The Scottish Government has been reviewing the use of planning agreements for a number of years. Significant reforms to section 75 agreements were proposed in the Planning etc (Scotland) Act 2006. The introduction of what will be called "planning obligations" under the 2006 Act had been postponed in a bid to avoid additional burdens on the development industry during recession, but the Scottish Government has now launched a consultation on regulations to bring reforms to the use of section 75 agreements into effect. The system would be very similar to that which currently operates in England and Wales.

For years there has existed a fundamental tension between the legal tests of planning obligations being for a planning purpose and directly related to the development established in the Tesco case and the more specific policy guidance recently reaffirmed in Circular 1/2010. When agreeing heads of terms, planning authorities will have regard to the guidance in the circular, but are ultimately bound in law by less stringent requirements. Reforms to section 75 will allow developers to offer unilateral undertakings to expedite the process of negotiation of agreements. More fundamentally, they will allow planning agreements to be revisited to take account of changing circumstances and, in the absence of agreement from planning authorities, for that decision to be appealed to the Scottish Ministers. 

The introduction of reforms to section 75 goes some way to redress the inequality in bargaining positions which has existed between local planning authorities and developers in negotiating the delivery of planning gain. This is a necessary reform which should ensure that existing planning obligations which developers cannot afford to meet in the current climate do not act as inappropriate barriers to development. However, it also underlines the need for local planning authorities to ensure that they have an adequate and transparent policy basis to justify any contribution sought, to avoid decisions and agreements on essential infrastructure contributions being overturned on appeal, where that appeal is determined on the basis of the new Circular 10/2010.

The requirement for a clear policy basis for decision making is underscored by the five tests for the use of section 75 agreements set out in the Circular. For example, we are advised that section 75 obligations should not be used to solve existing infrastructure deficiencies, but can be used where it is anticipated that a proposed development will exacerbate an existing deficiency. In the absence of a clear development plan policy or supplementary planning guidance on infrastructure contribution requirements to offset such deficiencies, it may no longer be competent for planning authorities to mandate construction of enabling infrastructure from which subsequent developments will benefit. There clearly remains a fine line to be observed in negotiating detailed heads of terms for any planning gain, with the balance having moved in favour of applicants who can now legitimately expect to have advance knowledge of likely contributions sought. This is a welcome move.  However, the balance of commercial deliverability and local authority budget certainty must be correct. A review of a section 75 obligation in response to a change in a particular project's finances and deliverability, should not jeopardise local authority spending commitments to deliver infrastructure. 

The current consultation does not seek to revisit the scope of reforms to section 75 agreements. Rather, it focuses on the practical application of the new rules, to ensure that they work effectively in practice. One of the issues addressed in the consultation is the manner in which applications for review of concluded agreements are to be progressed and the information to be taken into account in determining such an application or appeal to the Scottish Ministers at a later date. 

In a traditional planning appeal, the Scottish Ministers consider the merits of the appeal as though the application had been made to it in the first instance. If there has been a change in policy since the original decision of the planning authority was taken, then the most recent policy prevails in relation to determination of the appeal.  There is nothing in the consultative draft regulations which suggests that this approach should not apply in relation to appeals in respect of review of planning obligations. However, it seems counter intuitive that contributions should be capable of being revisited in this manner. It is clear that planning policies which are amended following conclusion of a section 75 obligation are not intended to apply retrospectively, and so some clarification of the principles to apply on appeal may be desirable.

As with all planning reforms which have been introduced in Scotland, the devil lies in the detail. Local authorities must ensure that their policies are sufficiently detailed and robust to withstand scrutiny on appeal. Practitioners much engage in the consultation to ensure that the detailed regulations achieve their intended benefit in practice.

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