Our current planning system is designed to provoke conflict rather than cooperation. Local politicians and residents have little incentive to support development, however beneficial, to set against people's natural antipathy to change. Developers get little benefit from trying to adapt their plans to maximise the benefit to the community.

The mainstream parties plan nothing to move from conflict to cooperation - if anything, quite the reverse. Labour introduced the Infrastructure Planning Commission (IPC), which aims to ride roughshod over local views on exactly the sorts of projects that will have the greatest impact on local communities. Conservatives and LibDems propose to scrap the IPC without any alternative suggestion for how they would resolve the tensions between the economic need for and local antipathy towards development. And the Conservatives propose to scrap Section 106 Agreements, which are one of the few ways that the interests of developers and local community can be brought somewhat into line.

We propose a radical overhaul of the planning and local business taxation system, to try to encourage cooperation (or at least more balanced consideration) rather than conflict.

Scrap the IPC and keep planning local

We believe in devolution of powers to the most local level possible. Planning cannot be devolved to the individual - it is fundamentally about the impacts of some people's activities on others (the local "externality" in the economists' lingo). But planning can and should be devolved to a lower level than central government. Planning is inherently local, and the move to centralize under the IPC the most contentious planning decisions without local consideration is contrary to natural justice and British tradition.

It is true that some planning issues have material impacts on wider or narrower communities (for instance, applications to build nuclear power stations or big wind farms can affect quite a wide radius of communities). All affected communities should be able to participate in the planning process, so some planning matters will need to be considered by an authority with a wider geographic remit than others. But few if any planning matters are truly national.

Of course, all infrastructure developments affect the national economy, but that is not the same thing as saying that those developments have equal external impacts on all UK citizens. Planning exists to take account of local external impacts - whether a local community is willing to accept the external cost of a new activity in the area. It is one of the fundamental tenets of liberal and humane law and morality that we cannot simply impose cost and inconvenience on some people because it brings benefit to others. We must instead look to persuade those who are inconvenienced to accept voluntarily the development that would benefit others, most often by means of negotiated compensation.

Ensure local planning takes account of the economic benefits

If we are not to stagnate under the weight of little-Britain NIMBYism, the enhancement of local planning powers must be accompanied by a change in the incentives on local planning authorities, so they have reason to weigh the positives equally to the negatives in any application. At the moment, planning authorities have little to lose from refusal and little to gain from approval. Local voters are insulated from the economic costs of persistent refusal, and are likely to punish any local politicians who approve more than the minimum. We need to make sure the system more accurately exposes authorities and individuals to the costs and benefits of any planning decision.

We believe that business rates should be repatriated to local authorities, so that an authority gains a direct benefit from whatever business activities are carried out within its boundaries.

This would be one of three sources of local funding for local authorities - the others being council tax and a local sales tax of 2.5% (bringing VAT effectively to 20%). This should bring the share of councils' revenues that are raised directly from the local community up to around 65-75% from the current 25%. Councils would continue to receive a central-government grant to make up the difference and allow for differences between communities with intrinsically higher or lower costs per capita (e.g. rural communities will have more miles of road to maintain per capita than urban communities). But these grants would be based solely on intrinsic, physical differences, and not on equalising the income of those communites whose hostility to development has resulted in low revenues from business rates and local sales tax.

Communities that did not attract business would therefore have to pay higher council tax or accept reduced services. The residents of some wealthy, dormitory towns may regard this as a worthwhile trade-off, and if so, they should have the right to make that choice so long as they do not expect other communities to subsidise their hostility to local development. Most communities, however, will prefer to attract sufficient business to deliver significant business rates and local sales tax revenues, so that council tax bills can be kept down.

Incorporate rates valuation within planning process

We believe that the initial rateable value of a new development should be set as part of the local planning process. Some new developments would be so beneficial to the local area that local authorities would want to attract them by offering the best deal possible on business rates. Others would impose serious cost on the community, and local authorities will want to demand adequate compensation if they are to approve such a development. The higher the revenue from business rates and local sales tax, the lower the revenue that must be raised from council tax. The permitting of a highly-rated development would therefore have a significant benefit to the council-tax bills of the local residents, providing meaningful compensation for the impact of the development, and therefore encouraging planning authorities to take a more balanced view of the costs and benefits of any application.

Those authorities that refused most applications or insisted on such high rateable valuations that businesses chose to setup in other locations would have much higher council tax (and fewer jobs) to set against the less developed character of the area. Those authorities that sought to encourage new businesses by applying lower rateable valuations would have lower council tax (and more jobs) to set against the more developed character of the area.

An area that already had plenty of jobs and industrial development might choose to demand higher rateable valuations in order to approve applications for developments that were not needed in the area. An area that had insufficient business activity to keep council tax down and the population in employment would have a strong incentive to approve applications on the basis of lower rateable valuations. Thus, the broader economic needs and preferences of the community would be more closely aligned with the incentives on the planning authorities within the planning system.

Protecting established businesses from arbitrary revaluation

Established businesses should be protected from the threat that their business model might be affected by unpredictable changes to the level of business rates applied by the local authority. The planning authorities should have the authority to set only the initial rateable valuations, and not to modify those valuations retrospectively.