Scotland is currently implementing radical changes to the planning system. This includes an overhaul of plan making functions and substantial alteration to the development management process. This reform is taking place against a background of turmoil in the international financial markets. The current crisis and its aftermath raise questions for the planning system as a whole.
The crisis has resulted in banks lending on less favourable terms to companies and individuals culminating in what can only be described as a meltdown in new house building. The Scottish Government has a target to seek to build 35,000 new homes a year in Scotland which looks, at best, very ambitious after what has happened to the house building industry. We have also witnessed an erosion of the other development sectors although certain elements such as convenience retailing and renewables continue to be active. Scotland will have to play to its key strengths in continuing to seek opportunities for investment. This is particularly relevant to the renewables sector where Scotland has a significant proportion of the European resource. To date there has been a degree of public resistance to schemes but it will be vitally important to maintain the momentum for the industry to maintain economic activity.
One of the benefits of the new streamlined planning system is that it should be able to respond to the new market conditions. The greatest challenge will be trying to attract new investment. There is no doubt that the risk profile associated with the development of property based assets will have changed considerably and we are all now aware of the international nature of capital. In the past decade numerous development plans have been produced which rely on the private sector to fund significant infrastructure. Reducing land values and the risk profile associated with development make it extremely unlikely that such investment will occur. The whole approach of Planning Authorities to negotiation of appropriate planning contribution will have to alter. Simply put the land values are no longer there.
The Scottish Government is currently reviewing planning agreements "to produce a system that will balance provision of contributions to support related infrastructure and amenity while facilitating development necessary to increase the sustainable economic growth in Scotland at a local and national level." This will provide an opportunity for the Scottish Government to provide forthright leadership on this issue.
An other area of significant change is likely to be the importance which is attached to public investment. Historically affordable housing was viewed as a burden by most private sector housing developers. It is now a comparatively safe source of the funding which can assist infrastructure cost. It is almost as if we are going full circle back to the post World War II days of the planning system being a vehicle which assisted in the identification of locations for public investment. Given the lack of appetite for full public funding it is likely that forms of partnership and relationship are likely to emerge with the private sector.
We have moved from development control to development management and it now seems that the planning system may well have to look to become a facilitator of development. It is now even more important to proceed with the structural changes to the planning system. It will be a key instrument in seeking to secure recovery. However changes in national policy will have to emerge to support that process. It is also clear that in the short term there are many parts of Scotland which will struggle to attract private investment given that development was marginal even in strong investment times. This is going to prove a great challenge to Local Authority planners in these areas who will have to adopt a proactive approach to reform and actively seek and support private investment. The current "downturn" provides an ideal opportunity to get on and implement many of the changes that are required in the planning system at a time when investment pressures are down.
Coin Innes is a partner specialising in planning law at leading UK law firm Shepherd and Wedderburn LLP.