Deferred payments
36. The proposals require developers to make their
PGS payment before they realise any value from their development
and at a time when development work itself will require considerable
investment. Several witnesses told us that, as a result, the cash
flow implications of PGS were a major concern particularly if
initial development comprised expensive demolition or decontamination
works before construction could begin.[72]
The HBF, for example, explained that
in cases where a large site is broken down into phases,
each with a separate detailed planning permission before work
commences, payment of PGS would be automatically phased. However,
it is sometimes in the interests of developers to submit a single
planning application for a large site, even though the site may
be developed over many years. If so, the PGS liability would be
very substantial [
] coinciding with the usually substantial
up-front on-site infrastructure payments required for a housing
development [
] PGS could influence the way in which sites
were submitted for planning and developed.[73]
English Partnerships argued that "the payment
should be phased; it should not all be up front at the point of
starting on site [
] it should be 25 per cent up front and
75 per cent upon completion so you can give an incentive through
the operation of the system for the developers to come forward
with sites".[74]
37. The PGS consultation document indicates that
"the Government may want to consider allowing developers
to pay their contributions in instalments over reasonable time
periods so as to ensure that house builder cash flow pressures
are sufficiently accounted for".[75]
We recommend
that the Government permit phased PGS payments particularly in
relation to those large sites where development itself is phased.
38. Permitting deferred payments would, however,
increase the time delay between development and the availability
of PGS receipts to finance the infrastructure required to support
those developments. We discuss the issues surrounding the timing
of provision of infrastructure in detail below (see paras 51-7)
but for the moment we note that one
implication of a deferred payment scheme would be to increase
the gap to be bridged by forward funding and therefore increase
the size of the initial dowry required from Government.
Revenue collection
39. The benefits of central Government collecting
PGS revenue and redistributing the funds raised to local authorities
has been questioned but the majority of our witnesses favoured
this arrangement. Because retention of a portion of PGS revenue
by central Government for strategic infrastructure provision is
a key element in the PGS proposals, we
concur that it is appropriate for central Government to collect
PGS payments.
68 Planning-gain supplement, para 3.3 Back
69
Planning-gain supplement, paras 3.5-6 Back
70
The Town and Country Planning Act 1990 defines "material
operation" as any work of construction in the course of erecting
a building; the digging of a trench which is contain foundations,
or part of foundations, for the construction of a building; the
laying of any underground main or pipe to the foundations, or
part of the foundations, of a building or to any such trench;
any operation in the course of laying out or constructing a road
or part of a road; or any change in the use of any land which
constitutes material development. Back
71
Ev 30 Back
72
Ev 22, 105 Back
73
Ev 114-5. See also, for example, responses to the Government consultation
from Lawrence Graham and The Grundon Group. Back
74
Q 153 Back
75
Planning-gain Supplement Consultation, para 1.6 (Box 1.1) Back