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16.0 PLANNING AGREEMENTS

16.1 Money payments

Proposal: The Scottish planning system would benefit from clarification that obligations can require the payment of a sum or sums of money to the planning authority. Should we follow the English model which contains an explicit power to require money payments? The power in Scotland is expressed to be incidental or consequential.

Source: C Buchanan & Partners, Robert Turley Associates and Dundas & Wilson, The Use and Effectiveness of Planning Agreements, SECRU, 2001, para.6.2.6. The English model is to be found in the Town and Country Planning Act 1990, s.106(1).

Present position: Section 75 of the 1997 Act provides that a planning agreement may contain such incidental and consequential provisions (including financial ones) as appear to the planning authority to be necessary or expedient for the purposes of the agreement.

Implementation: Section 75 would require amendment.

Discussion:

• it is not clear that such clarification is required. Section 75 permits agreements to contain financial provisions which are incidental to or consequential on the restriction or regulation of the development or use of land. Providing the overall purpose of an agreement can be shown to be restrictive or regulatory of the development or use of land, its sole obligation could be financial. The need for an explicit provision in England seems to stem partly from the common law background which does not permit positive obligations (such as a requirement to pay money) to run with the land so as to bind successors in title, and partly from a tendency by the English courts at that time to read limitations into the language used by Parliament in defining the scope of agreements. No such difficulties have arisen in Scotland and the flexibility of the present wording has its attractions.
• developers expressed concern about the divergence between law and policy over the permissible scope of financial provisions in agreements and felt that the advice in Circular 12/1996 should be given statutory expression. Particular problems arise in areas where there are major infrastructure deficits.
• an alternative and more transparent way forward might be to amend s.41 of the 1997 Act to make it clear that the power to impose conditions includes a power to impose conditions which contain financial provisions that are incidental to or consequential on the grant of planning permission for the development. At present, it is thought that the power to impose conditions does not include such a power except indirectly by means of a suspensive condition, although it clearly includes a power to require the carrying out of works and from the applicant's viewpoint this can amount to the same thing. The established tests for conditions would ensure that any such financial provisions were reasonably related to and proportionate to the application. Such a condition could be used, for example, to require a bond to cover reinstatement work.

16.2 Tariffs

Proposal: To replace site by site negotiation of planning gain with a system of standardised tariffs.

Source: C Buchanan & Partners, Robert Turley Associates and Dundas and Wilson, The Use and Effectiveness of Planning Agreements, SECRU, 2001, para.7.8.3; Reforming Planning Obligations: A Consultation Paper, DTLGR, 2001.

Present position: Obligations are negotiated ad hoc on a site by site basis, although increasingly these obligations reflect planning gain policies contained in local plans.

The proposal in more detail: The proposal in the English consultation paper was that local planning authorities would set standardised tariffs for different types of development.

Implementation: In view of the open-ended terms of s.106 of the English Planning Act, it is possible that a system of tariffs could be introduced there without further legislation. In Scotland, the financial provisions of an agreement are stated to be incidental or consequential on the restriction or regulation of the development or use of land. In other words, there must be a linkage between the financial provision and the development or use of the land. Section 75 would not allow the introduction of an arbitrary tariff and primary legislation would be required.

The imposition of a tariff has been characterised as a form of taxation (although it is by no means clear that the tariff is intended to reflect the uplift in development value arising from the grant of planning permission). In so far as this characterisation is correct, it should be noted that fiscal matters are reserved to the Westminster Parliament under the terms of the Scotland Act 1998, Schedule 5, Part II, A1 (although the reservation does not extend to local taxes to fund local authority expenditure). Legislation from the Westminster Parliament would seem to be required.

However, much will depend on the calculation of the tariff. If, for example, it were to be derived from an assessment of the aggregate infrastructure requirement for an area, it would, arguably, not be a form of taxation and, indeed, as a genuine pre-estimate of cost, could form the basis for s.75 agreements under the law as it stands at the moment.

Discussion:

• the proposal to introduce tariffs in England attracted a lot of criticism - notably from the Transport, Local Government and the Regions Select Committee. The Committee thought the proposal too complex; others objected to the introduction of a tax on development value. The proposal was surprisingly thin on the quantum of the tariff. The intention was that the tariff would be set by local planning authorities having regard to Government guidance. This could have been open to criticism on grounds of arbitrariness and selectivity contrary to Article 1 of the First Protocol of the Convention on Human Rights. Because of the outcry, the Government decided not to proceed with the proposals for a tariff in the English Planning Bill (see "Sustainable Communities - Delivering Through Planning", ODPM, 18 ^th July 2002). A further consultation paper is promised.
• developers see merit in a standardised approach to the imposition of obligations in place of the inconsistent and opportunistic approach that sometimes operates today. It could also be faster and more transparent than case by case negotiation.
• a system of standardised tariffs should get round the criticism that planning policy is sometimes traded for planning gain.
• consideration would have to be given to the method of setting the tariff, perhaps by reference to an area's aggregate needs. The Government consultation paper rejected the impact fee model adopted in the US, although this tends to be the basis on which obligations are negotiated in Scotland at present.
• a tariff would be set during the processing of a planning application. At present, the terms of any planning agreement must have at least a tenuous relationship with the subject matter of the related planning application, otherwise the planning decision could be open to challenge. It would be necessary to square any tariff provision with s.37(2) of the 1997 Act which requires planning authorities, when determining planning applications, to have regard to the development plan and to any other material consideration. If the tariff is unrelated to the impacts of the development, it would not be a material consideration.
• consideration would have to be given to the means of enforcing the payment of the tariff, although this would not be necessary if the tariff had to be paid before planning permission is issued. This would not be appropriate where a development is to be phased.
• consideration could be given to paying the tariff into a trust fund to secure the provision of infrastructure with repayment in default.
• a tariff system would benefit areas where there are strong development pressures and prejudice those of economic decline. Some equalisation system might be required.

16.3 Unilateral undertakings

Proposal: The ability for an applicant to execute a unilateral obligation would overcome any difficulty that might arise if a planning authority refuses to enter into a s.75 agreement.

Source: C Buchanan & Partners, Robert Turley Associates and Dundas & Wilson, The Use and Effectiveness of Planning Agreements, SECRU, 2001, para.6.2.8. See too Department of the Environment consultation paper for England on the reform of s.106 agreements, 1989.

Present position: At present reporters tend to issue a 'minded to approve subject to an agreement' letter with a time limit for completion of the agreement. If a planning authority prove intransigent, the reporter may grant consent in the absence of an agreement. It is arguable that unilateral undertakings can be given at the present time, could be taken into account and would be enforceable as a personal obligation by the planning authority. However, such undertakings could not be enforced by the authority against successors in title and would have to be renewed on each sale of the land.

The proposal in more detail: The idea of the unilateral undertaking, as introduced in England and Wales, was to overcome the log jam that sometimes occurred in planning appeals where an inspector concluded that planning permission could only be granted if some requirement was met that could not be imposed by planning condition. The requirement would have to be contained in an agreement but the inspector had no power to impose the terms of an agreement. That was a matter for negotiation between the parties and, although the applicant might be willing to accept the requirement, the applicant might be unable to reach agreement with the local planning authority. The solution was to extend s.106 so as to allow for unilateral undertakings as an alternative to agreements. Like agreements, undertakings bind the land and are enforceable by the local planning authority against successors in title. Unlike agreements, they cannot be challenged as ultra vires by the authority.

Implementation: Primary legislation would be required and could follow the English model.

Discussion: It is unclear how far this is an issue in Scotland.

16.4 Infrastructure trusts

Proposal: Provision should be made for the setting up of infrastructure trusts to accumulate and disperse contributions from developers towards meeting the infrastructure requirements for an area.

Source: Colin Buchanan & Partners, Robert Turley Associates and Dundas and Wilson, The Use and Effectiveness of Planning Agreements, SECRU, 2001, para.7.7.7.

Present position: Planning agreements quite often impose no obligation on the planning authority to apply a planning gain to the purposes for which it has been obtained. Developers are generally content to provide the gain and then get on with their development.

The proposal in more detail: There will, however, be cases where greater security about the application of the gain will be important for the developer. An example would be where the first developer into a new housing area makes a contribution towards the provision of a school and other infrastructure to be provided by the local authority during a later phase in the development of the area once other developers have also contributed. While the local authority can simply hold the money on account until the appropriate time, early developers may prefer greater security about the eventual provision of the infrastructure because it could affect the value and the marketability of their development. This can be achieved by the setting up of a trust, the purpose of which would be to accumulate and disperse the contributions, and with the developers and the local authority acting as trustees.

Implementation: This could be non-statutory. There is nothing to prevent the setting up of such trusts at the present time. Householders sometimes set up similar trusts to manage communal open space. There might, however, be some benefit in being able to insist on participation by developers in such a trust - there would be little incentive for a developer to join such an arrangement unless there was an assurance that all other developers would join - and this would require primary legislation.

Discussion:

• one of the most intractable problems in land development has been securing the orderly provision of infrastructure in a development area that is coming forward for development in several phases and involving a number of different developers. The problem is alleviated where there is one master developer for an area who sets up the consents, makes provision for the infrastructure and parcels out the development amongst the other developers having recovered a proportion of the infrastructure costs. In the absence of a master developer, the risk is that there will be a 'free for all'. Some mechanism is required to bring the developers together, to secure the appropriate contributions towards infrastructure costs and to ensure the necessary provision. An infrastructure trust could provide an orderly way forward, but, in the absence of some form of compulsion, it requires the agreement of the developers.
• this arrangement could work for money payments but could become more complicated where a developer is required to contribute land for infrastructure.

Such a mechanism might also operate on a wider basis where infrastructure, such as transportation measures, is required across a local authority area. The incentive for developers to involve themselves in such a trust, rather than just paying their contribution, is unclear.

16.5 Review of agreements

Proposal: All agreements should include a review clause with a right of appeal to Ministers against a refusal by a planning authority to vary an agreement following a review.

Source: C Buchanan & Partners, R Turley Associates and Dundas and Wilson, The Use and Effectiveness of Planning Agreements, SECRU, 2001, para.7.8.1

Present position: The parties to an agreement may agree to its review whether or not provision is made for this. Most well-drawn agreements, having a continuing life, will contain a provision for review in defined circumstances. There is no statutory provision for an appeal to Ministers against a refusal to vary the terms of an agreement. Nor does the Lands Tribunal for Scotland have jurisdiction to deal with the matter.

Implementation: The introduction of a right of appeal to Ministers would require primary legislation. The legislation could follow the English model and provide for an application to the planning authority to modify or discharge the terms of an agreement followed by an appeal to Ministers in the event of an adverse response.

Discussion:

• the proposed right of appeal to Ministers against a refusal to modify or discharge obligations in an agreement is similar to that exercised by the Lands Tribunal for Scotland over land obligations. It is for consideration whether the right of appeal should be to Ministers or to the Lands Tribunal.
• there would need to be a time limit (in England it is 2 years) before the request for a review and the right of appeal could be exercised - otherwise a review might be initiated by a developer immediately after planning permission has been granted.
• it would be convenient to provide for a statutory right to invoke a review to cover the situation where an agreement has failed to provide for a review, either at all or only in limited circumstances. Consideration would need to be given to promoting consistency between such a provision and a clause in an existing agreement providing for review.

16.6 Public participation

Proposal: The heads of agreement under negotiation and, on completion, the final form of the agreement should be entered in the planning register.

Source: Royal Commission on Environmental Pollution, 23 ^rd Report, Environmental Planning, 2002, para.5.57; See too the Third Report of the Committee on Standards in Public Life, Standards of Conduct in Local Government in England, Scotland and Wales, Cm.3702-1, 1997; White Paper, Your place, your plan, 2003, paras.118-119.

Present position: There is no obligation to disclose the heads of a planning agreement to members of the public; nor is there any obligation to record completed agreements in the Register of Sasines or in the Land Register for Scotland, although they will not run with the land unless they are.

Implementation: A disclosure requirement for heads of agreement could be introduced by way of an amendment to the General Development Procedure Order. A registration requirement for completed agreements could also be introduced through the Order.

Discussion:

• negotiations over a planning agreement can have an important influence on the decision on a planning application. As concerned members of the public have an opportunity to comment on the planning application, there is an argument for allowing them a similar opportunity to comment on the heads of agreement. Some authorities already provide for this.
• the SDD research report, Section 50 Agreements, 1992, noted a widespread lack of enthusiasm on the part of planning authorities and developers for including an element of public involvement in the process of negotiation.
• if the public are to be involved in commenting on the heads of agreement, it will not be enough that the heads of agreement are entered in the planning register. There will need to be some means of alerting the public to the negotiation of the agreement and to the time limit for commenting on the heads. The heads of agreement might be made available to the public as a committee paper in good time in advance of the relevant committee meeting, or there might be provision for public notice that the heads of agreement are available for inspection in the planning register.
• if the public are to be involved in the commenting on heads of agreement, it would be desirable for the guidance in Circular 12/1996 to be disseminated more widely so that the limits of negotiation are clear. Some communities may have inflated expectations about what can be achieved.
• developers are concerned about any additional delay that may result from public participation in planning agreements. Target timetables for concluding negotiations could be helpful with mediation available to help resolve disagreements over obligations.

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