Finance Committee, 21 Feb 2006

Meeting date: Tuesday, February 21, 2006

Official Report 261KB pdf

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Planning etc (Scotland) Bill: Financial Memorandum

Under agenda item 4, the committee will take evidence on the financial memorandum to the Planning etc (Scotland) Bill. Members will recall that we agreed to adopt level 3 scrutiny, which will involve taking written and oral evidence from organisations on which costs will fall and oral evidence from the Executive. We are in the first phase of that evidence taking.

I welcome James Fowlie, who is policy manager and team leader in the Convention of Scottish Local Authorities' environment and regeneration team; Alan Logan, who is West Lothian Council's head of finance; and Ian Snodgrass, who is North Ayrshire Council's chief executive and the Society of Local Authority Chief Executives and Senior Managers adviser to COSLA.

In line with our normal practice, I invite our witnesses to give a brief opening statement—I hope that one witness will make a statement on behalf of you all. Members will then ask questions.

Thank you for providing the opportunity to attend the meeting, convener.

COSLA has cautiously welcomed the new bill. A number of points about the details have been raised elsewhere, but the objective this morning, as has been mentioned, is to provide information on the bill's cost and resource implications.

The Executive undertook a survey of the existing system in 2005, the results of which have recently been published. A shortfall in resources of some £17.5 million was identified in the existing planning system. The financial memorandum, which—obviously—considers the implications of the proposed changes, refers to a second exercise that identified a new additional cost of some £10.7 million. Our view is that that work was honest in endeavouring to identify what the costs would be. Transitional costs are given, and the exercise identified that increased efficiencies would in time defray those costs by around 20 per cent to reduce the additional costs to around £8.9 million. We believe that such savings will not be forthcoming and that the increased demands on the planning system, which are continuing apace, will absorb that money in the transitional period.

In addition, it appears that the work that has been done to date has focused on the direct costs to planning departments. Members will be aware that planning is a pervasive service that requires active support across council departments. It involves legal people, engineers, environmental health people and committee clerks, for example. We believe that the work that has been done to date has not fully captured the wider costs that will be essential to delivering the new planning system.

To try to identify the associated costs, we sought further advice from five representative councils from across the country. The work was done fairly quickly, but it indicated that, under the existing system in Scotland, further costs of around £24 million outwith the planning system fall to councils. To date, we have not been able to identify the additional costs outwith the planning system that there will be for councils as a result of the changes.

COSLA believes that the Executive's work demonstrates the current underfunding of the system and the future costs that will arise from the proposed improvements. We agree with what that work shows, but the work that we have done indicates uncertainty about both the level of funding that is required to fund the existing system properly and the level of funding that will be required to deliver the expected improvements. We believe that further work is required to identify properly what the funding should be, and we would be pleased to co-operate with the Executive to identify the costs more clearly. If the costs that are given are not the full costs, there will be considerable disappointment, as the system will be unable to deliver what has been expected.

We are happy to answer members' questions.

Thank you very much.

Part 8 of the bill lays down provisions for ministers to set fees and charges for planning authorities to undertake any authority functions. The detail of those provisions will be set out in secondary legislation. Have you had any discussions about the charging system that will be put in place and how it will operate? For example, is there any prospect of objectors to a planning application being required to pay a fee to lodge their objection?

I understand that there is no intention to charge objectors for lodging objections. However, I point out that we have not yet been involved in such detailed discussions. Our point is that much of the secondary legislation is still to come and that, until we can consider fully that legislation and what it will mean, it will be difficult to work out the cost implications.

Have you not even had any preliminary discussions about the Executive's broad policy intention and the parameters for charging arrangements?

The answer is yes, but I am afraid that I cannot provide the committee with anything more specific at the moment. I will be able to give you more information when I have spoken to my colleague who was directly involved in the face-to-face discussions.

It would be useful to have that information.

The financial memorandum says that it will cost £1.7 million for all planning authorities to provide an additional member of staff to deal with neighbour notifications. Is there any link between that figure and reality?

We want to explore that area in considerably more detail. I should point out that, as a director of planning and transport in Renfrewshire Council until two years ago, I have an intimate knowledge of the system at the time when the proposal was first made. When I discussed it with colleagues south of the border who have been involved in such a system, they indicated that, although it was probably the fairest way of addressing the situation, we should underestimate neither the costs nor the implications for officers across the council. We chief executives receive complaints from individuals who believe that the council has not properly assessed matters or ensured that the applicant is notified. We might well have done so, but we are still required to answer the challenge and to move through the various stages of the complaints procedure, involve ombudsmen and so on. As a result, we feel that the proposal will have real cost implications.

South of the border, they have endeavoured to establish a protocol among authorities that sets out the operation of the system in more detail. We would welcome a more detailed examination of the matter, because the potential disruption and the effect on reputation might be quite considerable.

Is it possible to separate costs into different areas? Presumably, the system will incur certain mechanical costs associated with, for example, identifying the various neighbours and sending out letters. Moreover, if, for whatever reason, someone does not receive a neighbour notification, would any subsequent appeal incur processing costs for the council? Is it possible for the process itself to be challenged, which would delay the processing of the application, or for retrospective appeals to be lodged in the event that planning permission was given without proper neighbour notification? The proposal seems to lead to a number of potential costs and bureaucratic consequences.

You show a very good understanding of our concerns about the process. We can define the various mechanical issues that are involved. When COSLA consulted its authorities, it became clear that different councils have different concerns. For example, the issues that affect rural areas might well be different from those that affect urban areas.

That said, the problem is the potential for challenge. Indeed, in my own local authority, private sector interests have recently taken that approach to disrupt sales and other aspects of the process. We need to examine the whole matter, because once a challenge has been lodged, it moves quite rapidly from the planning system into the core of the council. From there, it can lead to legal challenges and to the involvement of ombudsmen.

Can you estimate the cost of ombudsmen cases to local authorities?

No. The nature of the system is such that people have to go through the complaints process before they go to the ombudsman. The case then has to be referred to the local authority, which has an opportunity to challenge it. A report goes to the head of the service and the case will then move on, usually to the chief executive. Anyone who is determined will go the whole way and more senior officers are involved at each stage. In many cases, people use the process to frustrate planning applications and prevent them from going ahead. It is not a question of supplying a quick answer. Local authorities are required to carry out interviews and to assess each case properly before responding to the ombudsman.

Is it possible to assess the relative costs of the appeals process and, for example, having a third-party right of appeal? Is it possible to compare the costs to local authorities of dealing with an appeal from a determined objector who has not received a notification with the costs that would arise from a different mechanism such as a third-party right of appeal?

It is certainly possible to calculate the cost of neighbour notification and to give some indication of different types of cases.

That would be useful. One of the issues is the avoidance of unnecessary bureaucratic overheads and costs to local authorities.

When the planning officers discussed the matter, it was clear that neighbour notification is regarded as the fairest system south of the border. However, we should not underestimate the cost of delivering it.

Bearing in mind the experience of your colleagues south of the border, what do you think is the likelihood that application fees will cover local authorities' costs? At what level would fees have to be set to meet the requirement to cover costs?

As we state in our submission, we do not believe that application fees will cover the additional costs. The sections of the financial memorandum on development management make it clear that fees are already factored in. My interpretation of the £10.7 million to which Ian Snodgrass referred is that it is, at best, an estimate of the additional costs that local authorities will have to meet. The fees will already have to be increased to take account of the development management factors that are mentioned in the financial memorandum. Therefore, if further costs are added in, the fees will have to be even higher. We do not have a precise percentage, but figures of up to 30 per cent have been tentatively mentioned. There are questions about the market's ability to absorb such an increase.

Can you give us cash values rather than percentage increases?

There is such a wide range that it is difficult to apply a cash value.

Is it possible to give some examples from that range? Perhaps you could send us a written response that shows us the possible effect on the public.

We will do that.

I ask Ian Snodgrass to clarify a point. In your opening statement, did you say that the current estimate of the underfunding of the planning service is about £24 million?

I mentioned three figures. When the Executive examined the system in the previous calendar year, it came to the conclusion that the planning system was underfunded by about £17 million. The work that the Executive's consultants did in preparing the financial memorandum identified a requirement under the new proposals for an additional £10.7 million, although they stated that, within a period of time, that would be reduced by 20 per cent to £8.9 million due to efficiencies.

Although COSLA generally supports the direction in which this is going, we recognise that there are other costs to councils. For example, the costs of traffic engineers, flood assessment appraisals, environmental appraisals, committee clerks, legal advice and so on all fall outwith those direct costs. We asked the City of Edinburgh Council, Fife Council, West Lothian Council, Highland Council and North Ayrshire Council a series of questions about those supplementary factors. The authorities identified non-direct costs of around £24 million—factored up—that were not captured by the original work, which asked very direct questions.

The work that we have done is not strictly accurate; it needs to be tested further. However, it leads us to believe that there is uncertainty about the costs. Given the fact that this is a once-in-a-generation improvement in the planning system and given the amount of work that has gone on behind it, everybody wants to ensure that the bill is capable of delivering the change that is intended. We believe that it is essential that we capture the overall costs of what is going on, and that will require further work—probably a continuation of the detailed work that we have done with the five councils. We would be happy to co-operate with the Executive in pursuing that further, to define more clearly the costs that are involved.

That is helpful. As has been mentioned, elements of the bill will be handled in secondary legislation and we have not seen the detail of that yet. What are your major anxieties about the possible cost implications? What issues within the scope of that secondary legislation would give you most anxiety about a likely increase in the cost burden for local authorities?

In the discussions that we have had, particular concerns have been raised about the cost implications of development planning and the preparation and implementation of plans. As the convener said, the development management system may involve fees and may endeavour to cover the costs in other ways, but the whole area of development planning is outwith the fees system.

Under the bill, development planning will play perhaps the most important part in changing the culture to improve the planning system. It will be the aspect of the bill that has to be revisited most frequently. Some of the development plans that are around today might have been revisited five years ago, but others might have been revisited 15 years ago or even longer ago. Frequency is an issue, and the success of the bill and the reforms will be predicated on how effectively that work can be undertaken. As yet, it is not clear what the extent of that work will be or what the likely cost implications are. Is that a fair assessment?

That is fair, although the financial memorandum endeavours to make some cost estimates. There is no doubt about the need for better management of the system and for authorities to renew their development plans. I am pleased to say that North Ayrshire Council has just approved, within five years, its renewed plan and its renewed structure plan. As the process changes, that will not only require to be done more regularly and to a timetable, but there will have to be public engagement and environmental impact assessment, which are time consuming and, therefore, resource intensive. We must ensure that that work is done properly or we will not manage to meet the targets. If public consultation is not properly resourced, time is added to the process. I have seen that happen in North Ayrshire. We have lost a lot of time and plans have become discredited as the costs have built up.

One of the other big areas on which the reforms will be predicated is the ability to have the appropriate professional and technical staff and therefore credible planning departments that are able to undertake the work. Opportunities exist for people with the same qualifications to work in either the private sector or the public sector. How challenging is the recruitment of planners into the public sector, given the climate of the planning area being underfunded, which I think that you and others have accepted? Is such recruitment a challenge, or can you compete effectively with private sector organisations?

That is an extremely important point, which we have raised with the chief planning officer in the Executive over time. It is a question not only of recruitment, but of the age of those in the planning profession, which will leave a gap. Extensive recruitment into the system has not happened for some considerable time. Given the closure of the planning schools on the west coast, the ability to train planners or to cross-train people from other professions has become limited.

SOLACE has had discussions with the chief planning officer, who is meeting us again on Friday. There has been consideration of upscaling what we call paraplanners. That is fine for regular processing of minor issues in casework, but if the system is meant to improve the quality of what we do on the ground and to provide more vision, it is now deficient. There is definitely an issue about securing support.

You mentioned the private sector. It is quite easy for us to get recruits in at the bottom, but we lose them quickly. As soon as they are qualified they go to the private sector and we then have to re-employ at considerably increased costs. That is what is happening at the moment, particularly in relation to implementation of plans in regeneration. We invariably have to employ the private sector to do that, at a cost.

In a consultancy arrangement?

Yes.

In effect, therefore, planning departments are contracting out services because they do not have the skills in house.

The immediate development management system is provided directly by the council. Elected members would have concerns about contracting that out. Although some councils south of the border use the private sector to process planning applications, elected members would prefer to keep that at their own hand, because the public see that as more direct and fair. Authorities will face issues with the development planning process in securing their plans in the proposed timescale. Having the ability to increase staff numbers is a real issue.

I quite understand the distinction between in-house consideration of planning applications and contracting out the more forward-thinking, visionary parts of development planning. Is such contracting out a bad thing?

Not per se. I can speak only for my authority. We have secured private sector advice in providing design guidance and development briefs. Authorities in Ayrshire find it difficult to procure such advice west of Glasgow, because there is no density of people there. There is a limit to what is available in the private sector as well.

One of the other points on which the financial propositions are predicated is the ability to make efficiency savings in the process. The local authority planning departments in my locality are under siege just now with major strategic applications. What is the potential to make efficiency savings?

The Executive's point about management of the system, which it made directly to the authorities, was well made. There is potential to tighten up the system. However, the reality is that the process of public consultation tends to absorb any time that is created through improvements to the planning system. Demands on the system have increased markedly in the past 10 years. As I said, I seriously doubt the Executive's assessment in the memorandum that there will be a reallocation of existing resources in planning departments and improvements from efficiency. If any time is freed up, it will be absorbed in the process of public consultation and dealing with new legislation as it comes through—it is being issued all the time.

The Executive estimates that the authorities' new role of monitoring and reviewing tree preservation orders will cost £2.7 million per annum, which is calculated on the basis of there being one full-time trees officer per authority. Interestingly, that is £1 million more than will be required for neighbourhood notifications. Why are trees so expensive relative to notification of neighbours?

Is it to do with leylandii hedges?

The issue with tree preservation orders is that the trees are not inspected just once—we have to keep returning to ensure that the orders are current and, if they are not, they have to be redone. My experience is that, as development progresses in local authority areas, the public want more and more tree preservation orders to protect the environment in which they live. Once an order is in place, to be effective at a time of challenge, the tree must be surveyed regularly. However, I am not familiar with the full basis of that calculation.

The issue may be about not only tree preservation, but broader environmental management. As well as the identification and maintenance of trees, an issue arises about open spaces more generally as they become designated. Is the issue broader than the tree preservation point that the bill picks up?

This is not a direct answer to your question, but one of our concerns is that the questions that were asked of planning departments were very direct. Arup's work for the Executive identified the sort of work that you mention as other activities that planning departments get into. However, they are the sort of activities that elected members often want officials to do. Development plans are only part of what planning departments do. In my case, the big issue just now is the seafront at Largs, which requires considerable design guidance. The planning system does not require that process, but clearly my councillors want to see it being done, with a view to the future vision for Largs.

On the environmental issue, planning departments are invariably used to deliver biodiversity improvement schemes and access schemes. You are right that dealing with trees and the natural environment is an essential part of that process. However, such schemes are not quantified in the figures that have been produced. I cannot work out whether what is intended in the talk of transfer of resources from non-core areas is a move away from some of that work to the core work of production of development plans. I cannot tell that from the memorandum.

The interesting issue that I was leading to is whether the Executive simply identified the legislative elements. That would explain why tree preservation orders, which are a legislative element, are included, whereas environmental management, for which there is no specific legislative designation, has been excluded.

It is non-core, perhaps.

Does that not take us back to the comments in your introductory remarks and in your response to my questions that the problem in local authority planning departments, as in many other departments, is that financial decisions are now predicated on the statutory functions? Authorities think that it would be nice if they could undertake duties that are not statutory but, increasingly, they do not do so because the money is being spent on statutory responsibilities. Much of the new regime will be predicated on considering in the round which development plan decisions must be taken.

The point is not so much that authorities do not undertake discretionary duties. Ian Snodgrass gave figures about underfunding at the margin in planning. In addition, the published position for planning as a whole is that the total grant-aided expenditure is about £90 million and the spend is £155 million, which suggests that authorities are doing work in addition to the statutory work, but they have to fund it.

As there are no more questions for this group of witnesses, I thank them for their evidence. We will take evidence on the bill from Executive officials at next week's meeting—some of your answers will give us questions for them.