In a nutshell: Reforming the planning obligations system
Ministers have long been annoyed by the reference to 'cheque book planning', a widely-used phrase to denote planning obligations.
Inaccurate or not, that description was how many viewed the process.
There has certainly been a degree of unanimity that the current system was 'complex, difficult to agree and [responsible] for delaying the planning process'.
The present arrangements are nearly 15-years old while the most recent circular on the subject surfaced eight years ago.
The roots of the latest bid to iron out some of the complexities and inconsistencies go back to 2001 when the government signalled plans to change planning law in an attempt to achieve greater simplicity and clarity.
It was subsequently decided that many of the reforms identified were possible without legislative change so further work was undertaken to streamline the negotiated route for agreeing planning obligations, often simply referred to as ‘section 106s’ after the relevant part of the Town and Country Planning Act 1990 (as substituted by the 1991 Act).
In November 2003, the Office of the Deputy Prime Minister (ODPM) published a further round of consultation with more detail on the reform of the negotiated system of planning obligations and the proposal for a so-called Optional Planning Charge (OPC).
ODPM last week released a draft circular on planning obligations. The consultation document recommends that "section 106 should continue to be an impact-mitigation or positive-planning measure linked to planning necessity and should not be used for tax-like purposes, such as the capture of land-value increases for purposes not directly necessary for development to proceed".
However, the circular does allow that local planning authorities will be able to form agreements outside the planning system "to secure funding for infrastructure that is not necessary in planning terms for the development to proceed".
The draft circular makes a number of recommendations, including proposals:
- that local authorities should only be allowed to claim maintenance payments from developers for a limited period;
- for the use of standard formulae and charges to aid quicker resolution of negotiations and greater certainty for developers;
- that standard legal documents are utilised to help speed up the process;
- that a possible reduction in the current 6-month time-limit for appeals: the suggestion is that this should become 3 months, in line with appeals made under s78 of the TCPA 1990.
The proposals now out for discussion retain but simplify the policy tests and clarify the policy on contributions for affordable housing.
The ODPM has made it crystal clear that it wants to discourage the offerings by developers of facilities that are not required by the development. The message from the ODPM is unambiguous: "planning permission is not being bought or sold".
In the case of affordable housing, the draft circular makes it plain that in seeking the delivery of such through s106, local planning authorities (LPAs) are "prescribing the nature of the development (in line with PPG 3) rather than mitigating its impacts".
In effect, this is legitimising current practice.
There is also clarification on guidance on pooled contributions and new guidance on the use of independent third parties and cost recovery.
Also highlighted is the encouragement of the use of unilateral undertakings "where it is possible for the developer to ascertain the likely requirements of the LPA in advance".
The ODPM expects this to become increasingly the case where local authorities set out detailed policies as part of their new-look Local Development Framework (LDF).
Planning minister Keith Hill has made the point that the proposed new regime should bring s106s in line with the new planning system.
The proposals have been generally welcomed as a pragmatic attempt to define what is acceptable and to focus on the direct impact of a development.
However the draft circular will not be the end of the story. This whole area remains, to an extent, work in progress.
This is because the proposals for an OPC remain on the table pending a final decision from ministers, led by the Treasury, on Kate Barker’s suggested Planning Gain Supplement (PGS), tied to the granting of planning permission.
This would allow part of landowner development gains to contribute to wider benefits for the community.
At the same time as proposing this, Barker suggested that if ministers agreed such a change then planning obligations should be scaled back.
The government has now agreed in principle that it is acceptable to fund social housing and other measures out of the ‘uplift’ in land values associated with the development process. If this happens it would be a new form of development land tax.
Chancellor Gordon Brown has announced that the Treasury will consider proposals for a PGS and make a decision by the end of 2005. However, at this stage it is not clear how widely or openly the Treasury will consult.
• Revised Circular on Planning Obligations: Consultation Document (PDF 341Kb).
• Reforming Planning Obligations: the Use of Standard Charges - Main Report (PDF 391Kb).
• Reforming Planning Obligations: the Use of Standard Charges - Appendices (PDF 330Kb)..
Roger Milne
11th November 2004
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