The Scottish Government

Development Department Research Programme Research Findings No 72
1999

Costs of the Planning Service in Scotland

Paula Gilder Consulting

Main Findings

• Councils is reflected in the range of different ways in which costs are accounted for.
• There is broad agreement as to what is covered by the term 'development control' and the core service is frequently delivered by a clearly identifiable group of people.
• On the other hand, 'development planning', or 'planning policy', frequently overlaps with other areas of activity and no consistent definition has been applied in the past.
• Analyses of costs at a more detailed level are not common and reflect only local management needs. There is no consistency between authorities. In particular there is very little information about the costs involved in processing different types of application.
• Information about the costs associated with the different stages of processing fee earning applications, and thus to assess the adequacy of fee levels, is very weak.
• The resources currently applied to monitoring and enforcing minerals permissions cannot be reliably assessed but are considered by practitioners to be inadequate.
• There is a perceived need to give the existing fee regime a more robust basis, to simplify it and to increase fees at the top end of the scale.
• Compliance with the suggested accounting framework is likely to require a time recording system. This is already under consideration in most authorities which do not have one.
• To maximise the reliability of financial information collected by the Scottish Executive, a common accounting framework should be introduced and used as the basis for returns.

Background

The study was set in the context of the best value requirement on local authorities not only to achieve continuous improvement in service delivery but also to be able to demonstrate this. Inevitably this will include an element of cost comparison with other councils and it was clear from data submitted on financial returns that a lack of consistent definitions underlying the recording and reporting of costs was undermining their comparability.

The Scottish Executive had also begun to collect information to try and assess whether the costs of determining planning applications were being covered by income from fees, as is the policy intention. This information was not considered reliable at an overall level and no information was collected in respect of different categories of application.

Seven research objectives were therefore set for this study brief relating both to assessing the actual costs incurred by local authorities on the planning service, overall and at a more detailed level, and to the development and use of a common accounting framework. The scope of the study did not extend to quality issues or the general level of funding available.

Approach

Central to the approach adopted was the selection of eight councils as case studies to enable a detailed analysis of their costs to be undertaken and to develop and test the suggested common accounting framework.

More general background information was also sought from all Scottish authorities. This illustrated the very wide range of organisational and accounting structure which exist. In addition, an early seminar was held to help identify the case study councils and also to agree what should be taken to be the definition of 'planning' for this study.

The Accounting Framework

The many benefits involved in adopting and then applying a common accounting framework are set out in the report. Realisation of these benefits requires managers of the service to agree that the advantages of consistent reporting of costs in accordance with such a framework are worth the inevitable adjustments to financial management information involved. The framework suggested therefore strikes a balance between the consistency achieved on one hand and the effort required to achieve it on the other.

The framework suggested in the report of this study includes a number of levels of detail, suggests how each level should be defined and how information at each level should be derived and maintained, including through the use of staff time analyses.

A common accounting framework requires standard activity headings to be carefully defined and a standard definition of what types of costs are included within the 'total cost' under each heading. Such a definition is given in the report.

Overall Costs of Planning

There are a number of difficulties involved in identifying the total costs of planning, notably in establishing the level of costs which arise in departments other than planning. These typically account for about 25% of total development control costs.

There are also many reasons why cost levels vary and this is illustrated by the range of costs derived for the case study authorities. This is especially the case for planning policy where the wide range of existing accounting practices for this part of the service limited the amount of detailed analysis of costs which could be undertaken.

Development Control Costs and Fees

More analysis was possible in the case of development control where, not surprisingly, total costs appear to vary with the volume of activity undertaken. Costs also seem generally higher in rural areas. It was found that between about 50% and 70% of total development control costs appear to relate to the determination of fee earning planning applications, although this varies significantly between authorities and the information supporting this finding is weak.

It would also appear that a majority of authorities recover between about 50% and 70% of their development control costs through fees, although this proportion also varies considerably. Because of these variations and the small number of authorities analysed, the findings above do not on their own imply that fees are covering determination costs even at an overall level. It is clear from the analysis that some of the case study authorities fall well short of recovering determination costs, while others more than cover these.

Very little information is kept about the time spent, or the costs incurred, in determining different categories of application. There is therefore little evidence to enable comparisons to be made between such determination costs and associated fee levels, although a number of perceptions are reported.

As regards the fee setting regime more generally, there was broad agreement among those officers interviewed that the scale of fees should be simplified and stretched, potentially lower at the bottom and certainly higher at the top. A number of specific suggestions for change were made and are summarised in the report. It was also felt that there is a need to give the fee regime a more robust basis.

Minerals

Very little detailed information is kept on current minerals related costs. However, some authorities were able to quantify what they thought should be invested in monitoring and enforcing minerals permissions, an activity which is generally thought to be under-resourced.

Data Collection and Reporting

The extent to which authorities can maintain detailed cost information on their corporate general ledgers varies and there are levels of detail below which it is more sensible to rely on other systems, notably time recording. It is suggested that the general introduction of time recording appears to be an essential requirement of a costing system good enough to provide the financial information required. Most authorities have such a system or are considering one although existing systems would require modification to fit within the proposed framework.

It is recommended that the relevant financial return applies all the definitions used in the common accounting framework and collects cost information under the seven suggested development control headings as well as under a single planning policy heading.