Leaders’ Committee
Alternatives to Planning Gain
Supplement
Report by:
Ruth Bradshaw
Date:
9th October 2007
Contact
Officer:
Ruth Bradshaw
Telephone:
020 7934 9909
Summary
Item no: 3
Job title:
Transport and Planning Section Manager
Email:
[email protected]
In late 2005, the Government consulted on a proposed Planning Gain
Supplement (PGS) to help fund infrastructure and ensure that local
authorities share in the benefits that new development and growth bring.
There was much opposition to this proposal, including from the then ALG,
and the Government has recently expressed a willingness to consider
alternatives to PGS. The Housing Green Paper published in July 2007 set
out four alternative approaches which the government is seeking views
on. Leaders’ Committee will have a separate report on London Councils’
proposed response to the Housing Green Paper. However, given the
important role that Section 106 contributions currently play in funding
other services such as education provision, transport and community
facilities, this report has been produced to allow Leaders’ Committee to
consider alternatives to PGS in more detail.
This report sets out a possible London Councils’ alternative approach to
PGS and a draft response to the Government’s proposed alternatives set
out in the Housing Green Paper. It also provides details of London
Councils’ ongoing work to influence the Government on alternatives to
PGS.
The emerging work on an alternative approach to PGS will be used to
inform discussion with development industry representatives and the
Government in coming weeks.
Recommendations
The Committee is recommended to:
 note London Councils’ emerging proposed alternative to Planning
Gain Supplement.
 Agree whether the London Councils’ proposed alternative should
include an option for the smallest developments no to be subject
to a charge (see paragraph 10).
 Agree and comment on the draft response on alternatives to PGS

to be submitted in conjunction with London Councils’ response to
the Housing Green Paper (attached as annex 1).
Note London Councils’ ongoing work to influence the Government
on alternatives to PGS.
Alternatives to Planning Gain Supplement
Background
1
Section 106 agreements are currently used by local authorities to secure planning
contributions from developers to fund the social and physical infrastructure required to
ensure they do not have a negative impact on local communities. They are also used to
ensure that new housing developments include an element of affordable housing. But they
are seen by some developers as too slow, unpredictable, and lacking in transparency.
2
The creation of a Planning Gain Supplement was one of the recommendations in the Barker
review of housing supply in the UK, the final report of which was published in April 2004.
Leaders considered a paper on the implications of this report in April 2004. The proposed
Planning Gain Supplement (PGS) was recommended to allow local authorities to share in the
planning gain from new developments, as an incentive to support housing provision and to
allow for the ‘scaling back’ of Section 106 (S106) planning obligations.
3
The Government released a consultation on PGS in December 2005, at the same time as it
published its formal response to the Barker Review. This proposed that PGS would be
charged as a percentage of the change in value of land from just before the granting of
planning permission to just after. It was also proposed that revenues from PGS would not be
ring-fenced, but would be dedicated to local communities and the provision of infrastructure.
Local authorities would receive either a fixed proportion of the PGS revenues or a formulaic
allocation. In addition, a proportion of PGS revenues would go to a regional pot to pay for
strategic infrastructure. London Councils Leaders considered this consultation in February
2006 and a response was submitted.
4
In December 2006, the Government consulted on ways to take forward the PGS proposal
with a series of three documents on changes to planning obligations, valuing planning gain
and paying PGS. London Councils also responded to these consultations.
5
London Councils opposed the proposed PGS as boroughs were concerned that London
would lose out if PGS was introduced. Many boroughs are very successful at securing
financial contributions under the existing system of S106 planning obligations and research
undertaken by London Councils in 2006 estimated that PGS would need to generate an
additional £90m across London to make up for the loss of funding if S106 planning
obligations were scaled back.
6
In July 2007, the Government published some alternatives to PGS as part of the Housing
Green Paper and stated that the Government would be prepared to consider alternatives to
PGS if a better option is identified before this year’s Pre-Budget Report. The four approaches
put forward in the Housing Green Paper are set out in the following section.
7
London Councils distributed a circular asking borough planning officers for their views on
these approaches. This circular also covered other planning elements of the Housing Green
Paper which are covered in the report on London Councils’ response to the Housing Green
Paper. Written responses were received to this circular from Barking and Dagenham,
Bromley, Camden and Redbridge. In addition, London Councils officers have discussed the
emerging ideas on a possible London Councils’ alternative approach to PGS at a number of
meetings with borough planning officers (including Section 106 Practitioners and the Officers
Advisory Panel on Planning) and the proposed approach has been shaped by feedback from
these meetings. The proposals have also been discussed informally with officers from the
GLA and will be discussed with representatives of the development industry.
The Government’s proposed alternatives to PGS
8
The four alternatives to PGS set out in the Housing Green Paper are:

Approach A: A lower rate PGS with a lesser scale-back of S106 planning obligations. All
PGS revenue would be returned to the region from which it was raised. Comment: It is not
yet clear how planning gain would be divided between S106 and PGS using this approach.
Site value changes are notoriously difficult to calculate in big urban areas and London
Councils objected to previous PGS proposals on the basis that PGS would be unworkable in
complex urban areas where land valuation is subject to many changing variables and
judgements.

Approach B: A Planning Gain Supplement limited to greenfield sites. Non-greenfield sites
would continue to use S106 agreements. Comment: This approach is unlikely to have much
impact in London given that there are unlikely to be many greenfield developments coming
forward.

Approach C: A charging system based on an expanded system of planning obligations.
Charges would be set out in Development Plan Documents and clearly linked to
infrastructure need. Comment: There is some support among borough officers for this
approach as it allows them to build on their existing systems and processes and they believe
it offers the flexibility needed whilst ensuring that funds are not diverted to the Treasury (as
would happen with approaches A and B which are based on the PGS approach). However, it
is likely that this approach would apply only to larger schemes (as is generally the case with
S106 at present) as these are the schemes that can be shown to have a direct impact on
infrastructure. It would be harder to demonstrate the impact of a series of smaller schemes
within the same area on infrastructure need and hence, require them to make a contribution,
even though cumulatively they will generate an additional demand for infrastructure.

Approach D: A statutory planning charge. Local authorities would be able to require
standard charge rates to be paid for infrastructure need, this would enable payment to be
made based on the total costs of infrastructure in an area. Comment: The advantage of this
approach is that it offers clarity and transparency for communities and the development
industry and could also be applied to developments of any size thus overcoming one of the
main concerns with Approach C. However, Approach D would offer less scope for ‘in kind’
benefits (e.g. new open space).
A proposed London Councils approach
9
London Councils has examined the pros and cons of each of the Government’s proposed
alternatives and has begun to develop an alternative approach which is primarily a modified
version of Approach D but also incorporates elements of Approach C. Whilst, London
Councils could continue to oppose any change to the existing S106 planning obligations
system on the basis that it is working well in London, it seems likely that some change is
inevitable and the priority should be to ensure that an alternative approach is identified which
best meets the needs of London and allows local authorities sufficient flexibility to meet the
differing circumstances of their local area.
10 The London Councils’ work on developing a proposed approach is intended to combine the
advantages of approaches C and D whilst overcoming some of the potential disadvantages
that each of these approaches would have if they were introduced in isolation. It places a
premium upon:

securing value for the public from a wider range of developments where appropriate

greater transparency in the way the system works to be captured in local development
frameworks.
11 It is proposed that a statutory planning charge would be applied to developments below a
certain threshold. For developments above the threshold, the existing S106 planning
obligations arrangements would continue to apply but with some modifications to ensure
greater transparency and clarity. This would mean that effectively approach D would apply
below the threshold and approach C above the threshold. However, it has been suggested
that the smallest developments should not necessarily be subject to a charge. To allow this
to happen, the proposed approach would need to include an option for local authorities to be
able to exempt or levy a zero charge on small developments below a certain threshold
depending on their local circumstances and economic development priorities. This could
apply to, for example, the first 10 units or 3000 sqm of floorspace. Leaders should consider
whether they want to include this option in London Councils’ proposed approach.
12 This mixing of the two approaches would mean that local authorities would still have an
opportunity to negotiate enhanced contributions from larger developments, for example,
allowing them to continue to negotiate ‘in kind’ contributions if they wish. The approach
would also ensure that planning contributions were obtained from smaller developments
which is one of the key concerns with the existing S106 arrangements, as the smaller value
to be obtained may not justify the resources needed to negotiate a S106 agreement. For
example, in response to a recent survey by CLG, one borough estimated that only 12% of
permissions for residential developments with 15 or fewer units had a planning agreement
attached compared to 100% of all permissions for developments with 16 or more units.
13 The proposed approach builds on what a number of boroughs are doing already. For
example, the City of London have a tariff system of £70 per square metre which they use as
the basis for negotiating S106 agreements (although the difference is that this applies above
a certain threshold). The City’s tariff system works well because the City is relatively
homogenous, but might not work so well elsewhere. Another example is Redbridge who have
developed a methodology for deciding an appropriate level of contribution for different
aspects (transport, education, housing, health etc.). Brent is in the process of introducing a
standard charge for additional self-contained residential units, including conversions and
live/work units of £3,000 per bedroom (or bed space in the case of bedsits or live/work units).
For commercial developments with more than 500sqm of additional floorspace, the charge is
£25sqm. Brent has consulted on a Supplementary Planning Document containing these
proposals and expects to adopt it in October 2007.
14 The key elements of the work on an alternative London Councils’ proposal are as follows:

Local authorities would set a threshold below which there would be a set charge per unit or
area of floorspace for all developments.

Above the chosen threshold, local authorities would continue to negotiate S106 agreements.

Local authorities would be able to set their own charges and determine the local priorities for
spending the money raised but would need to publish this clearly as part of the Development
Plan process. This means that the level of the charge would be tested through the planning
system and could be challenged if it was felt to be inappropriate. There are standard sources
available for boroughs to calculate an appropriate charge and many already make use of
these.

Local authorities would also be required to publish annual reports on how the money raised
is being spent in order to reassure the public and developers that it is being spent on the
agreed priorities.

Local authorities could choose to have varying charges for different parts of their area to
ensure that a high charge did not act as a disincentive in areas where they wanted to
encourage development.

The money raised across a borough would be pooled in a fund which would be ring-fenced
for local social and physical infrastructure spending in that borough.

There would be greater transparency and clarity for developers and local communities with
local authorities required to publish their policies on planning contributions in their
development plans, including details of the thresholds and charges set.
Other issues to raise in our response
15 Regional contributions: A key element of the Government’s proposals for PGS was that a
proportion of the PGS revenue raised in a region would go in to a fund for spending in
support of regional infrastructure priorities identified in the Regional Spatial Strategy. The
intention is that this would enable regional PGS revenues to be spent on infrastructure
projects or areas of the region where additional resources, particularly transport, are most
needed. There are clearly benefits to having a fixed regional contribution (even if it is
determined at the local level) as it will provide certainty for developers, the local authority and
the Mayor in contrast to the current arrangements where there can be prolonged negotiations
with the GLA and TfL over how much a development should contribute to regional priorities.
However, boroughs have mixed views on requiring regional contributions and if, as seems
likely, the government is going to introduce a regional element to whatever approach is
adopted then London Councils needs to ensure that it is done in a way which is acceptable to
the boroughs, particularly as the GLA is likely to be pushing strongly for a regional
infrastructure levy.
16 Any regional contribution would only be acceptable to the boroughs if there are clear
priorities and timescales for what it is to be spent on and the boroughs have an input in to
deciding what those priorities would be. There would also need to be a clear link between the
areas benefiting from a particular initiative and the areas contributing to the costs of it. It may
therefore be more appropriate to suggest that there are sub-regional funds or inter-authority
pooling of money for specific initiatives such as corridor transport improvements, but not to
support a general regional level fund as money raised in one borough could end up funding
infrastructure on the other side of London.
17 Careful consideration will need to be given as to exactly how any regional or sub-regional
infrastructure charge is introduced. It would not work if the borough and the GLA each set
their own charge as the combined charge might be too much for a particular development to
bear. The total charge can only be set by one authority and this must be the local planning
authority. By agreement through the Development Plan process, this charge could include
an element for a regional or sub-regional infrastructure fund.
18 Choosing an appropriate threshold: Some boroughs have expressed reservations about
the dangers of creating thresholds as it could lead to perverse incentives to escape the
charge (by putting forward developments just over the threshold). One way to overcome this
would be to require the standard charge to be paid by all developments with those above the
threshold also paying any S106 planning obligations as negotiated with the local authority.
For example, if the threshold is set at 10 units, an 11 unit development would still have to pay
the charge for the first 10 units plus potentially any additional contributions negotiated
through a S106 agreement.
19 Alternatively, if they chose to, local authorities could use the tariff as a starting point for
negotiating appropriate levels of contribution under S106 for developments above the
threshold. This may well be what happens in practice but local authorities would still have the
flexibility to take into account other aspects, such as ‘in kind’ contributions (new open space,
etc.) if they wished.
20 It is important that local authorities are free to choose a threshold that suits their
circumstances but guidelines on appropriate thresholds may be needed. For example,
guidelines could be based on the thresholds that local authorities currently use for requiring
affordable housing provision, given that a S106 agreement would still be needed where
affordable housing is required. At present, the affordable housing threshold is 15 units for the
majority of London boroughs. Guidelines could specify, therefore, that a threshold is chosen
within a range of 10 to 25 units, for example. Thresholds based on area of floorspace would
need to be set for non-residential development. Local authorities would also need to make it
clear whether the charge applied only to the increase in floorspace/units or to the total
amount.
21 Meeting existing demands: Whilst these proposals will ensure that new developments will
contribute towards the cost of the new infrastructure needs they generate, the Government
still needs to make it clear how upgrading of infrastructure to meet existing demands is to be
funded. The proposed charge must not replace funding for infrastructure from central
Government and must not be an excuse for other organisations, such as PCTs, to reduce
the level of funding they put into areas with high levels of development.
22 Consistency of approach: One of the Government’s objectives for introducing PGS was to
provide developers with greater certainty by ensuring that there was a consistent approach to
requiring planning contributions across local authorities. London Councils’ proposed
approach would ensure that there was greater clarity and transparency by requiring local
authorities to publish policies but still allows sufficient flexibility for local authorities to adapt
the approach to their local circumstances. In recent years, London Councils has played an
important role in identifying and sharing good practice between boroughs on S106
arrangements through the S106 Practitioners group co-ordinated by London Councils’
officers. It is anticipated that London Councils, through the (perhaps renamed) S106
Practitioners group and other activities, would continue to play an important role in
disseminating good practice and helping to develop a consistency of approach across
London where appropriate.
Next steps
23 London Councils will be submitting a response on alternatives to PGS in conjunction with our
response to the Housing Green Paper. The draft response on PGS is attached as annex 1 to
this report.
24 The development industry is promoting an alternative to PGS which has many similarities to
the London Councils’ alternative. London Councils has been talking to representatives of the
development industry about some common principles for a proposed alternative to PGS and
those discussions will be continuing in the coming weeks.
25 The Chairman will be meeting Yvette Cooper MP, Minister for Housing, in October and will
be discussing London Councils ideas for an alternative to PGS then. This will also be an
opportunity to report back to her on discussions with the development industry.
26 It is anticipated that Government will make an announcement on whether it is taking forward
PGS or an alternative, alongside the Pre Budget Report which usually takes place in late
November or early December but this year is expected to take place in mid October at the
same time as announcements on the Comprehensive Spending Review. It is unlikely that
any changes would be introduced before 2009 at the earliest.
Recommendations
27 The Committee is recommended to:

Note London Councils’ proposed alternative to Planning Gain Supplement.

Agree whether the London Councils’ proposed alternative should include an option for the
smallest developments no to be subject to a charge (see paragraph 10)

Agree and comment on the draft response on alternatives to PGS to be submitted in
conjunction with London Councils’ response to the Housing Green Paper (attached as
annex 1).

Note London Councils’ ongoing work to influence the Government on alternatives to
PGS.
Financial Implications for London Councils
There are no significant financial implications for London Councils
Legal Implications for London Councils
There are no significant legal implications for London Councils
Equalities Implications for London Councils
There are no significant equalities implications for London Councils
Background Papers
Short title of document
Date
Homes for the future:
more affordable, more
sustainable (Housing
Green Paper)
London Councils’ TEC
report on response to
Planning Gain
Supplement consultation
ALG response to
Planning Gain
Supplement consultation
July
2007
ALG Leaders’
Committee, Planning
Gain Supplement report
7
February
2006
8
February
2007
12 May
2006
File location
London
Councils,
Southwark
Street
London
Councils,
Southwark
Street
London
Councils,
Southwark
Street
London
Councils,
Southwark
Street
Contact
officer
Ruth
Bradshaw
Schedule 12A Exempt Info
Para
n/a
Ruth
Bradshaw
n/a
Ruth
Bradshaw
n/a
Ruth
Bradshaw
n/a
Annex 1: Draft London Councils’ response on Alternatives to Planning Gain Supplement
London Councils represents all 32 London boroughs, the City of London, the Metropolitan Police
Authority and the London Fire and Emergency Planning Authority. We are committed to fighting
for resources for London and getting the best possible deal for London’s 33 Councils. We lobby
on our members’ behalf, develop policy and do all we can to help boroughs improve the services
they offer. We also run a range of services ourselves designed to make life better for
Londoners.
This response focuses specifically on the alternatives to Planning Gain Supplement (PGS) set
out in Chapter 5 of the Housing Green Paper. A separate response sets out London Councils’
views on other aspects of the Housing Green Paper.
London Councils’ views on the Government’s proposed alternatives to PGS
London Councils views on the four alternatives to PGS set out in the Housing Green Paper are,
as follows:

Approach A: A lower rate PGS with a lesser scale-back of S106 planning obligations. All
PGS revenue would be returned to the region from which it was raised. London Councils’
view: It is not yet clear how planning gain would be divided between S106 and PGS using
this approach. Further information is needed on the extent to which S106 planning
obligations would be scaled back before it is possible to estimate what impact this approach
might have in London. London Councils believes that detailed analysis is required by the
Government to better assess the current value of S106 and what the funding implications
would be under this approach. Site value changes are notoriously difficult to calculate in big
urban areas and London Councils objected to previous PGS proposals on the basis that PGS
would be unworkable in complex urban areas where land valuation is subject to many
changing variables and judgements. In addition, further information is needed on the
proposal to return PGS revenue to the region. London Councils can not support the creation
of regional level pooling of funds which could result in money raised in one borough being
spent on the other side of London on infrastructure which has no impact on the borough
where the revenue was raised.

Approach B: A Planning Gain Supplement limited to greenfield sites. Non-greenfield sites
would continue to use S106 agreements. London Councils’ view: This approach is unlikely
to have much impact in London given that there are unlikely to be many greenfield
developments coming forward. However, many of London Councils’ concerns about
approach A would also apply to approach B. Further information is required about the
funding implications under this approach. It is also not clear whether PGS revenues from
greenfield sites would be returned to local authorities or pooled at a regional level.

Approach C: A charging system based on an expanded system of planning obligations.
Charges would be set out in Development Plan Documents and clearly linked to
infrastructure need. London Councils’ view: London Councils can see some merit in this
approach as it would allow boroughs to build on their existing systems and processes and
could offer the flexibility needed whilst ensuring that funds are not diverted to the Treasury
(as would happen with approaches A and B which are based on the PGS approach).
However, it is likely that this approach would apply only to larger schemes (as is generally the
case with S106 at present) as these are the schemes that can be shown to have a direct
impact on infrastructure. It would be harder to demonstrate the impact of a series of smaller
schemes within the same area on infrastructure need and hence, require them to make a
contribution, even though cumulatively they will generate an additional demand for
infrastructure.

Approach D: A statutory planning charge. Local authorities would be able to require
standard charge rates to be paid for infrastructure need, this would enable payment to be
made based on the total costs of infrastructure in an area. London Councils’ view: London
Councils can also see some merit in this approach. The advantage is that it offers clarity and
transparency for communities and the development industry and could also be applied to
developments of any size thus overcoming one of the main concerns with Approach C.
However, Approach D would offer less scope for ‘in kind’ benefits (e.g. new open space) than
the existing S106 system.
A proposed London Councils’ approach
London Councils has examined the pros and cons of each of the Government’s proposed
alternatives and has developed an alternative approach which is primarily a modified version of
Approach D but also incorporates elements of Approach C. London Councils’ priority is to ensure
that an alternative approach is identified which best meets the needs of London and allows local
authorities sufficient flexibility to meet the differing circumstances of their local area.
The London Councils’ proposed approach is intended to combine the advantages of approaches
C and D whilst overcoming some of the potential disadvantages that each of these approaches
would have if they were introduced in isolation. It places a premium upon:

securing value for the public from a wider range of developments

greater transparency in the way the system works to be captured in local development
frameworks.
It is proposed that a statutory planning charge would be applied to developments below a certain
threshold. For developments above the threshold, the existing S106 planning obligations
arrangements would continue to apply but with some modifications to ensure greater
transparency and clarity. This would mean that effectively approach D would apply below the
threshold and approach C above the threshold.
(Additional paragraph to be included if agreed at Leaders)It has been suggested that the
smallest developments should not necessarily be subject to a charge. To allow this to happen,
the proposed approach would need to include an option for local authorities to be able to exempt
or levy a zero charge on small developments below a certain threshold depending on their local
circumstances and economic development priorities. This could apply to, for example, the first 10
units or 3000 sqm of floorspace in any proposed deveopment.
This mixing of the two approaches would mean that local authorities would still have an
opportunity to negotiate enhanced contributions from larger developments, for example, allowing
them to continue to negotiate ‘in kind’ contributions if they wish. The approach would also
ensure that planning contributions were obtained from smaller developments which is one of the
key concerns with the existing S106 arrangements, as the smaller value to be obtained may not
justify the resources needed to negotiate a S106 agreement. For example, in response to a
recent survey by CLG, one borough estimated that only 12% of permissions for residential
developments with 15 or fewer units had a planning agreement attached compared to 100% of
all permissions for developments with 16 or more units.
The proposed approach builds on what a number of boroughs are doing already. For example,
the City of London have a tariff system of £70 per square metre which they use as the basis for
negotiating S106 agreements (although the difference is that this applies above a certain
threshold). The City’s tariff system works well because the City is relatively homogenous, but
might not work so well elsewhere. Another example is Redbridge who have developed a
methodology for deciding an appropriate level of contribution for different aspects (transport,
education, housing, health etc.). Brent is in the process of introducing a standard charge for
additional self-contained residential units, including conversions and live/work units of £3,000 per
bedroom (or bed space in the case of bedsits or live/work units). For commercial developments
with more than 500sqm of additional floorspace, the charge is £25sqm. Brent has consulted on a
Supplementary Planning Document containing these proposals and expects to adopt it in
October 2007.
The key elements of the London Councils’ proposal are as follows:

Local authorities would set a threshold below which there would be a set charge per unit or
area of floorspace for all developments.

Above the chosen threshold, local authorities would continue to negotiate S106 agreements.

Local authorities would be able to set their own charges and determine the local priorities for
spending the money raised but would need to publish this clearly as part of the Development
Plan process. This means that the level of the charge would be tested through the planning
system and could be challenged if it was felt to be inappropriate. There are standard sources
available for boroughs to calculate an appropriate charge and many already make use of
these.

Local authorities would also be required to publish annual reports on how the money raised
is being spent in order to reassure the public and developers that it is being spent on the
agreed priorities.

Local authorities could choose to have varying charges for different parts of their area to
ensure that a high charge did not act as a disincentive in areas where they wanted to
encourage development.

The money raised across a borough would be pooled in a fund which would be ring-fenced
for local social and physical infrastructure spending in that borough.

There would be greater transparency and clarity for developers and local communities with
local authorities required to publish their policies on planning contributions in their
development plans, including details of the thresholds and charges set.
Other issues London Councils wishes to raise
Regional contributions: A key element of the Government’s proposals for PGS was that a
proportion of the PGS revenue raised in a region would go in to a fund for spending in support of
regional infrastructure priorities identified in the Regional Spatial Strategy. The intention is that
this would enable regional PGS revenues to be spent on infrastructure projects or areas of the
region where additional resources, particularly transport, are most needed. There are clearly
benefits to having a fixed regional contribution (even if it is determined at the local level) as it will
provide certainty for developers, the local authority and the Mayor in contrast to the current
arrangements where there can be prolonged negotiations with the GLA and TfL over how much
a development should contribute to regional priorities.
However, any regional contribution would only be acceptable to London Councils if there are
clear priorities and timescales for what it is to be spent on and local authorities have an input in
to deciding what those priorities would be. There would also need to be a clear link between the
areas benefiting from a particular initiative and the areas contributing to the costs of it. London
Councils believes that it would be more appropriate to have sub-regional funds or inter-authority
pooling of money for specific initiatives such as corridor transport improvements, and can not
support a general regional level fund as money raised in one borough could end up funding
infrastructure on the other side of London.
Careful consideration will need to be given as to exactly how any regional or sub-regional
infrastructure charge is introduced. It would not work if the borough and the GLA each set their
own charge as the combined charge might be too much for a particular development to bear.
The total charge can only be set by one authority and this must be the local planning authority.
By agreement through the Development Plan process, this charge could include an element for
a regional or sub-regional infrastructure fund.
Choosing an appropriate threshold: Some boroughs have expressed reservations about the
dangers of creating thresholds as it could lead to perverse incentives to escape the charge (by
putting forward developments just over the threshold). One way to overcome this would be to
require the standard charge to be paid by all developments with those above the threshold also
paying any S106 planning obligations as negotiated with the local authority. For example, if the
threshold is set at 10 units, an 11 unit development would still have to pay the charge for the first
10 units plus potentially any additional contributions negotiated through a S106 agreement.
Alternatively, if they chose to, local authorities could use the tariff as a starting point for
negotiating appropriate levels of contribution under S106 for developments above the threshold.
This may well be what happens in practice but local authorities would still have the flexibility to
take into account other aspects, such as ‘in kind’ contributions (new open space, etc.) if they
wished.
It is important that local authorities are free to choose a threshold that suits their circumstances
but guidelines on appropriate thresholds may be needed, for example, they could be based on
the thresholds that local authorities currently use for requiring affordable housing provision, given
that a S106 agreement would still be needed where affordable housing is required. At present,
the affordable housing threshold is 15 units for the majority of London boroughs so guidelines
could specify, for example, that a threshold is chosen within a range of 10 to 25 units.
Thresholds based on area of floorspace would need to be set for non-residential development.
Local authorities would also need to make it clear whether the charge applied only to the
increase in floorspace/units or to the total amount.
Meeting existing demands: Whilst these proposals will ensure that new developments will
contribute towards the cost of the new infrastructure needs they generate, the Government still
needs to make it clear how upgrading of infrastructure to meet existing demands is to be funded.
The proposed charge must not replace funding for infrastructure from central Government and
must not be an excuse for other organisations, such as PCTs, to reduce the level of funding they
put into areas with high levels of development.
Consistency of approach: London Councils recognises that one of the Government’s
objectives for introducing PGS was to provide developers with greater certainty by ensuring that
there was a consistent approach to requiring planning contributions across local authorities.
London Councils’ proposed approach would ensure that there was greater clarity and
transparency by requiring local authorities to publish policies but still allows sufficient flexibility for
local authorities to adapt the approach to their local circumstances. In recent years, London
Councils has played an important role in identifying and sharing good practice between boroughs
on S106 arrangements through the S106 Practitioners group co-ordinated by London Councils’
officers. It is anticipated that London Councils, through the (perhaps renamed) S106
Practitioners group and other activities, would continue to play an important role in disseminating
good practice and helping to develop a consistency of approach across London where
appropriate.