So we are told, the current economic crisis has not been matched since the end of WW2. It is perhaps unsurprising therefore that - as the Coalition is just about to publish a National Planning Policy Framework which fundamentally revisits the town planning system – the same approach to taxing development values seems to be rising to the surface; this time by stealth.
Post war planning in the form of the new, bright and shiny Town & Country Planning Act 1947 sought to strip out development value for the Exchequer with a 100% land tax; the aim being to legislate development value out of existence. It didn’t last.
Now we see a whole raft of development related taxes that, quite frankly, are going to add up to a situation where anyone with any sense (and the desire to keep some money in the bank) will think more than twice about investing in the UK; England in particular.
The costs of mounting even a quite straightforward application are bad enough, given all the validation detritus one has to provide, but that is just the start.
First there is the pre-application charge levied by some local authorities for providing advice and guidance on planning applications. Helpful to some perhaps, but the cash/benefit analysis is so firmly weighted toward the heavily caveated advice of Officers one wonders what you are actually paying for.
And I note that Westminster City Council are early off the blocks with an extra service charge… for just doing their job properly! A £400,000 shortfall in its planning departments’ finances is being recovered from developers who are paying extra fees (of £26,000) in return for an agreed timetable for processing their application.
What!! So you don’t give advice we can rely on and then don’t keep to any published timetable unless palms are greased with filthy lucre. What about all those wonderful promises set out in the Statement of Community Involvement? Worthless.
Then we have the planning fee itself. Now some 30 years old it is obligatory. No pay no play. Designed to support the costs of the planning process it has worked reasonably well up to now, but as the tariff rises it is becoming restrictive on some small developers who are finding it harder to pass the costs on to future purchasers/tenants.
As I write, the Government is reaching its conclusions on whether to hand Council’s new powers to set their own planning application fees. With recent spending on planning and development services cut by up to 43% between 2009/10 and 2011/12, according to the Institute for Fiscal Studies, it doesn’t take a rocket scientist to guess what some authorities will be doing if they get such a power.
And let’s not forget that planning fees include post application fees for satisfying the plethora of planning conditions.
Next up there is the Community Infrastructure Levy. Designed to provide more certainty over ‘planning gain’ costs, it is easy for CIL to become a Councillors’ charter for raiding the piggy banks of all those ‘nasty developers’, to fund everything on their self aggrandizement checklist. This will doubtless be supported by the rise of Localism and the evident belief from the populous at large that anyone carrying out any form of development is as rich as Croesus and easy pickings for a handout.
And even if you’ve managed to scrape the cash together to build whatever it is, pay something off the bank borrowing and give something back to the shareholders (or your family) the pain is not over yet. Oh No.
Apart from having to pay business rates for any vacant commercial property you have foolishly constructed without a full pre-let, you might just be shafted by a random tax levy at any time, for pretty much anything, at the whim of the Council.
You’ve gone too far now Butter, even for you.
Well, what about this.
Scotland has just voted through the ‘Tesco Tax’; a windfall tax levy on retailers who sell alcohol and tobacco; allegedly in the interests of health policy. Yeh, right! At least Northern Ireland was more honest about it. In introducing a similar Tax on retailers Northern Ireland Finance Minister Sammy Wilson has said, "The money raised through the levy will be used to provide much needed additional support to small businesses, which continue to struggle during these difficult economic times".
Hmmm. Methinks many of the larger businesses could soon be looking for similar help in the near future as they become smaller because of all the ruddy tax they have to pay.
And it’s not over yet. The pain continues.
In this weeks’ Property Week (9/3/12 p57) I see , “Nottingham’s office and industrial property occupiers may next month have to pay a new tax, which starts at £3,168 a year and could exceed hundreds of thousands of pounds for larger firms”. Why? To pay for two new tram lines. This is Nottingham’s ‘Workplace Parking Levy’ which kicks in from 1st April at £288 per parking space per year. So what is the S.106/CIL Levy for then?
This all makes Shylock’s ‘pound of flesh’ look positively tame. He clearly wasn’t thinking big enough. What next? A window tax? It’s been done before, for much the same reasons. Think of all that plate glass on banks at Canary Wharf. Luverly!
If the proverbial development camel wasn’t already struggling under the weight of all the economic pressures placed upon it, these various stealth taxes are more than enough to break its back.
As stiff upper lipped Brits’ we may just clench our teeth and battle on until we finally collapse from levy-itis. But try explaining all that cost to your average overseas investor who thinks the UK is still a good place in which to do business. Faced with all that upfront cost and future risk he’s just going to run for the hills. Brilliant.
