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  • Retail policy in Wales... moving forward to the 20th Century

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    WG has recently held a consultation into proposed changes to Chapter 10 of Planning Policy Wales and Technical Advice Note 4, relating to retail development in Wales.

    In recent times the retail sector in Wales has all but stopped.  The number of retail schemes in Wales that have been cancelled or abandoned provides evidence of this. The financial crisis has had a significant effect on the appetite of investors generally towards new development, particularly when it is outside of the major cities. 

    The response in England has been to simplify the approach towards new retail development; to give local planning authorities greater independence as to how they support their centres whilst encouraging jobs and investment.  While some LPAs try and ignore it, there is a presumption in favour of sustainable economic development in England. [1]

    It comes therefore as a significant disappointment and concern that this review of Chapter 10, WG has not simplified the Guidance or made it more positive.  It is instead more complex, more prescriptive and, worryingly, gives few words of comfort to those wishing to invest in Wales. 

    Bluntly, it does feel that the Guidance is academic and bureaucratic in character with no grounding in or acknowledgment of, the practical, real world of retail development and investment.

    At a time when Wales desperately needs to show that it is open for business, this is a missed opportunity to put a sign in the Principality’s shop window.  Indeed by failing to present a simplified, more responsive and more commercially informed Guidance, this Draft Chapter 10 and associated Draft TAN4 has the potential to signal to investors that Wales is moving backwards, not forwards.  

    The issues that the consultation raises are numerous, but three are of particular concern are efficiency and competition, the need test and disaggregation.

    Efficiency and competition

    In terms of efficiency, innovation and competitiveness, the current version of PPW Chapter 10 sets as a key objective at 10.1.1 to “secure accessible, efficient, competitive and innovative retail provision for all the communities of Wales, in both urban and rural areas”.  

    This is, inexplicably, deleted from the Draft Chapter 10.  It is not clear why this has been done, and its removal sends an extremely negative message to investors as to the way Wales will respond to a dynamic retail market.

    Need test

    With regard to the need test, the Draft Chapter 10 now devotes almost a page of the Guidance to this, adding to, rather than reducing, the focus on this test as compared to the existing Guidance.

    It was recognised as long ago as the 2006 Barker Report into the Planning System commissioned by DCLG that a retail need test is not fit for purpose in a development management context.  In response to this report, the test was removed from the Guidance in England.

    Unfortunately, in more recent Guidance reviews Wales has missed the opportunity to remove this anachronistic and bureaucratic test.  It is therefore extremely concerning that in this latest Draft Chapter 10 and overhaul of TAN4, the need test appears to be given more, not less, weight.

    WG appears through the Draft Chapter 10 to support the retention of the test without question, without asking whether it is in fact necessary. 

    What does it achieve, in practice? The key objectives of town centres first policy is to protect existing centres from unacceptable impacts and to support investment in appropriate locations.  As can be seen in England under the NPPF, these two objectives are well addressed by impact and sequential tests.  The needs test set out in the Draft Chapter 10 adds nothing more.

    While maintaining the status quo and retaining the need test may be the easy option for WG, it is far from a benign test.  Indeed, retention of the need test it has a number of seriously negative effects.

    Firstly, it has the anti competitive effect of offering protection to existing out of centre retailing.  As Barker notes, it protects not only in-centre incumbents but out of centre ones too.   This has the effect of:

    • Restricting competition between out of centre retailers, distorting the dynamic of the retail sector. 
    • Restricting range and choice for consumers (although I note that this is no longer an objective of Chapter 10)
    • Where a capacity deficit is claimed, limiting investment in locations that, while not within a defined centre, may represent investment capable of supporting such a centre e.g. appropriate edge of centre sites.

    Secondly, it adds significantly to the costs of preparing a planning application for retail development.  In a commercial retail market where profit margins can be very low, this additional cost relative to England does little to support and encourage investment in the Principality.

    Thirdly, it adds to the cost of processing planning applications.  As Genecon highlight, LPAs in Wales do not generally have the technical skills to understand the intricacies of the highly academic quantitative need test, leading to the expense of the appointment of specialist consultants.

    The lack of understanding of the topic is well illustrated at Paragraph 5.2 of the Draft TAN4, where ‘qualitative’ is used to describe a ‘quantitative’ issue.  If WG doesn’t understand what it is dealing with, it does beg the question how it expects LPAs to. 

    The quantitative need test is in my experience a particularly flawed planning test.  Its basis lies not in the real world but an academic assessment of capacity.  It purports to determine “what the market needs” but is based on the use of benchmark trading levels and data that are not used by and have no bearing on the real life decisions of retail businesses.  In my experience, commercial decisions to seek representation in a town are never informed by the LPA assessment of capacity. The only people who consider these need assessments to have any bearing on requirements are professional planners.

    That this obsolescent test is retained and given even further weight in the draft Chapter 10 is likely to be extremely harmful to the realistic prospects of drawing appropriate and necessary retail investment into the Principality.

    Disaggregation

    The concept of requiring applicants to consider ‘disaggregating’ their proposals to fit on sequentially preferable sites is another concept that was considered and abandoned in England, as indeed it has also been in Scotland. 

    In consideration of this issue, in his judgment in Tesco Stores Limited v Dundee City Council [2012] UKSC 13 Lord Hope held at Paragraph 39:

    “Here too the context indicates that the issue of suitability is directed to the developer’s proposals, not some alternative scheme which might be suggested by the planning authority. I do not think that this is in the least surprising, as developments of this kind are generated by the developer’s assessment of the market that he seeks to serve. If they do not meet the sequential approach criteria, bearing in mind the need for flexibility and realism to which Lord Reed refers in Para 28, above, they will be rejected. But these criteria are designed for use in the real world in which developers wish to operate, not some artificial world in which they have no interest doing so.” (My underlining)

    The sensible approach is therefore to require flexibility to the application proposal within any sequential assessment, but not to the extent that it creates an artificial outcome.

    It is disappointing that in updating the Guidance WG has not taken the opportunity to reflect on this judgment (and subsequent decisions of the Courts in England & Wales) that are consistent with its common sense approach and to provide guidance on this matter that has a genuine grounding in the realities of commercial retail development.

    Mango has submitted representations to WG to encourage a more commercial and realistic approach to the application of retail policy.  We await its response with interest!



    [1] (National Planning Policy Framework Paragraphs 197 and 14).