Bell & Scott

This e-update is issued quarterly and will also be available to download from our website.

Strategic Land Update seeks to cover a wide range of topics of relevance to those interested in strategic land issues. In this issue, we comment on the Scottish Government’s consultation on the use of planning agreements (Section 75 Agreements).

If you wish to discuss any of the items in this edition or require advice on strategic land issues please contact either Bruce Anderson: DD: 0131 718 2399 e: b.anderson@bellscott.co.uk or Caroline Docherty: DD: 0131 718 2383 e: c.docherty@bellscott.co.uk

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Caroline Docherty, Partner, and Jamie Hunter, Solicitor, in our Strategic Land Team comment on the Scottish Government’s proposals for the revision of Circular 12/1996: Planning Agreements

December saw the release of the consultation paper on the revision of Circular 12/1996. It may seem more than a little odd to be consulting on Government policy for the use of Section 75 Agreements some two and a half years after the Planning etc (Scotland) Act 2006 introduced many changes and amendments to Section 75 of the Town and Country Planning (Scotland) Act 1997, but that is what we have.

The reason given in the introduction to the consultation paper refers back to the statement made by the First Minister on 19 August that the planned review of planning obligations under the 2006 Act would be postponed in order to avoid additional burdens on the development industry during the current period of economic uncertainty. The Government apparently made a decision to focus instead on how best to make the current system of planning agreements operate more effectively. However, the focus of that postponed review was not, in fact, to have been simply on best practice for negotiating and handling Section 75 Agreements, but was to have been on finding a way of balancing the provision of developer contributions to support the funding of infrastructure, whilst facilitating development. The emphasis was to have been on finding the Scottish solution to the infrastructure funding conundrum, which has been “solved” down south by the Community Infrastructure Levy. We commented on that solution to the conundrum in England and Wales in our October 08 issue of Strategic Land Update.

Not only has the issue of how to fund infrastructure not been solved, we now have a land market which has not so much slowed as come to a complete stop. As we have not yet reached the stage where “vultures” are in acquisition mode, precious few land deals are occurring at all. The effect on residual land values has been profound. Development land values have already fallen by around 50%, with further falls likely. The predictions are that development land values are not expected to return to the 2007 peak until 2026 unless the policy environment changes. It doesn’t take a genius to work out that land with higher associated infrastructure or remediation costs will experience a deeper and more prolonged downturn in residual site values.

The principal issue with Section 75 Agreements, as identified in the draft revised Circular, and as generally acknowledged, has been one of delay. The reason for that, of course, is that the negotiation of the Section 75 Agreement has in recent years been the means by which the package of planning gain for the development has been negotiated i.e. the means by which infrastructure, and others, will be paid for. However, that package in recent years has included everything from site specific infrastructure, through area-wide policies, to, put bluntly, as much as the Local Authority felt it could extract from the developer.

So, against the backdrop of a development industry in “meltdown” and no proposal on how to fund infrastructure, other than a tweaked status quo, one might be forgiven for wondering whether the background noise one can hear emanating from the Scottish Government is the sound of deckchairs being rearranged on the deck of the Titanic! Is that fair comment? Is there sufficient recognition of the realities of land values among Local Authorities, to result in this revised Circular assisting in freeing up what was previously the log jam caused in the planning process by the negotiation of Section 75 Agreements?

The revised Circular is, of course, simply a re-working of the Circular which previously stated Government policy on the use of Section 75 Agreements. Is there any reason to believe that a re-stating will make a difference? One of the issues previously was that developers were prepared to accept certain Section 75 Agreement provisions, provided they resulted in the issue of a planning consent. They cared little that what was being asked for was contrary to policy and/or the law! If the residual value of the site supported the cost of the planning gain, then it could be agreed to. Emphasising what a Section 75 Agreement should not do, at a time when there is no nation-wide policy on infrastructure funding, and developers are going to be less likely to agree to the level of contribution they would previously not have balked at, may not be helpful at all.

The revised Circular sets out the policy tests of necessity, planning purpose, direct relationship, fairness and reasonableness in relation to scale and kind of development and general reasonableness. All of these must apply to a Section 75 Agreement condition. A staged assessment of what type of agreement could best achieve the planning objective is to be carried out before the Section 75 Agreement is chosen. Could the objective be achieved by the use of a planning condition? Where this is not practical, could another form of legal agreement other than a Section 75 Agreement be used? If the answer to both questions is no, then a Section 75 ‘Planning’ Agreement may be appropriate. It is interesting to note the Government’s need to highlight the fact that “a Section 75 Agreement need only be necessary where successors in title must be bound by the required obligation.” The revised Circular also emphasises the importance of identifying those issues which may be best resolved by means of a Planning Agreement as early on in the planning process as possible.

It is suggested that development plans should include policies on likely planning requirements and these may be development specific.

Whilst some authorities already have policies in place dealing with the likely planning agreement requirements, the practice is not universal and it is good to see the Government putting this forward as good practice. However, the inclusion of this type of policy does present some difficulties, in that Section 75 only anticipates Planning Agreements being entered into in a fairly limited range of circumstances. As is mentioned in paragraph 9 of the document, “Scottish Ministers have noted the concerns raised about the extent of Planning Agreement usage and the levels and range of contributions sought by Planning Authorities.” This may not actually be helped by the objective of the Government to “place a strong emphasis on early identification of expected contributions and supplementary guidance”. This puts Section 75 Agreements in a rather odd position. A Section 75 Agreement is supposed to be an Agreement freely entered into by both parties. Whilst to some extent this remains the case (and there is always argument as to whether, in some respects, Section 75 Agreements can be little more than the purchase of a permission), by including the contribution criteria in the development plan, it almost puts the fundamental issues of a Section 75, such as the legitimacy of the authority to seek payment, beyond question. This is so because the Court of Session is notoriously reluctant to look behind provisions of any adopted development plan.

A point that may concern some participants in the planning process is that the Circular suggests that encouraging third parties to become involved in Section 75 Agreements may be desirable. Whilst this is perhaps understandable from the point of view of inclusivity, it could also go against the desire to speed the process up.

On the plus side, the revised Circular places emphasis on agreeing terms as early as possible and ensuring that, from start to finish, the process is effectively project managed, with the planning authorities identifying those with particular expertise and experience in the area. The recommendation of Heads of Terms, to agree the main terms to be covered by an Agreement prior to committee, and the encouragement of the use of “standard” agreement wording (something we have long been lobbying for) are to be welcomed.

We will, of course, be following the outcome of the consultation and the practices and attitudes of Planning Authorities and developers alike over the coming months. At best, however, it does seem that the proposed revised Circular can only ever be a sticking plaster; a temporary fix until the market settles, and a permanent solution is found to give certainty and transparency to the funding of essential infrastructure.

The Scottish Government has published the proposed National Planning Framework 2 which builds on the first NPF, drawing on the analysis contained in the 2006 Monitoring Report and the views of stakeholders. It identifies key issues and drivers of change, sets out a vision to 2030, and identifies priorities and opportunities for each part of the country in spatial perspectives for the Central Belt, the East Coast, the Highlands and Islands, Ayrshire and the South-West and the South of Scotland. The document includes the proposed list of “National” developments.

The Proposed Framework is available on the Scottish Government’s website accessible here.

Scottish Ministers have set out a multi-billion pound transport blueprint to grow Scotland's economy. The details were announced in the Strategic Transport Projects Review (STPR), which sets out the future investment programme for transport in Scotland over the next 20 years – said to be the biggest and most ambitious Scottish transport plan ever published. Major infrastructure projects with the potential to support Scotland's economy will include a new Forth Crossing and port developments.

The STPR is available on the Scottish Government’s website accessible here.

A number of the statutory instruments required to implement the reforms contained within the Planning etc (Scotland) Act 2006 have been laid before Parliament.

The regulations published, and which can be accessed by clicking on the links provided, were:

A Bell & Scott Alerter on the key points arising from the regulations can be accessed here.

The Scottish Government is rationalising the Scottish Planning Policy series into three parts:-

Part 1: aspirations and core principles;
Part 2: expectations for the key elements of the planning system; and
Part 3: a clear statement of Scottish Government planning policy relating to development and natural and built heritage.

The first two parts have been published and can be accessed here and the third part will be published early in 2009.

Scottish Planning Series Planning Circular 3 2008: Strategic Development Plan Areas

The Scottish Government has published a Planning Circular which sets out its determination of the boundaries of the strategic development plan areas for (1) Glasgow and the Clyde Valley; (2) Aberdeen City and Shire; (3) Dundee, Perth, Angus, and North Fife; and (4) Edinburgh and South East Scotland.

The Circular is available on the Scottish Government’s website accessible here.

PAN 45: Spatial Frameworks and Supplementary Planning Guidance for Wind Farms

The Scottish Government has published PAN 45 to give advice to planning authorities on supplementary planning guidance for wind farms, particularly on the process of preparing spatial frameworks for wind farms of over 20 megawatts capacity.

SPP 6: Renewable Energy, expects planning authorities to make positive provision for renewable energy developments in an environmentally acceptable way. Planning authorities are strongly encouraged to have up-to-date policies for wind farm developments which reflect SPP 6, in advance of preparing policies for other large-scale renewable technologies.

This is important for guiding the preparation of wind farm applications and their determination, whether under the Electricity Act or the Planning Act.

PAN 45 Annex 2 is available on the Scottish Government’s website accessible here.

The Scottish Government has published PAN 70 with a view to identifying how new technology can improve the delivery of the planning service.

PAN 70 sets out the online information and services that need to be provided by the Scottish Government, planning authorities and other organisations responsible for the efficient operation of the planning system.

The Climate Change (Scotland) Bill has been laid before the Scottish Parliament. It aims to:

set a target for the reduction of greenhouse gas emissions for the period up to 2050, an interim target for the year 2030 and to provide for annual targets;
make provision for the giving of advice to the Scottish Ministers on climate change issues;
confer powers on Scottish Ministers to (1) impose climate change duties on public bodies; (2) mitigate the effects of, and adapt to, climate change; (3) regulate energy efficiency and the reduction and recycling of waste.

A full text of the Bill is available on the Scottish parliament’s website accessible here.

Scottish Planning Policy (SPP) 3 Planning for Homes: Strategic Environmental Assessment Post Adoption SEA Statement

SPP 3 has been subjected to the process of Strategic Environmental Assessment (SEA), as required under the Environmental Assessment (Scotland) Act 2005. This Statement concludes the SEA process, by setting out how the SEA has influenced the development of the planning policy. It explains how the finalised policy now addresses the environmental problems and effects which were identified during the course of the assessment.

The Statement is available on the Scottish Government’s website accessible here.