Magazine article Public Finance

Not the Only Gain in Town

Magazine article Public Finance

Not the Only Gain in Town

Article excerpt

The government's proposed Planning Gain Supplement has been billed as a means of strengthening the funding stream and powers available to public bodies trying to expand housing supply in the UK. But, in reality, it is more likely to have the opposite effect.

The PSG could lead to a reduction in capital funds available in areas where rapid and substantial housing growth is being planned. Public authorities use developer funding for schools, nurseries, libraries, sports facilities, fire stations, public transport and highway improvements. These have been recognised as necessary to support residential and commercial developments in growth areas.

In some areas, powers to secure agreements under Section 106 of the 1990 Town and Country Planning Act are being used on a substantial scale to secure funding for planning obligations that cover the capital investment needed. The proposals for PGS suggest that virtually all the expensive public services that often need to be provided away from the development in guestion would become 'outside the scope of planning obligations'.

This would be a retrograde step and damage the fair and efficient system that successful authorities currently use. It would break the self-regulating link between developments and the authorities responsible for securing proper services. At present, there is local accountability for both the planning decisions and provision of the associated services. Under the proposals, the PGS would be collected by Revenue & Customs and passed to the Treasury.

The paper suggests that the PGS is assessed at the time of full consent or 'reserved matters' approval. On large sites requiring substantial infrastructure, reserved matters are usually determined over a long period. Such an arrangement will not, therefore, generate the cash flow that the public sector needs to provide, for example, new schools. The paper indicates that distribution would be by government allocation in response to 'bids' by the authorities needing to secure the services.

No guarantees are offered regarding the synchronisation of investment funding with the developments themselves. This is unlike the present system, which keeps the local public bodies in full control. Redistribution across the country is also indicated - the implication being that this would take resources away from areas where full planning obligations are currently being secured to ensure that the requisite infrastructure is funded.

Government reasons for reducing local powers and replacing planning obligations with the PGS are spurious. …

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