Planning, Competitiveness and Productivity ODPM Committee 17 Dec 2002

Mr. David Clelland (Tyne Bridge): Can I put a question to the TUC just to indicate you have not been forgotten about. In your evidence you seem to suggest that planning is not a major concern in terms of improving productivity and performance. Can you explain to the Committee what are the main factors that influence productivity and performance in the UK compared with OECD countries?

(Mr Coats) Perhaps I can start by referring to the work that we did with Michael's colleagues at the CBI about 18 months ago where we looked at four areas which we believed were the key drivers of productivity both in the UK and elsewhere. The first is investment and we found that the UK had a generally poorer record on investment than many of our major competitors. The second is innovation and technology which is both about the links between the science system in universities and business but also the ability of businesses to network with each other and transfer technology and best practice. The third is skills where the UK has a lot of ground to make up both on basic skills and intermediate skills for people already in the labour market, although new entrants to the labour market are better qualified than in the past. Finally, what the TUC and CBI described as best practice but is really about innovation in work organisation, new production systems and the use of new technologies in the work place. In our view those are the four central drivers of productivity which featured in our joint report.

Mr. David Clelland (Tyne Bridge): What grounds do you have for arguing that planning is not a major influence?

(Mr Coats) We cannot see any direct link either from the UK evidence or the international evidence that can demonstrate that the nature of your planning system has some fundamental impact on overall productivity. The US, France, Germany have broadly similar levels of productivity, with the US marginally ahead but very different planning systems. The Netherlands I think has higher GDP per hour worked than any of those countries and a rather rigorous planning system because it is a small country with lots of environmental constraints. We do not see that there is any strong evidence to draw a linkage between planning and productivity. A final point on the US, it is hardly surprising that planning constraints may be slightly weaker there in that land is not at a premium and population densities are low so it is easier to find a greenfield site for new development. That is not so true in the UK or elsewhere in Europe.

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Mr. David Clelland (Tyne Bridge): Does the CBI have any comment on what the TUC has submitted in terms of what they see as a lack of influence?

(Mr Roberts) The one point I would make is the need to draw a distinction between whether there is a relationship generally between planning and some of these key factors which have just been mentioned on the one hand and on the other hand the size and scale of that particular relationship. I think in principle we would say that there is a link, what is extremely difficult to do is to establish how significant that link is. Our memorandum did indicate that, for example, with regard to the functioning of the labour market, with regard to promoting, for example, some of the newer industries which in some cases are characterised by smaller firms, property, and by extrapolation the planning system, has a knock-on effect on these things. There is a linkage, at least in principle, it is difficult to establish how large that linkage is.

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MR TONY McNULTY, a Member of the House, Parliamentary Under Secretary of State, MR MICHAEL BACH, Principal Planner, PDI, Office of the Deputy Prime Minister, examined.

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Mr. David Clelland (Tyne Bridge): Minister, for the past 18 months your Department has been emphasising the costs to business of the planning system yet we have heard from expert witnesses just this morning that those costs are very difficult to define. Can you tell the Committee what your evidence is for the fact that this is a problem, and can you tell us whether you have actually weighed the costs of the planning system against the benefits to business and the wider community?

(Mr McNulty) If by the last 18 months you mean the whole process from the Green Paper first coming out and all the way through the process, the only certainty is that the more there is a lack of clarity in the planning system, a lack of speed and responsiveness in those three crucial areas that I talked about the more it is an impediment and it will be a cost rather than a benefit to society as a whole. As I have said before, the anecdotes that have been out there in terms of this huge impediment, that is the planning system, to business economic development is, thanks not least in part to your inquiry, not as substantive a point now as it was a couple of weeks ago before your inquiry started. Nonetheless, it would be wrong to jump from that to a conclusion that says there is nothing wrong with the planning system so leave it alone and that is what the whole process of the Planning Green Paper, the consultation, the response to your Committee's report and the subsequent responses from the consultees has all been about. In part, at least, we got wrapped up in some very serious, very contentious and very long-winded inquiries and I am not just talking about the T5 but some very significant developments in every region in terms of size and scale and taking far too much time to go through the entire process, and people are drawing conclusions from those for the entire planning system and those were clearly conclusions that were iffy at best.

Mr. David Clelland (Tyne Bridge): Are you saying that we started the whole thing on the wrong premise, that in fact this was not as big a problem as we thought when we started the whole process?

(Mr McNulty) I do not think so. There are still difficulties in some of those larger scale schemes and I do not mean just the T5 stuff. You will know that we went through a process of trying to improve significantly the major infrastructure project process. We determined not to go through the legislative route on that necessarily in terms of changing it drastically to a parliamentary-type process but simply to reform and update the existing process by concurrent inquiries and all that sort of thing which should assist the process. Underlying that there are many many examples of very large and significant planning applications having taken a good deal of time to get through the process, whether it is the tail end of section 106 and the planning obligation dimension that has held the thing up or the bigger schemes not a million miles away from here where that is the case and again we have decided to look at that. Simply because the anecdotal evidence has not proved substantive in terms of real evidence does not mean that there are not various parts and stages in the whole planning process that need looking at and reviewing which is what we are doing with this overall package and not simply the Bill.

Mr. David Clelland (Tyne Bridge): But it also presumes that if there are problems there are also advantages in the system and there does not seem to have been much work done on weighing up the advantages against the problems. You quoted the song earlier Things can only get better, but not necessarily. For instance, if you have not weighed up what the benefits of the system are as against the costs how can we be sure that the new Planning and Compulsory Purchase Bill will not actually create problems as a result?

(Mr McNulty) In terms of the inefficiencies in the current system, many of those which the Bill deals with are rooted in a lack of clarity in part, a lack of responsiveness and in some cases a tardiness in terms of the development of plans. Already people are starting to look at the UDP regime through rose tinted glasses, but it cannot be right that a major northern metropolis is ten years down the line and only just about depositing its first UDP. That cannot be good for any of the three key elements, a proper development control and land use system, a proper interest in regard to local communities who have to live with the consequences of a planning system, or a proper regard for economic development and activity. So trying to get the local development frameworks far more responsive but maintaining the quality of the decisions they make is a key element of the Bill, shifting the emphasis away from county structure level 2, which is just a reflection of the complexities of our regionally-based economy, that regional dimension we think is right as well. We think it has been relatively successful in the London context where there has been a spacial strategy in place and just going through its deposit and examination in public. The cumulative dimension to all that we do in the Bill is far more than simply tweaking. It is based on a body of evidence and experience not just gained through the Planning Green Paper process but prior to it, about how effective or otherwise the system works now and there are shortcomings and we are seeking to overcome them.

Mr. David Clelland (Tyne Bridge): You mentioned earlier that people often have to live with the consequences of planning and that is an extremely important consideration. If the presumption is that we need to speed up the system is there not a danger that that is going to compromise on quality?

(Mr McNulty) That is certainly not the intention. The fact that the whole process needs speeding up is clearly right and appropriate, but that means speeding up the process in terms of clarity of local development plans so that everyone knows what is going on in a particular area. I do not think you can speed up much more than beyond the eight week nominal turn around there is supposed to be already for planning applications. It is not that economic in terms of the applications themselves and other consequences like planning obligations, section 106s and all those dimensions. It is getting to a stage where anyone, whether someone living in a community or someone who wants to develop in the community, knows what the ground is, knows what the strategic framework is, knows what the dos and don'ts are for that particular area and that is the area that needs speeding up far more readily. As I have said in passing, which is not terribly appropriate for today, with my Minister for London hat on I would say that under the UDP regime London boroughs have been way ahead of the field because of their unitary status and no messing about with their boundaries as readily as some other local authorities over the last ten years have done. The London model is probably an area where the UDP deposits to review and everything else have worked far better than perhaps elsewhere in the country, but it has not had that dislocation of boundaries, but even that needs significant improvement.

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Mr. David Clelland (Tyne Bridge): What has been done about the problem of regions and local authorities competing with each other for new business investment in their area and all the dangers of driving down standards?

(Mr McNulty) Part of that process with the new Bill is the Regional Spacial Strategy, which I know is a clumsy title but it is meant to be all embracing in terms of picking up and identifying far more than simply land use and development control but about infrastructure and so much more which will almost predefine and compliment the local development frameworks from the other end of the process and where key aspects of development should be in any particular region. That is not going to pre-empt or stop in the end that almost mutually assured destructive nature of some of the intense competition but it will assist the process and get us to a stage where people are not taking a step back and taking that broader regional view. That needs to be seen in the context of a lot of the other development will happen at a local level. It sounds mundane but the development and the review of much of what we are doing on the planning policy guidance will work with that process, not least in terms of where some of the things I have seen, where there is this kind of cut-throat competition for things like out of town retail, near out of town or the next town, or whatever else. The assorted PPGs will deal with that as readily as the RSSs

Mr. David Clelland (Tyne Bridge): You mention the RSSs, in the Committee on Planning Green Paper we recommended that RSSs should take precedent over all other regional strategies. In its response the Government did not seem to go along with that, why was that?

(Mr McNulty) I think we need to get them in place first. I think a question from Dr Pugh earlier, ultimately - and it is not for me to rewrite the Bill on the day of the second reading - these things are organic and I would suspect not too long down the line not only will all of these regional activities be interwoven and interacted but I think the RSSs will end up predominating and getting broader in terms of what they do. They are intended to be fairly all incumbent and far more than simply local plans. They are pretty all-incumbent documents already and they will lead the process. The RPPs will work very closely with the RDAs and other regional authorities, some elected and some not subsequently, to drive the process forward in terms of a planning regime, an economic development regime and broader strategies for each week.