Experts have published a new discussion paper detailing how development taxes could help fund the infrastructure needed to create affordable living spaces.
Improving England’s infrastructure is arguably Labour’s biggest priority. The party’s 2024 manifesto outlined plans to ‘strengthen planning obligations to ensure new developments provide more affordable homes’. Despite the government’s ambition, it’s no secret they’re struggling to deliver.
With this in mind, experts from the University of Cambridge and the Town and Country Planning Association (TCPA) have published a new research paper which offers advice on how the current system can be reformed. Particularly through the use of development taxes – fees that are applied to new construction projects.
Within the research, which has been published in a paper titled ‘Development taxes and levies: lessons from the past, ideas for the future’, experts claim taxes could be applied to a wider range of developments, so that more money is available to fund public goods, including vital infrastructure.
‘Previous repealed development taxes are a much richer source of reform ideas than their critics would have us believe,’ Miles Gibson, former No 10 advisor and co-author of the report, said. ‘The key lesson is: keep is simple and flexible. Overambitious and complex policies with multiple objectives, uncertain economic effects, rigid legislation and high political visibility are likely to fail in the same way as previous levies.
‘Future reforms need to be based on clear objectives, the re-purposing and evolution of existing policy tools and legal concepts and smart politics.’
To give context on how current policies aren’t helping deliver more affordable homes, the research outlined a mere 33% of major developments have a section 106 agreement attached and only 22% pay the community and infrastructure levy (CIL) – a charge imposed by councils on developments to help fund infrastructure projects.
While experts have acknowledged that changing the current development system could evoke problems, they’ve also explained serious economic and political risks will persevere is business carries on as usual.
Fiona Howie, chief executive of the TCPA, said: ‘No contribution is being made via either planning obligations or CIL by 97% of all non-residential developments. We need to capture more value, from more developments. So, while we appreciate there may be a desire from the government to avoid disruption in the short term, change is needed if its aspirations for housing and growth are to be met.’
The full research paper can be read here.
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