For some months, the Mayor of Greater Manchester, Andy Burnham, has faced criticism and legal pressure for facilitating housing schemes in his area that are all “luxury” and no “affordable” – the sort of thing his counterpart in London, Sir Sadiq Khan, has rules against.
Burnham’s administration has been loaning many millions of pounds to a property developer to build towers of deluxe, market-priced flats (pictured). Meanwhile, making building less expensive for developers than it might be elsewhere is a policy of Manchester City Council, which is part of the wider combined authority Burnham leads. As its Guide to Development in Manchester states, the council is currently charging no Community Infrastructure Levy (CIL) as a condition of granting planning consents.
The CIL is one of ways in which local authorities can ensure that the need for more transport, health, educational and environmental provision created by new development is met and paid for out of developers’ profits. Another, longer-established, mechanism at councils’ disposal for achieving similar goals are agreeing developer contributions under Section 106 of the Town and Country Planning Act (1990).
Confusingly, CIL and S106 payments can be used to fund many of the same things, and Manchester reserves its right to ask developers for the latter. They are also different – significantly so in that CIL can’t be used to pay for affordable housing. And Manchester’s most recently-published statement of the funding it has secured from S106 suggests it doesn’t drive a very hard bargain – at least, not by comparison with local authorities in London.
In the financial year 2023/24, Manchester City Council received £5.7 million in S106 contributions (paragraph 5.1). The London Borough of Southwark, meanwhile, received £38 million from CIL and S106 combined and secured commitments to a further £5 million.
The Manchester local authority area is bigger than Southwark: it covers 45 square miles and puts its population at getting on for 600,000, while Southwark occupies just 11 square miles and is home to only 312,000. Yet the south London council brings in about seven times as much in developer contributions.
On the other side of the Thames, Camden – land area 8.4 square miles, population 210,000 – collected £10.2 million in CIL and received £23 million in S106, with a further £11.8 million agreed. And Westminster City Council? £20.4 million in CIL collected, £61.4 million in S106.
How about further from the centre? Haringey? £3.2 million received in CIL, £5 million received in S106. Newham? £4 million in CIL, £10.2 million in S106. Further out still? Croydon: £5.1 in CIL receipts, £2.3 million received in S106. Redbridge: £6.2 million in CIL, £900,000 in S106.
There are sub-divisions of CIL and some of it goes to the Mayor, but I you’re getting the picture. London’s local authorities, even those that raise relatively low amounts of CIL and S106 compared with other boroughs, score higher by that measure than Manchester.
What’s going on? Part of it is simply that the property market in Greater London is more valuable than Manchester’s. Everything involves a lot more money: land is more expensive, labour is more expensive and so on. But the return on investments can be bigger too. Put very crudely, the greater the potential profits, the more scope a borough might have for getting a few million out of the deal for things a neighbourhood affected by new developments needs that might not otherwise get paid for.
But part of it is also about priorities. When it comes to housing, the Mayor of London has powers to insist on a certain percentage of that provided through the planning system without grant funding from him being “affordable” – and he has shown throughout his time at City Hall that he is quite prepared to use those powers. And, in any case, boroughs, in individual ways and to differing degrees, want to extract affordable housing from developers – along with transport and street improvements, carbon offset funds, schools and doctors’ surgeries – because local residents want and need those things.
But Manchester City Council and Greater Manchester’s Mayor have long been operating in a different economic environment. Although Greater London’s productivity growth has been modest since the global financial crisis of 2007/08, it remains by a long way the UK’s most economically productive place. Greater Manchester is miles behind.
A Resolution Foundation report from 2023 acknowledges that it has picked up over the past 20 years, but also bluntly states that it has “barely kept pace with productivity growth across the UK as a whole” and “remains 35 per cent less productive than London”.
Greater Manchester’s politicians need to nurture and attract more highly-qualified people and “high value” firms. One way to go about that is to make it more attractive for developers to build the kinds of offices and other workspaces that such people might want to live in and such firms might want to set up shop in.
Wanting lower amounts of infrastructure funding from them than London government does – or even none at all – is one way to try to tempt such investment. If CIL and S106 deals are regarded as a kind of local tax, then Mayor Burnham and Manchester City Council have been creating a local low tax environment in order to draw in investment they wouldn’t otherwise get – perhaps because, all else being equal, it would rather go to London, the core of the UK economy, where the returns tend to be better.
“The Manchester approach is a form of tax competition,” says Professor Tony Travers, director of LSE London. “By having very little by way of developer contributions, coupled with public sector loans and a liberal planning policy, the policy is designed to make Manchester more attractive than other cities. London, by contrast, makes property development deliver local benefits beyond the homes and offices built.”
Travers points out that in London not only social and other affordable housing have been built and paid for by private developers, but even “an Underground extension, theatres and other new facilities”. He notes the irony that “the very pressure on London to deliver such contributions probably further increases the city’s productivity”.
The Resolution Foundation report raised doubts about Greater Manchester’s approach, enshrined in its Places for Everyone plan. The think tank recognises that housebuilding in expensive central areas makes sense at first glance, as “inner city living is often popular and a hallmark of ‘turnaround cities’.” However, it goes on to argue that in Manchester’s case there is “a very strong case for prioritising city centre land for commercial, rather than residential, building” and that it should hold sway.
Whatever the best balance for Greater Manchester, its attitude to developers is very different from that found in Greater London. The latter has a bit of leverage and its politicians try to use it, proceeding on the basis that if they are to give their blessing to a private company to make hundreds of millions of pounds on its patch, that company has wider obligations – and should put its hand in its pocket accordingly. Greater Manchester, by contrast, is going out of its way to let them off.
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