ON APPEAL FROM THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
PLANNING COURT - CO/76/2015
MR JUSTICE HOLGATE
Strand, London, WC2A 2LL
B e f o r e :
LORD JUSTICE LAWS
LORD JUSTICE TREACY
| Secretary of State for Communities and Local Government
|- and -
|West Berkshire District Council
Reading Borough Council
Mr D Forsdick QC and Mr A Mills (instructed by Legal Services at West Berkshire District Council) for the Respondents
Hearing dates: 15 & 16 March 2016
Crown Copyright ©
LAWS LJ and TREACY LJ:
"(i) Developments of 10 units or 1000 sq m or less (including annexes and extensions) would be excluded from affordable housing levies and tariff based contributions;?
(ii) A lower threshold would apply in designated rural areas, National Parks and Areas of Outstanding Natural Beauty (as defined in section 157 of the Housing Act 1985), with developments of 5 units or less to be excluded from affordable housing levies and tariff based contributions. Development of between 6 and 10 units would be subject to a commuted sum payable on or after completion;?
(iii) Where a vacant building is brought back into use or demolished for redevelopment, local authorities will provide a 'credit', equivalent to the floorspace of the vacant building, to be set against affordable housing contributions." (judge's emphasis)
Given the nature of the major issue in the case the language of the WMS itself is important. We should cite the following paragraphs.
"We consulted in March this year on a series of measures intended to tackle the disproportionate burden of developer contributions on small scale developers, custom and self-builders. These included introducing into national policy a threshold beneath which affordable housing contributions should not be sought. The suggested threshold was for developments of ten units or less (and which have a maximum combined gross floor space of no more than 1,000 square metres.
We received over 300 consultation responses many of which contained detailed submissions local data. After careful consideration of these responses, the Government is making the following changes to national policy with regard to S.106 planning obligations:
Due to the disproportionate burden of developer contributions on small scale developers, for sites of 10 units or less, and which have a maximum combined gross floor space of 1,000 square metres, affordable housing and tariff style contributions should not be sought. This will also apply to all residential annexes and extensions.
For designated rural areas under Section 157 of the Housing Act 1985, which includes National Parks and Areas of Outstanding Natural Beauty, authorities may choose to implement a lower threshold of 5 units or less, beneath which affordable housing and tariff style contributions should not be sought. This will also apply to all residential annexes and extensions. Within these designated areas, if the 5 unit threshold is implemented then payment of affordable housing and tariff style contributions on developments of between 6 to 10 units should also be sought as a cash payment only and be commuted until after completion of units within the development."
"We are also proposing to introduce a 10-unit and 1000 square metre gross floor space threshold for affordable housing contributions through section 106 planning obligations. This will aid the delivery of small scale housing sites. Rural Exception Sites will be excluded from this threshold."
It seems that the use of thresholds for affordable housing contributions goes back at least to 1993. As the WMS stated, over 300 responses to the consultation exercise were received by the Secretary of State.
(i) It was inconsistent with the statutory planning regime.
(ii) The Secretary of State had failed to take into account necessary material considerations.
(iii) The Secretary of State's consultation upon the proposals was legally inadequate.
(iv) The Secretary of State had failed properly to assess the impact of the proposal upon persons with protected characteristics: Equality Act 2010 s.149.
Holgate J found it unnecessary to enter into a fifth ground of challenge, namely that the policy was irrational.
"If regard is to be had to the development plan for the purpose of any determination to be made under the planning Acts the determination must be made in accordance with the plan unless material considerations indicate otherwise."
We should refer also to s.13 of the 2004 Act which was summarised by the judge at paragraph 26 of his judgment thus: "s.13 requires each LPA to 'keep under review the matters which may be expected to affect the development of their area or the planning of its development', which include the principal physical, economic, social and environmental characteristics of the area, the principal purposes for which land is used, the size, composition and distribution of the population and the effect of changes on the planning of development in the area. These statutory surveys form an important part of the evidence base for the preparation of development plans." S.19(2) provides in part:
"In preparing a local development document the local planning authority must have regard to—
(a) national policies and advice contained in guidance issued by the Secretary of State…"
"34. In addition, the Secretary of State has a broad power to intervene if he considers a local plan, or a policy in a local plan, to be 'unsatisfactory'. He may direct the LPA to modify the plan and the authority must comply with any such direction unless they withdraw the plan (sections 21 and 22). Any such modification will then generally be considered in the examination process (section 21(5)).
35. By section 26(1) an LPA may prepare a revision of its local plan at any time. Section 26(2) empowers the Secretary of State to direct the authority to prepare a revision of its plan in accordance with a timetable set by him.
36. Section 27 gives the Secretary of State a very wide default power if he considers that an LPA is failing to do anything necessary in connection with the preparation or adoption of a local plan. Subject to holding an independent examination under section 20, the Secretary of State may prepare or revise a local plan and then finally adopt a local plan."
"… shall have regard to
(a) the provisions of the development plan, so far as material to the application,
(b) any local finance considerations, so far as material to the application, and
(c) any other material considerations."
"(1) Any person interested in land in the area of a local planning authority may, by agreement or otherwise, enter into an obligation… enforceable to the extent mentioned in subsection (3)—
(a) restricting the development or use of the land in any specified way;
(b) requiring specified operations or activities to be carried out in, on, under or over the land;
(c) requiring the land to be used in any specified way; or
(d) requiring a sum or sums to be paid to the authority… on a specified date or dates or periodically."
GROUND 1: INCONSISTENCY WITH THE STATUTORY SCHEME
"Section 38(6)… gives 'priority' to the policies in adopted development plans. These policies have been formulated by reference to a local evidence base (section 13 of PCPA 2004) and have satisfied the requirements of the statutory process leading to adoption. The legislation does not give a general priority to, or a presumption in favour of, national policy as against statutory local policy…. The new national policy is inconsistent with the statutory scheme because its aim, and the language chosen, purports to confer exemptions in each and every case where affordable housing requirements in an adopted local plan policy are inconsistent with the national thresholds. A policy formulated in that way is improper because, in effect, it purports to override relevant policies in the statutory development plan in so far as they are inconsistent with the national policy. To that extent the national policy ignores or circumvents the presumption in favour of the development plan policies in section 38(6)… and the need to carry out the weighing process envisaged by the decisions in Alconbury  2 AC 295] and in City of Edinburgh  1 WLR 1447]…"
"If [the policy] had advised local planning authorities to ignore the policies in the regional strategies, or to treat them as no longer forming part of the development plan, or to determine planning applications otherwise than in accordance with them because the Government proposed to abolish them, or if it had told decision-makers what weight they should give to the Government's proposal, then such advice would have been unlawful."
"… a general rule or policy that does not on its face admit of exceptions will be permitted in most circumstances. There may be a number of circumstances where the authority will want to emphasise its policy… but the proof of the fettering will be in the willingness to entertain exceptions to the policy, rather than in the words of the policy itself."
The Rule against Fettering Discretion - Flexibility
"By virtue of section 18A the development plan is no longer simply one of the material considerations. Its provisions, provided that they are relevant to the particular application, are to govern the decision unless there are material considerations which indicate that in the particular case the provisions of the plan should not be followed. If it is thought to be useful to talk of presumptions in this field, it can be said that there is now a presumption that the development plan is to govern the decision on an application for planning permission. It is distinct from what has been referred to in some of the planning guidance, such as for example in paragraph 15 of PPG1 of 1988, as a presumption but what is truly an indication of a policy to be taken into account in decision-making. By virtue of section 18A if the application accords with the development plan and there are no material considerations indicating that it should be refused, permission should be granted. If the application does not accord with the development plan it will be refused unless there are material considerations indicating that it should be granted. One example of such a case may be where a particular policy in the plan can be seen to be outdated and superseded by more recent guidance. Thus the priority given to the development plan is not a mere mechanical preference for it. There remains a valuable element of flexibility. If there are material considerations indicating that it should not be followed then a decision contrary to its provisions can properly be given.
… [The section]… still leaves the assessment of the facts and the weighing of the considerations in the hands of the decision-maker. It is for him to assess the relative weight to be given to all the material considerations. It is for him to decide what weight is to be given to the development plan, recognising the priority to be given to it. As Glidewell L.J. observed in Loup v. Secretary of State for the Environment and Another (1995) 71 P. & C.R. 175 at p. 186 'What section 54A does not do is to tell the decision-maker what weight to accord either to the development plan or to other material considerations.' Those matters are left to the decision-maker to determine in the light of the whole material before him both in the factual circumstances and in any guidance in policy which is relevant to the particular issues."
The Unqualified Articulation of Policy
Cala Homes 2
The Issue in this Case Addressed
"(i) As a matter of law the new national policy is only one of the matters which has to be considered under section 70(2) of TCPA 1990 and section 38(6) of PCPA 2004 when determining planning applications or formulating local plan policies (section 19(2) of PCPA 2004), albeit it is a matter to which the Secretary of State considers 'very considerable weight should be attached';?
(ii) Ministers did not pursue the option of using primary legislation to create the exemptions (See Ms. Everton Witness Statement 1, paragraph 33). Instead the changes were introduced as policy, not binding law;?
(iii) In the determination of planning applications the effect of the new national policy is that although it would normally be inappropriate to require any affordable housing or social infrastructure contributions on sites below the thresholds stated, local circumstances may justify lower (or no) thresholds as an exception to the national policy. It would then be a matter for the decision-maker to decide how much weight to give to lower thresholds justified by local circumstances as compared with the new national policy;
?(iv) Likewise if in future an LPA submits for examination local plan policies with thresholds below those in the national policy, the Inspector will consider whether the LPA's evidence base and local circumstances justify the LPA's proposed thresholds. If he concludes that they do and the local plan policy is adopted, then more weight will be given to it than to the new national policy in subsequent decisions on planning applications."
"The policy simply refers to a blanket threshold of 10 units or 1,000 sq m gross floor area for the whole of the country, subject only to an explicit relaxation for rural areas falling within a certain definition. It is not expressed to be subject to adopted development plan policies. The policy does not contain any language to indicate that it operates in the manner suggested much later in the Secretary of State's statement through Leading Counsel in response to the legal challenge, indeed at the hearing itself."
GROUND 2: FAILURE TO TAKE INTO ACCOUNT MATERIAL CONSIDERATIONS
"A common law power is a mere power. It does not confer a discretion in the same sense that a statutory power confers a discretion. A statutory discretionary power carries with it a duty to exercise the discretion one way or the other and in doing so to take account of all relevant matters having regard to its scope. Ministers have common law powers to do many things, and if they choose to exercise such a power they must do so in accordance with ordinary public law principles, ie fairly, rationally and on a correct appreciation of the law. But there is no duty to exercise the power at all. There is no identifiable class of potential beneficiaries of the common law powers of the Crown in general, other than the public at large. There are no legal criteria analogous to those to be derived from an empowering Act, by which the decision whether to exercise a common law power or not can be assessed. It is up to ministers to decide whether to exercise them, and if so to what extent. It follows that the mere existence of a common law power to do something cannot give rise to any right to be considered, on the part of someone who might hypothetically benefit by it. Such a right must arise, if at all, in other ways, usually by virtue of a legitimate expectation arising from the actual exercise of the power…"
GROUND 3: INADEQUATE CONSULTATION
"Affordable housing contributions on small sites
23. A significant proportion of all planning obligations are [sic] affordable housing contributions. Previous research found that affordable housing accounted for approximately half of the value of all planning obligations. The Government considers that such capital contributions for small scale sites, including for those wishing to build their own home, can make a scheme undeliverable.
24. In its 2013 Autumn Statement, the Government made a commitment to reduce the planning costs to developers; including through a proposed new 10-unit threshold for section 106 affordable housing contributions. This is to help address the disproportionate burden being placed on small scale developers, including those wishing to build their own homes, and which prevents the delivery of much needed small scale housing sites.
25. This consultation proposes that before any request for affordable housing contributions can be considered as part of a section 106 planning obligations agreement, authorities will have to have regard to national policy that such charges create a disproportionate burden for development falling below a combined 10-unit and maximum of 1000m² gross floor space threshold. We also intend to make clear that, having regard to such disproportionate burdens, authorities should not seek affordable housing contributions for residential extensions or annexes added to existing homes."
"Question 5: Is the Government's objective of aiding the delivery of small scale housing sites and expanding the self build housing market supported by:
- the introduction of a 10-unit and 1000 m² gross floor space threshold for section 106 affordable housing contributions; and
- the exclusion of domestic extensions and annexes from section 106 affordable housing contributions?"
"It has to be remembered that consultation is not litigation: the consulting authority is not required to publicise every submission it receives or (absent some statutory obligation) to disclose all its advice. Its obligation is to let those who have a potential interest in the subject matter know in clear terms what the proposal is and exactly why it is under positive consideration, telling them enough (which may be a good deal) to enable them to make an intelligent response. The obligation, although it may be quite onerous, goes no further than this."
"We have no basis on which to challenge the factual accuracy of any of this data, but it does not take matters any further. The driver for the changes introduced to national planning policy…was not that all small scale development was insufficiently viable to provide any contribution to affordable housing rather, it was:
a. that the small scale housing industry makes an important national contribution to the provision of new housing;
b. that industry has steadily declined (from providing nearly two thirds of new homes registered in 1989 to just over one third in 2010);
c. that disproportionate, and generally up-front, charges imposed on this sector have contributed significantly to this decline;
d. that small scale sites with planning permission are stalled because of this…"
"The Government intends to strike an effective balance between providing the support and incentives which will drive up self build, small scale and brown field development without adversely impacting on local contributions to affordable homes and infrastructure."
GROUND 4: BREACH OF THE PUBLIC SECTOR EQUALITY DUTY (PSED)
i) Ministers did not take adequate steps to obtain relevant information in order to comply with the PSED; and/or
ii) The duty was not fulfilled in substance and with rigour; and/or
iii) Ministers did not assess the extent and risk of certain adverse impacts upon persons with protected characteristics and falling within section 149(1); and/or
iv) The exercise was not carried out with a sufficiently open mind.
(a) The effects of one element of the policy, namely vacant building credit (which officials had previously indicated had the potential to impact upon local affordable housing contributions), did not appear to have been further considered. The Equality Statement had simply dealt with vacant building credit as part of a package with the new threshold for affordable housing and did not address the impact of this particular measure.
(b) The Equality Statement had wrongly downplayed the effect of the policies as "minor" on the basis that only "a small amount" of affordable housing was delivered through section 106 obligations. Some months prior to the WMS, officials had advised that the "evidence suggests a significant impact on affordable housing numbers" if the 10 unit threshold were to be adopted. That advice was said to be inconsistent with the Equality Statement's assessment of the impact as "minor". The Equality Statement used the same information as had been available to officials earlier in the process. A figure of 35 per cent was used as the proportion of affordable housing provided through section 106 contributions compared to overall affordable housing. The figure of 21 per cent represented the proportion of affordable housing contributions derived from sites of 10 units or below. The judge concluded that an inconsistency on a fundamental point was demonstrated, thus indicating that the Equality Impact Assessment was carried out in order to support the WMS and was not undertaken with a sufficiently open mind.
(c) The preceding point was further developed by reference to the fact that the conclusion of "minor" impact had been based on information relating to those occupying social housing as opposed to affordable housing which was a broader category than social housing. Accordingly, it was said that the Statement had been based on an incomplete analysis.
(d) The Statement showed no evidence of the obtaining of information to fill gaps identified, and the timescale involved gave the impression that Ministers only relied upon information which was to hand.
(e) In dealing with the acknowledgment based on the survey of social housing that policy changes would impact on persons with protected characteristics to a greater extent than general market housing, the Equality Statement had relied on a very broad brush point, namely that £38 billion of public and private investment would be made in relation to affordable housing in the period 2015 to 2020. This was open to two objections. Firstly, a single overall figure of investment across the whole country did not take into account the challenges facing different Local Planning Authorities, particularly those in urban areas which, in distinction to rural areas, had not been more specifically catered for in the new policy. The second objection was that the Equality Statement in referring to funding available independently of the WMS was not properly discharging the duty under section 149 to address equality impacts arising from the new policy.
"I should, however, say by way of preliminary that some of Ms Monaghan's criticisms seem to me to fall into the error identified by Davis LJ in R (on the application of Bailey) v Brent London Borough Council  EWCA Civ 1586,  LGR 530 of approaching an EIA as if it were a forensic document… An EIA is a working tool designed to ensure that decision makers pay due regard to (as a shorthand) the equality impact of their decisions and to act as a record that they have done so or at least that those impacts have been drawn to their attention. It will not typically be drafted by lawyers, nor typically should it be. To the extent that views are expressed on matters requiring assessment or evaluation the court should go no further in its review than to identify whether the essential questions have been conscientiously considered and that any conclusions reached are not irrational. Inessential errors or misjudgements cannot constitute or evidence a breach of the duty."
"The concept of "due regard" requires the court to ensure that there has been a proper and conscientious focus on the statutory criteria, but if that is done, the court cannot interfere with the decision simply because it would have given greater weight to the equality implications of the decision than did the decision maker. In short, the decision maker must be clear precisely what the equality implications are when he puts them in the balance, and he must recognise the desirability of achieving them, but ultimately it is for him to decide what weight they should be given in the light of all relevant factors. If Ms Mountfield's submissions on this point were correct, it would allow unelected judges to review on substantive merits grounds almost all aspects of public decision making."
"In the present case, absence of an REIA was the result not of inattention but of a mistake made by the Secretary of State…In my view it sent out quite the wrong message to public bodies with responsibilities under section 71 to allow that deficit to be cured by a review only undertaken 8 months after the Amendment Rules have been laid, and in the face of an adverse court decision [the Divisional Court]; and only completed a year after the Amendment Rules were laid, and 4 days before the hearing in this court…I do not of course in any way doubt the good faith of the grade 7 civil servant who has produced a REIA that demonstrates that PCC is not applied in a discriminatory fashion. But as a matter of principle it cannot be right that a survey that should have been produced to inform the mind of Government before it took the decision to introduce the Amendment Rules was only produced in order to attempt to validate the decision that had already been taken."
"It continues to be of the first importance to mark that failure by an appropriate order. That an REIA has now been produced more than a year after it should have been is by no means conclusive on this issue of principle, granted the unsatisfactory conditions under which that work was undertaken. Miss Lieven pointed out that despite this court's strictures in the BAPIO case  EWCA Civ 1139 it did not interfere with the refusal of the trial judge to quash the regulations. But that was a case where the mistake had been realised and corrected before the matter came to court and was the subject of a proper apology. Neither of those things is true in this case."
"This policy may result in some local reduction in affordable housing in relation to the affordable housing threshold, including annexes and extensions, and the vacant building measure. Our assessment of the data shows that this is a minor element and as stated above the Government over the next Parliament, will be building more new affordable homes than during any equivalent period in the last 20 years."
"We do not consider that this policy will have a negative impact on discrimination, fostering good relations or advancing equality of opportunity. Delivery of the Government's affordable housing targets is providing local areas access to more affordable homes, benefiting local communities and local economic growth. Data shows that 1-2 jobs are supported per dwelling built. Groups that share protected characteristics will also benefit as a result of this.
This policy may impact on the delivery of affordable homes. However statistics show that the Government is on track to deliver 170,000 new affordable homes between 2011-2015. A further £38 billion public and private investment will help ensure another 270,000 new affordable homes are provided between 2015-2020. This means over the next Parliament we will build more new affordable homes than during any equivalent period in the last 20 years. The majority of which is delivered through national funding, with section 106 contributions making up a small proportion of the overall target."
MASTER OF THE ROLLS: