Sunday 12 January 2014

'Planning gain' - the replacement for S106 cash from developers - the Community Infrastructure Levy - but is it still 'bribery' by a different name?

Following on from a look at how local authorities and developers agree on 'planning gain'
Futures Forum: Missing out on developers' S106 funds...
the District Council will be considering the newly-proposed regime:

The East Devon Community Infrastructure Levy (CIL) Draft Charging Schedule (DCS) has now been submitted for Examination alongside the New Local Plan. Mr Anthony Thickett BA(hons) BTP MRTPI Dip RSA has been appointed as the Planning Inspector. In the draft hearings programme, the Inspector has indicated that the CIL Examination is likely to be heard on Thursday 13 March 2014 following the conclusion of the main Local Plan Examination hearings. Further information is available on the Programme Officer webpage.
East Devon District Council - Community Infrastructure Levy

This is the view from central government:

Community infrastructure levy

The community infrastructure levy is a new levy that local authorities in England and Wales can choose to charge on new developments in their area. Our overview document provides a quick guide to the levy. The levy is designed to be fairer, faster and more transparent than the previous system of agreeing planning obligations between local councils and developers under section 106 of the Town and Country Planning Act 1990.
In areas where a community infrastructure levy is in force, land owners and developers must pay the levy to the local council.
The charges are set by the local council, based on the size and type of the new development.
The money raised from the community infrastructure levy can be used to support development by funding infrastructure that the council, local community and neighbourhoods want, like new or safer road schemes, park improvements or a new health centre.
The community infrastructure levy:
  • gives local authorities the freedom to set their own priorities for what the money should be spent on
  • gives local authorities a predictable funding stream that allows them to plan ahead more effectively
  • gives developers much more certainty from the start about how much money they will be expected to contribute
  • makes the system more transparent for local people, as local authorities have to report what they have spent the levy on each year
  • rewards communities receiving new development through the direct allocation of a proportion (15% or 25% depending on whether a Neighbourhood Plan is in place) of levy funds collected in their area
Community infrastructure levy - Giving communities more power in planning local development - Policies - GOV.UK

This is the view from Wikipedia:

Planning gain
From Wikipedia, the free encyclopedia
Planning gain refers primarily to the increase in the value of land which results from planning permission being granted for that land. This increase in land value mainly accrues to the owner of the land, but a levy or tax may be applied to divert some of the planning gain to the public sector. In England and Wales, such arrangements are currently negotiated between the developer and the council, and take place under the terms of Section 106 of the Town and Country Planning Act 1990
Criticisms of Section 106 Agreements
The planning obligations put on developers by Section 106 agreements are sometimes criticised for: inconsistency, unfairness, lack of transparency, length of time to negotiate, some obligations being unlawful, obligations not actually within Section 106 of the Act...
Obligations may be created that are more than the developer would consider a bare minimum, with local authorities seeking contributions from developers that go beyond the definition originally given in DCLG Circular 1/97.[1]
Section 106 agreements are often used by planning authorities to provide new public realm development or affordable housing in England and Wales.
Typically, a new housing development over a given threshold size (commonly 15 dwellings in many local authorities) would be required to provide a pre-determined proportion of affordable housing - see DCLG Circular 05/2005. This is a source of friction between developers and local planning authorities, because the developers attempt to maximise revenue while the councils attempt to maximise the amount of affordable housing. Circular 6/98 states affordable housing itself is just one material planning consideration, therefore simply meeting a requirement for affordable housing provides no guarantee that other issues may need to be addressed.
One of the reasons that 106 agreements are unpopular with developers is that, at present, the government makes more money from the sale of affordable rented housing (about £5 billion a year) than it spends (about £3.5 billion a year) and it is arguable that the main cause of these proceeds is not ongoing government investment but private sector (developer) investment.
A counter-argument would run that developers seek to maximise revenue and would neither provide services for housing at a subsidised rate, nor subsidised rents for the vulnerable, unless such a provision forced them to do so.
The practice of bargaining for Planning Gain precedes the 1990 Act and a 1981 report by the Property Advisory Group[2] concluded that: "(with limited exceptions) the practice of bargaining for planning gain is unacceptable and should be firmly discouraged." However, the report was not acted upon.
The Community Infrastructure Levy
In 2003, criticisms of s106 agreements led to a report for the Government by eminent economist Kate Barker... and after extended debate on its merits the Government announced in 2007 that a new Community Infrastructure Levy (CIL) was its preferred method of securing generalised contributions from developers. The Government legislated for CIL in the 2008 Planning Act. Implementing Regulations followed, and CIL came into force in England and Wales on 6 April 2010... By April 2010 the UK General Election was less than a month away; so few local authorities took steps to implement CIL until the new Government's intentions became clear.
On 18 November 2010 the new UK Coalition Government indicated that it would in fact be retaining CIL. However, the Government proposed a number of reforms to the instrument that they had inherited.[4] The reforms included a number of selected changes to the primary legislation implementing CIL (the Planning Act 2008) through the vehicle of the Localism Bill, introduced into the UK Parliament in December 2010. The key changes proposed relate to a requirement to be placed on CIL charging authorities to pass money to other bodies (the stated policy intention being to pass money to neighbourhood groups), a clarification of the purposes to which monies raised may be put, and a reduction in the powers of the independent person appointed by the charging authority to advise on whether the proposed charges are appropriate. The Bill received Royal Assent as the Localism Act in November 2011.
... Many other local authorities are now proceeding to develop charging schedules...

But what do we mean by 'planning gain'? Who exactly is 'gaining'?

An interesting and helpful publication from 2008 asks some important questions: 

The No Pain Guide To Gain: A community guide to planning obligations
from the Future Planning project, a collaboration between the Ethical Property Foundation, the Town and Country Planning Association (TCPA) and the Rayne Foundation.

Here are some commentaries which are more critical:

Section 106 agreements are not compulsory, but the effects are nonetheless enforceable. Some are at the instigation of developers, whilst others are at the behest of local authorities. Some are so draconian by nature that they are do this or else, or if this does not happen then the permission granted cannot proceed. many of these agreements can be likened to planning bribes, or in planning terms 'planning gain'.
Planning Conditions Forum
Planning Gain: Community Benefit Or Commercial Bribe?. - Debenham Tewson & Chinnocks. Land Development Consultancy and Planning Dept - Google Books

An on-line debate from April this year:

> No, planning gain is not bribery. A planning gain contribution cannot make acceptable an application which is unacceptable in planning terms.
I would really like to agree with that, unfortunately the planning authorities seem very weak when it comes to dealing with rapacious developers. Planning gain often is pathetically misused too.
> Oh come on, 106 agreements have always lubricated the wheels, if not permitted what would otherwise have been rejected.

A pickled planning policy | Vote UK Forum 

From George Monbiot in 1996:

All over the country, developments which seem to provide no lasting benefit for any but a few well-furnished felines are fervently embraced. Why?
There is no single answer, but the code which cracks the greater part of this riddle is contained in a term which speaks crabbed volumes of official euphemism and obfuscation: “planning gain.” The English translation is legalised bribery.
Developers are entitled to modify the plans they present to a local authority by introducing benefits to the community, such as a clump of affordable homes in the midst of an executive estate, or a new bus shelter outside a supermarket. “Gains” like this, which relate directly to the original development, are largely unobjectionable; but increasingly developers have found that they can curry more favour by shifting the gain “offsite”, offering to build a sports hall or a roundabout on the other side of town, if only the council will allow them to build a superstore here. Often the offer of cash comes first, the decision about what to do with it, later.
Planning is perceived as monumentally tedious. It is the territory of bureaucrats and busybodies, nimbies and nutcases. Yet, perhaps more nearly than any other aspect of government, it prescribes both the control over and the quality of our existence. Planning is the means by which development (the force which shapes our lives) is brought to public account. When it fails, development ceases to work for the public good, and works instead for those who have money to make from it.
Decisions For Sale | George Monbiot

From the Telegraph in 2003:

Others have had it worse. Persimmon had to order staff to down trowels 30 houses into a Midlands development of 400 after the local council made some final demands. It wanted a contribution to highway improvements, which were nothing to do with the development itself. Again, it was almost a year before the brickies were finally back on site last month.
Much as it sounds like bribery, planning gain is rife. Under Section 106, as it is formally known, developers are obliged to repair roads or put in social housing as a condition of approvals. Last year, the industry estimates that Section 106 contributions came to £5billion.
The money, though, is not the problem - builders are making record profits at the moment. The issue is the delay such negotiations cause. Housebuilding grandees can remember when a six-month wait for planning approval was considered a delay.
Builders run into planning cul de sac - Telegraph

From the British Property Federation in 2005:

> This incoherence leads to lengthy and often bad-tempered negotiations which hold up much needed development, add to developer costs (thus leaving less funds to meet local requirements) and consume scarce local authority resource. 

> Local authorities are often accused of 'blackmailing' developers with last minute demands; developers have been accused of 'bribing' local authorities by offering more than is necessary to obtain their planning permission. 

> Local authorities do not plan strategically for the funding of provision of infrastructure by developers. They simply keep loading the s106 until the developer objects. This does not provide a stable framework for achieving essential items such as social/ affordable housing. 


From the New Statesman in 2007:
I wonder if most Britons realise how corrupt our planning system has become. I am not suggesting your local council will accept a bribe to nod through your rear extension, but a giant supermarket is a different matter.
Under the iniquitous system the Conservatives introduced in 1990, applicants for planning permission can offer inducements to councils to make their proposal "acceptable in land-use terms". In theory, councils are allowed to make Sainsbury's or Tesco pay for road-widening so its lorries don't cause congestion or make Barratt Homes build a few affordable houses so its new estate doesn't create an executive ghetto. In practice, commercial interests have paid for schools, fire stations, cricket pavilions, and general high-street facelifts, and have sometimes just handed over cash. They are called "planning gain" agreements and most have nothing to do with the development in question. As George Monbiot has put it, the public interest is being auctioned to the highest bidder. It took Labour until 2005 to issue a circular saying that "planning permission may not be bought and sold". Since agreements are usually made in secret, we cannot be certain councils have paid attention.
A corrupt system that affects us all

And from the Adam Smith Institute this April:

We proposed that any new development, which produces a planning gain to its proposers, should compensate the local losers. One can imagine a supermarket, say, that leads to local traffic problems as roads become congested. Those near the congestion should be compensated, and those less affected compensated less. It is not an exact computation, but at least it is better than people whose lives are blighted by some development having no redress.
Local authorities do, of course, try to tax developers of some of their 'planning gain'. But the system is totally corrupt. Petty officials bully people who want to extend their house or build a new house in their garden, implying that they must pay thousands to the council if there is any chance of their proposals being passed. Larger developers can find themselves being invited to pay for swimming pools or other large 'community' projects. Of course, it is local councillors and officials who benefit from this corrupt system, not the residents who are actually affected.
Fracking: compensate locals, not councils | Adam Smith Institute

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