NPPF Reforms in Practice: Impacts on Employment Land Planning

The release of the revised National Planning Policy Framework (NPPF) in mid-December has prompted a buzz of conversation in economic planning circles. Several clients have since approached us, keen to understand the impact of these reforms on how they plan for their local economy.

• How will the revised standard method for housing requirements affect the balance of labour demand and supply at a local level?
• How should local planning authorities optimally allocate employment land whilst meeting requirements for strategic site identification and providing for the needs of a ‘modern economy’?

The English Devolution White Paper, published soon after, provided some clarity – introducing new strategic geographies for economic and wider spatial development. Yet in this grey area of the transitional period, the above key questions remain.

Here, we’ve outlined our initial thoughts to help local and Strategic Authorities (or those on their way to becoming one) navigate recent changes.

1. Revised Standard Method for Housing: Balancing labour demand and supply

One key reform is the shift to a new standard method for calculating housing needs. This revised approach, based on stock and affordability rather than demographic change, has increased projected housing targets across all regions in England except London. At a local level, this change introduces new challenges to balancing labour demand and supply.

If new homes primarily support household formation rather than inward migration, the local labour market may only see limited growth in economically active residents. On the other hand, higher housing numbers could attract new residents, driving demand for employment opportunities and necessitating additional employment land—particularly in affordable areas where a surge in the workforce might outpace local job creation.  The answer is possibly somewhere in the middle.

The new architecture for local government and strategic planning proposed in the English Devolution White Paper will bring about clearer arrangements for planning across functional areas in order to balance housing and wider infrastructure and economic needs.  This will allow for more nuanced balancing of labour supply and demand than is often the case at present, although it isn’t going to fully solve the issue of matching demographics with a housing requirement driven by stock.

Nonetheless, until such changes come into practice, many authorities are left facing challenges to balancing labour supply and demand at a local level.

For some areas it will be important to explore what the demographic options look like. For others it might be about testing what the ‘bookends’ might be, and working out what this means for employment need. Without doing so, areas face the risk of becoming outward commuting dormitories, undermining their long term economic sustainability.

2. Modern Economy Needs: Are requirements universal?

Another significant reform is a new requirement to provide for the needs of a modern economy, which include “suitable locations for uses such as laboratories, gigafactories, data centres, digital infrastructure, freight and logistics”. The Government is understandably keen to avoid missed opportunities in these potentially high growth sectors, and once the Strategic Authority structure is rolled out across England, the geographical demand for these needs is arguably more justified.

However, in the interim period, how do local planning authorities navigate providing for these uses, particularly when demand might not necessitate it? Consider the following dimensions of demand:

• Place characteristics: The appeal and conditions necessary to accommodate the listed uses vary across different areas. An obvious example would be to compare the level of demand for laboratories in rural areas, against demand in Cambridge or Oxford.
• Use characteristics: Demand is unlikely to justify allocating sites in every area. For instance, the UK already has several well-established, strategically positioned freight and logistics hubs, characterised by strong road and rail connectivity and often with direct access to ports and airports. Not every area has the relevant characteristics to match those demanded by these uses. In addition, where there are already sites of regional significance in these uses it may eliminate the need for neighbouring areas to provide for the same uses, particularly at scale.

An ongoing issue unlikely to be easily solved until Strategic Authority areas are adopted, is how planning authorities negotiate accommodating national demand at a local level. With the English Devolution White Paper encouraging cross authority collaboration, citing the ‘Great North’ group of Mayors as an example, there is hope that the reorganisation of local planning will enable more effective distribution of strategic growth.

For now, this reform must be met with local planning authorities giving full consideration to industry led evidence around what modern economy needs are relevant to their local area.

3. Strategic Sites: Are they necessary in every area?

Another significant NPPF reform is the push to identify strategic sites that can meet a range of investment needs, rather than relying on more general criteria for potential sites. Like the requirement to provide for modern economy needs, are strategic sites required in every area or could this approach risk an oversupply of designated land? That is a very real risk if ‘strategic’ is interpreted as ‘large’.  In reality what constitutes a strategic site is likely to vary from area to area.

Again, the English Devolution White Paper shapes this reform by promoting planning at larger, more strategic levels with areas meeting criteria around scale, sensible economic geographies, and identity. Even so, once the new system is in place, Strategic Authorities are likely to differ significantly from one area to another in terms of size, infrastructure, and growth potential (see Figure 1). Planning authorities now and in the future will therefore need to consider:

• Flexibility vs. overcommitment: Mandatory identification of strategic sites could lead to a surplus of designated employment land in areas that may not require it, hampering efficient land use. In this transitional period, local planning authorities may have to consider strategic sites on a larger than local basis, allocating where demand justifies it, in areas with the highest potential for economic growth or alignment with regional and national growth strategies.
• Sector needs: Strategic sites should reflect the specific industry and employment needs of an area, particularly in sectors where clusters drive economic growth. Industry-led evidence must guide whether sites are necessary, ideally through partnerships with regional economic boards and industry stakeholders to ensure that these sites address real economic needs.

Until Strategic Authorities are rolled out, local authority areas will need to adopt a tailored approach, where possible considering strategic sites on a larger than local basis to ensure strategic provision across functional economic areas.

Recommendations

Until Strategic Authority areas are fully rolled out across England, local planning authorities may need to adopt a flexible, tailored approach to employment land planning. Our initial thoughts to help planning authorities navigate potential challenges arising from the revised NPPF include:

1. Consider and test the labour force ‘bookends’ of housing numbers when assessing the alignment of jobs and homes.
2. Ensure evidence-based consideration of what modern economic needs are relevant for your area.
3. Consider strategic sites on a larger than local basis, where possible, to ensure strategic provision across functional economic areas.

To better understand how these reforms might play out, we’ve created a quick survey focused on three key areas. Please share your views to shape this important conversation and we’ll share our analysis of the results soon!