Support Councils to Fund Infrastructure

Council funding is being reduced and councils are sensitive to risk They cannot accept the full financial risk associated with taking on the burden of upfront funding infrastructure delivery to recoup contributions from development, to stimulate delivery. Government should financially back councils willing to stimulate development delivery by funding infrastructure by sharing the associated financial risks, allowing private secotr to deliver, and pay a fair share of costs when revenue is generated from the development.

Why the contribution is important

The current situation does not allow either councils or private sector to upfront fund and deliver key infrastructre, to allow development to take place. Intervention by Govt could establish a model that reduces risk and stimulates development.

by pontipine on January 29, 2016 at 04:27PM

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Average score : 4.4
Based on : 7 votes

Comments

  • Posted by Redfox January 30, 2016 at 10:39

    Totally agree to funding front loaded infrastructure but there needs to be a mechanism to actually get the land owners/developer to deliver development. If the site is promoted for housing by a developer and then allocated through the LDP then perhaps the longer they take to build the higher the infrastructure bill. There is no point front loading infrastructure if the house builders continue to build out massive sites at 50 units per year, just to keep the prices up. this is nothing to do with sustainable.
  • Posted by pontipine February 02, 2016 at 16:13

    Good point, agree!
  • Posted by DJJ February 03, 2016 at 21:41

    If there is a transfer of risk to the public sector there needs to be a transfer of reward as well. Any company would like to reduce risk...deals would need to be structured to incentivise quick build-out.
  • Posted by alfaman159 February 04, 2016 at 09:27

    If developers are only building at 50 units per yr perhaps it is because they can only sell 50 units per yr? How can you incentivise quick build out if the market for new sales if limited by the availability of mortgage finance?

    However, the fundamental point about front funding infrastructure is key to bringing about growth in housing. No developer, however deep their pockets, can front fund a £30m secondary school, they can however afford to pay the money back as and when development proceeds.
  • Posted by DJJ February 19, 2016 at 17:30

    Alfaman159 - if only things were that simple! Many developers will have multiple sites and would naturally wish to reduce their own exposure to risk rather than that of the public sector. Incentives need to be aligned with the public good - with risk and reward shared in an equitable fashion...not just a risk transfer! I wasn't implying quicker build-out than the market can tolerate, although this is to some extent related to house builders' expectations of sales price.

    I generally agree with your 'fundamental point'.

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