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Progress on the PGS

This page sets out the development of the PGS and summaries the various stages and consultations that have taken place. It is clear that if PGS is introduced there will be a wide range of implications for how sport & recreation facilities can be secured and delivered through.the planning system.

As a result Sport England has been closely involved in the consultations and commenting on other aspects of the proposals. The key elements and implications of the proposals are outlined below. This includes Sport Englands sumbissions and current thinking on the development of the new system. This page will be added to, as the proposals for the new PGS is developed.

Overview
In 2005, the Government expressed its intention to consider the introduction of a Planning Gain Supplement (PGS), to help pay for local infrastructure related to growth. The proposal comprised a tax on land value uplift created by development, which would be collected by the Treasury (HM Revenue and Customs). The monies collected would then be partly redistributed to localities by a formula to be determined. The Supplement scheme would be paralleled by a honed down Section 106 planning obligations system.

In an announcement to the House of Commons on 11 July , the Prime Minister stated that the PGS scheme would not be proceeded with if, ‘…prior to the pre-budget report, a better way is identified of ensuring local communities receive significantly more of the benefit of planning gain to invest in necessary infrastructure, including transport’.

This announcement extends the period of uncertainty about the new tax, and therefore the way the funding of new sporting infrastructure in association with new development will be handled, until the pre-budget report in December 2007.

It should be noted that both the Royal Town Planning Institute and the Planning Officers Society are strongly critical of the proposed new tax. In its press release of 1 March, entitled ‘Government’s Land Tax Proposals Will Not Work Say Planners and Tax Experts’, the Institute list nine concerns about the tax.

If PGS is not adopted it is likely that some form of system of tariffs, or standard charges, will be introduced to complement current procedures.

Latest Progess: -
Housing Green Paper-(July 2007)
This Green Paper outlines a number of alternative approaches to achieving planning gain. These, the Green Paper states, will form the basis of discussions with key stakeholders prior to the pre-budget report in December 2007. The Green Paper specifically lists local authorities and developers as key stakeholders.
The alternatives are:

Approach A; A lower rate Planning-gain Supplement with a lesser scale back of section 106 agreements than that previously proposed. [The implication here is that non-local infrastructure would be paid for by a reduced PGS element]
Approach B: A Planning-gain Supplement limited to green field sites. [This could require EU approval]
Approach C: A charging mechanism based on an expanded system of planning obligations, with most of the policy restrictions in Circular 5/05 being removed.
Approach D: A statutory planning charge; which could include average standard charges of the type levied in Milton Keynes.

Responses to the Green Paper are requested, to the DCLG by 15 October 2007. Sport Englands response will be posted here in October.

The test of an effective approach, the Government states, will be its ability to raise significant additional funds to support the infrastructure needed for development.

Previous Progress:-
Second Consultation: Changes to Planning Obligations - December 2006

The Planning Gain Supplement (Preparations) Bill - 12 December 2006

Government response to CLG Committee’s report on Planning-gain Supplement - December 2006

House of Commons Communities and Local Government Committee report on Planning Gain Supplement - 7th November 2006

Planning-gain Supplement: A Consultation - December 2005

Second Consultation: Changes to Planning Obligations (December 2006)
One of three consultation papers produced at the beginning of December 2006. Two papers [Valuing Planning Gain, and Paying PGS] were technical in nature. The third, Changes to Planning Obligations,consulted on;

The use of a criteria based approach to what is to remain within the scope of the scaled back Section 106 system, rather than using a list of specific items [land uses] as previously suggested; and
Whether land for ‘public or community facilities’ on large sites should be included within the scope of planning obligations.

Sport England’s response stated that we do not support the use of the criteria based approach for the following reasons:

It would leave unclear what aspects of provision for sport and active recreation are included or excluded from the new planning obligations system;
This would result in planning officers and inspectors having to decide on what elements of a proposal make ‘the environment of a development site sustainable’ in any particular case; and
Discussions and negotiations over what comprise ‘existing facilities’, and suggested criteria such as ‘a direct replacement for a facility lost’, or a creating a ‘mix of uses’, could result in costly delays.

Our response suggests that playing fields, footpaths and cycle ways, provisions for court sports, and for built facilities in mixed use sites for sport, should fall within the scope of a scaled back Section 106 system. The reponse also suggests that the reservation and handing over, to local authorities or sports bodies, of land for community sports facilities on large sites, should fall within the future definition of Section 106. The view is also maintained in the response, that the proposals fail to guarantee that local communities can plan with confidence for an appropriate level of sports facility provision, to be delivered at the appropriate place and at the right time, because the full structure of the scheme has yet to be worked out.

Click here to view Sport Englands response.

The Planning Officers Society continue to campaign for tariffs. Their December 2006 Press Release on PGS states ‘…the suggestion that 30% of revenues raised will be diverted ‘to the regions’ is far too high and fails to recognise the need for local accountability. Innovative use of the tariff approach, as in Milton Keynes and Ashford, should be supported as a viable alternative to delivering much needed local infrastructure if it can be demonstrated that this raises more revenue than a national system of PGS’.

Richard Butt, writing a pro-PGS article in Town and Country Planning states, in the context of the Comprehensive Spending Review work, ‘…Past experience has shown how difficult it is to get central departments and agencies to delegate enough authority to regional and local levels to allow effective co-ordination of infrastructure provision and development.

The Planning Gain Supplement (Preparations) Bill, 12 December 2006
The Bill authorised Government expenditure on the creation of an IT system for handling contributions and links with HM Treasury and Customs. The vote was approved for £40 millions expenditure on the system.

The debate was significant for widespread concern among MPs that the PGS scheme was not fully enough worked for any judgments to be made on its likely success. Government Ministers suggested that the Select Committee had basically supported the scheme. However, members of the Committee, speaking in the debate, suggested that the report was, in reality a sceptical one, and that the alternative of improving the current Section 106 system had not been fully enough explored. One of the most significant contributions to the debate was by Nick Raynesford, previously a housing and local government Minister in ODPM, who expressed severe reservations about the principles and workings of the proposed PGS scheme. One MP noted that majority opinion in the planning and development sector was also sceptical.

Government response to CLG Committee’s report on Planning-gain Supplement, December 2006

The response to the November Committee report stated that:

The Government had looked at alternative models, and continues to believe that PGS is the best way to secure a portion of land value uplift for public benefit [however, no detailed cost benefit analysis has been published];
Detailed work on how PGS revenues would be allocated is forming part of the Comprehensive Spending Review (CSR 07) into Supporting Housing Growth. The Review aims to determine the social, transport and infrastructure implications of housing growth in different spatial forms and locations, and to establish a framework for sustainable and cost effective patterns of growth. The report of the review will feed into budget proposals later this year;
In terms of returning PGS to localities, the Government stated, in its 2006 Pre-Budget Report, that ‘…at least 70 per cent of PGS revenues would be hypothecated for local infrastructure priorities and would be returned to the local authority area in which they were generated, based on the amount of revenues raised’.

Click here to view link to DCLG's response to Select Committee.

House of Commons Communities and Local Government Committee report on Planning Gain Supplement, HC 1024-1, Published 7 November 2006)
This Committee established an inquiry into the likely workings and impacts of PGS in February 2006, and invited evidence. Sport England submitted a paper; along the lines of that produced for the initial consultation, in December 2005,click here to view. A key point within the submission proposed that the provision of facilities for community sport should be exempt from PGS.
The main concerns of the Committee, expressed in its recommendations, were as follows:

Government should carry out a cost benefit analysis comparing the proposed PGS and scaled back Section 106 system, with a system involving a fully effective utilisation of Section 106 powers and possible reforms and enhancements;
There were no proposals from the Government on how it would ensure the PGS supports infrastructure provision in a timely and predictable way; and
There should be a statutory undertaking that a majority of PGS revenue should be returned to the local area affected by the development.

In terms of the Sport England representation, the Committee stated ,’… as PGS is intended to increase the overall pool of resources available for investment in infrastructure, far from undermining the provision of community sporting leisure and other facilities, it should provide local authorities with an opportunity to improve provision’ [para 41 of the report].

Planning-gain Supplement: A Consultation (December 2005)
The key parts of the proposal were;

the PGS would comprise a levy on the land value uplift created by the granting of planning permissions;

the levy would be set at a modest rate, in order to preserve the incentive to develop;
it would apply to a range of uses (residential, business, industry and warehousing);
planning obligations would be scaled back to matters relevant to the development site itself and affordable housing;
PGS revenues would be collected centrally by HM Revenue and Customs;
Some of the revenue would be top sliced for strategic infrastructure purposes; and
The reminder would be recycled to the local level for local priorities.

In the interim, the Government encouraged local authorities to implement the measures in Circular 5/05, especially the use of formulaic and standard charge approaches. The original intention was to introduce the scheme in 2008 following the introduction of enabling legislation.

The Sport England response made the following points:

It was unclear whether greater resources would be made available for sport and recreation at local level through the introduction of PGS;
Removal of the direct link between new development and additional sports provision, currently provided by the planning obligations system, would make the delivery of sport and recreation facilities less certain;
It was unclear what types of sport and recreation facilities would be included in the ‘development site environment’ approach, the proposed new scaled back system of planning obligations), and which would fall within PGS funding; and
In particular it was unclear whether on-site replacement facilities for uses such as playing fields were included in the ‘development site environment’ approach.

Sport England went on to suggest that the Government should give more encouragement to local authorities to pursue standard charge and tariff approaches to contributions for sport and recreation at local level.

Click here to view Sport Englands response in full to the Decemeber consultation.

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