Land auctions report to outline financial incentives

The architect of the coalition's plans to introduce a system of 'land auctions' to boost development will publish a report next month setting out the huge financial gains that councils could make through the mechanism.

Dr Tim Leunig
Dr Tim Leunig
Speaking at a Liberal Democrat party conference fringe meeting organised by the Royal Town Planning Institute (RTPI), Dr Tim Leunig, chief economist at think-tank Centre Forum, said that the land auction model would make local communities "much more likely to vote for development".

The model aims to allow councils to capture almost all of the rise in land value created following the granting of planning permission. Leunig told the fringe meeting that the existing New Homes Bonus – which matches the council tax on each new home built for six years – is "nowhere near enough" and that the land auctions model would provide much greater incentives for development.

Leunig said: "As an order of magnitude figure, under the scheme, if Cambridge accepted one million houses, you’d be able to write out a cheque for every resident in Cambridge for half a million quid," he said. "How do you get people in Cambridge to vote for development? You stuff their mouths with gold."

Leunig, who published a paper on land auctions in 2007, told the fringe meeting that "there will be a new version of that paper out in a month".

The Plan for Growth, published alongside the Budget in March, said that the Government would test the land disposal element of the land auctions model.

Business secretary Vince Cable said in his Liberal Democrat conference speech this week that the "policy to allow councils to auction land with planning permission using the proceeds for social housing" could help stimulate economic recovery.

Also speaking at the fringe meeting, RTPI chief executive Trudi Elliott said that the draft NPPF "needs some work". "If you reduce thousands of pages to 50 very quickly, understandably there will be inconsistencies," she said. "It’s no good pretending that the document as drafted could come in without causing major difficulties."

Elliott added: "There’s a whole range of areas in the draft NPPF where it is a bit of a muddle and needs sorting out."

Leunig, meanwhile, criticised the government for failing to pilot the controversial planning reforms. "I would dearly have liked it if the government had had a pilot scheme," he said. "Frankly, that sort of Stalinist thinking that we are right without needing evidence does not lead to good policy-making".

Leunig added: "Evidence-based policy-making is better than policy-based evidence-making. That’s what we’re in danger of. That’s my worry."

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