The impact of Brexit on the UK planning system

Planning law

The primary elements of planning law and procedure which originate in European law are those that relate to environmental matters, particularly those that have incorporated and given effect to the Environmental Impact Assessment Directive, the Habitats Directive, the Birds Directive, the Water Quality Directive and the Air Quality Directive.

The European Communities Act 1972 (the 1972 Act) provided for the incorporation of European Union (EU) law into UK law and it is pursuant to the 1972 Act, and to subsequent primary legislation, that much EU law, including the above Directives, derives its force. Until an exit from the EU has occurred, which will be two years after a notice is given by the UK Government under Article 50 of the Treaty of the European Union (the Article 50 notice) to the European Council unless any other timetable is agreed, the UK will continue to be bound by the above Directives and other relevant EU laws.

The Article 50 notice is not expected to be given until autumn 2016 and after a new Prime Minister has been appointed, meaning that an exit from the EU in unlikely to occur until late 2018 at the earliest.

Following an exit from the EU, if EU law has been specifically implemented by UK legislation it continues to have effect. However, as the UK will no longer be under any treaty obligation to comply with or give effect to European laws, there may be a watering down of UK laws over time through new primary or secondary legislation to tailor them more to the UK Government’s economic and environmental priorities and objectives, rather than European priorities and objectives. It is also possible that UK laws will continue to be aligned with European laws where this is perceived as necessary to facilitate, or where it may be a compulsory requirement of, on-going trade with countries within the EU.

The Human Rights Act 1998 and the Charter of Fundamental Rights

The Human Rights Act 1998 (the 1998 Act) has featured in planning case law on many occasions, particularly in relation to the right to a fair trial and the right to respect for private and family life. The 1998 Act incorporates into UK law the rights contained in the European Convention on Human Rights. The 1998 Act will remain unaffected by an exit from the EU, although a move towards a British “bill of rights” may impact on both the 1998 Act and the European Convention on Human Rights in future.

The European Union Charter of Fundamental Rights (CFR) is distinct from the European Convention on Human Rights and enshrines rights and freedoms under the titles “dignity”, “freedoms”, “equality”, “solidarity”, “citizens’ rights” and “justice” for European Union citizens and residents into EU law. This includes freedom of movement. This would cease to have effect in the UK following an exit from the EU in the absence of any agreement to the contrary. The CFR’s core rights relate to wider social and economic rights such as the rights to fair and just working conditions, to health care and to have personal data protected. The impact on freedom of movement would impact on the availability of labour in the construction industry.

Development and the economy

Inevitably the uncertainty caused by the prospect of an exit from the EU and the currently unknown timetable for an exit will impact on decision making by investors, funders and developers. This may lead to a fall in the rate of building, particularly in the housing and speculative commercial building sectors. It is important though to bear in mind that the causes of any economic slowdown and fall in the rate of building will be very different from those which led to the 2008 recession, which were a reflection of a global liquidity crisis.

That is not to say that there will not be a recession – Goldman Sachs stated on 27 June 2016 that they believe that there will be a mild technical recession in the first quarter of 2017. However, the economic conditions are very different from 2008, and the UK’s capacity to pull out of any new recession will to some extent be dependent on market sentiment and the terms of any trade agreements with the EU which are negotiated to come into effect when the UK eventually exits the EU.

In the interim it seems likely that the overwhelming unmet demand for housing, particularly low cost and affordable housing, will continue to be unmet and may in fact become more acute as the rate of building falls. In the medium term, and dependent on the terms of agreements with EU countries, construction costs may increase where materials are sourced from within the EU and the availability of labour may decrease if there is a restriction on the freedom of movement of workers from EU countries to the UK.

In response to a fall in the rate of building, property prices and particularly the viability of development proposals, it may be necessary for the UK Government to consider implementing a number of measures which minimise the impact of such factors especially on the housing market. For example, Section 159 of the Housing and Planning Act 2016 could be brought into force and the Secretary of State could then make regulations which impose restrictions or conditions on the enforceability of planning obligations entered into with regard to affordable housing. In addition to this, it may be necessary to re-introduce into legislation the recently expired provisions of Section 106BA of the Town and Country Planning Act 1990 which allowed developers to seek the variation of affordable housing obligations in Section 106 agreements where they make a development proposal unviable. Although this would still leave a shortage in the supply of affordable housing, it may be better to have some house building rather than none.

Also, provisions such as the amendments made to the Town and Country Planning (General Development Procedure) Order in 2009, which enabled the renewal of planning permissions which had not been implemented and which were due to expire, may have to be re-introduced to extend the life time of development proposals which are delayed due to a change in the market and in the availability of development funding.

The payment of Community Infrastructure Levy may also be impacted by developments which may be unviable unless liabilities are reduced. This will also impact on the ability of charging authorities to fund infrastructure.

Infrastructure and funding

The Infrastructure and Projects Authority published the “National Infrastructure Delivery Plan 2016-2021” (the Plan) in April 2016. This sets out the UK Government’s plans for economic infrastructure together with its plans to support the delivery of housing and social infrastructure (broadly categorised as roads, rail, airports, energy, housing and regeneration, and telecommunication) over the five year Plan period. The economic benefits of the UK Government’s investment in infrastructure are stated in the Plan to include:

• supporting growth and creating jobs
• raising the productive capacity of the economy
• driving efficiency, and
• boosting international competitiveness.

These benefits will become acutely more important in light of the expected economic downturn caused by the uncertainty that the terms and effect of an exit from the EU will have on trade, investment and jobs.

The Plan also states that “around 50% of the Pipeline will be delivered through private investment”.

The uncertainty that an exit from the EU will have on investment and funding decision making by the private sector may impact on the UK Government’s ability to see the delivery of infrastructure projects over the Plan period. The health of the UK economy will also effect tax revenue and Government spending, which if cut in the face of a technical recession in the first quarter of 2017 could further impact on infrastructure delivery.

In addition to this, Boris Johnson has been a vocal opponent to a third Heathrow runway, so his possible future role as Prime Minister may materially impact on the announcement of the decision on future airport expansion in the south east, which was due in July 2016.

Together with investment and funding issues, the decision making mechanisms for the consenting of infrastructure will also need to be more closely scrutinised and, if at all possible, fine tuned in order to create the best opportunities for infrastructure development and achieve the economic benefits set out above. The UK Government has recently published the terms of reference of a review of the Hybrid Bill procedure to make the process simpler and less time consuming (although notably this does not include a review of the scope of Hybrid Bills themselves), and the Welsh Government has recently introduced the Developments of National Significance regime which should allow for a faster decision making process for major developments. Such measures will increasingly be important to facilitate an economic recovery if the UK finds itself in a recession in the near future.

In relation to infrastructure projects which have already been consented, the obligations in Section 106 planning agreements may need to be varied to ensure that such projects remain viable and deliverable in the event that there is a shortfall in funding, whether from public or private sources.

Comment

For the time being nothing will change, and, even after an exit from the EU, those EU laws which have been incorporated into UK law will continue to have effect. Also, international conventions such as the Aarhus Convention (relating to access to information, public participation in decision-making and access to justice in environmental issues) and the Kyoto Protocol (relating to a reduction in greenhouses gas emissions) will continue to have effect. The UK Government may, however, decide that, despite its obligations under current EU laws, it may not be a legislative priority to implement the 2014 Environmental Impact Assessment Directive by the deadline of May 2017.

Despite the fact that the UK will have the opportunity following an exit from the EU to repeal UK legislation incorporating EU laws, it remains to be seen if they would do so, and how soon they would do so, as Parliament may not regard this as a legislative priority. Developers hoping for a relaxation in the legal framework, and considering delaying development, particularly of major infrastructure projects, in the hope of such changes, may find that they are waiting in vain, but may instead choose to re-negotiate the terms of Section 106 agreement and conditions applied to consents which may impact on the viability of those projects.