Data insight
THE PLANNING MARKET IN 2023
• The fastest growing markets for consultancy services
• The skillsets that consultants are most likely to recruit
PLUS predictions for fee rate changes
The 26th edition of Planning’s annual Planning Consultancy Market Report revealed that the consultancy market grew by 14.8 per cent over the year to March 2022. However, firms reported that they were wary about the economic outlook across the sector.
Just ten per cent of firms agreed that the economic climate for development would improve over the next 12 months, down from 78 per cent in 2021. The majority of respondents (56 per cent) disagreed that it would improve, while the remaining third said they were unsure.
This is the least confident firms have been in the market for some time. In 2020, one third of firms agreed the economic climate would improve, while in 2019, 12 per cent said they expected the economic climate to get better over the following year.
Speaking in late 2022, Steve Norris, national head of planning, regeneration and infrastructure at consultancy Lambert Smith Hampton, said he believed it would be "foolhardy at this point in time for anyone to categorically predict an improvement in the economic climate for investment and development over the next 12 months".
He warned that the impact of inflation on both the construction and development industry and the high cost of borrowing means that some development will be "frozen or potentially shelved over the short term".
Philip Atkinson, director at consultancy Lanpro, said the recession and problems relating to housing delivery and nutrient neutrality were “biting hard in some areas we work in”, while the market is still “suffering the effects of Covid and Brexit”.
Despite this, firms are optimistic about their own fee income growth in 2023.
By weighting consultants' responses according to the number of chartered town planners employed at each firm, Planning has produced a bespoke market forecast, detailing how the consultancy market is expected to evolve over the coming months.
The weighted average for predicted fee income growth in the year to March 2023 is nine per cent, while the weighted figure for the two years to March 2024 is 14 per cent.
Philip Smith, board director for planning at LUC, which expects to grow income by a quarter by 2024, said his confidence is based on the experience of the expansion his business is undertaking, the growth in the new markets it has entered, such as carbon management services for local authorities that have signed “climate emergency” commitments, and the forward orders it has received.
“We’re more focused on the local planning authority side, and that’s a statutory function where there are certain things that have to happen, and so we’re not so reliant on private sector housing developers,” he said.
Elle Cass, head of strategic built environment growth at planning consultancy SLR, which predicted a ten per cent rise in its fee income over the next 12 months but indicated it did not think the economic climate would improve, said this was because the business was “quite diversified”.
This means the firm is “not particularly exposed to one particular market”, which helped through the “choppy waters” of the pandemic, she said.
“Being realistic… it’s not going to be an easy three or four years,” she warned.
THE FASTEST-GROWING MARKETS FOR PLANNING ADVICE
While fee income is expected to increase in nearly all corners of the market, consultants expect some sectors to grow faster than others.
The market for planning advice on greenfield housing is expected to increase in value more than any other subsector. Once the weighting is applied, the data shows that the market for greenfield housing projects is expected to increase by £9.1 million over the 12 months to March 2023.
A spokesperson for Pegasus Group, which said it expected its fee income from greenfield housing projects to increase by five per cent over the year to March 2023, said the demand for housing remained “unchecked”, while the “availability of brownfield sites continues to fall across the UK as a whole”.
Furthermore, the firm said it expected upcoming changes to planning policy “will – in part – increase the need for our involvement in this sector”.
The second largest predicted increase in value is in planning advice on the energy sector, which is expected to be worth £7.6 million more than it was last year come March.
According to the spokesperson for Pegasus Group, “the need for the UK to address energy security issues, coupled with the requirement to deploy renewable and low carbon sources of energy at an unprecedented rate to assist in reducing carbon emissions and tackle climate change, is resulting in an important area of growth in both the short and long term”.
A spokesperson for Carter Jonas said that, “given the climate crisis, we expect continued, ramped up investment in this sector”.
The demand for planning advice on the transport sector is also expected to grow rapidly, with consultants predicting a rise in the value of the market of £5.3 million.
According to the spokesperson for Carter Jonas, “this is one area the government seems determined to keep investing in”. The firm is therefore seeing “new clients across a range of transport projects and expect growth to be double-digit”.
The spokesperson for Pegasus Group indicated that the firm expected transport services within the Midlands and the North to “fuel our ten per cent growth in that sector”.
The retail sector is the only market consultants expect will decrease in value. Once weighted, the data suggests the market will shrink by £300,000 over the year to March 2023.
FEE RATES
Meanwhile consultants’ responses to our survey, when weighted, indicate that they expected to put up their fee rates by an average of five per cent.
Sam Metson, planning partner at Bidwells, said he saw future fee rate increases as unavoidable.
“We want to be able to reward staff and keep pace with wider inflationary pressures, and to do that we’ll need to increase fees,” he said. “This year it will be down to inflation more generally – I think clients expect us to put rates up in the current environment.”
Similarly, James Fennell, chief executive at Lichfields, said: “We want to look after our staff amid a cost-of-living crisis. This means increased wage costs which will be passed to clients, and I am sure they will be organising their businesses in the same way.”
LUC’s Smith said the business was predicting “modest” rate increases simply to maintain competitiveness in inflationary times – pointing out that even a five per cent increase in rates would be well below general inflation.
“There’s an incredibly competitive market for staff, and people are asking for very high salaries. To attract people into the business and keep people in the business we have to have a fee structure that can pay those wages,” he said. “The signs are that our clients will accept it.”
THE EMPLOYMENT MARKET
Meanwhile, 60 per cent of firms indicated they expected their planning consultancy team to grow in the 12 months to March 2023.
According to the data, some skillsets are more in demand than others. Responding in early autumn 2022, 50 per cent of firms indicated they were likely to recruit those with strategic planning skills.
Planners with experience in housing assessment (36 per cent) and retail/leisure/ town centre regeneration (25 per cent) are also in high demand.
Assuming that larger firms are more likely to recruit more planners, weighting these figures results in a more accurate prediction of the likelihood of recruitment across the market as a whole.
Strategic planning and housing assessment remain in the top three, with weighted scores of 78 and 63 respectively. However, weighting the averages ensures design and design coding shoots up the ranking to take second place with a weighted score of 66.
According to the data, much of this recruitment is likely to be at a junior, rather than senior, level.
Just 24 per cent of firms said they were likely to recruit at director/partner level in the 12 months to September 2023, compared with 32 per cent in 2021, indicating a shift towards a less senior level intake going forward.
Some 60 per cent of respondents indicated that they were likely to recruit student or licentiate members of the RTPI, while 48 per cent indicated they were likely to recruit at associate level in the 12 months to September 2023.
The weighted figures also show that students and licentiates are the most in demand, while the recruitment of those at director or partner level is less likely.
David Jackon, at Savills, attributed the firm’s own interest in student and licentiate members of the RTPI to it being a “definite strategy for growth”.
He said: “The increase is a deliberate policy on our part given the scarceness of planning professionals in the marketplace and competition for that scarce resource. The most effective way for us to recruit is therefore to bring in graduates and build our own future from within.”
Similarly, Bidwells’ Metson said the recruitment of junior staff members was a “key priority for the sustainable operation of the business".
Stephen Ottewell, national director of planning at Capita, said the firm had found the “recruitment and retention of more experienced staff challenging, so we have focused on growing our own”.
This approach has allowed them to keep up with demand without the need for higher level recruitment, he said.
WORKING FROM HOME
Firms also indicated that the trend towards home working was likely to continue.
Some 85 per cent of respondents said their planning staff were likely to spend a higher proportion of their hours working from home in future years than they did before the outbreak of Covid-19.
Despite this, the majority of consultants (65 per cent of firms) indicated that they did not expect to reduce the amount of office floorspace they occupy in the 12 months to September 2023.
WEIGHTING: HOW WE DID IT
Some of the predictions in this report were produced by weighting firms' responses according to how many chartered town planners they employ. Where this has occurred, we have flagged it in our reporting.
The way we have done this is as follows. Let’s say a firm employing a single town planner predicted, for example, a ten per cent growth in fee income in the coming year. In calculating the weighted figures, we would record that as a single response predicting ten per cent market growth.
And let’s say a firm employing ten planners predicted five per cent growth. We would record that as ten responses predicting five per cent growth. Hence the prediction from the ten planner firm is given ten times more weight than the prediction from the one planner firm.
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