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Member Briefing: Court overturns government policy exempting small sites from affordable housing contributions

Date: 03/08/15

Court overturns government policy exempting small sites from affordable housing contributions

Apologies the link within this briefing was corrupt, the full judgment can be found here.

In a significant High Court decision Mr Justice Holgate has upheld the challenge brought by West Berkshire District Council and Reading Borough Council with regard to the government’s new policy to exclude developments of 10 units or less from affordable housing contributions and other tariff based contributions.

This decision means that the policy will no longer be applied in decision making and local plan production.

It is understood that the government will be appealing the decision.


On 28th November 2014 Ministers issued a Written Ministerial Statement that declared that:-

  • 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;
  • 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;
  • 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.

Grounds of the Challenge

West Berkshire District Council and Reading Borough Council challenged the new policy on the following grounds:

  1. The Secretary of State had failed to take into account material considerations;
  2. The national policy was inconsistent with the statutory scheme and its purposes;
  3. The consultation process carried out by the Secretary of State was unfair;
  4. In deciding to adopt the new national policy the Secretary of State had failed to comply with the public sector equality duty in section 149 of the Equality Act 2010; and
  5. The decision to introduce the new national exemptions from affordable housing requirements was irrational.

Details of the Judgment

The full judgment can be found here.

The Court dealt with the five grounds for challenge in the order 2, 3, 1, 4, and 5

Issue 2

The challenge related to the interaction between the Secretary of State’s policy for exempting small sites from affordable housing contributions and the statutory code for the adoption of local planning policies and the determination of planning applications. In effect, could the Secretary of State set policy that rendered existing adopted local plan policies obsolete or order local authorities to ignore their adopted local plan policies?

National policies, concluded the Court, provide guidance to individual decision-makers “and give an indication of the principles upon which the Secretary of State or his Inspectors will act …” when considering planning appeals. Local circumstances within a particular area can lead to a decision that national policy be given less weight and not applied, whether the decision concerns the outcome of a planning application or the formulation of local planning policies.

The legislation does not require the local plan policies of an LPA to be in “conformity”, or even “general conformity”, with the Secretary of State’s national policies.  It is common ground that an LPA is entitled to put forward, justify and adopt local plan policies which depart from national policies.

The legislation does not, declare the Court, give the Secretary of State a power to make policies outside the statutory local plan process which simply override a local plan.  Instead, his powers to intervene are embedded within that process.

The earlier national policies (setting down affordable housing thresholds – for example, Circular 06/98) simply gave “criteria” or “indicative thresholds” which LPAs were to take into account when formulating local plan policies. This was not the case with the new policy which did not purport to give guidance to LPAs which should be considered alongside local plan policies.  Rather it gave thresholds below which affordable housing (and tariff style contributions) should not be sought when any planning application for housing development in England is determined. Those thresholds were to be applied directly, and with immediate effect, in the determination of planning applications, notwithstanding any local plan policy inconsistent therewith. To that extent the policy has been drawn up so as to displace adopted local plan policies on affordable housing requirements.

Similarly, the Written Ministerial Statement purported, with immediate effect, to create exemptions from affordable housing requirements contained in adopted local plans. It purported to do so for all small housing developments in England, without distinguishing between existing or future local plan policies. Unlike the NPPF, the Written Ministerial Statement (and the revisions to the NPPG) was not devised so as to be taken into account alongside local plan policies in development control decisions or as guidance when new local plan policies come to be formulated. The purported effect of the exemptions in the Written Ministerial Statement did not envisage that LPAs may prepare, justify and adopt local policies departing therefrom. Furthermore, the policy did not allow any transitional period within which adopted local plan policies would continue to be given full weight or primacy, or for LPAs to consider whether their local plan policies should be revised in the light of new national guidance.

The judge did emphasise that the legal conclusions reached in this judgment are solely concerned with the circumstances which I have sought to summarise in paragraph 133 above. They do not affect, for example, the ability of Ministers to make policies affecting local plans, and the weight to be given to such plans, of the kind set out in Circular 06/98 and PPS 3 (see paragraphs 48 – 50 above). Moreover, different considerations may well need to be addressed in other cases, for example, subjects which are primarily a matter for national policy, such as developments of national or regional importance.

Issue 3

The judge agreed with the appellants that the consultation process undertaken by the government did not give any evidence of why the policy change was being made. There was no evidence presented as part of the consultation process that gave sufficient reasons for the proposal so as to allow intelligent consideration and responses to be given and the Secretary of State had also failed to take the product of consultation conscientiously into account. 

The consultation process was, concluded the judge, manifestly unfair and the challenge should be upheld.

Issue 1

The effect of the policy would be to reduce the amount of affordable housing able to be sought and provided within local authority areas. This was a material consideration, particularly on the land supply for affordable housing. Because of the lack of any transition period within the new policy, LPAs were unable to address this problem.

The challenge under ground 1 was therefore also upheld.

Issue 4

The impact of the policy would clearly affect specific groups of society yet that effect had not been adequately assessed by the government. The adoption of the new policy, therefore, did not meet the requirements of the Public Sector Equality Duty (PSED).

Issue 5

Given the conclusions on the other four grounds for challenge the judge decided that it was not necessary to specifically address the grounds of this issue.

Exemption from tariff based contributions

With regard to the exemption given to small sites from tariff based contributions the judge concluded that the challenge succeeds on grounds 2 and 3 above.

Vacant building credit

Similarly the challenge to the vacant building credit must succeed, concluded the judge, on grounds 1, 2, 3 and 4 above.

Implications of the judgment

This decision is important for both the government and the housebuilding industry.

The judgment does not quash the Written Ministerial Statement but effectively negates its provisions being applied in either decision making or local plan production.

The government is understood to be appealing the judgment but until the outcome of the appeal the policy will not be applied.


Andrew Whitaker

HBF Planning Director

August 2015