Planning gain agreements

Mr Prescott encouraging regional assemblies to go for more planning gain agreements

The regeneration proposals for the Greenwich Peninsula site, part of the U.K.

Governments priority Thames Gateway project for creating sustainable communities in London and the South East of England, provide a strong lead on the manner in which such large-scale developments can be successfully realised.

One great advantage possessed by English Partnerships as the agency moves forward with this complex task is integration of the various land-holdings on this 120 hectare site, the bulk of which was already in their ownership.

This permits what is described as a comprehensive approach in joint venture with Meridian Delta to draw down and develop over time land largely owned by English Partnerships, Quintain Estates and London Underground, whose Jubilee Line and its North Greenwich station originally provided for public access to the Millennium Dome has proved such a great asset in raising values and facilitating development.

Setting up this deal has cost English Partnerships almost £8 million in legal and property service fees, plus £7 million or more in administrative expenses.

But those sums will no doubt pale into insignificance when the scale of the values released on this site become apparent.

Those who knew Canary Wharf when it was little more than a quayside for banana boats will appreciate the potential.

Developing the rest of the Thames Gateway area will also be a complex task.

In this it is expected that two or three of the eight regional assemblies set up in England some years back following the European pattern will play an important role.

Since September last year they have been designated as regional planning bodies responsible for preparing and implementing the new-style Regional Spatial Strategies.

This operation may be somewhat more complex in one respect because none of these regional assemblies is an elected body, whereas the local authorities they will work with are.

Mr Prescott, the Deputy Prime Minister and head of the ODPM, said after the people of the North East Region had rejected the proposal for an elected assembly that there would be no further referendum for at least seven years.

Neither would he go ahead with those planned for the North West and Yorkshire and Humber Regions.

Reorganisation of local government to cope with this vast regeneration operation will in any case be essential for whatever form of democratic government emerges from the general election.

If an incoming government scrapped present plans in the interests of reducing pressure on the Treasury, it would still face the problem of house prices which have become unaffordable for growing numbers of the population ? main subject of Kate Barkers Housing Supply review.

Another problem for the local authorities charged with producing affordable housing and new infrastructure in the Thames Gateway, Milton Keynes/South Midlands and so on is integration of powers to undertake provision on the scale required.

As reported by CIOB International recently, the East of England Regional Assembly has made it clear to the Government that without help it does not have the resources to tackle a task of this nature, given its Regional Spatial Strategy demand for some 500,000 new dwellings within its territory.

More funding for sustainable communities However, at the Sustainable Communities summit conference being held in Manchester, the Deputy Prime Minister John Prescott, is likely to inform delegates that help is at hand.

Over the past few months he and his department (said now to comprise more than 3,300 staff) have been consulting with the regional assemblies and the local authorities about a fresh approach to funding the infrastructure, which everyone recognises is fundamental to sustainable communities.

The discussions centre on the question of planning obligations.

As noted in the adjacent commentary on the English Partnerships negotiations over the Greenwich Peninsula site, the London Borough of Greenwich as planning authority has won promises of up to £100 million funding by means of Section 106 and Section 278 Agreements.

This is a most useful contribution to the financial resources of the local authority associated with the development of this key site.

Mr Prescott is encouraging the regional assemblies to do likewise.

His draft on the broad principles of this policy describes Section 106 agreements as private agreements between local planning authorities and developers, with the intention of making acceptable that which would otherwise be unacceptable in planning terms.

For example, planning obligations might be used to prescribe the nature of a development - e.g by requiring that a given proportion of new homes are affordable [as in the London Borough of Greenwich] - or to secure a contribution from the developer to compensate for deprivation of existing amenities or to mitigate a developments impact on the locality.

The Government has set out strict rules which govern such obligations: they must be necessary, relevant, directly related to the proposed development and reasonable in all other respects.

But, it says, planning obligations should never be used as a means of securing for a local community a share in the profits of development.

Well, it does look as though that is happening in Greenwich, but thats alright according to the rules provided it doesnt take the form of a betterment levy, tried by Mr Prescotts predecessors and found unworkable.

Consultation on the final form of the revised planning guidance is due to close just prior to the Sustainable Communities summit conference, so no doubt some indication of its significance in building sustainable communities will be forthcoming at the conference.

One aspect of the changes that is regarded as very important is provision for pooled contributions.

This clause could be invoked whenever funding is needed for infrastructure relating to a number of developments, such as is bound to happen in the Thames Gateway.

The whole concept has received a warm welcome from the regional assemblies because the new emphasis on Section 106 agreements buttresses the connection between provision of obligations and development plan policies, where they are now in charge of planning in its spatial sense.

Barker Review: waiting for the Chancellor The ODPM has told the planning authorities that it does not intend at present to make regulations to set planning obligations on a new statutory basis.

Instead it will prudently wait for the Chancellor of the Exchequers decision at the end of the year on the Governments response to Kate Barkers review of Housing Supply.

As they go into force on the basis of amending current planning guidance, the new rules will give the regional assemblies and local authorities a new tool with which to extract funding from the proceeds of development on valuable land.

Taking Kate Barkers model of economic rent from her interim report, it appears like yet another squeeze on the developer.

But as she found, the increasing likelihood of such infrastructure provision featuring in planning permissions tends to reduce the price at which the land comes to market.

Since the demand for affordable housing is in part driven by rising land prices, the diversion of economic rent into the infrastructure, at the same time making housing more affordable, does not seem too bad a move.

The odd thing is that this way the developer in a sense gets back what he apparently loses, in reduced land prices and improved infrastructure.

So who should not be happy? Its certainly a better idea than an unworkable planning gain supplement.

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