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Planning-gain Supplement (PGS): A Multi-dimensional Approach to Infrastructure Funding

This article by John Stewart, Director of Economic Affairs at the Home Builders Federation, discusses the Planning-gain Supplement (PGS) as a step change in house building by addressing taxation, permissions, and infrastructure funding. It explores the multiple objectives of PGS, including reducing opposition to development, redistributing funds according to need, and simplifying the process. The article also examines the potential risks and challenges of PGS, and offers alternative solutions.

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Planning-gain Supplement (PGS): A Multi-dimensional Approach to Infrastructure Funding

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  1. Planning-gain Supplement (PGS) John Stewart Director of Economic Affairs Home Builders Federation 23 February 2006

  2. Planning Taxation Valuation Finance/site viability Government infrastructure funding and provision PGS: Multi-dimensional

  3. 1. Step change in house building 2. Tax planning permission land uplift 3. Fund/provide site-necessary infrastructure 4. Fund/provide site-generated infrastructure needs 5. Fund/provide wider & strategic infrastructure Multiple Objectives

  4. 6. Reduce local development opposition 7. Redistribute funds according to need 8. Simpler, more efficient alternative to S106 9. Contribute to Affordable Housing funding/provision 10. Encourage land recycling (brownfield) …and probably more Multiple Objectives

  5. Too few instruments, too many objectives i.e. no system can meet all objectives Multiple Objectives

  6. Extensive HBF member consultation Discussions with experts (including Treasury, Valuation Office) Open mind - didn’t pre-judge Danger: going down rabbit holes, not watching the quarry Responding to PGS Proposal

  7. The Core Objectives Reform S106 Fund off-site infrastructure Maintain S106 Affordable Housing But without damaging house building step change Responding to PGS Proposal

  8. Always mindful Alternatives (PGS, S106, Optional Planning Charge, Tariff) – pros & cons HBF can’t just reject need strong case preferably alternative if reject Responding to PGS Proposal

  9. HBF believes the proposed PGS would not work Big risks, unintended & unforeseen consequences, one-size-fits-all vs development complexities – risk to industry of worst of all worlds And the answer is…

  10. We recognise/accept: Need to fund infrastructure to facilitate development Out of land value planning uplift Need to reform S106 – including Affordable Housing Government’s housing objectives And the answer is…

  11. Brownfield Work on greenfield Not complex brownfield Why PGS won’t work

  12. Infrastructure Breaks contractual link with provision – developer dependent on third party Local community: no link from development to benefits Why PGS won’t work

  13. Scaled-back S106 Mission creep Off-site obligations in kind? Why PGS won’t work

  14. Affordable Housing Major source of S106 delay, uncertainty Yet no reform proposal Undermines key PGS objective Why PGS won’t work

  15. Valuation Many complexities, uncertainties, especially complex brownfield vs simple one-size-fits-all Why PGS won’t work

  16. Future Chancellor “Modest rate” easily raised And LA grant cut by PGS revenue – LA no better off, so no infrastructure Why PGS won’t work

  17. Government form “coalition of the willing” (Treasury, ODPM, HBF, BPF, RICS, etc): review options, crack detail, find solution Coincide with Government “cross-cutting review” of infrastructure “to support housing and population growth” Time – PGS not before 2008 The Way Forward

  18. Welcome acceptance of many HBF recommendations Moving towards market responsiveness Parking one-size-fits-all abandoned Density one-size-fits-all relaxed Land availability assessments vs theoretical Urban Capacity Studies A Few Words on PPS3

  19. Welcome acceptance of many HBF recommendations Five years land available, suitable, viable, plus 10 years Prematurity removed Sequential test (brownfield first) removed Focus housing markets vs admin areas A few words on PPS3

  20. But serious reservations Big risk size & type dictated by LAs – can’t respond to market demand Affordable Housing Companion Guide not available Density still prescriptive – how to reconcile with market responsiveness? A few words on PPS3

  21. Growing demands on house builders Input into RSSs Housing Market Assessments Land Availability Assessments LDFs – various elements Plus: justify mix against HMA A few words on PPS3

  22. Planning-gain Supplement (PGS) John Stewart Director of Economic Affairs Home Builders Federation 23 February 2006

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