Archived decisions

PLANNING-GAIN SUPPLEMENT - RESPONSE TO GOVERNMENT PROPOSALS

HM Treasury, HM Revenue and Customs and the Office of the Deputy Prime Minister jointly published a consultation document relating to the introduction of a Planning-gain Supplement (PGS). The document was published as part of the Government's response to the Barker Review of housing supply. The purpose of a PGS would be to capture a portion of the land value uplift arising from the planning process in order to fund the infrastructure that makes growth possible and acceptable. The Government's view is that the introduction of a PGS is likely to be more effective than other means of capturing land value uplift, such as VAT on new housing on greenfield sites, provided it could be successfully designed and implemented. The consultation document invited stakeholders to respond to 13 specific questions, many of which were technical in nature. The closing date for the consultation was 27 February 2006.

The main thrust of the Government's proposals are as follows:-

· a percentage of the `planning gain' (i.e. the difference between the land value with full planning permission and the value of the land in its current use - `the uplift') would be the basis for calculating a PGS


· the values detailed above would be self-assessed by the developer and collected by HM Revenue and Customs


· it is expected that for the majority of cases the developer would pass the cost of the PGS back to the landowner


· the Government intends to apply a single percentage rate of PGS to all types of development, although it is seeking views as to whether a lower rate should apply to brownfield land


· home improvements would be excluded from the levy and consideration is also being given to a further threshold, possibly to exclude smaller development projects


· the introduction of a PGS would be accompanied by a scaled down planning obligations system, limiting planning obligations to those matters that need to be addressed in order for the environment of the development site itself to be sustainable, safe, of high quality and accessible plus affordable housing


· should a PGS be implemented, it is proposed that a significant majority of PGS revenues would be recycled directly to the local level for local priorities; that revenues would be dedicated to financing additional investment in the local and strategic infrastructure; and that revenues would ensure growth is supported by infrastructure in a timely and predictable way


· although it is proposed that the majority of PGS revenues would be recycled directly to the local level, a significant proportion would be used to deliver strategic regional infrastructure through an expanded and revised Community Infrastructure Fund


· there is a possibility that PGS income would be redistributed around the country, i.e. from areas of high land values/high development pressure to areas of low land values/low development pressure

In considering the proposed response to the consultation document, the Cabinet expressed concern about the suggestion to retain the planning obligations procedure in relation to the environment of the development itself and to "twin-track" this with the new PGS procedure which would almost certainly increase the bureaucracy and costs associated with the planning system. Although the Government intends for a majority of planning gain revenue to be redistributed to the local level, it is unclear what this proportion would be; unless this is a high proportion and the levy is high, it is unlikely to be advantageous to Hampshire.

By removing funding from a local collection process, the Cabinet was concerned that the potential for leakage was high and there was no guarantee that infrastructure would be provided in a timely and predictable way. The Cabinet was also concerned that, by leaving affordable housing as part of the planning obligations procedure, this need would be met first, leaving little residual value for infrastructure. On that basis the Cabinet expressed its preference for the planning obligations framework to be retained and improved through a tariff based approach, as was being negotiated for the expansion of Milton Keynes, with all funds being collected and retained locally.

In conclusion, the Cabinet expressed their disappointment at the lack of any detail which prevents a full understanding of the Government's proposals and thus precludes the County Council from submitting a comprehensive response at this time. Therefore the Cabinet approved a response which reflected their views and concerns and this is attached as Appendix 2 to the report. The decision made to seek to influence the way in which infrastructure relating to new development is financed and implemented supports the County Council in delivering the majority of its corporate aims.