Flagship Levelling-up Bill becomes Law

The Levelling-up and Regeneration Act 2023 (the Act) lays the groundwork for the Government’s flagship levelling-up programme, which aims to even out regional disparities through improving for the prosperity, living standards and wellbeing of communities across the UK.

The Act makes changes in a number of policy areas including:

•    A requirement for Government to set clear levelling up missions and report on progress towards these objectives.
•    Greater devolution of powers in England. 
•    Reforms to the national and local planning systems. 
•    A new Infrastructure Levy for developer contributions in England.
•    A new environmental outcome reporting framework.

This sizeable piece of legislation has been through a long journey of parliamentary scrutiny and amendment since May 2022. Some of the Bill’s proposed measures did not make it through both the House of Lords and Commons, such as the proposal to provide clarity on permission for housebuilding to take place on land with nutrient neutrality issues.

CIOB has tracked the passage of the Bill throughout its course and, in 2022, we responded into the Bill’s Parliamentary Committee Call for Evidence to ask the Government to consider a range of matters in developing the legislation, to take into account the context and needs of the construction industry.  

The Act begins with a legal requirement for the Government to set and state its levelling-up missions, which will define the wider objectives for the levelling-up agenda and the metrics to measure their progress. The Government has already stated its 12-core levelling up missions it aims to reach by 2030 in the Levelling Up White Paper, such as the aim of making local public transport connectivity across the UK “significantly closer to the standards of London”. The Act gives levelling up missions the weight of legislation to ensure that the Government’s objectives are clearly stated and reported on, though it remains unclear what accountability measures will be used to ensure meaningful progress on the ground other than Parliamentary scrutiny.

Much of the detail of the systemic reforms to planning, developer contributions and environmental outcome reporting introduced by the Act remains to be set in regulation or secondary legislation. In September 2023, the Department of Housing, Communities & Local Government launched a consultation on proposed changes to the National Planning Policy Framework (NPPF) which will form the constituent parts of the proposed reforms to the system as set out in the Act. Once a conclusion has been reached on how the reforms will take place we will highlight the key areas that are relevant to the construction industry.

Infrastructure Levy

The Infrastructure Levy enabled by the Act will present a new system for calculating developer contributions for local infrastructure in England, including affordable housing, transport infrastructure, schools and green spaces.

The Infrastructure Levy will require mandatory developer contributions for which the use will be determined by local authorities, replacing the current developer contributions system of the Community Infrastructure Levy (CIL) as well some of the Section 106 obligations. Local authorities will be required to prepare their own Infrastructure Delivery Strategies to determine local infrastructure spending.

There were concerns raised by a range of organisations in the planning and house-building sector about the proposed levy and its efficacy in delivering new affordable housing at scale. In response to this, there have been amendments to the Act which require that the new levy system delivers affordable housing at least at the same rate as before the introduction of the Act. The Government has also committed to a “test and learn” process for a 10-year period to allow the Levy to be adapted to ensure it remains fit for purpose. The Levy will first be trialled in a number of Local Authorities before being rolled out to the rest of England.

The full details and technical aspects of the levy are yet to be announced and will be set in additional regulation following further consultation. CIOB will continue to monitor the development of the new developer contribution system in England.

Reforms to Planning and Managing Land Use

The Act has a strong emphasis on reforming planning to simplify the current system and try to increase the speed of the planning process, improving protections for local interests and the environment, as well as strengthening the role of community consultation and involvement in planning. The reforms intend to support an increased drive for housebuilding and development of local infrastructure across the nation, and there are many areas of reform that will affect developers.

The Act’s widespread set of measures to reform planning and management of land use include:

•    Digitalising planning, so that it is more accessible for interested persons in the community.
•    Placing greater importance and primacy on local authorities developing Local Plans for their area to dictate development and stem speculative development.
•    Requiring local authorities to have a design code for their area with specified conditions for a development to be granted planning permission.
•    Amendments to compulsory purchase orders to bring more brownfield sites into use. 
•    A duty to protect both the natural environment and heritage assets through the planning process.
•    Introducing the concept of national development management policies, which will provide direction and requirements for planning the national development of the built environment and will take precedence over local authorities plans where local policies replicate existing national policies or conflict with national policies.

•    New powers for local authorities to issue developers a ‘completion notice’, requiring them to complete construction within a set timeframe or apply for a new planning permission, to hasten built-out rates. 
•    Granting planning authorities, the power to deny planning permission for developers that have built a track record for slow completion of projects.
•    Allowing for planning fees to be increased by up to 35%. 
•    Greater enforcement powers for local authorities looking to ensure compliance with a plan, including potential fines for developers.

Further Changes Impacting the Oversight of Construction

The Act also includes a range of other provisions that relate to the oversight and regulation of construction activity, most notably:

•    Environmental Outcome Reports - the Act requires the replacement of the current Environmental Impact Assessment process with a new system of Environmental Outcome Reporting. As the name suggests, the new system will have a focus on ensuring development reaches outcomes for protecting the environment, including both natural and heritage assets. Developers will need to consider the environmental outcomes of construction work starting from the design and outset of a project. The specification of environmental outcomes and the details of the new reporting system are due to be revealed in a new set of regulations.

•    Power to replace HSE as the Building Safety Regulator – the Act enables the Government to transfer the function of the Building Safety Regulator from the Health and Safety Executive (HSE) to another public body. Whilst there are currently no stated plans for the Government to utilise this power, CIOB will monitor for any indications of intention to transfer the Regulator’s functions to a new or existing body.

•    Power to Review RICS Governance – the Act introduces a new power for the Government to undertake review of governance arrangements for the Royal Institution of Chartered Surveyors (RICS), the professional body for chartered surveying professions akin to CIOB. This marks the first granting of legal powers to the Government for oversight of a built environment professional body. Whilst the new power to is specifically in application to the RICS, CIOB will be monitoring how this power is utilised and whether there is any possibility of its extension towards the other built environment professions.

The Road Ahead for Levelling-Up and Construction

Though the Act imposes a range of upcoming technical policy changes for developers to adapt to, the levelling up agenda provides great opportunity for the construction sector due to the scale of housebuilding and infrastructure development the Government is aiming for in next decade. This may help to provide some relief for the construction industry in a time of significant economic pressure.

However, the Act leaves many practical questions unanswered as to how the intended scale of construction work will be achieved in the coming years given challenges faced by industry, notably the skills gap in built environment professions. In order to deliver an increased rate of regeneration work and housebuilding, the Government will need to take steps in a number of other supplementary policy areas and enable the construction industry to play its vital role in achieving the levelling-up missions.

The Act also seems to have missed a key levelling-up opportunity in its sole focus on new builds and infrastructure development, by lacking measures to improve the quality, safety and sustainability of the existing building stock in communities.

CIOB will be tracking the evolution of subsequent regulation and secondary legislation enabled by the Act, as well as the Government’s announcement of the levelling up missions that will provide further clarity on what this programme will require from the construction industry in the years ahead.

For any questions or comments on the Government’s levelling-up agenda, please contact the CIOB policy team at [email protected].