Arguments of Principle and Pragmatism

This policy approach has been controversial. Critics have argued that this is an inappropriate use of planning, for the following kinds of reasons. Firstly, there is a lack of ‘rational nexus’ (connection) between affordable housing and the development of specific sites (Crook 1996). This is different from other uses of planning agreements, which generally relate to requirements which are necessary to make a particular development acceptable in itself (e.g. environmental improvements, transport connections) (Healey, Purdue and Ennis 1993). Secondly, the mechanism has been characterised as a ‘stealth tax’ on development, and any such taxes on development should be overt. Thirdly, and related, it was argued that it was not the job of the housebuilding industry to subsidise social housing, any more than it was the job of farmers to subsidise the food bills of the poor.

The counter view (which, for example, was accepted by Barker 2004) was that, since it was the planning constraint on new housing supply that was substantially responsible for the affordability problem, the planning system should compensate for this. In response to the ‘rational nexus’ objection, it was seen that the nexus was at the level of the plan area (or settlement) level, rather than the individual site. With regard to the stealth taxation argument, it may be countered that respectable economic theory argues that betterment taxation (i.e. taxing development gains in land value) is economically efficient (it should not affect supply) and equitable (the people who pay, landowners, tend to be well off). Thirdly, on a more pragmatic note, it seems likely that there will never be enough public subsidy for all the social housing that is needed.

In practice, it may be observed that the policy has had three main drivers:

  • • the need for land to put social/affordable housing on; as traditional sources of land for RSLs, for example from local authority land banks, were drying up
  • • getting a subsidy from land value; typical developments generated huge unearned increments in land value; and
  • • promoting mixed communities; traditional patterns of development tended to reinforce the segregation of social housing from the private market housing, and this was increasingly seen as undesirable in its social effects.

It is true that using planning agreements in this way may be likened loosely to a form of tax on development. However, the planning agreement system as it has evolved has a number of differences from a typical tax as imposed by the Treasury. It is:

  • • locally determined rather than fixed by statutory means
  • • discretionary rather than intended for universal application
  • • variable rather than uniform or standard
  • • in kind rather than financial
  • • hypothecated rather than unhypothecated
  • • reused locally rather than redistributed nationally.

Although such an approach does not conform to abstract national norms in taxation, these differences suggest that it may have virtues in this particular context. In particular, it motivates local authorities (who may be reluctant to support development, because of NIMBYism or concerns about the costs and impacts) to become more engaged with and supportive of developments (see also Monk 2010). The local authority has control and discretion, can adapt to particular circumstances and can negotiate for particular contributions which both make the development more acceptable and meet locally perceived needs.

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