Communities to get funds to approve new homes, says minister

Up to £650,000 may be given directly to communities to spend on infrastructure if they approve new home building, Planning Minister Nick Boles has told BBC Newsnight.

The funds will come from house developers paying a levy when they are granted planning permission.

The plan is the latest push to reduce opposition to house building.

But house developers are concerned it could make land more expensive and affect affordable homes.

Mr Boles explains the incentive could see groups such as parish councils and residents groups up and down the country receive hundreds of thousands of pounds should they support proposals for more house building.

He jokingly refers to the policy as "bribes" and "Boles' bungs" and suggests communities might use the funds to build a new swimming pool or village hall.

On Newsnight Mr Boles says that the failure to increase the rate of house building is, in his opinion, "the biggest social justice crisis we have".

"It is a huge national crisis. For my money I think it is the biggest social justice crisis we have," he says.

"It is bigger than bad schools - though we have plenty of bad schools - and it is bigger than people without jobs -though we have lots of people without jobs."

Mr Boles says the housing problem lies at the root of many other problems because if people are unable to get houses they cannot bring their children up well or move to an area with jobs.

"We completely understand the situation, that's why we want to try and support some of this stuff," he says.

Incentivising communities

His policy revolves around this government's innovation of neighbourhood plans - groups of residents, villages, parish councils, interest groups set up to shape planning decisions in a given area but whatever mix, all designated by a local authority.

The new money will flow to those communities who have neighbourhood plans, but in cities where there are no parish councils and where neighbourhood plans have been designated by local authorities by different criteria, the money will be allocated to the district council to be spent only on the direction of the group behind the neighbourhood plan.

In areas with no constitutional status, officials told BBC Newsnight the local council would hold the funds on behalf of the neighbourhood group and wait for a stipulation on how that neighbourhood would like the funds to be spent.

The funds are to be provided by house developers who pay a tax - the community infrastructure levy (CIL) - when they are given planning permission.

In total, Mr Boles says the Treasury has estimated this levy could bring in a total of £1bn.

Not all councils will charge the CIL, but the government expects that they will all move towards it otherwise they will not be asking developers to help them meet the expense of an increase in infrastructure costs in any given area.

This government and the previous Labour government believed this necessary to reflect the fact that developers have seen an increased price of land with newly granted planning permission, and that developers must help a community with extra infrastructure to deal with the increased numbers of inhabitants.

Though the policy was developed by the Labour government, government officials said they had yet to set out how the revenue from the levy should be spent.

In order to assuage local communities opposing developments, the government is announcing that local communities who get involved in neighbourhood plans - and whose community puts them to a vote - will be given 25% of the CIL to spend on infrastructure of their choosing.

Those groups where there is no neighbourhood plan and no referendum on the plan, will also receive 15% when planning permission for a development is approved.

Officials have told BBC Newsnight that the plans could see communities finding themselves in direct receipt of anywhere between £236,500 and £652,500 of funds depending on the number of new properties they accept. The sole proviso is the new money is spent on infrastructure from an approved list.

Because the levy is calculated based on the rates payable in any given area, the higher figure of £652,500 would be an outlier - central London or another high value area.

Officials said £200,000 to £300,000 "would be a very reasonable expectation for average neighbourhoods".

The (CIL) was proposed in 2008 by the previous government and legislated for by the coalition in their first weeks in power in 2010. Having criticised it, the coalition decided to adopt it and on Wednesday are announcing they will significantly scale it up.

For the past two and a half years of government ministers have resisted setting out who would receive this money and some in government had fought for the monies to go to direct to national infrastructure programme.

It had been expected the council or local authority would be given it, to pay for the increased amenities required in the area of increased building but now ministers are insisting 25% is put directly into the hands of local people and not all given to the council or local authority to spend.

Mr Boles caused controversy last month when in his first interview since becoming the minister for planning, he said that green field sites would have to be built on if Britain was going to meet the demand for housing.

He said he believed part of the opposition to housing was driven by a dislike of the designs of the new builds which he called "pig ugly". If design could be improved, opposition might reduce.

Previously, under the legal requirement of "section 106", developers had to make a contribution to local infrastructure to help it cope with the new burdens placed on it by an influx of new dwellings.

However these had to be negotiated on an individual basis and were cumbersome. Local people were not in charge of what it was spent on.

Housing developers have expressed concerns about the imminent implementation of the CIL, saying it could actually end up making land more expensive. When costs go up, they predict, the element of house building that ends up suffering are those less expensive affordable homes.

Watch Allegra Stratton's report on BBC Newsnight on Wednesday, 9 January 2013 at 22:30 GMT on BBC Two or afterwards on BBC iPlayer.