Twisting the planners' arms?

Public sector finance: The Nolan Committee is looking into the controversial area of 'planning gain', in which a development wins approval in return for a community benefit. Paul Gosling reports

A fundamental principle of local government is that planning permission cannot be bought. Yet councils often insist that a proposed development will only be given the go-ahead if it contains some community benefit, which may be the provision of social housing or a new leisure centre.

The Nolan Committee's inquiry into local government will spend much of its time considering whether this use of so-called "planning gain" is compatible with councils taking decisions without fear or favour. The committee will start taking oral evidence next month, and has already received written submissions arguing contrary views.

Local authorities are keen to retain the right to negotiate planning gain. They admit their use of planning gain is influenced by reductions in government grant and tight council tax-capping. Persuading developers to pay for things that the council would once have provided can help to dig councils out of a financial hole.

"Decisions taken through the planning system can result in a significant increase in property values, or disbenefits for the local community," says Phil Swann, planning under-secretary at the Association of Metropolitan Authorities (AMA). Planning gain can help to channel some of the developers' profits back into community provision, and can therefore be fair and just, Mr Swann argues.

The AMA and the other local authority associations have told Nolan that they would like the Department of the Environment's guidance on use of planning gain relaxed, while ensuring that the public does not perceive that the system is being abused. Others say that planning gain has already encouraged the public to view the planning process with suspicion.

David Rose, secretary of the Royal Town Planning Institute, says that planning gain is an issue that needs to be addressed, although he is not convinced that the Nolan Committee, which is examining propriety, is the right body to look at it. "Local authorities are so cash-strapped some have looked at planning gain as a means of obtaining some local financial benefit," says Mr Rose. "In our view this does not solve the problem of underfunding.

"It is nothing to do with corruption or mismanagement of local government. The problem lies far more with central government policy, which is not prepared to fund local government properly, or have a local tax by which the benefit from a development flows back to the local community."

The RTPI is keener for Nolan to look at the relationship between members and officers. "Some local authorities do not wish to receive good advice, or don't want other people to know what the best advice is," suggests Mr Rose.

But the Council for the Protection of Rural England is glad that Nolan is examining planning gain, and wants controls strengthened. Local authorities should be told that planning applications need to be in line with the council's own development plan, argues the CPRE. It believes that planning gain is only justifiable if the community benefit is directly related to the application itself.

The CPRE also wants the content of a negotiated agreement with a developer made public before a planning application is decided, and complains that too often the public is kept in the dark.

"We recognise that the planning system is brought into disrepute when developers are perceived to be granted approval in return for financial benefits," says Neil Sinden, planning campaigner for the CPRE. "We are not against planning gain, per se. However, where it is used to approve an otherwise unacceptable development there are clearly problems."

The Confederation of British Industry takes a similar position. "Our overall view is favourable - with caveats," says Richard Taylor, the CBI's planning adviser. "There is a question of propriety associated. There are some concerns that the process needs to be made more acceptable, and clear guidance needed for the gain to be reasonable, and the linkage obvious."

These criticisms have been implicitly accepted by the Department of the Environment, which last week held a consultative seminar on new guidance on planning gain, or planning obligations as the DoE calls it. The proposed new guidance underlines the principle that planning permission may not be bought or sold, and that negotiations with applicants should be conducted in a fair and open manner.

The DoE goes on to stress that planning gain should only be sought in order to make a site acceptable in land-use terms. This might, for instance, relate to the provision of road access for an industrial development. There must, says the DoE, be a direct relationship between the planning gain and the application, and unrelated benefits should not influence a decision.

All this is very well, but it fails to come to terms with a central problem. Whatever the guidance says, developers know that it is better to come to an early negotiated agreement with councils, rather than go through a drawn-out conflict which is settled on appeal. Delay as well as refusal can be costly, and developers may save money through submission rather than fight against a council by appealing to the DoE.

Councils should still be able to obtain extra facilities with some well- targeted arm-twisting unless Nolan can devise a more enforceable code of practice.