1. MR JUSTICE SULLIVAN: This is an application under section 288 of the Town and Country Planning Act 1990 ("the Act") to quash a decision by an inspector appointed by the first defendant contained in a decision letter dated 7th January 2003. In that decision letter the inspector dismissed the claimant's appeal against the second defendant's refusal to grant outline planning permission for residential development with access, an extension to open space and land raising, on a site at Danley Farm, Minster Road on the Isle of Sheppey.

2. The Kent structure plan was adopted in 1996. Policy H1 stated that provision should be made within Swale Borough Council for 9,400 dwellings for the period 1991 to 2006, of these, 3,300 were to be within the Isle of Sheppey.

3. The Swale Borough Local Plan was adopted in July 2000. In section 3, dealing with housing policies, paragraph 4.3.1 explained the priorities for the Isle of Sheppey planning area:

"The main priority for the Local Plan must be to identify sufficient land to meet Structure Plan requirements. For the Isle of Sheppey, this is set in the medium- to long-term above local trend requirements and reflects the need to support the economic development potential identified for the Island within the context of the Thames Gateway Planning Framework. These figures represent a marked contrast to provision in the previous plan, where allocations were limited to below Structure Plan requirements to reflect local building rates.

4.3.2 In locational terms the priorities have been to ensure that development is sustainable as far as possible. This includes ensuring that sites are well related to employment and infrastructure provision, avoiding the best of the natural environment and those areas at risk of flooding or erosion. Where possible, priority has been given to the re-use of land within the existing urban areas boundaries to minimise the loss of greenfield sites."

4. The Local Plan identified a number of sites with planning permission for housing development. They including Thistle Hill, Minster and Kingsborough, Minster. Together these sites were to provide "the residential support element to the employment initiatives proposed particularly at Sheerness port and Neatscourt" (4.3.10).

5. In addition to these sites with planning permission, Policy H28 identified a number of new housing sites. The application site forms the major part of one of those sites, No 8, Danley, Halfway. The area of the Local Plan allocation is given as 8 hectares, on which it was expected that 160 dwellings would be provided between 1991 and 2001. The allocated site lies between Halfway and Minster and on its eastern side adjoins Abbey Rise, a public open space which is designated as a Local Landscape Area in the Local Plan. Paragraph 4.3.20 of the Local Plan explains:

"The opportunity also exists to extend the adjacent park at Abbey Rise for the benefit of existing and future residents. A significant proportion of the overall open space requirement required for this site will be expected to be put to this use. The extension westwards and northwards of Abbey Rise park, will also form an extension to the existing Local Landscape Area, the current extent of which is shown on the Proposals Map. In determining the extension of the Local Landscape Area, the Borough Council will have regard to the relationship with the proposed housing (and any reduction thereof) and ensure that it retains adequate separation between the settlements of Minster and Halfway."

Policy H30 deals with access arrangements to the Danley allocation, and also refers to the need to extend the Abbey Rise Local Landscape Area.

6. In March 2000 a revised version of PPG3 Housing, replacing the 1992 edition, was published. The introduction explains that the new guidance:

"... introduces a new approach to planning for housing which, for most authorities, will mean that their development plan will require early review and alteration in respect of housing."

Under the heading "maintaining a supply of housing", paragraph 21 states that:

"The Government is committed to promoting more sustainable patterns of development, by:

. concentrating most additional housing development within urban areas;

. making more efficient use of land by maximising the re-use of previously-developed land and the conversion and re-use of existing buildings;

. assessing the capacity of urban areas to accommodate more housing;

. adopting a sequential approach to the allocation of land for housing and development;

. managing the release of housing land; and

. renewing existing allocations of housing land in plans, and planning permissions when they come up for renewal."

Dealing specifically with the reuse of urban land and buildings, paragraphs 22 and 23 say in part:

"The Government is committed to maximising the re-use of previously-developed land and empty properties and the conversion of non-residential buildings for housing, in order both to promote regeneration and minimise the amount of greenfield land being taken for development.

23. The national target is that by 2008, 60% of additional housing should be provided on previously-developed land and through conversions of existing buildings. ..."

7. Paragraph 24 advises Local Planning Authorities to undertake urban housing capacity studies. Paragraph 28 states that Development Plans "should provide clear guidance as to the location of new development so that it meets housing requirements in the most sustainable way." To this end, paragraph 31 states:

"In deciding which sites to allocate for housing in local plans and UDPs, local planning authorities should assess their potential and suitability for development against each of the following criteria:

. the availability of previously-developed sites ...

. the location and accessibility of potential development sites to jobs, shops and services by modes other than the car ...

. the capacity of existing and potential infrastructure, including public transport, water and sewage, other utilities and social infrastructure (such as schools and hospitals) ...

. the ability to build communities to support new physical and social infrastructure ...

. the physical and environmental constraints on development of land, including for example ... flood risk ..."

Under the heading "Allocating and Releasing Land for Development", paragraphs 32 and 33 advise local authorities:

"32. In determining the order in which sites identified in accordance with the criteria set out in paragraphs 30 and 31 should be developed, the presumption will be that previously-developed sites (or buildings for re-use or conversion) should be developed before greenfield sites. The exception to this principle will be where previously-developed sites perform so poorly in relation to the criteria listed in paragraph 31 as to preclude their use for housing (within the relevant planning period or phase) before a particular greenfield site.

33. Local plans and UDPs should include policies for the release of sites for housing development according to the order of priority set out in the first sentence of paragraph 32. This should take account of the likely supply of windfall sites. Local authorities should manage the release of sites over the planned period in order to control the pattern and speed of urban growth, ensure that the new infrastructure is co-ordinated with new housing development and deliver the local authority's recycling target."

8. Paragraph 34 is as follows:

"Sufficient sites should be shown on the plan's proposals map to accommodate at least the first five years (or the first two phases) of housing development proposed in the plan. Site allocations should be reviewed and updated as the plan is reviewed and roll forward at least every five years. Local planning authorities should monitor closely the uptake of both previously-developed and greenfield sites and should be prepared to alter or revise their plan policies in the light of that monitoring. However, it is essential that the operation of the development process is not prejudiced by unreal expectations of the developability of particular sites nor by planning authorities seeking to prioritise development sites in an arbitrary manner."

9. Thus far the advice has been concerned with development plan preparation, not development control. Paragraphs 37 to 39 deal with "Determining Planning Applications". Paragraph 37 urges local planning authorities to revise their plans to take account of the new guidance as quickly as possible. Paragraph 38 is in these terms:

"In considering planning applications for housing development in the interim, before development plans can be reviewed, local authorities should have regard to the policy contained in this PPG as material considerations which may supersede the policies in their plan (see paragraph 54 of PPG1). Where the planning application relates to development of a greenfield site allocated for housing in an adopted local plan or UDP, it should be assessed, and a decision made on the application, in the light of the policies set out in this guidance. Comparison with available previously-developed sites against the criteria in paragraph 31 and in the light of the presumption in paragraph 32 and the policies on design, layout and efficient use of land, including car parking, will be particularly relevant."

10. The cross-reference in paragraph 38 of PPG3 to paragraph 54 of PPG1 is to the following passage:

"If the development plan contains material policies or proposals and there are no other material considerations, the application or appeal should be determined in accordance with the development plan. Where there are other material considerations, the development plan should be the starting point, and the other material considerations weighed in reaching a decision. One such consideration will be whether the plan policies are relevant and up-to-date (the age of the plan is not in itself material). The plan may, for example, have been superseded by more recent planning policy guidance issued by the Government."

11. This was the policy background which led to the refusal of planning permission by the council. As the inspector explained in paragraph 6 of his decision letter:

"The site is greenfield land, based substantially on a Local Plan housing allocation (LP Policies H28 and H30). PPG 3 was published too late to influence the main content of the Local Plan although certain PPG 3 principles, including the need to make the best use of brownfield land, are consistent with the objectives of the Local Plan."

12. On 24th May 2002 the council refused planning permission for two reasons:

"(1) The site is located on the edge of the existing developed area of Minster on land that is not previously developed land. Notwithstanding its allocation in the Swale Borough Local Plan, the release of this site for local development is contrary to the objectives of Planning Policy Guidance Note no. 3, which give priority to the re-use of previously developed land within urban areas. There are no circumstances that would justify the release of this site before the development of alternative previously developed sites within the existing developed areas on the Isle of Sheppey.

(2) The proposal to develop this site in the manner proposed will prejudice the definition of the countryside gap for the area between Queenborough, Sheerness, Minster and Halfway, as advocated in Policy E10 of the Swale Borough Local Plan."

13. In the light of these two reasons for refusal, the inspector identified the main issues as:

"(i) Whether the release of the site for residential purposes would accord with advice in Planning Policy Guidance: Housing (PPG 3) concerning the use of brownfield sites in preference to greenfield sites.

(ii) Whether the development of the site in the manner proposed would unacceptably erode the openness between the settlements of Halfway and Minster." (Paragraph 4 decision letter)

14. On the first of those issues the inspector concluded:

"... that the release of the site for residential purposes would not accord with advice in PPG 3 in concerning the use of brownfield sites in preference to greenfield sites."

15. On the second main issue he concluded:

"... that the development of the site in the manner proposed would unacceptably erode the openness between the settlements of Halfway and Minster."

16. Having dealt with a number of other matters, access, flooding, archaeology and ecology, and concluded that they did not justify a refusal of planning permission, the inspector's overall conclusion, in paragraph 64, was as follows:

"Because of my conclusions on the main issues, I conclude overall that the proposal is unacceptable."

He therefore refused planning permission.

17. On behalf of the claimant, Mr King QC submits that the inspector erred in law in three respects. Firstly, by failing properly to apply PPG3; secondly, by failing properly to apply section 54A of the Act; and thirdly, by failing to take into account a material consideration in reaching his conclusions about the effect of the proposed development on openness between Halfway and Minster. I will deal with these three grounds in reverse order.

Openness

18. Although the application for planning permission was in outline "siting with regard only to the division between the housing and the open space" was not reserved for later approval (see paragraph 2 of the decision letter). (Further references in parenthesis are to the decision letter unless otherwise stated.)

19. In paragraphs 33 and 34 the inspector referred to those policies in the Local Plan which sought to protect, and extend, the Abbey Rise Local Landscape Area, and to Policy E10 which sought to prevent the erosion of countryside gaps between settlements. In paragraph 35 he referred to three landscape assessments which had been carried out by the Borough Council, by Kent County Council and by Alan Pyke Associates on behalf of Halfway Residents Association. These assessments advocated slightly different boundaries between the housing and the open space. The claimant was contending that the boundary of the housing development could be taken further east, towards the existing LLA, than recommended in any of the three landscape assessments. At the inquiry the council argued that housing development should not be allowed any further east than an established hedge along a field boundary between Field III (on which housing would be allowed) and Field II, to the east, which would become part of an extended LLA. The claimant was contending that Field II could be developed for housing. During the course of the six-day public inquiry in October and November 2002, the inspector heard extensive argument in relation to this topic. Both the claimant and the council called expert landscape evidence. Although there was disagreement over the accuracy of montage representations, the inspector was satisfied that sufficient material had been produced to allow him to form an opinion (paragraph 41). He made a site visit on 27th November 2002. In paragraph 42 he concluded:

"In my opinion, the built development proposed would encroach too far eastwards. At its closest it would be only some 160 metres from the houses on Appleford Drive, a distance less than the width of many open spaces within settlements, including the nearby school playing fields."

20. In the remainder of paragraph 42 and in paragraphs 43 and 44 the inspector amplified his reasons for reaching this conclusion, by reference to various viewpoints and the perceived impact of housing development so far east upon Abbey Rise.

21. It might be thought that there could be no possible criticism of this conclusion, and none was advanced by Mr King. But the inspector in paragraphs 45 to 47 went on to consider what would be the appropriate LLA boundary. In paragraph 45 he said that he agreed with the Kent County Council landscape appraisal which was based on land form, it proposed a line denoting the base of the hill which lay to the east of Field III, rather than a hedgerow boundary, as advocated by the Borough Council. This meant that the southern part of Field II (included in the LLA by the Borough Council) would become available for housing development, but not the whole of Field II as contended by the claimant.

22. Accordingly, in paragraph 46 of the decision letter the inspector said:

"I see no objection to the principle of land raising as flood protection. However, in common with other boundary options, adopting the KCC boundary would demand careful consideration of the manner of transition from existing levels to those of the raised land. The southern part of Field II would be available for housing development, as would the northern triangle (Field VI), and access could be taken off Minster Road as proposed. With appropriate density, the capacity of the land developed for housing could approach the allocation figure."

Having rejected the council's alternative boundary in paragraph 47, the inspector said in paragraph 48:

"In these circumstances, I find that the proposal would conflict with the aims of LP Policy E15 (protection of the LLA from development which would undermine its integrity and character); LP Policy E10 (prevention of the unacceptable erosion of the openness of an important countryside gap); and LP Policy H30 (extension of the LLA to retain adequate separation between Minster and Halfway). I conclude, on the second main issue, that the development of the site in the manner proposed would unacceptably erode the openness between the settlements of Halfway and Minster.

23. The claimant's criticism of this aspect of the decision letter is confined to the inspector's view that adopting the KCC landscape appraisal would leave not merely the southern part of Field II, but also Field VI available for housing development (paragraph 46). Field VI is the north-western corner of the housing allocation in the Local Plan. It was excluded from the application site. In his closing submissions to the inspector Mr King (who appeared on behalf of the claimant at the inquiry) dealt with the implications of the Borough Council's proposed development boundary, which excluded the whole of Field II. He said this apropos of Field VI:

"Field VI is not currently available for development because of land ownership constraints, it is the part of the allocated site with the greatest archaeological potential, and it is unsuitable for land raising. It may well therefore not come forward by 2006. If it does, it could yield around 20 dwellings, assuming that the set-back required from the field boundary to enable the necessary construction level to be achieved was not too great."

24. It is submitted that the inspector failed to have regard to these matters in concluding that Field VI would be available for housing if the KCC boundary was adopted, and that this was clearly a relevant factor since it was necessary to balance the impact on the gap and the LLA against the need to maximise the housing yield from the site. Even if there was any force in this criticism, it would not avail the claimant. The inspector had already concluded in paragraph 42 that the boundary for housing development proposed by the claimant would encroach too far eastwards. That conclusion remains valid, whether or not the inspector erred in his assessment of all the implications of agreeing with the KCC landscape assessment.

25. But in my judgment there is no force in the criticism in any event. Field VI is part of the housing allocation in the Local Plan. Thus, setting aside the first main issue, PPG3, which one must do for this purpose, it is in principle as available for development as the remainder of the allocation. It was not suggested that the land ownership constraints were insuperable, merely that the claimant had tried and been unable to obtain an option. The archaeological evidence is best described as tentative and it certainly does not suggest that there would be an archaeological objection to residential development on Field VI. The inspector had accepted "the principle of land raising as flood protection". No doubt Mr King put the claimant's case before the inspector to best advantage in his closing submissions. That case was not that Field VI would not be available for housing development, merely that it "may well ... not come forward by 2006." The inspector was entitled to take the view that, for the purposes of defining the appropriate long-term boundary between housing development and the LLA, adopting the KCC boundary would leave Field VI available for housing development.

Section 54A

26. Having defined the main issues in paragraph 4 of the decision letter (as set out above) the inspector dealt with planning policy in paragraph 5:

"The development plan comprises the Kent Structure Plan 1996 and the Swale Borough Local Plan adopted in July 2000. The policies considered relevant by the main parties are identified in [an appendix to] the Statement of Common Ground (Document 12)."

Document 12 listed the development plan policies, and recorded the parties' agreement that "subject to the provisions of PPG3 it is agreed that all policies referred to satisfy the full weight of section 54A of the Act."

27. I have set out above paragraph 6 of the decision letter. In it the inspector begins his reasoning on the first issue by recording that the site is greenfield land "substantially on a Local Plan housing allocation." The inspector continued in paragraph 7:

"PPG 3 advises in paragraph 38 that, in considering applications for housing development in the interim, before development plans can be reviewed, local authorities should have regard to PPG 3 policy as material considerations which may supersede the policies in their plan. Where the planning application relates to development of an allocated greenfield site, it should be assessed in the light of the policies set out in the guidance. Paragraph 32 notes that the presumption will be that previously-developed sites should be developed before greenfield sites except where previously-developed sites perform so poorly in relation to the criteria listed in paragraph 31 as to preclude their use for housing (within the relevant plan period or phase) before a particular greenfield site."

As mentioned above, paragraph 38 of PPG3 refers in turn to paragraph 54 of PPG1 which gives practical guidance as to how to give effect to the requirements of section 54A. During the course of his consideration of the first issue the inspector referred, under "Housing Land Supply", to the requirements of the structure plan:

"The Structure Plan requirement is for 3,300 houses within the Isle of Sheppey planning area by 2006. It is clear, from figures presented to the Inquiry, that this is unlikely to be met, even with the use of allocated greenfield sites and the additional capacity derived, on any interpretation, from the Urban Capacity Study (UCS)." (Paragraph 23)

28. Having considered the implications of this shortfall in paragraphs 24 to 32 of the decision letter, the inspector concluded, in the last sentence of paragraph 32:

"... that the release of the site for residential purposes would not accord with advice in PPG 3 concerning the use of brownfield sites in preference to greenfield sites."

29. In its second ground of challenge the claimant contends that the inspector failed to identify the respects in which the proposal did not accord with the development plan, failed to assess the policies of the development plan and decide whether in the light of the plan, read as a whole, planning permission ought to be granted, and failed to identify the material considerations which indicated that planning permission should be refused otherwise than in accordance with the plan. Mr King submitted that rather than adopt the approach prescribed by section 54A, the inspector had simply asked himself, on the first main issue, whether the proposal accorded with the advice in PPG3 (see the last sentence of paragraph 32).

30. This criticism takes one sentence of paragraph 32 out of context and is wholly unrealistic, given the context in which the inquiry was being held and the rival contentions with which the inspector had to grapple in his decision letter. This was not a case where there was any issue as to whether or not the proposed development was in accordance with the housing policies in the statutory development plan. The starting point was that the appeal site comprised the majority of a housing allocation in the Local Plan. The council's reasons for refusal (see above) did not suggest that there was any conflict with any relevant development plan policy, save in relation to the manner of the development prejudicing the countryside gap. In paragraph 48 of the decision letter (see above) the inspector identified those Local Plan policies, relating to the countryside gap and the local landscape area with which the proposed development was in conflict. There is no indication in the decision letter that he believed that the proposed development would conflict with any other policies in the development plan. He was right to say, in paragraph 32, that the proposal accorded with development plan policy "in many respects", because he would, in the remainder of the decision letter, conclude that it conflicted with the policies identified in paragraph 48. Thus it would have been inaccurate for him to have said that the proposal was entirely in accord with development plan policy.

31. Against the background of the site's allocation for housing development in the Local Plan, the issue, as identified in the council's first reason for refusal, and the inspector's first main issue, was whether the change in policy guidance contained in the new PPG3 justified a refusal of planning permission otherwise than in accordance with the development plan. The inspector was not writing a thesis on section 54A, he was dealing with the contentious issues between the parties at the inquiry. Given that the appeal site was allocated for housing, it is readily understandable that the inspector briefly recorded this as his starting point and then proceeded to deal, in detail, with the implications of PPG3. His reference at the outset to paragraph 38 of PPG3 makes it plain beyond any doubt that he appreciated that the development plan was the starting point, and that the issue at this particular inquiry was whether the new policy guidance in PPG3 "superseded the policies in [the] plan", thus justifying a decision otherwise than in accordance with the plan.

PPG3

32. This was the claimant's principal challenge. As particularised in the claim form this ground was subdivided into seven criticisms of the inspector's application of PPG3 to the appeal proposal. The first of those criticisms contended that the inspector had erred in principle, in failing to adopt the approach to PPG3 which was set out by His Honour Judge Rich QC in Alderney Estates Ltd v Secretary of State for Transport, Local Government and the Regions and Fylde Borough Council[2003] JPL 744, as clarified by the Court of Appeal on 21st February 2003, [2003] EWCA Civ 346. In that case the inspector had recommended that planning permission should be granted for the release of a greenfield site, saying:

"... that to produce an out-turn even approaching the Structure Plan housing requirement figure necessitates the urgent release of the appeal site. Moreover, the urgency invites consideration of a decision in advance of the Inspector's report into objections to the Local Plan."

The Secretary of State disagreed with the inspector's recommendation and refused planning permission on PPG3 grounds. On the developer's application to the High Court to quash the Secretary of State's decision there was debate as to the interrelationship between the advice contained in paragraphs 32 to 34 and 38 of PPG3. Having referred to the advice in paragraph 38 that a comparison with previously-developed sites in the light of the presumption in paragraph 32 would be particularly relevant, His Honour Judge Rich said this in paragraph 21 of his judgment:

"That presumption is that such sites 'should be developed before greenfield sites'. But, having regard to the way the presumption is applied by paragraph 38 and the specific words of paragraph 34, warning against prejudice to a development process by unreal expectations or arbitrary prioritisation, it would, in my judgment, be an impossible construction of paragraph 32 if it requires the prohibition of any greenfield development as long as any brownfield sites capable of development remain to be developed. The presumption must be read as being subject to the objective to provide sufficient housing land in accordance with the provisions of the approved development plan so far as applicable."

33. In paragraph 40 the judge said:

"Let me say at once that if the Secretary of State had accepted that refusal of planning permission would result in a major undershoot [of the structure plan requirement] but, in his judgment, that it did not matter, that would, subject to his giving reasons and complying with s.54A of the Act, have been within his powers. He did not, however, proceed on that basis ..."

34. In paragraph 43 the judge said that the driving force for the Secretary of State's decision was a misinterpretation of paragraph 32 of PPG3. Having referred to the reasoning in the Secretary of State's decision letter, the judge concluded in paragraph 45:

"The finding of fundamental conflict means, therefore, that the Secretary of State construes paragraph 32 as requiring refusal of planning permission for a greenfield site unless the applicant satisfies the decision maker that there is no brownfield site capable of development in priority. This, for the reasons which I gave in my exposition of the terms of the PPG, cannot be the true meaning of paragraph 32, which, apart from the other indicia in the PPG to which I referred, has to be read subject to paragraph 34. This requires sufficient sites to be shown for at least five years. Thus, where brownfield sites do not provide such supply, a sufficiency of greenfield sites should be identified. If they are not so identified, and supply is not then monitored as that paragraph envisages, the operation of the development process will be prejudiced in the manner that paragraph 34 warned against. Such misinterpretation or misapplication of paragraph 32 is therefore, in my judgment, a further error of law disclosed by the decision letter in thus having regard to an immaterial consideration."

35. The Secretary of State appealed to the Court of Appeal. It was conceded that the decision letter would have to be quashed in any event upon the basis that he had given no evidence, or inadequate reasons, for concluding that other sites might come forward. However, the Secretary of State was concerned with what His Honour Judge Rich had said as to the relationship between the advice contained in paragraphs 32 and 34 of PPG3. During the course of submissions before the Court of Appeal, the issue between the parties narrowed, as the Court of Appeal recorded "almost to vanishing point". In the event it was not contended on behalf of the Secretary of State that paragraph 34 had no relevance to a planning application. Nor was it contended on behalf of the developer that local planning authorities should not refuse planning permission on greenfield sites where they could not identify a five-year supply of land. After discussion between the parties, the court endorsed the following formulation:

"PPG3 does ... require Development Plan needs to be met and, where it is apparent that greenfield land must be released in order to meet those needs, paragraph 32 of PPG3 should not be used arbitrarily as a means of prioritising brownfield land over Greenfield land where the result would be prejudice of the development process and to meet housing need. ... Paragraph 34 is a relevant factor against which the presumption in paragraph 32 must/may be balanced." (See paragraphs 14 and 15 of the judgment of Carnwath LJ, with whom Buxton and Simon Brown LJJ agreed.)

36. Mr King submitted that the inspector in the present case had made an "Alderney-type" error. He had failed to have regard to development plan need (paragraph 34 of PPG3), and had instead considered whether there was sufficient brownfield sites available to match the provision that would be made by the appeal site. That was, in effect, to construe PPG3 as though it prevented the release of any greenfield site so long as an alternative brownfield site was available, regardless of development plan needs. The very error made by the Secretary of State in the Alderney case.

37. In my judgment, this criticism is plainly unfounded as soon as one reads the decision letter as a whole. The inspector dealt with the first issue under a number of subheadings. In the first of these, between paragraphs 6 and 11, he referred to the council's procedure for dealing with applications for the residential development of allocated greenfield sites, in the light of PPG3, in advance of the Local Plan. That procedure involved a number of tests, one of which was to consider whether the proposed number of dwellings could be accommodated on previously-used land within the existing urban area. The council had identified such land in an Urban Capacity Study (UCS), as recommended in paragraph 24 of PPG3. It contended that the number of dwellings proposed in the appeal could be accommodated on land identified in the UCS. Between paragraphs 12 to 18 the inspector considered the UCS, which was available to the inquiry even though it had not been published. He concluded (paragraph 17) that the proposal's site capacity "could be met by 2006 from UCS sites". If the inspector had stopped there and concluded that for this reason planning permission would be contrary to PPG3 he would have been in error in failing to consider development plan requirements, but he did not. Between paragraphs 19 to 22 he considered the criteria set out in paragraph 31 of PPG3, as he was advised to do by paragraph 38. He concluded in paragraph 21 of the decision letter:

"Whilst many of the UCS sites have difficulties, they have the general advantage of being more central to shops and most other facilities, and to public transport and employment opportunities. In my view, none perform so poorly, in relation to the paragraph 31 criteria, that the appeal site would be preferred."

It will be seen that in that passage the inspector was faithfully applying the advice set out in paragraph 32 of PPG3.

38. Again, if the decision letter had stopped there Mr King's submissions would have had considerable force, because up to that stage of the decision letter the inspector had not addressed the advice in paragraph 34 of PPG3. However, the inspector went on to consider housing land supply in considerable detail between paragraphs 23 to 27 of the decision letter. I have set out the terms of paragraph 23 above. It is plain that the inspector took as his starting point the structure plan requirement for 3,300 houses within the Isle of Sheppey planning area by 2006. He concluded that that requirement was not likely to be met. In paragraphs 24 to 27, he went on to consider the significance of that shortfall:

"24. However, the Isle of Sheppey is an area of relatively high unemployment. Although much lower than the very high levels of a decade ago, unemployment is still high compared with other areas in the region, being more than 50% higher than the average for Kent. There is also a need to increase employment in the area for regional, strategic reasons. The Thames Gateway PLanning Framework (RPG 9a) advises, in paragraph 6.11.4, that the development plan should bring forward an adequate supply and range of new housing on Sheppey to support economic development. Very little employment land has been taken up in recent years and employment development is falling short of the strategic requirement set out in the Structure Plan by a very large margin.

25. In turn, it is generally accepted that demand for employment floorspace is being held back by the delay in relieving the severely congested Swale crossing, the only road and rail link between Sheppey and the mainland. Information to the Inquiry indicated that construction of the second crossing would now start in Spring 2004 and that it would be complete by the Spring of 2006, the end of the current plan period.

26. The Council argues that it is unnecessary to meet that part of the housing land supply which reflects the expansion in employment which could be expected to arise from the second crossing. Indeed, the Local Plan indicates that part of the Thistle Hill and Kingsborough greenfield allocations should be held in abeyance, on the advice of the Highways Agency, until the second crossing is complete. Only the sites necessary to satisfy local need, identified as trend growth, need be provided, the Council contends. The Structure Plan indicates a trend based figure of 2,300 dwellings between 1991 and 2006.

27. Various calculations were presented and reworked during the Inquiry. They show a range of results in the broad region of the local need figure, wither shortfall or surplus, which would be improved were windfall sites forthcoming. The calculations include a number of allocated greenfield sites, but not the Thistle Hill and Kingsborough sites being held back for the second crossing."

39. Against this background, the inspector's conclusions in paragraphs 28 to 32 of the decision letter were as follows:

"28. Overall, housing development in Sheppey is falling behind the Structure Plan target, and there may also be shortfalls in trend growth. However, employment development is also falling behind target to a very great extent and its revival depends critically on the second Swale crossing. PPG 3 advises, in paragraph 33, that local authorities should ensure that new infrastructure is co-ordinated with new housing development. At the time of the 1991 census, 70.9% of those in work on Sheppey were employed off the island and, given the way that employment development has fallen short of the Structure Plan target, this figure is now likely to be greater.

29. House prices are amongst the lowest in the region, despite the Appellant's contention that landowners are tending to hold onto sites in the expectation that prices will rise with the arrival of the second crossing. One would normally expect prices to rise, in conditions of restricted supply such as these. There does not, therefore, appear to be a high market demand for houses in Sheppey and it is questionable whether housing land supply is poor, relative to local need as distinct from [employment] growth.

30. I have looked carefully at the Alderney Estates judgment and note the emphasis placed on providing sufficient housing land in accordance with the provisions of the development plan. However, in my opinion, if the proposed houses were built now, they would be occupied mainly by those commuting off the island for work. This would not be desirable in terms of sustainability. Moreover, if developed now, there would be much less chance of the UCS sites identified being developed in the short or medium term, including those which are not expected to come forward until after 2006.

31. An appropriate strategy for the monitoring and managing of housing supply, in these circumstances, would be to do all that is possible to move the UCS sites forward in the short term. This would include restricting the availability of greenfield sites which, in their nature, are generally much easier to develop. At the same time, to control the order of release of greenfield sites such as this, as advised in paragraph 33 of PPG 3, so that brownfield land continues to be taken up, but overall development keeps pace, sensitively and adequately, with the growth of employment. It may well be that the large brownfield resources of the Queensborough Creek sites would then be available in time to match employment growth.

32. In my view, the proper vehicle for this is the consultative forum of the Local Plan Review. A timetable exists for the Review with adoption anticipated in Autumn 2005, prior to the completion of the second Swale crossing. Although the proposal accords with development plan policy in many respects, I conclude on the first main issue that the release of the site for residential purposes would not accord with advice in PPG 3 concerning the use of brownfield sites in preference to greenfield sites."

40. The Alderney Estates judgment considered by the inspector was of course the judgment at first instance, not that of the Court of Appeal, but what is important and fatal to the claimant's criticism of the inspector's approach to PPG3 in principle is the inspector's express consideration of the argument that sufficient housing land should be provided in accordance with the development plan. Thus, the inspector was, in terms, balancing the advice in paragraph 34 of PPG3 against the presumption in paragraph 32. Having done so, he was entitled "subject to his giving reasons and complying with s.54A of the Act" to conclude that planning permission should be refused (see paragraph 40 of His Honour Judge Rich's judgment above).

41. I have dealt with section 54A (above). The inspector's reasons for concluding that planning permission should be refused, notwithstanding the fact that there would undoubtedly be a shortfall on the structure plan requirement for 3,300 houses are set out in paragraphs 28 to 32 of the decision letter. In summary, the structure plan requirement was employment led and employment development was falling behind target to a very great extent. In consequence, if the proposed houses were built now they would be occupied mainly by those commuting off the island for work, which would not be desirable in terms of sustainability, one of the principal objects of PPG3.

42. At one stage Mr King submitted that paragraph 32 gave no guidance as to whether development plan targets should be met, it was solely relevant to how development plan targets should be met. Thus, if development plan targets were not likely to be met conflict with the presumption in paragraph 32 could not be a proper reason for refusal. This legalistic approach to the interpretation of PPG3 fails to pay sufficient regard to the totality of the advice in paragraphs 31 to 34 and 38, and is, in effect, an attempt to reinstate the interpretation which was rightly disavowed by counsel for the developer in the Alderney Estates case in the Court of Appeal (see paragraph 14 of the Court of Appeal's judgment). Paragraph 34 does not compel a local planning authority to grant planning permission for a greenfield site merely because it is unable to identify a five-year supply of housing on brownfield sites, just as paragraph 32 does not compel a local planning authority to refuse planning permission for a greenfield site merely because an alternative brownfield site is available. Whether planning permission should be granted or refused in any particular case will depend upon a balanced assessment of all relevant factors, including in particular those identified in paragraphs 32 and 34 of PPG3 (see paragraph 38).

43. Mr King criticised the inspector's reliance on the Local Plan Review, submitting that it was wrong for the inspector to speculate as to what alterations there might be to development plan requirements. In my view, the inspector did not engage in speculation. In marked contrast to the inspector's finding in the Alderney case that there was an urgent need for the release of the appeal site, the inspector in the present case concluded that although there was a shortfall in relation to the structure plan requirement of 3,300 dwellings, there was no such shortfall in relation to local need (see paragraphs 27 and 29). In these circumstances, with the higher, employment-led figure being held back by the non-availability of the second crossing of the Swale until spring 2006, the end of the current plan period (paragraph 25), there was sufficient time to devise an appropriate strategy for monitoring and managing housing supply through the Local Plan Review, the adoption of which was anticipated in the autumn of 2005, prior to the completion of the second Swale crossing (paragraphs 31 and 32). I appreciate that such an approach is most unwelcome to the claimant, but it would appear to be an eminently reasonable one upon the basis of the inspector's findings, and it certainly does not disclose any error of law or misapplication of the policy advice contained in PPG3 when read as a whole.

44. The claimant's remaining criticisms under this ground were concerned with detailed aspects of the inspector's findings when dealing with the first main issue. In paragraph 16 of the decision letter the inspector said this:

"Many of the UCS sites may have failed to come forward in the past, partly because of the availability of greenfield sites. PPG 3, in paragraph 33, emphasises the importance of local authorities managing the release of sites to control the pattern and speed of urban growth and to deliver its recycling target. If easier greenfield sites are available, there will be little incentive to overcome site difficulties and bring the most sustainable urban land into re-use."

45. It was submitted that there was no evidence for the conclusion in the first sentence of paragraph 16. The evidence before the inquiry was that only one allocated site, containing eight dwellings, had been developed. It was also contended that this error influenced the inspector's further conclusions in paragraphs 30 and 31 that if the appeal site was developed now there would be much less chance of the UCS sites identified being developed in the short or medium-term, and that an appropriate strategy would include restricting the availability of greenfield sites which were much easier to develop. I do not accept either contention. In his proof of evidence on behalf of the council before the inspector, Mr Lloyd, the council's Local Planning Manager, had argued, inter alia:

"It is easy to find fault and difficulties with previously-developed sites, but PPG3 is all about changing the mind-set of developers away from easy Greenfield development, to tackle the more difficult opportunities involving previously-developed land ... What is lacking is developers' resolve to realise opportunities, and that lack of resolve will remain all the while easy Greenfield sites continue to be released."

The inspector was entitled to accept that evidence, not least because a similar approach underpins the advice in paragraphs 31 to 33 of PPG3. A presumption that previously developed sites should be developed before greenfield sites is needed precisely because, in the absence of such a presumption, developers will be tempted to pick off the easier greenfield sites. The inspector's conclusions in paragraphs 30 and 31, and his conclusion in the final sentence of paragraph 16, were not merely open to him on the evidence, but entirely in accord with the reasoning underlying the new policy advice in PPG3. The conclusion in the first sentence of paragraph 16 is, as Mr Brown points out on behalf of the Secretary of State, a tentative one. The inspector does not conclude that all of the UCS sites failed to come forward in the past because of the availability of greenfield sites. His conclusion is merely that many of them may have failed to come forward in the past partly for that reason. There was, in addition, evidence before the inspector that non-allocated greenfield sites at Thistle Hill and Kingsborough had been developed. Those sites were mentioned during the course of the inquiry and the inspector had visited them during the course of his site inspection. In the light of all that evidence, he was entitled to use his planning judgment to form the somewhat tentative conclusion of which the claimant complains.

46. Next, criticism is made of paragraph 29 of the decision letter (which is set out above). It is said that the inspector made an assumption that house prices in Sheppey were not rising and that there was no evidential basis for that assumption. There was evidence before the inspector that house prices in Sheppey were amongst the lowest in the region. Mr King accepts that it was contended on behalf of the claimant that landowners were holdings on to sites in the expectation that prices would rise with the arrival of the second crossing.

47. Against this background, the inspector's comment that one would normally expect prices to rise in conditions of restricted supply (because landowners were, for whatever reason, holding on to sites) seems perfectly reasonable. It is impossible to describe it as an error, much less to elevate it into an error of such significance as to justify quashing the decision. Against the undisputed background before the inspector of house prices being the lowest in the region and of landowners holding on to sites, the inspector was entitled to form the view that there did not appear to be a high market demand for houses in Sheppey, whether or not one would have expected prices to rise in such a situation.

48. The next criticism in the claim form was not pursued. The final sentence of paragraph 29 of the decision letter, as issued to the parties, read as follows:

"There does not, therefore, appear to be a high market demand for houses in Sheppey and it is questionable whether housing land supply is poor, relative to local need as distinct from trend growth."

Since the inspector had earlier equated local need with trend growth (see paragraph 26), and distinguished the resulting figure from the 2,300 dwellings from the 3,300 dwellings required by the employment-led policies in the structure plan, the last five words of paragraph 29 make no sense. In response to the claim form, the inspector acknowledged in a witness statement that there was indeed an error in the decision letter and the word "trend" should have been "employment". It is clear that the distinction between the employment-led figures in the structure plan and local need was very much in the inspector's mind. Even if that distinction was not apparent in paragraph 29 of the decision letter as written, the conclusion that it was questionable whether housing supply was poor relative to local need was made plain, and it is that conclusion which was significant in the inspector's reasoning, even if the error had remained uncorrected.

49. Then it was said that the inspector had erred in paragraph 27 of the decision letter when dealing with the issue of windfall sites. The relevant part of paragraph 27 is as follows:

"Various calculations were presented and reworked during the Inquiry. They show a range of results in the broad region of the local need figure, either shortfall or surplus, which would be improved were windfall sites forthcoming."

The complaint made by the claimant is that the calculations provided by each party had already made an allowance for windfall sites. Indeed, there was no dispute between the parties as to what that allowance should be. Both parties included an allowance of an anticipated contribution from small sites between 2001 to 2006 of 206 dwellings. I accept that in this particular respect the inspector appears to have made an error. But in my judgment, for the reason given by Mr Brown on behalf of the Secretary of State, the error is of no consequence. The reason is a simple one. The inspector concluded that with or without windfall sites, the range of results in the calculations that had been presented to him was "in the broad region of the local need figure, either shortfall or surplus". This was not one of those cases where the inspector had concluded that the structure plan requirement was not met without taking into account windfall sites, but was met taking into account windfall sites and therefore there was no need for a proposed development. If there was an erroneous double-counting of windfall sites in such a case, that might make a material difference to the outcome of the appeal. In the present case, by contrast, the inspector was in no doubt whatsoever that with or without windfall sites there was little prospect of the structure plan requirement for 3,300 houses being met. Equally, he was satisfied that with or without windfall sites a figure in the broad region of that relating to local need, either shortfall or surplus, was likely to be met. He then set out his reasons for concluding that whilst it was important that the latter figure should be met, it was not so important that the former figure should be met as to warrant a grant of permission for this greenfield site.

50. A further criticism which was not pursued related to the inspector's approach to other greenfield sites in paragraph 22 of the decision letter. The inspector said:

"The Council has made no comparison with other allocated greenfield sites. I see no reason to suppose that the appeal site would significantly outperform the others. As applications are made, each would be judged on its merits against available brownfield sites, in accordance with the Council's established procedure."

The claim form complained that the inspector had failed to acknowledge the claimant's evidence that none of the other greenfield sites performed better than the appeal site, and contended that the inspector had in effect set up an Aunt Sally requiring the appeal site to "significantly outperform the others". Mr King, however, accepted in his submissions that comparison of the rival merits of other greenfield sites would only become relevant if the inspector had erred in his approach to the sufficiency of brownfield sites. Since I have concluded, for the reasons set out above, that he did not so err, the question of comparison with greenfield sites does not arise.

51. Lastly, it is said that the inspector erred when assessing the appeal site against "the ability to build communities" criterion in paragraph 31 of PPG3. In paragraph 20 the inspector concluded:

"The proposed development appears to me neutral in its ability to build communities. It would be an urban extension, located on the periphery of existing communities, but would probably give support to facilities and services at Halfway and would allow play facilities and the Abbey Rise Local Landscape Area to be extended. It would also provide 24 units of affordable housing, which might not be forthcoming from smaller sites or brownfield sites with problems of viability."

It is said that the inspector erred because he did not acknowledge that the proposal to provide 24 units of affordable housing was directed towards meeting a need for such housing in Halfway.

52. This was a very long and, despite the error in paragraph 29, careful decision letter. I have cited only selected extracts from it. The inspector was required to deal with the principal issues before him, not with every single aspect of every issue, however minor. The matter was put in this way to the inspector by Mr King at the very end of that section of his final submissions which dealt with issue 1:

"There is another significant aspect to housing need, and that is that the proposal (through the unilateral planning obligation) will secure the provision of 24 units of affordable housing, and will thereby satisfy a specific need for affordable housing in Halfway which has been identified by the Swale Housing Association. It is agreed that there is no other site in Halfway in prospect on which this need is likely to be met."

As is plain from the extract from paragraph 20 that I have set out above, the inspector addressed the issue of affordable housing, but as one aspect of just one of the criteria in one paragraph (paragraph 31) of PPG3. Given the relative importance of this particular issue, the inspector was entitled to deal with it in the way that he did. Indeed, it is a tribute to the thoroughness of this very comprehensive and detailed decision letter that this particular matter was referred to at all.

53. For these reasons, I am satisfied that the inspector did not err in principle when considering the first main issue and that in so far as there were any errors of detail -- "trend" rather than "employment" in paragraph 29 and double-counting of windfall sites -- they could have had no possible impact upon the inspector's overall conclusion.

54. For these reasons, this application must be refused.

55. MR BROWN: My Lord, I am very grateful for that. I do not know if a copy of our costs schedule has reached your Lordship?

56. MR JUSTICE SULLIVAN: I do not think it has, actually.

57. MR BROWN: If I could pass one up? (Handed) I should stress, my Lord, that the costs schedules were not exchanged in advance before today. I leave it to my learned friend to say whether that causes him a problem, although I do not understand at the moment that it does.

58. My Lord, my application is for the first defendant's costs in the sum that you see set out on the second page, grand total, £6,314.25.

59. MR JUSTICE SULLIVAN: What do you want to say about that, Mr King?

60. MR KING: My Lord, only two things. The first is that the sum is not in issue and is agreed, but the second is that I am going to invite your Lordship, for reasons which I will explain, not to make a full award of costs in favour of the first defendant. I am not going to submit that the first defendant should not get any of his costs, but there should only be a partial award. The basis for that, my Lord, is, as I mentioned yesterday, that essentially the basis for that submission is the contents of the inspector's witness statement, which was submitted late in the day, 22nd May. It is dated 21st May but I think we received it on 22nd May. In my submission, much more significantly than the lateness, which in itself I am not suggesting is significant, does much more, we would submit, than merely correct a typographical error in the decision letter, as paragraph 4 of the inspector's statement suggests or asserts.

61. My Lord, yesterday in argument I drew attention to my learned friend Mr Brown's skeleton, paragraph 3.12, where he said that the last sentence of paragraph 29 of the decision letter made no sense as written. I understand my Lord to have agreed with that in his judgment, at least no sense we would submit as written without explanation. The claimant genuinely did not understand what the inspector meant in that sentence, although of course anyone can speculate as to what he might have meant. It is, I submit, perfectly possible in the context of the decision letter, and in particular the rest of paragraph 29, that the inspector had had in mind some distinction between local need on the one hand and trend growth on the other which had some kind of bearing on the outcome of the appeal. As it turned out, of course, that is not what he meant, he meant something different. But I would submit that it was necessary, and it was necessary in order to resolve that evident nonsense to make the application to the court under section 288. My Lord, of course I accept -- it is a fact and I have not suggested otherwise -- that the inspector's witness statement led to the withdrawal of the claim, of course it did not. I recognise that. I recognise of course as well that the claimant pursued other grounds which were unsuccessful. Nevertheless, I think it is unusual, perhaps very unusual, for an inspector to have to correct an error of this kind through a witness statement. The claimant has not, I hope your Lordship will think reasonably and sensibly, sought to argue that the decision should be quashed on that ground alone. But there was an error. It has been corrected. It is for that reason that, in my submission, my Lord in his discretion should award the Secretary of State only part of his costs. The proportion is more difficult, of course. I am going to invite my Lord to make an order that the claimant should pay 50 per cent of the Secretary of State's costs.

62. MR JUSTICE SULLIVAN: Thank you. Mr Brown, what I am minded -- sorry, would you like to say anything else?

63. MR KING: Not at all, my Lord. I was wondering if my Lord was going to ask me a question.

64. MR JUSTICE SULLIVAN: No, I was not. I quite understand your position.

65. Mr Brown, I was not minded to be quite as generous as Mr King thinks I might be, but at the moment I do not really see why the claimant should pay for the Treasury Solicitor sorting out with the inspector that the inspector had made an error in the inspector's own decision letter. They were perfectly entitled, if you like, to have that much of the cost of their claim as set out this error. In so far as you are seeking costs from them, if one has to bear in mind they incurred a very little bit of costs, it was only one of the grounds amongst many, I understand that. But it did seem to me a possible injustice could be done about this by saying that the Treasury Solicitor got together with the inspector for a couple of hours or so at £150 an hour, and if the costs were £6,000 rather than £6,300 that would mean that fairness would be done. Could you really complain about that?

66. MR BROWN: My Lord, I couldn't complain about the general principle. It is point which I rather anticipated might be made and one of the things that I asked about when I saw the costs schedule was -- first of all, is there any time which is attributable to the inspector's witness statement and, secondly, if there is, can that be isolated? The answer to the first question is, "Yes, there is time in there." The answer to the second is, "Yes, it can be isolated and it is of the order of three-quarters of an hour", which my instructing solicitor works out at about £87.50. But if your Lordship wanted to say £100 or so to knock off the total, we would have no quarrel with that.

67. MR JUSTICE SULLIVAN: Thank you very much indeed. Bearing in mind the fact the claimant -- do you want to say anything else?

68. MR BROWN: No, my Lord.

69. MR JUSTICE SULLIVAN: Bearing in mind the fact that the claimant has been put to a bit of unnecessary expense and bearing in mind that the Treasury Solicitor has incurred what is, from the claimant's point of view, a bit of unnecessary expense even though not quite as much as the two hours that I have mentioned, I think I am going to adhere to my initial view, albeit for slightly different reasons, and say that the costs ought to be rounded down to £6,000 and that would fairly reflect the fact that we need not have spent time on the error.

70. MR BROWN: My Lord, I am grateful.

71. MR JUSTICE SULLIVAN: The application is dismissed. Costs are summarily assessed in the sum of £6,000.

72. Thank you both very much indeed for very helpful submissions. I am sorry that they have led me into giving rather a long judgment. There is a spare copy of the appeal decision I have just fished it out for those who might be disadvantaged for not having copies.

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