always supported the existence of permitted development rights. However permitted development has a cumulative impact on issues like infrastructure and amenity, and it is important that local planning authorities are able to manage these impacts in line with the broader strategic objectives of the rural community. Proposals for further change should recognise that proper safeguards are still needed to ensure that permitted development does not result in in poor quality development, strain on infrastructure, or neighbourhood conflict.

29. Re-using agricultural buildings is a good idea and it would be helpful to enable non-farm businesses to be able to expand within a given farm complex. However, it is vitally important that local planning authorities are able to restrict the change of these new businesses into housing. The conversion of agricultural buildings under permitted development can create a principle of residential development in locations with poor access to employment and services. In subsequent applications for development, or even prior approval applications, we believe these criteria should be factored into decision making. There are also no provisions to ensure that the homes created through permitted development are affordable, or to limit occupancy to those connected to the farm or local area, creating a risk that new houses would be of excessive price and not contribute to local housing need.

30. Previous changes to permitted development rights also reduced revenues to local authorities while providing little in the way of savings. We are concerned that any further relaxation of these rights would continue to negatively impact on local authority finances during a period of cuts.

Rural and entry level exception sites

31. The revised 2018 NPPF introduced entry-level exception sites as a mechanism to provide sub-market housing suitable for first-time buyers (or equivalent for those seeking to rent). While these sites are excluded from National Parks, AONBs and Green Belt land, close monitoring will be required to ensure they do not lead to a reduction in rural exceptions sites coming forward in non-designated rural areas, or an increase in the price of such sites.

Integrated transport and land use policy

32. The RTPI is concerned that the revised 2018 NPPF does not contain strong enough policies to ensure that housing delivery is coordinated with measures to ensure maximum accessibility by sustainable modes of travel. This integration is critical to tackling serious issues of congestion, air pollution, rising carbon emissions from the transport sector, and the negative impacts of car dependency on both individual health and wider place-making.

33. Our Location of Development study has explored changing settlement patterns and in twelve fast-growing English city-regions. The study mapped planning permissions for over 226,000 new houses granted between 2012 and 2017, focusing on major schemes of 50 or more units. It found that new housing is being located relatively close to jobs, with 74% of permissions within 10km of a major employment cluster. However, it found that over half of the houses permitted are not within easy walking or cycling distance of a railway, metro or underground station [14]. In some city-regions, this suggests that urban housing need is being met through dispersed patterns of development in more rural areas.

34. The recent Transport for New Homes report, published by the Foundation for Integrated Transport, also shows that a number of major housing developments and urban extensions, some of which are located in rural areas, are not located or designed to facilitate active modes of transport [15].

Do the Government and other public bodies pay sufficient attention to the rural economy and if not, why not? What might be done to ensure that Government and other public bodies hear and act on rural voices?

35. There is a need to ensure that devolution deals between government and sub-regional bodies do not focus exclusively on large metropolitan areas. While there have been some examples of deals with more rural areas, most notably Cornwall, the current model of mayoral combined authorities may not be flexible enough to work in places without an obvious core settlement. Government should ensure that the devolution model is rural proofed so as to avoid exacerbating urban/rural inequalities.

36. Effective strategic planning across urban and rural areas can perform a vital role in ensuring that the benefits of economic success are shared more evenly. However, cooperation can be a challenge especially where there is a central city surrounded by more rural areas or outlying towns, as non-urban areas can sometimes perceive little benefit in engaging with the process – perhaps due to concerns that the process will be dominated by the central city. In areas where cooperation has nevertheless worked, a central success factor is identifying how all contributing areas can benefit, and providing incentives for cooperation.

37. Rural communities should play an active role in planning for their future, and the government has strengthened the emphasis on Neighbourhood Planning in the plan-making process. In Cornwall, for example, the St Ives Neighbourhood Plan undertook a referendum to restrict second homes which was subsequently held up in court. However, smaller rural communities in remote areas, or without the necessary skills base, can lack the capacity to develop an effective Neighbourhood Plan. Continued support and resourcing will be needed to enable all communities to benefit from this opportunity.

What is being done in local government to support rural economies? How effectively do other public bodies such as Local Enterprise Partnerships operate in rural areas, and how might coordination between bodies be improved?

LEPs covering significant rural areas need to ensure that rural people and businesses have a strong voice, and that strategies contain specific programmes which address enterprise and employment in rural areas. A CPRE survey in 2017 suggested that the majority of LEPs were not taking sufficient account of the economic potential of rural communities, or their social needs and environmental quality[16]. Emerging Local Industrial Strategies will also need to ensure they take sufficient account of the potential of rural communities to contribute to UK productivity.



[1] Rural Coalition, 2017. Evidence Base & Assessment of Progress. Available from: acre.org.uk/cms/resources/rural-coalition-evidence-base-2017-low-res.pdf

[2] rtpi.org.uk/events/awards/awards-for-planning-excellence

[3] rtpi.org.uk/betterplanning

[4] rtpi.org.uk/events/awards/englands-great-places-2015

[5] For an example, see: ncptool.com

[6] Rural Coalition, 2017. Evidence Base & Assessment of Progress.

[7] RTPI. Settlement Patterns, Urban Form and Sustainability. Available from: rtpi.org.uk/media/2822766/settlementpatternsurbanformsustainability.pdf

[8] RTPI. Settlement Patterns, Urban Form and Sustainability. Available from: rtpi.org.uk/media/2822766/settlementpatternsurbanformsustainability.pdf

[9] Rural Coalition, 2017. Evidence Base & Assessment of Progress.

[10] ibid

[11] CPRE and Shelter. 2018. Viable Villages. Available from: cpre.org.uk/resources/housing-and-planning/item/download/5317

[12] RTPI and NPF. 2017. Local authority direct provision of housing. Available at: rtpi.org.uk/media/2619006/local-authority-direct-provision-of-housing.pdf

[13] RTPI. 2016. Delivering the value of planning. Available from: rtpi.org.uk/media/1915891/rtpi_delivering_the_value_of_planning_full_report_august_2016.pdf

[14] For more information see rtpi.org.uk/locationofdevelopment

[15] Foundation for Integrated Transport. 2018. Transport for New Homes. Available from: transportfornewhomes.org.uk/wp-content/uploads/2018/07/transport-for-new-homes-summary-web.pdf

[16] CPRE. 2018. Next steps for LEPs. c pre.org.uk/resources/housing-and-planning/item/4894-next-steps-for-leps