Who pays for our Scottish railways?

Transport Scotland recently published its consultation document on the future of rail services in the country. Scotland’s passenger railways are broadly a £1bn a year business with 26% of revenue coming from passengers and the remainder from tax payers – of whom a minority are also rail users. (This covers just Scotrail operations and excludes cross border services provided by other operators as well as rail freight.)

The consultation document raises the question of what should be the balance between rail users and taxpayers in terms of paying for rail services. The implication being that the present split is not seen as equitable. The recent funding of London’s Crossrail (whilst an infrastructure project) provides an interesting precedent about how rail services might be funded with its a third, a third, a third funding package. That is a third of the money comes from users, a third from businesses and a third from general taxes. The logic behind this funding arrangement is broadly as follows. Passengers obviously benefit from the service so should contribute to it. Businesses (ie employers) in locations served by the rail network benefit from being able to draw upon a larger labour pool to recruit from which reduces wages and improves competitiveness while not having to provide so much car parking. Whilst the general public benefits from a reduced number of cars on the road network, so benefits from less congestion and pollution as well as reducing the need to invest in new road infrastructure.

So what would be the implications of such a funding regime in Scotland? If passengers were to pay a third of the cost of services this would require (all other things being equal) fares to rise by 27%. If we assume that such a funding package were to be phased in over say a five year period this would require annual real fare rises of 2.5% if passenger numbers also grew at 2.5%. This would mean that the present average single fare of £3.30 per single trip would increase to £3.70 in present prices by year 5.

The second source of funding, from businesses, could be  based on the French “versement transport” which is a hypothecated local tax levied on the total gross salaries of employees. In France the rate varies by area and is applicable only to companies of more than nine employees. It is highest in Paris where the rate is 2.6%. To keep it simple in this example we have assumed the levy will be paid by everyone employed in those local authority Districts where at least 4% of the workforce commute to work by rail and that the levy will need to raise £330m a year. Based on the 640,000 people employed in these Districts and average wages within them this would equate to a levy on wages of 1.9%. In the context of France this a high levy especially as it only covers national rail services and few employers benefit from their staff commuting by rail.

The balance of funding would come from general taxpayers and in this third/third/third model would see a reduction in the amount sought per household from £315 per household now down to £140 per household.

The above analysis highlights some of the issues of rail funding in Scotland. It is difficult to see how the “a third, a third, a third funding package” could work given the high level of contribution required from employers in relation to the low number of rail commuters. However, even with considerable above inflation fare increases and assumed growth in rail patronage it is difficult to see passenger revenues covering much more than a third of operating costs.

This suggests, that if the present funding split is not acceptable, the need to identify either new sources of finance or to significantly reduce costs including closures to improve the financial sustainability of Scotland’s passenger rail services.

Key planning aspects of 2011 Autumn Statement

Planning 

In response to the Penfold Review, the Government will:

•• ensure the key consenting and advisory agencies have a remit to promote sustainable development as soon as the National Planning Policy Framework is finalised. This will ensure that these bodies consider the impact of their decisions on sustainable economic growth and swiftly approve consents when it is appropriate to do so; and

•• introduce a 13-week maximum timescale for the majority of non-planning consents, to speed up the consenting process and give certainty to developers. This will take immediate effect for government agencies.

In addition, the Government will:

•• ensure that there is a more effective mechanism for applicants to obtain an award of costs, if there is an appeal against refusal of a planning permission where a statutory consultee has acted unreasonably, through measures to be implemented in summer 2012. The Government will also improve the performance of the key statutory consultees in responding swiftly to applications. This will include key statutory bodies bringing forward an improvement plan by spring 2012;

•• build more flexibility into the new major infrastructure planning process, particularly in the pre-application phase, by summer 2012, as part of a light touch review of the process responding to feedback from users of the regime; and

•• ensure that compliance with the Habitats and Wild Birds Directives does not lead to unnecessary costs and delays to development, while continuing to support the Directives’ objectives. The Government is reviewing the Directives as currently implemented in England by Budget 2012 and is committed to tackling blockages for developments where compliance is particularly complex or has large impacts. In addition, the Government has announced progress on specific projects where compliance has already proved problematic, including Falmouth Harbour.

The Government will also:

•• review planning appeals procedures, seeking to make the process faster and more transparent, improve consistency and increase certainty of decision timescales. Proposals will be brought forward for implementation in summer 2012;

•• consult on a proposal to allow the reconsideration of those planning obligations agreed prior to April 2010 where development is stalled; and

•• consult on proposals to allow existing agricultural buildings to be used for other business purposes such as offices, leisure and retail space, to make it easier for rural businesses to find the premises they need to expand.

Housing market

The Government will:

•• introduce a new build indemnity scheme to increase the supply of affordable mortgage finance for new build homes. Under the scheme, home buyers will be able to purchase new build houses and flats with a five per cent deposit. House builders and the Government will help provide security for the loan. The Government will take on a contingent liability which will build up in line with purchases under the scheme, to a maximum of £1 billion. This will help up to 100,000 families and young people to buy their own home;

•• reinvigorate the Right to Buy to support social tenants who aspire to own their own home, by raising the discounts to make it attractive to tenants across England. For each home purchased, the Government will provide an additional affordable home, in addition to plans to deliver up to 170,000 affordable homes through the new Affordable Homes Programme;

•• launch a new £400 million Get Britain Building investment fund, which will support firms in need of development finance. This will help to drive progress on stalled sites which have planning permission and are otherwise ready to start. The Government will issue a prospectus to interested developers by the end of the year; and

•• support new development, which could include modern garden cities, urban and village extensions. The Government will invite proposals from developers and local authorities for new developments which have clear local support.

The Government is committed, through the Green Deal, to improving the energy efficiency of buildings to benefit energy bill payers and the environment. As additional one-off support for this, delivering the commitment at Budget 2011, the Government is allocating £200 million to encourage early uptake of the Green Deal in its initial phase over 2012-13 and 2013-14. Further details will be set out next year and will be subject to state aid considerations.

The Government is publishing analysis showing that the stamp duty land tax relief for first time buyers has been ineffective in increasing the number of first time buyers entering the market. This relief will therefore end on 24 March 2012 as planned.

Autumn Statement 2011 – Key transport announcements

Infrastructure

The Government will invest over £1 billion (of which around £900 million will be in the Spending Review 2010 period) to tackle areas of congestion and improve the national road network, including:

• £270 million for two new managed motorway schemes to allow use of the hardshoulder at congested times on the M3 and M6;
• £150 million for improvements to the M1/M6 intersection, £110 million for the A14 Kettering Bypass, £160 million for widening the A453 and £110 million for the A45/46 Tollbar End improvement scheme; and
• £220 million for smaller projects which will deliver significant improvements on the road network, such as removing bottlenecks and improving safety and road layout.

More than £1.4 billion will be invested in railway infrastructure and commuter links, including:

supporting Network Rail to deliver £290 million to electrify the Transpennine railway route from Manchester to Leeds, and £270 million for a rail link between Oxford and Bedford;

supporting Network Rail to deliver £390 million of enhancement and renewal works to improve stations and rail infrastructure, improve resilience against extreme weather and tackle problems more quickly; and the Government funding improvements to the quality of travel for rail users, including

 £45 million to extend smart ticketing across London and the South-East,

 £80 million to support the Southern Rail franchise’s procurement of 130 new carriages, and £290 million to limit the increase to regulated rail and Transport for London fares in January 2012 to the Retail Prices Index (RPI) plus one per cent.

The Government will commit £170 million of extra funding to allow more local transport projects to go ahead, including the Kingskerswell Bypass in Devon, the Lincoln Eastern Bypass and Manchester Cross City Bus, and will write down £150 million of debt on the Humber Bridge, which will halve the tolls for cars.

In addition, £50 million will be made available to replace the Caledonian Sleeper fleet, to improve on-train facilities. The funding is subject to the Scottish Government agreeing to co-fund the replacement and provide the remainder of the funding. The Government will also engage with the Welsh Government on improvements to the M4 in south east Wales.

A14 challenge – The Government will examine ways to increase the long-term capacity and performance of the A14 with the launch in early December 2011 of a large-scale engagement programme: ‘the A14 Challenge’. By spring 2012, it will have developed and assessed proposals including capacity enhancements on the Fen Ditton to Ellington section of the road. The Government will also look at the scope to relieve congestion by improving other modes including local roads, freight facilities and public transport. It will consider whether improvements can be funded through innovative financing mechanisms including tolling. This work will support the proposed development of new homes in Northstowe, Waterbeach and Alconbury. The Government will also consider tolls to fund other road infrastructure if appropriate.

The Government also commits to build a new crossing across the Lower Thames, with the Government launching analysis of three options to inform a consultation in 2013. The Government will also explore the options for tackling pressures at Junction 30 of the M25 and on the A13 corridor as part of that analysis; and support the development of the London Gateway port, which is forecast to create 12,000 jobs, by helping the developer identify sufficient traffic management measures that, once formalised, will enable the next phase to proceed within a variation to the existing planning consent.

Fuel duty, rail fares and air passenger duty

Given the current high cost of fuel, to support motorists and businesses, the Government announces that the 3.02 pence per litre (ppl) fuel duty increase that was due to take effect on 1 January 2012 will be deferred to 1 August 2012, and the inflation increase that was planned for 1 August 2012, currently expected to be worth 1.92ppl, will be cancelled. This will ensure that there will only be one RPI increase next year. The 5ppl discount for the Inner and Outer Hebrides, the Northern Isles, the islands in the Clyde and the Isles of Scilly will, in addition, come into force on 1 March 2012. The Government will publish details of the design of the fair fuel stabiliser at Budget 2012.

The Government recognises the pressures that businesses and passengers are under as a result of public transport fares. The Government has decided to limit the increase to Transport for London and regulated rail fares to RPI plus one per cent for one year from January 2012.

Air Passenger Duty (APD) rates will increase from 1 April 2012, as set out at Budget 2011. The Government will also proceed with the extension of APD to flights taken aboard business jets, effective from 1 April 2013. Details will be set out in the Government’s response to the APD consultation on 6 December 2011. As announced on 27 September 2011, APD will be cut for passengers travelling on direct long-haul routes departing from airports in Northern Ireland, effective from 1 November 2011. To provide a lasting solution, the Government has launched a parallel process to devolve aspects of APD to the Northern Ireland Assembly.

Regional detail

In detail by region including some previously announced:

NORTH EAST

Electrification of the Transpennine Express

Tees Multimodal Bio-Freight Terminal

YORKSHIRE AND THE HUMBER

Accelerating M1 junction 39 to 42 scheme

A164 Humber Bridge to Beverley

A18-A180 Link (NE Lincolnshire)

A6182 White Rose Way Improvement Scheme (Doncaster)

Access York Park & Ride – Two new park and ride sites

Leeds Rail Growth – Two new railway stations: Kirkstall Forge and Appley Bridge

Supertram additional vehicles (Sheffield)

Electrification of the Transpennine Express

Improved access to the Sheffield Gateway

Humber Bridge toll reduction

NORTH WEST

Electrification of the Transpennine Express

M56 at Manchester Airport link road to A6 south of Stockport

Completion of Western gateway Enabling Scheme at Port Salford

Expansion of Mersey Multimodal Gateway

Crewe Green Link Southern Section

Manchester Cross City Bus

Rochdale Interchange

Mersey Gateway Bridge

Reinstating Todmorden Curve

EAST MIDLANDS

Lincoln Eastern Bypass

A43 Corby Link Road

Hucknall Town Centre Improvement Scheme

London Road Bridge (Derby)

Widening the A453 between Nottingham, the M1 and Nottingham East Midlands Airport

M1/M6 Junction 19 major road improvements

Development consent granted for a scheme to improve the A1 at Elkesley

Widening the A14 Kettering Bypass between junctions 7 and 9

WEST MIDLANDS

M6 managed motorway scheme between Birmingham and Manchester

A45 Westbound Bridge (Solihull) – Replacement bridge over the West Coast Main Line close to Birmingham Airport on the A45 strategic corridor into Birmingham

Evesham Bridge Maintenance (Evesham) – Rebuilding of the main bridge into Evesham from the South

A45/46 Tollbar End improvement scheme

A45 Corridor (Damson Parkway to M42 junction 6) diversion

EAST OF ENGLAND

New Lower Thames Crossing

A14 in Cambridgeshire

M1 Junction 10a improvement

SOUTH EAST

M3 in Surrey – managed motorway scheme Replacement of Northern Road Bridge (Portsmouth)

New M275 Tipner Interchange (Portsmouth)

130 additional carriages for the Southern rail franchise in south London

New rail link between Oxford and Bedford

SOUTH WEST

Bus Rapid Transit scheme from Ashton Vale to Temple Meads (Bristol)

Kingskerswell By-pass (Devon/Torbay)

South Bristol Link Phases 1&2

LONDON

Northern Line extension to Battersea

Acceleration of M25 junction 23 to 27 scheme

Thames Tideway Tunnel

Localism Act – key measures

Key measures to increase the power of local government through the Act include:
 Introducing a new general power of competence, giving councils freedom to work together to improve services and drive down costs. Councils are now free to do anything – provided they do not break other laws
 Opening the door for the transfer of power to major cities to develop their areas, improve local services, and boost their local economies
 Ending the system for overseeing the behaviour of councillors by abolishing the Standards Board
 Clarifying the rules on predetermination in order to free up councillors to express their opinions on issues of local importance without the fear of legal challenge
 Enabling councils to return to the committee system of governance, if they wish, regardless of
 Giving councils greater control over business rates. Councils will have the power to offer business rate discounts, which could help attract firms, investment and jobs. It stops plans to impose a business rate supplement on firms if a simple majority of those affected do not give their consent, and simplifies the process for claiming small business rate relief
 Introducing new planning enforcement rules, giving councils the ability to take action against people who deliberately conceal unauthorised development
 Increasing powers for councils to remove illegal advertisements and graffiti and prevent fly-posting, and giving planning authorities stronger powers to tackle abuses of the planning system
 Reforming homelessness legislation to enable councils to provide good quality private rented homes where appropriate, freeing up social homes for people in need on the waiting list
 Allowing councils to keep the rent they collect and use it locally to maintain social homes through the abolition of the housing revenue account
 Passing greater powers over housing and regeneration to local democratically elected representatives in London.
Key measures to increase the power of local communities include:
 Introducing a new Right to Bid, which will give residents the opportunity to take over local assets like shops and pubs
 Introducing a new Right to Challenge, making it easier for local groups with good ideas to put them forward and drive improvements in local services
 Removing the ability of councils to charge families for overfilling their bin and to introduce extra tariffs for taking away household waste
 Increasing transparency on local pay, by requiring councils to publish the salaries of senior officials working in local authorities,
 Giving communities the right to veto excess council tax rises.
 Introducing a new right to draw up a neighbourhood plan, giving local people a voice to say where they think new houses, businesses and shops should go – and what they should look like
 Enabling communities to bring forward proposals for development they want – such as homes, shops, playgrounds or meeting halls, through the Community Right to Build
 Abolition of Home Information Packs.
 Enabling people to swap their social home, for example because they wish to move jobs. A national home swap scheme will give access to details of all other tenants who may be a match
 Giving social tenants stronger tools to hold their landlords to account. Landlords will be expected to support tenant panels – or similar bodies – so tenants can carefully examine the services being offered.
 The Tenant Services Authority will be abolished
 Requiring developers to consult local communities before submitting certain applications.
 abolishing the Infrastructure Planning Commission,

Launching SKM Colin Buchanan

Colin Buchanan & Partners Ltd, a leading transport planning, planning, urban design and economics consultancy, will merge with projects firm Sinclair Knight Merz (SKM).

The two businesses share a common culture and values and a complementary set of clients and market focus. Combining both teams creates a world leading transport planning consultancy with global reach and increased capacity and capability to service clients both in the UK and overseas. In the European and Chinese markets, the merged organisation will be known as SKM Colin Buchanan.

Paul Dougas, SKM’s Chief Executive and Managing Director said, “Our strategy continues to be driven by the evolving needs of our clients and their operations. Right now, our transport infrastructure clients are facing particular challenges and require trusted partners to bring deep insights and innovative solutions that meet their commercial needs across the entire life cycle of a project.”

Michael Shirley, SKM’s General Manager for Buildings and Infrastructure, added, “The combination of Colin Buchanan and SKM’s transport planning practices will double our strategic capability in this space and create an impressive group of transport planning professionals offering great services and insights to public and private sector clients across a range of geographies.”

Andreas Markides, Colin Buchanan Chairman will take a key role in the new operation, joining the board of SKMEurope. “SKM and Colin Buchanan already have experience through collaboration on a number of opportunities and we now look forward to providing that stronger, joint capability to all our clients.”

More about Sinclair Knight Merz (SKM):

Sinclair Knight Merz is a leading projects firm, with global capability in strategic consulting, engineering and project delivery. It operates in three regions: Asia Pacific, the Americas and EMEA (Europe, Middle East & Africa), deploying some 6,500 people from more than 40 offices while serving the Buildings and Infrastructure, Mining and Metals, Power and Energy and Water and Environment sectors.  Formed in 1964 in Sydney as a private company, SKM has retained its independence through employee ownership, with fee income now greater than A$1 billion (£700 million). The firm continues to grow with its clients, and since 1996 has completed more than 60 mergers, acquisitions and outsourcings.

McNulty Review

The review by Sir Roy McNulty, former Chairman of the Civil Aviation Authority and Board member of the Olympic Delivery Authority, was billed as the biggest shake-up in the rail industry since privatisation in the 1990s.  Following publication of his Summary Report, what are the implications for passengers and taxpayers?

European benchmarking indicates that both passengers and taxpayers are paying 30% more than those in other countries.  McNulty believes that the industry should be aiming for a 30% reduction in unit costs for GB railways (per passenger km) by the end of the next control period (2018/19).  He has not looked at possible cuts to the network as a means of achieving this reduction, thus avoiding any comparisons to Beeching but potentially missing an opportunity to look at whether certain rail lines and services are the best way of addressing the public’s transport needs in rural areas.  He concludes that rail fares are too high, and so has not considered further increasing fares to provide additional support to the industry.

His key recommendations can be summarised as:

• Development of clearer definitions of the roles of Government and industry
• DfT to analyse how its subsidy is being used – in particular what is it paying for and does it meet DfT objectives?
• Establishment of a Rail Delivery Group from Network Rail, TOCs, freight and other stakeholders to lead a ‘programme of change’ based on the recommendations
• Less prescriptive franchising (already underway) plus consideration of price-based specifications, up-front payments instead of performance bonds and a review of the franchise map with a possible ‘Northern Region’
• Decentralisation and devolution within NR (already underway) to support comparative regulation of route-level units
• A pilot scheme for vertical integration (possibly Greater Anglia) and two joint ventures/alliances where TOCs and NR work together
• Cost and revenue sharing across all TOCs and NR
• Potential for all subsidy for NR to be channelled through access charges making it more transparent where the costs are borne
• ORR to take on an expanded role of the ‘single industry regulator’ including regulation of franchises
• DfT to undertake a full review of fares policy and structures, with a view to a system that is less complex and aids the management of peak demand within the boundary of revenue neutrality
• Acceleration of smart cards and other retail technologies
• Overhaul of the Ticketing and Settlement Agreement to reduce ticket office opening hours alongside more ticket machines, simple internet sales channels, print-at-home and mobile ticketing
• Improvements in asset management, programme and project management, and supply chain management – including involvement of the private sector earlier in projects with wider use of partnering approaches
• Review of many aspects of staffing and working practices, overheads and administration including Driver Only Operation as standard unless there is a commercial or technical reason for additional staff
• Increased standardisation and more effective procurement of rolling stock
• Pilot approaches to reducing the costs of less intensively used networks

Did we get the big shake-up we were expecting?  No, what we have got are a lot of small changes rather than a few significant ones.  It is a glacial change rather than a tsunami.  But if a 30% (£1bn per annum) reduction in unit costs can be delivered in less than eight years, then the industry will have moved towards the performance of its European neighbours and the taxpayer will be feeling a bit happier as well.  Now it is over to the DfT, who will be preparing a White Paper in the autumn of this year which will include some (or all) of the recommendations.

Privatisation failed to deliver what it has done in other industries, that is, provided transparency over the cost of providing the service.  The rail industry today is a financial merry-go-round and DfT grants to NR make it impossible to see the drivers of high costs.  Hopefully McNulty’s suggestions, for all NR subsidy to go via access charges and DfT to review where its subsidy is being spent, will provide the transparency required to challenge industry costs in more detail and lead to better decision making on where rail subsidies are spent.

New planning powers to promote business

The Government has announced significant amendments to the Localism Bill to promote economic growth. The amendments would broaden the role of Neighbourhood Plans which could now be set up expressly for “promoting the carrying on of trades, professions or other businesses in such an area”, strengthening the role of business in Neighbourhood Planning.

The Government has also announced the “Business Neighbourhoods” initiative which is based on the Department for Communities and Local Government’s “Neighbourhood Planning Frontrunners” scheme.   Milton Keynes Central and Bankside, London, are the first two ‘frontrunner’ areas to be announced under the scheme. Business Neighbourhoods will promote commercial development in various towns and parishes by granting a local development order (LDO), a mechanism designed to give specific types of development planning permission without the need to apply to the local authority. As part of the scheme, businesses will be given the opportunity to vote on the local development plans usually restricted to local residents. Section 70 of the TCPA 1990 (determination of applications for planning permission: general considerations) will also be amended, adding a new consideration to make “any local finance  considerations” material to an application.

What are the opportunities for business?

These amendments represent a great opportunity for business. They will help to unblock sites and opportunities previously held up by restrictive planning policies which have inhibited the ability of businesses to grow and respond to the changing needs, demands and requirements of customers. The amendments will help enable businesses to remain competitive in a rapidly changing economic market. The granting of LDOs will provide a flexible long term framework providing certainty for businesses, allowing future change and direction to be accommodated. The amendments will represent major cost savings for businesses as it will enable an alternative route to the traditional planning application process to be followed.

Localism – are we a nation of Nimbys?

There has been much written about the dichotomy of the government’s desire for localism and the need for more housing in many parts of the UK. The general perception is that local communities will not accept development of any type in their neighbourhoods and giving local communities more power over local planning decisions will stymie development throughout the country.

Research we undertook into Rural Housing Affordability for Defra found that in fact there was a willingness in many local rural communities to accept new housing provided some of it was to meet the needs of the local community.

We have followed up that research with a survey aimed at urban residents asking the degree to which they thought market housing, social housing, a supermarket, office block or a light industrial unit were acceptable or not in their local area. The survey while not claiming to be statistically rigorous provides a usefully corollary to our previous rural analysis.

What we found was that people are, just about, willing to accept additional market housing (that is private housing sold on the open market) in their area. On a scale of 1 to 10 where 1 is very opposed and 10 is very positive to development market housing scored 5.4. Social housing on the other hand scored 4.0 indicating that people are generally opposed to such developments in their local area. However, it did score marginally better than a supermarket which gained a score of 3.9 and offices at 3.7. Even fewer people were prepared to accept light industrial units which obtained a score of just 2.7.

This acceptance or not of housing and other development in a local area seems to depend on the nature of the local community. Evidence from the rural housing study and work we have done elsewhere suggests, not surprisingly, that people are much more accepting of development where there are clear local benefits. In larger urban areas where the benefit of development often does not accrue to the existing community there is less willingness to accommodate it.

A key task for the new localism and neighbourhood planning agenda would therefore seem to be to better align the interests of developers and residents to ensure development is made more widely acceptable.

Scottish transport policy

With the SNP sweeping to power what does this mean for transport? The SNP’s manifesto contains the following transport pledges:

• Borders Railway project
• M8 Baillieston to Newhouse, M74 Raith Junction and M8, M73 and M74 network improvements
• Aberdeen Western Peripheral Routeand A90 Balmedie
• A96 and A9 improvements
• GlasgowFastlink
• Modernisation of theGlasgowSubway
• Edinburgh-Glasgow rail improvement programme, including electrification of much of the central Scotland network and more frequent and faster journeys between Glasgow and Edinburgh

Other rail proposals are to improve connections between Inverness and Aberdeen and between these cities and the central belt. The SNP also intends to make representation to the UK government for the reintegration of rail services in Scotland with the aim of making the delivery of rail services more efficient for the benefit of rail users in Scotland.

Other plans are to progress a new integrated ticketing system and invest in ferries. The Road Equivalent Tariff will continue on the current routes and they will look to roll this out to Argyll and Bute.

The investment in the Southern General Hospital, the Commonwealth Games and school, college and healthcare building programmes will also have implications for transport infrastructure.

The Future Transport Fund has already been launched by the SNP. This is a £50m fund to invest in projects which improve connectivity whilst reducing CO2 emissions -Scotland has a target to reduce emissions by 42% by 2020. It will be paid for through efficiency savings from the negotiation of the Forth Crossing contract.

Budget – Planning and Transport Issues – the details

Budget – Planning and Transport Issues

This note covers the main planning and transport issues arising from today’s budget

Planning reform

Government will:

• introduce a new presumption in favour of sustainable development, so that the default answer to development is ‘yes’;
• localise choice about the use of previously developed land, removing nationally imposed targets while retaining existing controls on greenbelt land;
• pilot a land auction model, starting with public sector land;
• introduce a number of measures to streamline the planning applications and related consents regimes removing bureaucracy from the system and speeding it up. This will include a 12 month guarantee for the processing of all planning applications, including any appeals;
• ensure a fast-track planning process for major infrastructure applications through the Major Infrastructure Planning system; and
• consult on proposals to make it easier to convert commercial premises to residential.

To accelerate the release of public sector land to support homes and jobs, Government will work with local authorities to expedite planning decisions for surplus military land and other public sites suitable for housing, also testing ’build now, pay later’ techniques to quicken delivery. Together with the new presumption in favour of sustainable development, these proposals will potentially allow the Ministry of Defence to realise up to £350 million of estate disposals and enable delivery of up to 20,000 new homes by 2014-15.

Enterprise zones

Government announces the location of ten new urban Enterprise Zones within the following Local Enterprise Partnership (LEP) areas: Birmingham and Solihull; Leeds City Region; Sheffield City Region; Liverpool City Region; Greater Manchester; West of England; Tees Valley; North Eastern; the Black Country; and Derby, Derbyshire, Nottingham and Nottinghamshire. In addition, London will have an Enterprise Zone and be able to choose its site.

The Government will also launch a competitive process for interested LEPs to establish ten more Enterprise Zones.

The Government will make a range of policy tools available to all 21 zones:

• a 100 per cent business rate discount worth up to £275,000 over a five year period for businesses that move into an Enterprise Zone during the course of this Parliament;

• all business rates growth within the zone for a period of at least 25 years will be retained and shared by the local authorities in the LEP area to support their economic priorities;

• Government and local authority help to develop radically simplified planning approaches in the zone; and

• Government support to ensure superfast broadband is rolled out in the zone. This will be achieved through guaranteeing the most supportive planning environment and, if necessary, public funding.

LEPS

Government will work with individual LEPs to consider:

• the scope for introducing enhanced capital allowances to support zones in assisted areas where there is a strong focus on high value manufacturing;

• the use of Tax Incremental Finance to support the long-term viability of the zone, in tandem with the Local Government Resource Review; and

• UKTI support on inward investment and trade opportunities.

Government will work with the devolved administrations to explore opportunities for employing the new Enterprise Zone model across the UK.

The Regional Growth Fund was set up to support private sector growth in the areas most dependent on the public sector. The Government will confirm all successful bids shortly and will launch the second round in April 2011.

Housing

The Budget provides help for homeowners and new buyers, and supports the capacity of the house-building industry to ensure a more efficient housing market:

• the Government will help homeowners facing difficulties by extending for a further year temporary changes to the Support for Mortgage Interest (SMI) scheme. The 13-week waiting period and £200,000 limit on eligible mortgage capital will now remain in force for new working age SMI claimants until January 2013;

• the Government will provide £250 million to support first time buyers to purchase a new-build property. The FirstBuy programme will assist over 10,000 households with equity investments jointly funded with house-builders; and

• the Government will strengthen demand for residential property by reforming the stamp duty land tax rules applied to bulk purchases. This will reduce a barrier to investment in residential property, promoting private rented housing supply.

• The Government will announce the outcome of its review of the stamp duty land tax relief for first time buyers in autumn 2011.

Government will make Real Estate Investment Trusts easier to set up and more accessible to investors. This will encourage investment in the private rented sector over the longer term.

Motoring

In recognition of high current oil prices, fuel duty will be cut by 1 penny per litre from 6pm today. The Government will abolish the fuel duty escalator and replace it with a fair fuel stabiliser. When oil prices are high, as now, fuel duty will increase by inflation only.

In addition, to ease the burden on motorists, the 2011-12 inflation-only increase in fuel duty will be deferred to 1 January 2012. The 2012-13 increase in fuel duty will be implemented on 1 August 2012.

In future years, if the oil price falls below a set trigger price on a sustained basis, the Government will reduce the Supplementary Charge back towards 20 per cent on a staged and affordable basis while prices remain low. Fuel duty will increase by RPI plus 1 penny per litre in each such year. The Government believes that a trigger price of $75 per barrel would be appropriate, and will set a final level and mechanism after seeking the views of oil and gas companies, and motoring groups

The Government has today formally submitted a derogation request to the European Commission for a rural fuel duty rebate pilot scheme. This is intended to deliver a 5 pence per litre duty discount on petrol and diesel across the Inner and Outer Hebrides, the Northern Isles, the islands in the Clyde and the Isles of Scilly

Air Passenger Duty

In the June Budget 2010, the Government undertook to explore changes to the aviation tax system, including switching from a per-passenger to a per-plane duty. The UK’s international obligations in this area include Air Service Agreements with over 150 different countries and the 1944 Chicago Convention. The Government will not introduce a per-plane duty at the present time, given concerns over the legality and feasibility of this approach. The Government will start a programme of intensive work with our international partners to build consensus for a perplane duty in the future.

The Government is launching a consultation on reform of Air Passenger Duty. The Government wants a simple tax system for air transport services which does not hamper growth, which ensures a fair contribution toward the public finances and which will support the reduction of global emissions. The consultation includes plans to extend the tax system to flights taken aboard business jets for the first time. The Government will also freeze Air Passenger Duty rates for 2011-12, with the RPI increase assumed in the forecast deferred to April 2012.

Other transport

Budget announces £200 million of new funding for rail projects and £100 million of funding for local authorities to repair potholes caused by the exceptionally cold winter, funded from within existing budgets. This is in addition to the £100 million announced in February 2011.