Study backs planning gain supplement move

New research into the use made of planning obligations has provided extra ammunition for ministers who are now more adamant than ever that the proposed planning gain supplement (PGS) will make a major contribution to funding infrastructure and affordable housing.

According to a study commissioned by the predecessor of the Department for Communities and Local Government (DCLG), the existing planning obligations regime is more widely employed than six years ago with section 106 agreements now accounting for housing and infrastructure valued at around £2bn.

But the research also showed wide variations in the amount of contributions, even for comparable sites and between similar local authorities.

The study also indicated that some two-thirds of new homes are built without any contribution towards affordable housing and infrastructure.

Use of planning obligations has increased from 1.5 per cent of all applications in 1997/98 to 6.9 per cent in 2003/04.

However, nearly 80 per cent of retail developments were not accompanied by s106 agreements; the proportion was even higher in respect of major industrial and warehousing proposals, where the figure without s106s was 88 per cent.

The research, undertaken by consultants Halcrow and the planning department at Sheffield University, showed that the number of planning agreements attached to planning permissions for major residential development has risen from 26 per cent in 1997/98 to 40 per cent in 2003/04; the activity was significantly higher in south east England than in the north.

London authorities secured the highest average value per obligation (£107,776) nearly double that secured by northern planning authorities.

Planning minister Yvette Cooper insisted that although the research demonstrated the existing planning obligation system could ensure developers' contributions would make a significant contribution to the provision of local infrastructure, the proposed PGS regime could deliver more.

She said: "The research shows there should be plenty of scope to increase contributions from planning gain without hindering development. The value of land can shoot up just because of planning permission.

"It is only fair that local communities should also be able to benefit from that gain through more affordable housing or infrastructure".

The minister promised fresh guidance on planning obligations later this year.

In a related development, Cooper challenged opponents of the PGS to propose measures which would "raise the additional funds we need to accompany the extra investment the public sector is putting in [for infrastructure]".

She threw down the gauntlet during a speech to the British Property Federation.

"We need practical policies- backed with the budgets – to meet our future housing needs," she said.

Meanwhile, under questioning by a parliamentary select committee she confirmed that ministers still hoped to introduce the new PGS regime by 2008, possibly with variable rates depending on whether sites were green field or brown field.

She acknowledged that new legislation would almost certainly be needed but suggested that the government might make use of so-called "paving legislation" to prepare the ground.

"We have not come to any firm decisions on this but we have anticipated the fact that legislation will be needed," she told MPs.

View the 'Valuing Planning Obligations in England: Final Report' here.

View the full text of the 'Speech to the British Property Federation' here.

Roger Milne

25 May 2006