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Waverley Borough Council Committee System - Committee Document

Meeting of the Environment Overview and Scrutiny Committee held on 19/02/2002

To consider the Government’s proposal’s to change the system of planning obligations and feedback comments from Waverley Borough Council.




[Wards Affected: N/A]

Summary and Purpose

· To consider the Government’s proposal’s to change the system of planning obligations and feedback comments from Waverley Borough Council.



1. Planning obligations, also known as section 106 agreements, are typically agreements between local planning authorities and developers, negotiated in the context of granting a planning consent. They provide a means of ensuring that developers contribute towards the infrastructure and services that local authorities believe to be necessary to facilitate proposed developments. Contributions may either be in cash or in kind. Planning obligations are also used to deliver affordable housing

2. The current system is criticised for a number of reasons. Lord Nolan’s Committee on Standards in Public Life1 found planning obligations “were the most intractable aspect of the planning system with which we have had to deal [and that they] have a tremendous impact on public confidence”. Agreements may also take an unacceptably long time to negotiate, involving unnecessarily high legal costs. The operation of the current system can frustrate or delay development and even cause it be abandoned.

3. The consultation paper states:-

· An effective planning obligation system should enhance the quality of development and the
wider environment, and ensure that it makes a positive contribution to sustainable development, providing social, economic and environmental benefits to the community as a whole. It should
help to provide an increased supply of affordable housing, the provision of public spaces, and
the facilities and infrastructure needed to accommodate growth.

· An effective planning obligation system should also be transparent to all stakeholders in the
planning process, including the community. It should provide greater certainty to those
contemplating development and enable agreements to be concluded quickly. · A good planning obligation system will promote economic prosperity. It will not impose
unacceptable burdens on developers, which would ultimately result in desirable development
not taking place.

· The consultation document was published in December 2001 and sets out proposals to meet
the above objectives. The government is seeking any comments on the proposals by
18th March 2002. Much of the following text is taken from the consultation paper and therefore
suggested comments from the Council are shown in bold italic.

The Government’s Proposals

4. The consultation paper puts forward proposals for reform and improvement of the planning obligations system. It complements the wider review of planning being undertaken by the Government, including the Green Paper Planning: delivering a fundamental change.

5. The Government believes that a new approach to planning obligations is required that regularises what are currently very uncertain procedures and which gives a clear purpose to planning obligations. It believes this purpose should be to promote the objective of delivering sustainable development.

6. It is proposed that local authorities should set standardised tariffs for different types of development through the plan-making process.

7. Tariffs would contribute to meeting a range of planning objectives, including the provision of affordable housing. Negotiated agreements should only supplement or substitute for the tariff where these are clearly justified to deliver, for example, site-specific requirements.

8. The tariff approach is, by its nature, much more transparent than a system of planning obligations based on negotiated agreements. We intend to require, both for the current and the future system, that details of all planning obligations will be available for public inspection on the statutory planning register. We also set out proposals for better monitoring and accounting procedures to ensure that planning obligations are used for the purposes intended.

9. The government seeks views on proposals to speed up planning processes by increased use of standard contractual terms for negotiated planning obligations, where these are required, and the introduction of dispute resolution procedures where the local authority and developer cannot agree on the value of site-specific costings.

Positive Benefits 10. In the Planning Green Paper, the Government has already proposed that developers and local authorities should agree a timetable for reaching a planning decision on major planning applications, including the finalisation of any negotiated planning agreements.

11. The Government believes that planning obligations should be used in a positive way to help achieve planning objectives. It thinks that the current focus of the system, essentially on mitigating the impacts of development, limits their potential benefit. It intends to use planning obligations as a positive planning tool to deliver desired outcomes.

Sustainable Development

12. The Government believes that the purpose of planning obligations should be refocused to deliver sustainable development. This means that they should be used as a mechanism to ensure that development provides social, economic and environmental benefits to the community as a whole. Planning obligations should be used to achieve a wider range of objectives than is permitted under current policy as set out in Circular 1/97. The government wants to ensure that developers are encouraged to make sustainable development choices and that the local community is not disadvantaged by accepting development in their area. Equally, sustainable development is about promoting economic prosperity. Any changes to the system of planning obligations should be consistent with a faster, more efficient and more effective planning system. We need to ensure that planning obligations do not impose unacceptable burdens on developers, which would ultimately result in desirable development not taking place. Clearly, it would be counter-productive were any revised approach to result in some otherwise sustainable sites being unprofitable to develop.

13. There is a question about whether, under the present system, planning obligations are falling unequally – and possibly unfairly – on some developments but not others, and whether this is biasing investment decisions. The common practice, which we encourage, of seeking affordable housing contributions on larger residential developments may, for example, cause developers to favour commercial development rather than housing; greenfield developments may be preferred to re-using land within our towns and cities. It is proposed that local authorities should be able to seek a contribution towards affordable housing, either in cash or in kind, from a wide range of development proposals, including commercial schemes.

Other Considerations

14. Some developments are of such a large scale or long-term nature that their effects cross local authority boundaries. A number of sub-regional studies are now underway as an offshoot of the continuing programme of updating Regional Planning Guidance e.g. The Blackwater Valley Sub Regional Study and some are revealing a need for significant investment in infrastructure over the longer term. It is intended that our new approach to planning obligations should address this need.

15. It is proposed to introduce primary legislation to give the Secretary of State power to oversee the introduction of a tariff as a requirement to be paid in all qualifying circumstances.

16. National guidance would be issued about the workings of the new system. This would cover the requirement for local authorities to set clear policies in their development plans (or Local Development Frameworks as envisaged in the Planning Green Paper) about their use of planning obligations and their approach to setting tariff schedules. It would also set out the requirements for local authorities to operate the system in an efficient way – including use of standardised terms in agreements and proposals for monitoring and accounting. The guidance would give local authorities discretion about their approach to the use of planning obligations within the overall framework set at a national level.

17. The Planning Green Paper proposes that the present system of local plans should be replaced by new Local Development Frameworks. These should include core policies covering, amongst other things, the use of planning obligations. One set of policies would set out the arrangements for determining the schedule of tariffs and how they would apply, the criteria for negotiation or exemptions and the approach to monitoring and accounting. A parallel set of policies would cover the purposes to which receipts from the tariff would be put. This would reflect the priorities for spending within the local area, set in the context of the authority’s strategies for housing, transport, regeneration, education, health, ‘liveability’ and public open space, recreation and other community benefits.

18. Officers propose that local authorities should have discretion to determine the type, sizes and location of development on which the tariff would be charged and how it would apply in different circumstances, subject to national policy considerations. It is also proposed that there should be local discretion about how receipts from the tariff are spent, again subject to national policy guidance. A wider range of developments being subject to a tariff than are currently subject to planning obligations, are envisaged.

19. The Government envisages tariff levels for particular sizes and types of development being set through Supplementary Planning Guidance or successor arrangements such as local action plans or topic plans as envisaged in the Planning Green Paper. Some locations would attract a higher tariff than others: greenfield development would almost certainly have a higher tariff than brownfield developments, which may be exempted altogether.

20. There are options for how a tariff might be set, for example:
21. It is anticipated that smaller developments would not be liable to pay the tariffs. Views are sought about where the size threshold should be set and whether it should be determined nationally, regionally or locally. One option would be to exempt developments below 200 square metres of gross commercial floor space or 150 square metres of residential floor space. Tariffs would need to be developed locally and updated with full consultation and the involvement of the development industry. They also need to be based on good quality valuation advice in order to ensure that they do not stifle development.

22. One concern is that local authorities should not seek to impose an excessive tariff to choke off development. Nor would there be a wish to see the tariff applied in such a way as to discourage the expansion of small businesses, which might, for example, be subject to a sliding scale. We envisage providing central guidance on how a tariff might be set and the purposes to which it might be applied.

23. The current policy guidance on affordable housing would be withdrawn in favour of contributions towards affordable housing within the planning obligation tariff. Local authorities would define the proportion of the tariff to be used to deliver affordable housing. Depending on the local assessment of the needs of the area and regional policies, the affordable housing element may represent a large proportion of the overall tariff.

24. The tariff supporting affordable housing would be paid by both residential and commercial development schemes. It follows that the present thresholds set out in circular 6/98 for the size of residential scheme from which an affordable housing contribution can be sought, would no longer apply. The overall value of the affordable housing contribution from a development would be determined by the tariff and would be known in advance by a developer. It could be taken in cash or kind, or a mixture of both. The Government believes, however, that the planning system should continue to support the objective of creating balanced and mixed communities to promote sustainable development and social inclusion. We shall continue to encourage local authorities to seek on-site provision as a first choice.

25. The decision about how much affordable housing should be provided on-site and its type would be for local authorities to agree with the developer. Equally, the form of that contribution – which could be in land or dwellings – would be a matter for agreement. Local authorities would need to take full account of their housing needs assessments so as to ensure provision of the most appropriate type of housing to meet, for example, the need for social rented housing or housing for key workers.

The Council welcomes the opportunity to set tariffs at a local level reflecting the scale and nature of community benefits required to meet the objectives of the Community Plan. The Council is, however, minded that there is great deal of work required to quantify and translate community benefit into a tariff that is set against assumptions about future development. In addition, the work is likely to generate the need for new skills to assess land values, the development economics, and local market conditions. There will also be a need to make some calculations about the specifications and costs of facilities at the plan making stage e.g. say a community centre. The Council would therefore welcome any assistance from the Government to help resource the detailed work required to deliver the supporting policy frameworks.

In terms of calculating tariffs, it is likely that there would be an advantage to Waverley in adopting a system relating to residential property or land values given the significant values the planning system generates in the Borough. For other development there is no evidence to suggest whether a tariff related to floor space rather than to development value would be appropriate. It is likely that a tariff applied to floor space for extensions to commercial premises would provide a practical option.

The proposals to set specific tariffs for affordable housing arising from wider development opportunities is welcomed.

Whilst the proposals are generally welcomed, the Council is concerned that the Government does not see the planning system as a stealth tax and that it maintains the strong connections between development growth and social and physical infrastructure. It is important that planning retains its integrity as an arbiter in resolving competing interests in the development process and not as a revenue collection service.

Negotiated Agreements and Provision in Kind

26. Tariffs alone will not provide the flexibility to deal with all development circumstances. In some cases, there will be specific constraints that need to be addressed where a planning obligation can remove an impediment to development. The tariff may, therefore, need to be supplemented or amended. The most obvious example of this is the need to deal with site conditions or access but there are other examples, such as the need to make special arrangements for environmental protection (possibly with a statutory consultee under the planning system rather than a local authority) or to allow effective policing of late-night entertainment venues. The proposal is that this should result in a single planning obligation negotiated around the tariff.

27. The Government does not think it acceptable for development to be subject to multiple planning obligations agreed for different purposes or with different agencies. There will also be circumstances in which the local authority would not wish to pursue a planning obligation tariff because the scheme contributes to sustainable development in its own right. Examples might include provision of small neighbourhood shops, a crèche or other local facilities serving a community need, or particular types of education, health or recreation uses. It might also include development of a difficult brownfield urban site where charge of the tariff might make development financially unviable. In these cases, a tariff might need to be reduced or waived altogether.

28. It is envisaged that local authorities should, therefore, set out criteria in their core policies to indicate so far as possible where a reduced tariff would apply. If described carefully, these criteria would provide a positive, transparent and powerful incentive for developers to deliver high quality and sustainable development proposals. It would also ensure that a developer receives recognition for bringing forward developments of a type and in a location that a local authority would welcome.

The provision for exceptions are welcomed, but the rules and criteria for these will need to be clearly set out in the Local Development Framework. This facility again raises the issues concerned with skills and mechanisms to determine and arbitrate on what could be complicated and specialised development economics.

Pooling Tariffs

29. It is proposed to legislate to enable local authorities to pool contributions from tariffs if they choose. Local authorities wishing to do so would work within a sub-regional context. They would identify in their local plan or Local Development Framework, any proposed arrangements for pooling and the purposes to which pooled contributions might be put. This might include pooling a proportion of contributions towards the delivery of significant infrastructure needed as part of a sub-regional growth or regeneration strategy and could imply pooling of affordable housing contributions (see below). Resources could be spent possibly some years later than they were collected. Clear and auditable monitoring arrangements would be required to ensure the proper use of resources for agreed purposes.

The opportunity to pool tariffs, to account for development and growth pressures beyond administrative boundaries, is welcomed.

Ensuring Sufficient Sites for Affordable Housing

30. Under the tariff-based approach, a much wider range of types and sizes of development would contribute to affordable housing, including commercial development. It is recognised that on-site provision may not always be appropriate in, for example, some commercial developments or where residential developments are very small in scale. There would therefore be a need to ensure that sufficient sites are available on which to build affordable housing.

31. One option is to allow local planning authorities to allocate sites solely for affordable housing where there is demonstrable need and where such allocations would be consistent with the objective of creating mixed and balanced communities. This could provide opportunities to invest financial contributions obtained from tariffs in affordable housing. Local planning authorities are already able to use site briefs to specify how sites are to be developed.

The proposal to allocate land specifically for affordable housing in Local Development Frameworks is welcomed. In a Borough such as Waverley, this could be a significant tool to assist the Council deliver more affordable housing. It is likely that in some cases this facility will need to be used with improved compulsory purchase powers.

New Opportunities for Affordable Housing

32. Current planning policy for housing gives priority to bringing empty homes back into use and converting existing buildings in preference to the development of greenfield sites. In the interests of achieving sustainable development, it is proposed that tariffs should be used not only to develop new property but also to convert existing buildings and to bring empty property back into affordable residential use. Local authorities will, under the proposals, have to make clear in their development plans (or Local Development Frameworks as proposed in our Green Paper) what proportion of the tariff will be devoted to affordable housing, the nature of local need and what their policy is towards seeking provision on-site. The Secretary of State will continue to examine plans (and, once implemented, the new Frameworks) and will use his powers to ensure that local policies comply with national policy.

33. The need for affordable housing may be localised but more often will cross local authority administrative boundaries and therefore cooperation between local authorities in meeting affordable housing needs is expected. Regional planning bodies will also identify affordable housing needs and priorities across their regions, or parts of regions. The Secretary of State will expect affordable housing policies set out in local development plans (or Frameworks) to be consistent with appropriate regional policy.

34. The overall intention of all these proposals is not only to increase the supply of affordable housing but also to ensure that both commercial and residential developers support its provision within a simplified, predictable and transparent framework.

35. All planning obligations are to be available to public scrutiny. The Town and Country Planning (Development Procedures) Amendment Order 2001 will require all planning obligations to be placed on Part II of the planning register which can be inspected by any member of the public on request at any local planning department. This will deliver transparency and openness, which is so important in terms of public confidence in the planning system.

36. Local authorities will be encouraged as a matter of good practice to ensure that where negotiated agreements are required, the heads of terms for such agreements are included in planning committee reports relating to the relevant application, so that they are made available to the public before a planning decision is taken.

37. Greater transparency is also required in the use of planning obligations. Proper procedures for monitoring and accounting are important to maintain the integrity of the system. There needs to be clarity that contributions obtained for specific purposes and to deliver particular strategies have been appropriately spent. This is particularly important for projects that can only be implemented once a sufficient volume of development has taken place. It is also important to know the extent to which all signatories to a negotiated planning agreement discharge their obligations.

38. New national guidance will set out the requirements for monitoring planning obligations and accounting for all the income and expenditure arising from their use. In order to ensure maximum transparency, we also propose that the outputs obtained from the use of planning obligations – including affordable housing – should be displayed alongside the financial information.

39. Clear local policy statements about standardised tariffs will help to simplify the development control process by removing the need in many cases to negotiate individual planning agreements.

40. Where individual agreements are still needed, a key factor in ensuring that they do not delay the development process is to start the process of negotiation at an early stage. Pre-application discussions can cover the likely scope of any planning agreement and the process of drafting the agreement can proceed in parallel with consideration of the application. The Planning Green Paper makes proposals for delivery contracts whereby local planning authorities and developers can agree a target date for determining a planning application for a large development. A key aspect of such an undertaking should be the agreement of a negotiated planning obligation, if that is required.

41. Legal agreements concluding planning obligations are frequently long and complex contractual documents. Considerable scope exists to save time and resources by the provision of good practice advice on the use of model clauses and guidance on terms for use in specified circumstances. The Government proposes to take forward this proposal.
42. It would be for the developer to provide sufficient justification as to why site-specific circumstances warrant a reduction in the standard tariff. It will be important to ensure that the tariff is only reduced in circumstances where there is a genuine need. Otherwise there is a risk that this flexibility will be abused, leading to lengthy negotiations and long planning delays.

43. In order to speed up the development control process, it would be beneficial to have a fallback arrangement to help resolve any disputes between the local authority and a developer over valuation issues. Such a procedure might provide an independent valuation of site-specific items, such as the cost of reclamation or the provision of specified infrastructure. The emphasis would be on obtaining an expert opinion to establish the facts, rather than a means by which a developer could dispute a tariff that has been set through the plan-making process.

44. Such independent valuations would be a material consideration in a planning decision and could be taken into account by a local planning authority or a planning inspector in reaching a planning decision. It would therefore not fetter the discretion of the local authority in determining a planning application.

A system to resolve disputes is welcomed. However, clear rules of engagement need to be thought through. For example if one is disputing the costs of remediation of land there needs to be agreement about the size of the problem and the solution specification and who is to instruct the independent advisor?

Human Rights/Community Safety Implications

45. There are no human rights issues or community safety implications arising directly from the proposals in this report.


46. The Government’s proposals are to be welcomed and should result in additional community benefits for the people of the Borough. The current system of S106 agreements are normally only triggered by major developments and given that the Borough has not been a significant generator of major development schemes, it has been disadvantaged. The Council would welcome a system that can deliver real community benefit from its significant smaller development schemes, which together increases the burden on social, environmental and economic infrastructure. Such a system will assist the Council in delivering Community Strategy objectives.


That the report be referred to the Executive with any comments or amendments suggested by the Environment Overview and Scrutiny Committee.


Background Papers (DoPD)

There are no background papers (as defined by Section 100D(5) of the Local Government Act 1972) relating to this report.


Name: John Anderson Telephone: 01483 523298
E-mail: jaanderson@waverley.gov.uk