Archived decisions

Contact: Karin Taylor, ext 7362 email: [email protected]

1. Summary

1.1 This report relates to Government proposals to change the planning obligations system by which developer contributions are secured in order to fund the infrastructure and facilities required to support new development. The proposals go hand-in-hand with Government proposals to introduce a Planning-gain Supplement (PGS), which would be a tax on development land uplift in order to generate further finance for infrastructure.

1.2 It is in the County Council's interest to enhance quality of place by securing a process which delivers timely funding to provide facilities and infrastructure in support of new development.

2. Recommendation

That the County Council responds to the Government's consultation on changes to planning obligations on the basis of the advice in the supporting report.

3. Introduction

3.1 The Government has published a suite of documents relating to the proposed introduction of a PGS. PGS was first mooted by the Government in December 2005 when a consultation document was published which proposed the introduction of PGS in parallel with a scaled-back system of planning obligations. That consultation was considered by Cabinet on 27 February 2006 and a detailed response was sent to Government, the main points of which being that the County Council believed that a locally collected and administered tariff system would be preferable, and that, if PGS is introduced, 100% of the funding should be reallocated locally. It was also recommended that local authorities should be exempt from paying PGS where they are developing land for operational purposes or to re-invest in infrastructure.

3.2 Broadly, the purpose of a PGS is to capture a portion of the land value uplift arising from the planning process in order to fund the infrastructure required to make new growth successful and sustainable.

3.3 The approach outlined in the consultation document is in line with that put forward in the December 2005 consultation. The Government has heeded requests for more detail by publishing the current range of documents and seeking views on detailed technical aspects; indeed the very detailed and technical nature of the questions asked by Government discourages further comment on the general principle of PGS. The publication of these latest proposals suggests that the Government intends to press ahead with introducing a PGS in tandem with retaining a scaled-down planning obligations system, thus introducing a `twin-track' approach to developer contributions. The Treasury has already set in motion measures to allow the Government to meet the initial setting up costs of £50 million for information technology and administrative systems and £12 million to finance a core team of PGS project staff.

3.4 This report concentrates on the consultation document published by the Department for Communities and Local Government relating to changes to planning obligations, which is particularly relevant to the County Council. The other consultation documents relate more specifically to PGS considering, in particular, the detailed valuation aspects and the PGS collection system, neither of which will directly involve the County Council.

3.5 The consultation document poses 12 specific questions and these are reproduced as an appendix. The main issues are covered in the body of the report and a basis for response suggested.

4. The Government's Proposals

The `Development Site Environment' Approach

4.1 The 2005 consultation paper introduced the `development site environment' approach which limited planning obligations to those matters which related directly to the viability of the physical environment of the site and to affordable housing.

4.2 The Government intends to go ahead with the concept of the `development site environment' approach; however, since the 2005 consultation revealed some confusion as to what exactly it means, Government intends to define the future scope of planning obligations in legislation, using a criteria-based approach which could be based on the following principles:

(i) the provision of affordable housing as required by the relevant Local Development Framework (LDF) policy;

(ii) direct replacement/substitution for the loss of or damage to a facility or amenity caused by the development; or

(iii) facilities or amenities required to make the development site acceptable, for example in terms of accessibility, physical environment, operational effectiveness and mix of uses.

4.3 Whilst a criteria-based approach will provide clarity, it may not give the timely provision of the necessary infrastructure to support development and may result in local authorities having to use conditions to prevent development commencing until off-site infrastructure is in place.

4.4 There is a danger that the revised approach will undermine the operation of Environmental Impact Assessments (EIAs), as some EIA requirements will fall outside the scope of the scaled-back planning obligations but it is by no means certain that they would be included in the PGS. This would make it difficult to determine the acceptability of the development proposal and there would be a risk that the responsibility for funding and providing mitigation measures would be passed to public bodies or other third parties.

In-kind Contributions of Land for Public and Community Facilities on Large Sites

4.5 Applying the `development-site environment' approach, contributions towards community and social facilities associated with a new development would in future not be included within the scope of planning obligations, but would fall within the PGS regime. However, a separate decision is needed on the treatment of the land on which the facilities are located. Government is consulting on whether land for public or community facilities on large sites should be included in the scope of planning obligations in future, or excluded, and on how `large' sites should be defined.

4.6 A response which supports inclusion of land in planning obligations is recommended. Land for public or community facilities on large sites should be included to achieve timely delivery and the ability to coordinate the provision of facilities in support of sustainable communities. This issue is of crucial importance to education facilities. Replacing inclusion of land in a Section 106 Agreement with a need to negotiate purchase will not speed up the process of delivering development. Contrary to what is implied, what is necessary to secure a school site that is physically suitable, in an acceptable condition, with all remediation and other exploratory measures having taken place, and with access and services being provided at the right time, will require the same level of negotiation whatever the basis of the transaction. Without the link with the grant of planning permission, local authority service providers will be in a weaker position in negotiations, with nothing to stop developers from adopting a "take it or leave it" stance. Cost is crucially important and a need to negotiate purchase at development value which could be up to £5 million for a new primary school could prejudice delivery of the infrastructure required.

4.7 If land is taken out of the planning obligations regime, it is recommended the land required for public services should be valued differently, otherwise the private sector will be benefiting at the expense of public finance. Any apparent `unfairness' where a facility is required but serves more than one development would be mitigated through the PGS assessment, on the basis that the Planning Value of the overall development will not be greater with the facility than without it.

4.8 In terms of how `large' sites should be defined, this should equate to the smallest site that would be likely to require significant community infrastructure. This will vary according to the type of community facility/infrastructure and the location; the definition of the size, shape and type of land required for public service and infrastructure facilities is very varied. In respect of education facilities, a trigger point of, say, 800 new houses for the provision of a new primary school would be appropriate.

Affordable Housing

4.9 The Government wishes to clarify the basis for the delivery of affordable housing through the planning system; for example by reviewing whether improvements could be made to the current legal basis for planning obligations for affordable housing contributions or by producing clear policy statements. LDFs would be expected to clarify the link between housing need, planning policies and the developer contributions being made. This would be helpful, as long as it still allowed for flexibility in the amount of provision in relation to local requirements and need as expressed in the LDF.

4.10 In view of the current lack of predictability for developers as to the value of the contribution likely to be sought from them, the Government is proposing to introduce a common starting point in negotiations for the value of developer contributions to affordable housing. Government is seeking views from stakeholders on the best common starting point for the value of contributions towards affordable housing, but suggests that a contribution by the developer in the form of, or equivalent to the value of, the land necessary to support the required number of affordable units on the development site would be a reasonable starting point. It would be helpful to establish such a common starting point and the option put forward in the consultation document would appear to be appropriate.

4.11 The retention of affordable housing within planning obligations will mean that it has first call over other infrastructure. Local development frameworks will determine the share of development value devoted to affordable housing.

Use of Planning Obligations/Highway Agreements for Managing the Transport Impacts of New Development

4.12 The Government is seeking consultees' views on which aspects of transport provision might best be included within planning obligations or highways agreements in future and which aspects might better be dealt with directly by the public sector using PGS and other revenues.

4.13 It is proposed that measures to implement Travel Plans, and demand-management measures directly related to the site environment, should remain within the scope of planning obligations. In principle this is supported, as these issues cannot be dealt with through PGS. It would be helpful if it is the Highway Authority (the appropriate body to determine, deal with and implement or control such measures) which actually deals with the requirements. How these can relate solely to the environment of the development site, however, is unclear.

4.14 The Government is suggesting that the use of PGS revenue would be a fairer way of getting developers to contribute to the costs they impose on the transport network, and two options are put forward in respect of a narrower scope for planning obligations:

(i) Option A: Works needed to allow access to and from the site to the nearest point on the transport network compatible with safety and its operational effectiveness.

(ii) Option B: Transport provision to allow access to and from the site to the nearest appropriate transport network in terms of capacity.

Option A would require developers only to connect the site to the immediate road network, whilst Option B would expect them to cover the costs of improvements needed to accommodate all the additional traffic demand generated by their development. Option A would apply for other forms of transport infrastructure.

4.15 It is strongly recommended that Option B is the one that should be pursued for highway improvements. Option A seeks only to cover works which are needed to allow access to be gained to the nearest part of the highway network, eg a roundabout or set of traffic signals at the site access. For larger developments the impact will be felt much further afield and the responsibility for dealing with that will be left to the Highway Authority. There is no guarantee that PGS funding will be made available to address the works which may be necessary, resulting in uncertainty about their delivery. The Planning Authority, in assessing whether a development proposal causes demonstrable harm, will need to understand what works are needed and whether they can be delivered. If these are significant, the Authority may need to tie the start of the development to the start date for delivery of infrastructure. Option B would allow the Highway Authority to assess, negotiate and arrange for the implementation of these works in a timely, structured and related manner and would result in better management of the demand for road transport.

4.16 This will, however, add a new system to an existing one which will not reduce delay in the way that a tariff would. Encouraging local authorities to adopt a tariff-based approach would be a preferable means of securing the provision of both car and non-car based transport infrastructure in major developments.

Use of Planning Obligations Versus Planning Conditions

4.17 The Government proposes to reinforce the current policy presumption that planning obligations should only be used where it is not possible to use a planning condition, but not to provide for this in legislation as flexibility needs to be retained. The Highway Authority is only able to secure control of the necessary improvements through planning obligations. Planning obligations also ensure that land issues are addressed at the planning application stage. Therefore the County Council should support the retention of flexibility.

5. Impact Assessments

5.1 The recommended policy stance will not have different impacts by virtue of race, gender or disability.

6. Conclusion

6.1 Most of the general points made by the County Council in relation to the previous consultation on the proposed introduction of Planning-gain Supplement are still relevant as the current consultations are based on the finer detail and technicalities. It is still not clear how a number of aspects of the new system would operate, for example the taxation rate, the level of funds to be repatriated and what mechanism there will be to allocate funds in a two-tier area. It is still not possible to assess whether this would be advantageous or detrimental to the County Council in terms of funding for infrastructure provision. The risk-averse approach is therefore to endeavour to keep as much as possible within the planning obligations system, whilst continuing to pursue a tariff-based approach, where appropriate.

1196Rpt/KT

APPENDIX

THE CONSULTATION QUESTIONS

1. Do you agree that a criteria-based approach to defining the scope of planning obligations is the best way forward? If not, what approach would you recommend?

2. Do you agree that the scaling back of planning obligations will not undermine the operation of Environmental Impact Assessments for the reasons set out above?

3. Do you think that land for public or community facilities on large sites should be included in the scope of planning obligations in future, or excluded? How should "large" sites be defined?

4. Do you agree with the proposals to establish a clear statutory and policy basis for affordable housing contributions?

5. Do you agree with the proposals to establish a common quantum for such contributions?

6. Can you envisage any unintended consequences of the above approach?

7. What common quantum would you recommend? What would be the impact of this option on a) development viability and b) affordable housing delivery?

8. Do you agree that measures to implement Travel Plans and demand management measures directly related to the environment of the development site should remain within the scope of planning obligations?

9. Which of the above options for developer contributions to transport infrastructure should the Government pursue in order best to balance the objectives of:

· managing demand for road transport;

· the need to ensure network improvements are provided in a timely manner;

· the need for transport impacts to be dealt with on a cumulative and strategic basis alongside other forms of infrastructure; and

· the need to create a scope for planning obligations which is sensible and consistent and does not lead to delay? Are there any other options?

10. Do you agree with the proposal to define the new scope for planning obligations for non-road infrastructure as described above, ie those contributions required to allow "accessibility to access points" but to exclude more strategic contributions or those which are better dealt with on a cumulative basis?

11. Do you agree that in future all planning obligation contributions, including towards highways works, should, if possible, be made under a single agreement, to which highways authorities would also be parties where relevant? Do you see any downsides to this approach?

12. Do you agree with the proposal to reinforce the current policy presumption that planning obligations should only be used where it is not possible to use a planning condition, but not to provide for this in legislation?