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Market Forces Must Replace The Planning Bureaucracy 14/12/2006

Land use planning in Scotland has become a bureaucratic nightmare and should be exposed to market forces, according to a research paper published today by the Policy Institute. In 'The New Land Economy' Mark Pennington and Tom Miers call for a radical overhaul of the planning system and a new network of Local Amenity Companies (LACs) taking charge of land development rights. The LACs, owned by residents in community council-sized areas, would be able to set development rules and trade development rights for fees depending on environmental and economic impact. The LACs could also pay for desirable but unprofitable services such as transport or post offices. Ultimately they could take on many of the functions of local government including roads, parks and rubbish collection. Community buy-out areas in the Higlands and Islands would be the best places to establish the first LACs, say the authors. Tom Miers, executive director of the Policy Institute, said: "Land use planning is at the root of many of our most painful controversies such as urban sprawl, new transport projects, lack of affordable housing, wind farms and power lines. "But the planning system is a bureaucracy that employs methods utterly discredited in other fields of economic activity where competitive markets have proved superior. The recent Planning Bill passed by MSPs focuses on streamlining the bureaucracy but leaves the basic system unchanged. Instead, we need to find a way to price the impact of development, so that society can make decisions about land use more precisely and less controversially." Miers stressed that LACs could also be the lifeline for Scotland's threatened sub-post office network. He said "Subsidising these services at the national level is not sensible because government cannot tell accurately where there is real local demand for them, and so misallocates its subsidy at the expense of the general taxpayer. Instead, local people should decide on any subsidy, which would be paid for by them. This would encourage not only local people to assess the real benefit of the post office, but also the postmaster to maximise the value of the service he offers to local people. LACs would be an ideal vehicle to deal with these matters. They could either make the decision alone or co-operate with neighbouring LACs to fund a joint outlet in an agreed location." Key points: LACs would be constituted like a company, with AGMs and an executive chosen by and accountable to local residents. The LACs would compete with each other to develop efficient planning systems that would find the right balance between development and conservation. LACs would establish local rules encouraging specific standards for building and development. As residents would be directly affected by these rules, they would be designed to enhance the value of local property by maximizing environmental amenity and economic potential. LACs could trade development rights and charge fees for industrial developments according to their environmental impact. Development would be encouraged to be as environmentally sensitive as possible and located in the least environmentally sensitive area. LACs could pay to attract certain types of development that had positive effects. For example, they might invest in a new rail line that had a station in the area. LACs could also subsidise other assets such as post offices, schools, libraries, medical centres or even certain types of shop. LACs could co-operate to deal with large scale regional developments. One LAC might be paid by surrounding LACs to accept an airport that would have negative local effects but positive regional effects. LACs would return net fees to - or collect net contributions from - residents in the form of annual dividends. Local people would thus have a financial incentive to encourage sensible development that either enhanced the value of their property and surroundings or provided their LAC with income, countering any ‘nimby’ tendencies. Developers would pay, on average, less than they do now. Development fees would replace the premium currently attached to land with planning permission, and competition between LACs would help to keep fees low. Landowners who benefit from the big rise in land value with planning permission would lose out. But such rises are widely resented and are likely to be taxed in future. Ultimately LACs would replace most of the functions of local government with processes that were far more democratically accountable and responsive to economic and environmental needs. Tom Miers added: "The changes we propose would not happen overnight but a first step might be to grant powers over planning, local roads and rubbish collection to those rural communities which have bought out the estates they live in. These powers could quickly be extended to other small rural communities such as islands and areas with active community councils. After some bedding-in LACs could be extended to other areas so that competition and collaboration between LACs could be tested." Dr Mark Pennington is Senior Lecturer in Political Economy at Queen Mary, University of London. He is author of Conservation and the Countryside (Institute of Economic Affairs, 1997), Planning and the Political Market (Athlone, 2000) Liberating the Land (Institute of Economic Affairs, 2002) and articles in leading political science and political economy journals. Tom Miers is the executive director of the Policy Institute.
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