Planning-gain Supplement PGS John Stewart Director of Economic

Planning-gain Supplement (PGS) John Stewart Director of Economic Affairs Home Builders Federation 23 February 2006

PGS: Multi-dimensional • Planning • Taxation • Valuation • Finance/site viability • Government infrastructure funding and provision

Multiple Objectives 1. Step change in house building 2. Tax planning permission land uplift 3. Fund/provide site-necessary infrastructure 4. Fund/provide site-generated infrastructure needs 5. Fund/provide wider & strategic infrastructure

Multiple Objectives 6. Reduce local development opposition 7. Redistribute funds according to need 8. Simpler, more efficient alternative to S 106 9. Contribute to Affordable Housing funding/provision 10. Encourage land recycling (brownfield) …and probably more

Multiple Objectives Too few instruments, too many objectives i. e. no system can meet all objectives

Responding to PGS Proposal • Extensive HBF member consultation • Discussions with experts (including Treasury, Valuation Office) • Open mind - didn’t pre-judge Danger: going down rabbit holes, not watching the quarry

Responding to PGS Proposal The Core Objectives • Reform S 106 • Fund off-site infrastructure • Maintain S 106 Affordable Housing But without damaging house building step change

Responding to PGS Proposal Always mindful • Alternatives (PGS, S 106, Optional Planning Charge, Tariff) – pros & cons • HBF can’t just reject need strong case preferably alternative if reject

And the answer is… HBF believes the proposed PGS would not work Big risks, unintended & unforeseen consequences, one-size-fits-all vs development complexities – risk to industry of worst of all worlds

And the answer is… We recognise/accept: • Need to fund infrastructure to facilitate development • Out of land value planning uplift • Need to reform S 106 – including Affordable Housing • Government’s housing objectives

Why PGS won’t work Brownfield • Work on greenfield • Not complex brownfield

Why PGS won’t work Infrastructure • Breaks contractual link with provision – developer dependent on third party • Local community: no link from development to benefits

Why PGS won’t work Scaled-back S 106 • Mission creep • Off-site obligations in kind?

Why PGS won’t work Affordable Housing • Major source of S 106 delay, uncertainty • Yet no reform proposal • Undermines key PGS objective

Why PGS won’t work Valuation • Many complexities, uncertainties, especially complex brownfield vs simple one-size-fits-all

Why PGS won’t work Future Chancellor • “Modest rate” easily raised • And LA grant cut by PGS revenue – LA no better off, so no infrastructure

The Way Forward • Government form “coalition of the willing” (Treasury, ODPM, HBF, BPF, RICS, etc): review options, crack detail, find solution • Coincide with Government “cross-cutting review” of infrastructure “to support housing and population growth” • Time – PGS not before 2008

A Few Words on PPS 3 Welcome acceptance of many HBF recommendations • Moving towards market responsiveness • Parking one-size-fits-all abandoned • Density one-size-fits-all relaxed • Land availability assessments vs theoretical Urban Capacity Studies

A few words on PPS 3 Welcome acceptance of many HBF recommendations • Five years land available, suitable, viable, plus 10 years • Prematurity removed • Sequential test (brownfield first) removed • Focus housing markets vs admin areas

A few words on PPS 3 But serious reservations • Big risk size & type dictated by LAs – can’t respond to market demand • Affordable Housing • Companion Guide not available • Density still prescriptive – how to reconcile with market responsiveness?

A few words on PPS 3 Growing demands on house builders Input into • RSSs • Housing Market Assessments • Land Availability Assessments • LDFs – various elements Plus: justify mix against HMA

Planning-gain Supplement (PGS) John Stewart Director of Economic Affairs Home Builders Federation 23 February 2006