25 July 2018

What is it all about?

The government has refreshed the post-war mechanism to deliver new towns in order to help deliver the growing number of garden cities, towns and villages proposed. The mechanism, which delivered the likes of Stevenage and Crawley and by which a corporation is responsible for developing a settlement, has been given a local flavour.

New towns are planned settlements built using the powers of the New Towns Act 1981 (or preceding legislation). An organisation known as a development corporation is set up in order to deliver the new town. Once the new town is established, the development corporation is dissolved and responsibilities and assets passed to the local authority (or local authorities) of the area in which the new town is built.

To date, central government has overseen new town development but the new regulations would, in essence, enable local government to oversee a new town development corporation. The local authority (or local authorities, if the new town will straddle authorities’ boundaries) would be known as the oversight authority.

The government consulted on the proposed regulations over the Christmas period. Having taken into account the responses to the consultation, draft regulations were introduced to parliament in early June and came into force on 24 July 2018. The government published a summary of the consultation responses and its response alongside the draft regulations. It has also published guidance aimed at supporting readers’ understanding of the regulations and setting its expectations for applications.

How is the process to establish a locally led new town started?

The local authority (or authorities) will need to apply to the Secretary of State requesting an order is made to:

  • designate an area to be a new town
  • appoint the local authority (or authorities) as the oversight authority
  • establish the new town development corporation.

Ultimately the order will need to be approved by parliament. The government envisages that locally-led development corporations will only happen if:

  • all the local authorities covering the area of the new town support a locally-led development corporation
  • those local authorities have a strong evidence base demonstrating that the site is suitable for development at the scale proposed
  • appropriate consultation has been undertaken locally. 

The local authority’s application will need to reflect that.

The government anticipates that allocation of a site in an adopted local plan is likely to create a presumption that the requisite evidence and consultation criteria have been met.

In its guidance, the government also sets out that the applicant will need to demonstrate:

  • deliverability of the new town (including financial modelling covering the whole lifecycle)
  • that the locally led new town mechanism is the best route to deliver the settlement, as opposed to another private or public-sector led delivery model
  • governance proposals, which should include a balance between independence and oversight of the development corporation and a mechanism to review the corporation to ensure it remains fit for purpose throughout its lifetime
  • high quality place making, long-term plans for how community assets will be funded once the development corporation has been dissolved and details about governance arrangements that will support community participation.

The applicant will also need to consider whether a strategic environmental assessment and habitats assessment are needed. Again, the government expects that where the proposal is part of the local plan, this material may already have been prepared.

On to designation

After examining the application, the government will undertake its own consultation. Following this, the Secretary of State decides whether it is expedient in the national interest to designate the new town. If so, he will lay the order in parliament for debate and approval.

Once a new town is designated, how are the responsibilities shared?

The functions relating to new towns are set out in the New Towns Act 1981. These provisions are modified by the regulations to reflect the balance of responsibilities between the oversight authority and the Secretary of State. The draft regulations set out:

  • which functions of the Secretary of State will be exercised by the oversight authority (for example, the granting of planning permission, acquisition or disposal of land by the development corporation, the authorising of entry for surveying or valuing land and appointing board members of the development corporation)
  • which functions will only be exercised by the Secretary of State with consent of the oversight authority (for example, confirming any compulsory purchase orders, making an order for the dissolution of the development corporation and the disposal of surplus funds).

During the consultation, the government asked whether it had got the balance right and whether there were other functions that should be considered. Despite suggestions from consultees that compulsory purchase powers and highways functions should also be transferred to the oversight authority, the government has not made provision for these. However, the government recognises that new guidance is needed about the use of the new town development corporations’ compulsory purchase powers.

How will the planning functions work?

The government acknowledged that the transfer of planning functions required particular consideration. Proposals for the new town need to be approved by the oversight authority, which may also adopt them as a local development document. The guidance states that it will be for the oversight authority to decide what level of community engagement and participation in the approval process would be appropriate and proportionate. The government also says it would expect the oversight authority and the development corporation to work together to produce a masterplan for the area. Some consultees fear duplication of work but the government points out that there is flexibility in the system to use a masterplan that has been produced prior to designation of the new town area, e.g. within an existing development plan document.

The oversight authority may deliver the new town by making a local development order or by granting planning permission. The government says that where appropriate, it would encourage consideration of local development orders to deliver development as it sees them as enabling high quality development to be secured at pace and improving the certainty of the project.

High quality and sustainability

The government wants the new garden cities and towns to be extraordinary – ‘exemplars of high quality and good design’, sustainable and with enough ‘resources to reinvest in the renewal of the physical place and support a thriving, diverse community’. It is seeking to achieve this by (a) setting out the aims of the oversight authority, including ‘to plan for the creation of a high quality settlement which is a sustainable community’; and (b) setting out requirements for the development corporation including to ‘aim to contribute to the achievement of sustainable development’ and ‘have regard to the desirability of good design’.

In response to the concerns over long-term stewardship of new towns, the final regulations include the aims of the oversight authority to ‘plan at the outset for – the long-term stewardship of the assets of the new town for the benefit of the community; the participation of the community; and the legacy arrangements following the dissolution of the new town development corporation’.

Borrowing arrangements

The consultation responses led the government to change the proposed borrowing abilities of a development corporation. These are to be agreed on a case-by-case basis in advance of the Secretary of State consulting on designation of an area for a new town. Previously the government proposed that new town corporations obtain HM Treasury consent before borrowing. Under the New Towns Act 1981, a development corporation may borrow a maximum of £4.6 billion.

Governance of the corporation

The oversight authority will be responsible for appointing the board of the development corporation. It must have regard to the desirability of appointing individuals who are residents or have special knowledge of the new town area and also of appointing individuals who have relevant experience. The majority of members will need to be independent and the chair will be an independent member. There will need to be a member from each of the local authorities in whose area the new town is situated. Also, the oversight authority is to request nominations from any local authorities that appear to be concerned with the development of the new town.

What happens next?

The government is due to prepare new guidance on the use of new town development corporations’ compulsory purchase powers.

According to the government's summary of the consultation responses local authority consultees are supportive, and professional bodies and parish councils are broadly supportive of allowing a new town development to be overseen by a local authority rather than the Secretary of State. Developers, however, have mixed views.

In theory there are enough proposed garden city, town and village projects to make use of a locally led development corporation. How widely used this approach becomes is likely to depend on how, on any given project, its benefits balance against its costs.

In February, the government granted funding to support cross boundary working (the Joint Working Fund) to the tune of £9.4 million. Perhaps such funding streams together with others like the Housing and Infrastructure Fund will help make the locally led new town mechanism economically viable and popular. One of the first could be North Essex Garden Communities.  The project’s leaders have announced they will be working on a mandate for a development corporation to present to the government later this year.

How can Burges Salmon help?

We have experience in regeneration projects, urban extensions, garden settlements and compulsory purchase. We work with local authorities, developers and landowners. If you have any queries regarding the regulations, new towns, or garden settlements more generally, please contact Gary Soloman or Laura Fuller.

Key contact

Gary Soloman

Gary Soloman Partner

  • Head of Planning and Compulsory Purchase
  • Regeneration and Highways
  • Compulsory Purchase and Compensation

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