Sequential Test: Still Testing

The  “town centres first” sequential test in paragraph 24 of the NPPF still leads to much uncertainty as to its practical application. This post briefly summarises (largely just by cutting and pasting the relevant passages) the recent Warners and Aldergate court rulings and the Secretary of State’s Exeter decision letter, all from the last month alone.

But first, the paragraph:

“Local planning authorities should apply a sequential test to planning applications for main town centre uses that are not in an existing centre and are not in accordance with an up-to-date Local Plan. They should require applications for main town centre uses to be located in town centres, then in edge of centre locations and only if suitable sites are not available should out of centre sites be considered. When considering edge of centre and out of centre proposals, preference should be given to accessible sites that are well connected to the town centre. Applicants and local planning authorities should demonstrate exibility on issues such as format and scale

A little, but not much more, guidance is set out in the NPPG:

“It is for the applicant to demonstrate compliance with the sequential test (and failure to undertake a sequential assessment could in itself constitute a reason for refusing permission). Wherever possible, the local planning authority should support the applicant in undertaking the sequential test, including sharing any relevant information. The application of the test should be proportionate and appropriate for the given proposal. Where appropriate, the potential suitability of alternative sites should be discussed between the developer and local planning authority at the earliest opportunity.The checklist below sets out the considerations that should be taken into account in determining whether a proposal complies with the sequential test:

  • with due regard to the requirement to demonstrate flexibility, has the suitability of more central sites to accommodate the proposal been considered? Where the proposal would be located in an edge of centre or out of centre location, preference should be given to accessible sites that are well connected to the town centre. Any associated reasoning should be set out clearly.
  • is there scope for flexibility in the format and/or scale of the proposal? It is not necessary to demonstrate that a potential town centre or edge of centre site can accommodate precisely the scale and form of development being proposed, but rather to consider what contribution more central sites are able to make individually to accommodate the proposal.
  • if there are no suitable sequentially preferable locations, the sequential test is passed.”

This replaced more detailed practice guidance  which was withdrawn on 7 March 2014.

Warners Retail (Moreton) Ltd v Cotswold District Council & Ors [2016] EWCA Civ 606 (24 June 2016)

The Court of Appeal rejected a claim for judicial review brought by the owner of a Budgens store in Moreton-in-Marsh, seeking to quash a planning permission granted for an out of town food store. The arguments were around whether the applicant had been sufficiently flexible before rejecting as sequentially preferable an extension to the Budgens. (The permission was granted when the more detailed practice guidance was in place, hence references in the passages below).

Lindblom LJ:

“Under paragraph 24 of the NPPF both applicants and local planning authorities are expected to “demonstrate flexibility on issues such as format and scale”. What bounds can reasonably be set on an applicant’s preference and intentions as to “format and scale” in any individual case will always, and necessarily, depend on the facts and circumstances of that particular case. The policy in paragraph 24 of the NPPF should not be seen as prescriptive in this respect. It plainly is not.

Flexibility was also called for under the practice guidance, in somewhat more elaborate terms. It is very clear from paragraphs 6.42 and 6.45 that the identification of a relevant “need” or “need/demand” for the purposes of the sequential approach was not intended to be merely a self-serving exercise on the part of the developer himself. As paragraph 6.45 made plain, sites were not to be rejected on the strength of the “self imposed requirements or preferences of a single operator …”. Otherwise, the sequential approach would likely become a merely self-fulfilling activity, divorced from the public interest. It is also clear, however, that the authors of the practice guidance regarded the developer’s own intentions as generally having some bearing on the application of the sequential test. One sees this, for example, in paragraph 6.37 – in the reference to “the need or demand which the proposal is intended to meet”; in paragraph 6.42 – in the concept of “what aspect(s) of the need are intended to be met by the site(s)”, the recognition that a more central site does not have to be able to “accommodate precisely the scale and form of development being proposed”, and the need to consider what contribution such a site might make to “meeting the same requirements”; in paragraph 6.45 – in the reference to the “need/demand [the applicant’s] proposal is intended to serve”; and also in paragraph 6.46 – in the reference to “the scale/form of town centre uses proposed …” (my emphasis).

The only site said to have been a sequentially preferable alternative to Minton’s is the site of the Budgens store. It is not suggested that that site could have accommodated an additional food store of the kind assumed by Minton for the purposes of the sequential test, even if the permitted extension to the Budgens store were not built. In essence, Mr Warren’s argument was that the members should have asked themselves, but did not, whether the extended Budgens store could meet the identified need, and, if the answer was that it could, should have found that Minton’s proposal for an additional food store must fail the sequential test because there was no need for it. 

In my view that argument is untenable. It does not reflect the national planning policy and guidance bearing upon the council’s decision on the Minton proposal. In effect, it seeks to restore to national planning policy for retail development a test of need that has not been there since PPS4 replaced PPS6 in December 2009. That, of course, is not possible. Minton’s proposal did not have to be justified by a demonstration of need.

One of the grounds for the challenge was that the officer had wrongly treated the Supreme Court’s ruling in the Tesco v Dundee City Council  case on suitability as directly applicable to the NPPF notwithstanding differences in the language of the guidance north and south of the border.

“I think one must be careful here. The Government’s policy for the sequential approach in paragraph 24 of the NPPF and the practice guidance are not in all respects the same as the NPPG8 and development plan policies construed by the Supreme Court in Tesco v Dundee City Council. They are similar in broad intent, but they are not in identical terms. An obvious similarity, though the language is different, lies in the concept of “flexibility”. The requirement in the final sentence of paragraph 24 of the NPPF for both applicants and local planning authorities to “demonstrate flexibility on issues such as format and scale”, as amplified by the advice in paragraphs 6.42 to 6.46 of the practice guidance, bears some similarity to the requirements for “flexibility and realism” on the part of both developers and retailers and planning authorities in paragraph 13 of NPPG8 and the requirement for planning authorities to be responsive to the needs for retailers in paragraph 14. That much is clear. But one should not simply read across the Supreme Court’s interpretation of the Scottish policies in Tesco v Dundee City Council as if it were the construction of the differently worded policy in paragraph 24 of the NPPF and the corresponding parts of the practice guidance. It is not.”

Aldergate Properties v Mansfield District Council and another [2016] EWHC 1670 (Admin) (8 July 2016)

The High Court quashed planning permission for a proposed out of town Aldi foodstore, following a challenge by the owner of a site in Mansfield town centre. The town centre had been ruled out by the applicant as a potential location, partly because there is already an Aldi store near to the centre and planning permission for another.

Ouseley J summarises parts of the planning committee report that, led to approval of the application, as follows:

“The Report continued, saying that as the application site was out of centre, a sequential assessment had to be carried out. The Report referred to the agreement that the exercise did not need to include sites covered by the catchment areas of the existing store on Nottingham Road or the recently permitted store at Leeming Lane South, to the south and north respectively of Mansfield town centre, because it was “unrealistic that Aldi would operate a store in close proximity to these existing and committed stores, and it would therefore be unreasonable to require a search for sites that would not make commercial sense for the operator”. 

The Report noted the centres and sites considered, and the reasons why they were not suitable. In order to be suitable for Aldi, sites needed to be at least 0.6 ha in size. The applicant was thought to have been fairly flexible in terms of more central sites, and in format and scale by looking for sites “which are slightly smaller than the application site”. Aldi’s reasoning for not being more flexible was based on Tesco Stores Limited v Dundee City Council, (dealt with below), set out in the Planning and Retail Statement with particular reference to paragraph 38 of the judgment, which focussed suitability on the developer’s proposals, not on some alternative scheme which might be suggested by the authority. The question, said the Report, was whether an alternative site was suitable for the development proposed, not whether the proposed development could be altered to fit an alternative site. The sequential test was thus passed and the principle of retail development acceptable. There was no separate discussion of impact.”

Ouseley J ruled that it was inappropriate to rule out the town centre as a potentially more suitable location, purely due to the identity of the proposed retailer:

“[…] In my judgment, “suitable” and “available” generally mean “suitable” and “available” for the broad type of development which is proposed in the application by approximate size, type, and range of goods. This incorporates the requirement for flexibility in [24] NPPF, and excludes, generally, the identity and personal or corporate attitudes of an individual retailer. The area and sites covered by the sequential test search should not vary from applicant to applicant according to their identity, but from application to application based on their content. Nothing in Tesco v Dundee City Council, properly understood, holds that the application of the sequential test depends on the individual corporate personality of the applicant or intended operator.

[…] NPPF [24] positively “requires” retail investment in the first place to locate in town centres rather than elsewhere. Its thrust is rather more emphatic than policies which advise developers and retailers to have regard to the circumstances of town centres, as in Tesco v Dundee [28]. It is the purpose of the planning system to control development, that is to permit, prevent, encourage, inhibit or limit and condition it, so that the individual private or commercial interest and the broader public interest meet in reconciliation however uneasily. NPPF [24] cannot therefore be interpreted as requiring “suitability” and “availability” simply to be judged from the retailer’s or developer’s perspective, with a degree of flexibility from the retailer, and responsiveness from the authority.

Third, and of critical importance here, still less can it be interpreted as envisaging that the requirement or preferences of an individual retailer’s trading style, commercial attitudes, site preferences, competitive preferences whether against itself or greater competition should dictate what sites are “suitable” or “available” subject only to a degree of flexibility. NPPF [23] and [24] are simply not couched in terms of an individual retailer’s corporate requirements or limitations. That would be the antithesis of planning for land uses and here, its default policies. It would take very clear language for such an odd result to be achieved.”

The applicant had accepted a condition that made the permission personal to Aldi. However, the judge held:

“This is not solved by the imposition at the end of the process of a condition restricting occupation to a particular retailer. That may be necessary for consistency of approach but it would reinforce the error of approach; instructively though it was opposed here by Aldi which had benefited from an approach unique to Aldi. The town centre remains where development is required; the out of centre development may inhibit or prevent a store coming forward in the town centre, and draw away town centre trade, trips, expenditure and vitality.

Fourth, there is a further reason why the identity of the applicant, as opposed to the sort of development it proposes, is not generally relevant to the sequential test. The sequential test in the NPPF is not just one of suitability; it covers availability: “only if suitable sites are not available, should out of centre sites be considered.” A town centre site may be owned by a retailer already, to use itself for retailing, who is not going to make it available to another retailer. It is plainly available for retailing, though only to one retailer. That does not mean that another retailer can thus satisfy the sequential test and so go straight to sites outside the town centre. “Available” cannot mean available to a particular retailer but must mean available for the type of retail use for which permission is sought.”

The judge had delayed handing down the judgment so as to be able to take into account the Court of Appeal’s ruling in Warners but found nothing in that to change the approach he was taking.
The Secretary of State’s decision letter dated 30 June 2016 in relation to the north of Honiton Road and west of Fitzroy Road, Exeter, site 

This was a recovered appeal in relation to a proposed district centre. The Secretary of State dismissed the appeal, partly because he agreed with his inspector that the more centrally located bus and coach station site was sequentially preferable and had been wrongly discarded.

The Secretary of State agreed that it was wrong to argue that the core strategy was “inconsistent with the NPPF, or out of date on the grounds that whether development is acceptable is now only to be determined by reference to the sequential and impact tests”. He agreed that the NPPF expects local plans to “fill the gaps” by meeting the criteria set out in paragraph 23 of the NPPF for policy making, including a network and hierarchy of centres. The core strategy defined local centres and the proposal would go beyond any reasonable of local centre for the purposes of the core strategy.

The inspector goes into an interesting analysis of the previous decision of the Secretary of State in Rushden Lakes dated 11 June 2014  distinguishing it on the basis that in that case the local plan’s settlement hierarchy policies were found to be out of date.

On the suitability of a potentially preferable site and whether sufficient flexibility had been shown, the Secretary of State says this:
“For the reasons set out at IR11.30-11.37, the Secretary of State agrees with the Inspector that given no more than reasonable flexibility, the Bus and Coach Station site would be suitable for the town centre uses proposed for the appeal site (IR11.37). The Secretary of State has taken into account the Inspector’s reasoning at IR11.38-11.40. He agrees that there is no rationale for concluding that the site must be on the open market to any developer, and that the new retail floorspace would be marketed to traders who would occupy it regardless of who developed or owned the scheme (IR11.39). He further agrees that the requirement for a bus station and a leisure outlet on another part of the Bus and Coach Station site does not mean that the area earmarked for retail development is not available (IR40). Overall he considers that the Bus and Coach Station site is available.”

The inspector:

11.32 Tesco v Dundee looked at how the policy should be interpreted including flexibility. As above, it found that the question of suitability does require judgement but also that the purpose of flexibility is not to require the application to be transformed into something significantly different. Here, the proposed retail elements could be accommodated without disaggregation but the configuration of floorspace would need to be different to take account of the relative size of adjacent properties (their scale) and the floorspace would most likely need to be concentrated nearest to the existing PSA for commercial reasons. This would be no more than showing reasonable flexibility. 

11.33 To insist on the same requirement for parking and access in a town centre, which has ample existing parking, service roads and excellent links to public transport, would be unreasonable. Drive-through restaurants do feature within the definition of a town centre and so, to be suitable, it must be possible for these to be accommodated. Nevertheless, as with general access requirements for servicing and other vehicular needs, it would be no more than showing reasonable flexibility to accept that existing streets and access arrangements could provide part of the drive element of such a proposal if not the restaurant area. Moreover, drive-through restaurants are not fixed elements of the proposals as they do not feature specifically in the description of development, would not be a requirement of the suggested conditions, and could easily be varied to another use. The scheme would also include a gym which would fall within the health and fitness centres part of the NPPF definition. However, the Council’s contribution to the PHL as a whole includes a leisure centre. It was not suggested that an operator who might occupy the gym proposed for the appeal site would not be interested in a City Centre location, and there are already other gyms in Exeter.

11.38 The NPPF and the PPG both refer to availability with regard to the sequential test but neither clarifies how this should be defined. The appellant argued that the BCS is not available since CEH and the Council have agreed on a way forward and are unlikely to allow other developers a look in. The purpose of retail policy in NPPF 23 is to promote competitive town centre environments and manage the growth of centres. The NPPF test should not be used to prevent development unless a sequentially preferable site could actually deliver the proposals. 

11.39 However, there is no sound basis for finding that the BCS site is not available to traders and no rationale for concluding that the site must be on the open market to any developer. Providing PHL goes ahead, the new retail floorspace would be marketed to traders who would occupy it regardless of who developed or owned the scheme. The need for flexibility in the Judgment in Tesco v Dundee refers to retailers as well as developers and this strengthens the conclusion that available means for the development proposed not for the landowner hoping to carry out the development. Although on the separate point of specific locational requirements, the PPG does state that land ownership does not provide a justification for excluding a site. 

11.40 In the absence of any clearer interpretation, the preference in NPPF 24 should refer to availability to traders. It follows that it doesn’t matter who develops the site so long as it can provide the proposed level of shop floorspace. As above, the requirement for a bus station and a leisure outlet on another part of the BCS site does not mean that the area earmarked for retail development is not available. On this point as well, the BCS would be sequentially preferable.

Simon Ricketts 23.7.16

Personal views, et cetera

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