UK: Planning Gain - Justified Or Not?

Last Updated: 24 June 2009
Article by Murray Shaw

The issue of "planning gain" is one of the most contentious in relation to planning. Certainly until the recent financial difficulties it was common for developers to offer up "planning gain" as part of the process of securing planning permission. There is Scottish Government guidance on the issue set out in Circular 12/1996. While that Circular is under review most involved in the industry consider that the Circular contains sound guidance. The issue is not the wording of this Circular but rather its interpretation and application.

It is common knowledge that local authority spending has been under pressure for some time. While the economy was buoyant (and similarly house prices and land prices were buoyant), developers probably had more latitude in what they were prepared to agree to, not least if that avoided the delays that might result from an inquiry. Against that background it is probably fair to suggest that to some extent the expectations of local authorities have increased over the last few years as has the willingness of developers to satisfy those expectations, albeit both sides would contend that what they were doing was within the guidance given by Circular 12/1996.

While the issues relating to planning gain are well known, it is rare to find cases where those issues are exposed before the courts. However a recent decision of Lady Stacey sheds some light on matters. That decision related to a case brought by Scottish Borders Council v Scottish Ministers where an opinion was issued on 15 May 2009.

In effect Scottish Borders Council appealed a decision of a Reporter to grant planning permission to the applicant. The Council had originally refused permission. The only ground of refusal had been that no financial contribution was being offered towards the reinstatement of the Waverley Rail Line. This is a project which is due to be undertaken and policy G6 of the Finalised Local Plan required contributions to that project to be made in relation to applications made within certain geographical areas. The site of the application fell within a relevant geographical area.

According to the Committee Report the applicant identified a number of apparently cogent reasons why no contribution should in fact be required notwithstanding the policy in the Finalised Draft Plan. The Planning Officer nonetheless recommended refusal on the basis of the Council's policy. Inherent in the applicant's refusal to make a contribution was an argument that in fact no benefit would accrue to the application site from the construction of the rail line and it was therefore inappropriate that any contribution should be made. The planning officer's view was that this in effect was a challenge to Council policy and the appropriate way of dealing with that issue was when a review of the policy was carried out as opposed to any consideration of the position on a case by case basis.

The Reporter did not accept this view and granted planning permission without the requirement for any contribution. It was this decision that was challenged by the Council. The Reporter specifically founded upon Circular 12/1996 which concerns planning agreements (and therefore developer contributions). One of the tests set out in that Circular was whether or not any requirement to contribute is connected to the development proposed while another is whether or not the requirement to contribute was reasonable.

Before Lady Stacey it was argued for the Council, firstly, that the Council had adopted a policy and the Reporter was not entitled to interfere with that policy. Secondly, as a fall back, it was argued that even if the Reporter was entitled to look at the terms of the policy, he had failed to do so properly in the circumstances of this case.

It is clear that there had been some procedural issues in relation to how the application was handled and in particular what notice the applicant was given of the relevant Committee meetings but nothing apparently turned upon that for the purposes of the appeal.

Lady Stacey rejected the first argument for the Council. It is not immediately clear from the decision to what extent the fact that the relevant policy was in a Finalised Draft as opposed to an Adopted Plan was relevant to her consideration of matters. She does refer to policy G6 as a "material consideration" which suggests that she accepted and proceeded upon the basis that the relevant policy was not actually part of the underlying Development Plan. In the circumstances, therefore, she considered the Reporter was entitled to look at policy G6 and not simply accept it should be applied without any further consideration. It is not clear from her decision whether she would have a different view if policy G6 had been within the Adopted Local Plan. In reaching this part of her decision she appears to have accepted that to some extent the Council acknowledged that some consideration of individual cases was appropriate.

However she did feel that the Reporter had failed to take into account all relevant issues, or at least to show in his decision letter that he had done so. In particular she was critical of the fact that the Reporter failed to set out in his decision letter how he considered arguments from the Council about the certainty that their approach provided. She was also critical that he appeared not to have considered the wider public benefit of the project.

In the circumstances she therefore allowed the appeal quashing the decision letter.

A number of cases recently have indicated that the Scottish Courts do not consider that decision letters require to be particularly detailed and it is not essential that all arguments are summarised and commented upon by Reporters. It does not look as if these decisions were referred to by Lady Stacey. It is not therefore clear whether her decision was intended to step back from these other decisions. Given the use of "short form" decision letters by Reporters this is an issue the courts may need to address again.

The outcome of this case in its own terms is probably of limited significance. Nonetheless it is one of the few cases involving issues of planning gain which have appeared before the Scottish Courts in recent times. The case does not deal with any fundamental legal issues about when planning gain might be considered legitimate. It is also likely that on reconsidering matters the Reporter could come to an identical conclusion, albeit differently justified. The approach of Lady Stacey is none the less interesting particularly her view that it was not correct that a policy of a Council had simply to be followed. That must be correct.

In general terms, the Scottish Government has indicated a desire to review the "system" of planning gain in Scotland, albeit that review appears to have been put on hold given the current financial position. While the Circular itself is under review many consider that a more fundamental review is necessary particularly to ensure that Scotland is not put at a disadvantage in comparison to England where a levy system to fund infrastructure is likely to come into effect in the relatively near future.

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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