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A chance to unblock the economy … or just another pipe dream?

After years of frustrating planning delays stifling Scotland's economy, a new Scottish Government strategy is being hailed as a "watershed moment" that could unblock the housing backlog and boost jobs growth.

Snarl-ups in Scotland's planning system, particularly the length of time taken to decide planning applications, have long been blamed for throttling the country's economic progress. And with the number of new homes being built reaching a 70-year low in 2013, it is hoped that what was billed as a major planning shake-up, unveiled by the government last week, could kick-start housebuilding and all its related benefits, not least increasing the pace of jobs growth. It all sounds good, but will it succeed where previous strategies have failed to deliver?

The main change is the introduction of a presumption in favour of new development, which means that applications to build homes, supermarkets and roads, as well as other developments, are now more likely to get the green light. However, it is not yet clear how much the change will weaken the power of councils to refuse developments, as town hall planners will be required to take account of any "adverse impacts" that could "significantly and demonstrably outweigh the benefits of any planning application".

The shift in the balance of decision-making in favour of development is contained in the third edition of the National Planning Framework (NPF3) and a new version of Scottish Planning Policy (SPP), two documents which are updated every five years.

At the launch last week, planning minister Derek Mackay hyped up the changes as a "watershed for planning in Scotland", claiming that the documents would collectively "deliver improvements that will benefit the nation for decades to come".

The NPF3 updates the list of what are deemed major national developments for fast-tracking, including the regeneration of Dundee waterfront and Ravenscraig. Also included are proposals to build carbon capture and storage facilities at Peterhead and Grangemouth, airport improvements, a high-voltage energy transmission network, a national cycling and walking network and plans for high-speed rail. The updated SPP sets out a preference for the reuse of previously developed land rather than the use of green field sites for building.

In 2013, fewer than 15,000 new homes were built in Scotland, compared with the 25,000 homes a year being built before the financial crisis got under way in 2007. It is also 20,000 fewer than the government target of 35,000 new builds a year by 2015 to meet housing demand and curtail house price inflation.

As Scotland's population and the number of new households being created continues to grow, the government last year estimated that 465,000 new homes will have to be built by 2035. For this target to be met, an average of 21,500 homes a year will have to be built

Prior to the credit crunch, the private housebuilding industry was the largest source of private investment into the Scottish economy, contributing around £6 billion a year to GDP and employing about 100,000 people. But since 2006, thousands have lost their jobs as construction companies went under. The shortage of housing stock is now one of the main drivers of rising house prices.

Ironically, 2006 was also the year that saw the creation of the Planning (Scotland) Act which aimed to promote "culture change" in the planning system to boost Scotland's slow growth rate.

Blair Melville, head of planning strategy at industry body Homes for Scotland, said that the new presumption in favour of development would be a shot in the arm for the construction sector and should lead to more homes being built.

A similar presumption in favour of development in England unveiled by communities secretary Eric Pickles in 2012 has meant that around two-thirds of applications for permission to build new homes that go to appeal are now successful. Prior to the introduction of the presumption in favour, the success rate in England was closer to the current Scottish level of 35%-40%.

Melville said: "Although the Scottish Government doesn't like to be seen to be copying what is happening in England that is effectively what they have done."

The presumption in favour of development imposed by the UK coalition government has led to legal actions being launched between central government and local authorities considered to be too "nimbyish" by Westminster.

Melville believes that the Scottish Government is unlikely to impose its version of the presumption in favour of development in such a direct form.

He said: "The government here is much more inclined to take a collaborative approach and to get things done by persuasion and agreement without the confrontation between central and local government that we have seen down south. The onus is now on the minister to make sure that this works."

Many construction companies who are members of Home for Scotland would have preferred to have seen the presumption being given stronger legal teeth by being included in the National Planning Framework document, where it would have firm legal status, rather than only in the Scottish Planning Policy, which means it is only a guideline.

Nevertheless, housebuilders expect the new provision to help them in the case of disputed applications that go to appeal. Where local authorities fail to keep their local development plan up to date or fail to have in place a five-year supply of land for housing development, the new presumption is likely to tip the balance in favour of development.

According to Homes for Scotland, only six of Scotland's 32 local authorities currently comply with the requirement to have a five-year supply of land earmarked and ready for development.

Melville said: "It is still not a guarantee but it is encouraging that two-thirds of appeals in England have been approved since the presumption in favour of development was introduced.

"Of course, it is much better to get a decision through the planning process itself. Planning by appeal is more uncertain and time-consuming, so we would much rather that there was certainty in the development plans. Whilst a sense of optimism has been returning to the market, the industry still too often encounters a system which is frustrating and delaying development rather than encouraging and facilitating it."

Speculative construction - where developers build properties without a committed buyer - almost completely stopped during the recession and, with some exceptions, has not so far resumed.

Although confidence is slowly returning to the market, access to bank lending for most construction companies remains restricted. The industry norm now is to "build when you have a customer", Melville said.

Meanwhile, it remains the case that the part of the housing sector where there is most demand - one- and two-bedroom flats rather than family homes - is also the sector where potential buyers, typically young first-time buyers, are most likely not to have sufficient cash.

On the positive side, the Scottish Government's Help to Buy shared equity scheme has relieved pressure in this sector. Since the scheme was launched last September, 3750 applications have been approved. The scheme, which can be used to finance new-build homes up to the value of £400,000, allows buyers to overcome the barrier of raising large deposits.

Although a similar scheme in England has been criticised for contributing to a potential housing bubble in London, the Scottish version of the scheme has, according to Melville, helped to provide builders with the certainty and confidence they need to increase production.

Although the new presumption in favour of development and the Help to Buy scheme combined with a recovering economy could make a real difference to Scotland's economy, concern remains that there has been little improvement in speeding up planning decisions.

The justification given for a 20% increase in fees for planning applications introduced in 2013 was that the extra money would be used to reduce backlogs of planning applications and speed up the processing of new applications.

But despite lobbying from the builders the money was not ring-fenced, meaning that local authorities were free to spend the extra cash on education or social work or other areas in need of cash.

And the signs are that most local authorities have chosen to do just that. In the last quarter of 2013, the average wait for decisions on major applications stood at 36.2 weeks: the same as for the last quarter of 2012 and a long way from the statutory time frame of 16 weeks.

There was, though, a modest improvement in the average decision time for local developments at 10.7 weeks in the last quarter of 2013 from an average of 11.5 weeks the year before.

The total number of planning application decisions made by Scotland's 34 planning authorities (32 local authorities and two national parks) in the last quarter of 2013 was 9176, broadly similar to the 9199 applications decided in the last quarter of 2012.

"Our members' view is that there is no real evidence of a significant improvement in speed," Melville said. "Most local authorities have actually lost staff because of the years of reduction in public spending for local government. Wherever the extra money is going it is certainly not going to planning.

"With fewer than 15,000 new homes completed last year, the lowest level since 1947, we welcome the firm view expressed by the planning minister that local authorities must focus on delivery of the many thousands of homes of all tenures that Scotland desperately needs."

While the largest construction companies now face fewer problems raising finance, medium-sized firms in the sector continue to find it hard to persuade banks to fund proposed developments. A typical such firm that might have built 500 homes a year before the credit crunch is now more likely to be building around 250 homes a year, said Melville.

Chairman of the board of Homes for Scotland, Sandy Adam, who is also chairman of housebuilder Springfield Properties, welcomed the new planning guidelines as a "step in the right direction", although he said it would have been better if the government had introduced a carrot-and-stick approach to chivvy along local authorities that do little to bring new homes, jobs and economic growth to their areas.

He said: "Unfortunately, there are still many councils that don't zone enough land for house building. The attitude in some planning authorities is frustratingly slow."

Craig McLaren of the Royal Town Planning Institute, the professional body for planners, said that the main benefit of the shift in planning policy will be the greater certainty and predictability it provides to local authorities, investors and developers. This will give them a better idea of the likely outcomes for proposed developments.

It will also help to "focus planners and the planning system much more on delivery", he said.

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