Royal Commission on Environmental Pollution

Introduction
The study of environmental planning by the Royal Commission on Environmental Pollution is to be welcomed. Planning is an important vehicle in the delivery of environmental policy and the implementation of environmental law. Planners exert more control than any other profession on the use of land, the demand for transport, and the visual amenity of the landscape. They influence not only the conservation of environmental services, but also the distribution of access to welfare and commercial services across society, and the efficient function of the economy. In summary, good planning contributes to the triple bottom line of sustainability-the environment, society and the economy. Bad planning can destroy value in each of these areas.

Planning and Development
The planning process should reconcile the possibly conflicting interests of the local community, the developer, the landowner, and strategic national needs. At present, except for major developments that are subject to an inquiry, the planning system can be opaque and inconsistent. Planning authorities purport to represent the public interest in extracting the best possible deal from the developer, but sometimes cannot stop developments that they do not support. Appeals are not democratically accountable and may ultimately be decided by the Secretary of State in private. While the scarcity of land in the UK requires the planning process to be efficient, the fact that one of the main mechanisms-S106 agreements (planning gain)-is agreed in only 5% of cases, illustrates that the system does not work well.

There is further evidence that demonstrates the inadequacy of the current planning system. This is found in individual examples of poor development, and in the tendency for planning controls to follow trends that are later reconsidered. Examples of this might include high-rise residence, in-town multi-storey car parking, light-rail schemes and out-of-town retail development. In these cases, economic and social problems have been created because of imperfect assessments (or in some cases the absence of any assessment) of the long-term impact of the development in the context of a changing social structure, and of its induced effect on transport and amenities. Moreover, these problems are expensive to reverse. Robust regional demand modelling should therefore support local-development strategies.

Planning and Economics
Some of these problems could be avoided if planning were placed on a sound economic and social framework. Robust cost-benefit analysis could provide the basis for this framework. At present, impact assessments are informative, but do not bridge the gap between information and negotiation or decision-making. A sound economic basis for planning is needed to disentangle the generation of economic wealth from the relocation of economic wealth, and to promote an advantageous combination of land use and employment for the community. Cost-benefit analysis is also required to quantify the social impact of the geographical redistribution of services that may result. A full economic welfare assessment would illuminate the consequences of development (for example, large blocks of single-purpose development) more instructively than environmental impact assessments. It should also establish the link between transport demand and development, and should employ valuations specific to local impacts. The local valuation of impacts will draw out the relative merits of developing different locations. This would bring the economic, social and environmental case for development together onto an equal footing.

A sound basis for economic assessment would also distinguish between the funding of the provision of essential services (including health services, utilities, roads and schools), and the compensation offered to the community for loss of environmental amenity and increased congestion on roads. Planning gain too often neglects the latter.

Recovering the Cost of Development
The government is reviewing the case for a 'land development' or 'betterment' tax. There is a strong case for a development tax to fund the local provision of services, so that the cost of expanding capacity for schools, highway drainage, roads, etc, is met in full by the developer and landowner. This tax could be set at standard rates for residential, industrial, and retail developments.

Loss of amenity or ecological habitat is rarely offset by the creation of similar amenity value or habitat nearby, and loss of access is not always replaced by new access elsewhere. These are just two examples of the external costs of development. Compensation to the local community for external costs is rarely provided, and hardly ever in a commensurate form. The full consequences of development are too often identified after the development is complete. Yet compensation could be made, and on a more transparent footing than currently offered by planning gain, through clear guidelines on the impacts to be assessed, and the associated eligible compensation. This might be recreation of habitat, parkland, or provision of public transport. Without compulsory compensation, developments that destroy value and welfare overall will continue to be allowed.

Differential Development Tax Rates
Taxes also offer the opportunity to send clear policy signals, and to incentivise choices that the planning system may not effectively control. For example, the development of brownfield sites in preference to greenfield sites will be difficult to administer by quota because the development cost and sale price of the former make greenfield sites a more profitable prospect for developers. Demand for development of greenfield sites is higher than for brownfield sites. There are two possible solutions:

• to relax planning controls on brownfield sites relative to Greenfield-the level of planning control should be appropriate wherever the development; and

• to use an economic instrument, such as a differential rate of tax-detailed planning controls would still be required, but the tax differential would reflect the relative external costs of the two developments and would raise the demand for brownfield sites.

Finally, there remain some vested development rights that are anachronistic and provide the landowner with greater powers than generally granted, such as to develop land without planning permission. These rights should be revoked.

The Case for a Planning Review and Possible Proposals
In summary, there is a strong case for a substantial revision of the planning system, to harmonise rules for development against an economic assessment of the costs and benefits. The planning guidelines should clearly distinguish between short- and long-term impacts and complementary and substitute developments should be considered. In particular, developments should always be considered against the alternatives of no development, or a redevelopment. Development should also be coordinated so that there is a balanced provision of amenities.

A development tax could be used to recover the costs borne locally for the extended provision of services, and to bring the costs of brownfield site development into more favourable balance with those of greenfield sites. The tax would be paid by the developer, but would be passed through in part to the landowner and to the purchaser. The tax revenues should be collected centrally and then redistributed locally, so that the expansion of local services is funded, but local authorities are not accused of approving new development in order to raise revenues. An environmental compensation scheme could co-exist with the tax, based on a clear framework for eligible compensation to mitigate loss of community and environmental amenity. The scheme would replace environmental services displaced by development with new equivalent or improved environmental services.

Back to Index of comments on the scoping of the Environmental Planning Study