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CHAPTER TWO - CONTEXT
2.1 In this chapter, three important dimensions affecting current practice in the use of planning agreements for developer contributions are examined - the legal framework, current government policy and changing contextual issues for policy and practice.
Legal Context
2.2 The purpose of this study is to assess the value of planning agreements i.e. the value of developer contributions associated with formal agreements with the planning authority under statute. These are normally associated with the powers of s75 of the Town and Country Planning (Scotland) Act 1997 but, under certain circumstances, the same ends may be achieved through other statutory powers. The effects of the three principal provisions are summarised below:
- The Town and Country Planning (Scotland) Act 1997 (s75)
This provision gives planning authorities the power to enter into agreements with landowners for the purpose of restricting or regulating the development or use of the land, either permanently or during such period as may be prescribed by the agreement. In addition they 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. Not all agreements entered into under this legislation involve a developer contribution. Many are used just to regulate the use of a development, for example by ensuring that houses built for agricultural workers can only be occupied by those working in agriculture, or restricting the range of goods that can be sold in a retail park.
At present there are significant differences between the legislation in Scotland and its equivalent in England (planning obligations under s106 of the Town and Country Planning Act 1990 (as amended)). However, the Planning Etc. (Scotland) Act 2006 makes provision for a number of changes to s75 agreements which largely match the English provisions including the introduction of unilateral obligations and of an appeal mechanism. However, at the time of writing this report, those provisions are not yet in force in Scotland.
- Local Government (Scotland) Act 1973 (s69)
This gives local authorities the power to enter into agreements entered for a purpose that facilitates, or is conducive or incidental to, the discharge of any of their functions. It can be implemented through a simple Minute of Agreement between parties and can be used for developer contributions where a single up-front payment is made, without the need to register the Agreement for application to the land in perpetuity. The powers are not available to National Park Authorities as planning authorities.
- Roads (Scotland) Act 1984 (s48)
This provision allows the roads authority to enter into an agreement with any person willing to contribute to the construction or improvement of a road. It is an alternative to the use of s69 of the 1973 Act where single up-front payments are made specifically to roads related investment which falls under the powers and duties of the local authority as roads authority. The powers are not available to National Park Authorities. Separate Minutes of Agreement are entered into with the Scottish Government for improvements to trunk roads.
2.3 All three types of agreement involve developers entering into legally binding contracts with the local authority. None of these agreements needs to be linked to a grant of planning permission but nearly all of them are. Normally planning permission will not be issued by the local authority until the relevant agreement has been concluded. However only planning agreements under s75 of the Town and Country Planning (Scotland) Act run with the land, and may be registered in order to bind successors in title. As a result, only s75 agreements are likely to be useful in situations where ongoing commitments (e.g. phasing of contribution payments) are required. This is because, should the site be sold to another developer, that new party will be bound by the agreement. Agreements under s69 or s48, on the other hand, do not run with the land. If a site is sold to another developer then the agreement will no longer apply. As a result, s69 and s48 agreements are normally only useful in situations where a one off payment is required.
Scottish Government Policy on the Use of Planning Agreements
2.4 Current policy is set out in Circular 12/1996 (Town and Country Planning (Scotland) Act 1972: Planning Agreements). This states that planning agreements have a limited but useful role to play in the development management process. However, they should only be used where other measures, such as conditions on planning permission cannot be lawfully used to address an obstacle to granting planning permission. Where a contribution is to be sought from a developer this needs to be related in scale and kind to the proposed development and be aimed at addressing an issue arising from the development. In particular the following tests are given to help determine the reasonableness of an agreement:
- Is an agreement needed to enable a development to go ahead?
- In the case of financial contributions, will these contribute to the cost of providing necessary facilities required as a consequence of, or in connection with the development in the near future?
- Is the requirement in the agreement so directly related to the regulation of the proposed development that the development should not be permitted without it?
- Will the agreement offset the loss of, or impact on, any amenity or resource which is present on the site prior to development?
2.5 Planning authorities are encouraged to flag the need for developer contributions in advance through statutory and other planning policy statements in order to help developers and others anticipate where the need for planning agreements is likely to arise.
Current Issues
2.6 Although the use of planning agreements is a well established part of the planning system, the amount and type of developer contributions which the public sector secures from the development process and the way it has been done has been a topic of debate for a number of years. The original purpose of planning agreements was to effect greater control over the nature, phasing or impact of development than could be achieved by the use of conditions alone. However, in recent years there has been an acknowledgement that planning agreements are no longer used just to mitigate the impact of development. Increasingly, planning authorities use agreements to secure contributions towards essential public infrastructure to serve such developments - education, sports facilities and roads and towards related policy objectives such as affordable housing.
2.7 This study looks at which local authorities are doing what, which ones are the leading proponents of planning agreements and which ones are using agreements less often. It examines best practice and analyses the use of the more innovative models of agreements and general trends in their use. In doing so, it has captured for the first time in Scotland a picture of the amount of value captured through planning contributions secured in recent years and projects this forward to 2010.
2.8 In parallel with the possible need to update Circular 12/96 in its own right, there have been proposals for alternatives to planning agreements such as the proposal in the first Barker review of planning for a Planning Gain Supplement ( PGS) which remained under consideration by H.M. Treasury until very recently (Barker, 2004). The Scottish Government has indicated that it will undertake a review of the operation of the system of planning agreements in Scotland as part of the current planning modernisation and reform programme and this research will assist this process.
2.9 Over recent years planning agreements have also been one of the principal tools for achieving affordable housing provision and again this is a topical issue with the announcement of the UK Government's Green Paper on Housing in July 2007 which focuses on the need to deliver specific affordable housing numbers in England by 2010, and the publication by the Scottish Government of its own discussion paper "Firm Foundations: Future of Housing in Scotland" in October 2007 (Scottish Government, 2007). One stated intention of the Scottish Government in the document is:
"We will take action to further the integration of land-use planning and housing strategy through a strengthened national policy framework, including"….. inter alia….."the outcome of a current review of planning agreements and their operation in facilitating housing development."
2.10 There is no central register of planning agreements and so the approach adopted for this research project has been to try to obtain all the planning agreement details (including copies of all the agreements) from all 32 local authorities and 2 national park authorities in Scotland. Detailed spreadsheet questionnaires asked for details on all the individual types of contributions, amounts and numbers.
2.11 In parallel with this, further questionnaires to all authorities requested more subjective data on best practice, trends, procedures and practices. This has required robust and comprehensive data collection and the co-operation of the planning authorities.
2.12 Furthermore, selected authorities were studied in more detail in order to more fully establish trends in agreements and practice and inform the valuation process. The methodology is examined in more detail in the next chapter but, it is noted at this point that it may be well worth developing a system of regular data collection in the future in this increasingly significant area of planning activity.
Conclusion
2.13 Throughout the study, the topicality of the issues referred to above was evidenced by widespread interest from planning authorities and developers. Important development took place in the shelving of Planning Gain Supplement by the UK Government in favour of a Community Infrastructure Levy provision in the Planning Bill introduced to the Westminster Parliament in November 2007, which will apply to England and Wales only, if passed. Concerns over the needs for affordable housing, and the role of the planning system as one important tool in meeting these needs, were addressed in the Scottish Government's housing discussion paper (Scottish Government, 2007).
2.14 Against this rapidly changing environment and expectations of the planning system, this study required to adopt a wide ranging methodology which is examined in the next chapter.
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