Tue 16 Feb 2016

A review of the S75 Agreement system

The developers feel that the hard yards have been covered, the various reports completed, the community has been engaged with, and they are delighted that they are now the proud owner of a minded to grant planning decision for an exciting new development.  But wait, a Section 75 planning agreement (planning obligation - which I'll refer to as a "S75 Agreement") needs to be entered into - surely that will not take too long to complete.

The Scottish Government is currently reviewing the planning system in Scotland and one of the aims of the review is to "streamline, simplify and improve current systems and remove unnecessary blockages in the decision-making process".  It seems clear to me that one area of improvement is the completion of S75 Agreements, which can be a lengthy process.  But why is that?

Common themes include:

  • Heads of Terms/clarity in Committee Reports - There can be, at times, little clarity in committee reports on the amount of contributions due and their associated payment dates.  This means that once the planning committee is minded to grant planning permission, subject to the entering into of a S75 Agreement, there can be extensive negotiations and disagreements on its terms, which leads to delay.
  • Differing Objectives - There will always be disagreements between planning authorities and developers over the extent of planning gain payable due to the differing objectives of the public and the private sector. 
  • Uniformity of Approach - There is a wide variety of approaches throughout the 32 local authorities in Scotland on how planning agreements are entered into, with examples of good and bad practice.
  • Too Many Cooks - Traditionally, a planning officer will need to liaise with several internal and external consultees, to establish if there is a need to enter into a S75 Agreement in line with planning policy.  Different departments across local authorities will have different expectations on the level of planning gain applicable to a development. 
  • Policies on Developer Contributions - Local development plans and supplementary planning guidance can often be unclear on the types and level of contributions expected for development proposals. 
  • Delivering Major Infrastructure - With reducing budgets and financial pressures, Local Authorities are increasingly finding it difficult to deliver essential infrastructure.  Equally, for developers the problem is often that planning policy for an area requires financial contributions to support infrastructure.  However, the levels of contributions in some circumstances can make development no longer viable.Ideas for improvement?

I must stress that there are examples of good practice from Planning Authorities when dealing with S75 Agreements, so it is not all doom and gloom.  However, ideas for improvement include:-

  • Development Plans/statutory supplementary guidance, should clearly set out (1) the policy basis for the planning obligations (2) what planning obligations will be sought and (3) the amount.
  • Processing Agreements are used as a relatively informal project management tool at the moment.  They could be used on a more formal basis, with agreed timescales to be met by all parties.  Detailed heads of terms for any planning obligations should also be agreed through this process in advance of the application being determined at Planning Committee. 
  • Action Programmes should be used effectively, with appropriate buy in from central and local government, to ensure that major infrastructure requirements are identified and reviewed on a regular basis.  Action programmes should be 'live' documents and form the basis of statutory supplementary guidance covering planning obligations.
  • Committee Reports/Reports of Handling should be clear on the planning obligations required for the development, the policy basis, and the trigger point for payments.  Planning Committees must take ownership of this and set out any requirements clearly.  As my colleague Caroline Docherty pointed out in a previous article, S75 Agreements are not Willy Wonka Golden Tickets.  This comment was aimed at developers, but it applies equally to Planning Committees.
  • A model S75 Agreement should be introduced.  Distinct provisions will be required for each planning authority, but the boiler plate provisions and format of the S75 Agreement should be consistent. 
  • A 6 month time limit should be formally introduced for agreeing, signing and registering planning agreements.  If the time limit is not met by the developer, the planning authority should have the ability to refuse the planning application.  If the time limit is not met by the planning authority, the developer should have the ability to take forward a unilateral obligation and appeal to the DPEA for the release of the planning permission.
  • Community Infrastructure Levy ("CIL") could be introduced for major infrastructure.  The introduction of CIL would remove the need for a reasonable relationship between a development and a financial contribution where the CIL applies, allowing a general charging schedule to be created which can be applied to infrastructure which may not serve the development.  After detailed consultation and ratification by the Scottish Ministers, each planning authority could have the ability to set its own CIL, based on its own needs and circumstances.
  • Holyrood and Local Government should take the lead on the provision of major infrastructure and consider alternative funding mechanisms such as City Deals, TIF and prudential borrowing.  It is difficult to fund major infrastructure through planning obligations alone, and the aforementioned innovative approaches must be considered as another available route to delivery.  Planning obligations will work effectively where contributions can be collected by the planning authority prior to necessary infrastructure being provided for smaller schemes where there are not multiple developers and landowners.  However, I would suggest that they will not be a suitable mechanism in isolation where advanced major infrastructure works are required in order to unlock development potential in growth areas.

The Scottish Government's timetable suggests that the independent panel for the Review of the Scottish Planning System will publish their report in May.  Improvements to the S75 Agreement  process will no doubt form part of that report. 

The wider point is that ultimately S75 Agreements are used to deliver essential infrastructure such as schools, roads and affordable housing.  Improving the process will benefit developers as well as Planning Authorities - both site start dates and the delivery of infrastructure will be earlier.

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