Friday, December 18, 2009

Ashwell's discussed at East Area Committee

The topic of Ashwells and the station redevelopment was discussed at East Area committee last night - amidst the concerns I have already raised that the transport improvements forming part of the scheme are now at risk - in particular the issue of cycle parking. I thought it was quite a successful meeting, we agreed to summon the Director of planning to our next meeting so we can question what the transport situation is now, and to request that the section 106 agreement is reviewed in light of the administration of Ashwell's.

I wouldn't normally respond to posts on other partys' blogs but Lib Dem Cllr Nichola Harrison has taken my comments made last night and misrepresented them in such an amusingly ridiculous way I can't resist.

As much as I enjoy, on occassions like last night's East Area committee, hearing Cllr Harrison's explanations of 'how things really are' and how with her great knowledge she is able to 'correct' my misunderstandings, I see the situation rather differently.

She says on her blog: "Chris Howell’s diatribe last night was based on the strange reasoning that the system is a tax and is therefore unfair on developers."

Firstly on the question of what s106 payments are.

If something looks like a duck, quacks like a duck, and waddles like a duck, I tend to call it a duck, even if other people insist on calling it something else.

In this case s106 agreements result in money or value that developers have to pay to the local authorities in order to get planning permission on a new development. Thats why I call it a developers tax.

To correct the biggest error in Cllr Harrison's blog post. No, I don't want to see this system completely abandoned with all developer payments stopped, just recognised for what it is, and for the Council to therefore act accordingly so we can start having the type of new developments people want and would welcome.

My argument is that if you accept the system is a tax, the Council will stop treating it like free money that no-one has to pay for (apart from developers of course who don't really count), and start considering both the economic effects of the Council's demands on developers and what this means for people who have to put up with the pokey overpriced rabbit hutches and inadequate transport infrastructure that results from our current broken planning system.

The suggestion that s106 agreements are purely there to mitigate the effects of a new development as Cllr Harrison claimed last night is laughable when you see what happens in practice - it is a system whereby the Councils' try to extract as much of the uplift in value from a developer being granted planning permission because they can, and don't seem to have any sense or scrutiny of whether the taxpayer gets good value for money from this huge tax burden. If these payments really are vital to mitigate the effects of development, why has the Council been busy renegotiating them over the last few months?

The fact is that new development has got into a vicious cycle, aided by local Councils, of which Lib Dem run Cambridge is a prime example - and it is going to take something dramatic to get us out of this.

  • People see how horrible many new developments are so seek to oppose them (it doesn't help that the history of new house building in the UK for decades has been littered with hideousness)
  • Planning permission is therefore hard to come by, so the uplift in value of the land when it is granted is significant (and the house prices in the free market are extortionate - yes Nichola, the other big error in your blog post, it is not big business, it is the ordinary people looking to buy market houses in and around Cambridge that are paying for all this nonsense)
  • The Council through the s106 system has the power to tax this uplift in value, sees it as free cash so tries to extract as much of this uplift as it can, to spend on all sorts of things - 40% so called 'affordable housing' being one of the biggest costs for developers.
  • Developers then need to extract as much value as possible from their open market housing, so don't allocate sufficient physical space for public open space and transport links, and build private sector housing to a low spec, with poor design and poor materials.
  • The Council meanwhile thinks that community facilities are only things that Council's run, like community centres and libraries, and don't even think about providing things like a local shop or a local pub - nor do they necessarily think about the ongoing revenue implications of the things they spend their one-off capital payments from developers on. (Orchard Park springs to mind)
  • The result is new developments that are hideous - and the cycle starts all over again.

The whole system has been even more broken over the last few years, as property valuations have been based on what effectively was a pyramid scheme, bearing no relation to underlying value, rather values inflated by the prospect of someone else coming along willing to pay even more than you have just paid, thanks to a buy to let mortgage fraudulently obtained from a now bankrupt bank. But the Councils were still lapping it up, and ramping up the s106 shopping lists for schemes getting approval, such that now the inevitable crash has happened, developments like Northstowe are on hold, Ashwells has gone bust, and developers around the city are seeking to renegotiate what were previously claimed to be vital payments. In other words, we are still in a high demand area for housing, there are sites available ready to go, and the Council's demands are stopping development from happening - it is a tragic irony that Council demands for affordable housing are probably doing most to keep housing unaffordable for the vast majority of the local population.

The Conservatives have proposed a different way (see policy green papers 9 - Control Shift, returning power to local communities, and 10 Stong foundations, building homes and communities) - s106 type taxes clearly won't go completely, but there will be less interference from government over how developments occur, with control passed to local residents, and local incentives for new development. Hopefully developers will start to focus on what people want, rather than what Councils want, and we can see high quality new developments around Cambridge, with appropriate transport that are welcomed by local residents.


Frugal Dougal said...

Thanks for that, I'd always struggled to understand s106 payments when covering parish council meetings for the paper.

I'd also class the TV licence as a tax!

Tim said...

Does anyone know what happens to the City Council's s.106 receipts? I looked into the receipts for the Belvedere development opposite the Cattle Market a few years ago. The money there was all frittered away on small environmental projects in LibDem wards. Helping those in most need - forget it! Is there a source setting out where the money comes from, where it goes, and how much is lying idle waiting to be spent? Or is the money that was deposited in the Icelandic Banks?

Chris Howell said...

Good point indeed Tim.

I think main Belvedere s106 contribution was a commuted sum related to not providing the Council's required level of affordable housing on site, that was spent on a project elsewhere in the city. That raises a number of questions...

Generally the City Council sticks all the s106 cash in the bank - they make up significant minority of the £80m in cash the Council holds, so arguably a proportion of the cash is missing in Iceland (however when the Council hit budget problems last year, the first thing they did was start to look at the accounting rules for this type of money and other reserves, and, for example, decided that interest on the s106 moneys belonged to the general fund, and should no longer be accumulated in the s106 pot - welcome to budgeting Lib Dem style)

When I last enquired, there was several million (I think it was about £4m) of s106 cash given in lieu of developers providing insufficient public open space on new developments. Much of this cash had repayment clauses if not spent by certain dates, so the Council is now in a desperate scramble to spend the cash 'improving' existing open spaces with new equipment etc. Trouble is, many people like their open spaces left how they are and not 'improved' by the council (cf controversy over Jesus Green), and these projects both create an ongoing revenue liability when the 'improvements' need to be maintained, and in no way mitigate the fact that we are allowing developments without adequate open space (or transport space for that matter).

To put these figures into context, the City Council share of Council tax collected is about £6m per year.

There is a similar situation on Riverside, where there is a load of s106 cash (I think from Tesco) in the bank to 'improve' Riverside, so grandiose schemes are now being planned, sucking in further taxpayers cash, and again with a clock ticking before the money goes back to the developer. In this case, it really would be a windfall benefiting the developer at the expense of taxpayers and those occupying the new developments if the money was repaid, as the project has already been completed based on the s106 payment that would then be unexpectedly returned. The whole system is very, very broken.

Martin said...

There is plenty of demand in Petersfield (which has a considerable shortage of public open space) for the Howard Mallet Centre on St Matthew's Piece to be returned to open space. The Labour Councillors seem to think this would be £ ~1/2m or so, so would be a good use of this S106 money for open space.

Richard Taylor said...

"s106 moneys belonged to the general fund, and should no longer be accumulated in the s106 pot - welcome to budgeting Lib Dem style"

This is interesting in the context of the City Council's current pressure on the County to spend some of the S106 money from the Vie development in Chesterton, which will have to be paid back later this year if not used. As the money was destined for highways work the City Council which collected it passed it to the County Council. Liberal Democrat Executive Councillor Clare Blair spoke at the recent Traffic Area Joint Committee to call on the County Council to spend the money, PLUS INTEREST, on allowing parking on Church Street in Chesterton.

Inconsistency is what those voting Lib Dem are opting for though, Cllr Blair may well believe she has a mandate for taking her position.