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Milton Keynes
Local Government
Chronicle - 29 October 2007
When the Pope decreed some months ago that Purgatory did not exist I thought to myself that here was a bloke who had never had to drive through Milton Keynes. Since I live south of Cambridge and the son and heir hangs out north of Oxford the choice of route to check out the grandchildren is either the long detour via the M25 (Hell) or the Purgatory of a drive which consists largely of roundabouts.
However, we must all now give thanks to Milton Keynes. Seeing off the proposed planning gain supplement does not quite rank Milton Keynes alongside Athens or Florence in its contribution to civilisation but it nonetheless entitles it to a small plaque in the wall of British planning history.
The planning gain supplement was promoted by Kate Barker in her 2004 review of housing demand and supply commissioned by Gordon Brown. She argued that the wealth created literally by the stroke of the pen which awarded planning permission for a site should be taxed to help fund the infrastructure required to service developments.
The Government said it would introduce the planning gain supplement unless a better way could be found to capture planning gain for the community. They found a better way – a roof tax- in Milton Keynes. There the Milton Keynes Partnership Committee is intending to raise some £300m from developers over the next 10 to 15 years to fund the £1bn infrastructure bill which will come with the construction of some 15,000 new homes.
Milton Keynes is certainly not a typical settlement, but the pilot of a tariff on new build worked well enough to achieve broad support from developers who dreaded the nightmare complexity and disincentives for development of the PGS. In fact some 25 local authorities are already using tariff schemes including in the Thames Gateway. The roof tax or tariff will be levied by the council on the developer on both residential and commercial schemes and the rule of thumb is that a contribution of about a third of the infrastructure cost will be raised. The construction industry is demanding a simple and flexible mechanism based on a single tariff. The Government, on the other hand, presently intends that the new levy (which will be signed off through a 106 agreement) will sit alongside the existing 106 agreement applying to site specific works. The levy will not apply to affordable housing since it is clear that the tax will end up on the price.
Legislation will come in the planning bill. But already some big questions are being asked? How local will the infrastructure be to the development or should, as the Government suggests, the levy contribute to sub-regional or even regional programmes run by the regional development agencies? Will levies be used for development across regional borders, given that economic activity and travel-to-work patters do not respect historic boundaries? Developers can see the logic of levies to deal with demands on infrastructure which flow directly from their programmes but will howl at being taxed for wider schemes. They also want to make sure they are funding new programmes- not helping to catch up the deficit one existing schemes- especially as, presumably, developers will have to raise the money to pay the tax before development begins.
And how can the scheme be made to work on brownfield sites assembled through CPOs governed by statutory rules and where the developer will be the occupier? I suspect the supermarket groups may be scratching their heads over that issue!
On the more parochial level do local authorities have the planning expertise to manage the system especially where there might be a case for a differential tariff according to circumstances (regeneration programmes on brownfield sites, for example)? The industry is floating the idea of regional teams of experts to help out with the evaluation of big schemes.
It is a big shift to raise money through the planning system rather than the tax system. It will make for a complex planning bill and some tortuous navigation in committee.
I have some experience of that: driving through Milton Keynes, for example!
© Local Government Chronicle
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