Land Value Capture Contents

2Improving existing mechanisms

44.There are three broad approaches to improving how the state captures uplifts in land value: improving existing mechanisms of capturing development values, legislative reforms, and more fundamental measures. Over the next three chapters, we will consider each of these broad approaches in turn. This chapter focuses on how the existing mechanisms for capturing development values—primarily Section 106 and CIL—might be improved in order to better capture uplifts in land value and consistently raise higher revenues for infrastructure made necessary by new developments.

Section 106 agreements

45.Section 106 agreements—often referred to as Planning Obligations—are legally enforceable obligations entered into under Section 106 of the Town and Country Planning Act 1990.64 They are agreements made between a developer and the Local Planning Authority (LPA) designed to meet the concerns an LPA may have about meeting the cost of providing new infrastructure made necessary by the development. The obligations that form the agreement are discretionary while contributions are negotiable and can relate to a wide range of infrastructure including: highways, public transport, education, community and cultural facilities, green infrastructure, environmental mitigation, and affordable housing.65 LPA’s policies for planning obligations should be published and included in Local Plans. The National Planning Policy Framework (NPPF) requires that a planning obligation must only be sought where: it is necessary to make the development acceptable in planning terms; it is directly related to the development; and it is fairly and reasonably related in scale and kind to the development.66

46.Section 106 was not specifically designed to capture uplifts in land values.67 Rather, it was seen as a tool to raise revenues for infrastructure and services that would make a development acceptable to a local community that would otherwise not be. Nevertheless, Section 106 inherently has the effect of capturing land value, with requirements for the provision of affordable housing having the effect of depressing the value of the site and, in so doing, sharing value with the community.

47.We heard that Section 106 had been far more effective in obtaining a share of development value arising from residential development than previous historical attempts.68 Professor Crook (et al.) told us that this could be attributed to the way in which planning obligations are locally administered, that they enabled varying circumstances to be respected through the viability process, and that they have the character of a hypothecated tax to be spent locally.69 For example, the GLA and TFL told us that Section 106 had made “a significant contribution to the delivery of affordable homes in the capital”, a point also highlighted by the Chartered Institute of Housing, while Hugh Ellis told us that Section 106 does “yield substantial results for communities”.70

48.There was a clear preference from many witnesses for Section 106 to be retained. Some, such as the Land Promoters and Developers Federation (LPDF), reported that Section 106 was working adequately enough and there was no need to introduce any alternative system of land value capture.71 Others told us Section 106 should form part of a wider package of land value capture mechanisms. Steve Akehurst said that Shelter “would like to keep the Section 106 system because it could be made to work better and there is no reason it cannot be better”.72 Similarly, the Royal Town Planning Institute told us they favoured retaining Section 106, “as it allows flexibility”, arguing that it would operate most effectively if solely aimed at mitigating the impact of particular developments, with additional measures in place to fund other services.73

Reforms to Section 106

49.We nevertheless heard from many witnesses that Section 106 requires significant reform. The CLA told us there were “a number of flaws in the way in which the system operates”, while Shelter expressed their view that “Section 106 is almost not fit for purpose as a way of capturing land value”.74 We heard several suggestions for how Section 106 might be improved to better capture uplifts in land value. We focus here on four of those suggestions: improvements to the viability process, enhancing the competence of local planning authorities, a greater use of Compulsory Purchase Order (CPO) powers, and a minimum accepted level of developer contributions.

Viability assessments

50.A fundamental principle of Section 106 agreements is that they should not change the nature of the planning permission or be so onerous as to mean the development cannot go ahead. Especially since the financial crisis, when renegotiation became more commonplace, this second element has led to concerns about ‘gaming’ the system. The LGA highlighted that Councils were concerned that the planning system was being undermined by the use of viability arguments from some developers to avoid the need to meet local plan policy requirements.75 Councillor Tett reported that, “Everybody says, ‘There is just not enough money left to fund all of the things you want’”.76 Government statistics showed that planning obligations are indeed frequently renegotiated, with 65% of planning authorities renegotiating a planning agreement in 2016/17, most commonly to change the type or amount of affordable housing required.77 Of course, the extent of this varies over time and by location and developer, with Barratt Developments telling us that fewer than 15% of their developments end up in a viability dispute of renegotiation.78 Nevertheless, a study by the Bureau of Investigative Journalism undertaken in 2013 found that of 82 housing developments in ten cities, just 40% complied with local targets for affordable housing provision.79 It is important to note, however, that this study was undertaken after the financial crisis when land values dropped considerably, but before local plans were amended to reflect this.

51.Shelter argued that the viability system was “weak due to its negotiable and flexible nature” and that this encouraged developers to overpay for land, overstating their expected contribution to affordable housing in the belief that this could be reduced in subsequent negotiations with the local planning authority.80 This was also highlighted by the Minister of State for Housing, who told us that the viability process:

[ … ] might, in the past, have created an incentive to overpay for land on the basis that you have a limit at the top, in terms of the market price for the house that you are producing. Therefore, all the other moving parts have to fit into that overall price. The moving part that is most negotiable, most complex and most likely to be squeezed, given the incentive for the local authority to produce housing, is necessarily the contribution.81

The LGA agreed, telling us there were “no disincentives on a developer overpaying for land, which can then impact on their approach to viability, design and quality, and build-out rate”.82 Professor Henneberry highlighted that one of the key problems with developers building into their bid price an assumption that they will subsequently be able to lower their obligations was that, “the more it happens, the more comparable values, which are used to assess land values, reinforce and build in this assumption that you will deliver fewer affordable homes”.83

52.Another important tension in the Section 106 process concerned the transparency of viability assessments. Hugh Ellis told us that Section 106 was regarded with a great deal of suspicion by many communities, for whom it was not clear how money is collected, what it is for, or where it is spent.84 This was acknowledged in a recent Government consultation into developer contributions, which said: “The proceeds of planning obligations are not clearly communicated to the public. There is also little transparency on how Section 106 planning obligations are negotiated, nor on how they have delivered the necessary infrastructure to support development”.85

53.In July 2018, the Government introduced several reforms to the Section 106 viability process through the revised National Planning Policy Framework (NPPF).86 Much of our evidence was taken in the period between the consultation into the then-draft NPPF in March 2018 and the publication of the finalised NPPF in July, although many of the points we heard remain relevant. The new NPPF requires viability to be tested at the plan-making stage, with developers told to set out the levels of affordable housing they intend to build at an early stage, reducing their ability to negotiate this down later in the process. The Minister of State for Housing told us that the assumption during viability negotiation processes should broadly be towards developers meeting their affordable housing and infrastructure obligations as set out in the local plan.87 The Government also now requires that viability assessments be made public. These are changes that this Committee has repeatedly called for in the past, including in our 2014 report into the operation of the NPPF, in which we recommended:

[ … ] that the Government issue guidance [which should] state that assessments should be transparent, that is ‘open-book’, so that the developers’ finances in relation to the specific site are open to scrutiny, and consider developers’ own projections for future viability. In addition, the Government should work with local authorities and the house building industry to agree the wording of new guidance setting out a standard approach to determining viability.88

54.It is clear that there has been much support for the changes made to the viability process in the revised NPPF. The LGA said it was “encouraging to see moves towards greater transparency in the planning system, and measures that try to resolve the challenges in negotiating the number of affordable homes through the viability process”.89 Shelter praised the new NPPF as being “much better” than the previous version and “far more transparent”, although they said there was “much more to do”, especially around the definitions of ‘affordable housing’.90 Shelter noted that the new Planning Practice Guidance now required that the price paid for land must account for the affordable housing policies of local authorities, with the following phrase being used repeatedly in the new guidance: “Under no circumstances will the price paid for land be relevant justification for failing to accord with relevant policies in the plan”.91 This was also a point emphasised by Simon Gallagher, Director of Planning at the Ministry of Housing, Communities and Local Government, who told us he was “particularly pleased” this sentence had been included and that it would “give the local authority more tools in these conversations”.92

55.Lichfields, a planning and development consultancy, described the reforms to the viability assessment process as “ambitious”, arguing that the practical impacts of these reforms ought to be tested and monitored over a longer period of time to understand whether Government has struck the right balance.93 The Minister of State for Housing told us that the Government would indeed continue to monitor the changes made to the viability process, telling us the Ministry was “ constantly testing and monitoring all the changes that are going through.”94

56.In addition to these formal policy changes, we also heard that the recent judgement in Parkhurst Road Ltd v Secretary of State for Communities And Local Government clarified important powers for local authorities within the viability process. In 2013, Parkhurst Road Ltd bought a 0.58 hectare former-Territorial Army site in Islington and sought planning permission for a scheme of 112 homes, of which just 16 would have been affordable.95 Islington Council refused permission for the scheme, arguing that the developer “failed to demonstrate that the proposed development will provide the maximum reasonable amount of affordable housing”. In April 2018, the High Court agreed with Islington Council, with Mr Justice Holgate ruling that:

I do not accept the appellant’s position that the level of affordable housing provision is not relevant to determining land value, as any notional willing land owner is required to have regard to the requirements of planning policy and obligations in their expectations of land value.96

57.Both Philip Barnes, Barratt Developments, and Paul Brocklehurst, (LPDF), highlighted the potential significance of the case in evidence to us.97 Stephen Ashworth, a planning partner at Dentons, told us this was a “wonderful decision”, which sent a clear message to developers that they could not overpay for a site and expect to get a relief from local plan policies on that basis alone.98

Local planning authority competence

58.In order to make use of their Section 106 powers, local planning authorities require the resources and competence to effectively negotiate with developers. However, as highlighted by Professor Henneberry, one of the main problems with the Section 106 process has been the variation in the success of obtaining a share of development value, as a result of local planning authority practice.99 He noted that, while many authorities were very good at negotiating with developers, others were not. He told us:

There is quite a lot of potential, by simply improving practice across the board with local planning authorities, to get more of the land value capture in gross terms overall, rather than for specific sites, because the good authorities are getting a pretty good land value capture in that regard.100

59.This was supported by Councillor Tett from the LGA, who told us that there needed to be “a more level playing field between local authorities and developers”.101 He said that, due to a lack of resources in local authorities, planning departments were “anaemic by comparison with the very well-staffed departments that developers can put forward”.102 As well as resources, there is clearly also a need to raise the skills, knowledge and competence of those planners that are already in post. Developers and landowners were keen for local authorities to be provided with greater resources to negotiate, with Christopher Price from the CLA describing current local government practice as “a bit messy”.103

Compulsory Purchase Order powers

60.We discussed whether CPO powers could be used as an effective mechanism to enforce local authority planning requirements, where developers sought to use viability assessments to avoid their obligations. It was proposed that, where developers refused to build the required number of affordable homes, local authorities could use their CPO powers to threaten to, or actually, take that land away from the developer and build the required homes itself.104 Such powers could provide an additional tool to ensure that developers meet their local planning obligations and form part of wider reforms to the CPO process—proposals for which are addressed in more detail in the next chapter.

61.Paul Brocklehurst from the LPDF told us that he believed recent policy changes and court judgements were anyway moving towards an obligation for developers to meet local policy requirements.105 He told us he could support greater use of CPO powers to ensure developers met their affordable housing obligations, although he highlighted that many larger sites delivered wider benefits—such as schools and road infrastructure—to offset affordable housing requirements. Similarly, Christopher Price, from the CLA, told us he would be comfortable with this approach, and emphasised the importance of local authorities having a “robust local plan”.

62.However, Barry Denyer-Green, a barrister from Falcon Chambers, argued that the use of CPO powers could be expensive and take up time, with uncertainty as to how the determination of the consideration might work out, and suggested that the use of CPO to enforce planning obligations “does not seem to be very sensible, frankly”.106 However, Vicky Fowler, a partner at Gowling WLG and Chair of the Compulsory Purchase Association, told us that CPO powers could be used for this purpose, although it would be easier on larger settlements than smaller sites.107 The Minister of State for Housing agreed that there may be some circumstances in which it would be appropriate for a local authority to compulsorily purchase land where a developer fails to meet its planning obligations, although he emphasised that taking away privately-owned land should always be a last resort:

In compelling cases, CPO may be appropriate. As a Conservative politician, I am naturally nervous about the spot nationalisation of land [ … ] The ability of the Government to confiscate assets is a problem in a capitalist society, so we have to be careful about that, but I hear what you say. Certainly in my experience and in my area, there are sites where, frustratingly, you would like to see some kind of action, but we would like to see how the current changes to the CPO and to viability bed in before we look at anything more.108

Non-negotiable developer contributions

63.The Community Infrastructure Levy (CIL) review group was established by the Government in November 2015 and chaired by Liz Peace, a former Chief Executive of the British Property Federation. In its final report, published in February 2017, the Review Group made several recommendations for reforms to CIL—which will be referred to later in this chapter—but particularly relevant in this context was its recommendation for a low-level Local Infrastructure Tariff (LIT) which would apply to all developments without exception.109 It would involve a standard methodology, but also rely on local data to ensure local economic conditions were recognised within the consistency of a national framework. Given ongoing concerns around viability assessments and developers negotiating down local plan requirements, a non-negotiable low-rate tariff—a minimum charge, but additional to revenues raised through Section 106 agreements—has clear attractions. In evidence to our inquiry, Liz Peace explained the rationale for this recommendation:

[ … ] the principle that everybody should contribute to large pieces of infrastructure was a good one, and that it would be simple and acceptable to set this relatively low level that everybody paid, which the local authority would use for the broader package of big infrastructure measures, not site-specific ones. You would not let the big developments escape; let them negotiate their section 106, because they could do it exceedingly effectively. Out of that, you would get what that specific development needed. It would save a whole lot of time. It seemed you would get the best of both worlds.110

Liz Peace told us she was “disappointed” the review group’s recommendation was not accepted.111 The Minister of State for Housing told us that he had not ruled out introducing LITs in future, but preferred more “incremental change, market assessment and monitoring”, and noted that the implementation of LITs would require primary legislation.112

64.We agree with the witnesses who told us that Section 106 had been successful in generating significant revenue for infrastructure and affordable housing, that its contractual nature helped to ensure delivery, and that it should be retained as part of a wider package of land value capture mechanisms. We believe that the Government has made several important changes through the revised National Planning Policy Framework (NPPF), in particularly around transparency in the viability process—something we have called for repeatedly in the past. It will, however, be important to ensure these changes lead to real improvements and the Government should report to the Committee in 12 months’ time as to the effect of these reforms.

65.Further, the recent judgement in Parkhurst Road Ltd v Secretary of State for Communities And Local Government should give assurance to local authorities that developers cannot avoid their local plan obligations by claiming that the price they paid for the site means that this would not be viable.

66.It is clear that the most successful local planning authorities have well-defined local plans, which set out clear expectations of what is required of developers, and the professionalism and resources to ensure that these obligations are met in practice, resorting to enforcement mechanisms where necessary. Local authorities that expect to raise higher revenues from Section 106 agreements should ensure that they too have agreed local plans that provide clarity and certainty to developers.

67.However, further reforms will be necessary if Section 106 is to provide the infrastructure and affordable housing that this country needs:

Community Infrastructure Levy (CIL)

68.The Community Infrastructure Levy (CIL) is a locally-determined, fixed-rate development charge designed to help finance the infrastructure needed to delivery infrastructure to support the development of the affected area.113 The CIL was brought into force on 6 April 2010 by the Community Infrastructure Levy Regulations 2010, made under Section 206 of the Planning Act 2008. In contrast to Section 106, which raises revenue for infrastructure associated with specific development, CIL was intended to address the cumulative impact of development in an area. CIL is set in terms of ‘£ per square metre’—rather than based upon the increase in the value of land, as had been intended for the Planning Gain Supplement—and is not always seen as a land value capture mechanism, although it has the function of raising revenue arising from development gains.

69.Local authorities are able to determine their CIL charges according to local considerations, although these are subject to two rounds of statutory public consultation and review by an Independent Examiner. Variations in charging rates are permitted between areas within the planning authority, as well as by different intended types of development, which must be set out in a published charging schedule. Local authorities are able to spend CIL revenues on a broad range of infrastructure—including roads, schools, flood defences and health facilities—but must have a published list of priorities for expenditure.

70.As a fixed development charge, CIL was intended to be a fairer, faster, more certain and transparent system of securing developer contributions for local infrastructure than was the case with Section 106 obligations.114 As the Chair of the CIL Review Group, Liz Peace, told us:

The objectives of CIL were to be a levy, as the name implies—a community infrastructure levy—which would be set by local authorities. It would be very clear, straightforward and simple. Developers who were coming along to do a development would know exactly what they were up for; they could do a quick calculation, write the cheque, and off you go.

Unfortunately, CIL did not turn out to be like that.115

71.The CIL Review Group identified several flaws in the operation of the levy. They noted the inconsistent take-up of CIL across the country and that it had not become, as originally envisaged, a universal and ‘fair for all’ approach to developer contributions.116 Government statistics showed that, as of March 2018, just two-thirds of local authorities were charging CIL or had taken steps towards doing so, predominantly in areas where land values were higher.117 Liz Peace told us that a large number of local authorities, particularly in the North, had decided not to implement CIL “simply because, they said, it was unviable”, and the cost of collecting it would be more than they would acquire from CIL.118 Consequently, in those areas that had not introduced the levy, smaller developments that could have afforded to make a contribution to local infrastructure were “getting away without making any contribution”.119

72.Further, the CIL Review Group found that CIL has “undoubtedly been undermined by the ongoing introduction of exemptions”.120 Liz Peace told us that CIL had “become far too complex”, to the extent that the industry which had developed around it had become “a substantial waste of everybody’s time and effort”.121 She explained that the number of exceptions and exemptions in the scheme had led to several early-adopting local authorities raising 50% less revenue than they had initially anticipated.122 As highlighted by the GLA and TFL, CIL rates have to be set at a level that ensures the ‘strategic viability’ of development across an area as a whole, taking into account a range of development types, including those that are less viable, which leads to a bias towards setting lower rates.123 Consequently, as noted by the LGA, “CIL simply does not yield enough money to fund vital infrastructure needs”.124 The complexity was also a concern for developers, including Barratt Developments, who told us that CIL created “inconsistency and confusion”, and could be “quite off-putting to many players”.125 Several witnesses, including Professors Crook, Whitehead and Henneberry told us that CIL could be made significantly more efficient if the exceptions and exemptions within the CIL system were removed.126

73.The Review Group also found that CIL “has not necessarily worked well for larger sites with complex site-specific mitigation requirements”.127 Liz Peace explained that, while smaller sites were relatively simple to calculate, for “a very, very large development, it was almost impossible to apply the formulaic CIL approach”.128 Where a new, large development required a new school, for example, developers “did not want to pay that into a pot and wait for the local authority to build you a school in however many years’ time it would be; you wanted the ability to do that on your site in kind”.129

74.Liz Peace summarised the recommendations of the Review Group as follows: “if you look at it bluntly, we were recommending that you park CIL and do something different”.130 The report recommended that the Government introduce a non-negotiable low-rate tariff to apply to all developments—a ‘Local Infrastructure Tariff’, referred to earlier in this chapter—alongside an additional ‘Strategic Infrastructure Tariff’ to fund specific, major infrastructure projects in Combined Authority areas:

We recommend that the Government should replace the Community Infrastructure Levy with a hybrid system of a broad and low level Local Infrastructure Tariff (LIT) and Section 106 for larger developments [ … ] We recommend that Combined Authorities should be enabled to set up an additional Mayoral-type Strategic Infrastructure Tariff (SIT).131

The Review Group argued that this approach would raise more money for infrastructure in aggregate than the current CIL regime and enable the timely delivery of infrastructure for larger sites.132 We heard much support for the Review Group’s recommendations in evidence, including from Barratt Developments, the British Property Federation, and the LGA.133

75.The equivalent of the Strategic Infrastructure Tariff introduced in London in April 2012 to raise funds for the Crossrail project—the Mayoral Community Infrastructure Levy—was highlighted by the CIL Review Group as “an interesting example of how a relatively low level and simple levy applied across a wider economic area has been able to provide a contribution towards the funding for one large identified piece of infrastructure”.134 Julian Ware, from TFL, told us that the Mayoral CIL was initially targeted to raise £300 million over seven years, but had ultimately raised over £500 million.135 He highlighted that a new Mayoral CIL was being prepared to fund between 15% and 20% of the costs of the proposed Crossrail 2 project.136 John Wacher explained that the GLA had found there were several benefits to identifying single large items of infrastructure that are highly visible, where it is clear to those paying the charge what their money is being spent on.137 Ian Fletcher, from the British Property Federation, told us that he saw Strategic Infrastructure Tariffs as one of two key new mechanisms for capturing uplifts in land value, and saw no reason why it should not be applicable to other parts of the UK.138

76.The 2017 Autumn Budget statement committed the Government to consult further on developer contributions, including CIL—which it subsequently did in March 2018—but made clear they were not inclined to accept the CIL Review Group’s key recommendation for a Local Infrastructure Tariff.139 Instead, the Government proposed simply to introduce a Strategic Infrastructure Tariff for Combined Authorities and joint committees, where they have strategic planning powers. The LGA told us that the Government had “missed an opportunity” to make CIL a more effective tool for raising funds for infrastructure, while Ian Fletcher told us he was “disappointed” that the Government did not grasp the opportunity to take onboard the recommendations of the Review Group.140

77.If the Community Infrastructure Levy (CIL) is to become an effective mechanism for capturing development value for the provision of local infrastructure, it requires considerable reform, as highlighted by the CIL Review Group. CIL is far too complex and the extensive range of exceptions need to be removed. Importantly, there has to be greater certainty that the infrastructure associated with development is actually delivered at the appropriate time, sometimes in advance of development commencing. It is regrettable that the Government has decided not to implement a Local Infrastructure Tariff, as recommended by the Review Group, which would address some of these concerns. We call on the Government to reconsider its rejection of this proposal.

78.The Mayoral CIL in London indicates that Strategic Infrastructure Tariffs that are simple, generally accepted and universally-applied could be effective mechanisms for capturing value to fund specific large infrastructure projects. The Government is right to explore how Strategic Infrastructure Tariffs can be extended across the country, and in particular to combined authorities, who may wish to seek advice from the Greater London Authority as to how such schemes can be successfully implemented. However, the Government should show greater urgency in this respect, given the CIL Review Group made its recommendations nearly two years ago. Care must be taken, however, to ensure that Strategic Infrastructure Tariffs create an additional source of revenue and do not undermine Section 106 receipts. Once a number of Strategic Infrastructure Tariffs are in place, the Government should undertake an assessment to ensure that they have indeed raised additional revenue and not simply diverted money from one pot to another.

Tax Increment Financing

79.Tax Increment Financing (TIF) permits local authorities to borrow money for infrastructure projects against the anticipated increase in tax receipts resulting from the infrastructure.141 In the UK, TIFs take the form of increasing the proportion of business rates that are retained by local authorities, which in turn expands the authorities’ borrowing capacity. TIFs are not a legal structure in their own right, but are created by altering the destination of business rates revenue in the localities in question. There are two models of TIF in England, summarised by the Government as:

An open structure that lets councils invest and take on the risks alone or one with stronger Government controls that guarantees revenue and disregards the levy or reset processes.142

Both options were based upon borrowing against business rates income, and were linked to the Business Rates Retention Scheme, through which half of business rate income is retained by local government collectively and redistributed to local authorities on the basis of a formula decided by central government, allowing local authorities to retain half of the growth in business rates revenue above their baseline funding level. Under the first TIF option, local authorities borrow against their income within the Business Rate Retention Scheme. Under the second option, local authorities borrow against the business rates revenue in specific geographical areas (such as Enterprise Zones) in which they retain 100% of the growth in revenue. These areas are not subject to the levy or reset for a defined period of time. The two options involve borrowing against different elements of retained business rate revenue.

80.TIFs have been widely used in the United States, with Illinois alone having over 900 TIF schemes.143 It is important to note, however, that the United States has a very different system of property taxation, with these collected locally and retained fully at the State level, making the designation of TIF districts far simpler than is the case in the UK.144 Consequently, very few TIF schemes have been introduced in England since they were first permitted in 2013: “no more than a handful”, according to the British Property Federation.145 Three of the City Deals agreed in 2012—Newcastle, Nottingham and Sheffield—included agreement on specified localities in those council areas where business rates would be fully retained locally. A further four projects in Scotland are being managed by the Scottish Government. The most high-profile TIF scheme has been implemented in Battersea, and was described to us by Julian Ware from TFL:

Over a 25 to 30-year period, the new businesses at Battersea will pay additional business rates over and above what the land was worth before. With Government’s agreement, that will be captured, paid to the GLA and we will use it to pay down the debt from the project.146

81.The Royal Town Planning Institute said that, while TIFs have some issues, the possibility should continue to be made available to local authorities as an option for capturing land values.147 Hugh Ellis, from the Town and Country Planning Association, told us there could be greater potential to use TIFs in high-value areas, such as London or across the Oxford-Milton Keynes-Cambridge corridor, although he expressed his view that it was “definitely a second-order instrument”, and was concerned as to how it would fit into a wider regime of land value capture.148 Similarly, the Chartered Institute of Housing said that, while TIFs may operate effectively in city regions and may be useful for Combined Authorities, they were likely to be far less useful for smaller authorities.149

82.Tax Increment Financing (TIF) has been used to some effect in Battersea and local authorities should consider how it could be used more extensively to fund infrastructure in enterprise zones. However, if TIFs are to be more widely adopted, the Treasury-approval process will need to be far less complex, while there urgently needs to be greater certainty around the Government’s plans for business rates retention—something this Committee has repeatedly called for.


64 Planning Obligations (Section 106 Agreements), House of Commons Library, Briefing Paper 7200, 24 May 2016

65 Ministry of Housing, Communities and Local Government (LVC084), para 5

66 National Planning Policy Framework (NPPF), Ministry of Housing, Communities and Local Government, July 2018

67 A point made by Daryl Phillips (District Councils Network) and Councillor Tett (Local Government Association) - Q79-Q81

68 Q9 (Professor Henneberry)

69 Professor Tony Crook CBE, Dr Gemma Burgess, Dr Richard Dunning, Dr Alex Lord, Professor Craig Watkins & Professor Christine Whitehead OBE (LVC046)

70 Greater London Authority & Transport for London (LVC 091), Chartered Institute of Housing (LVC052) and Q176 (Hugh Ellis, Town and Country Planning Association)

71 Land Promoters and Developers Federation (LVC065), para 28

72 Q32 (Steve Akehurst, Shelter)

73 Royal Town Planning Institute (LVC055), para 15

74 Country Land and Business Association (LVC082), para 1.4, and Q9 (Steve Akehurst, Shelter)

75 Local Government Association (LVC059), para 2.4

76 Q81 (Councillor Tett, Local Government Association)

77 Supporting housing delivery through developer contributions, Ministry of Housing, Communities and Local Government, 5 March 2018, para 29

78 Barratt Developments (LVC022), para 3.10

79 As highlighted in Chartered Institute of Housing (LVC052)

80 Shelter (LVC037), para 3.5.7

81 Q259 (Kit Malthouse MP, Minister of State for Housing)

82 Local Government Association (LVC059), para 3.9

83 Q9 (Professor Henneberry)

84 Q180 (Hugh Ellis, Town and Country Planning Association)

85 Supporting housing delivery through developer contributions, Ministry of Housing, Communities and Local Government, 5 March 2018, para 34

86 National Planning Policy Framework (NPPF), Ministry of Housing, Communities and Local Government, July 2018

87 Q268 (Kit Malthouse MP, Minister of State for Housing)

88 Fourth Report - Operation of the National Planning Policy Framework, 2014–15, Communities and Local Government Committee, para 67

90 We closed the viability loophole, Shelter, 25 July 2018

91 Viability, Guidance, Ministry of Housing, Communities and Local Government, 24 July 2018

92 Q268 (Simon Gallagher, Ministry of Housing, Communities and Local Government)

94 Q261 (Kit Malthouse MP, Minister of State for Housing)

97 Q142 (Paul Brocklehurst, Land Promoters and Developers Federation) and Q162 (Philip Barnes, Barratt Developments)

98 Q209 (Stephen Ashworth, Dentons)

99 Q9 (Professor Henneberry)

100 Q9 (Professor Henneberry)

101 Q109 (Councillor Tett, Local Government Association)

102 Q109 (Councillor Tett, Local Government Association)

103 Q141 (Christopher Price, Country Land and Business Association)

104 For example, Mr Hollinrake’s question to Philip Barnes, Barratt Developments (Q162)

105 Q165 (Paul Brocklehurst, Land Promoters and Developers Federation)

106 Q234 (Barry Denyer-Green)

107 Q238 (Vicky Fowler)

108 Q266 (Kit Malthouse MP, Minister of State for Housing)

110 Q25 (Liz Peace)

111 Q26 (Liz Peace)

112 Q272 (Kit Malthouse MP, Minister of State for Housing)

113 Community Infrastructure Levy, House of Commons Library, Briefing Paper SN03890, February 2014, and Community Infrastructure Levy, Guidance, Ministry of Housing, Communities and Local Government, 12 June 2014

115 Q9 (Liz Peace)

117 Supporting housing delivery through developer contributions, Ministry of Housing, Communities and Local Government, 5 March 2018, para 25

118 Q13 (Liz Peace)

121 Q9 and Q25 (Liz Peace)

122 Q9 (Liz Peace)

123 Greater London Authority & Transport for London (LVC091), para 2.8

124 Local Government Association (LVC059), para 3.2

125 Q124 (Philip Barnes, Barratt Developments)

126 Professor Tony Crook CBE, Professor John Henneberry, & Professor Christine Whitehead OBE (LVC053)

128 Q9 (Liz Peace)

129 Q25 (Liz Peace)

130 Q25 (Liz Peace)

133 Barratt Developments (LVC022), para 1.1, British Property Federation (LVC044), and Local Government Association (LVC059), para 3.3

135 Q56 (Julian Ware, Transport for London)

136 Q59 (Julian Ware, Transport for London)

137 Q92 (John Wacher, Greater London Authority)

138 Q187 (Ian Fletcher, British Property Federation)

139 Autumn Budget 2017: documents, HM Treasury, 22 November 2017, and Supporting housing delivery through developer contributions, Ministry of Housing, Communities and Local Government, 5 March 2018

140 Local Government Association (LVC059), para 3.3, and Q176 (Ian Fletcher, British Property Federation)

141 Local Government in England: Capital Finance, House of Commons Library, Briefing Paper Number 05797, 27 June 2016, Section 2.1

142 Councils freed from begging bowl put on path to growth, News story, Department of Communities and Local Government, 18 July 2011

143 Q191 (Ian Fletcher, British Property Federation)

145 Q195 (Ian Fletcher, British Property Federation)

146 Q57 (Julian Ware, Transport for London)

147 Royal Town Planning Institute (LVC055), para 18

148 Q192 (Hugh Ellis, Town and Country Planning Association)

149 Chartered Institute of Housing (LVC052)




Published: 13 September 2018