Infrastructure: who pays?

The white paper “Modernising the Planning System” was published by the Scottish Executive on 29 June (see August Journal, page 26). As part of a fundamental review of the planning system it is necessary to revisit section 75 agreements. Many local authorities now rely on these, in increasingly diverse ways, as a key mechanism for public infrastructure provision and other forms of “planning gain” such as affordable housing and environmental improvements.

Arguably section 75 of the Town and Country Planning (Scotland) Act 1997 (itself basically section 50 of the previous 1972 Planning Act) was never designed for such purposes. Indeed section 75 is remarkably short and contains no detail as to what its purposes might be. The formal guidance (Circular 12/1996) contains many useful provisions clarifying the intended scope and purposes of such agreements, but is not binding and is often departed from in practice. Local authorities now often lack the ability to fund many public infrastructure projects and other improvements, so must look to the private sector to assist.

Playing for high stakes

The result has often been a poker game where the prize for the developer is planning permission and the size of the pot is determined by how much planning gain the local authority can negotiate. No one denies this is highly unsatisfactory for developers, local authorities and local communities alike. Revision of the planning regime is therefore an overdue opportunity to expand and clarify the legislation and guidance in this complex area. The latest significant publication is a report, “Planning Agreements and Positive Planning for Sustainable Communities in Scotland”, written in 2004 but published by the Scottish Executive in September 2005. That report, given the timing of its publication, seems to represent current ministerial thinking and its recommendations therefore seem likely to form part of the Scottish Executive’s forthcoming Planning Bill.

The report expands on the white paper and, significantly, recommends that section 75 of the 1997 Act be “rewritten to explicitly set the parameters of necessity, proportionality and reasonableness as presently expressed in Circular 12/1996”. Any attempt at bridging the gap between law and policy and the way the circular is interpreted in practice is welcome. However, while the report acknowledges that planning agreements are useful in aiding the delivery or funding of necessary projects, earlier proposals to consider standardised tariffs to fund infrastructure have been dropped as “the dynamics of planning would mean that rates would be difficult to set with any degree of confidence”. There is clearly also a political desire not to create inadvertently a “stealth tax” on property development.

Simpler alternatives

The report is also refreshingly honest in criticising the “unnecessary duplication of conditions in agreements or for agreements to be recommended for the sole purpose of denying the applicant the availability of appeal or to aid enforcement”. Indeed it recognises that sometimes the cost and formality of a section 75 agreement is unnecessary, and that simpler agreements which do not run with the land and bind successors indefinitely can be more appropriate (if indeed the matter cannot be satisfactorily dealt with in the planning permission conditions). It seems these issues may be dealt with in revised formal guidance rather than new legislation. However, the report recommends that arbitration, review, appeal and abandonment/discharge provisions should appear in legislation. Currently no such provisions apply to section 75 agreements unless they can be negotiated in at the outset. (In our experience some local authorities are remarkably reluctant to allow this, though Circular 12/1996 lists such provisions as sensible in many cases.)

The white paper itself is rather coy on revisions to planning agreements, but it is intended to make registration in a public register compulsory (most are already recorded in the Sasine or Land Registers), to aid transparency. Further, it is intended to allow developers to submit a unilateral undertaking, as one can in England and Wales, if negotiations fail. In other words developers could offer competing terms to the local authority and offer to unilaterally bind themselves and successors to honour them.

Laudable intention

Planning agreements do give scope for achieving many social and environmental objectives, such as affordable housing. Perhaps more than any other area, the “assumption that the planning system can deliver a solution to the affordable housing problem, almost by default”, identified in the report, must be the subject of further consideration by the Scottish Executive. Indeed it adds that there is no “obvious connection between the granting of planning permission for mainstream private housing and the obligation placed on the house builder to deliver an affordable housing contribution”. In the meantime the Scottish Executive’s intention to clarify and update the law and policy on planning agreements is laudable and should be embraced in the forthcoming Planning Bill. We await that with interest.

Robin Priestley and Martin Whiteford, Planning & Environment, Anderson Strathern