House planning incentives queried

Labour says housing is one of its main priorities over the next year

Financial incentives given to councils in England to speed up housing planning applications may have had "perverse" consequences, MPs have said.

The Public Accounts Committee accepted cash incentives for councils to reach judgements within 13 weeks had speeded up decision-making.

But councils can "lose interest" in an application once the 13-week target has been missed, the committee claimed.

The housing minister said the planning system had become far more efficient.

Rate of delivery

Councils are required to meet national targets for the length of time they take to consider residential planning decisions.

To encourage authorities to meet the 13-week deadline, those that do are rewarded with extra funding from a £68m annual planning delivery grant to increase their planning capacity.

Of the decisions taken within the 13 weeks, a much greater proportion are rejections than acceptances Edward Leigh, Public Accounts Committee

The Committee said financial incentives had helped double the number of developments considered within the set period to 67% between 2002 and 2008.

But committee chairman Edward Leigh said this success had to be weighed against a number of unforeseen side-effects and lingering weaknesses within the planning system.

"The target has created perverse incentives," he said.

"Authorities can lose interest in applications once the target has been missed. And of the decisions taken within the 13 weeks, a much greater proportion are rejections than acceptances."

'Busting red tape'

Officials were still not clear about the average length of time it took to get from pre-application stage for a new development to the start of construction, Mr Leigh added.

Recent research has suggested the process can take two years.

"It will have to be speeded up if the rate of delivery of new homes is to meet underlying housing need, estimated at nearly 250,000 new households a year," he said.

Housing minister John Healey said decision-making had become more efficient since 2004 and measures announced last month would make it easier for developers to launch and sustain projects in the face of the recession.

"I will shortly be announcing further red-tape busting reforms to planning decisions which could save the economy millions of pounds a year," he added.

"The changes will ease the pressure by taking thousands of minor applications out of the system altogether or making them subject to a quicker and simpler process."

Gordon Brown outlined plans on Monday to build an extra 110,000 homes in the next two years to help address what is widely recognised to be the UK's acute housing shortage.