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Appendix 1: Stakeholder Consultation

TO : As per attachment
2 February 2004

Dear Sir/Madam

Proposed Planning Bill
Planning agreements/obligations, sustainable communities and the provision of affordable housing

For the six month period extending to the middle of July I have been seconded from Dundee City Council to the Scottish Executive Development Department Planning Bill Team to assist and advise on issues which will be relevant to the preparation of a new Planning Bill.

During the period to the end of March I have been asked to consider and report on the above topic area. For the remainder of my secondment I will be drawing on my local authority experience in both development planning and development control advising on a range of other topics of relevance to the content of the Bill and complementary secondary legislation and guidance.

In relation to the legal agreements/obligations work I am adopting the following approach :

a) Stage 1 (Context) - Desk top research of the Scottish experience using, as a starting point, earlier work undertaken on behalf of the Scottish Executive, and in particular drawing on the debate currently taking place in England, as the amended Planning and Compulsory Purchase Bill undertakes its passage through the House of Lords. I will also be addressing international approaches to the funding of infrastructure and community facilities.
b) Stage 2 (Stakeholder Involvement) - A dialogue with planning authorities, developers, professional bodies, infrastructure providers, and other relevant stakeholders with the objective of defining any consensus which may exist on what changes to primary and subordinate legislation may be justified and/or how best practice advice might be amended or clarified. It is my intention to make arrangements to meet with those most closely involved in negotiating, concluding and enforcing legal agreements and in particular those who have experience in testing cases or who have strong feelings on the subject matter.
c) Stage 3 (Interim Options Report with Recommendations) - Prior to concluding a final report I would wish to obtain feedback on the conclusions of the research. The formation of a small, short life Focus Group drawn from participants in the Stage 2 process is a possibility.
d) Stage 4 (Final Report with Recommendations) - Following further discussions I envisage being in a position to circulate the outcome of my research. A stakeholder symposium to share the conclusions and recommendations is also being considered.

This consultation is in connection with Stage 2 of the project and I would be grateful for your input and support.

To inform the discussion I have enclosed a short introductory issues paper, which will serve the purpose of setting an agenda for meetings with those who wish offer views and share experiences from practice.

In parallel with this project I intend to use the opportunity of this exercise to listen to views which parties may have on any specific issues which should be considered for inclusion in a Planning Bill, following from the publication of the "Options for Change" Research Paper prepared for the Scottish Executive by Professor Jeremy Rowen-Robinson in September last year. It is appreciated that several topics have already been the subject of separate consultation and others may follow. However I have in mind the more detailed issues of policy and procedure which presently frustrate or hinder efficient and effective planning and which are most acutely experienced by those practitioners at the sharp end of the process.

I hope that you will feel able to participate in this project and I look forward to hearing from either yourself or your nominated colleague(s) in due course.

I can be contacted by E Mail at iain.ross2@scotland.gsi.gov.uk , by telephone at 0131 244 5597 or by letter at the following address :

Iain Ross MAMSC Dip TPMRTPI
Planning Bill Adviser
Scottish Executive Development Department
Planning Division
2-H Victoria Quay
Edinburgh EH6 6QQ

Thank you for your assistance in this matter.

Yours faithfully

IAIN ROSS
Planning Bill Adviser

Enclosures :
1. List of Stakeholder Contacts
2. Briefing Paper

Briefing Paper

"A Partnership for a Better Scotland : Partnership Agreement" (Labour/Liberal Democrat Scottish Parliament Coalition, 2003)

The Scottish Executive, in its legislative programme is committed to improving the quality of life for all in Scotland. Its High Level Commitments include

• Regenerating communities and securing a decent environment through the reform of planning laws with the intention that the involvement of communities would be strengthened, decisions would be speeded up, local views would be better reflected and quicker investment decisions would be made
• Delivering good quality, sustainable and affordable housing for all.
• Growing the Scottish economy
• Delivering sustainable development that puts environmental concerns at the heart of public policy and secures environmental justice for all of Scotland's communities.

Commentary: The Communities Minister Margaret Curran MP has emphasised the major role which planning plays in delivering the Executive's key priorities in health, education, crime, transport and jobs. The modernising agenda for planning should ensure that it balances the needs of communities and the environment with the prime objective of delivering economic prosperity and jobs. Innovative partnership approaches to the delivery of infrastructure and other community services will in future be required and the issues surrounding legal agreements and obligations will be central to this debate .

In the proposed Planning Bill (how) should we define a more positive and pro active role for planning in relation to the delivery of development ( Enabler? Facilitator? Co-ordinator? Provider?) in order that we can best define any revised statutory purpose for planning agreements ?

"Your Place, Your Plan" A White Paper on Public Involvement in Planning (Scottish Executive Development Department, March 2003)

Consultation responses indicated that there was near universal support for more information about planning agreements to be made publicly available and that this information should be as full and complete as possible. The Scottish Executive will pursue these issues.

Commentary: The consultation papers in relation to Section 106 Agreements in England deal with the interlinked issues of transparency/open government, effectiveness monitoring and accounting procedures. There seems to be general agreement that heads of agreement should be at least referred to in published Committee reports and recorded in the Planning Register. Beyond this minimum should we legislate for a greater level of public involvement in the process? At what level of detail will commercial confidentiality be compromised if at all? Should Best Value style accountability for outcomes be a requirement, as seems to be the case in many English authorities?

"The Use and Effectiveness of Planning Agreements" (Research Paper by Colin Buchanan& Partners with Dundas & Wilson and Robert Turley Associates; Scottish Executive Central Research Unit, 2001)

The research concluded that there was scope for legislative change to secure the following objectives

• Improve the consistency in the use of planning agreements through clarifying the scope of statutory powers and the necessity to use agreements as opposed to using other mechanisms eg. Conditions and other forms of agreement
• Increase the effectiveness of agreements in delivering wider sustainability, transport and planning objectives
• Ensure that applicant's right of appeal was not undermined in compliance with ECHR
• Provide for review of agreements at appropriate stages.

Legislative change in relation to agreements would be required to secure a delivery purpose (area-wide economic, physical and social benefits including mechanisms for delivering multiple land use projects involving multiple developers); and a funding purpose (transfer of funds from a developer to the public sector for agreed projects) .

These objectives could be provided for by widening the scope of the existing Section 75 in the following ways :

• the inclusion of review and annulment clauses and provisions for appeal to Scottish Ministers;
• a publicly available register of all agreements;
• the introduction of the right to enter into unilateral obligations
• the express authority to transfer funds.

A revised Circular would be required to update guidance and best practice.

These provisions could be complemented by or incorporated within new legislation which could possibly include formulae for securing financial contributions linked to the environmental or infrastructure impacts of development viz. development levy or impact fee.

This approach would require to be linked to a relevant and up to date policy framework subject to public consultation. There would be a need to clearly set out the scope and purpose of any funding mechanism which, although relating to the proposed development went beyond the boundaries of the site in question but which aimed to achieve a wider agenda.

"Infrastructure Trusts" could be a method of securing agreement on the scope of the agreement and on the receipt and disbursement of funds.

Commentary: This report represents the latest comprehensive and published review of the issue in Scotland and provides an excellent starting point for the current study. The findings and recommendations have parallels with the options discussed at the time of the publication of the Green Paper in England and in the most recent consultation paper (See below). Do the conclusions and recommendations of this research provide an adequate basis for prescribing changes to the legislation or are they a step too far?

"Options for Change-Research on the Content of a possible Planning Bill" (Scottish Executive Development Department, September, 2003)

This paper builds on the above research findings and offers the following propositions for discussion :

• Money Payments - The circumstances under which conditions with a financial element can be applied as an alternative to the negotiation of a Section 75 Agreement should be clarified;
• Tariffs - A system of standardised tariffs should be applied in such a way as to deliver proportionate contributions for the provision of infrastructure and other facilities to meet wider community needs. Can/should this controversial mechanism be legislated for whilst avoiding the obvious criticism that it represents a form of taxation?.
• Unilateral Undertakings - Should there be a change to Scottish legislation to adopt the procedure provided for within Sec.106 of the English Act to allow an applicant to execute a unilateral undertaking that would overcome the obstacle of a planning authority refusing to enter into a Section 75 agreement?
• Infrastructure Trusts - There should be positive encouragement for trusts to be established where a structured approach is necessary to the accumulation and dispersion of contributions to the provision of infrastructure. In respect of major mixed land use and multi-developer/multi-ownership cases where ordered implementation is essential, how could trusts be made to be effective?
• Review of Agreements - Every agreement should contain a mandatory review clause. Appeal mechanisms should be introduced. Should Scottish Ministers or the Lands Tribunal receive and discharge the appeals?
• Public Participation - Heads of agreement (under negotiation or completed) should be entered on the planning Register. However this may not be sufficient in itself to avoid criticism that the procedure lacks proper provision for public involvement.

Commentary: Although this paper has been widely circulated and comments invited it is appreciated that responses may not be able to do justice to all topics equally. Therefore specific comments focussing on the above propositions are invited as part of this exercise.

"Contributing to sustainable communities- a new approach to planning obligations" ( ODPM Consultation Paper, November 2003)

In December 2001 the Government published a Planning Green Paper which contained a package of measures for the improvement of the planning system in England. In parallel a consultation document was issued which invited comments on options for the reform of Planning Obligations. The Government suggested the replacement of the Sec.106 provisions by a mechanism for the payment of a fixed fee to cover infrastructure and environmental costs and in addition to provide for affordable housing. Following widespread criticism the proposal in this form was dropped in favour of a streamlining of existing mechanisms with provisions to ensure greater transparency. Reform of primary legislation was not contemplated.

However The Planning and Compulsory Purchase Bill is currently in the House of Lords and now contains clauses, which replace Section 106 of the 1990 Planning Act (as amended). The Bill provides that the Secretary of State may by regulation allow for the making of planning obligations although the developer may opt to make the contribution by paying a fixed sum with the criteria for payment having previously been set out in the development plan and thereby exposed to public consultation. This would ensure speedier decision-making. Alternatively, the negotiated agreement route can be opted for.

This consultation document explains the proposals in detail. The following summary may be of assistance in judging whether the proposals may be applicable in a new planning Bill for Scotland

• It is common practice for local authorities to seek contributions from developers that go beyond the criteria of the 'necessity test' prescribed in advice (Circular 1/97). Case law has confirmed that all that is required is a 'greater than de minimis' connection between the development and the obligation. The proposals take this convention as a starting point for reform.
• Local authorities would set out the contributions framework in development plan policies;
• Where the levels of financial contribution are predictable, formulae can be offered up for debate and confirmation;
• Pooling of contributions from several developments is allowed for;
• As an alternative to the speed and certainty of the 'optional charge' regime the developer may opt for the flexibility of a negotiated contribution by the conventional route with the delay and uncertainty that follows;
• Payment of the charge will be a material consideration and agreement to pay the charge should not make otherwise unacceptable development acceptable;
• Charges would be set at the local plan making stage and at a level sufficient to mitigate the likely impacts (direct and indirect) of new development with the objective of ensuring that the new development provides economic, social and environmental benefits for the community as a whole;
• Charges could be applicable only to sites identified in the development plan although authorities could be given the option to accept unilateral undertakings equivalent to the charge for unallocated windfall sites;
• Non financial issues would still need to be resolved by a separate conventional agreement;
• Register entries of heads of agreement are already in place in England and separate provisions would be introduced in relation to financial procedures and declarations in the interests of openness and transparency.
• The proposals are assessed by the Government to have the following impacts:

	Benefits	Costs
Developers	Reduced risk and uncertainty Finance arranged quicker and cheaper Reduced legal and consultants fees Reduced development timescales Flexible arrangements for payment of charges	Numbers of obligations will increase Contributions for larger developments may increase as all direct and indirect impacts are accounted for in formulae
Local Authorities	Faster negotiations will reduce staff time and other resources Negotiations aided by an explicit development plan framework Pre determined formulae and standard heads of agreement should speed up process	Up-front costs in setting up standard heads and formulae Costs in additional work during plan preparation
Local Communities	Direct and indirect impacts of developments covered Pooling of contributions allows for efficiencies Clear local plan policies removes uncertainty and unpredictability	Any increased costs faced by the developer my lead to required developments not proceeding

Commentary: These proposals raise fundamental questions in relation to the operation of planning system in England and which need to be considered in suggesting this model for Scotland:

• What will be the extent of any impact on house and commercial prices?
• What will be the extent of any impact on the market in land as costs of optional charges are passed back to landowners?
• To what extent will the costs of administering the system counterbalance any savings in legal costs for local authorities?
• Given the dynamics of development, to what extent can individual and cumulative levels impact be accurately predicted in local plans so that charging formulae can be set with certainty?
• What impact is likely on local plan adoption timescales if complex charging regimes connected to complex developments are challenged and modified ?
• How much of a skills challenge will planning departments face in overcoming issues of development appraisal and valuation?
• In respect of Sections 25 and 37(2) of the 1997 Act decision-makers may choose to afford development plan policies on obligations maximum weight in the face of other material considerations. To what extent would legitimate decision making be threatened?

Affordable Housing

SPP 3 : Planning for Housing provides that where there is evidence of a shortage of affordable housing, development plans should set out a policy, particularly in respect of areas of development pressure where land values are high or where a new settlement or major housing expansion is contemplated, and in consultation with house builders, such a policy should explain how planning agreements are to be used as a mechanism for delivering affordable housing.

Commentary : The relationship between legal agreements and the direct provision of affordable housing by the private sector or levels of contributions towards its provision by other housing providers, is contentious.

As a contribution to the work on the delivery of affordable housing which is presently underway in the Scottish Executive I would wish to discuss with stakeholders any views they may have on how the relationship between the development plan and the provision of affordable housing directly or indirectly by way of legal agreement or obligation can be improved.

30 January 2004

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