Memorandum by the Northamptonshire Chief
Planning Officers Group (NPOG) (PGS 23)
1. Northamptonshire Chief Planning Officers
Group comprises representatives from all of the Northamptonshire
local authorities, the West Northamptonshire Development Corporation
and North Northamptonshire Joint Planning Unit. I would like to
state at the outset that Northamptonshire Chief Planning Officers
Group strongly supports the principle of the community taking
a greater share of betterment and agrees that in recent history
Section 106 has in many cases been unable to do this effectively.
However, whilst NPOG supports the concept of capturing betterment
for community benefits, it has some significant concerns regarding
the current Planning Gain Supplement (PGS) proposals as set out
in the government's consultation paper.
2. It asks for the following issues to be
addressed in any future considerations.
3. LOCAL ACCOUNTABILITY
AND INFRASTRUCTURE
DELIVERY
4. Under the new PGS proposals the local
planning authority, developer and the local community will not
be able to guarantee that infrastructure required due to the development
will be provided as funds would be collected, administered and
distributed centrally. As such the PGS proposals could bring a
lack of accountability into the system. Increased local certainty,
transparency and accountability on longer term funding and the
timing of this is crucial for delivery, and is crucial for public
acceptance of the growth. This is a major shortcoming of the current
PGS proposals.
5. The PGS consultation paper is far from
clear on how much money would come back to the local area only
that "the majority of PGS will be recycled directly to the
local level for local priorities". It states that a significant
proportion would be used to deliver strategic regional, as well
as local, infrastructure. It is also unclear and how and when
this would be done as clearly timing is critical to ensuring the
funding is available to deliver infrastructure led growth.
6. Proportionality is an important principle.
Funding received through PGS or standard charges should be related
to the scale of growth being planned and delivered, rather than
merely land value uplift. Otherwise resources will be skewed to
towards those areas where the land values are highest as opposed
to those delivering most growth and where needs are greatest.
7. Any funding generated through PGS or
another mechanism should be "in addition to" rather
than replace funding which is currently received from government
departments such as the Department for Transport, Department for
Education and Skills, and the Department of Culture, Media and
Sport. This would in part reflect the fact that strategic infrastructure
has a much wider role to play than serving and supporting new
development. This additionality is crucial.
8. SCHOOL PROVISION
9. Under the proposals outside the scope
of planning obligations and therefore for funding via the PGS
would be education provision, health provision, community centres,
bus services, fire stations, employment and training, labour initiatives,
town centre management, cultural facilities, and leisure facilities.
10. NPOG is particularly concerned regarding
the affect that this could have on our ability to deliver schools.
The County Council has recently adopted Supplementary Planning
Guidance on "Planning Obligations and Local Education Facilities".
This is based upon school capacity and pupil generation rates
from different types of residential developments and provides
transparent and robust guidance for developers and local communities.
11. In many cases, particularly for new
primary schools in new housing developments, the County Council
requires funding for school infrastructure at the beginning of
a development. This is currently secured via 106 agreement and
is because of the length of time that it takes to design and build
a school and because school places need to be there when children
arrive. Any delay or uncertainty in the provision of funding could
have a detrimental effect on the provision of school places and
require unnecessary expense in transporting children to other
schools in the interim period.
12. In addition, this measure could negatively
impact on the statutory process. The current legislation and guidance
does not allow the approval of a proposal to build a new school
or significantly expand an existing one until the capital resources
are available. Also, the recent Education White Paper requires
a proposal for all new schools to be subject to a competition
of prospective providers. New school proposers would need some
guarantee of the funding available. Uncertainty over funding could
prolong the statutory process and delay delivery.
13. In some cases, it is useful to negotiate
directly with the developers when planning new schools. For example,
at Upton, Northampton the County Council received additional funding
in order to provide a school designed to fit in with the specification
of the development. In addition, the County Council may also negotiate
with developers to support neighbouring schools that are affected
by new development and the opening of new schools. The proposals
appear to inhibit any opportunity to do this.
14. STRATEGIC
INFRASTRUCTURE FUNDING
15. There is a danger with the proposals
that there will significant problems with the funding of "strategic
infrastructure". The contributions made under a reformed
planning obligation regime would be taken into account for the
planning value. This implies that "scaled back" s106
costs will have to be agreed and deducted from the potential uplift
in land value before the PGS due can be calculated. There may
be some reluctance on the part of developers to "scale back"
payments which are held and applied locally under s106 in order
to need to leave sufficient value within the scheme for PGS to
be collected.
16. DEVELOPMENT
LAND AND
THE MARKET
17. PGS would be payable when development
starts. An upfront payment of the PGS at the granting of full
planning permission is likely to have a major impact on the cash
flow of the project. If the cost of borrowing to fund PGS is shown
as a development cost this could ultimately reduce the amount
received by the Treasury.
18. There is a danger that if the PGS is
introduced then landowners and developers will not bring land
forward for development and instead wait in the expectation that
this will change. This experience of previous "Development
Land Tax" initiatives is well documented. This could have
a major impact on delivery and lead to market stagnation. Proposals
should not hinder regeneration, developer interest, and importantly
the delivery of strategic and local infrastructure. Indeed they
should help to accelerate infrastructure delivery. Because the
tariff operates through a conventional Section 106 Agreement there
are direct links between the revenues raised and the application
of the funds to infrastructure needed at the local level.
19. There is a risk that the PGS could encourage
"land banking" if market conditions soften or enter
a downturn. Alternatively, developers may seek to bring forward
development in smaller parcels to minimise or phase PGS payments;
this could be detrimental to the co-ordination of infrastructure
and facilities within the Sustainable Communities Plan growth
areas.
20. EFFICIENCY
AND BUREAUCRACY
21. The efficiency needs to be questioned
of setting up a new regime of tax collection alongside the grant
of planning permission, to double handle and redistribute the
majority of funds collected back to the local authorities in the
first place.
22. There is likely to be an increased role
for policing the system for local authorities with the monitoring
of Development Start Notices and where appropriate the serving
of Development Stop Notices. In terms of strategic infrastructure
it is proposed that there is a revised CIF programme introduced.
Again there is a danger this will be a bureaucratic process compared
to the standard charge approach.
23. The PGS proposals have the danger of
increasing bureaucracy and introducing an inefficient system.
It is an imperative that any new system must be not overly-bureaucratic,
fit for purpose and adequately resourced at all levels.
24. AFFORDABLE
HOUSING
25. It is noted in the proposals that a
number of items will be left to negotiation at a local level,
most notably affordable housing. The level of affordable housing
is still going to require extensive negotiation within the context
of the PGS.
26. To put it in context half of all the
affordable housing units (26,541) housing units provided in 2003-04
were provided from the planning system through Section 106 agreements.
If you factor in PGS there is a serious risk that either development
would be frustrated or affordable housing resources coming from
s106 would be cut in those areas with the greatest affordable
housing problems.
27. REVENUE FUNDING
28. Further consideration of PGS proposals
should also look at the revenue implications of planning for and
accommodating growth and the opportunity to address these, as
this is a significant issue not only for local authorities, but
also other service providers including those in the health sector.
29. MAKING THE
CURRENT SYSTEM
WORK BETTER
30. Developer contributions should mitigate
the impact of their developments. It is clear in Circular 05/05
this includes strategic as well as local infrastructure.
31. Public agencies acting within Northamptonshire
have embarked upon a substantial piece of work to ensure that
land value can be captured effectively through the existing Section
106 system. These agencies are committed to taking forward this
work and are pleased that the government has acknowledged the
work that has been undertaken on standard charge based approaches
in Northamptonshire and elsewhere in the growth areas and that
it has encouraged this work to continue.
32. Practical experience has shown that
where local authorities have clear Supplementary Planning Guidance
and other approved policies in place the system has been shown
to work well and is accepted by the development industry as a
legitimate means of raising capital to help fund the infrastructure
and facilities which support growth. This is the approach that
the public agencies within Northamptonshire are working hard collectively
to introduce.
33. Moreover the Milton Keynes Tariff approach,
which is similar to the approach being developed in Northamptonshire,
indicates how with the necessary support and commitment the current
system can be used to front-fund infrastructure.
34. The framework for this work is the MKSM
Inter-Regional Board report in October 2004 on land value capture
(see attached). The principles set out in this report provide
a sound context for not only this work but also for testing alternative
proposals such as PGS.
35. TRANSITION
ARRANGEMENTS
36. If the government are determined
to move towards the PGS then clear proposals need to be introduced
that ensure a smooth transition from any "Northamptonshire
approach" that is adopted. Public agencies are seeking to
introduce a high level of certainty regarding the future funding
streams from s106 and provide confidence with regard to how their
contributions will be applied at both the local and strategic
level.
37. To maintain the pace of development
required in Northamptonshire theses conditions will need to be
maintained. A transitional framework is therefore required to
cover the following points:
38. An unequivocal statement that PGS will
not impact on parties who are signatories to the "Northamptonshire
approach" to capturing the rise in land value.
39. An exemption from PGS for all reserved
matters applications granted pursuant to any outline planning
consent with the "Northamptonshire approach".
40. A clear statement regarding the proposed
arrangements for prioritising for funding infrastructure required
to deliver the next phase of growth to ensure a seamless transition
from tariff funding to PGS funding for both strategic and local
infrastructure.
41. Clarification of the government's intention
with regard to the scope of the scaled back planning obligations
to ensure that no overlaps remain whilst allowing scope to vary
the coverage of the scaled back obligations in accordance with
local needs and circumstances.
42. As stated above, NPOG supports the principle
of land value capture to enable sustainable growth and would be
willing to provide further information in support of its comments
and to work with the government to put in place clear transitional
arrangements which would enable, should it be implemented, any
switch from tariff to PGS to be made without risk of delaying
infrastructure provision and growth.
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