[diggers350] draft planning gain submission

Mon Feb 19 19:46:17 GMT 2007

The Submission looks great. The PG policy has the potential to _support_ sustainable and affordable building/living if it would kick in once the conditions (LID, Agricultural tenancy, etc lapse and market prices come in). How do we want to handle getting submissions in - is a mass of submissions following a standard format helpful here, ie do numbers hold any sway? Or is it the strength of the argument only?

________________________________

From: diggers350 at yahoogroups.com [mailto:diggers350 at yahoogroups.com] On Behalf Of Simon Fairlie
Sent: 19 February 2007 17:05
To: pnuk at sheffield.ac.uk; ecovillageuk at yahoogroups.com; diggers350 at yahoogroups.com
Subject: [diggers350] draft planning gain submission

Thanks for the helpful response from many people to my previous e-mail.

Here is a draft response from Chapter 7. I would be very grateful for any comments on this. The three documents are pretty long and I could well have missed something.

You are welcome to paste any or all of this into your response, though watch out for changes in the next week. Responses to Paul Martin, planning.obligations at communities.gsi.gov.uk <mailto:planning.obligations at communities.gsi.gov.uk>  and julie.dufty at hmrc.gsi.gov.uk <mailto:julie.dufty at hmrc.gsi.gov.uk>  Deadline 28 February.

Simon Fairlie

We are grateful  for the opportunity to reply to the current consultation papers on Planning Gain, namely:

Changes to Planning Obligations (DCLG);http://www.communities.gov.uk/index.asp?id=1504924 <http://www.communities.gov.uk/index.asp?id=1504924> 

Valuing Planning Gain (HMRC) http://www.hmrc.gov.uk/consultations/value-planning-gain.pdf <http://www.hmrc.gov.uk/consultations/value-planning-gain.pdf> 

Paying PGS (HMRC)http://www.hmrc.gov.uk/consultations/paying-pgs.pdf <http://www.hmrc.gov.uk/consultations/paying-pgs.pdf> 

Our response focuses on one particular aspect of the proposed legislation, though this is spread across all three consultation papers. Rather than deliver our submission in three separate responses, it seems more sensible to lay it out in one (fairly short) response covering all three documents simultaneously, so that the full depth of our concern can be appreciated.

The nub of our concern is highlighted in Question 1 of Chapter 8 of Paying PGS where it is stated that the forms of development exempted from Planning Gain Supplement (PGS)include small-scale home improvements, development carried out under the GPDO and possible other small-scale non-residential thresholds.

We submit that there are certain classes of residential development where it would be counterproductive and/or inequitable to impose a PGS; and that planning authorities, appeal inspectors or the Secretary of State should have the discretion to exempt a residential development from the charge where a case for exemption has been substantiated. Without the discretion to grant exemptions, the  PGS becomes a "blunt instrument" whose impact in some  circumstances could be counterproductive .

The following are some classes of developments where an exemption might be beneficial:

(1) Affordable housing. We appreciate that ( as stated in Question and Answers No 5 on page 33 of Valuing Planning Gain)  the PGS for affordable housing will be lower than the amount levied on market housing, because the Planning Value (PV) valuation will be reduced. However we question the value of raising any PGS on housing that is destined to be affordable, particularly that which is not delivered through developers contributions, but through a rural exception site scheme or a self-build scheme.  The provision of affordable housing is one of the main objectives of the overall planning gain programme, so what is the point of levying a tax on it? 

Even without a levy, and where land has been acquired at less than market price,  it often remains difficult to provide housing at an affordable rate. Much of the housing now classed as affordable, is still beyond many people's budgets. Some people find themselves excluded from any mainstream housing and resort to extra-legal housing, while in others it is paid for by the taxpayer through housing benefit. There seems little point in extracting a tax on affordable housing which will either serve to make it less affordable, or else have to be paid for through another form of taxation.

(2) A similar issue relates to tied agricultural dwellings. These are conventionally assessed at 25 to 30 per cent less than market value, but even this is often far too high to be  paid off by someone working full time in the agriculture industry. For example, a  tiny  1980s farmworker's bungalow near our office, formerly part of a county farm but without any tie, is currently being marketed  at £550,000 with 17 acres (it was sold last year by Somerset County Council by sealed tender with a guide price of £350,000, but is known to have gone for a good deal more than that.) With a 30 per cent discount  the same cottage with an agricultural tie would fetch £385,000. This is well in excess of what most farmers can afford through their agricultural enterprise - especially new entrants. To pay off 6.5 per cent on a loan of £385,000 would be £25,000 per year, whereas the rent charged by Somerset County Council for its farm was around £9,000 per year, and that was with 90 acres, not 17.

In other words tied agricultural dwellings command 70 to 75 per cent of market price, not because farmworker's can afford that much, but because of the hope value derived from the possibility of getting the agricultural tie removed - and a lot of buyers of agriculturally tied dwellings attempt to do just that. Farmers anxious to sell to somebody who is committed to farming the property would be advised to sell the dwelling not "at arm's length" but at a reduced price. This, unfortunately, does not often happen, and many new entrants into farming,finding that they cannot possibly afford even a tied agricultural dwelling, buy a bareland plot and apply for a new agricultural dwelling, which they will be given if they meet the financial and functional tests in PPS7.

This is a deeply unsatisfactory state of affairs which needs to be addressed by measures which are outside the remit of this consultation. But it is important that PGS does not place a disproportionate burden on new entrants into farming, for that is the last thing that such people need. If hope value is not to be included in the Current Use Value of developments, equally it should not be included in the Planning Value. We submit that new agricultural dwellings should either be exempt from PGS, or else pay at a very low rate. If we are concerned to support farmers (and that of course is the purpose of agricultural ties)  PGS should be imposed only when the agricultural condition is removed and the dwelling acquires its full market value.

(3) In  residential developments where profits from planning gain are already being  channelled  into the provision of socially or environmentally beneficial infrastructure or activities, levying full PGS will be inequitable because in effect the tax will be being paid twice. 

For example, in  the Lowland Crofting schemes in West Lothian, profits from increased land value went into planting large areas of the Central Scotland Forest -  this planting, secured by a Section 50 agreement (Scottish Section 106), did not diminish the value of the houses, but it significantly increased their costs.

Similarly, there are a number of eco-developments, such as the  the Hockerton Housing Project in Newark and Sherwood, where much of the profit from planning gain has been funnelled into providing highly sustainable and zero carbon developments which cost more to build than conventional developments.

It would clearly be unjust and counterproductive to levy  PGS on any development which  already provided community benefits from the profits derived from planning gain. Indeed reduction of or exemption from PGS is an obvious financial incentive  to encourage developers to strive towards the zero-carbon houses which the government (bravely but optimistically) wishes to see across the board by 2016 - and a justifiable one too, because reductions in carbon emissions will help reduce the future expense of community infrastructure designed to address and mitigate the effects of climate change.

A similar dynamic may occur in connection with travel arrangements. Highly sustainable developments normally formulate travel plans which impose limits on car use, and provide infrastructure to support this in the form of car share clubs, collective deliveries, school runs etc. There are several examples of this approach already in the UK and there will no doubt be many more as responses to climate change become a priority: indeed in some years' time we may  see larger car-free developments providing a public transport service which is made accessible to other members of the public in the neighbourhood. Again, there may be costs to the developer associated with developing car-free infrastructure, and at the same time the reduction in car trips would be reflected in reduced demand on the community infrastructure. These costs to the developer and benefits to society clearly need to be reflected in the level of PGS applied.

Question 8 of Changes to Planning Obligations asks 'Do you agree that measures to implement travel plans and demand management measures directly related to the environment of the development should remain within the scope of planning obligations."

Indeed we do. The current draft PPS on Climate Change states: "Planning authorities should engage constructively and imaginatively with developers to encourage the delivery of sustainable buildings. They should be supportive of innovation."(para 30).

 Imaginative and sustainable innovation, if it has to be maintained continuously as for example a car pool or a bus route does,  must be secured otherwise it is of little value.  In many cases it is hard to see what mechanisms could secure these benefits better than a planning obligation. Such innovations are unlikely to be provided by "the use of PGS as a revenue stream held by local authorities" however desirable this stream may be for dealing equitably with mainstream developers who "impose costs upon the transport network" instead of coming up with solutions (Changes to Planning Obligations, para 72). Imaginative, sustainable innovations tend to come in the first instance from small-scale developers rather than from large developers or  local authorities, because when the development is small the risks are  small. If the Climate Change PPS wants to encourage such innovation it needs to supply a suitable mechanism to secure them, and the obvious mechanism is a planning obligation. Statutory imposition of a blunt instrument such as PGS will only act as a deterrent.

We therefore submit that exemptions from PGS (or reductions)  should be allowed where profits from increased land values are ploughed into the provision of affordability or other social or environmental benefits for the wider community - provided that these benefits are secured by a condition or a Section 106 agreement. PGS would be payable on removal of the condition or legal agreement -  this would help to make these conditions and agreements more robust. And exemption would provide an incentive for developers to come up with more sustainable solutions.

Simon Fairlie

Hats: Chapter 7, The Land, The Scythe Shop

The Potato Store, Flaxdrayton Farm,

S. Petherton, Somerset TA 13 5LR

01460 249204

chapter7 at tlio.org.uk <mailto:chapter7 at tlio.org.uk> 

www.thescytheshop.co.uk

www.tlio.org.uk

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