Development corporations – what can we expect going forward?

Katie Scuoler analyses recent Government announcements on the future role of development corporations.

Nearly three years after the Department for Levelling Up Housing and Communities launched its technical consultation on development corporation reform in October 2019, it has now published the response to that consultation. Several of the key points coming out of the consultation have been quietly introduced into the Levelling-up and Regeneration Bill to ensure that development corporations are fit-for-purpose.

In the consultation response the government emphasises that it sees development corporations as an important and powerful tool for both national and local government. That said, they are not the only tool to drive forward large-scale development and the appropriateness of a development corporation model depends on the specific local circumstances. The low number of consultation respondents – only 45 – suggests that they are also not necessarily a widely considered ‘go-to’ tool in the delivery toolbox either.   

So what can we expect for development corporations going forward?

1. Streamlining of the process for establishing a development corporation. The government response recognises that the current process for establishing a development corporation is overly burdensome, particular in regard to the level of evidence required and the upfront uncertainty that this creates for local authorities. The Levelling-up and Regeneration Bill includes proposals to reform the statutory process for designating a development area and establishing a development corporation. In particular, the Bill updates the procedure to allow all locally-led development corporations to be established via the negative procedure for statutory instruments. This shifts the process from one where the establishment order has been debated and passed in both Houses of Parliament (the affirmative procedure) to one where the establishment order becomes law on the day it is signed and remains law unless annulled by either House. Whilst this may sound like legal-ease this is a critical and practical step to speed up the establishment process.
2. All development corporations having the ability to exercise plan-making and development management powers. Currently, only Mayoral development corporations have access to such powers. The Levelling-up and Regeneration Bill includes proposals to extend to both Urban Development Corporations and New Town Development Corporations (both local and centrally led) the option to be given access to local plan-making and development management powers. Any such power would be subject to the ability of the Secretary of State to intervene as a last resort where an authority is failing in its duty. Whilst the ability for all development corporations to have plan-making powers is welcomed, there is a question mark about how readily this will be taken up in practice. As development corporations are set up for specific purposes they usually have a limited shelf-life. Plan-making is a resource intensive and time-consuming process, which does not square easily with ambitions of development corporations who want to deliver at pace. Particularly for new town development corporations, we would encourage the department to consider if there is scope for a slimmed down or fast-track process for plan-making within those (likely tightly defined) designated areas to ensure that the plan-making process keeps pace with the delivery ambitions.
3. Ability for development corporations to collect the Infrastructure Levy. Under proposals included in the Levelling-up and Regeneration Bill, any development corporation which takes on plan-making functions would have the ability to charge the proposed Infrastructure Levy. As part of the detailed design of the levy the government has confirmed they will explore whether levy funds might be collected by and/or passed to development corporations which have not taken on planning powers. The devil as always will be in the detail, but this opens the door to more flexible and tailored arrangements. This ought to include the scope for development corporations, but especially new town development corporations, to share a percentage of any levy they collect with neighbouring communities, in a similar way that parish councils can currently retain up to 25% of CIL contributions. This approach would recognise that a new community is likely to have an impact on the surrounding area in terms of amenity spaces, leisure facilities and town centres, amongst others. The ability to share the levy would help facilitate the necessary community and infrastructure provision, but also help secure support from the neighbouring area.
4. Greater knowledge sharing. One of the recognised barriers to the uptake of development corporations is the lack of expertise available, in both the public and private sectors, on the establishment of different types of development corporations. This is perhaps attributable in part to there being at present several types of development corporation with different powers and remits (although the Levelling-up and Regeneration Bill seeks to introduce greater consistency in this regard). The government considers that there is an opportunity to provide greater clarity on potential new development corporations “and will be exploring options on how this could implemented, including through publication of a toolkit“. Steps to make the process more transparent and accessible should be welcomed. Critically, and helpfully, the government commits to work with Homes England to explore the use of their expertise, powers and funding in support of development corporations. 
5. Potential clarification on the role of private sector expertise. Recognising that the private sector expertise plays a crucial role in delivering developments of significant scale, the government “will explore with stakeholders publishing further information on the potential roles that public and private sector stakeholders might play in a development corporation, including potential partnership models“. That commitment is rather tepid and dances over the thorny question of specific measures to facilitate investor confidence (particularly around public sector funding) which is critical to securing private sector involvement. The government will need to address that if it wants to secure greater commitment from the private sector.

Development corporations, when armed with the appropriate powers, have the potential to be powerful drivers of efficient housing delivery. Whilst nothing in either the consultation response or the Levelling-up and Regeneration Bill is going to open the floodgates to a tidal wave of new development corporations (which would not be desirable either), there are several practical steps being taken to ensure that the process is more accessible and the development corporations of the future can be tailored to individual local circumstances.

Katie Scuoler is a Senior Associate in the Planning and Public Law Team at Dentons. This article first appeared on the firm’s Planning Law Blog.