ODPM plots ‘slimmed down’ section 106

The government is to overhaul the planning gain system in order to smooth the way for the introduction of proposals made last year by the economist Kate Barker.

Housing Today has learned that ODPM officials have been told to work out how the present system of section 106 agreements can be “slimmed down” so that developers will stomach the introduction of Barker’s “planning gain supplement”.

This supplement might take the form of a financial contribution or tariff alongside the existing section 106 process.

It will be the latest in a long line of changes made to the system that grants planning permission to developers in exchange for the addition of community facilities or affordable housing to schemes.

The news is also certain to fuel concerns that social housing would lose out in changes to the planning system. Mike Hayes, corporate director for development and environment at Watford council and former president of the Royal Town Planning Institute, said: “If [councils] are simply taking the money, I don’t think it will lead to more houses. In fact, I think it will lead to fewer. If there is a move to off-site provision of housing [funded by the supplement] that will only work if the sites have been identified.”

However, a senior government source said: “One of our key priorities is ensuring that any slimmed-down section 106 system would not result in a reduction in housing numbers. That is a bit of a no-brainer.”

The source added that the government would instead sweeten the pill of the new dual system by cutting requirements for other community facilities, roads or infrastructure, that councils frequently negotiate from developers.

It is also understood that a separate update to the current planning system will be published by the ODPM in early summer. This will aim to “make the section 106 process work as well as possible in conjunction with developers and councils”.

However, this updated system will be overhauled again if, as seems likely, the government presses ahead with Barker’s planning gain supplement. The ODPM has pledged to make a decision by the end of 2005.

Barker proposed the tax on increased land values last March in her report on housing supply. She intended it to run alongside section 106 but recognised that developers would baulk at the idea of having to comply with both systems without concessions.

The ODPM has made no secret of the fact that Barker’s proposal will be a key means of funding the 1.1 million more homes demanded by John Prescott by 2016.

Alongside these proposed reforms, the government last month published consultation papers in which it outlined how a dual system of tariffs and planning gain might work.

The document indicated that a dual system was the ODPM’s preferred option for reform.