With the UK facing a shortage of housing and the government intending to overhaul the planning process, CSC Director Liz David-Barrett considers what corruption risks affect local government planning decisions.

In 2013, I researched and wrote a report for Transparency International UK on corruption in local government. The research identified three areas which were most prone to risk: one was applications for planning permission, another social housing, and the third public procurement. In these areas, we found that conditions were conducive to corruption: there were low levels of transparency, poor external scrutiny, evidence of local cronyist networks, and outsourcing of public services was undermining public accountability, not least because it put large sections of public service delivery beyond the reach of Freedom of Information requests.

The report also warned that the risks of corruption were mounting, because: the austerity drive had forced councils to curb ‘back office’ functions like audit; central government had abolished the Audit Commission, an independent auditor that not only audited individual councils but also played a broader oversight role in identifying emerging systemic risks; and, as part of a ‘localism’ agenda, the government had withdrawn a national code of conduct, leaving it up to local councils to write their own if they wished, with no requirement for councils to have a standards committee or indeed a register for declaring gifts and hospitality. On top of all this, the report noted a reluctance or lack of resource to investigate alleged wrongdoing, and often a denial that corruption was an issue at all.

Seven years on, a new report from TI-UK focusing on planning permission, Permission Accomplished, provides clear evidence of how, in the absence of action, these risks have crystallised – in some cases, into alleged misconduct that is under investigation by law enforcement. Conflicts of interest, excessive gifts and hospitality, secret lobbying and weak oversight have become commonplace. In a review of 50 councils, TI-UK found 32 councillors (across 24 councils) holding critical decision-making positions in their local planning system whilst simultaneously working for developers.

The report shows clearly how corruption risks intersect with and contribute to the UK’s chronic shortage of affordable housing. With the government having recently launched a White Paper on planning reform, it is a good time to take stock of these risks and to ensure that they are mitigated in any new system.

Corruption risks arise because councils have significant discretionary power over many aspects of planning decisions that property developers want to influence. And some property developers seek to improperly influence those decisions – whether by using their connections to lean on decision makers, offering jobs to councillors (during or after they leave office), or by wining and dining them into a position where they feel obliged to abuse their office to help.

One key decision that property developers might seek to influence relates to the categorisation of land, ie to decide whether it can be used for industrial building or housing or should be kept as green belt. ‘Change of use’ decisions can have huge implications for the value of that land to developers.

Another risk relates to ‘Section 106’ commitments, where developers promise to provide necessary infrastructure to the local community. For example, if they are building a big new housing estate, they might promise to build new roads or other facilities to avoid burdening existing infrastructure. But councils are often lax about enforcing these rules and often fail to report them to the Land Registry, making it difficult for the public to hold them – or the developers – to account.

Councils also have some discretion over whether to implement targets that developers build a certain amount of affordable housing. This issue came to the light in the case of Westminster councillor Robert Davis, chairman of the planning committee, who was found to have received gifts and hospitality from property developers at a rate of about once a week over several years. While improper influence was not proven, the council dramatically undershot its target for 35% of new homes to be ‘affordable housing’, with only 12% of new homes built in 2013-16 qualifying.

The timing of decisions can also matter to developers. This became evident in a scandal that broke this summer, although it was a central government minister, not local government officials, who faced allegations of improper influence. UK Housing Secretary Robert Jenrick’s decision to override the local council and his own ministry officials to fast-track the Westferry development – and thereby allow the developer, a Conservative Party donor, to avoid a £45 million council levy – was found to be unlawful.

The Jenrick case showed that central government can intervene in planning decisions with relative ease, by ‘recovering’ decisions that have been made by local authorities. Open Democracy found that Jenrick has recovered about 20 such decisions since becoming housing secretary in July 2019, and the Westferry affair is not the only one tarnished by conflicts of interest. The same team found that property tycoons and construction companies have donated more than £11m to Conservatives since Johnson took office.

Tackling conflicts of interest in local government is not straightforward. Councillors take on the role as a part-time post and earn a tiny amount for their trouble. They cannot be banned from taking second jobs. And yet if second jobs are permitted, this bakes in to their role an inevitable risk of conflicts occurring.

As I have written elsewhere, our regulatory tools for dealing with conflicts of interest are out of date. Relying wholly on self-regulation is risky given what we know about how difficult it is for individuals to screen out biases, and asking individuals to recuse themselves from relevant decisions raises major questions about what is regarded as relevant. Banning individuals from having other interests risks the unintended consequence of deterring good people from entering public office. Transparency about interests and the minutes of meetings are important minimum requirements but they only translate into accountability if accompanied by adequate audit structures and bodies that conduct investigations and sanction accordingly. But starting a conversation with councillors about what is acceptable and feasible would be a good step.