Wilson Connolly Ltd., R (on the application of) v First Secretary of State & Anor

J U D G M E N T

1. MR JUSTICE OUSELEY: This is an application under section 288 of the Town and Country Planning Act 1990 whereby the claimant, Wilson Connolly Limited, seeks to quash the decision of the First Secretary of State, who by a decision letter of 9th May 2003 dismissed two appeals by the claimant in respect of proposed housing development on land at Highworth in Swindon. This case is concerned with only one of those appeals, and that was in respect of an application for outline planning permission on the 2.23 hectare site.

2. The site lies adjacent to an established residential area, and it was regarded by the Inspector, whose conclusion in this respect was not differed from by the First Secretary of State, that the land constituted an urban extension. It certainly did not constitute previously developed land.

3. The site had been allocated for residential development in the 1999 Swindon Borough Local Plan. The Inspector identified the main considerations as being, so far as material, whether the guidance in PPG3 should override the development plan policies that favoured the site's residential development. It is convenient to deal now with the significance of the reference to PPG3.

4. PPG3, which postdated the Swindon Borough Local Plan, emphasises in paragraphs 30 and 32 that, whether identifying sites to be allocated for housing and local plans or determining the order in which identified sites should be released, a sequence had to be followed: first of all, the re-use of previously developed land and buildings within urban areas identified by the Housing Capacity Study, then urban extensions, and finally, new development around nodes in good public transport corridors.

5. Where there was a development plan, the advice in paragraph 37 of PPG3 was that the plans should be kept up to date and revised to take account of the guidance in this PPG.

6. Paragraph 38 deals with the specific position here: namely where there is a development plan preceding PPG3 but which contains an allocation for housing in respect of which section 54(A) of the Town and Country Planning Act 1990 would, in the absence of other material considerations, lead to the granting of planning permission.

7. Paragraph 38 is as follows:

"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. Where a proposed housing development involves the use of a previously-developed site or the conversion of existing buildings, the proposal may need to be amended in accordance with this guidance, for example, in relation to design, layout, density and parking."

8. The other paragraph of PPG3 to which I should make reference, in the light of submissions, is paragraph 34. This refers to the role of a five-year housing supply when dealing with local plans, but also envisages that there will be some effect on the operation of the development control process through the existence of a five-year supply, provided it is a realistic five-year supply.

9. For the purposes of this case, it is unnecessary to go into the interpretative problems which exercised the Court of Appeal in Alderney Estates Ltd v Secretary of State for Transport Local Government and the Regions [2003] EWCA Civ 346, [2003] 2 PNCR 15.

10. The reference to the preferred type of site as being previously developed land and buildings within urban areas identified by the Urban Housing Capacity Study leads to the requirement in PPG3 that the local planning authority should carry out an Urban Housing Capacity Study which could then become material both in plan making and in development control decision making.

11. The Swindon Borough Council had carried out a recent Urban Capacity Study which was agreed by the parties to the Inquiry to be a competent and robust study. Indeed, Mr Wolton, QC for the claimant, sought to emphasise its competence and robustness to urge the argument that nothing more could be found in Swindon Borough's area.

12. Evidence given on behalf of the local authority at the Inquiry explained the purpose and effect of the Urban Capacity Study: the Urban Capacity Study had demonstrated potential on previously undeveloped land within the main settlements. It is clearly the purpose of an Urban Capacity Study to identify potential for development, and thereby not merely to discourage greenfield site development but to encourage development in the sequentially preferable order which PPG3 sets out.

13. I return to the Inspector's report. In the light of the policy guidance, it became necessary for the Inspector to examine how the appeal site fared against the sequential approach as analysed in the Urban Capacity Study. He pointed out that the replacement Local Plan was at an early stage, (it was a deposit draft), and in it, the appeal site had not been retained as a housing allocation, although that proposal was subject to objection and its provisions could be given little weight.

14. He then turned to his conclusions in relation to the availability of housing. He regarded the council's view as to supply as being too optimistic. There was a requirement for 1,500 houses or so over the period to 2011. One of the major components of supply towards that requirement was the Southern Development Area, but he took the view that only 1,950 out of the anticipated 4,500 completions were likely by 2011, leaving a shortfall of 2,550 on the expected output of the Southern Development Area.

15. There was also evidence that the Northern Development Area, which was another significant component, was producing houses at a significantly lower rate than was expected or required. He was concerned about the council's heavy reliance on those two main greenfield sites.

16. He then said, in paragraph 103:

"The UCS has identified some additional sites within the urban areas which have been taken forward into the DLP. Consequently, Policy H2 of the latter lists 28 sites which, together with the NDA and SDA, and an allowance for windfalls, are intended to satisfy the residual requirement of an additional 7465 new dwellings (after completions and commitments are taken into account). However, in my opinion, it would be unrealistic to expect all sources to deliver the forecast amount of housing during the Plan period. I therefore agree with the Appellant that it would be reasonable to add a 10% non-implementation to sites with unimplemented planning permission and allocated sites. This would increase the residual requirement from 7465 to 8020 which would be increased further when the allowance is applied to the residual figure itself to allow for non-implementation of newly identified sources. This would represent a significant increase above 8020 dwellings it would be somewhat below the figure of 8823 units as suggested by the appellant, since it appears to me that the latter includes some double counting in respect of sites already allocated in the SBLP [27/28, 50/52].

"104. The UCS has helped to clarify that the Borough has a greater number of potential brownfield housing sites than previously thought [51, 52]. Nevertheless, under-performance of the main housing allocations, especially the SDA, is likely to result in a significant deficit in the provision of land to satisfy housing requirements during the Plan period. This would increase should development of the SDA be delayed further [30]. I therefore consider that a greater number of dwellings from sources other than the NDA, the SDA and land already identified in the UCS and DLP will need to be found. This process should be guided by the advice in PPG3."

17. He then concluded in paragraph 105 that the site was an urban extension in a sustainable location equal to or better than other possible urban extension sites in Highworth, and concluded:

"Given the limited brownfield opportunities, and the need to rely on greenfield land to provide for the Borough's housing requirements, I conclude that the guidance in PPG3 is not sufficient to override the plan which allocates the site for housing development. Indeed, the release of the site would be consistent with the sequential approach advocated in national guidance".

18. Having considered other matters, the Inspector recommended that appeal (b), with which we are concerned, be allowed.

19. The Secretary of State agreed with the Inspector's analysis of what the main issues in the appeals were. He agreed that there was an outstanding requirement of 15,000 units. He accepted that completion rates on the NDA had been slow. He also accepted that on the SDA site, there would be a shortage of 2,550 dwellings, and that accordingly, the Borough would be assisted by additional smaller sites.

20. He then turned to paragraph 38 of PPG3, and considered the need to release this greenfield site for housing. He set out his position in paragraphs 12 to 14 of the decision letter as follows:

"12. The Urban Capacity Study (UCS) carried out by the Council and completed in September 2002 concluded that the Borough has a greater number of potential brownfield sites than previously thought. Some of these sites have been taken forward into the DLP and, together with the NDA and SDA sites, and an allowance for windfalls, are intended to satisfy the residual requirement of an additional 7,465 new dwellings (after completions and commitments are taken into account) [IR 103].

"13. The Secretary of State agrees with the Inspector that under-performance of the main housing allocations, especially the SDA, is likely to result in a significant deficit in the provision of land to satisfy housing requirements during the Plan period [IR 104]. He agrees with the Inspector that a greater number of dwellings from sources other than the NDA and the SDA will need to be found. However, he does not agree with the Inspector that these dwellings would need to come from sources other than land identified in the UCS [IR 104].

"14. The UCS identified a number of sites within defined urban areas which are sequentially preferable to the appeals site and which could potentially be utilised for housing. A proportion of these sites have been taken forward into the DLP, although this is at an early stage in its development. The Secretary of State considers that there is significant capacity available on other sites identified by the UCS which could be utilised to contribute towards making up the likely deficit from the SDA and NDA sites. The Secretary of State is not persuaded therefore that it is necessary for this greenfield site to be released for housing at this time, ahead of sequentially preferable sites identified in the UCS. He considers, therefore, that the release of this site for housing now would be contrary to the search sequence advocated by PPG3."

21. The Secretary of State then considered other matters, but stated in paragraph 15 that he did not agree that the guidance in PPG3 was insufficient to override the development plan which allocated the site for housing, nor did he consider that its release would be consistent with the sequential approach.

22. It is clear that the Secretary of State differed from the Inspector on at least this critical point. The Inspector, in paragraph 104 of his report, refers to the need for dwellings to come forward from sources other than the NDA, the SDA, and land already identified in the UCS and DLP. It is agreed that that is a reference to the 28 sites listed in policy H2 of the deposit draft Local Plan.

23. The Inspector draws a line at that stage in his consideration of the effect or content of sites identified in the UCS to exclude those which are not referred to in policy H2 or, I would infer, other sites which do not form part of the calculation of shortfall or surplus relied on by the parties. I say that because it is clear that the council, in reaching its optimistic view that there was a surplus, had in fact included in its calculation an allowance for some sites identified in the UCS which were not identified specifically in policy H2. I think that the Inspector was taken by the Secretary of State, and should be taken, to have included references to those sites as well in his assessments.

24. It is clear from paragraph 14, however, that the Secretary of State was referring to sites in the UCS additional to those to which the Inspector had referred as being either in policy H2 or otherwise already relied on in the calculation of housing surplus or deficit.

25. It is this difference in approach to which Mr Wolton's arguments for the claimant have been addressed.

26. The essential points made by Mr Wolton were: first, that the Secretary of State had failed to explain why he differed from the Inspector, and second, that the Secretary of State had no basis in the evidence, and if so had failed to give adequate reasons, for his conclusion that other UCS sites beyond those in policy H2 or already used in the housing supply figures would be available to meet the shortfall which the Secretary of State referred to.

27. He also pointed out that although the Secretary of State had accepted arguments which showed that there would be a shortfall to 2011 on the basis of the figures hitherto used, he had not quantified the shortfall, and in that way had deprived himself of the necessary basis upon which to analyse whether the sites he relied on in the UCS would be sufficient to overcome that shortfall.

28. The argument in the grounds of challenge ranged over a number of other matters, but Mr Wolton, in his helpful and succinct submissions, has focused on a short but not necessarily simple point arising from paragraph 14 of the decision letter.

29. It is perhaps useful to say at the outset that to my mind there is nothing objectionable in principle in the approach which the Secretary of State has taken in paragraph 14, either in terms of the policies which he has set out or in terms of the evidence and arguments which he heard.

30. It is open to the Secretary of State to conclude firstly that he does not need to identify in 2003 all the sites that are necessary to make up a deficit in a period running to 2011.

31. It is to my mind also legitimate, particularly in view of the way in which the arguments and evidence at the Inquiry seem to have been presented, to deal with matters of shortfall and supply in broad terms. He has dealt with the matters, as it seems to me, by saying that there is a substantial amount of other development potential which will make up the shortfall which he has seen, and on that basis, this particular site does not need to be released "at this time". He therefore regards release of this site as premature, whilst waiting to see how the sequentially preferable sites in the UCS fare over the coming eight years or so.

32. As a matter of approach, there is nothing, in my judgment, that is wrong with that. The question is whether that was open to him as a conclusion on the specific material in this case.

33. To deal with the first way in which Mr Wolton put it, it is unnecessary for the Secretary of State as a matter of law always to explain why he differs from an Inspector. There are of course hazards if he fails to do so in terms of his own reasoning, but the focal point of his reasoning must be the reasons for the decision, not the reasons for him differing from the Inspector.

34. In fact, the reasoning of the Secretary of State on this matter is quite clear in terms of his disagreement, and it relates to the weight and attention which he gives to the sites to which I have referred in the UCS outside the scope of H2 or the figures, and the lack of attention paid to those points by the Inspector.

35. Turning then to the evidential basis and the adequacy of the reasoning which underlies the conclusion in paragraph 14, it is helpful to turn briefly to the housing figures as relied on by the council at the enquiry. These are in appendix 2 to the evidence of the council's witness.

36. These figures start with a residual requirement of 7,465 houses. The way in which that residual requirement would be met is then set out. 2,098 units come from policy H2. Between 132 and 329 units come from conversions and the like, also referred to in the Urban Capacity Study, but not within policy H2. A further 768 come from what are called realistic, uncommitted and unallocated sites, also from the Urban Capacity Study, but again not in any DLP policy. Added to those are 402 units not from the Urban Capacity Study, which is a conventional allowance for unidentified sites, to which is then added 4,500 houses from the SDA. The local authority calculated arithmetically correctly that that led to a surplus of between 435 and 632 houses.

37. It can immediately be seen that if one takes the Secretary of State's reduction in the output of the SDA of 2,550, which yields an output of 1,950, there is a shortfall of the order of 2,000 dwellings instead of a surplus of between 435 and 632.

38. These figures contain an allowance for a possible under-performance in the NDA, but it is not known whether the Secretary of State regarded that as sufficient. It would appear from his comments and those of the Inspector in relation to the residual requirement that they did not regard that as adequate.

39. The Inspector in addition accepted an argument by the claimants that an allowance should be made of 10 per cent for houses which were unlikely to come forward, although allocated or permitted. The effect of accepting that point would be to increase the shortfall, depending upon precisely how one calculated it, by perhaps 800 units. The Inspector took the view that it would be somewhere between 0 and 800 in respect of which an allowance had been made to take care of that point.

40. The Inspector's conclusions in that respect are not referred to by the Secretary of State in his decision letter one way or the other. He neither agrees nor disagrees. The important point for this exercise is that there was a shortfall that was at least 2,000 and could be more.

41. Mr Wolton submits that the Secretary of State ought to have provided a conclusion that was more definitive, or explained more clearly what his view was on the numbers in the shortfall, in order that he have a rational basis against which to measure his satisfaction that it could be met by the output of UCS sites that had not already been relied on.

42. Mr Wolton then turned his fire from the shortfall analysis onto the supply side, and in particular onto the Secretary of State's approach to the Urban Capacity Study. It is useful at this stage to refer briefly to the way in which that study has been done, recognising, as did Mr Wolton, that there has been no criticism made of that. Mr Wolton's argument relates to the conclusions that could rationally be drawn from that accepted and robust study.

43. The report on the Urban Capacity Study explains that conventionally, it has gone through the requisite steps; the urban area has been defined and then all possible sites have been examined, but by the time those sites within the defined urban area had been examined, some had become permanently excluded whilst others had been identified for further consideration.

44. The third step was that sites that would not be acceptable for housing development under existing local plan policy were discounted, but some that might be more acceptable, given a more relaxed approach to open space and other matters, were retained. Some sites accordingly were excluded at this point, although they might later nonetheless come forward.

45. The potential of the sites and buildings that had thus been arrived at was examined in order to reach minimum and maximum estimates of their development potential. The upshot of that was that the final discounting step was to examine the policy constraints applicable to each site on an individual basis, but as that had largely been done already, few sites were discounted at that stage, and the upshot was that there were now 342 sites which had been identified. They were then assessed on a market basis in terms of access, location, interest, viability and potential problems, in order to get some ranking order and to analyse the number of units that might become available on them from a market point of view, but it did not lead to any further discounting.

46. The results of the study were then explained. 342 sites had been assessed for their potential. 318 sites remained as the balance had been built or consolidated. The make-up of the 318 sites was then set out. Some of the implications of that make-up were explained. The conclusion was that there were 318 sites at that stage to contribute to the potential of the Borough; originally it was 342, but some had been developed; the minimum potential was 4,269 dwellings and the maximum 7,945.

47. It was said that both of those figures were based upon a potential which did not have the benefit of a full planning and property assessment; although an element of planning realism was built in, the figures might be reduced. The relationship of the survey to the Local Plan was then considered, but it is relevant for these purposes as well.

48. In paragraph 4.15(1), it was said that the survey demonstrated "that there exists the potential in the town" to accommodate the residual requirements of dwellings on brownfield sites in urban areas.

49. In 4.15(2) it said that in order to provide certainty for developers and avoid excessive complexity of the Local Plan, the better way to proceed was to provide housing allocations "on realistic sites". This required an exercise whereby the sites providing some potential were reduced to a manageable number in order to move towards allocations. Three criteria were employed that would serve to begin that process. It is plain from what subsequently happened that the "sites providing some potential" is a reference to the 342, the "manageable number" is a reference to the 88, and the "allocations" is a reference to the 28 that appeared in policy H2.

50. Three criteria were involved. The first was that the sites were included, "which contribute to the overall capacity (to avoid including unrealistic sites)."

51. There was a criterion to avoid double counting sites which already had a planning commitment, and sites which were larger than 0.4 hectare were focused on in order to enable them to deliver additional social benefits. This produced 88 sites, and a further two came on.

52. It was said: "The final allocations in the plan constitute the most realistic from this final 88."

53. Mr Wolton accordingly submitted that if that was the evidence upon which the Secretary of State was relying, the 88 sites referred to as realistic had been reduced to 60 sites through the policy H2 and could have been reduced further because of the inclusion of some other Urban Capacity Sites in the housing figures: for example, in the larger sites or in the office conversions. He said that the Secretary of State did not explain how he had reached the view, and the evidence did not permit him to reach the view, in any event, that those other sites would be sufficient to meet the shortfall which was identified as being 2,000 at least.

54. Miss Lieven for the first Secretary of State and Miss Robinson for Swindon Borough Council emphasised that although the 88 were described as being realistic, that did not mean that there was not more potential available. Miss Robinson submitted that the essence of the Urban Capacity Study was to identify and encourage sites which were potentially available to come forward. The very fact that they had passed through the various steps thus required of them in an Urban Capacity Study meant that there was a degree of realism about their being viewed as sites with a longer term potential over the timescale at which the Secretary of State was looking, namely to 2011.

55. She submitted that the Secretary of State was entitled to have regard to that potential, and that potential, even allowing for a number of the sites in the Urban Capacity Study to have already been taken into account, was significant. Putting it very broadly, the housing figures relied on to which I have already made reference meant that approximately 3,000 units from the UCS had already been allowed for in the calculations which led to the shortfall of over 2,000.

56. Taking the Urban Capacity Study figure of between 4,269 and 7,945 dwellings, that meant that there was between about 1,300 and 4,900 units available to meet the 2,000 plus shortfall.

57. Mr Wolton points out that of course, at the lower end, that means there is nothing to meet the shortfall, the shortfall cannot be met; and that at the upper end, it requires more of an optimistic view to be taken of the figures.

58. In my judgment, the Secretary of State's approach, even though it is not explained in detail, is not one, in the end, of which criticism can be made such as would lead to the quashing of the decision. Although the issue has been explored in some depth before me, it is necessary to remember that the issue was not explored in that way or in that depth before the Inspector. The claimant focused his fire at that stage upon other issues.

59. Although issue was taken with a number of features within the calculations, the argument at the Inquiry did not deal with the realism or otherwise of the other sites, or at least did not do so to anything like the detailed extent with which some Inspectors are favoured.

60. The reason the matter is presented in the way it is by Mr Wolton is not because he is seeking to take advantage of a point which he did not raise, but it reflects the way in which the Inspector and the Secretary of State differ from each other, and it throws up a point the full significance of which may not have been appreciated at the Inquiry; hence it has been necessary to examine and consider the point.

61. The exercise which the Secretary of State was undertaking in the light of the way material had been presented was, it seems to me, to reflect upon the fact that the Urban Capacity Study which he had was regarded as a robust study. The very purpose of such a UCS is to be a realistic approach to, and to encourage the potential of, brownfield urban area residential development.

62. Having taken a broad view of the study, he did not need to explain in detail or site by site what the conclusions were in relation to it. He only needed to take a broad view that there was considerable unused potential within the Urban Capacity Study. He had to take that view and then measure it against a shortfall, in relation to which again he was in my judgment entitled to take a broad view without being very specific as to precisely what view he took of the shortfall in the NDA, or of any further allowance for sites not coming forward.

63. I add parenthetically that it might be thought that with the substantial discount from the SDA, the main problem had been dealt with, particularly if an increase to the 2,000 shortfall is allowed in respect of slowing output from the NDA.

64. But on the basis that he was entitled to take the broad view that he had to examine the shortfall of some 2,000 plus, he was then entitled to set against that a broad view, which the figures would have permitted, that there was more, reasonably to be contemplated as having potential within the UCS, that had not already been allowed for.

65. Having taken a broad view, it is to be noted that the Secretary of State does not say that the deficit will be made up. He considers that there are sites which could be utilised "to contribute towards making up the likely deficit". That is sufficient to justify the conclusion that:

" ... it is [not] that it is necessary for this greenfield site to be released for housing at this time [my emphasis] ahead of sequentially preferable sites identified in the UCS."

66. As I have said, the Secretary of State is entitled to take a broad view of shortfall and other sources of preferable housing sites in order to reach the conclusion that now is not the time to release this site. The Secretary of State is entitled to say: I think there are better sites, and I would prefer to wait and see whether those other sites come forward before releasing this greenfield urban extension site.

67. The material which he had enabled him to reach that conclusion and did not require him to be more precise or more detailed in his explanation in order for his reasons to meet the necessary legal test.

68. The Secretary of State uses the word: capacity "available" on other sites identified in the Urban Capacity Study."Available" is not a term of precise meaning, but it is clear that in the planning context it does not require immediate or definitive availability. Here, one is looking at, in reality, the realistic potential availability of Urban Capacity Study sites over the next eight years, and in my judgment, "available" in the Secretary of State's decision letter should be read in that context. I should also note that in addition to other sites within the UCS, there was an argument raised at the inquiry that the H2 sites had produced somewhat more than had been anticipated, and indeed other urban capacity sites not hitherto relied on in the housing calculations had come forward producing.

69. The Secretary of State makes no specific reference to those calculations, but it is perfectly possible that they have informed the conclusion which he has reached.

70. Finally, I should mention the five-year supply position. Miss Robinson submitted that there was plainly a five-year supply of housing, a conclusion which was not at issue at the Inquiry. This, she said, would have been relevant by virtue of paragraph 34 of PPG3.

71. The Secretary of State, however, does not refer to the five-year supply, and it does not appear to be part of his reasoning. That may well be because when he is considering, as he must, paragraph 38 in this context, in respect of a site that has already been allocated in the Local Plan, he prefers, understandably, to focus on whether there are significant urban capacity sites available rather than the precise five-year position. But it is possible, on the basis that there was a five-year supply, to see that as supportive of the conclusion that need did not exist at this time to release this sequentially less preferred site. It is not necessary to analyse that matter further.

72. In the end, it seems to me that in the light of the way the case was presented, and in the light of the nature of the Urban Capacity Study, the Secretary of State was entitled to take a broad view of shortfall and availability and say that the situation was not such as to require the release of a sequentially less preferred site at this stage.

73. For those reasons, and notwithstanding the attractive submissions of Mr Wolton, this application is dismissed.

74. MISS LIEVEN: My Lord, in those circumstances I make an application for a summary assessment on costs in the sum of £4,786. I do not believe that is contested.

75. MR WOLTIN: There is no issue on that.

76. MR JUSTICE OUSELEY: There will be an order for costs in the sum of £4,786.

77. Thank you all.