Developers to pay more towards local schools, hospitals and roads under Government shake-up of planning system

Developers and landowners will be required to pay more towards building schools, hospitals and local infrastructure under a major Government shake-up of the planning system.

The Housing Secretary Robert Jenrick will this week propose a new system of contributions from developers which will require them to handover more of the profits generated from rising land values.

The Daily Telegraph understands that the plans involve overhauling Section 106 agreements and the Community Infrastructure Levy, the two primary mechanisms through which planning authorities seek to reclaim money for local communities.

It comes after Mr Jenrick unveiled plans for a new zonal planning system in an article for The Sunday Telegraph, which would see new homes, hospitals, schools, shops and offices given an automatic “permission in principle” in swathes of the country.

The changes would require councils to designate land according to three zones - “growth”, "renewal" and "protection" - with developers given permission in principle in the former.

In his article, Mr Jenrick wrote that the existing system has been a “barrier” to building affordable and family homes, with the average standard housing development taking five years.

He also argued that the system had caused delays to the construction of hospitals, schools and road improvements, which are often needed alongside large housing developments.

At present, developers are often required to enter into Section 106 agreements with local planning authorities, which can require them to make a financial contribution to specific infrastructure projects needed in a community.

Some councils calculate the charge based on the number of bedrooms in a new-build - for example a four-bedroom family home - in order to pay for more schools in areas where there are limited places.

Introduced in 2010, the Community Infrastructure Levy is a tariff calculated on the total floor space or number of new dwellings in a development, and is used by local authorities to fund the building of new roads, schools, parks, leisure centres and hospitals.

This newspaper also understands that the plans, due to go out to consultation this summer, will also include the creation of new development corporations, which will see powers over planning permission transferred from local authorities in some areas.

The development corporations would be able to buy land with taxpayers’ money, grant planning permission to build on it, then sell the land to developers at a profit.

All money raised would be used for public benefit by building schools, roads or other infrastructure.

However, a senior Government source stressed on Sunday that development corporations would only play a limited part in a much wider reform of the planning system.

Setting out the reforms on Sunday, Mr Jenrick said the existing system has been “a barrier to building homes which are affordable, where families want to raise children and build their lives."

Currently, it takes an average of five years for a standard housing development to pass through the planning system "before a spade is even in the ground." The Government believes it can reduce the process by up to two years.

Under the proposed zonal system, developers will be given “permission in principle” in growth areas, with full consent provided once the council has confirmed design is in line with local development plans which stipulate the type of buildings that can be constructed on that land.

All proposals would also be checked against local design codes, hich would set out the types of buildings that are acceptable in each area.

Areas marked for "renewal" would largely encompass brownfield and urban sites, with ministers consulting on how a similar “permission in principle” could apply.

Protected areas will include Green Belt land and Areas of Outstanding Natural Beauty.