Developing a New Legal and Financial Model for New Garden Cities/Suburbs #NPPF Part 1

Later this year the DCLG will be consulting on how best ‘garden city principles’ can be implemented.  The hope is some of the beartraps and mistakes of the Ecotown’s fiasco.  We can predict that many many responses to that consultation will respond that an indispensable component of Garden Cities (including Garden Suburbs and Eco-Communities in urban areas) is that residents share in the uplift of land values and this is used to fund on-going community and social services. We can also safely predict that the Policy Exchange model of let it rip, disregard all local democracy and design and let landlowners take 100% of the uplift in land values will get a lead balloon reception if consulted on.

So rather than wasting six moths it is important that any consultation deals with real practical issues on how they could be set up quickly, successfully, not subject to legal challenge and be fit for purpose.  Below i’ve set down a number of key issues.

1) Is Current Legislation fit for Purpose?

The New Town Act 1981 is still on the statute book.  As even this government has recognised development corporations, such as the Mayoral Development Corporations planned for London, can have a role, especially where LPA boundaries are crossed and to unite the ‘deal making’ and ‘Planning’ function – a key lesson both of Urban Development Corporations and New Town Development Corporations.  The power to acquire and hold land is critical.

In the longer term there is a very strong case for the law commission to look at consolidating Planning, Regeneration, CPO/Compensation , SEA and New Towns law into a single simpler bill.   Planning law has become creaky and complex like an overextended wooden house and it is now 22 years since the last consolidation which set up a system which lasted exactly one year.   As im sure all parties will be looking at that after the next election the law commission perhaps needs to start this this year.  But that reforms will take years, so what can be done now with current legislation.

From a modern eye there are aspects of the 1981 which act as a positive hinderance to achieving sustainable development.

Section 5(5) of the act however prevents development corporations from carrying on ‘any undertaking for the supply of water, electricity or gas or for the provision of sewerage services, or any railway, light railway, tramway or trolley vehicle undertaking’

Sustainable design may well propose reed bed sewerage, local renewable energy etc.  Corporations are allowed to build these but prevented from running an undertaking, a ridiculous restriction.

Fortunately there is a general power to remove outdated legislation, as this is, under the Henry VIII clauses of the Legislative and Regulatory Reform Act 2006  orders to remove such clauses can be laid before parliament.

There are other aspects of the 1981 Act which are outdated but can be worked around.  For example section 7 on planning control separates out powers for masterplanning – Section 1 – from granting consent – section 2.  Doing this within the context of current EU law – such as the SEA directive, is critical.

A key lesson from the second round of New Towns – the likes of Skelmersdale and Cumbernauld – is that designating a new town (or Garden City in modern context) before a masterplan is a disaster.  Lets hope that LPAs and the government learn that lesson now.  LPAs should not just be content with landowner led designs.  A key lesson from the Ecotowns process is that these designs can be very poor indeed.  Also if these are to be translated into statutory plans (in whatever form) requires an SEA which considers ‘reasonable alternatives’ at an ‘early stage’  It was the failure to consider alternative locations for example in the centralised Ecotowns project which ultimately killed it off as locations were not chosen through a proper ‘larger than local’ strategic planning process with consideration of alternative masterplan designs.  Legal challenges were lined up even if the election had not intervened.

So a possible model is to run a proper design competition – similar of course to Letchworth.  A LPA or LPA consortium might say – to give an example the consortium of local authorities in the Gatwick / Brighton corridor considering a new country town – ok we are looking at the option of a ‘Garden City’ in this broad area we invite masterplans for a settlement with a design size of up to x population.  Then these alternatives could be SEAd and this contribute to the final decision, this decision (which may require masterplan modification to mitigate adverse impacts) then becoming part of the submitted local plan or plans.  The Design Council – CABE  in their new role could help coordinate and advise on these – though some seed-corn national funding would be helpful.

This would ensure that section 7(1) Masterplans could not be legally challenged.

The split between masterplanning in section 7(1) and allocation under section 7(2) of the NTA is critical in ensuring that land can be CPO or acquired at existing land use value +compensation – critical to making the Garden City model work. Though the government again could look at revised models where landowners share in a % of uplift which would encourage them to get on board rather than challenge the process in courts or at the lands tribunal. Of course landowners could voluntarily offer the large part of any uplift through an unilateral undertaking which would be a swift and pragmatic solution.  Failure to capture any uplift whatsoever however would not be a Garden City at all – Ebenezor Howard would turn in his grave.

The key aspect of CPO law, as it has been for 40 years, is the concept of ‘relevant date’  the date the CPOing body acquires land, broadly, is the date compensation is assessed.  However if land is zoned, or a special development order is issued under the 1981 act, before then then the landowner will get full market value making the whole process pointless.

But there was a process used by the old Development Corporation that could be used now.  The SoS approves a masterplan (and in the future why not make it so LPAs too can approve materplans) showing land needed as some in determinate date, but not released allocated.  After CPO the DC then gets the SoS (and in future LPA) to issue a special development order which jointly allocates the land and grants outline planning consent – a very powerful way of attracting employment development for example.  Then land can be acquired at close to existing use value.  This was critical to the economic model of New Town where Treasury funding was paid off over years by land value uplifts.  That model wont be practical now but the issue today is how to make schemes cover their own face from private up-front infrastructure funding (see next section).

This model can be done both under the 1990 or 1981 acts as I set out in a previous post.  Subject to the CPO being ‘back to backed’ by a development partner there would be no cost to the LPA or DC.  Such CPOs of course are at existing land use value and the CPO inquiry can be concurrent with the EIP and by the same inspector. (see circular 06/2004).  Under the 1981 Aquisition of Land Act the ‘relevent date’ for CPO valuation is the date of the lands tribunal decision of the date value are agreed, or the date vested if that procedure is used.  (see para 23 of DCLG 2010 guidance).  So all a local plan need do is state in a phasing policy that the allocation of the land shall not take place until after the land has been acquired by the LPA.  National Guidance could confirm the legitimacy of this approach

I cant see that any other clauses of the 81 act are hindrances, it is a clear and well written act by modern standards, far more so than the Localism Act.  Though the designation procedures etc. may need to be added to at the SoSs discretion.  For example simply imposing a board to override local democracy would be unacceptable in current localist circumstances.  The procedures used to appoint National Park boards are more of a model, ensuring local democratically elected representatives are in the majority together with a rage of other local stakeholders.

Later today or tomorrow – time permitting – I will post the second part on what financial and legal structures might be used – fleshing out the recent TCPA/Land Securities report, and later a third part on the detailed masterplanning and consenting of specific phases.

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About andrew lainton

International Urban Planner

Posted on April 30, 2012, in National Planning Policy Framework, urban planning and tagged . Bookmark the permalink. 4 Comments.

  1. Hi Andrew,

    i’m looking up CPO powers and was surprised to read the above. i thought that, when a local authority has to make a case for CPOing land, it has to evidence the reasons why it needs it, and the deliverability of what it is proposing to do with the land. i’ve been told that an LPA therefore requires planning permission for the land’s intended purpose (to prove the use’s deliverability), so it can’t in effect CPO at EUV, but rather at the value with planning permission. But you’re saying that it can CPO under s226 of the 1990 act without requiring permission, but just for a general beneficial purpose, and then allocate the land subsequently. this then captures the value uplift for the LPA.

    Was my understanding wrong, then, and is the above the case?

    many thanks,

    Dominic

  1. Pingback: Will Clegg Screw Up Garden Cities Like Everything Else He Touches? « Decisions, Decisions, Decisions

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