Let’s Ensure Planning Reform is a Pathway to Growth

Growth. We talk about it a lot but what do we mean and how do we achieve it? For small businesses, it can look like increasing revenue, attracting investment, expanding operations or introducing new products. For the UK Government, growth translates to increasing the Chancellor’s headroom against her fiscal targets, enabling greater investment in public services. 

In Wales, the government's limited revenue-raising and borrowing powers present particular challenges in identifying how to drive growth, however, a crucial mechanism at their disposal is the planning system. 

The goal has to be a Wales where businesses can quickly and easily expand, where new homes are readily available, and where investors are confident that critical infrastructure can be delivered. This hinges on a streamlined and effective planning system. But for many small businesses, the current system feels more like a complex maze to be navigated rather than a pathway to growth. 

The Federation of Small Businesses have long called for reform of the Welsh planning system due to complaints from our members of a labyrinthine system which is limited in capacity and expertise, and where decision making is painfully slow. These challenges impact all development, from the largest infrastructure project to the smallest commercial premises extension.  

These delays and inefficiencies not only stifle business growth and add costs to projects, they also hinder the Welsh Government's ability to achieve its broader policy goals. A streamlined planning system is essential to maximising Wales' potential in renewable energy and supporting the transition to net zero by enabling projects like retrofitting homes and businesses. It can also play a vital role in revitalising our town centres by facilitating change of use applications that adapt to evolving high street needs and supporting communities wanting to run community assets (pubs, churches) as enterprises. 

Well-intentioned planning regulation, attempting to balance competing interests, has become overly complex and self-defeating. The result is inertia and SMEs in particular feeling locked out of opportunities as they often lack access to the expertise required to navigate this system. 

The First Minister’s emphasis on unlocking the system is therefore extremely welcome. The Welsh Government has signalled its willingness to act by releasing several large-scale decisions waiting for approval, and consulting on proposals for improving the resilience and performance of planning services. 

The Welsh Government’s proposals address three key areas; fees, performance and skills. On fees, they propose phased increases over three years to achieve full cost recovery (i.e. a self-financing system). To improve performance, they suggest re-invigorating and reintroducing the Performance Framework. Finally on skills, they propose bursaries to ‘pump-prime’ supply, and apprenticeships to build a long-term pipeline of qualified professionals.  

Aligning the three tracks will be challenging, as addressing skills gaps, for example, will take longer than the proposed fee increase period. It is notable that the consultation set our far more detail on increasing fees than it did on building skills supply and driving performance. SMEs may feel the costs sooner than they will feel the benefits, even if the policy change is successful.  

This misalignment underscores the need for strong conditions to be placed on any increase in fees. FSB have proposed that: 

• fee increases should only apply within a statutory period to prevent open-ended costs for SMEs in the event of any delays; 
• some payment of fees may be back-ended for developers to the end of the process and would not apply if a decision is delayed.  

This is necessary to re-build the trust which has unfortunately been undermined by the current system. Clear conditions will provide small businesses with some protection and act as an incentive to decision-makers to improve the system’s efficiency. Warm words won’t be enough, there has to reassurance that if improvements do not materialise, business won’t pay for those delays.  

FSB have also expressed our concerns that attempting to achieve full cost recovery for each individual project rather than across the system as a whole could prove damaging for small business. The burden and risk of planning is proportionately larger for SMEs relative to larger businesses and developers as they do not have the same access to specialist planning expertise, the burden of paperwork is greater, and it is far more difficult to mitigate risk with tactics such as buying and holding land for future development. 

A further proposal put forward by FSB is to assign a single point of contact for each planning application throughout its journey. Currently, a developer might have to contact multiple departments for different aspects of the application, causing confusion and delays. Assigning a single point of contact would streamline communication, significantly reducing the administrative burden and making it easier for developers to navigate the system. This change would not only make the process more transparent and efficient, but also foster greater trust. 

The Welsh Government must capitalise on this opportunity to reform the planning system; forging a genuine partnership with small businesses that will drive sustainable economic growth across Wales, and serving the needs of Wales from better housing to the transition to net zero.