'No pot of gold from land value capture,' government infrastructure chief warns

The idea that land value capture can provide a 'pot of gold at the end of the rainbow' to deliver new infrastructure and housing is misguided, the head of the government's infrastructure advisory body has told the Planning for Housing conference.

NIC chief executive Phil Graham speaking at the Planning for Housing conference earlier today
NIC chief executive Phil Graham speaking at the Planning for Housing conference earlier today

Speaking this morning at the conference, Phil Graham, chief executive of the National Infrastructure Commission, said land value capture was an issue that had come up "again and again" in its work to produce its National Infrastructure Assessment (NIA) in July.

But Graham said the body has always been careful to "manage expectations around the land value capture aspect".

In particular, he said, the view that is sometimes prevalent among politicians and big promoters that "there is a pot of gold at the end of the rainbow that will make everything happen magically and take all responsibility away from the taxpayer".

"We don’t think that’s the case. These pots of money are always finite," he said.

Graham said that, compared to other countries, "the UK has historically been pretty good at getting money of this kind out of scheme developers and investors".

But he did recognise there was a case for the system to be "more flexible" and "more responsive" in capturing rises in land value.

This was particularly the case, Graham said, "for those larger schemes where you really are changing the nature of the housing market and the commercial development market in a city or a region, to capture a fuller part of the value of the land".

July's NIA said that "local authorities should be given further powers to capture a fair proportion of increases in the value of land from planning and infrastructure provision". This should include giving local authorities "powers to levy zonal precepts on council tax where public investments in infrastructure drive up surrounding property values" by 2021, the NIC advised.

It also called for the removal of all section 106 pooling restrictions by 2020 to allow local authorities to use the planning gain mechanism "more effectively" to finance new infrastructure.

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