Arguments in store

Anyone involved in retail planning over the last two decades or so will be well familiar with the “sequential approach” and its overriding objective of directing new retail and other commercial development towards town centres.

To those lucky enough never to have come across it, the sequential approach basically directs that all new development should be directed first to town centres, then to edge-of-centre locations, followed by commercial centres and finally out-of-centre locations. Its genesis was the growth of large, out-of-centre shopping centres and the capacity these had to suck the life out of the traditional High Street.

Reference to the sequential approach in development plans, national policy guidance and retail statements produced by planning consultants is so ubiquitous it would be surprising indeed if there was any uncertainty or ambiguity as to what it means and how it is meant to be operated. But the decision of the Supreme Court in Tesco Stores Ltd v Dundee City Council [2012] UKSC 13 (21 March 2012) suggests that such confusion is alive and well.

Alternative sites

The facts of the Dundee case are relatively simple. Tesco opened a new store at South Road in the west of the city in 2009. This followed a lengthy development plan process and the adoption of a new local plan, in which it was recognised there was capacity for one store only to serve west Dundee. The South Road site was allocated for this purpose by the council. Also in 2009, NCR vacated a factory on the Kingsway, also in west Dundee, some 750m from the new Tesco development. This prompted the developer McDonald Estates and operator Asda to submit an application for a new superstore application on the vacant NCR site. The application came before the planning committee of Dundee City Council in January 2010 and planning permission was granted. Tesco raised judicial review proceedings challenging the legality of the decision to approve the application.

Central to Tesco’s challenge was the council’s understanding and operation of the sequential approach. A site existed at Lochee in west Dundee, in the same catchment as the South Road and Kingsway locations, which was suitable for retail development – it had previously been occupied by a Tesco store. Lochee was a district centre which had town centre status in the local plan and was accordingly sequentially preferable to the out-of-centre NCR site.

Despite this, the report to committee concluded that the proposal for the NCR site was in accordance with the sequential approach. Whilst the report readily acknowledged that the proposal was in breach of other retail and economic development policies, members were advised that the proposal complied fully with the sequential approach, the centrepin of UK retail policy. Tesco disagreed – a suitable and available site for retail development existed at Lochee, and the report to committee was therefore incorrect to conclude that the Asda proposal was in accordance with the sequential approach. This was such a profound error, it was argued, that it entirely undermined the council’s assessment of the application.

Policy arguments

Why then the difference of opinion?

The case has placed in sharp focus when town centre and other sequentially preferable sites can be overlooked. Paragraph 63 of the current iteration of the sequential approach, set out in the Government’s Scottish Planning Policy, advises that out-of-centre locations for retail development should only be considered where “all town centre, edge-of-town centre and other commercial centre options have been assessed and discounted as unsuitable or unavailable”.

When does a sequentially preferable site become “unsuitable”? Dundee City Council’s approach was that the Lochee site could be discounted because it was not large enough to accommodate the Asda development proposed for the NCR site, in terms of both the size of store and the preferred number of car parking spaces. The Lochee site was roughly half the size that Asda wished to develop.

The counter argument was that the council’s approach allowed a coach and horses to be driven through the sequential approach and the overriding objective of protecting and improving town centres – on this approach, an available and perfectly suitable town centre site could be discounted on the basis that it was too small to accommodate the scale of development proposed by the developer. Circumvention of the sequential approach on this basis would be easy – the developer would simply have to bring forward a proposal marginally larger than could be accommodated on an otherwise suitable town centre site for that site to be discounted.

Matters in Dundee were complicated further, however, by one other factor. Paragraph 63 of Scottish Planning Policy requires also that for out-of-centre development to be contemplated, the scale of the development proposed must be appropriate. It was argued on behalf of Tesco that this brings into play the need to assess the level of retail deficiency in each catchment area. If there was a major underprovision of retail floorspace in any particular area which the planning authority decided was best met by the provision of a single, new, large superstore development, an available town centre site capable of accommodating only half or a third of the required space might legitimately be set aside.

Conversely, if there was very little deficiency in the particular catchment, the case for discounting a sequentially preferable site becomes far more difficult. On this approach “suitability” and “appropriate” scale are inextricably linked.
It was recognised by the council and all concerned that there was no deficiency at all to be met in west Dundee. This meant either that the sequential approach was an irrelevance or that the proposals automatically failed the test: no out-of-centre development was appropriate because there was simply no need for new development.

Suitable for what?

In the Supreme Court, the justices characterised the difference of approach in this way – did “suitable” in the relevant development plan policy and national guidance mean “suitable for the development proposed by the applicant”, or “suitable for meeting the identified deficiencies in retail provision in the area”?

The answer, according to the court, was the former – in assessing whether or not a suitable sequentially preferable site exists, developers and planning authorities have to ask whether such a site is suitable for what the developer wishes to build, not what might be required to meet a retail deficiency in the area. The court recognised that some flexibility was expected to be shown by the developer – regard should be had to the particular circumstances of the town centre and to the scope for accommodating the proposal in a different built form. Fundamentally, however, the question to be considered was whether a sequentially preferable site was suitable for the proposed development, not whether the proposed development could be altered or reduced so that it could be made to fit an alternative site.

Lord Hope puts the point in what some at least may regard as surprising terms. He says: “the whole exercise is directed to what the developer is proposing, not some other proposal which the planning authority might seek to substitute for it which is for something less that that sought by the developer… 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… 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”.

Implications

Where then does this leave developers and their advisers, and what are the consequences likely to be for the Government’s aim of directing new retail and other development to town centres and discouraging out-of-centre locations?

It is difficult to avoid the conclusion that the Supreme Court decision will be of very little assistance to planning authorities seeking to encourage developers to pursue compromised, difficult-to-develop and expensive town centre sites. With the benefit of the judgment, the way is now clear for retailers and others to say that such locations are simply not suitable, measured against their own “real world” aspirations for large floorplates, an abundance of car parking and easy access to the main road network – typical out-of-centre characteristics and arguably precisely the kind of attractions which SPP and its precedessors SPP8 and NPPG8 were designed to curb.

Of course, some flexibility is meant to be shown, but this is subject to the overriding direction that “suitability” is to be measured by reference to what the developer would like to build. It is difficult to see how flexibility can amount to anything more than tinkering at the edges.

A further, possibly unintended consequence is of the sequential approach meaning different things north and south of the border. In England, guidance on the retail section of Planning Policy Statement 4 specifically directs that when judging the suitability of a site it is necessary to have a proper understanding of the scale and form of development needed in the location; town centre sites should not be rejected “on self imposed requirements or preferences of a single operator”.

This comes uncomfortably close to saying precisely the opposite of what the Supreme Court has said is the case in Scotland. Might this be the catalyst for the Scottish Government issuing further planning guidance telling us all what the sequential approach actually means?