Even planning circulars are not immune to the effects of the recession!

In January 2010, the Scottish Government issued a new circular on planning agreements - Circular 1/2010. Although much of this guidance follows its predecessor Circular 12/1996, in other respects, the content should be seen as introducing some very far reaching changes likely to affect the content of Section 75 Agreements.

The Scottish Government initially announced an intention to undertake a review of Circular 12/1996 to coincide with changes to Section 75 being introduced through the 2006 Act. These included the use of unilateral undertakings and appeals against planning obligations. As a result of the recession, the Government postponed enactment of the changes although they are to be implemented in 2010 along with the introduction of new guidance. Circular 1/10 is therefore likely to be considerably more short lived than its predecessor.

When should an Agreement be used?

Conditions are always better if they are simple and have the potential to save time and money. Paragraph 14 of the Circular continues the hierarchical approach suggesting that Section 75 Agreements should only be used where there is a requirement to bind successors in land, where, for example, phased contributions to infrastructure are required.

If there is no requirement to bind successors, the Circular suggests the use of other agreements such as those under the Roads (Scotland) Act 1984.

Paragraph 11 sets out all of the policy tests to be met where an agreement is sought. The agreement should:

  • be necessary to make the proposed development acceptable in planning terms;
  • serve a planning purpose and where it is possible to identify infrastructure provision requirements in advance, should be relevant to the development plan;
  • relate to the proposed development either as a direct consequence of the development, or arising from the cumulative impact in the area;
  • fairly and reasonably relate in scale and kind to the proposed development; and
  • be reasonable in all other respects.

Necessity

If successors in title do not require to be bound, consideration is to be given to another mechanism such as a Section 69 Agreement.

Planning Purpose Test

A Section 75 Agreement must serve a planning purpose related to the use and development of land. That judgment should be based primarily on the development plan and any associated supplementary guidance. In general, local plans contain poor levels of information on the circumstances in which Section 75 Agreements are to be used, their likely content and the formula to be used to determine financial contributions.

While it is not possible to predict all planning gain requirements with certainty, transparency means that developers can pass the costs onto landowners in the purchase price. Difficulties in negotiating Section 75 Agreements often arise because notice of the nature and amount of planning gain is only given at or after a resolution to grant permission and not when land was put under option! Processing agreements for major developments should help to identify the gain requirements earlier in the planning process than at present.

Relationship to proposed development test

The circular maintains the previous guidance that planning agreements "should not be used to extract advantages, benefits or payments from landowners or developers which are not directly related to the proposed development". The guidance is at variance with the law in this respect. The thrust of advice is that the Government is not in favour of Section 75 Agreements which facilitate the purchase of planning permission through the provision of benefits or improvements unrelated to the scheme which is the subject of the application.

This is at odds with the law which was well settled by the case of Tesco Stores Limited v Secretary of State for the Environment (1995) 1 WLR 759. That case decided that taking into account by a planning authority of a planning gain package would be legitimate even if the planning gain elements had only a tenuous link with the proposed development. This is to be distinguished from the more high minded attitude adopted by Scottish Ministers in Circular 1/2010.

Scale and Kind

Planning gain should be proportionate. The guidance seeks to avoid excessive contributions being sought or for contributions to address pre-existing problems.

Reasonableness

According to the Circular, the requirement in the planning agreement should be so directly related to the regulation of the proposed development that it should not be permitted without it. Agreements should not be used where the relationship between the development and the contribution is too remote.

Process

The Circular also sets out the process by which planning agreements should be used. The Circular makes clear that:

  • agreements should not slow up the planning process;
  • agreements should only be used where they meet the tests above;
  • infrastructure requirements should be identified in strategic and local development plans and associated action programmes;
  • supplementary guidance should specifically identify expected contributions;
  • developing, negotiating and concluding agreements should be effectively managed;
  • there should be early identification of heads of terms which can be worked into the detail of any agreement;
  • swifter finalisation of agreements should enable permissions to be issued more promptly; and
  • implementation of agreements should be monitored.

Policies and Supplementary Guidance

When drafting local development plans and associated guidance, planning authorities are to work with infrastructure providers and other local authority departments to undertake a robust assessment of infrastructure requirements, the funding implications and timescales involved. From this, the level of provision that needs to be provided through planning agreements can be identified. Methods and exact levels of contribution should be included in supplementary guidance. Reference is also made to standard charges and formulae being set out in a way that allows landowners and developers to predict the size and types of contributions likely to be sought. Clearly ad hoc and sometimes opaque demands for financial contributions will no longer be supported.

It is reasonable to assume that the determination of appeals against a refusal to vary the terms of an obligation will take into account the justification for the obligation and the notice provided within the supplementary guidance or the local development plan. A lack of transparency or policy justification could well be fatal to a planning authority's attempts to seek contributions.

The Circular also makes clear that where a planning application is refused due to the failure to conclude an agreement, any appeal should consider whether or not the planning authority has highlighted relevant development constraints in its local development plan and supplementary guidance. A reporter will pay particular attention to guidance issued by the Scottish Government.

The Circular should therefore be seen as putting planning authorities on notice that planning gain will be subject to far greater scrutiny than at present. Clear justification for requirements will be needed.

Development Management Process

Consistent with the aim of speeding up the planning process, the Circular acknowledges that it is possible for a developer to conclude a planning agreement before a decision is reached on whether planning permission can be granted. It seems highly unlikely that a planning authority would go as far as to conclude the agreement prior to a recommendation on the application being made. What is perhaps more likely is negotiating heads of terms on a without prejudice basis while an application is under consideration. Once heads of terms are agreed, the Circular states that these should not be revised or renegotiated.

Registration

The Circular helpfully indicates that planning authorities may consider issuing planning permission immediately upon receipt of an acknowledgement by the Keeper of the Registers of Scotland that the agreement has been received. This is in contrast to the previous position, which suggested that registration be the trigger.

For the full text of the Planning Circular 1/2010 click here