The Government’s latest report on planning could make out-of-town development more complex as it strives to protect town centres. Ben Cooper investigates the implications of the changes

The timing ofL ast week’s publication of the long-awaited revised report on planning guidance, PPS6, surprised many. After months of rhetoric and ambiguous hints about when it would come out, the Department of Communities and Local Government issued the report in something of a hurry.

But the changes laid out are less surprising. They represent another clear sign of the Government’s love affair with town centres and a red light to further out-of-town developments.

The principle of improving town centres is universally accepted, but pitching that against out-of-town retailing has frustrated property developers. Out-of-town centres are popular with retailers, consumers and developers. Moving into town is associated with problems including higher rent and overhead costs and is something that many retailers, especially supermarkets, are reluctant to do. But retailers are also good at adapting to changing need and the call to move into town has been heard already.

The most notable change to the policy is the scrapping of the need test and the introduction of an impact test for town planners. At present, local authorities are only required to bear in mind how much demand there is for a new development within or outside a town. The revised policy will mean that, on top of this, they will have to take into account the effects that putting up a new centre or supermarket will have on the retailers in residence and the town as a whole.

Councils will be expected to assess what implications a new development will have on a town centre based on a more extensive, qualitative range of factors than the need test allowed for. This will include job prospects, regeneration, effects on transport, range of consumer choice and the spending habits of individual towns.

In a foreword to the policy revision published last week, Secretary of State for Communities and Local Government Hazel Blears said: “The need test is a blunt tool that is not achieving the ends it was designed for. Too often, it causes planners to get caught up in debate about technical definitions and overlook the vital question of what the proposed development actually means for the town centre and the people who rely on it.”

In real terms, the new test could be a double-edged sword for out-of-town retailers. The key theme of the revised statement is the continuation of the Government’s drive to improve town centres and, as it claims, promote smaller, independent retailers.

By furnishing local authorities with more reasons to restrict out-of-town builds, on the face of it, the Government has nailed its pro-town centre colours even more firmly to the mast. But there are some who argue that changes could work to the benefit of big out-of-town retailers.

Perhaps the most affected sector will be supermarkets. In this market, the impact test is being tentatively welcomed as a positive change, but the way that the Government oversees its introduction will clearly be closely watched.

Sainsbury’s head of town planning Sue Willcox says: “I hope that the replacement of the need test with a more holistic and rigorous impact test will lead to more judgements as to what type of retail development is most beneficial for town centres and shoppers, rather than decisions being dominated by the need test. We will be keen to participate in discussions over the detailed Practice Guidance that will accompany the policy refinements.”

Likewise, Savills director Jeremy Hinds believes the impact test will give retailers the upper hand, because they know better than anyone the complexities involved. He says: “What will happen is that the arguments will become more sophisticated and they will depend more on the economic realities of retailing. We are moving away from simple number-crunching exercise. Retailers understand that a lot better than planning authorities.”

This may well favour developers and retailers – in particular supermarkets – that want to develop new property. The added depths of the revised requirements will allow developers and retailers to present a more comprehensive case for new builds, rather than having to satisfy criteria that many felt were far too simplistic.

“I think the pendulum is swinging back towards retail developers rather than local authorities,” argues Nathaniel Lichfield and Partners director Peter Wilks. “With the old test, it was a case of ticking boxes. This approach is saying that, while you might tick some boxes and have a few missing, you need to balance the negative impact with the benefits of the proposal.”

Barrier to growth

Nonetheless, developers will inevitably find more and more obstacles to out-of-town development in their way. The emphasis is still firmly on the town centre build, but at the same time, town centres are finite in terms of the amount of space available and catchment size. For the market to continue to grow, development needs a relatively free rein and, for this to happen, town planners need to be flexible and allow towns to expand. As a result, developments on the edges of towns are likely to become more commonplace and will be easier to push through the planning procedure.

DTZ head of retail planning Jonathan Baldock says: “The overall effect of these proposed changes to policy is likely to be a greater emphasis on research, analysis and evidence, both at the development plan stage and when planning applications are submitted.

“But, if rigorously applied, the proposed new policy should result in more development in and on the edge of town centres and in less out-of-town locations.”

However, governments are not arbiters of need. The fact that some developers and retailers feel planning authorities are insufficiently qualified and experienced to judge whether or not a new centre should go ahead is an area of frustration.

The sticking point is that, in a free-market economy, need is dictated by demand. While the desire to protect high streets and town centres’ individuality is widely applauded, allowing local authorities to veto a new scheme purely based on its impact on a town could become a bar to economic growth.

Out-of-town locations have become popular with retailers, developers and shoppers for a number of reasons. For retailers, rents are lower, as are overheads on the day-to-day running of a store. Transport is also less of an issue out-of-town than in urban centres, because the sites are invariably well-connected and easy to access and allow retailers to draw from a wider catchment encompassing various towns.

But, above all, retailers and developers have often favoured out-of-town development to tap into the huge demand from shoppers. Their convenience, ease of access and free parking have proved a winner in the past decade, particularly in the larger regional centres such as Bluewater, which have continued to perform solidly in the face of hardening times.

True, the Government’s call to bring retailers and shoppers back to town centres happens to chime well with the present crisis in fuel prices that is putting consumers off using their cars, but the stronger centres are showing no signs of being hit any harder than the rest of the market.

It’s also been argued that, while the latest revision to PPS6 is clearly going to mean a shake-up in the planning process, details on exactly how this will pan out are notably absent from the report. The Government has painted some broad strokes, but the industry will have to wait a little longer to see the finer details, which will come in the form of the Practice Guidance, which will be published with the final PPs^ draft.

“The PPS6 consultation paper poses more questions than it answers,” says Barton Willmore head of retail planning Simon Macklen. “The draft provides little detail as to the precise scope and methodology of the new test. As a result, we feel the test is a missed opportunity to remove the ambiguity inherent in the existing PPS6.

“While we hope the Practice Guidance will address these concerns, it is disappointing that this has not been issued for consultation at this time so that we can fully understand what is being proposed.”

At a time when there are few certainties, retailers are having to adapt very quickly to changing circumstances. While town centres may not be their first-choice location, a number of factors, including last week’s PPS6 revision, are conspiring to force retailers’ hands.

The market should be allowed to grow with as little intervention as possible and, while the principle of enhancing town centres is one that few can argue with, it does go against the grain of free-market growth.

Town centres are expensive places to be and, by forcing retailers and developers into the towns, the Government has presented retailers with an uphill struggle. Then again, given the problems the out-of-town market is facing, it might not take PPS6 to convince some retailers to stay in town.