Can higher planning fees unlock Labour’s housing potential?

Increase productivity by raising prices. It’s not exactly straight out of the business handbook, but one proposal in the Government’s Planning and Infrastructure bill, published last week, aims to achieve this.

As seen in Property Week, March 2025

The bill includes large-scale changes to the planning system, such as who makes planning decisions and when, and some controversial recommendations regarding Compulsory Purchase Orders (CPOs) for land. Additionally, there is a section that addresses the fees planning authorities can charge for applications.

It says that Local Planning Authorities (LPAs) in England will be able to set their own planning fees, rather than adhere to a national fee structure. Given this freedom, and the scale of the work facing planning departments, it is likely that LPAs will take this opportunity to raise, not cut, fees.

A hike in fees, and there is little detail on what this might look like, is never going to be welcomed with open arms from those footing the bill, especially when the fees will differ by location.

The plan from the Government is that higher fees will boost income for planning departments, and – as spelled out in the official guidance accompanying the Planning and Infrastructure bill – help fund the recruitment of more planners into financially-pressed LPA departments.

If this is the result, any increase in fees will get a more favourable reception from housebuilders, developers, infrastructure providers and all of those involved in the planning system.

However, any fee increases that do not directly and significantly improve the functioning of LPAs, including the speed and efficiency of handling planning applications, will not be welcomed.

Local authority planners have seen the size of their departments cut and are struggling to manage an ever-growing workload. Despite these pressures, it remains the case that paying more for the same results will not only undermine trust, but ultimately undercut the Government’s housing targets, as well as those to deliver crucial infrastructure. 

The Government has recognised the planning system’s challenges since its days in opposition. It pledged 300 new planners in its manifesto last year and reiterated this promise after winning the election. These additional graduate planners will be in place next year, however 300 is only a drop in the ocean for LPAs to speed up the process. A report from the RTPI found that 25% of planners left the public sector between 2013 and 2020, and separate research from the Local Government Chronicle revealed that only one in ten councils in England had a fully staffed planning department in 2023.

A better outcome from planning departments is critical because whilst the cost of planning fees is a consideration, another real cost of planning is time. Long delays in securing planning permission means investment is stalled. The uncertainty on timing, with the risk of very long delays, means it is a challenging financial process, especially for smaller housebuilders who rely on debt rather than operating from their balance sheet.

An eye-opening report by the Country Land and Business Association (CLA) highlighted that some planning applications made to rural LPAs in 2020 are still waiting for approval five years later. Councils are legally required to decide on major developments within 91 days, but CLA research, which surveyed 35 rural LPAs, found nearly that half of the 18 councils surveyed exceeded this target in 2023. Dorset council averaged 1,372 days, over three and a half years, to issue a decision. Additionally, 40% of the 35 councils surveyed were still handling planning applications from before 2020.

Smaller developers simply cannot afford to wait five years for planning. There are now around 85% fewer SME housebuilders than a generation ago, according to the Homebuilders Federation, but they are crucial in delivering homes in smaller plots and developments across the country.

The changes announced in the new National Planning Policy Framework (NPPF) regarding grey belt sites mean that more planning applications than ever will be landing at the doors of LPAs, with many landowners identifying these sites and applying for permission to build for the first time.

While this will create a pipeline of potential homes, it underscores the importance of planning departments in not becoming a bottleneck to the delivery of new homes. Only by ringfencing the additional income from higher planning fees and ensuring this money is spent solely on recruiting more planners, raising planning prices will lead to the delivery of more homes and infrastructure.

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