Linking growth options and infrastructure funding
September 2009
Planning authorities are still struggling with “delivery”. Since the updated PPS12 came out a little over a year ago, local authorities have been grappling with the requirement to provide an understanding of the infrastructure needs that their proposed growth options will create, along with how it will be funded and delivered, and by whom. Put simply, this is not easy. The topic is a new one for most planners, placing them at the heart of the new place shaping agenda which brings together a disparate set of service providers and seeks their input into long term spatial planning. Engaging with service providers, many of whom are used to responding to specific planning applications, rather than possible strategic growth options, often feels like trying to converse with someone in a language they don’t speak. This is only one of the many issues that will need to be addressed before meaningful infrastructure plans can be produced that demonstrate a portfolio of projects which both the public and private sector can fund and deliver.
PPS12 seems kind to the planners in that it doesn’t place undue demands on them. Although it asks for information on needs and costs, phasing of development, funding sources and responsibilities for delivery, it critically doesn’t ask for demonstration of what is realistically fundable; it only requires a test of whether there is a reasonable prospect of provision for critical infrastructure. The response has therefore often been little more than a list of “nice to have...” schemes, with unquantified central government and developer contribution funding sources identified. Even where developer contribution funding is estimated, this has often been based on boom-time assumptions without fully taking account of other requirements such as affordable housing and sustainability standards, and a finer grained analysis of which sites can afford such levels.
With no core strategies yet adopted under the new PPS12 requirements, it is unclear whether this simplistic approach will be sufficient. Inspectors seem to be questioning the robustness of it, but how far will they go? Even if they duck the big financing and deliverability issues in infrastructure, problems are only likely to be delayed for local authorities if these aren’t tackled now. The ability to finance infrastructure provision and other policy objectives such as affordable housing will get worse in the current economic climate.
Development and investment could simply grind to a halt in a stalemate. But it should not be assumed that the Government will step in. It’s a case of out of the frying pan and into another frying pan. If the expectation is that mainstream funding streams will be able to plug the significant gaps, this is extremely unlikely. This is even more the case now that we are faced with public sector investment being cut to the bone for another decade. Something will have to give.
For planners, this highlights the need for new skills. Members will need to make tough choices. The recent consultation on CIL indicates that if local authorities wish to use contributions to pay for general infrastructure requirements, the levy will be the only method available in the future. Developers are already exploiting the lack of joined up and robust policy on the back of decisions such as the Blyth Valley and Greenhithe cases.
But local authorities can act smarter. The must show a more sophisticated understanding of the financial side of development, infrastructure and public funding. This expectation is apparent in the draft CIL regulations - a much better evidence base will be required. The relationship between planning requirements and development viability should be examined to help clarify priorities so local authorities can set or negotiate optimal, but realistic, developer contributions.
Planners should be working with service providers to make best use of limited public and private funding. The sector needs to start producing work that looks as much like a business plan as a spatial plan. This is going to need a cultural shift if development is going to be enabled. It means less emphasis on the imposition of plans and policies, and more on understanding tasks along the critical path, overcoming viability and funding problems, sequencing work, and packaging investment.
This is going to be a big change: in our recent survey of local planning authorities, securing information from service providers and estimating public funding sources emerged as more difficult challenges to infrastructure planning than understanding potential developer contributions and integrating infrastructure planning with other LDF policy.
If local planning authorities and their political paymasters accept change, the same must be expected of the development industry and landowners. At present, many developers are insisting that they will be unable to make such significant contributions as they could in the past. But this often presupposes the same returns for themselves and for landowners as in the height of the boom years. This is simply unrealistic. The world has changed. Even when we come out of the current recession, things won’t return to business as usual.
All of us – planners and developers alike – are going to have to get our heads around this new world: business as un-usual.
Chris Bowden, Senior Associate, Roger Tym & Partners
With contributions from Andrew Clarke and Philip Wallbridge
This article appeared in Planning magazine on 25 September 2005
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