Commentators and housing policy wonks spent much of last week debating the merits of the Government’s revamped Right to Buy scheme. But there’s a much more egregious planning issue that has gone largely unremarked.
For years, local authorities have been sitting on literally billions of pounds of money that is going unspent when it could be used to alleviate the housing crisis. The cash in question comes from a combination ‘Section 106’ payments and Community Infrastructure Levy agreements.
For those not schooled in the intricacies of the planning system, Section 106 payments are essentially developer contributions used to mitigate the impact of new buildings on the local area, in addition to highway contributions and the Community Infrastructure Levy (CIL). The CIL itself is a charge that local authorities can set on new development in order to raise funds to help pay for local infrastructure.
The problem is, councils aren’t actually spending all of the money they’re getting from developers. In a Property Week exposé last year, journalist Mitchell Labiak found via Freedom of Information requests that London authorities alone were sitting on an astonishing £1.39bn of S106 and CIL cash. That finding was in line with a 2019 report in the same magazine which calculated at least £2.5bn – or 63% of this money – in English Councils had not been spent.
The excuse from the Local Government Association was that spending this cash where it’s meant to be spent, on local infrastructure, ‘can be a complex process and can take time’.
This strikes me as an obvious area for the Levelling Up Secretary, Michael Gove, to be concentrating on. Rather than focusing on reviving a 1980s policy in the shape of Right to Buy, we should be looking to reinvest as much of that developer cash not just in infrastructure, but building new homes in the places people want to live.
With the pot of cash only growing – and the iniquitous prospect of developers being able to claw back the cash if it remains unspent – it’s surely time for councils to be given a ‘use it or lose it’ ultimatum, with the money funneled into a national housebuilding pot to build the homes we so desperately need.
And where better to build all those new homes than on some of the 1.3 millions of local authority land in England. Nor is that land all in sparsely populated, benighted communities where no one actually wants to buy a home – some of our most ambitious, high-growth local authorities are sitting on thousands of acres of land which could be put to use in a national effort to ‘build, build, build’.
Obviously, not all of that council-owned land is suitable for development – some of it is moorland, nature reserves and, indeed, existing council housing – but given that it represents 4% of all the land in England, even devoting a small proportion to new homes could have a sizeable impact.
What’s more, new building projects will almost certainly run at a profit, creating a virtuous circle where new funds can be used to build more homes. With the economy in dire straits and a recession on the horizon, a renewed focus on building would provide a much-needed fillip, not to mention thousands of skilled jobs.
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