Subordinate Legislation
Town and Country Planning (Fees for Applications and Deemed Applications) (Scotland) Amendment Regulations 2013 [Draft]
Agenda item 2 is subordinate legislation. We will take oral evidence on an affirmative instrument.
Members have a covering paper from the clerk, which sets out the background to the instrument. Minister Derek Mackay is still with us for this item, and he is joined by Sam Anwar, head of planning legislation at the planning and architecture division of the Scottish Government.
Minister, do you have any opening remarks on the Scottish Statutory Instrument?
I do. Thank you once again, convener.
The regulations will introduce new levels of planning fees, which, if the committee approves them, will come into effect on 6 April. The charging of fees for planning applications has been law since 1981. The regulations do not seek to change that principle; they will set the level of fee that we now consider appropriate for planning applications.
I should make it clear that fees relate only to the processing of planning applications. The wider resourcing of the planning service is a matter for each local authority. In September 2011, Audit Scotland reported that the funding model for processing planning applications was becoming unsustainable. To address that, in March 2012 we published a consultation paper on new regulations for planning application fees, which would have led to substantial increases. Many respondents to the consultation paper—with the exception of planning authorities—strongly opposed the proposed fee increases.
Following discussions with Convention of Scottish Local Authorities leaders and other key stakeholders, in December 2012 I announced that we would make regulations to increase planning fees and the fee maximum by approximately 20 per cent. I believe that an increase of 20 per cent will strike the right balance between supporting sustainable economic growth and strengthening the resources of planning authorities.
It will be the first increase in planning fees since April 2010. Taking into account the increase proposed in the regulations, planning application fee levels will continue to represent a modest proportion of developers’ overall costs. For users and potential beneficiaries of the development management system, fee levels should meet the costs incurred when determining planning applications, which would otherwise fall to be met by council tax and business rates payers generally.
Moving towards full cost recovery has to be done in partnership with all the various partners and stakeholders to ensure that the process reflects where we are in the current economic cycle and that those who pay the fees can expect a high-quality, efficient service for their money. To that end, we have formed a high-level group with COSLA to review planning performance and drive improvement over the next 12 to 15 months.
I welcome the opportunity to answer any questions that the committee may have on the regulations.
I remember the joy of making the last instrument in April 2010, which the minister referred to.
The business and regulatory impact assessment refers to the link between increased fees and improved performance, which the minister mentioned in his opening remarks. That is something that many in the development industry, and applicants generally, are looking for. Will the minister enlighten us as to what actions might be taken, either globally across all 34 planning authorities or locally in particular cases, if performance is not improved in the way that the Government and the wider community want? In particular, I am talking about guaranteed performance in relation to major applications.
On the link with performance, the high-level group has an aspiration to move towards full cost recovery. We will put in place a range of measures to improve the performance of the planning system, working in partnership with Heads of Planning Scotland, Planning Aid for Scotland and others.
I like to think of it as a carrot-and-stick approach. The carrot is the extra resources for planning authorities through the proposed 20 per cent increase in fees. We have allocated new resources to local authorities on a one-off basis in relation to renewables, as well as resources for Heads of Planning Scotland and Planning Aid. There is a range of simplification, streamlining, performance improvement and other measures, as well as the next steps work that I announced in Parliament and which was helpfully and positively received by members in the recent debate on planning.
That shows that we are taking a range of actions to improve performance. That is the quid pro quo for the 20 per cent increase. Obviously, we are focused on planning performance statistics and we will continue to monitor them. That includes examining particular legacy cases, which I think have skewed some of the performance statistics.
I have mentioned the carrot, which is the incentivisation, the resources and the action plan; the stick is the measure that I propose to support my colleague Mr Ewing, the minister in charge of the proposed better regulation bill. That is a penalty mechanism, under which planning authorities that consistently underperform and do not respond to the challenges could have their planning fees reduced. The measure will come to Parliament in due course as part of that bill.
That said, I would much rather have positive engagement, partnership and a range of actions to link fee increase with improved performance. As planning minister, I am absolutely determined to see improved performance.
To me, it is not surprising that those who were most supportive of the planning increase were local authorities, which are planning authorities. We should bear it in mind that the fees that are associated with some planning applications by no means meet the cost of dealing with those applications. For example, my local authority, North Lanarkshire Council, had to subsidise fees to the tune of nearly £2 million to progress planning applications.
I am heartened to hear the minister talk about full cost recovery at some point in future. Is it possible to give us a timescale for that? In times of austerity when local authorities are having to make cuts, I am getting a wee bit concerned that the better planning service that we hope to promote might again be diminished because resources will have to be found to subsidise application fees.
I absolutely cannot give a timescale because—to refer back to Mr Stevenson’s point—I am completely dependent on local authorities to improve their performance to give me the justification for increasing planning fees further. In all honesty, therefore, I cannot give a timescale, but we will certainly be focused on full cost recovery.
In probing the issue, we need a full understanding of what each application would cost on an authority-by-authority and case-by-case basis. Mr Pentland might take a more sympathetic view on a householder application than he would, for example, on an application for a large supermarket. In that case, he might take a different view as to whether a subsidy is relevant, appropriate or justifiable.
We therefore need a full understanding of the costs that are associated with each planning application. We will do further probing work on that, because I am not convinced that the data that we have is sufficient to allow us to get real figures. We are therefore doing further cost analysis.
On full cost recovery, I make the point that planning fee income has increased. In the most recent figures, which are for 2011-12, the figure is more than £23.5 million, which is higher than both the figure for the previous year and the figure for 2008-09.
It is a valid question to ask what exactly those who pay for planning applications are paying for. I would not want them to be paying for a bureaucracy that does not relate to their applications, considering that planning fee income has gone up and the number of planning applications has gone down. I want to ensure that if we move to full cost recovery—which is an aspiration that I share—it is robust and fair to people who pay for applications.
I understand that local government is under financial pressure. I am sure that the member will therefore welcome, as he did in the debate, that the increase is the highest single increase since the Scottish Parliament was created.
Good morning again, minister. Will you confirm what the current funding gap is between expenditure and income and say what the gap will be when the new fees have been put in place?
From memory, I think that Audit Scotland identified a gap of about £20 million. It is estimated that, given the current level of planning applications, the 20 per cent increase could generate between £4 million and £5 million a year. That is the rough estimate that I have. However, to return to Mr Pentland’s point, I would like to probe the figures further to ensure that the cost analysis that we have identified is accurate.
Therefore, there will still be a gap of £15 million to £16 million between the actual cost of processing applications and the income that is generated. In those circumstances, is it realistic to achieve the increase in efficiency and effectiveness that many people seek from an increase in the fees?
I entirely take on board the point that these are difficult times and the majority of the respondents were against any increase. That is reflected in the sensible approach for lower-end applications. However, did the Government look at the fees that are charged in other jurisdictions for supermarkets and superstores? What caps exist elsewhere and how do they compare with what the Scottish Government proposes?
I see the irony in Mrs Mitchell challenging me on supermarkets given that she opposed or supported the annulment of the public health supplement, which is a fund raised from that sector.
Of course we carried out an analysis of the different applications in the devolved jurisdictions in the United Kingdom. The point remains that planning fees in Scotland are generally at the same level as or lower than those of our counterparts in England. That said, they will be considering their forward look for planning fee increases as well.
I am happy to give the committee more detail on the cost of individual applications and the equivalent costs in other parts of the UK if you would find that information helpful, but generally speaking the costs are not disproportionate. The maximum fee is higher in England, but we have kept the 20 per cent increase as standard for the maximum fee. If you like, I can give you some of the figures now.
I am really interested in the upper level for the very big applications that are, as John Pentland pointed out, so costly for local authorities to process. My understanding was that the cost would be hundreds of thousands of pounds as opposed to £19,000 or £20,000, as proposed under the regulations.
I will make two points. First, when we consulted the individual sectors, we did not want to upset any investment decisions that might be made in Scotland or give the impression that we are not open for business, which we most clearly are.
Secondly, I am sure that you, as a Conservative, will agree that it is important not to raise taxation or raise charges to fund a service without looking at what people are paying for. There is a lot of room for reductions in bureaucracy and more streamlining and simplification so that, as well as raising income to pay for the service, we can reduce the cost of the service.
Last time I was at the committee, or the time before that, we discussed a planning change by way of regulations. That change will take some cost out of the system. I hope that reform will take out some of the costs, and I think that between the increase in planning fees and the reductions in costs, which we can probe further, we can get closer to full cost recovery.
11:45
As I am sure the committee does, I see the planning service as a public service—after all, it is all about putting the right development in the right place—and the public would not necessarily object to a subsidy for some types of development. Of course, that brings us back to the question of who should assume the burden of full cost recovery.
Finally, the planning system is only one element in a development viability appraisal. A planning application might cost a maximum of £24,000, but the costs of assessments or appraisals might run into hundreds of thousands of pounds. As a result, we need to take a more proportionate approach, which will form part of my next steps action plan. I am very much focused on the needs of the planning service, the communities and indeed the applicants who put a great deal of money into their proposals.
Thank you for those comments, but I think that a balance has to be struck. Big companies locating here do not want to lose out through having to pay disproportionate costs, but if we have not funded the system sufficiently well to make improvements, are they really gaining in the long run from what seem to be top-end fees that are very much less than those elsewhere in the UK? I wonder whether you could reflect on the matter but, in the meantime, it would be useful if you could tell me the upper level of fees for very big developments elsewhere.
Sam Anwar (Scottish Government)
After the regulations come into force, a 5,000m2 supermarket in Scotland will pay £19,100; in England, the fee would be £21,000.
And what are the upper limits?
The upper limits are £19,100 in Scotland and £250,000 in England. However, not all applications for large supermarkets will necessarily pay the maximum.
Why has such a restriction been made? Why did you not consider an upper limit to take cognisance of the circumstances and complexity of an application and to try to get it through the system smoothly and efficiently?
It has been some time since our original consultation paper but, from memory, I believe that we proposed a £100,000 cap compared with the UK cap of £250,000. Although that sounds attractive and although the fee is still less expensive than that in England, the fact is that, as the sector was keen to make clear to us, the size of new developments in Scotland means that the measure would have had a disproportionate impact on the scale of developments. With this 20 per cent increase, we are being consistent; indeed, the planning fee increase and the maximum fee are easy to understand across the board.
That said, I am open to the committee’s views. I was surprised that, in the parliamentary debate on planning, no one criticised the planning fee increase, so perhaps we should go further. I do not want to increase it to the extent that it deters investment in Scotland, which is why I consulted on it so comprehensively when I took the bold step of suggesting an increase from £19,000 to £100,000. Analysis suggested that, with such a move, we would almost immediately become more expensive, simply because of the scale of supermarkets in Scotland. I was quite sympathetic to that view and kept the increase at 20 per cent.
Of course, this is just the beginning of our consideration of future planning fee increases. If the member or indeed the committee has particular views on how I should direct that matter with local government, I am certainly willing to engage in that discussion.
Those comments were very helpful, minister.
Is there much difference between the service that applicants get here and the service they get south of the border?
The service is not only different between Scotland and England; it varies from local authority to local authority from the very good to the not very good—hence my support for a fee mechanism that can reflect that and which we will be debate in the future.
I like to think that the planning service is improving. Homes for Scotland and other key stakeholders were aware of the original consultation, so they warmly welcomed the 20 per cent increase as a compromise in the knowledge that it went hand in hand with an improvement plan. I cannot generalise and say that the planning service in Scotland is better than that in England—as Scotland’s answer to Eric Pickles, I like to think that it is—but I think that our approach to planning reform is much more harmonious. Instead of bashing planners over the head, which is not something that I would encourage, we are seeking partnership with them.
The situation across the country is varied. However, I believe that it is getting better and that our action plan and the range of actions that we are taking will continue to make a difference.
Along with bringing into play the stick of fees reduction, will you also roll out good practice across Scotland? In my experience, I have seen some planning services that have a huge number of processes that seem a little unnecessary and which are, in some cases, downright risk-averse.
That is an excellent point. Actually, we are sharing best practice right now.
Obviously, we have an opportunity here. After all, if we know that certain practice works, why has it not been mainstreamed in the 32 local authorities and the two national park authorities? We have to mainstream and roll out best practice and ensure that it is complied with.
I am sure that the committee will not want me to, but I could go on at some length about our national planning and performance frameworks and how we are encouraging planning authorities to emulate best practice. However, I think that the fee mechanism will be a useful tool for what I shall call the more uninterested planning authorities that are missing some of the clear opportunities that exist.
We can discuss the mechanism in much greater detail, but the committee will be interested to hear that experience in local government is that the director of planning, the head of planning and the convener of the planning committee take a great interest in the service. I am not sure that the same can always be said of the director, the chief executive and the leader of every council. I think that, when those people discover that my mechanism could reduce a local authority’s income on the basis of poor performance, they will suddenly take a great deal of interest in their planning service.
Thank you, minister.
We now move to the debate on the motion to approve the regulations.
Motion moved,
That the Local Government and Regeneration Committee recommends that the Town and Country Planning (Fees for Applications and Deemed Applications) (Scotland) Amendment Regulations 2013 [draft] be approved.—[Derek Mackay.]
Motion agreed to.
I thank the minister and Mr Anwar for their evidence. We now move into private session.
11:52
Meeting continued in private until 12:12.