Examination of Witnesses (Questions 87-99)
MR JOHN
BEST, MS
JANE HAMILTON,
COUNCILLOR KEITH
MITCHELL, MR
MARTIN TUGWELL
AND MS
NATALIE DEAR
24 APRIL 2006
Q87 Chair: I am sorry for the slippage
in time but, as you will have seen if you were in the evidence
session, we were enjoying ourselves. Could we start off this session
as before, if you would not mind saying who you are?
Ms Dear: I am Natalie Dear, Nottinghamshire
County Council Strategic Planning.
Ms Hamilton: I am Jane Hamilton.
I am the Chief Operating Officer for Milton Keynes Partnership
Committee.
Mr Best: John Best, Chief Executive
of Milton Keynes Council.
Councillor Mitchell: Keith Mitchell,
Chairman of South East England Regional Assembly and Leader of
Oxfordshire County Council.
Mr Tugwell: I am Martin Tugwell,
Planning Implementation Director with the South East England Regional
Assembly.
Q88 Chair: Do not all feel obliged
to answer every question; otherwise we will never get down the
list. To what extent do you feel that the Government's consultation
on the PGS proposals has been undermined by the fact that no proposal
has been made for the rate at which it would be levied?
Councillor Mitchell: I think,
Chair, it gives us an opportunity to make some suggestions and
so I am not entirely unhappy about it. It makes one feel that
there is some flexibility. I have listened to the rumour mill
and I have an idea of what the rumour mill says it might be and
it sounds a fairly sensible level. I think we need to keep it
low. The figure I have heard bandied about is the VAT rate up
to 20%. This feels as if it might work because there is history
here when high rates have led to subsequent abolition and I think
we need to remember history if we are going to take this Planning
Gain Supplement seriously.
Q89 Chair: Is that based on research
that SEERA have done that you are suggesting 20%?
Councillor Mitchell: No, I am
sorry. It is the Westminster rumour mill.
Chair: The Westminster rumour mill; okay.
Q90 Martin Horwood: Twenty per cent
is a low rating.
Councillor Mitchell: It is compared
with previous attempts to introduce Development Land Tax, as I
understand it.
Q91 Chair: It was 100%. Is that generally
speaking the view of the rest of you?
Mr Best: Chair, could I offer
a Milton Keynes view, which is that we are against the principle
of the Planning Gain Supplement because we think that the tariff
that we worked up jointly with Milton Keynes Partnership is a
much more effective mechanism, so our preferred rate would be
zero, for reasons that we can go into in the context of how the
tariff would work.
Q92 Chair: We will come later if
we may to why you think the tariff is great and I am not going
to ask it; somebody else is, so can we put that to one side?
Ms Hamilton: Chair, I think the
extent to which there is no predetermined rate does cause some
difficulties in terms of certainty in the system. Certainly in
talking with developers that we are working with at the moment
that is one of the main concerns, that it is very difficult to
make any comparisons with any alternatives, whether it is a tariff
or whether it is existing section 106, in the absence of any clear
information on the level of the rate that might be set.
Q93 Mr Betts: Have you got a view
when you come to collect Planning Gain Supplement as to what proportion
should be retained locally if that is the sort of system we are
going to end up with and what should be distributed through the
national pot? There is some nodding of heads that someone wants
to contribute to the debate.
Councillor Mitchell: The Regional
Assembly has given a cautious welcome to this consultation and
it is on the basis that 100% will be distributed locally; none
will be taken by the Treasury, and our view is very clear, that
this should be a low tax and a local tax. I am going to give you
some mnemonics during this discussion and the first mnemonic is
KILL: keep it low and local.
Q94 Chair: What do you mean by "local"?
Councillor Mitchell: I think it
should be collected by the authority that issues the planning
application and section 106 works very well in two-tier areas—well,
it does in the ones I know—in terms of the distribution
and the negotiations between the county council and the district
council because the district council grants planning application,
the county council take most of it for its schools and highways,
and I believe if the section 106 can work in terms of the allocation
then a Planning Gain Supplement can. There is incentivisation
here. If planning permission is seen as getting funding there
is strong incentivisation for the local authority. Given where
I come from, my Party's national stance on Planning Gain Supplement
is not the same as mine, one of my views is around the incentivisation
that it brings.
Q95 Martin Horwood: Is there not
then a huge problem that some areas with overwhelmingly greenfield
sites with large amounts of uplift and therefore large amounts
of revenue will raise pots of money for this and local authorities
which have predominantly brownfield sites with little uplift will
raise almost nothing?
Mr Best: That is a very good point
and I think you can probably test it, although not yet, in Milton
Keynes because Milton Keynes has got a much higher proportion
of greenfield than elsewhere.
Q96 Martin Horwood: Does your tariff
distinguish between—
Mr Best: The tariff is applied,—and
Jane Hamilton may be able to go into more detail as devised so
far—is applied to greenfield areas where basically there
is a very simple proposition to say that it is a blank canvas
with no infrastructure. There is nothing to clear away, no community
to negotiate or wrestle with, no existing organisations to manage
greenfield. Even in that environment, where we have, through the
tariff, increased roughly three-fold the amount of contribution
from development, the contribution is not sufficient to cover
the costs of infrastructure that would be required to support
the level of housing growth. Even in that most favourable of circumstances
the tariff and the sorts of levels that we are pitching it at,—and
we believe we have got as far as the market will bear before starting
to discourage development, which would be counter-productive—there
is still not enough. I do not have an answer to your point because
in all the areas that I can see, not only the greenfields in Milton
Keynes but also the brownfields in Milton Keynes—and I would
say there is a third category which is existing estates, which
do not really count as despoiled brownfield or contaminated land
but nonetheless come with a very different mix of costs and liabilities
to them—in no case is a tariff or an equivalent level through
Planning Gain Supplement plus section 106 going to be sufficient
to meet the needs for infrastructure.
Q97 Martin Horwood: Does the tariff
differentiate between brownfield and greenfield sites or is it
flat?
Ms Hamilton: The way in which
the tariff is set up at the moment it only applies to defined
expansion areas in Milton Keynes, of which I think I am right
in saying there are no brownfield elements at the moment. It does
have a remnant of some existing communities but all of the areas
covered by the tariff are greenfield. It is set up under the planning
powers of Milton Keynes Partnership and our planning powers do
not extend to any existing communities and therefore it does not
hit on any defined brownfield sites.
Q98 Martin Horwood: So if you demolish
something and replace it on a brownfield site there is no tariff
whereas if you build an extra building on a brownfield site there
would be a tariff in theory even though there are not many locally,
you are saying?
Ms Hamilton: The tariff applies
outside of the existing area within Milton Keynes, the existing
built-up area. In fact, English Partnerships itself is carrying
out various regeneration projects within the built-up area of
Milton Keynes, but the tariff does not apply there because the
partnership committee is not the planning authority there; the
council is the planning authority, and so the tariff which has
been quoted a lot is really a broad section 106 agreement but
only under Milton Keynes Partnership's planning powers which are
in a very clearly defined greenfield area and therefore the question
of whether or not this tariff applies to brownfield or to other
sorts of projects simply is not there.
Martin Horwood: Would you like
it to be?
Chair: Since we have got on to
this can we deal with this now? Lyn, would you like to ask the
questions about how the Milton Keynes model might or might not
apply elsewhere?
Q99 Lyn Brown: Is there anything
more you would like to say about the Milton Keynes model that
you have not so far covered and, if so, can you do it now? The
second bit is can you tell me if you think it would easily apply
to other bits of the country and, if so, why?
Ms Hamilton: It is something that
I have not covered. It covers a defined area. That area will include
about 15,000 homes and about 500,000 square metres of commercial
development. The tariff itself is set at a level which has been
quoted at £18,500 per dwelling or about £66 per square
metre of commercial floor space. What it does not include, in
addition to that, and this is quite relevant in relation to some
of the issues you have been discussing, is provision for affordable
housing so affordable housing must be provided on top of any payment
of tariffs and also free land for schools, open spaces and community
purposes must also be provided on top of any tariff payments,
so the real cost is around about £35,000-£40,000 per
dwelling. It does apply within a defined area. It is very much
a broad strategic section 106 payment and it is set against very
clearly defined master plans that could be costed up so it is
set against a pre-defined planning agenda in Milton Keynes where
the costs of growth can be clearly set out. When the monies are
to be applied back in to the locality they are divided 50/50 between
what is loosely called strategic and local facilities. The local
facilities are the normal ones that you would expect under a section
106 payment, such as schools, open spaces, community facilities,
and those are facilities within the areas from where the tariff
is drawn. The strategic facilities are ones such as higher level
strategic transport, higher education, further education and health,
the payments that would feed into facilities that operate at the
city or town level rather than just within the localities from
where the payments are drawn.
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