UK: Planning Gain In Scotland - What Next?

Last Updated: 18 September 2008
Article by Murray Shaw


The whole of the planning system in Scotland is undergoing considerable change. These changes are primarily to do with processes and procedures though underlying them there is a perceived need for "culture change".

The future for one critical area of the planning system, namely "planning gain", remains unclear. The position has moved on in England. The question is whether, or to what extent, Scotland will go down a similar route.

Developments outwith Scotland

Over the past two or three years the Government (the UK Government) considered the introduction of a Planning Gain Supplement based upon advice from the respected economist, Kate Barker. In effect this was a "tax" intended to capture part of the increase in the value of property following the grant of planning permission. The funds realised would be used to meet deficiencies in infrastructure.

The Planning Gain Supplement was roundly criticised by many including the development industry both in principle and because of the perceived difficulties in administering the system fairly.

The concept of the Planning Gain Supplement has been abandoned in England and Wales and is to be replaced with a Community Infrastructure Levy. The statutory basis for this is included in the Planning Bill currently before the Westminster Parliament. In August the Communities and Local Government Department published a detailed report setting out how the Community Infrastructure Levy will work.

In effect the Levy will be a new charge which local authorities will have a discretion to levy on development. It is intended the Levy will be based, as the report puts it, on a formula which relates the amount of the Levy to the size and character of the development involved. The proceeds of the Levy will be spent on "local and sub-regional infrastructure to support the development of the area".

In effect, the Levy will be fixed on a tariff basis by the relevant authority rather than being related to some perceived increase in value of the proposed development.

The consultation paper suggests that one of the attractions of this scheme is certainty for developers and there appears to be have been widespread consultation with bodies representing the property industry prior to the report coming out.

The sums realised are to be spent on infrastructure. The primary intention is that the Levy should fund infrastructure to meet the needs of future development provided for in the Development Plan rather than to remedy existing deficiencies. That aspiration may be more difficult to achieve in reality than in theory.

The authorities entitled to charge the Levy (those who prepare Development Plans) are to provide a draft charging schedule which is to exist outside of, but alongside, the Development Plan. The current intention is that there will be an independent inquiry into the charging schedule and that the report of the independent party who undertakes that inquiry will be binding. The charging authority will have an option (rather than accepting that report) to come forward with revised proposals if unhappy, albeit these would equally be subject to independent scrutiny.

The charging schedule is intended to set out amounts for different types of development being sums to be levied on a square foot basis. Presumably it is intended that the amounts levied should take account of the infrastructure needs or requirements of different developments. Payment is to be made when development commences though the Government is looking at payment on a phased basis where the development is phased.

The new system will not be implemented until 2009 though preparatory work is to be undertaken immediately.

The report produced by the UK Government does acknowledge that, as it puts it, "the housing market is experiencing some challenging conditions in the short term". Notwithstanding the generally challenging economic times, the Government is firmly of the view, it appears, that this is the appropriate time to bring in the Community Infrastructure Levy. At least in part it appears the Government envisages that in fixing the levy for an area, the "charging" authorities will take into account land values with a view to ensuring that development is not stifled.

The Community Infrastructure Levy will not replace planning obligations entered into under Section 106, the equivalent of Section 75 in Scotland. Planning obligations under Section 106 will be used to deal with the specific issues raised by a particular development and to deal with affordable housing. In other words, it appears that developers may be expected to meet, where appropriate, the cost of affordable housing deal with site-specific issues and pay the Community Infrastructure Levy.

It is intended that the infrastructure upon which the money raised can be spent will be defined in regulations but is likely to include public uses such as transport and flood defences, schools, sporting and recreational facilities, open space and other community facilities.

Developments in Scotland

While this is of interest, it is of limited relevance to Scotland where it is still unclear what changes the Scottish Government intend to make to deal with the general topic of "planning gain".

In the draft of SPP3, which was published in January 2008, reference was made to a review being undertaken - albeit this document commented that the Scottish Government believed at that time that it was "right in principle that the public should benefit from the uplift in value of land due to the grant of planning permission". That language had a strong relationship to the concepts underlying the now abandoned Planning Gain Supplement.

The final version of SPP3 came out in July 2008. All it says on the topic is:-

"The Scottish Government is undertaking a review of the framework governing planning agreements. The aim of the review is to produce a system that will balance provision of contributions to support related infrastructure and amenity while facilitating development necessary to increase sustainable economic growth in Scotland at a local and national level".

The draft Aberdeen City and Shire Structure Plan identifies infrastructure issues as impediments to development and sees a significant private sector input commenting:-

"Developers will have to accept the need for contribution towards necessary infrastructure. However in cases where development has wider effects we will have to secure extra contributions. We also expect that the increase in land value as a result of granting planning permission will fund a large percentage of the new infrastructure needed, although the public sector will also need to make an important contribution".

The problems with infrastructure remain great in Scotland. Reference is made to this in the draft National Planning Framework 2 which identifies the need for up to date infrastructure to support development and the deficiencies which exist.

That is fine as far as it goes. The review process presently means we are unclear about what is to happen. In a speech on 19 August the First Minister indicated that an "alternative" to the Planning Gain Supplement would not be pursued meantime as a result of market conditions.

It remains to be seen however whether the Scottish Government will eventually seek to follow the approach south of the border following on from the current review. Obviously they are unlikely to want a system in Scotland which is an impediment to development if the system in England is perceived to be more favourable, or at least certain, particularly in the current economic climate. Equally, however, failing to address infrastructure issues does not help the development process.

Come what may, it seems unlikely that the processes and procedures in relation to any comparable Scottish Community Infrastructure Levy will be the same as those in England. In England it is proposed that there will be an examination of the charging schedule including "a right to be heard in person before an independent person". That right to be heard may be a formal inquiry or hearing to be at the discretion of the person carrying out the investigation. While we still await the final version of the proposed changes to the Development Plan system in Scotland, it appears unlikely that there is to be a right to be "heard" – objections may well be dealt with in writing. Likewise in England it is proposed that the report of the independent person will be binding – in a comparable processes in Scotland, the Scottish Government deliberately decided not to make Reporters' recommendations in relation to Development Plans binding.


Given the problems in infrastructure in Scotland, notwithstanding current market conditions, we need a firm and early indication from the Scottish Government about how they intend to approach this issue even if implementation is delayed meantime. The development industry frequently tells the Government that it needs certainty with regard to planning. Certainty is certainly needed in the present economic climate. The proposals of the Scottish Government therefore are awaited with considerable interest.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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