Review of planning gain reopens tariffs debate

The ODPM's optional planning charge has opened a veritable can of worms, says Chris Charlton.

This month's ODPM proposal to revise guidance on planning gain comes as no surprise. What is surprising is the reopening of the debate on a form of tariff or "optional planning charge".

The December 2001 planning green paper set out three options: no change, a revision of Circular 1/97 to allow local authorities more flexibility to negotiate and a system of impact fees. In its latest proposals (Planning, 7 November, p2), the government has effectively decided to hedge its bets and opt for a combination of the last two.

Revised policy guidance would give local authorities more flexibility on the contributions they can seek from developers through planning agreements.


The consultation document suggests that new guidance would:

- Allow planning obligations to cover direct and indirect impacts.

- Require councils to include their planning obligation policies in

local plans.

- Allow authorities to set formulae for calculating the costs of

different elements in planning obligations.

- Enable ongoing contributions, to be agreed at the outset.

- Encourage voluntary pooling of contributions.

- Encourage the use of standard heads of terms and clauses to reduce


- Recommend councils to consider bringing in expert third parties to

overcome staff shortages.

- Encourage the use of mediators to help resolve disputes.


Few of these proposals are particularly novel. But what is new is the government's backing for the suggestion that guidance should follow case law such as Tesco Stores Ltd v Secretary of State for the Environment (1995) and allow far greater flexibility in the scope for requiring planning obligations.

Many local authorities already use the test in the Tesco decision as their benchmark. Until now, that has been tempered by the developer's ability to appeal to the secretary of state. But under the proposals, inspectors would be playing by the same rules as the local authority.

This could leave developers without a lever with which to negotiate, thus footing a higher bill.

The proposal for a "planning charge" can be seen as a watered-down version of a full-scale tariff system. The fact that this notion has reappeared so soon after tariffs seemed to have been consigned to posterity suggests that the government is very keen on this as a way forward.

The planning charge would be enshrined in legislation, either in the Planning and Compulsory Purchase Bill or in further legislation. It would be an optional charge for the grant of planning permission in lieu of a negotiated planning obligation.

Under this system, local planning authorities would have to set a charge for all the elements for which they would normally require a contribution.

It would be open to the developer to pay this charge rather than negotiate an agreement.

But a planning charge system has a number of drawbacks. For example, a negotiated agreement would still be required where an existing planning permission is to be given up in return for the grant of a new permission.

Some awkward issues also arise over affordable housing. At present, affordable homes are normally sought as part of residential development schemes, bringing about a range and mix of housing types and tenures within a single site. Under the planning charge, the affordable housing requirement could be met off-site. That would mean procuring land and services from scratch, which could be more expensive.

The minor improvements to guidance will probably be generally welcomed.

But it remains to be seen whether developers will be content for the requirement under Circular 1/97 for planning obligations to be "necessary" to disappear without a fight. The jury must still be out on the benefit of "buying" planning permission through a planning charge.

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