The SNP Government is considering preventing the trade-offs between local authorities and builders that for years have helped pay for the construction and repair of school buildings and village halls and contributed towards medical and care facilities.
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The move comes as the country’s 32 councils strive to reduce their costs by £270 million as a result of the global economic downturn.
The Scottish Government overhaul of the trade-off system has been prompted by concerns over the abuse of such deals.
Scottish Government figures relating to the practice show for the first time the scale of the income raised through the trade-offs, with calculations revealing that since 2004 councils have earned more than £300m from such deals.
The money has been used to create thousands of affordable houses, new roads and hundreds of playparks and other community facilities across Scotland, but concerns over its potential abuse and over-use mean the “cash cow” could dry up as early as next year.
Critics have questioned the reliance of local authorities on such trade-offs, their growing use and the lack of transparency over how they are struck. Builders claim the system is grinding to a halt because they are unable to meet rising costs attached to planning consent as part of the deals.
It has prompted the Scottish Government to review the controversial issue as councils seek to keep the money flowing and builders seek to end a practice that requires them to make additional payments.
Experts from major development companies have now been seconded to the Scottish Government to help with the overall review, and in the meantime Holyrood has reissued guidelines about the agreements to councils.
While there are many good examples of the use of conditions, known as “planning gain”, including provision of new schools and or community centres, other uses have been criticised.
Edinburgh City Council hoped to raise £23m from developers seeking to build within 750 yards of the new tram line, but it has already lost at least £3m after a controversial deal for a hotel at Haymarket fell through.
The Scottish Civic Trust (SCT) and Edinburgh heritage watchdog the Cockburn Association were joined by former law lord Baron McLuskey in raising concerns over the “tram clause”.
It is estimated Glasgow City Council has raised £11.5m in the last three years from attaching conditions to planning consent, and council staff have admitted they will have to “cope as best we can” when changes are phased in, a process that could begin as early as next year.
Terry Levinthal of the SCT, who also sits on a planning committee, said: “It really is time for the Scottish Government to update and clarify the purposes of a planning agreement.”
The Scottish Building Federation said: “This kind of infrastructure was meant to be directly related to developments, but it was stretched to the limit over the years.”
It is feared changes to the system already being planned will not go far enough.
The Scottish Government said the research was ongoing and was due to be completed later this year, but that its purpose was to “identify blockages to development”.
Separate statistics this week showed a large drop in the number of planning applications, of 12% from 53,389 in 2008 to 47,220 in 2009.
The Scottish Government said it was currently “not possible to indicate all appropriate circumstances for using planning agreements”.
However, suitability tests can be used, including checking that the extra work paid for by builders would not be done without the development.
The Scottish Government said: “The requirement in the planning agreement should be so directly related to the regulation of the proposed development that it should not be permitted without it.”
DONE DEALS: Examples of planning trade-offs:
Glasgow: Improved transport infrastructure, primarily the Fastlink network, was brought about by the redevelopment of the Southern General; new children’s play area in Willowford Road, Nitshill; multi-purpose games court in Ruchill Park.
Edinburgh: The council borrowed £23 million to fund the construction of the tram system and intends to repay this amount through developer contributions.
Perth and Kinross: £1.6m has been received for affordable housing in past five years, £8,000 for play area provision; £8,000 for sports provision; £3,000 for a footpath link and £400 for provision of trees.
Aberdeenshire: Last year it was revealed American tycoon Donald Trump was to receive free land worth an estimated £5m from Aberdeenshire Council in a move damned as a taxpayer-funded sweetener. The decision to gift the land to Trump was made by council officers.
East Lothian: Dirleton Primary School and North Berwick High were to get £74,000 worth of improvements as part of a deal for a golf course, lodges and houses at Archerfield.