Charged with delivery

The government has dropped its proposals for a planning gain supplement in favour of tariffs but plenty of matters still need to be resolved on the technicalities, reports Christina Papas.

Housing: tarrif-based system will not be problem-free
Housing: tarrif-based system will not be problem-free

It was hardly the most unexpected U-turn in political history. Last week, the government bowed to the inevitable by scrapping plans for a planning gain supplement (PGS) in favour of a tariff-based system.

Chancellor Alistair Darling's pre-budget report has finally killed off the hugely controversial proposal for a nationwide levy on the uplift in land value resulting from planning permissions. The PGS, first mooted more than three years ago, has attracted brickbats from across the planning and property sectors.

In recent months, support has coalesced around the tariff model pioneered in the form of the Milton Keynes roof tax, amid widespread concern that any kind of PGS would be unworkable. The RTPI welcomed the news that ministers have backed down. Developers and home builders reiterated their preference for tariff-based schemes, which are already operating in more than 20 areas.

Last week, housing and planning minister Yvette Cooper outlined how local authorities would be given powers to incorporate tariffs into local development frameworks (LDFs) and regional spatial strategies. Planning charges would work alongside section 106 agreements to bring forward infrastructure to support housing growth.

The forthcoming planning reform bill will provide the statutory underpinning but the technicalities have yet to be unveiled. The government needs to clarify how charges are set, how high they may be and what mechanisms will be available for people to appeal against them. Their effect in stimulating or curbing development must be assessed.

Some observers are wondering why a tariff system needs to be embedded in legislation. "While the government has been trying to capture PGS, many authorities have come up with their own tariff arrangements," says Knight Frank head of planning Jeremy Edge. "Around £44 million was set aside for a PGS computer system. That has been wasted, as has Treasury time."

British Property Federation director of regeneration and development Michael Chambers agrees that local authorities are already voting with their feet and learning from experience. "Many schemes have been operating well and can be established under existing laws. It will be interesting to hear the government's reasons for legislation," he says.

Town and Country Planning Association chief executive Gideon Amos warns that charge rates could be used to manipulate the level and location of development. "Because the setting of tariffs is not a precise science, local authorities could impose them so as to discourage development, frustrating the government's desire for a rapid improvement in the number of houses that are being built," he explained.

Another huge issue is the management of the system. "There is no reason why you cannot factor a tariff in as long as you have staff. It is a big area of activity that would need to be properly resourced," says a Planning Officers Society spokesman.

Then there is the question of how proceeds will be used. DTZ director Nick Lambert insists that revenue "must be ring-fenced for infrastructure, not absorbed into road-sweeping and refuse collection pots".

Regional Cities East director Michael Crouch supports the tariff but has concerns about how the income will be allocated between different scales of project. "National schemes should be dealt with by the exchequer and not shifted to local authority level," he says.

The North Northamptonshire Joint Planning Unit has been working on a tariff system for the past 12 months. It hopes that charges will form part of a supplementary planning document if its core strategy is approved next year. All four constituent authorities have agreed to a standard solution, says planning manager Andrew Longley.

North Northants Development Company project director Simon Evans adds: "We thought it was better to get our act together and find a solution rather than relying on PGS to redistribute developer contributions. We are working to come up with a single document that is straightforward to apply."

Edge sees problems in rolling out the system more widely. "LDFs will need to be overhauled because of the planning white paper, so it could take several years before local authorities have analysed their infrastructure needs and are in a position to set a tariff," he contends.


- Local authorities can use planning charges to supplement negotiated agreements which will be needed to secure affordable housing and tackle costs related to specific development sites.

- Tariffs should be based on a costed assessment of the infrastructure requirements identified in development plans.

- Planning charges should include contributions towards the costs of infrastructure of sub-regional and regional importance included in development plans.

- Residential and commercial developers will be liable to pay charges subject to a minimal threshold.

- Charging policies in development plans will be tested through the development plan process in consultation with developers, stakeholders and the community.

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