by Robin Barton
Planning gain, generally viewed as the ability of local authorities to tie the grant of planning permission to the provision by developers of wider benefits, has the capacity to raise strong emotions in the mildest of property people. It is loved and hated by both sides with equal fervour, if not equal consistency. It has attracted criticism and controversy for most of the last decade.
Central government guidance published in 1983 (DOE Circular 22/83) provides assistance, but stops well short of providing clarity. In response to the latest wave of concern, the Government has published a discussion paper outlining proposed legislative change and new policy guidance(1). With good timing the Royal Town Planning Institute has published its own discussion paper(2) giving food for thought as to the desirability of rather more substantial change.
How is it that the idea of planning gain, which is so often an important element of major development schemes, does not enjoy public understanding and confidence? The answer must in part lie in the lack of clear guidance as to its application, and the sometimes well-publicised instances of its excessive use which have brought disrepute to the system. Every developer seems able to recount at least one harrowing tale of excessive local authority demands. Cynics argue that “There is no such thing as a free lunch”, and every community centre, playing field and amenity area donated “free” by a developer is paid for by the community through larger office blocks or housing estates. Since the Property Advisory Group report in 1980(3) concluded that there was no place for planning gain in our system of planning control, there have been continual calls for clarification and reform of the system.
The present system
The capacity of local planning authorities to influence land use-related matters by way of legal agreement under section 52 of the Town and Country Planning Act 1971 and allied legislation(4), is referred to by the generic term “planning gain”. Present government advice on the use of section 52 agreements is that what is sought by the planning authority should be related in scale and kind to the development proposed and should be
- needed to enable the development to go ahead, eg connection to off-site drainage facilities; or
- a financial payment towards such facilities in the near future; or
- so directly related that the development should not be approved without it, eg off-site car parking or roads; or
- designed, in the case of mixed development, to secure an acceptable balance of uses.
On first reading, these guidelines could be viewed as relatively tightly drawn; in practice, however, their interpretation is quite different. Considerable discretion is afforded to the local planning authority. It is the variation with which the guidelines are interpreted, and the uncertainty as to just what is, or is not, permissible that lies at the root of present criticisms of the system.
The 1980s have been a period of restraint on public expenditure, coupled with the promotion of the market economy and the concept that the private sector can play a major role in the provision of public infrastructure, provided of course that it is linked to economic activity. The growth in the use of planning agreements has been a corollary to this constraint on public spending. Unable to fund provision of community and social benefits, local authorities have looked to developers to foot at least part of the bill. While such reliance on market forces may fit well with the ideology of government, it does not make for clear and consistent policies and decision-taking by local planning authorities.
Proposed legislative change
The Department of the Environment has floated three proposed amendments to section 52 of the 1971 Act:
(a) to enable the developer to give unilateral undertakings;
(b) to allow a planning agreement or undertaking to be discharged when its planning purpose has been served; and
(c) to enable the crown to enter into section 52 agreements.
(a) Unilateral undertakings
For all its notoriety, section 52 is simply an enabling provision which allows local planning authorities to enter into legal agreements with anyone having an interest in land for the purpose of “restricting or regulating the development or use of the land”. Such a person does not have to be an applicant for planning permission, but with very limited exception, usually is. The fundamental presumption on which this power is based is that it is for the local planning authority to judge the necessity for these agreements, and indeed it must be a party to them. The first of the proposed changes removes this presumption — a change emotively described as the privatising of section 52 agreements.
In common with other measures introduced by this government, such as the private sector’s right to promote designation of a simplified planning zone, or to prompt sale of publicly owned land through the Surplus Land Register, the proposed change will allow the developer or landowner to take the initiative. Unilateral undertakings should permit developers, rightly, to present comprehensive development proposals to local planning authorities from the outset.
Major development schemes are seldom purely land-use proposals to which there is a yes/no answer; they are packages which must be considered as such. Undertakings could be used by developers to underpin the balance of uses within a mixed-use scheme, to demonstrate willingness to undertake off-site highway improvements to service a scheme, or to provide a phasing arrangement.
Of key importance is the proposal that “in considering the related planning application or appeal, the planning authority or the Secretary of State would be required to have regard to the terms of any unilateral undertaking offered by the developer; and the developer would be able to give further undertakings during the course of appeal proceedings”. This change of emphasis is welcomed. As any local authority development control officer knows, the assessment of a proposal purely on the basis of planning policies seldom provides a cut and dried answer. Policies are almost invariably framed to be discretionary, not mechanistic, eg “… permission will not normally be given for …”, or “…there is a presumption in favour of …”. Giving planning authorities the obligation to consider these allied undertakings should make for more pragmatic implementation of the system.
Planning committee resolutions often include reference to loosely worded principles to be included in a section 52 agreement. It is a major source of frustraton to developers that so much time is spent arguing over the detail of these agreements. Under the new proposals, developers could submit either a draft of an undertaking with an application, or even a signed undertaking the implementation of which is conditional upon the grant of consent to the application as submitted. If necessary, amendment could be made to the undertaking in the course of discussions on the application.
This change should not mean that local and structure plans will be consigned to the municipal dustbin as market forces overrule planning policy. Contrary to popular mythology a planning free-for-all is not sought by the development industry, for sound commercial reasons.
There is, however, one particular cloud on this horizon. Many planning gain benefits require either land to be provided by a second party (often the local authority) or the performance of activities by the local authority. If a developer undertakes to pay a local authority to provide parking spaces, how can he ensure performance by the local authority? If he offers a road improvement, will the highway authority be obliged to acquire the land necessary to carry it out, or be required to offer a licence to permit the developer to undertake the works on its land?
(b) Power to discharge undertakings and agreements
It has been a source of concern to developers and landowners that section 52 agreements become binding covenants on the land. While attention to detail in the drafting of agreements can cover the majority of eventualities, the passage of time has a tendency to change circumstances. A benefit offered through an agreement can become redundant, but the covenant remains attached to the land and could be the cause of uncertainty. For example, individual phases of a large development, even when built, can remain tied to requirements for the overall scheme which are wholly irrelevant.
It is possible to apply to the Lands Tribunal to set aside the covenant, but this is a cumbersome procedure. Alternatively, an approach may be made to the other parties to the agreement with a proposal for a deed of variance. However, since one of these parties is invariably the local planning authority, it is never a simple alternative. The proposal that agreements and undertakings be either revoked or varied by application to the local planning authority, or on appeal to the Secretary of State, promises a simpler procedure. There is already a precedent in the present procedure for seeking change to conditions attached to a planning permission. For the system to work effectively, it will be necessary to address only the planning merits of the agreement, even though one party can still derive benefit from the agreement which is not related to a present planning purpose. For example, a local planning authority in the South East of England which seeks to constrain the growth of new office floorspace, notwithstanding the arrival of the business use class (B1), will not be falling over itself to release an agreement which was drafted pre-1987 and constrains use to light industrial or research and development uses.
It would appear that there are legal niceties to resolve under this proposal. Legal agreements are made under seal, but the suggestion is that they be capable of being revoked through an administrative procedure which only one of the parties may initiate. To date, when the Secretary of State is minded to grant consent to a development on appeal, but cannot do so outright due to the need for some form of legal agreement, he cannot dictate the terms of that agreement. The proposed change in legislation would appear to be aimed not only at removing this constraint, but also at discharging existing agreements. Certainly, many of the more historic agreements are in need of change or removal.
An alternative procedure which does not appear to have been considered, is the possibility of time-limiting the covenants, or tying them to later events, following which, they would be removed. For example, an agreement could specify that access be provided via the developer’s land to an adjoining area of land, eg a community facility for a period of five years, or until a new road is constructed elsewhere to service this other land, provided that its construction is not longer than 10 years hence (the latter condition giving the local authority some incentive to build the new road!). A further option would be the ability to apply to the local planning authority for a “certificate of performance” of all or part of an undertaking or agreement. This procedure could work somewhat along the lines of those used at present for section 53 determinations and applications for established use certificates, whereby the determination of an application is principally a matter of legal judgment, rather than interpretation of planning policy.
(c) Crown land agreements
The inability of the crown to fetter its land through planning agreements has provided a headache in preparing public authority land — for example, redundant hospitals, for disposal with the benefit of planning permissions. This eminently sensible change will rectify this, and reduce the drafting necessary by solicitors.
Is there an alternative?
The changes proposed represent a tuning of the present system. It is not unreasonable to ask whether there is not a better system which could be used. Alternatives proffered from eminent academic sources have included the straight purchase of planning permission for cash, auctioning of development rights, and private sector compensation of affected individuals(5). One of the options supported by the RTPI and commentators such as Professor Nathaniel Lichfield(6), is legitimising the taking of a cut out of the development profits of a scheme, after having made an allowance for a profit to be taken by a developer.
There are those who believe that this is the manner in which local authorities should act within the present framework. I do not believe this approach bears close analysis. First, development profits are already taxed at other points in the system, eg company profits and capital gains. The level of taxation is consistent, it lies with government to ensure appropriate distribution. Second, and more fundamentally, it turns the planning system on its head. If the need for a certain community facility has been identified by a local authority, but it turns out the slice of the development profit is not enough to cover all or part of the cost, is it just tough luck on the community? If it turns out that the development profits could fund the facility with some to spare, will an authority frantically dream up something else to soak up the “extra”? What happens with erosion of the profit margin during the course of development, a not uncommon occurrence, if a community gain has already been set (or perhaps already built)?
Property developers have never attracted the love and admiration of the local authorities and communities, they have certain past excesses to blame for this, but an attack on development profits will not make for an equitable or respected planning system. I must endorse the view of Steven Byrne, author of the RTPI paper and an ex-chief planning adviser to government, that planning gain should not be seen as a substitute for properly funded public sector development programmes. Planning authorities need developers and vice versa. It is no accident that many of the better large-scale developments are the result of a partnership (not necessarily a financial one) that has respected the role to be played by both sides. Within the present statutory framework, a discretionary system is the only practical alternative, but the government must give clearer guidance as to what is acceptable. The draft guidance presently put forward by government gives no greater clarity than the existing DOE Circular 22/83.
The process of planning gain would benefit from clear, considered and early guidance from the local planning authorities as to the requirements sought in connection with new development. Timing is an important consideration. If there is to be a shopping list, get it out early. Local planning authorities would do well to appreciate that it is the more practical, and perhaps more equitable, proposition for planning gain requirements to be reflected in initial land values, rather than development profits.
While the Government’s proposed changes to legislation can be welcomed as pragmatic within the present framework, greater effort must be put into the supporting guidance if past pitfalls and abuses are to be avoided.
References
(1) Planning Agreements, Consultation Paper published by the DOE, July 11 1989.
(2) Planning Gain: An Overview, Royal Town Planning Institute, June 1989.
(3) Planning Gain, Report to the DOE by the Property Advisory Group, HMSO 1980.
(4) Planning agreements may be drafted under powers granted by section 52 of the Town and Country Planning Act 1971, section 111 of the Local Government Act 1972, and section 33 of the Local Government (Miscellaneous Provisions) Act 1982.
(5) Pricing for Planning, Graham Mather, Institute of Economic Affairs 1988.
“The Coming Revival of Town and Country Planning,” Professor Peter Hall, Regional Studies Association Journal 426.
No Room! No Room! The Cost of the British Town and Country Planning System, Alan Evans, Institute of Economic Affairs 1988.
(6) From Planning Gain to Community Benefit, Professor Nathanial Lichfield, Journal of Planning and Environmental Law, February 1989.
