Whitehall is concerned that English Partnerships’ plan to borrow £60m will transgress public spending rules
The introduction of a “roof tax” in Milton Keynes, Buckinghamshire, is being delayed because of Treasury concerns that it may breach public spending rules.
It is understood that Treasury officials are trying to decide whether the funding package linked to the levy, which is designed to pay for important infrastructure, is allowable under present regulations.
Building revealed earlier this year that the Milton Keynes Partnership Committee, an arm of regeneration agency English Partnerships, had proposed a roof tax under which homes in growth areas would be subject to a flat rate £20,000 levy.
Under the 15-year development package, submitted to the government during the summer, the proceeds of the tax will eventually pay for much of the infrastructure of Milton Keynes. But before the money starts to flow, EP will need to borrow to pump-prime investment in schools, roads and health facilities.
The issue for the Treasury is whether borrowing by an arm’s length agency, which could reach up to £60m in the early years of the programme, should count as public or private investment.
Any public borrowing counts against the public sector borrowing requirement, which the Treasury is keen to minimise.
EP is short of money after its purchase of the NHS Estate portfolio, and this means that it cannot provide the money directly.
Is government serious about these growth plans or not?
Nigel Smith, RICS
The outcome of the negotiations on the issue is being awaited anxiously in the growth areas where the roof tax is seen as a template for similar schemes.
Consultant Roger Humber, who is leading the Milton Keynes Forward consortium of local landowners, which has been working closely with the Milton Keynes Partnership Committee on the roof tax proposal, said his members were not interested in Treasury debates about the definition of public spending but wanted to get on with developing their land. He characterised the Treasury concerns as “theological”.
Nigel Smith, chairman of the RICS regeneration panel, said: “Is the government serious about these growth plans or not?”
Bill Brisbane, of Roger Tym and Partners, who drew up the strategy for the Milton Keynes region, expressed frustration with the slow progress of the scheme. He said: How else do they think all the infrastructure is going to be funded?”
The leader of Milton Keynes council, Isobel Wilson, said it was unfair to expect the residents of the town to pay for the investment through the council tax.