Public Audit Committee

Meeting date: Wednesday, October 5, 2011

Official Report 456KB pdf

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Section 23 Report

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“Modernising the planning system”

Item 2 is the section 23 report entitled “Modernising the planning system”. Along with the Auditor General are Barbara Hurst, Mark Roberts and Kirsty Whyte.

Good morning, convener. With your agreement, I will invite Barbara Hurst to introduce the item.

I agree.

The report on planning is a joint report for the Accounts Commission and the Auditor General that was published on 15 September by Audit Scotland.

The planning system is central to balancing the interests of individuals, communities, businesses, the wider economy and our built and natural environment and it contributes significantly to the Scottish Government’s goal of sustainable economic growth. The report examines the progress that the public sector as a whole has made in modernising the planning system since the Parliament passed legislation in 2006; councils’ performance in managing planning applications; and the planning system’s financing.

First, and by way of context, it is important to note that much of the work to modernise the planning system has taken place in challenging economic circumstances. That has significantly reduced the number of planning applications that have been received—the figure has fallen by 29 per cent from a peak of more than 56,000 applications in 2004-05 to just over 40,000 in 2009-10.

I will highlight three key findings from the report. The Scottish Government, key national bodies such as Transport Scotland, Scottish Water and the Scottish Environment Protection Agency, and planning authorities have made progress in modernising the planning system and are working together better. However, more progress is needed to realise modernisation’s full potential.

The Scottish Government needs to introduce legislation to allow some smaller developments to proceed without going through the formal planning application process. The Scottish Government has estimated that such legislation could remove 8 per cent of all planning applications from the planning system.

The process of establishing new, up-to-date local and strategic development plans in all 38 planning authorities—the 32 councils, the two national park authorities and the four strategic development planning authorities—must be completed. That is important as the new system was intended to be plan led, and individual decisions about planning applications are to be made in the context of an up-to-date plan. When our fieldwork was done in May, half the local development plans had slipped from their original timescales—we highlight that in exhibit 5 on page 16 of the main report.

The performance of the planning system is currently assessed on the basis of the time that is taken to decide a planning application. The vast majority of applications are for smaller, local developments. It is expected that planning authorities should make a decision on such applications within two months. Since 2004-05, performance has remained fairly consistent, with around two thirds of applications being decided within the two-month timescale.

Time is clearly an important factor in assessing performance, but it is only one measure. Another measure of performance is user satisfaction. As part of our audit, we surveyed users of the planning system and found that the majority of recent applicants for planning permission were satisfied with the process for planning applications. Exhibit 11 on page 25 of the report shows that more than a quarter of users said that they were very satisfied and half said that they were fairly satisfied. However, a key area in which a third of applicants—householders, in particular—raised concerns was that of how well they had been kept informed of the progress of their application.

Therefore, our report recommends that a broader perspective of performance should be taken. Exhibit 12 on page 26 of the report makes suggestions for other criteria that could be used to assess planning authorities’ performance, including costs, user satisfaction and contribution to outcomes. It is encouraging to note that five planning authorities are already piloting a wider performance framework, following work by the Scottish Government, the Convention of Scottish Local Authorities and Heads of Planning Scotland.

Finally, our report highlights that the funding model for planning applications is becoming unsustainable. Planning authorities charge fees for processing applications, but the gap between the income that is received from fees and expenditure on processing applications is widening. In 2004-05, 81 per cent of expenditure was covered by income. By 2009-10, that figure had reduced to 50 per cent. During the same six-year period, income from planning fees reduced by 28 per cent, in line with the fall in the number of planning applications, but expenditure on processing applications increased. Exhibit 14 on page 32 of the main report illustrates the widening gap. Although we tried to understand the reasons for that gap, it remains unclear why expenditure rose during a period when the number of applications declined. To help understand costs, set appropriate fees and take action to reduce the gap, it is important that councils get a better understanding of the costs of handling planning applications.

It is fair to say that the report has generated a large amount of interest. We are following it through with a number of speaking engagements with key groups of people who are in a position to be able to influence change and improvement in the planning system. I will stop there but, as ever, we are happy to answer any questions that the committee may have.

Thank you very much.

You partly answered the first question that I had, which was on the rising expenditure on processing planning applications and the growth in the gap between that expenditure and income at a time when staff numbers fell. You said that you had not received a detailed explanation for that, but I find it bizarre that councils can report increases in expenditure and falls in staff numbers but cannot tell you why the expenditure is rising. What other factors do they report as part of rising expenditure?

This is becoming a common theme for the committee. I invite Mark Roberts to help the committee with that issue.

As the convener said, there was no compelling answer to the question of why the gap was increasing. Various arguments were put to us, such as the impact of the introduction of e-planning during the period and changes in how councils reported their expenditure within the local government financial return, which is where the data come from. It may be that some councils include some costs, whereas others include different costs—councils do not seem to have reported in a systematic way. However, none of those arguments for the existence of a gap was ever supported or gave a compelling reason for it.

Am I missing something? It is astonishing that, despite the fact that we have a plethora of well-qualified accounting staff in local authorities, and despite Audit Scotland’s evident ability to ask relevant and searching questions, a factor as simple as falling staff numbers, which should mean falling expenditure, does not correlate with the rising expenditure that has been presented. What is missing?

There perhaps needs to be a systematic look at what activity, and therefore cost, is included in the local government financial returns, so that there is systematic reporting across all councils.

Are you suggesting not only that councils report things differently but that councils do not know what they are reporting?

As we said in the report, there is fairly limited understanding within councils of the costs of processing planning applications. Such understanding is a necessary first step in trying to ascertain how much time is being spent on processing planning applications and, over and above what council planning officers do, what other parts of the council are contributing to consideration of planning applications. I suspect that that is where some of the anomalies lie.

When you said that there is “limited understanding”, was that a polite way of saying that councils do not know what they are doing?

I am not sure how I can answer that. There needs to be a consistent basis, which all councils share, for what is articulated as expenditure on handling planning applications.

Perth and Kinross Council, in my area, spends a huge amount of time and resource on planning appeals to the reporters in the Scottish Government directorate for planning and environmental appeals. That has been particularly evident in recent years in relation to applications for wind farms. When the council rejects an application and there is an appeal and a public inquiry, the resource that is taken up in the planning department is huge, in terms of the time that planning officers take to prepare submissions to the inquiry and the cost of engaging legal representation to represent the council’s position. Have you picked up that that is an issue across the country? Is it a factor in the rising costs?

The simple answer is that it might be, but we did not go into such a level of detail. I do not remember that argument being expressed to us when we did the fieldwork, but Kirsty Whyte might have more insight into the matter.

As Mark Roberts said, the argument did not come up. Expenditure on processing planning applications, which is the main issue that we considered in the report, would not necessarily include all the time that is spent on appeals to the Government.

Are you saying that the figures in the report are purely on expenditure on processing planning applications and do not apply to other expenditure, such as dealing with appeals?

That is right.

Is there a breakdown of costs of the planning process by local authority, so that we can see the picture authority by authority? Such a breakdown might help to inform the committee.

Yes. We can provide the committee with a detailed breakdown by individual council.

That is helpful.

In your report you say that there are two main parts to the planning system: development planning, which involves local consultation on local planning; and the management of applications as they come in. I think that the costs that you are talking about relate to the second part.

Yes.

Do you have figures on the cost of consultations on local planning and development? Are the costs going up or down?

In 2009-10, total expenditure on planning was £105 million, of which about £50 million was spent on the development planning side and £54 million was spent on development management, which included £41 million on processing planning applications.

Is the trend upwards, downwards or steady?

I cannot remember off the top of my head, but I can provide the information along with the breakdown of expenditure on development management.

10:15

Although it would be helpful to have the breakdown by local authority that Willie Coffey sought, is it your understanding that what you show reflects a general trend or, from what you can remember, is it skewed by a couple of authorities that, compared with others, are particularly high spending?

We think that this is a general trend across all local authorities. When we have discussed the matter with COSLA and Heads of Planning, they have recognised the pattern.

Okay. It will be interesting to see that information.

It is important to bear it in mind that, although they might not necessarily form part of planning applications, development and local plans will still add costs.

Willie Coffey’s request for a breakdown by local authority is relevant in light of the report’s comments about significant variations in local authority uptake of e-planning. One might well find that in authorities where more e-planning applications have been submitted costs might have reduced while other authorities have been unable to generate the same reductions. Have you examined what local councils might be doing to encourage—or, indeed, not to encourage—the submission of e-planning applications?

Yes. First, however, I should say that although there has been significant variation across councils, the overall uptake of e-planning has been way above the Scottish Government’s expectations. We looked in detail at five councils in our fieldwork but I do not think that we found any particular moves to encourage or promote e-planning to a greater or lesser extent. We could examine whether there might be a correlation between the level of uptake and cost and expenditure issues but I have to say that I do not recall a pattern emerging in any systematic way when we went through all the numbers earlier this year. We could have another look at that and get back to you.

In paragraph 89 on page 26 of the report you say:

“Councils have reduced staff numbers in recent years in response to budget pressures”

and point out that

“two per cent of planning department staff left West Lothian Council and”

a quite staggering

“29 per cent of planning staff left Dumfries & Galloway Council.”

I suspect that across Scotland the staff who are leaving are going under early retirement and voluntary schemes and have many years of experience and expertise behind them; they are not the staff who are at the start of their career and still building up their experience.

Do you have any indication of how the loss of experienced and highly qualified staff will affect efficiency, effectiveness and knowledge not only of the wider planning system but local conditions? Surely if we remove that level of experience and leave the work to younger members of staff who, although undoubtedly able, are still learning, we will affect the whole quality of the application process.

That was a deeply held and profound concern of almost everyone we spoke to not only in the five fieldwork councils but in the wider planning system community, including applicants and other stakeholders. The data in our report run up only to July 2010 and a lot of the early retirement and voluntary severance schemes that you mentioned have continued to run since then. By way of illustration, I point out that when we were carrying out our fieldwork we were asked whether we wanted to speak to the planners who were going to be in on Friday or those who were going to be in on Monday, because the numbers were significantly different.

Taking more of a glass-half-full perspective, I suggest that the introduction of a whole new planning system gives new groups of the younger planners the opportunity to take that work forward. However, it all comes with the big risk of losing the experience of the large numbers of people who have left the planning profession in recent months.

It is all very well to say that there is a new system and a new generation—sometimes such things happen whatever field we are in. However, the new generation sometimes just needs some consolidation and support in order to be able to develop to their full potential. I worry that short-term, expedient measures that are taken to alleviate budget pressures could lead to longer-term problems that could involve costs. There is also an argument about who pays for many of these schemes, which is not an issue for this report but it is one that we have touched on before.

Just to follow on from your question, one of the things that the team picked up in the study was the opportunity for shared services for specialist expertise. I would imagine—we have no evidence on this, but the team might be able to help us—that there must be a risk of bottlenecks in local authorities if the specialists who used to be employed by them are no longer there. I think that we have examples of the Ayrshire councils sharing services in areas such as ecology and archaeology. However, it is fair to say that the team did not find anything much in the way of shared services that might help during a time of staff reductions.

That is absolutely right. There were odd examples here and there, but there was no major sharing of activity across councils.

My final question is on one of the key recommendations in the report’s summary section. It is suggested that the Scottish Government

“consider replacing the four-month timescale for deciding major applications and work with planning authorities to agree a new way of assessing performance for these applications as part of a new performance measurement framework for development management”.

What would that “new way” mean specifically for timescales?

Rather than have a fixed four-month timescale, we think that major developments, such as housing developments of more than 50 houses, ought to have a timescale that is agreed between the planning authority, the applicant and the other key agencies involved, who would discuss how long the planning application would take to process. That would take the form of a processing agreement. It may mean that the application takes 12 months to process, but that might be appropriate for the application. Once the agreement is signed up to by all who participate in processing the planning application, that timescale becomes the target.

The reason behind that approach is that developers are saying to planning authorities that they want certainty about how long it will take to process a planning application. They do not want to be told that it will take four months when it will actually take eight months; they just want to know that it will take eight months. Such processing agreements have been around for a while. The City of Edinburgh Council uses them reasonably frequently, and it thinks that they are a great success. However, we did not find evidence of significant take-up of them by other councils.

We suggest that we replace the four-month timescale with a bespoke timescale for each individual application that would have to be agreed and then adhered to by all the participants in the planning application process.

Who would make the decision about that bespoke timescale?

It would be a shared agreement between the planning authority, the applicant and any other bodies that participated in assessing the planning application.

Are you saying that it would be agreed not council by council but application by application?

That is right.

Applicants would not have a benchmark against which they could measure the timescale that applied in their case, because every application would be different.

Given the complex nature of major applications, they are very different, to an extent. I guess that the benchmark would be the extent to which councils managed to perform against what they agreed to.

But if you are going to measure councils against what they agree to, you can measure only what they agree to for an individual planning application.

We would not know whether one authority was doing better or worse than a neighbouring authority, because there would be no guidelines against which performance could be measured. We would need to examine all the individual applications in each authority. Would not such an approach allow authorities that were not performing well to hide that fact, because there would be nothing against which to measure their performance?

There will obviously be downward pressure from applicants for different councils to come up with compatible processing agreements. Developers may well operate across council areas, and they will share experience with other developers. That is where the compatibility issue comes in.

But you could be introducing a charter for inefficiency. We would have no way of knowing what was going on.

Within the wider performance issue, we have suggested that authorities might want to examine the cost of processing planning applications. That would be the measure of efficiency, and we would hope to drive down costs council by council.

Okay.

On staffing and knowledge retention, it is fair to say that that issue is not peculiar to the planning system.

In my usual fashion I have forgotten to declare my interest as a councillor, so I do so now.

At a local council level, I have dealt with the issue of how to ensure the retention of knowledge in relation to finance and information technology. That does not have to mean that we retain the staff who have that knowledge; we just need a system in place to ensure that knowledge transfer takes place.

You mentioned that major reforms in the planning system have taken place and are still bedding in. On the timing of the report, do you feel that this is an appropriate time to make a fair assessment of the system? Might the system have benefited from a report further down the line on how councils are coping with such major reforms?

As I said, we will go out and promote the report, but we will follow it up through our usual audit processes. We want to give councils some time to implement our recommendations, but we certainly plan to follow them up in about a year’s time to see what is happening on the ground.

On staffing, I remind the committee that we are starting a study on the implications of staffing reductions across the public sector. We are therefore keen to pick up the issues that members have raised this morning around knowledge transfer and the need to ensure that skills are retained and that staff reduction is not being used simply as a quick fix for budget reductions.

Good morning. It is clear that the Government thinks that 8 per cent of applications could be taken out of the process if permitted development was in place, which is potentially a massive saving. What explanations have you had from the Government as to why we are no further forward with that?

The Government has conducted two consultations on how that might be implemented. However, the details of how it will work and what will be removed from the requirement for planning applications has proved complicated to work out with councils and the planning profession.

The Government anticipates that it will introduce secondary legislation on permitted development during 2012. Planning authorities say that the introduction of permitted development is really important because it will allow them to concentrate on the complex, contentious and difficult applications, and they are asking when it is going to happen.

I am afraid that I do not know the details of exactly what the sticking points have been. The Government might be better placed to answer that question.

10:30

I suppose that I am just interested in whether you have a sense that the Government has a sense of urgency about this. The proposal appears to offer a huge saving in a complex process. I am still not completely clear from the report why the legislation is three years late.

I think that there is a desire to make sure that, once the legislation is brought in, it is right and workable. Planning authorities are putting a lot of pressure on the Government to get the measures into legislation as soon as possible. I suspect that the Government might say that it wants to ensure that the measures are wholly workable before introducing the legislation. It has listened to the feedback that it got from the consultations and has tried to resolve those issues.

I would hope that the Government wants to get any regulation right; that is not necessarily an excuse for taking three years longer than anticipated.

Mark McDonald has just reminded me that I should declare an interest as a member of the planning committee of Midlothian Council.

On page 19, the report says that some planning authorities commented that community councils

“do not have the capacity to contribute fully to the planning process”,

in which they are statutory consultees. During the audit, did you get a feeling for the quality of community councils’ contributions? Did you see what was coming into the planning department? Were you able to evaluate the quality of community councils’ involvement, in view of the comments that were made?

The first point that is worth making is that the extent of community councils varies across the country. Some areas have a number of community councils, whereas others have none. As part of our fieldwork, we spoke to a few community councils and to various officers in the planning authorities. One of the main issues that kept cropping up was the capacity of community councils. Many planning applications are coming through now, some of which are complex, and some of which are major applications that require early engagement and take up a lot of time. Many community councils do not have many members and have neither the expertise nor the funding to participate fully in the process. The extent to which community councils are able to fully engage in the planning process is therefore variable across the country.

You seem to be saying that, as statutory consultees, community councils are fairly weak organisations on which to rely at this time. The report raises the possibility of planning authorities engaging with community councils, presumably to hold their hands through the more complex applications. Is there any indication that that could happen widely? Are planning departments gearing up to do that?

Some of the authorities that we spoke to provide further support to community councils. They hold meetings and provide further information to try to help them. Other authorities have less involvement.

It might be worth splitting the two aspects of the planning process. Community councils are statutory consultees for planning applications but, as representatives of their area, they should also be involved in their local development plans and strategic development plans. However, because their involvement in the development side is not statutory, the incidence of that involvement is variable. Under the modernisation process, the move towards public involvement is about getting people involved much earlier, at the stage when strategic and local plans are being developed so that, when a planning application comes in downstream, it should be much less contentious, because people will know that a certain site has been allocated for whatever purpose.

I can sympathise with everything that my colleague Colin Beattie and Kirsty Whyte from Audit Scotland have said. As another currently serving local authority councillor, I would say that that is very much my experience. Community councils feel that they have missed the boat in relation to the local development planning process. There needs to be a better way of engaging not only with them but with the wider public as the development planning process makes its merry way to the local plan. I was drawn to the Tayside study, case study 5, which gives some interesting pointers as to how the situation could generally be improved. I might have expected something like that to have been incorporated in the Planning etc (Scotland) Bill, as long ago as 2006. Given that Audit Scotland recommends that there needs to be better engagement, there is a lesson there for us about engaging better and more thoroughly with the wider community.

This issue is not covered in the report, but I will take a chance anyway—the role of elected members in local authorities when a planning application comes in. There are clear frustrations for everyone—for elected members and for developers and objectors who want a word with them. Generally, of course, the advice to elected members is not to engage with either developers or objectors, or to engage on an equal basis, but having to remain quiet and objective until the issue is determined at a planning meeting creates a hell of a lot of frustration for elected members who want to carry out their duties properly. Does your study capture any sense of that frustration? Could we look to make any improvements so that the situation is better all round in the future?

We are probably quite limited in how we can respond to that. An area in which there is quite marked variation between councils is in the levels of delegation. In some councils, there is quite a lot of delegation to officers for the smaller, less contentious applications and in others there is virtually none. When we spoke to elected members and subsequently, we heard the suggestion many times that the scheme of delegation needs to be reviewed to concentrate elected members’ time and efforts on the high-profile, difficult and complex cases, hence the recommendation that planning authorities should review their schemes of delegation to enable the best use of elected members’ time. That is probably the most important issue that came up on that front.

If no one else would like to comment, I thank the Auditor General and staff from Audit Scotland for their contribution. We will reflect on what we have heard.

10:37 Meeting suspended.

10:39 On resuming—