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CHAPTER TWO FINDINGS FROM THE LITERATURE REVIEW

2.1 In this section we identify the main detailed assertions made by critics of and commentators on the planning system. The documents reviewed to inform this study include:

• Delays in the Planning System, Brodies Solicitors, 1999.
• Development Control and Planning, Audit Commission, 2002
• Scottish Planning Policy PP2 Economic Development, Scottish Executive, November 2002
• Planning for Growth - the Business Agenda for Planning Reform, CBI Scotland, November 2003.
• Planning Agreements and Positive Planning for Sustainable Development in Scotland, Iain Ross, Scottish Executive Development Department April 2004 (internal report).
• Planning for Economic Development, report by ECOTEC Research and Consulting Limited and Roger Tym and Partners for the ODPM, May 2004.
• Affordable Housing Review: Initial Summary of Main Messages from Stakeholders, Scottish Executive, June 2004.
• Sixth Annual Report of the Planning Audit Unit 2003, Scottish ExecutiveDevelopment Department, July 2004.
• 2002 Retail Development Survey, Scottish ExecutiveDevelopment Department, July 2004.
• Review of the Evidence on the Scottish Housing Market, Scottish Executive, July 2004.
• The Framework for Economic Development in Scotland, Scottish Executive, September 2004
• The Planning Famine - Reforming Land Use in Scotland, Professor Sir Donald MacKay, Policy Institute, November 2004.
• Draft Revised Circular on Planning Obligations - Consultation Document, ODPM, November 2004
• National Planning Framework for Scotland, Scottish Executive, April 2004
• Review of the Year 2003-2004, Scottish Executive Development Department Inquiry Reporters Unit, December 2004.
• Implementing the Planning Gain Supplement: BURA Steering and Development Forum Working Paper, BURA, January 2005
• Planning Advice Note 74: Affordable Housing, Scottish Executive, March 2005
• Congestion on Scottish Trunk Roads 2003. Scottish Executive, March 2005

2.2 We have attempted to identify the key issues raised by commentators and which of them lie within the current system of statutory land use planning and which outwith it, but still within the control of the Scottish Executive or of national government. We have also reviewed the existing evidence base to establish to what extent it supports these assertions. At the beginning of the Section, we set out the Scottish Executive policy context with regard to planning, business and economic development issues.

2.3 A detailed review of each of these documents was appended to the interim report. The key findings of the literature review are as follows:

The Policy Framework

• The Framework for Economic Development in Scotland (2004)
• The National Planning Framework for Scotland (2004)
• Scottish Planning Policy 2 ( SPP2): Economic Development (2002)

growing the economy is the top priority of the Scottish Executive and that a successful economy is the key to future prosperity and a prerequisite for building first class public services.

2.6 However, economic growth is not to be achieved at any cost - amongst the outcome objectives is that of sustainable development - development which is sustainable in economic, social and environmental terms.

2.7 The Framework emphasises the importance of physical infrastructure, both for enterprise and in delivering an adequate supply of housing, and the role of planning and development structures. The contribution of the planning system to economic development is explicitly recognised, as is the need to reform the planning system to make it more efficient, more rapid in its processes and more attuned to the needs of business and housing requirements. However, the complexity of the role of planning in economic development is recognised in the statement that planning has the power to facilitate or constrain enterprise and business development, and the quality of life, the latter in itself important in growth.

• To set the land use framework for promoting sustainable development
• To encourage and support regeneration; and
• To maintain and enhance the quality of the built environment

Key Findings

• Most commentary relates to the impact of the planning system on housing - other than the general observations made by CBI Scotland, there appears to be much less evidence that the planning system is holding back business. Indeed, the Brodies report on delays suggested that Scottish planning authorities were more positive about commercial developments than their English counterparts.
• The CBI Scotland report focused as much on deficiencies in infrastructure investment as on the statutory land use planning system. It also considered poor integration between the two to be an important issue.
• The CBI Scotland view of the impact of congestion on business is echoed by a survey reported in the Scotsman early in 2005 by KPMG of their major business clients which indicates that business views lack of infrastructure (and in particular roads infrastructure) as a major constraint on business.
• A recently published Scottish Executive report on congestion on Scottish trunk roads which suggests that the economic cost of congestion is some £71 million per annum (Congestion on Scottish Trunk Roads 2003, Scottish Executive, 2005).
• The CBI Scotland report produced an indicative estimate (£600m) of what the planning system might cost business in Scotland. That estimate was based on an earlier CBI national report entitled 'Shaping the Nation - Report of the Planning Task Force'.
• We have reviewed the approaches used in that report and consider that certain of them - those used to estimate the costs of delayed infrastructure investment and the impact on wage costs through increased house prices - are very approximate in their nature and open to debate. The CBI report considers only costs to individual businesses, whereas there are many other countervailing effects and impacts which are not taken into account. In our view, a more robust methodology would be required to tackle this extremely complex question of impact at the level of the national economy.
• CBI Scotland believes that the planning system is failing both in terms of DC performance and in the speed of preparation of structure and local plans.
• The power of statutory consultees to obstruct development was also the subject of comment.
• Local authority performance with respect to major planning allocations has declined sharply over the last five years, although performance has been maintained for householder applications (Planning Audit Unit, 2004).
• Development control decision-making is slow, taking an average of 6 months, though often 12 months or more. Slower applications are normally for large scale applications (Brodies, 1999).
• Call-ins by the Scottish Ministers cause significant delay - anything from 6 to 16 months is standard, and can be much longer. (Brodies, 1999).
• Many appeals take well over 3 months, with some taking over 2 years (Brodies, 1999).
• Absence of a time limit for petition for judicial review against a decision by a planning authority raised concerns over the uncertainty this raises for developers, and 27% of respondents were aware of instances where this had caused problems. (Brodies, 1999).
• Planning agreements are a major problem - in particular the lack of transparency, uncertainty and delay associated with them has been commented upon. They are becoming more common. ( CBI Scotland Report, Policy Institute report, Affordable Housing Review Stakeholder Messages).
• Statistics from the Scottish Executive indicate that since 1997/8 there has been a significant increase in applications notified to Scottish Ministers (over 50%). Performance rates for the time taken to decide whether these applications are to be determined by the Scottish Ministers have stayed more or less the same, at around 84% within 28 days, and 95% within 2 months. This relates to targets of 80% to be cleared or called-in within 28 days, and 100% in 2 months. (Planning Audit Unit, 2004).
• Performance by the Scottish Ministers in the cases they determine (including recalled appeals, called-in notified and Notification of Intention to Develop ( NID) cases) is measured against the target of 80% in 2 months, and 100% in 3 months. Since 1997/9 there has been significant fluctuation in performance at 2 months (between 88% and 60%) and at 3 months (between 100% and 79%). (Planning Audit Unit, 2004).
• From 1996 to 2004 around 13% of the cases notified to the Scottish Executive were called-in, and of those around 45% were refused. (Planning Audit Unit, 2004).
• Appeal cases are dealt with by the Scottish Executive Enquiry Reporters Unit. Performance in determining appeals improved in 2003-4, with 97% (up from 84%) of written submission appeal cases determined within the target of 20 weeks, and 86% (up from 71%) of the public local inquiry appeal cases determined within the target of 38 weeks. (Inquiry Reporters Unit, 2004).
• Around a third of appeals were successful in 2003-4, and this rate has shown little variation in recent years. (Inquiry Reporters Unit, 2004).

Housebuilding

• The rate of completions is insufficient to replace the housing stock or to meet future household formation rates ( CBI Scotland report).
• However, over a 30 year period the rate of real house price inflation in Scotland has been the lowest of any UK region and generally much closer to the European average, which tends to suggest that over that period at least, supply has been broadly adequate (Scottish Executive Affordable Housing Review).
• Since 2000, however, real house price growth has been well above the long-term trend (Scottish Executive Affordable Housing Review).
• Affordability is decreasing across Scotland, but is still good relative to England (Scottish Executive Affordable Housing Review).
• However, the overall Scottish picture masks very different circumstances in different areas, and most particularly, sharp house price increases and a decline in affordability in the East of Scotland (Scottish Executive Affordable Housing Review).
• Housing supply would need to increase by 7,700 completions per annum (32% of current output) to reduce house price inflation to the European average (Scottish Executive Affordable Housing Review).

Solutions Advocated

• The new Strategic Planning System must ensure that the plan development process is faster, and there should be a statutory requirement for local authorities to update development plans every five years. There should be some form of financial forfeit to pay, as well as powers for the Scottish Executive to recruit consultants to develop plans where local authorities have failed to meet the deadline. ( CBI Scotland report).
• Where plans are more than five years out of date they should lose primacy in decision making ( CBI Scotland report).
• Action plans to accompany development plans are desirable ( CBI Scotland report).
• Guidelines should be used to decide a specific deadline for applications, agreed between the local authority and developer ( CBI Scotland report).
• There should be financial penalties, including refund/non payment of fees, for poor performance ( CBI Scotland report).
• National agencies should be set a 2-month time limit for commenting on applications ( CBI Scotland report).
• Scottish Enterprise should be included as a statutory consultee on all significant applications. ( CBI Scotland report).
• Where a public agency does not comment on a draft development plan, it should not be able to block a planning application. ( CBI Scotland report).
• Planning agreements must relate directly to a development, and any contributions required should be stated in development plans. ( CBI Scotland report).
• The Scottish Executive should provide sufficient investment in water infrastructure to support growth. ( CBI Scotland report).
• A survey by Brodies suggested that there was some support for an additional fee to accelerate application processing, though there was also concern that this would have a detrimental effect on the processing of other applications (Brodies).
• Use of market data to inform planning system - local authorities to undertake detailed assessment of price trends for different house types when drawing up local and structure plans. (Policy Institute).
• The Scottish Executive should publish an annual review of house price changes for the major markets and house types, and an analysis of how the supply of sites is meeting demand. (Policy Institute).
• The supply of new housing sites needs to be increased, including greenfield sites, if demand is to be met (Policy Institute).
• The presumption should be that an oversupply of sites with planning permission is preferable to an undersupply (Policy Institute).
• Volume release of green belt land around Edinburgh is advocated (Policy Institute, 2004).
• Local authorities need clearer targets for the publication of local and structure plans, and financial penalties for missing them (Policy Institute).
• Use of Section 75 Agreements should be restricted to offsetting site-related costs, or alternatively, a 'planning gain supplement' should be introduced, as identified in the Barker Report (Policy Institute).
• Affordable housing should not be funded through planning gain - the taxpayer should pay, not landowner or other house buyers (Policy Institute).
• Councils could be incentivised to promote residential development by being allowed to retain all Council Tax on houses build in the last 3-5 years in addition to the block grant. This could then be spent on new infrastructure investment as required. (Policy Institute).

Reforming Planning Obligations and the Funding of Infrastructure for New Development

• Planning agreements should be retained but their scope clarified.
• Specialist expertise should be deployed on both sides.
• Requirements should be made clear from the outset - a revised PAN should set out how this should be done.
• A revised Circular should emphasise the role of conditions as the first choice option.
• The new Bill should make provision for unilateral undertakings.
• Heads of agreement should be set out in Committee reports.
• There should be advice on ring fencing in Circular and Advice Note, but it should not be mandatory.
• Planning agreements should be recorded on the Planning Register.
• Legal procedures need to be streamlined and well resourced - an Advice Note should address this.
• There should be provision for independent adjudication and a right of appeal where negotiations break down or take too long.
• Agreements should contain provision for periodic review and abandonment.

• The revised Circular would formalise the broader use of planning obligations which has now become practice - i.e. their use to make the development acceptable in planning terms, rather than the narrower definition of being 'necessary for the development to proceed'.
• The objective of the revisions is to produce a 'fast, predictable, transparent and accountable system'. It is suggested that the good practice guidance to be produced will/should give detailed examples of how planning obligations can be made more streamlined, more predictable and more transparent.
• Standard heads of terms, agreements and model clauses are to be provided in the good practice guidance.
• It is accepted that some infrastructure will not be provided in this way, and indeed by implication that not all developments will be capable of meeting all associated costs.
• It is recommended that there should be local planning obligations policies, set out in the Local Development Framework (the statutory development plan for the area) which should include high-level policies about the principles and use of planning obligations.
• More detailed policies - e.g. application to specific localities and likely quantum of contributions - should be set out in Supplementary Planning Documents, which may include matrices for predicting the size and types of obligations likely to be sought for specific sites, sub-plan areas or windfall sites.
• Local authorities are expected to co-ordinate the infrastructure requirements of other public sector agencies who have responsibility for physical and community infrastructure.
• Local authorities would be encouraged to employ formulae and standard charges where appropriate in the interest of speeding negotiations and promoting transparency. Pooled contributions may be appropriate, as may contributions towards future infrastructure, which may be returned if circumstances change.
• Use of third parties for mediation and to negotiate planning obligations for complex or major obligations is advocated.
• It is even proposed that contributions may be used to fund local authority costs incurred during agreeing a planning obligation, including the cost of local authority planning obligations officers, legal fees, and monitoring and implementation of obligations.

• BURA members expressed dissatisfaction with Section 106 but also some belief that it could be used more constructively along the lines clarified in the revised Circular - a revised S 106 might be a valid alternative to the Planning Gain Supplement ( PGS).
• All expressed a desire that the PGS should go into supporting the delivery of sustainable development and regeneration, not a general Treasury pot. Considerable resistance was thought likely if PGS becomes a general tax and if funds raised in one area are not retained locally.
• The view was held by some that an improved S106 is the only alternative and that there is considerable scope for improvement, e.g. through clarification through approaches such as the recent ODPM circular and some of the work done in growth areas such as that for the Milton Keynes South Midland Inter-regional Board. These suggest that there is potential to make SIO6s more strategic, clearer at an earlier stage, more transparent and more related to local values, costs and needs. The Best Practice Guidance to be produced will be key to future use and acceptability.
• However, if re-distribution between areas is paramount, PGS may be more suitable than S106 which can only redistribute within a particular planning area.
• The lack of clear long-term planning and budgeting in many parts of central and local government and the privatised utilities makes the needs side of infrastructure for sustainable development hard to identify, quantify and budget for.
• There are important issues of timing in funding infrastructure - if PGS were only collected retrospectively, who would fund infrastructure up front? Various options are proposed to deal with this.
• Transparency as to how money is used is key. S106 is in disrepute because developers often do not get what they pay for and the community does not know how S106 is used and what it provides.
• In Milton Keynes South Midlands ( MKSM), Cambridgeshire and Ashford, an attempt is being made to complete the circle between developer contributions, plan making, infrastructure needs, funding and delivery. S106 is used as the only currently available mechanism. English Partnerships is to be the provider of cash flow facilities to deal with timing differences in expenditure and income.
• The Forum considered that the experience of implementing the MKSM S106 approach should be closely monitored over the next 12 months by Government and taken into account in formulating PGS proposals.
• The development industry would be nervous of a dual system ( PGS and S106), fearing that each would expand over time and add to burdens. If PGS is adopted then Section 106 will need to be scaled back. It will be important to consider the overlap and combined impacts in phasing in the PGS. Otherwise there is a risk of overloading developments and discouraging development.

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