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02/09/2015

LGA identifies planning cost pressures ahead of spending review

Words: Laura Edgar
House building

Local councils could lose £3 billion over the course of the Parliament by exempting house builders from Section 106 agreements and Community Infrastructure Levy (CIL) payments for starter homes, says the Local Government Association (LGA).

In Spending Smarter: A Share Commitment (PDF), its submission to the Treasury ahead of the government’s spending review, the LGA says government policies to be introduced over the next five years will cost councils £6.3 billion by 2020.

One of the cost pressures affecting planning identified by the LGA is exempting house builders from s.106 and CIL payments for 200,000 starter homes for first-time buyers. An average s.106 payment of £15,000 a home “would see £3 billion lost” over the next five years.

Additionally, reducing the rents paid by social housing tenants by 1 per cent will, explains the LGA, cost local authorities £2.6 billion. This money could be used to improve and maintain social housing stock and is the “equivalent cost of building an average of 19,000 homes”.

The LGA suggests that the government could introduce locally set planning fees to “ensure effective, responsive and fully funded council planning services”. This would then, states Spending Smarter, remove the burden from taxpayers, who currently subsidise 30 per cent of total costs.

Other suggestions listed under “planning for infrastructure and growth” include:

  • Removing national exemptions to s.106 contributions and CIL, replacing them with a “more robust and transparent local viability assessment process to ensure development and supporting infrastructure meets community need.

  • Ensuring that local areas are able to use the growth fund to support local housing and infrastructure investment strategy.

  • Enabling local councils to have a say over all new brownfield land development as well as the conversion of office to residential property, combined with giving councils the power to ensure developers prioritise brownfield land.

  • Removing the restriction on pooling s.106 contributions for strategic sites identified in local plans.

The spending review will be delivered by chancellor George Osborne on 25 November, with government departments, including Communites and Local Government, Transport, Energy and Climate Change, and Environment, Food and Rural Affairs, expected to find £20 billion in savings.

LGA chairman Gary Porter said the spending review will be “critical for the future of our public services” over the next decade.

“Leaving councils to pick up the bill for new national policies while being handed further spending reductions cannot be an option.

"Enormous pressure will be heaped on already stretched local services if the government fails to fully assess the impact of these unfunded cost burdens when making its spending decisions for the next five years,” said Porter.

Spending review decisions need to be guided by the “fundamental principle that local people will know best how to spend money on services in their area,” added Porter.

"If our public services are to survive the next five years, councils need fairer funding and the freedom to pay for them. Only radical reform of the way public money is spent and widespread devolution of transport, housing, skills and health and social care across England in the Spending Review can protect the services which bind our communities together and protect our most vulnerable."

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