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David Curry

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LGC's columnist gives thanks to Milton Keynes.

When the Pope decreed some months ago that purgatory did not exist, I thought to myself that here was a bloke who had never had to drive through Milton Keynes. Since I live south of Cambridge and the son and heir hangs out north of Oxford, the choice of route to check out the grandchildren is either the long detour via the M25 (Hell) or the purgatory of a drive which consists largely of roundabouts.

However, we must all now give thanks to Milton Keynes. Seeing off the proposed planning gain supplement (PGS) does not quite rank Milton Keynes alongside Athens or Florence in its contribution to civilisation but it nonetheless entitles it to a small plaque on the wall of British planning history.

The PGS was promoted by Kate Barker in her 2004 review of housing demand and supply commissioned by Gordon Brown. She argued that the wealth created literally by the stroke of the pen which awarded planning permission for a site should be taxed to help fund the infrastructure required to service developments.

The government said it would introduce the PGS unless a better way could be found to capture planning gain for the community. They found a better way - a roof tax - in Milton Keynes. There the Milton Keynes Partnership Committee is intending to raise some£300m from developers over the next 10 to 15 years to fund the£1bn infrastructure bill which will come with the construction of some 15,000 new homes.

Milton Keynes is certainly not a typical settlement, but the pilot of a tariff on new build worked well enough to achieve broad support from developers who dreaded the nightmarish complexity of the PGS and its disincentives for development. In fact some 25 local authorities are already using tariff schemes, including ones in the Thames Gateway area.

The roof tax or tariff will be levied by the council on the developer of both residential and commercial schemes and the rule of thumb is that a contribution of about a third of the infrastructure cost will be raised. The construction industry is demanding a simple and flexible mechanism based on a single tariff. The government, on the other hand, presently intends that the new levy (which will be signed off through an s106 agreement) will sit alongside the existing s106 agreement applying to site-specific works. The levy will not apply to affordable housing since it is clear that the tax will end up on the price.

Legislation will come in the planning bill, but already some big questions are being asked. How local will the infrastructure be to the development or should, as the government suggests, the levy contribute to sub-regional or even regional programmes run by the regional development agencies? Will levies be used for development across regional borders, given that economic activity and travel-to-work patterns do not respect historic boundaries?

Developers can see the logic of levies to deal with demands on infrastructure but will howl at being taxed for wider schemes. They also want to make sure they are funding new programmes and not helping to catch up with the deficit on existing schemes. Especially as, presumably, developers will have to raise the money to pay the tax before development begins.

Another question is how can the scheme be made to work on brownfield sites assembled through compulsory purchase orders governed by statutory rules and where the developer will be the occupier? I suspect the supermarket groups may be scratching their heads over that issue!

On the more parochial level, do local authorities have the planning expertise to manage the system, especially where there might be a case for a differential tariff according to circumstances, regeneration programmes on brownfield sites, for example? The industry is floating the idea of regional teams of experts to help out with the evaluation of big schemes.

It is a big shift to raise money through the planning system rather than the tax system. It will make for a complex planning bill and some tortuous navigation in committee. I have some experience of that: driving through Milton Keynes, for example.

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