Planning and Externalrelations Panel

HERTFORDSHIRE COUNTY COUNCIL

PLANNING AND EXTERNALRELATIONS PANEL

TUESDAY 11 MARCH 2008 AT 2.00PM

DRAFT PLANNING POLICY STATEMENT 4: PLANNING FOR SUSTAINABLE ECONOMIC DEVELOPMENT

Report of the Director of Environment

Author: David Hughes, Key Sites and Regeneration Manager

Tel:01992 555210

Executive Member: Derrick Ashley

1. Purpose of report

1.1To assist Members in advising the Executive Member on a County Council response to the Government’s Draft Planning Policy Statement (PPS) 4, Planning for Sustainable Economic Development.

1. Summary

2.1 Recent government consultations and policy documents, particularly the Sub-National Review(SNR) have raised the profile of economic development and signalled new roles and duties for local authorities. The existing planning policy guidance on economic development is outdated and fails to take account of structural changes to the UK and world economies. The new draft guidance requires local authorities to take a positive, constructive and demand-led approach to economic development based on more consistent data and indicators. Better coordination of local plans and policies with regional and national strategies is envisaged and the scope of economic development is widened to include a range of activities that provide employment but sit outside traditional business-type development.

2.2While much of the new guidance is to be welcomed and is likely to have positive benefits for the Hertfordshire economy, the is concern that the draft fails to properly balance economic against environmental considerations, respond positively to the challenges of climate change and the need to develop the low carbon economy. There is also concern over the proposals to allow development on rural sites not necessarily accessible by public transport and on suggestions that employment sites where existing permissions are not taken up should be developed for housing.

2.3To respond to these challenges, there is a need to develop a new vision for economic development in Hertfordshire, linked to the Sustainable Community Strategy and supported by the district councils and Hertfordshire Prosperity Ltd.

3. Conclusions

3.1The Panel is invited to consider the main issues identified in section 6 of this report and the suggested responses to the consultation’s questions in Appendix A and advise the Executive Member whether these should form the basis of the County Council’s response.

4. Context

4.1In a number of recent policy documents and reviews, the Government has signalled that it sees economic development as a core activity of local government and intends to put in place a new framework to promote economic development at regional and local level.

4.2Planning Policy Guidance notes (PPGs) and their replacements Planning Policy Statements (PPSs) are prepared by government to explain statutory provisions and provide guidance to local authorities and others on planning policy and the operation of the planning system. They also explain the relationship between planning policies and other policies which relate to the use and development of land.

4.3The existing PPG4: Industrial, commercial development and small firms (1992) - is now largely outdated and fails to take account of impacts on the UK economy of macro-economic changes of globalisation and the competitive growth of the knowledge economies. It also adopts a narrow view of economic development taking no account of the significant numbers employed outside the traditional business use classes.

4.4Kate Barker’s Review of Land Use Planning (December 2006) argued that planning authorities do not always give sufficient weight to economic considerations when considering new development and in preparing Local Development Frameworks. The ‘Planning for a Sustainable Future’ White Paper (2007)set out the Government’s intention to reform the planning framework to ensure that the planning system responds more positively to economic development.

4.5In theSub-National Review of Economic Development and Regeneration (SNR - July 2007) the Government proposed to consult on a statutory economic duty for upper tier local authorities;to require them to carry out an economic assessment of the circumstances and challenges of their local economy;to reform the performance frame work for economic development; for RDA’s to delegate funding to local authorities and sub-regions and on a single regional strategy, prepared by the RDA for each region. This is likely to be driven largely by economic growth objectives with each Regional Development Agency (RDA) being set a growth target. Further guidance on these proposals is expected imminently.

4.6The new national indicator set will require local authorities to monitor and report on economic development matters and their performance will be reflected in the forthcoming Comprehensive Area Assessment.

5.Draft PPS4

5.1The Government’s key policy outcomes for economic development are stated to be to:

• Raise the productivity of the UK economy;
• Maximise job opportunities for all;
• Improve the performance of the English regions and reduce the gaps in economic growth rates between them;
• Deliver sustainable development as defined in PPS 1 – Planning for Sustainable Development (2005);
• Build prosperous communities by improving economic performance, promoting regeneration and tackling deprivation.

5.2These objectives can be met in two ways – by improving the performance of existing businesses and their employees through investment in skills or IT or by developing land for employment uses. Because PPS’s are part of the statutory land-use planning process, this draft focuses entirely on the latter approach.

5.3The new draft PPS aims for a positive, less prescriptive and constructive approach to economic development that balances economic opportunities with social and environmental considerations in line with the principles of sustainable development. It seeks to encourage policies and decisions that respond to economic change, market signals, and business needs while maximising job opportunities for all. Proposals for economic development should be considered favourably unless social or environmental costs outweigh the benefits and they should clearly demonstrate how they address climate change issues.

5.4At regional level, the draft seeks better integration of economic development and spatial planning, to reduce regional disparities and improve the economic performance of the English Regions. At local level, it seeks the provision of a range of employment sites and high quality development which responds to climate change, recognising that a well-designed working environment can influence business decisions to locate or remain in an area.

5.5A significant change from the previous guidance is in the interpretation of what constitutes economic development. This now goes beyond the traditional emphasis on industry, offices, warehousing (the various Business (B) class uses set out in the Use Classes Order) to recognise the significant numbers of people employed in retail, leisure, heath, social care and other service sector occupations. It suggests that in many areas, up to two thirds of employment is found outside the traditional business classes and so is not linked to employment land allocations in development plans.

5.6The guidance establishes useful policies about plan-making, encouraging the provision of a range of sites for economic development and mixed uses, a good supply of land and buildings offering a range of opportunities for the differing needs of business uses, high quality development, the avoidance of adverse environmental impacts and the provision of sustainable travel choices. Planning policies need to be underpinned by a wide evidence base to help local authorities understand the needs of business. This must include making assessments of existing land supply through employment land reviews, taking account of market conditions and trends and of the economic assessments that upper tier authorities are expected to have to carry out as part of the SNR.

5.7Development Plan should plan positively for the proximity of compatible land uses such as universities and hospitals, recognise the needs of rural areas and give preference to sites for office development in or on the edge of town centres, consistent with the sequential approach in PPS6 (Planning for town centres (2005)) but recognising that the market demand will influence location. They should avoid identifying sites for single or restricted uses and carrying forward existing allocations which cannot be justified. In these circumstances, consideration should be given to alternative uses such as housing.

5.8The draft also proposes replacing the blanket approach to parking standards provided by PPG 13 (Transport (2001)) with maximum standards set locally. In Hertfordshire, on-site parking provisions are determined by Districts and are generally higher than the guidelines set by HCC.

5.9In rural areas, accessibility should be recognised as a key issue and local authorities should support economic development through farm diversification, sustainable tourism, leisure developments and small scale economic development in villages. More controversially, the draft suggests that some rural sites may prove acceptable locations for development even though not accessible by public transport.

5.10The new approach will require local authorities to better understand business needs using local business surveys, property market reviews and stakeholder consultation. They will need to ensure that the development potential and quality of employment sites properly reflect commercial requirements and market realities.

5.11Local authorities should factor in the costs and benefits of economic development alongside other costs/benefits while being sensitive to climate change as required in the recent supplement to PPS1

6.Comments

6.1It was widely anticipated that following the Barker Review, this guidance would spell out an overriding need to promote economic development and support wealth creation. While it does adopt a more positive, demand-led and less prescriptive approach, it is still within the context of the overriding need to deliver new housing development.

6.2The draft is weak on the need to balance economic development against environmental and social considerations including tackling the causes of climate change. The data sources suggested to underpin the new planning are almost wholly economic in nature and do not currently include wider environmental considerations such as biodiversity, green infrastructure, the historic environment and traffic generation. No mention is made of the importance of a high quality environment in attracting knowledge-based jobs, a particularly important consideration in Hertfordshire.This lack of emphasis on balancing economic againstenvironmental considerations may make it more difficult to secure high value investment and jobsin the growth sectors for which a high quality environment is often a key attractor.

6.3The draft also misses the opportunity to link economic development to the wider well-being agenda and to promote the creation of high value activities in the areas of green jobs and the low carbon economy. This will become increasingly important as the economy develops over the next decade with the need to move towards a low carbon, resource-efficient economy. Again these considerations are important for Hertfordshire and need to be embedded into the final guidance.

6.4The recognition that significant economic development takes place beyond traditional business-type employment areas is to be welcomed, as is the recognition that benefits can accrue where certain types of businesses locate close to each other and to compatible land uses such as universities and hospitals. Economic development is seen as any activity that contributes to Gross Value Added (GVA) but clarification is needed whether the inclusionof housing in the list of activities refers to the house-building industry, the housing development process or housing development per-se.

6.5While the need to establish a more robust evidence base is likely to be challenging and require the development of new skills or the use of consultants, it will put planning for economic development on a firmer basis which will aid future plan-making at local and regional level. It is unclear however whether the economic data and analysis required by the draft guidance to underpin local planning policies is the same as that likely to be required to be provided by upper-tier authorities in carrying out assessments required by the SNR.

6.6However the draft does not provide clear advice to Regional Planning bodies and RDA’s on improving integration between economic development and spatial planning, nor does it get to grips with challenges of merging the RES/RSS, leaving to a separate consultation the forthcoming statutory duty of economic development and local economic assessments. There is also concern that the draft guidance could encourage more economic development in rural areas where accessibility by public transport is poor and undermine attempts to secure revenue support to improve and enhance public transport.

6.7The role of highway authorities in promoting sustainable economic development through the LTP needs to be recognised as does the potential danger in allowing local interpretation of maximum parking standards which could lead to competition between local authorities to attract economic development and further peak hour traffic congestion. While the draft advises local authorities to designate more land for a range of employment uses, it needs to be noted that transport needs and infrastructure requirements will vary according to the nature and intensity of the use.

6.6The new emphasis on planning proactively for economic development on the basis of a firm and up-to-date evidence base will help ensure that the planning system is more responsive to the needs of the market. But in an area with good links to the national road and rail network, it may make it more difficult to oppose warehousing and logistics development for which there is a ready demand, in favour of knowledge-based employment that better reflects the established nature of the County.

6.7This raises the question of how high quality sites that need to be retained for specific uses can be protected against pressures for housing development or developed for alternative economic purposes when there is no market demand for the approved use. Examples would include the Key Employment Site at Leavesden which offers a rare opportunity for high value employment uses but where the current planning consent does not reflect the type of development demanded by the market in south-west herts. As a result, the site is coming under pressure for housing development.

6.8In the light of the new approach for planning for economic development outlined in the draft PPS4 and the proposals in the SNR, it is important that planning for economic development in Hertfordshire is informed and driven by a shared vision for the county. This needs to be linked to the Sustainable Community Strategy and work Hertfordshire Prosperity is about to commission on what a low carbon economy could look like in Hertfordshire. The likely impact of the SNR and new duty to promote economic development need to be discussed between the HCC, District Councils and Hertfordshire Prosperity in order to develop a consistent and robust approach.

6.9The consultation sets out 10 questions on which the Government is seeking views. These, and suggested County Council responses are set out in Appendix A. A covering letter reinforcing the key points is attached as Appendix B.

7.Financial Implications

7.1The draft recognises that there will be some costs in implementing the new proposals particularly around the need to obtain specialist knowledge in market analysis and information. At this stage it is impossible to quantify these costs which will need to be considered alongside any cost implications arising from the implementation of the Sub-National Review.

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Background Information used in preparing this report

Draft PPS4 – Consultation Paper on Sustainable Economic Development

APPENDIX A - Consultation Questions

1. Do the policies set out in draft Planning Policy Statement on Economic Development achieve the right balance between economic, social and environmental considerations?

Will they help to deliver sustainable development?

No. The draft fails to strike a proper balance between the need to promote economic development and environmental issues including tackling the causes of climate change. No attempt has been made to set economic considerations in their social and environmental context and to recognise the contribution a high quality environment makes to economic growth. This is evidenced by the suggested data base at Appendix A which comprises exclusively economic indicators. While it is accepted that a more flexible approach can in some cases promote economic development, it should not be at the expense of efforts to tackle climate change. There is nothing in the draft to suggest that regional planning bodies or local authorities can take a restrictive approach to economic development where they consider that such growth would be likely to conflict with the principles of sustainable development.

The draft also misses the opportunity to link economic development to the wider well-being agenda and to promote the creation of high value activities in the areas of green jobs and the low carbon economy. These considerations need to be embedded into the final guidance.

2. The draft Planning Policy Statement proposes a stronger emphasis on the need for evidence, including economic evidence for plan making and decision making. Do youagree that this is the correct approach?

Yes. A better evidence base will assist in putting planning for economic development on a firmer and more robust footing but it is unclear whether the economic data and analysis required by the draft guidance to underpin local planning policies is the same as that likely to be required to be provided by upper-tier authorities in carrying out assessments required by the SNR. This needs to be clarified. The draft also provides little guidance on how regional planning bodies and local planning authorities can work together to establish a firm evidence base for their areas.

3. If you agree that there should be a stronger emphasis on the need for evidence what areyour views on the following:

The need for final Planning Policy Statement to include a suggested list of data as at Annex A?

In general the range of data suggested in Appendix A is considered appropriate subject to a number of caveats. Experience from the RSS suggests that the Annual Business Inquiry (ABI) date can be unreliable and the Office for National Statistics (ONS) advises against the use of the ABI for examining trends through time, suggesting using the Annual Business Survey (ABS) at sub-regional level and the Annual Survey of Hours and Earnings (ASHE). This should be added to the data sources, as should VAT stock compared to 16+ population (a proposed national performance indicator); Workforce Jobs Series (WJS) for employment change and ONS model-based estimated for unemployment in Local Authority Districts. VAT de-registrations should not be used as they could be just as much an indicator of takeovers than business failures. Gross Value Added (GVA) is a poor indicator of well-being and fails to capture the full costs and benefits of development.