Taxpayers to boost private developers profits

The Government's latest attempt to boost the building industry will transfer taxpayers money into private developers profits.  Eric Pickles, Communities Secretary, has given the green light for "expert planning brokers" to renegotiate hundreds of Section 106 planning agreements already made with Councils.

Section 106 planning agreements are a long standing arrangement which require developers to make a financial contribution to the community or provide affordable housing or infrastructure in return for planning permission. Typically the builders financial contribution will fund new road access, contributions towards new school places or a subsidy towards provision of more affordable housing to be rented by Councils or Housing Associations.

In other words developers are required to contribute towards infrastructure which will otherwise will have to be paid for from the public purse as a result of the very development from which they will make a profit. Without these agreements the developers effectively receive cross subsidy from the taxpayer for the public infrastructure which the new developments inevitably need to make them sustainable and saleable.

Since the 2007 credit crunch developers' home sales have been hit by stalled house prices and lack of buyers due to unaffordable or unobtainable mortgages. Not surprisingly many developers, who have to make a profit to survive, have put thousands of developments on hold and made even more thousands of building workers redundant. To help out the builders and increase the supply of housing the Tory led Government plans to send in the "planning brokers" to  effectively 'seal the deal' for the house builders profit needs by transferring the hidden costs of infrastructure to the taxpayer.

Who are these "planning brokers"? I don't actually know. My guess is they will be part of the same legion of private planning consultants who are normally acting on behalf of developers to arm-twist quasi-judicial local Council planning committees into accepting unwelcome planning applications with the threat of planning appeals often unaffordable for many Councils. If I am right that will be like letting the fox into the hen-house. I genuinely feel sympathy for Councillors on these Committees, being torn between their constituents' greater interests and the quasi-legal path they must tread. So what is happening to localism while central government appoints "expert brokers" to renegotiate these agreements?

Lets face it, this whole approach typifies this Tory led Government's ideology. They are putting private sector profit before the interest of the average taxpayer. This form of cross-subsidy to the developers will only help sustain unaffordable house prices, force working families who can get a mortgage into greater debt  and add further financial pressure to Councils to fill the infrastructure gap and/or reduce standards of these most basic services.

If the Government was really concerned about sustaining a vigorous building industry and a decent, affordable and sustainable housing supply they would be using any additional public sector funding to increase affordable social housing development, which already very effectively levers in private finance to minimise public sector borrowing. This would then provide employment and profit for the most efficient developers. Taxpayers would have the community owned asset of affordable rented housing, reducing the demand for private rented housing and the consequent expenditure on housing benefit (see previous post on this issue) as well as reducing pressure on the bottom end of the housing market ultimately making owner occupation an option available to more people.