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Revising planning obligations.

The charitable purpose of the Town and Country Planning Association is to improve the art and science of town and country planning. It is the only independent organisation concerned with planning and housing covering the UK and is the longest established planning body in the world. Its key objectives are to:

* secure a decent home for everyone, in a good human-scale environment combining the best features of town and country;

* empower people and communities to influence decisions that affect them; and

* improve the planning system in accordance with the principles of sustainable development.

It campaigns for improvements to the places in which we live and strives for the best in the new communities of the future.

To further these objectives, the TCPA campaigns to:

* integrate sustainable development into planning;

* bring about better strategic planning at regional and sub-regional levels;

* regenerate inner cities as green and pleasant places in which to live and work, making the best use of urban housing capacity;

* provide affordable housing for those in need;

* manage land values so that some of the development value goes to the community;

* exploit opportunities to make use of fiscal instruments to achieve planning objectives;

* determine and respond to the implications of changing employment patterns for housing provision and community infrastructure; and

* build new and extended settlements where they would reduce development pressures on existing towns and villages and achieve a more sustainable development pattern.

Membership of the TCPA is open to everyone in broad agreement with the aims and objectives of the Association.

RESPONDING to the ODPM's Draft Revised Circular on Planning Obligations, the TCPA expressed regret that the draft had abandoned the idea of more radical proposals--including those relating to the 'Optional Charge' for development (which would have required new primary legislation)--put forward in the consultation paper Contributing to Sustainable Communities--A New Approach to Planning Obligations, published in November 2003, and which the TCPA had broadly welcomed.

The Draft Revised Circular focuses instead on proposals to amend the current negotiated system of planning obligations; but this falls far short of the radical reform of the planning gain system that was promised as part of the fundamental review of the planning system in the Planning Green Paper of 2001.

While the Draft Revised Circular points to the possibility of more major reforms within the next two to three years, the inadequacies of the existing system to deal with the problems of both growth areas and declining areas will have a seriously adverse effect on the creation of sustainable communities until such time as a more radical system is implemented.

Furthermore, the draft sets up practices (embedding the planning obligation requirements within the local development framework) which will take some time to form. This will inevitably slow the process down, at least in the initial stages, which will further frustrate the delivery of sustainable communities in the areas which need them most.

The TCPA's fundamental objection to the draft is that the system does not go far enough; more radical interventions should be secured in the further reviews of the system.

However, within the broad caveat that the existing system does not go far enough, the TCPA broadly supports the refinement of the system that is currently proposed, although it does have major concerns over its ability to speed up the process and its implications for the resources within local authorities across the country.

Fundamental objection

The TCPA considers that there should be a far more radical review of the planning gain system. The TCPA's fundamental objection relates to the way that land values are treated in the planning system. It is the community that generates land value, and it is the community that should benefit from any increases in land value. Ebenezer Howard's book To-morrow argued convincingly that if the agricultural and town estate were held in commonhold, increases in land value arising from development would not only produce for the community the money to pay for civic and cultural facilities, amenities, and institutions, but could also contribute to education and health services and even pensions. That potential persists today.

Throughout its existence, the TCPA has campaigned for the principle that the increase in land value generated by the community's need for development--an 'unearned increment' in land value--should be taken by the community. This was the 'master key' to the Garden City idea that the Association was originally formed to promote in 1899 and which it helped to demonstrate in Letchworth and Welwyn Garden Cities. It is also the foundation of the economics of the government-sponsored new towns programme mounted under the New Towns Act 1946 and its subsequent revisions. The same principle was applied, albeit in a rather different form, in the legislation relating to urban development corporations.

It is these principles which the TCPA seeks to secure in a reformed planning gain system. Until such time as the relationship between the planning system and increased land values is properly recognised, there will continue to be a mismatch between a community's legitimate expectations of its environment and the ability of the public sector to deliver these.

Previous legislation dealt with the problem in terms of new towns and urban development areas. But new towns and urban development corporations are very special structures, each with a clear, specific, and targeted purpose, and generally with a limited life span and varying levels of public accountability. While the volume of development that they generate is highly significant, and is likely to be replicated in various ways in the current South East growth areas, the vast majority of development in national terms will be brought forward on ordinary sites across our urban and rural areas. It is in these areas that local services and infrastructure will find increasing demands placed upon them as a result of the cumulative impact of relatively modest individual developments.

The only mechanism currently available to capture any of the increase in development value is the successful negotiation of a planning gain package; but this is woefully inadequate in the case of small-scale development whose cumulative impact is highly significant, or in the case of major strategic development which requires substantial amounts of new infrastructure, frequently shared with an existing community. It is also hugely reliant upon the skills of the local authority negotiating the agreement.

In the case of major developments, or major infrastructure proposals, the need to take a long-term view of provision is essential so that the infrastructure requirements can be anticipated and planned in advance of the development with appropriate funding mechanisms put in place.

Consequently, a more radical solution is needed, one that captures the development value of land more effectively than the current system and is based on the principle of betterment. The point is one of profound philosophy: the demand for development arises from the activities of society at large and not from the activities of the landowner. Since the nationalisation of development rights under the Town and Country Planning Act 1947, the opportunity for individual landowners to profit from consent to develop is at the discretion of government, and this principle should now be taken forward within a fairer and less ad hoc planning gain system.

Some specific comments

The TCPA considered the current proposals to be a very limited response to a major planning issue, and one which will fail miserably to deal with the requirements of the South East growth areas and the delivery of sustainable communities across the country. However, the TCPA welcomed the Draft Revised Circular in so far as it clarified and defined the planning obligations system as delivered under section 106; it also considered useful the recommendations in respect of standard charges and the use of formulae; similarly the recommendations for standard clauses and agreements. The TCPA offered substantial comments on specific points raised in the draft, an edited selection of which are included here:

* Policy tests: The TCPA strongly believes that planning obligations should be subject to the necessity tests and therefore welcomes the strengthening of criterion (i) to state that the planning obligations should be 'necessary to make the proposed development acceptable in planning terms' and that the obligation should meet all of the Secretary of State's criteria. This is a useful clarification of the 'necessity test' and will remove the tension that exists between planning law and policy as a result of the Tesco vs Secretary of State case of 1995.

* Typology for use of planning obligations: The clarification given in para. 3 appropriately emphasises that planning obligations are intended to make acceptable development that would otherwise be unacceptable in planning terms; but this still does not satisfy the fundamental requirement; i.e. that it is reasonable for the community to collect a proportion of rising land values.

Both impact mitigation and capture of development values are legitimate objectives of the planning system, and a planning gain system should be structured in this way. In the interim, however, planning gain should be used to pay only for the impacts of development and for elements of infrastructure that are necessary to make it work and to contribute to sustainable communities.

* Contributions for affordable housing: In the context of a system that deals with planning obligations secured under section 106, the TCPA supports the identification of affordable housing as a development component that may be prescribed by way of a planning obligation. However, the provision of affordable housing is vital to the creation of sustainable communities and as such should not be left to the vagaries of delivery in the planning gain/development control system. The need for such housing is not actually an impact of development but an essential component of it. It should be provided for in other ways for example via a fiscal measure which is entirely different from planning obligations.

The need for affordable housing is great, while the pot of money from section 106 is small and has many legitimate calls upon it. The planning system cannot deliver the necessary levels of affordable housing; this will require other mechanisms which should be established outside the section 106 system.

However, unless and until such measures come forward to provide housing which is affordable, the TCPA considers that the current level of contributions to housing made by planning obligations should be substantially retained. Under these circumstances, it is important that the majority of developments secure a reasonable mix of social and private sector housing provision. Contributions to off-site housing provision should only be permitted in exceptional circumstances.

* Local planning obligations policies: The TCPA supports the principle of higher-level obligations policies being contained within an authority's development plan documents and more detailed policies being contained within supplementary planning documents. However, the whole process is likely to be time-consuming, and the proposals have the potential for slowing the system down while the plans are being prepared.

There is concern that LDFs could become increasingly controversial and hearings could become bogged down in detail. With policies being subject to continuous review there could be a constant stream of hearings which could lead to confusion as to what the adopted policies might be; this would undermine the Government's aspirations to have a streamlined system with up-to-date policies. Furthermore, it is conceivable that discussions relating to planning obligations will increasingly move into a legal arena, with more legal challenges being made.

* Formulae and standard charges: The TCPA supports the use of standard charges and formulae in principle, but has considerable reservations as to the extent to which such measures might increase the speed of negotiations: except in the case of the most straightforward development proposals, standard charges or formulae are likely to apply only in the case of a very limited range of circumstances; the process of proposing, consulting upon, adopting, and reviewing standard charges and formulae within the context of an LDF is time-consuming and protracted; the sheer degree of variation that will have to be provided for in drawing up such policy documents casts doubt on whether this can be achieved in practice and then applied; and some authorities may attempt to underbid their neighbours to attract development while others may overbid their charges to fend off unwanted but much needed development.

* Draft Revised Circular on Planning Obligations. Office of the Deputy Prime Minister, London, Nov. 2004 The TCPA Response

* The full TCPA response is available from the TCPA Policy Officer. T: 020-7930 8930. E:
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Title Annotation:Inside Stories
Publication:Town and Country Planning
Date:Feb 1, 2005
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