Local people must see their community benefit from new developments

Government should make it easier for councils to ensure that new developments, big or small, benefit the local community.

This is the thinking underpinning London Councils' proposals on alternatives to planning gain supplement (PGS), which are outlined in a special response to the Housing Green Paper.

In late 2005, the government consulted on introducing PGS - a levy on developers paid to government based on the increase in land value once a development has received planning permission.

The government wanted to use this to replace part of the value of section 106 agreements (s106) - these are funds negotiated by councils from developers to off-set the impact of a new development on the community. The money from s106 agreements can be used to fund anything, from affordable housing to new schools and green spaces.

The government's proposals met with widespread opposition - especially from London Councils, which warned that the capital could lose out on millions of pounds of valuable regeneration funding. Because of this, the government is now consulting on alternatives to planning gain supplement.

In response to the consultation, London Councils has called for a combination of two of the government's proposed options. This approach would mean that a fixed planning charge would be made on developments below a certain size. For any developments over this size, local authorities would be allowed to negotiate funds using the current s106 arrangements.

At present the cost and time that it takes to negotiate s106s means that it sometimes is not worth the effort to negotiate over small projects. A fixed charge for developments below a certain size will make this process easier - while also ensuring that developers won't feel that they were being asked for disproportionate contributions for small projects.

But keeping the s106 arrangements for developments over a certain threshold means that councils will be free to negotiate the maximum benefit for their local community to off-set the impact of large-scale developments. The pre-Budget report, announced on Tuesday 9 October, indicated that the government is now thinking about an approach broadly in line with London Councils' proposals.

London Councils also believes that it is very important for this process to be as transparent as possible so that local people can see the evidence of how these developments benefit the community. As such, local authorities should publish annual reports on how the money raised is being spent in order to reassure the public and developers that it is being spent on the agreed priorities.

Speaking on the response, London Councils Executive Member for Planning, Mr Michael Snyder said:

"We were pleased to see that the pre-Budget report suggests that the government is already beginning to think along the lines of our proposals for alternatives to planning gain supplement. This is welcome, as PGS could have seen the capital lose out on millions of pounds of regeneration funding. Our proposals are fair to business, and yet would allow local authorities to ensure that communities are not short-changed by new developments.

"Any new development - no matter what size - can be controversial, especially when local people believe that businesses are profiting at the expense of their community. This is why we want to see a more transparent system - if local authorities publish reports on exactly what money they have received from developers and how that money is being spent, local people will realise the benefits new developments can bring."

Notes to editors

London Councils' response on Alternatives to Planning Gain Supplement

See Housing green paper Opens in a new window 

See information on planning gain in the pre-Budget report Opens in a new window

In December 2006, London Councils warned that the government's proposals for PGS could see the capital lose out on vital regeneration funding. In 2005/6, London's boroughs negotiated approximately £230 million through section 106 agreements with developers.

This money was used to off-set the impact of any new development on the local community. They are often used to fund affordable housing, but can be used to fund anything from minor road-widening to building new railway stations; from environmental improvements such as green spaces to building new schools to address increased demand.

If the government has pressed ahead with its intention to introduce PGS, boroughs would only receive approximately £140 million of this funding. Planning gain supplement would be used to make up the £90 million shortfall.

Given the limited uplift in value which occurs in London on previously developed (brownfield) sites, London Councils warned that it was highly unlikely that PGS would provide this value, SeePress release: Government planning proposals not right for capital
 

Any member of the media wanting more information should contact Christopher Hogwood on 020 7934 9757 orchristopher.hogwood@londoncouncils.gov.uk