Planners say they’re needed to solve the housing crisis, so why don’t they promote section 106?

The RTPI says planners are essential to increased housing output, pointing to their submission to the Lyons Review. But why do they ignore the potential of planning gain created through section 106 agreements?

Neither the RTPI nor the Town and Country Planning Association make much mention of planning gain and section 106 in their submissions to the review, seeming to accept the coalition’s sidelining of the measure since it took office. The government’s attitude to s106 was confirmed this week when its new online guidance also made little mention of its role in providing affordable housing. Yet it’s arguable that it’s one of the most important ways in which planners can contribute to the output of new homes at social rents.

In contrast, three of the other Lyons submissions – from ARCH, CIH and JRF – focussed strongly on the potential revival of s106, and a little background history quickly shows why this is the case. ‘Planning gain’ was first established by section 106 of the Town and Country Planning Act 1990, hence its alternative name. This measure allows planning authorities to oblige developers to include affordable housing (and potentially other things like schools) in their developments, either by setting land aside or by building the homes or by paying cash instead. It took a while for the use of planning gain to grow and for good practice to develop. But by 2010/11, as the graph from Savills shows, s106 accounted for 60 per cent of affordable housing completions.

Savills graphThis is particularly pertinent to Lyons and to Labour as this was the peak year of the old National Affordable Housing Programme, that the Tories brought to a halt in the 2010 Spending Review.

Since then, goaded by the developers, the Tories have poured cold water on s106, coming up with various ways to reduce its impact that culminated in last year’s Growth and Infrastructure Act, which invited developers to appeal against uneconomic s106 requirements. Of course, there was a case for looking at planning obligations after the credit crunch, and many local planning authorities were evidently doing so on a voluntary basis. But it was also apparent that developers would try to kill off s106 in the recession so that it wouldn’t bug them again when the market started to grow. Which of course is what is now happening.

The Tories seem strangely indifferent to the effects of weakened s106 agreements on their own Affordable Homes Programme.  But even now they still make a significant contribution, providing 4,820 units in 2012/13 alone, in recent years even with no grant from the Homes and Communities Agency. Clearly they now need to be harnessed as part of Labour’s drive to build 200,000 homes per year: in fact, not to do so would invite failure.

There are plenty of issues about the working of s106, for example why its use is so variable between local authorities. Clearly it needs to be reappraised and guidance strengthened. However, Labour has so far been rather indifferent to it. Roberta Blackman-Woods MP, the planning spokesperson, has said that it would be reviewed alongside the Community Infrastructure Levy with the idea of replacing it with a ‘community investment fund’. The problem with this is that if the planning gain is taken as a financial contribution it misses out many of the successful attributes of s106, especially the fact that land is made available and new developments as a result are often mixed. There is also the danger that, with so much pressure to renew or extend infrastructure under limited capital budgets, that’s where the money will be spent, rather than on housing.

Lyons should be well aware of the risks of dropping s106 and also of the potential gains from keeping and strengthening it. After all, at the peak of output under the last government, when output from planning gain was at its height, we were building 140,000 homes per year in total.  Rather than holding back development, section 106 was one of the leading drivers of it.

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One Response to Planners say they’re needed to solve the housing crisis, so why don’t they promote section 106?

  1. mono says:

    It is particularly shameful that the Crown Estate and the Duchy of Cornwall lead the way in persuading local authorities that affordable housing is too expensive on many of the developments that they undertake. See the Bureau for investigative journalism report summarised in Inside Housing on 10 Feb 2014 showing that of 14 out of 31 schemes by both these funds for the royals, which aims to build 4299 homes do not meet local affordable homes targets resulting in a shortfall of 213 affordable homes. In the issue of Inside Housing of 17 feb 2014, Paul Clark, Director of investment and Asset Management for the Crown Estate said ‘House builders and private landowners (however historic) are not, ultimately, responsible for meeting the nation’s housing needs.’ Shame on you Mr Clark and on your parasitic bosses.

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