Councils call for freedom to recoup rising cost of planning applications

Government has gone quiet on plans to allow local planning fees, but councils are finding creative ways to fill the gap

Local authorities are awash with new financial freedoms. Councils recently took charge of their own housing stock and the associated rental income. The local government finance bill, working its way through parliament, will provide a direct link between local business rate growth and local authority finances. Controversial plans are under way to localise council tax support. With power being devolved in so many areas, why are ministers still reluctant to do the same with planning fees?

In November 2010 the government consulted on allowing councils to set their own planning application fees. Since then, nothing has been heard on the matter – at least on the government’s side. Planners have been calling for the introduction of local fees ever since, while growing increasing fearful that the plans have been dropped at the centre. Their fears appeared to be confirmed in July when decentralisation minister Greg Clark announced fees would be increased by 15% across the board, in line with inflation.

Malcolm Sharp, president of the Planning Officers Society, says the announced increase is far from the solution that was hoped for. “Planning is being asked by the government to step up to the mark. We’re all willing and ready to do that but if we’re really going to do this effectively we need the resources. This is just going to help us keep the show on the road.”

Recent planning reforms have introduced new responsibilities such as the requirement to submit applications for design review. Some local authority areas are inherently more complex for planning teams, meaning the application process is much more resource intensive. Councils are adamant that they must be allowed to recoup the true cost of dealing with applications from developers.

The evidence also suggests that developers are prepared to cover this cost. Last year, fed up with waiting for local fees to be introduced, Westminster city council struck a voluntary deal with Westminster Property Association. The group, which represents major developers in London’s West End, agreed to contribute an extra £26,000 for major projects in return for guarantees over the time taken to process the application.

Despite the success of this arrangement, ministers have declined to formally extend the deal elsewhere. John Walker, operational director of development planning at Westminster, is unimpressed. “It’s a fob off,” he says of the 15% increase.

Walker believes ministers are concerned about introducing a policy which could result in increased fees and be seen as a brake on the economy. “It’s only cost recovery, which I don’t think is unreasonable,” he says, pointing out that the money has to be found somewhere. “Why should the taxpayer be subsidising someone who’s carrying out a major development?”

It wouldn’t be the first time that planning policies have borne the hallmark of Treasury intervention. Sharp agrees that fears about the impact on economic growth played a part in the decision. “I can only think that the government feels local fees would have some dampening effect on development,” he says.

Conversely, some suggest a uniform approach to fee setting could actually stifle development. Kate Henderson, chief executive of the Town and Country Planning Association, says pro-development councils may be hindered by the enforced 15% fee hike, which could add to the financial pressure on developers. “A blanket national increase may have implications for areas that are struggling with viability,” she says. “In areas where there are more challenging sites, this may have an adverse impact.”

In Westminster, Walker says feedback from developers on voluntary fee contributions has been positive and he is hopeful the council’s deal will be renewed in October. He recommends others councils discuss similar proposals with local developers. Provided with guarantees over the quality of the service, many applicants will be prepared to stump up the extra cash.

For now, a more formal arrangement looks unlikely to be forthcoming. A spokesperson for the Department for Communities and Local Government claimed: “The government has balanced the need to ensure councils are properly resourced to assess planning applications, while reducing the burden on ordinary council taxpayers. These measures will enable councils to provide an efficient planning service and support the delivery of development and regeneration.”

If ministers think the matter is dealt with, others remain unconvinced. “We will continue to press for an even fairer, more transparent, localised system for planning fees,” says Clyde Loakes, vice-chair of the Local Government Association’s environment and housing board.

It was four years ago that planning fees were last reviewed. It seems unlikely councils will put up with the lack of flexibility for that long again.

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