Planning-gain Supplement (PGS)
John Stewart
Director of Economic Affairs
Home Builders Federation
23 February 2006
PGS: Multi-dimensional
• Planning
• Taxation
• Valuation
• Finance/site viability
• Government infrastructure funding
and provision
Multiple Objectives
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
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
Too few instruments, too many objectives
i.e. no system can meet all objectives
Responding to PGS Proposal
• 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
The Core Objectives
• Reform S106
• Fund off-site infrastructure
• Maintain S106 Affordable Housing
But without damaging house building
step change
Responding to PGS Proposal
Always mindful
• Alternatives (PGS, S106, Optional
Planning Charge, Tariff) – pros & cons
• HBF can’t just reject
need strong case
preferably alternative if reject
And the answer is…
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…
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
Why PGS won’t work
Brownfield
• Work on greenfield
• Not complex brownfield
Why PGS won’t work
Infrastructure
• Breaks contractual link with provision
– developer dependent on third party
• Local community: no link from
development to benefits
Why PGS won’t work
Scaled-back S106
• Mission creep
• Off-site obligations in kind?
Why PGS won’t work
Affordable Housing
• Major source of S106 delay,
uncertainty
• Yet no reform proposal
• Undermines key PGS objective
Why PGS won’t work
Valuation
• Many complexities, uncertainties,
especially complex brownfield vs
simple one-size-fits-all
Why PGS won’t work
Future Chancellor
• “Modest rate” easily raised
• And LA grant cut by PGS revenue –
LA no better off, so no infrastructure
The Way Forward
• 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
A Few Words on PPS3
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
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
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
Growing demands on house builders
Input into
• RSSs
• Housing Market Assessments
• Land Availability Assessments
• LDFs – various elements
Plus: justify mix against HMA
Planning-gain Supplement (PGS)
John Stewart
Director of Economic Affairs
Home Builders Federation
23 February 2006