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An Assessment of the Value of Planning Agreements in Scotland

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CHAPTER SEVEN - FORECASTING VALUES TO 2010

7.1 This chapter sets out the results of study forecasts made of future revenues from Scottish planning agreements to 2010. Rather than simply take the global figure of contribution revenues which have been calculated over the past 3 years and add an "inflationary figure" to it in line with previous trends, three projections have been produced on an authority-by-authority and year-by-year basis, taking account of the trends established in the frequency of use and value of planning agreements over the period 2004-2007.

7.2 In all cases it is assumed that development activity, in terms of the number of planning permissions and scale of development, will remain constant over the period 2007-2010, and based on 2006-2007 levels. The increases where shown are based on the increased use and value of developer contributions.

7.3 The amount of known planning agreement contributions over the past three years totals just over £116.6m. Chapter Four indicates that this figure accounts for the responses made by 28 of the 34 planning authorities and that assumptions for the remaining authorities and for unknowns in the returns which were received raises the total estimated contributions to £159.1 m. The total of confirmed contributions includes two that were worth a total of around £39m, an indication of the incidence of unusually high contributions that can be expected from time to time.

Justification for Forecasts

7.4 The section below gives a justification for the forecasts to 2009/10. This is based on market knowledge of the various authorities, and in some instances in-depth evaluation of the various case studies. Through the background research it has been possible to identify authorities which are innovators and those which have been achieving only slow growth in the level of contributions received.

  • Aberdeen City: The council has no major history of securing financial contributions although has recently taken on a Planning Gain Co-ordinator shared with the Shire. It has been anticipated that this will take some time to work its way through the Aberdeen planning processes and to build on what has been to date a very small amount collected by this authority for planning contributions. Therefore over the next three years only some small growth is forecast.
  • Aberdeenshire: It is projected that the value of contributions secured will remain constant over the next three years. It is a mature authority in terms of planning gain and in-kind affordable housing contributions are the biggest factor. Direct contributions have been low in recent years and no major growth is forecast, but steady contributions.
  • Angus: No data was received 1. We have assumed average contributions for similar authorities.
  • Argyll & Bute: No data was received. We have assumed average contributions for similar rural authorities.
  • Cairngorms National Park:CNPA is only responsible for calling in certain planning applications. Contributions received have mainly been related to affordable housing and therefore a slow growth rate is forecast.
  • Clackmannanshire: Higher growth is forecast as the Council are bringing in a new developer contributions policy in 2007 and will be seeking higher levels of contribution.
  • Comhairle Nan Eilean Siar (Western Isles): Similar to Orkney and Shetland; no financial contributions were received and no growth is forecast.
  • Dumfries & Galloway: There was a marked rise in contributions in 2006/7 and there are solid policies now in place. Steady and slow growth is predicted.
  • Dundee City: There are no affordable housing policies and contributions should be steady and related to infrastructure. No growth is forecast, with contributions received remaining constant over the next three years.
  • East Ayrshire: Solid and steady growth is forecast as the Council appointed a dedicated Planning Gain Officer in October 2006 and procedures have become more refined and efficient.
  • East Dunbartonshire: Steady growth is forecast built on the back of the one-off set of contributions towards Woodlea Hospital redevelopment. There are no plans to get a dedicated officer and contributions will be geared to towards greenspace and some affordable housing.
  • East Lothian: The new Local Plan is expected to be adopted within the next 12 months. Developer contribution requirements are set out in each of the housing allocations in the Finalised Plan, which include a major extension to Haddington (750 houses) and Blindwells new settlement (1600 houses), and it is forecast that the value of developer contributions received will increase.
  • East Renfrewshire: No data was received 1. We have made a conservative assumption about housing growth .
  • Edinburgh Solid and steady growth is forecast. Policies are now in place securing contributions towards the Tram, affordable housing, and education. Amounts have increased since 2004. Policies are not expected to advance significantly despite the recent appointment of a dedicated officer.
  • Falkirk: No data received to base forecasting on. We have assumed contributions similar to Stirling as there is reasonable economic development activity in the area.
  • Fife: Good growth is forecast. The Council has identified major affordable housing shortages and a new Finalised Structure Plan policy for developer contribution policies. It also wants to use more s69 agreements for efficiency. As a result of new policies likely to come into force, it is expected that the values captured through planning agreements will increase.
  • Glasgow City: Good and solid growth expected. New policies coming into place with City Plan 2. Existing policies capture significant contributions towards recreation and green space. In addition, the Council is about to adopt a highly refined formulae approach to capturing contributions towards the Fast link project.
  • Highland: High growth is forecast as the Council will bring into play the developer's protocol for the Inverness and A96 Corridor area and wish to obtain large contributions for all types of development. Innovative S 75 policies are beginning to emerge in draft development plans unrelated to planning applications.
  • Inverclyde: No data was received 1. We have assumed low level of contributions.
  • Loch Lomond & Trossachs: Not enough information for forecasting 1. We have assumed similar to Cairngorm National Park.
  • Midlothian: High growth is forecast for this Council. The Council has recently advanced its policy framework with results evident in the case study. The new Local Plan is likely to be adopted within the next three years, with new development sites being released. Negotiations continue over the Shawfair agreement, elements of which may be delivered before 2010.
  • Moray: Steady growth is forecast with figures remaining constant. The Council has no major initiatives for expanding what are solid existing contributions and no major expansion is forecast.
  • North Ayrshire: The Council has no real planning contributions policies or initiatives in place, and therefore no significant growth is expected.
  • North Lanarkshire: Solid growth is expected from this Council which achieved a £12.5m contribution from the Ravenscraig development. However, the actual growth could be more than forecast if contribution policies are applied to new major projects.
  • Orkney: No direct contributions received over the last three years 1. Agreements concluded are regulatory or restrictive conditions.
  • Perth & Kinross: No returns were received. We have assumed contributions similar to Angus.
  • Renfrewshire: No data to base forecasting on. We have assumed low levels of contributions.
  • South Ayrshire: No data was received 1. We have assumed average contributions for similar authorities.
  • Scottish Borders: The Council has a solid framework in place with a steady level of contributions received from developments reflecting the level of development activity in the area. The Waverley line is scheduled to open in 2011, and so it is anticipated that contributions will continue to come in until 2010.
  • South Lanarkshire: No data to base forecasting on *. We have assumed higher contributions similar to Falkirk and Stirling.
  • Shetland: No direct contributions; similar to Orkney.
  • Stirling: Solid growth is expected. The Council has a sound framework already in place, although new Transport contribution policy is likely to be introduced within the next few months. Furthermore, the adoption of the first alteration to the local plan identifies new development sites, with site specific contributions identified in Supplementary Guidance.
  • West Dunbartonshire: No data received to base forecasting on. 1 We have assumed similar to adjacent Argyll and Bute.
  • West Lothian: Solid and steady growth is forecast as this Council begins to use its emerging developer's protocol policies in a consistent manner. There is already a wide range of contribution policies in place and the new Local Plan likely to become statutory within the next 12-18 months.

Projection 1 - Trends from Authorities who Responded

7.5 Table 7.1 shows contributions previously captured by each authority on a year-by-year basis as this enables trends to be seen for each authority. For instance, many authorities show a significant rise in the amount of contributions in later years as their developer contribution policies have become more refined. It also highlights the years where major contributions have been captured.

Table 7.1 Payment Projection 1

Authority

Financial Year

Total

2004/2005

2005/2006

2006/2007

Year Unknown

In-Kind

Grand Total

Average

2007/08

2008/09

2009/10

Projection

Aberdeenshire Council

£1,120,288

£762,501

£202,452

£382,768

£5,943,950

£8,411,959

£2,803,986

£2,500,000

£2,500,000

£2,500,000

£7,500,000

Aberdeen City

£230,000

£230,000

£250,000

£300,000

£350,000

£900,000

Cairngorms National Park

£184,000

£330,000

£514,000

£171,333

£165,000

£165,000

£165,000

£495,000

Clackmannanshire

£145,000

£177,000

£15,000

£99,100

£436,100

£145,367

£150,000

£200,000

£250,000

£600,000

Dumfries & Galloway

£26,500

£20,000

£337,500

£ -

£384,000

£128,000

£300,000

£350,000

£400,000

£1,050,000

Dundee City Council

£350,000

£1,446,349

£774,324

£1,070,000

£3,640,673

£1,213,558

£1,000,000

£1,000,000

£1,000,000

£3,000,000

East Ayrshire Council

£116,310

£223,672

£164,362

£230,000

£86,700

£821,044

£273,681

£275,000

£350,000

£400,000

£1,025,000

East Dunbartonshire Council

£93,400

£417,580

£26,670,120

£17,500

£27,198,600

£9,066,200

£450,000

£550,000

£700,000

£1,700,000

East Lothian

£358,824

£557,628

£156,302

£6,435,000

£7,507,754

£2,502,585

£2,000,000

£2,500,000

£3,000,000

£7,500,000

Edinburgh

£1,382,797

£3,027,894

£3,849,112

£10,000

£945,000

£9,214,803

£3,071,601

£4,000,000

£4,500,000

£5,000,000

£13,500,000

Fife Council

£80,000

£768,958

£1,688,437

£93,400

£327,900

£2,958,695

£986,232

£1,250,000

£1,750,000

£2,000,000

£5,000,000

Glasgow City Council

£2,487,241

£2,658,603

£2,920,054

£122,285

£831,000

£9,019,183

£3,006,394

£3,750,000

£3,750,000

£4,000,000

£11,500,000

Highland Council

£78,400

£913,410

£425,000

£1,250,215

£ -

£2,667,025

£889,008

£1,000,000

£1,500,000

£1,750,000

£4,250,000

Midlothian Council

£1,205,981

£3,052,690

£2,657,734

£5,310,150

£12,226,555

£4,075,518

£4,000,000

£4,500,000

£5,000,000

£13,500,000

Moray

£170,066

£690,000

£220,926

£400,000

£1,480,992

£493,664

£500,000

£500,000

£500,000

£1,500,000

North Ayrshire Council

£81,575

£495,750

£587,620

£ -

£1,164,945

£388,315

£550,000

£600,000

£600,000

£1,750,000

North Lanarkshire

£850,000

£12,921,500

£1,681,000

£189,500

£765,000

£16,407,000

£5,469,000

£1,000,000

£1,250,000

£1,500,000

£3,750,000

Scottish Borders Council

£46,794

£189,151

£463,304

£13,184

£1,155,000

£1,867,433

£622,478

£500,000

£500,000

£500,000

£1,500,000

Stirling Council

£90,550

£2,087,850

£67,750

£3,490,000

£5,736,150

£1,912,050

£1,500,000

£1,750,000

£2,000,000

£5,250,000

West Lothian Council

£346,000

£216,636

£1,549,851

£2,580,000

£4,692,487

£1,564,162

£1,500,000

£2,000,000

£2,250,000

£5,750,000

Grand Total

£9,029,726

£30,811,172

£44,415,848

£2,306,352

£30,016,300

£116,579,398

£26,640,000

£30,515,000

£33,865,000

£91,020,000

7.6 The "year unknown" column refers to where authorities have not given details of the financial year in which contributions were made. .

7.7 The "in-kind" column shows the values that have been given by the study team to the in-kind contributions. These are the totals for all the years from 2004 - 2007.

7.8 Generally, either level or increased activity is projected from all the authorities that have submitted data to the study team. The total projection figure shown in table 7.1 is lower than the amounts previously collected due to the fact that two authorities - North Lanarkshire and East Dunbartonshire - secured over the previous period two very large contributions of over £12m (Ravenscraig) and £26m (Kirkintilloch) respectively. These total £39m and this projection is forecast on the assumption that such one-off sums will not be obtained over the period to 2010.

7.9 If these two contributions are discounted from the previous period the total would be £77.8m. The projection therefore forecasts normative figures for these two authorities but nevertheless a significant rise from this base line figure of £77.8m (excluding Ravenscraig and Kirkintilloch) to just over £91m in the period 2007-2010.

7.10 As stated above, the total projected figure of £91m does not include very significant development such as that proposed at Shawfair in Midlothian, which is to be built in phases over the next 15 years. This is a potential contribution of £49m. However, if this were to be captured in the period it could add a significant amount to the total projections. This forms the basis of the second projection.

Projection 2 - Taking Account of Major Developments

7.11 A second projection table (Table 7.2) has been produced to take into account aspects of some major developments that could result in major developer contributions in the period to 2010. These are developments in Midlothian and West Lothian where the study team have been advised that there may be some progress in Shawfair (Midlothian) and the Core Development Areas (West Lothian).

Table 7.2 Payment Projection 2

Authority

Financial Year

Total

2004/2005

2005/2006

2006/2007

Year Unknown

In-Kind

Grand Total

Average

Windfall Sites

2007/08

2008/09

2009/10

Projection

Aberdeenshire Council

£1,120,288

£762,501

£202,452

£382,768

£5,943,950

£8,411,959

£2,803,986

£2,500,000

£2,500,000

£2,500,000

£7,500,000

Aberdeen City

£230,000

£230,000

£250,000

£300,000

£350,000

£900,000

Cairngorms National Park

£184,000

£330,000

£330,000

£171,333

£165,000

£165,000

£165,000

£495,000

Clackmannanshire

£145,000

£177,000

£15,000

£99,100

£436,100

£145,367

£150,000

£200,000

£250,000

£600,000

Dumfries & Galloway

£26,500

£20,000

£337,500

£ -

£384,000

£128,000

£300,000

£350,000

£400,000

£1,050,000

Dundee City Council

£350,000

£1,446,349

£774,324

£1,070,000

£3,640,673

£1,213,558

£1,000,000

£1,000,000

£1,000,000

£3,000,000

East Ayrshire Council

£116,310

£223,672

£164,362

£230,000

£86,700

£821,044

£273,681

£275,000

£350,000

£400,000

£1,025,000

East Dunbartonshire Council

£93,400

£417,580

£26,670,120

£17,500

£27,198,600

£9,066,200

£450,000

£550,000

£700,000

£1,700,000

East Lothian

£358,824

£557,628

£156,302

£6,435,000

£7,507,754

£2,502,585

£2,000,000

£2,500,000

£3,000,000

£7,500,000

Edinburgh

£1,382,797

£3,027,894

£3,849,112

£10,000

£945,000

£9,214,803

£3,071,601

£4,000,000

£4,500,000

£5,000,000

£13,500,000

Falkirk

£0

£ -

£ -

Fife Council

£80,000

£768,958

£1,688,437

£93,400

£327,900

£2,958,695

£986,232

£1,250,000

£1,750,000

£2,000,000

£5,000,000

Glasgow City Council

£2,487,241

£2,658,603

£2,920,054

£122,285

£831,000

£9,019,183

£3,006,394

£3,750,000

£3,750,000

£4,000,000

£11,500,000

Highland Council

£78,400

£913,410

£425,000

£1,250,215

£ -

£2,667,025

£889,008

£1,000,000

£1,500,000

£1,750,000

£4,250,000

Midlothian Council

£1,205,981

£3,052,690

£2,657,734

£5,310,150

£12,226,555

£4,075,518

£25,000,000

£4,000,000

£4,500,000

£5,000,000

£38,500,000

Moray

£170,066

£690,000

£220,926

£400,000

£1,480,992

£493,664

£500,000

£500,000

£500,000

£1,500,000

North Ayrshire Council

£81,575

£495,750

£587,620

£ -

£1,164,945

£388,315

£550,000

£600,000

£600,000

£1,750,000

North Lanarkshire

£850,000

£12,921,500

£1,681,000

£189,500

£765,000

£16,407,000

£5,469,000

£1,000,000

£1,250,000

£1,500,000

£3,750,000

Perth & Kinross

£500,000

£500,000

£500,000

£1,500,000

Renfrewshire

£100,000

£200,000

£300,000

£600,000

Scottish Borders

£46,794

£189,151

£463,304

£13,184

£1,155,000

£1,867,433

£622,478

£500,000

£500,000

£500,000

£1,500,000

Stirling Council

£90,550

£2,087,850

£67,750

£3,490,000

£5,736,150

£1,912,050

£1,500,000

£1,750,000

£2,000,000

£5,250,000

West Lothian Council

£346,000

£216,636

£1,549,851

£2,580,000

£4,692,487

£1,564,162

£25,000,000

£1,500,000

£2,000,000

£2,250,000

£30,750,000

Grand Total

£9,029,726

£30,811,172

£44,415,848

£2,306,352

£30,016,300

£116,579,398

£50,000,000

£27,240,000

£31,215,000

£34,665,000

£143,120,000

7.12 This projection forecasts revenues to 2010 of £143m. This represents an increase of 21% from the value of developer contributions in the period 2004-2007.

Projection 3 - Assumptions for Non-Respondents

7.13 Table 7.3 includes projections for the authorities that did not respond to the study team during the initial data gathering stage of the research. The projections for those authorities are based upon the methodology explained in appendix 2, Table A2.4.

7.14 The projected figure, including the £24m from the missing authorities is £167.1m. This compares with £140.6m for the same authorities over the period 2004-2007, and shows a projected increase in the value of developer contributions of almost 12%.

Table 7.3 Payment Projection 3

Authority

Financial Year

Total

2004/2005

2005/2006

2006/2007

Year Unknown

In-Kind

Grand Total

Average

Windfall Sites

2007/08

2008/09

2009/10

Projection

Aberdeenshire Council

£1,120,288

£762,501

£202,452

£382,216

£5,943,950

£8,411,407

£2,803,802

£2,500,000

£2,500,000

£2,500,000

£7,500,000

Aberdeen City

£230,000

£230,000

£76,667

£250,000

£300,000

£350,000

£900,000

Cairngorms National Park

£184,000

£330,000

£514,000

£171,333

£165,000

£165,000

£165,000

£495,000

Clackmannanshire

£145,000

£177,000

£15,000

£99,100

£436,100

£145,367

£150,000

£200,000

£250,000

£600,000

Dumfries & Galloway

£26,500

£20,000

£337,500

£ -

£384,000

£128,000

£300,000

£350,000

£400,000

£1,050,000

Dundee City Council

£350,000

£1,446,349

£774,324

£1,070,000

£3,640,673

£1,213,558

£1,000,000

£1,000,000

£1,000,000

£3,000,000

East Ayrshire Council

£116,310

£223,672

£164,362

£230,000

£86,700

£821,044

£273,681

£275,000

£350,000

£400,000

£1,025,000

East Dunbartonshire Council

£93,400

£417,580

£26,670,120

£17,500

£27,198,600

£9,066,200

£450,000

£550,000

£700,000

£1,700,000

East Lothian

£358,824

£557,628

£156,302

£6,435,000

£7,507,754

£2,502,585

£2,000,000

£2,500,000

£3,000,000

£7,500,000

Edinburgh

£1,382,797

£3,027,894

£3,849,112

£10,000

£945,000

£9,214,803

£3,071,601

£4,000,000

£4,500,000

£5,000,000

£13,500,000

Fife Council

£80,000

£768,958

£1,688,437

£93,400

£327,900

£2,958,695

£986,232

£1,250,000

£1,750,000

£2,000,000

£5,000,000

Glasgow City Council

£2,487,241

£2,658,603

£2,920,054

£122,285

£831,000

£9,019,183

£3,006,394

£3,750,000

£3,750,000

£4,000,000

£11,500,000

Highland Council

£78,400

£913,410

£425,000

£1,250,215

£ -

£2,667,025

£889,008

£1,000,000

£1,500,000

£1,750,000

£4,250,000

Midlothian Council

£1,205,981

£3,052,690

£2,657,734

£5,310,000

£12,226,405

£4,075,468

£25,000,000

£4,000,000

£4,500,000

£5,000,000

£38,500,000

Moray

£170,066

£690,000

£220,926

£400,000

£1,480,992

£493,664

£500,000

£500,000

£500,000

£1,500,000

North Ayrshire Council

£81,575

£495,750

£587,620

£ -

£1,164,945

£388,315

£550,000

£600,000

£600,000

£1,750,000

North Lanarkshire

£850,000

£12,921,500

£1,681,000

£189,500

£765,000

£16,407,000

£5,469,000

£1,000,000

£1,250,000

£1,500,000

£3,750,000

Perth & Kinross

£0

£ -

£500,000

£500,000

£500,000

£1,500,000

Renfrewshire

£0

£0

£0

£60,000

£60,000

£20,000

£100,000

£200,000

£300,000

£600,000

Scottish Borders Council

£46,794

£189,151

£463,304

£13,184

£1,155,000

£1,867,433

£622,478

£500,000

£500,000

£500,000

£1,500,000

Stirling Council

£90,550

£2,087,850

£67,750

£3,490,000

£5,736,150

£1,912,050

£1,500,000

£1,750,000

£2,000,000

£5,250,000

West Lothian Council

£346,000

£216,636

£1,549,851

£2,580,000

£4,692,487

£1,564,162

£25,000,000

£1,500,000

£2,000,000

£2,250,000

£30,750,000

Missing* Authorities

£24,000,000

£24,000,000

Grand Total

£9,029,726

£30,811,172

£44,415,848

£2,305,800

£30,076,150

£140,638,696

£50,000,000

£27,240,000

£31,215,000

£34,665,000

£167,120,000

* Missing authorities - these include 6 non-respondents as well as 6 others for whom individual projections from base information was not feasible.

Conclusion

7.15 The projections in this chapter offer a range of possibilities between £91m and £167.1m for contributions over the next three years, without any preferred one. The major assumptions relate to trends perceptible in the survey results for the last three years, the individual circumstances of authorities and the likelihood of major developments taking place which are dependent on the state of the economy, planning decisions and other factors, in addition to which policy and practice for planning contributions from such applications may change in a short period of time. Assumptions have also been made concerning the 6 authorities who made no return. Given an 82% sample, the survey can be considered robust overall and provides a range of evidence to fill the gaps.

7.16 The authors selected this approach with an emphasis on what these projections can convey with regard to policy and practice for the future of planning contributions in Scotland, rather than emphasis the overall impact of the income from them. The projections are also based on the calculation of the value of in-kind affordable housing contributions at market value of units provided although this does not reflect the proven practice of authorities to secure contributions only for the equivalent of a discount against market value to bring the units within affordability criteria.

7.17 Another of the checks and balances to be considered in considering the significance of the total projection figures is that certain developer contributions are not received through the route of planning agreements of any kind. However, the projections do point up the growing importance of contributions through larger developments where better infrastructure coordination can be achieved and through developing policies and management techniques used by planning authorities.

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