Modernising the planning system

Prepared for the Auditor General for Scotland and the Accounts Commission
September 2011

Auditor General for Scotland
The Auditor General for Scotland is the Parliament’s watchdog for helping to ensure propriety and value for money in the spending of public funds. 
He is responsible for investigating whether public spending bodies achieve the best possible value for money and adhere to the highest standards of financial management. 
He is independent and not subject to the control of any member of the Scottish Government or the Parliament. 
The Auditor General is responsible for securing the audit of the Scottish Government and most other public sector bodies except local authorities and fire and police boards.

The following bodies fall within the remit of the Auditor General: 
•	directorates of the Scottish Government
•	government agencies, eg the Scottish Prison Service, Historic Scotland 
•	NHS bodies 
•	further education colleges 
•	Scottish Water 
•	NDPBs and others, eg Scottish Enterprise. 
The Accounts Commission
The Accounts Commission is a statutory, independent body which, through the audit process, requests local authorities in Scotland to achieve the highest standards of financial stewardship and the economic, efficient and effective use of their resources. The Commission has four main responsibilities:
•	securing the external audit, including the audit of Best Value and Community Planning
•	following up issues of concern identified through the audit, to ensure satisfactory resolutions
•	carrying out national performance studies to improve economy, efficiency and effectiveness in local government
•	issuing an annual direction to local authorities which sets out the range of performance information they are required to publish.

The Commission secures the audit of 32 councils and 45 joint boards and committees (including police and fire and rescue services).
Audit Scotland is a statutory body set up in April 2000 under the Public Finance and Accountability (Scotland) Act 2000. It provides services to the Auditor General for Scotland and the Accounts Commission. Together they ensure that the Scottish Government and public sector bodies in Scotland are held to account for the proper, efficient and effective use of public funds.

Summary
The planning system is central to achieving the Scottish Government’s goal of sustainable economic growth.

About the planning system
1. The planning system provides the framework for deciding how land is used, how communities take shape and how new developments look and work. It has to balance economic, environmental and community priorities and is central to achieving the Scottish Government’s goal of sustainable economic growth and to Scotland’s economic recovery.
2. There are two main parts to the planning system in Scotland:
 •	Development planning sets out long-term plans for an area’s development and provides the basis for making decisions about planning applications.
 •	Development management determines whether to grant individual applications for planning permission, either by deciding applications or through subsequent appeals, and makes sure development is carried out correctly and takes action where it is not.
3. The Planning etc. (Scotland) Act 2006 (the 2006 Act) started a modernisation programme to change the way the whole planning system works and the way that everyone involved in planning, including the private sector, engages with the system.1 This audit concentrates on the performance of the main public bodies that are involved in the planning system (Exhibit 1, overleaf):2 
•	Scottish Government. 
•	Six key agencies: Architecture and Design Scotland (A+DS), Historic Scotland, Scottish Environment Protection Agency (SEPA), Scottish Natural Heritage (SNH), Scottish Water, and Transport Scotland.3 
•	Four strategic development planning authorities (SDPAs): Aberdeen City and Shire, Glasgow and Clyde Valley, SESplan, and TAYplan.4 
•	Thirty-four planning authorities: 32 councils and two national park authorities (Cairngorms National Park Authority and Loch Lomond & The Trossachs National Park Authority).
4. In 2009/10, councils spent £105.5 million on planning services and received income of £30.4 million. In the same year, councils decided over 40,000 individual planning applications.  
5. There are four main types of applicant for planning permission: developers; agents working on behalf of applicants, for example architects; small businesses; and householders. Applications cover a broad range of developments, from new retail parks to changes to a single house.
About the performance audit
6. The audit aimed to assess whether recent reform and modernisation of the planning system is making it more economic, efficient and effective. We evaluated the overall progress made by the public sector in modernising the planning system and the impact that modernisation is having on councils’ performance in managing planning applications. The private sector also has a role to play in modernising the planning system but we did not look at this.
7. Our report is organised into four main parts: 
•	Part 1 sets the scene.
•	Part 2 assesses progress in modernising the planning system. 
•	Part 3 assesses councils’ performance.
•	Part 4 examines how the planning system is financed.
8. We analysed performance statistics and councils’ financial returns.5 We also conducted interviews with the Scottish Government, key agencies, national park authorities, strategic development planning authorities and representative bodies including COSLA, Federation of Small Businesses, Heads of Planning Scotland, Homes for Scotland, Planning Aid Scotland, the Royal Town Planning Institute and the Scottish Property Federation.
9. We also carried out interviews and reviewed key documents in five councils – Comhairle nan Eilean Siar, Dundee City Council, Falkirk Council, Renfrewshire Council, and Scottish Borders Council. We gathered users’ views using targeted surveys and focus groups with people who had made planning applications in the five council areas, and with developers and businesses nationally. We also captured the views of the general public using a public attitudes survey. Further details are in Appendix 3.
10. Two supplementary reports that provide further analysis of planning application data, and the findings of the service user survey are available on our website www.audit-scotland.gov.uk
Key messages
•		The Scottish Government, key agencies and planning authorities have made progress in modernising the planning system and are working better together. However, more progress is needed to realise the full potential of modernisation.
•		Despite falling numbers of applications and modernisation, few councils are performing well against timescales set for processing planning applications. However, time is only one indicator of performance and a more comprehensive performance measurement framework is needed. The Scottish Government and Heads of Planning Scotland are working together to develop a new framework for measuring and reporting performance.
•		The funding model for processing planning applications is becoming unsustainable. The gap between income and expenditure is widening, leading to greater dependence on already constrained council budgets.
Key recommendations
The Scottish Government should:
•		evaluate the modernisation programme and ePlanning to assess whether they are achieving their aims and objectives
•		evaluate whether the planning system is contributing to sustainable economic growth
•		set out a clear timetable for the introduction of new regulations and guidance for permitted development rights
•		consider replacing the four-month timescale for deciding major applications and work with planning authorities to agree a new way of assessing performance for these applications as part of a new performance measurement framework for development management
•		consider including a measure of performance of the planning system in Scotland’s national performance framework
•		clarify what activities planning fees cover, taking account of new activities that were introduced by modernisation and created additional costs for councils.
Councils and national park authorities should:
•		review their schemes of delegation to ensure the decision-making process is as efficient as possible
•		work with the Scottish Government to monitor use of ePlanning and quantify efficiency savings
•		ensure processes are in place to enable and support better and more creative engagement with community councils and the wider community
•		ensure they use a project planning approach for managing major applications and agree key milestone stages and dates with applicants and key stakeholders
•		continue to work together, and with the Scottish Government, to develop a new comprehensive performance measurement framework that clearly links planning activities with national outcomes
•	collect, monitor and report data on the cost of development planning and development management to help inform the setting of planning fees and to help make decisions on how resources can be used effectively. This should include information on staffing and time spent on development planning and development management, broken down by activity. It should also include other costs such as legal, committee and specialist support services provided by other parts of the council or national park authority.

1	Planning etc. (Scotland) Act 2006.
2	The audit does not examine the role of the private sector in the planning system.
3	There are six main national agencies involved in development planning and development management at the national, regional and local levels. These are commonly referred to as the ‘key agencies’ and we use this term in this report. These six agencies have also formed a Key Agencies Group. A number of other bodies including Forestry Commission Scotland, Crofters’ Commission, Highlands and Islands Enterprise, Scottish Enterprise, regional transport partnerships and NHS boards also contribute to the planning system. Their involvement is largely determined by geography or policy area.  
4	SESplan covers City of Edinburgh, East Lothian, part of Fife, Midlothian, Scottish Borders, and West Lothian Councils. TAYplan covers Angus, Dundee City, part of Fife and Perth & Kinross Councils.
5	Planning Performance Statistics, Scottish Government, 2004/05 – 2009/10 and Scottish Local Government Financial Statistics, Scottish Government, 2004/05 – 2009/10.

Part 1. Setting the scene

The way the planning system works has changed.
Key messages
•	Modernisation of the planning system has significantly changed the way it works at national, regional and local levels.
•	These changes took place during an economic downturn which reduced opportunities for new development and the number of applications for planning permission. 
The way the planning system works has changed
11. In 2003, the Scottish Executive committed to improving the planning system. 6 Its aim was to strengthen community involvement and reflect local views, enable quicker investment decisions and speed up the time taken to make decisions. 7  These aims have not changed since 2003 but there is now greater emphasis on supporting sustainable economic growth.
12. In 2005, the Scottish Executive said that the planning system was seen as over-bureaucratic, slow to respond to social and economic needs, unpredictable, complex, difficult to understand and intimidating. It appeared to lack transparency and caused frustration in central and local government as well as individual applicants and communities. 8
13. Modernisation sought to change this by introducing new processes to enable development and by encouraging better partnership working among public sector bodies, developers and communities. It aimed to make the system:
•	more efficient and effective
•	more encouraging and enabling of development
•	easier to understand
•	more inclusive of communities.
14. The changes introduced by the 2006 Act sought to create a system that encourages development and investment and contributes to achieving economic, social and environmental outcomes. The main changes to development planning and development management were implemented in 2009.  
Development planning shapes the areas we live in
15. A central aim of modernisation was to establish a plan-led system where national, strategic and local plans clearly set out development priorities and guide individual planning decisions. The National Planning Framework sets out national priorities for development planning and provides the context for regional and local developments. Four new strategic plans and 34 new local development plans will replace structure and local plans and these should be updated every five years. 9  These new plans are mandatory and set out the priorities for development at the regional and local area levels. 
16. Strategic development plans concentrate on the long-term development of the city regions and cover 19 council areas. Four new strategic development planning authorities (SDPAs) are responsible for preparing strategic development plans which consider cross-boundary land use and infrastructure issues, for example utilities and roads (Exhibit 2).  
17. Local development plans concentrate on the long-term development of local areas and all planning authorities, including the national parks, must prepare these. For those areas covered by strategic development plans, local development plans must reflect the priorities of these. For the national park authorities, their local development plans should reflect their wider park plans.
18. The changes to development planning were made in February 2009. A number of planning authorities, including Loch Lomond & The Trossachs National Park Authority, Aberdeen City Council and Aberdeenshire Council, were in the process of finalising local or structure plans when the changes were made. Transitional arrangements were put in place to enable them to be completed. 10  
Development management is the process for making decisions about planning applications
19. The 2006 Act introduced a wide range of changes to development management (previously development control). These included:
•	a new way of defining planning applications by their scale – the hierarchy of developments  (Exhibit 3)
•	new processes for handling major developments including requirements for developers to provide notice to planning authorities about new applications (pre-application notice), and for formal consultation with communities at an early stage (pre-application consultation)
•	planning authorities taking on responsibility to notify neighbours about planning applications
•	specific powers for planning authorities to delegate more decisions to planning officers 
•	a new appeals process, where elected members on a local review body deal with appeals on planning decisions made by officers.
20. Most changes to development management were implemented in August 2009 with further changes implemented by February 2011.  However, new conditions which set out whether planning permission for small developments is required or not (householder permitted development rights) remain outstanding.
Changes to the planning system have taken place during an economic recession 
21. The changes to the planning system took place during an economic downturn and the economic climate influences how much development takes place. In the last six years, the total number of applications for planning permission has fallen by 29 per cent and the decline was more prominent after 2007/08, most likely as a result of the economic downturn.

6	Prior to September 2007, the Scottish Administration was referred to as the Scottish Executive. It is now called the Scottish Government.
	When dealing with the earlier period this report refers to the Scottish Executive but in all other instances it refers to the Scottish Government.
7	A Partnership for a Better Scotland: Partnership Agreement, Scottish Executive, May 2003.
8	White Paper: Modernising the Planning System, Scottish Executive, June 2005.
9	Prior to the 2006 Act, every planning authority in Scotland was required to produce a structure plan and a local plan. Structure plans focused on the long-term strategic issues for an area, while local plans set out the detail of proposed development sites and the processes for deciding planning applications.
10  Scottish Planning Series: Planning Circular 1 2009: Development Planning, Scottish Government, 2009.

Part 2. Progress in modernising the planning system

The Scottish Government, key agencies and planning authorities have made progress in modernising the planning system.

Key messages
•		The Scottish Government, key agencies and planning authorities have made progress in modernising the planning system and are working better together. However, more progress is needed to realise the full potential of modernisation.
•		Without an evaluation framework, it is difficult for the Scottish Government to assess whether modernisation is achieving its aims.
•		Strategic and local development plans are essential in achieving a plan-led system but progress in establishing these has been slower than expected.
The Scottish Government has provided leadership in modernising the planning system
22. The Scottish Government has a clear vision for how the planning system should work; the key agencies and planning authorities are aware of its priorities and how it expects these to be achieved. It has led the modernisation agenda at a strategic level and ensured support among stakeholders by engaging with them and being responsive to their feedback. For example, it has recently consulted on legislation and guidance that have been difficult to implement.  
23. Delivering Planning Reform helped to promote the Scottish Government’s vision for planning.11 This statement, prepared in partnership with key agencies, planning authorities and others, established the commitment to change the culture of planning.12 In implementing changes to the planning system, the Scottish Government has funded training and supported planning authorities by establishing forums for development planning and development management and developing a range of case studies to promote best practice. This has helped promote modernisation and enabled planning authorities and the Scottish Government to discuss practical changes and their experiences. It also regularly meets Heads of Planning Scotland and the key agencies group.
24. Despite leading modernisation, the Scottish Government has not established a framework to evaluate whether modernisation is achieving its aims and contributing to sustainable economic growth. The Scottish Government undertook a review of the changes to development management in 2010.13 However, there is no framework in place for evaluating how well all parts of the planning system are working together, from the national planning framework and development planning to development management.
25. One of the aims of modernisation was to make the planning system more efficient. The main focus of this was on speeding up the time taken for development rather than on financial savings. The 2006 Act provided some opportunities for financial savings, for example by removing the requirement for all planning authorities to have two levels of development plan. However, the 2006 Act also introduced additional costs such as making councils carry out neighbour notification of planning applications. Given the increasing constraints on public sector budgets, there is now a need for the public bodies involved in the planning system to focus on achieving the financial savings offered by modernisation.
Key agencies and planning authorities are working together better but further progress is needed
26. Each key agency represents a different policy area, eg environment, trunk roads and road safety, and historic buildings. They provide specialist input and advice on the development of strategic and local development plans and on individual planning applications (Exhibit 4).
Key agencies’ involvement in the planning process has changed
27. Under modernisation, key agencies are expected to provide greater input at an earlier stage in both development planning and development management processes. This is to ensure any concerns about developments are known and possible adjustments made. They are expected to contribute to each stage in the development planning process, including identifying development issues and helping to prepare the proposed plan and action plans.
28. Key agencies may be consulted about planning applications before the application is made (pre-application discussion) and, where appropriate, may be involved in these applications throughout the process. When key agencies are formally consulted on a planning application, they are expected to comment on proposed developments and raise any concerns about its potential impact. They may also request that developers carry out assessments relevant to the development, for example a transport impact report, flood risk assessment or environmental impact assessment. 
29. The number of consultations on specific planning applications has risen in Scottish Water but fallen in A+DS, Historic Scotland, SEPA, SNH and Transport Scotland. For example, between 2008/09 and 2010/11 the number of consultations to SNH decreased by 29 per cent. This is in line with the general fall in the number of planning applications being made in the same period.
30. Each key agency has either reviewed or restructured its business processes for working with developers and planning authorities and for responding to consultations. While these changes are not wholly attributable to modernisation, it was a key motivator. Changes include introducing electronic case management systems to monitor progress on applications, producing revised guidance for staff and putting new performance measures and targets in place (Case study 1).14 In Historic Scotland, SEPA, Transport Scotland and A+DS, the time taken to respond to consultations has improved.15 For example, in 2010/11, Historic Scotland responded to 98 per cent of consultations within its target timescale, an improvement of seven per cent from 2008/09. 
Case study 1 
SEPA’s restructuring of its planning service

In 2008, one of SEPA’s priorities was strengthening its planning service, including restructuring and changing the way the organisation engaged in development planning and development management. The main drivers for change included clear direction from the new chairman and the chief executive, and the modernisation of the planning system.  

Changing the structure
Until 2008, SEPA’s planning service was delivered through a regional structure, which led to inconsistencies across the organisation in interpretation of guidance, and the style and content of responses to planning consultations. A move to a national structure aimed to address these issues and a new planning service manager and planning support manager were made responsible for leading the service and developing consistent procedures and processes for the whole organisation.

Delivering the service
SEPA reviewed its approach to consultations to: 

•	ensure greater clarity and consistency about which issues it would look at
•	focus on where it could add most value to proposed developments.
There were a number of actions to put this into practice including:

•	introducing standing advice on low-risk and small-scale developments, with bespoke advice reserved for development plans and high-risk and larger developments
•	being clear about roles and responsibilities with other stakeholders, for example Scottish Natural Heritage
•	getting involved earlier in development planning
•	introducing an electronic planning casework system to allow better management of caseloads
•	introducing an internal service level agreement to improve consistency
in the speed and quality of internal consultation responses to the planning service.
The changes have contributed to:

•	an improvement in responding to consultations within its target timescales from 74 per cent in 2008/09 to 96 per cent in 2010/11
•	an increase in involvement in development planning consultations from 142 in 2008/09 to 444 in 2010/11.

Source: Audit Scotland

31. After an application has been made and assessments reviewed, key agencies have the opportunity to raise an objection. The number of objections made has fallen, which is largely attributed to improved pre-application consultation. It may also reflect the commitment by key agencies to reduce duplication and provide greater clarity on what they should be consulted on.16 For example, between 2009/10 and 2010/11 the number of objections made by SEPA fell by 58 per cent. 
Key agencies are working better together
32. Before modernisation the key agencies did not regularly work together. In 2008, this changed when a key agencies group was set up. This provided a forum for the key agencies to identify new approaches for working together, and with planning authorities, and to identify areas and actions for improvement. Since 2008, the group has prepared an annual progress report and service improvement plan, which complements their individual agency service improvement plans. Its shared action plan for 2011 includes commitments to produce guidance for pre-application engagement with developers and planning authorities.17 The group also aims to work with planning authorities to provide better information and training about the key agencies’ roles and responsibilities.
33. The key agencies group has helped to improve joint working among key agencies, and there are good examples of this. For example, Transport Scotland and Scottish Water have worked together to collect data from planning authorities and will use this to inform future investment plans. SEPA and Scottish Water are also working together to develop map-based information to inform new development proposals.18  
Planning authorities and key agencies have mixed experiences and different expectations of working with each other
34. In 2010, the key agencies and planning authorities committed to work together to remove duplication of work and provide clarity about key agency involvement in both development planning and management.19 However, there may be tension between key agencies’ policy priorities and local development priorities. For example, the proposed site for a new development may increase traffic flow in an area or be situated in an area of environmental value. 
35. While the culture of planning is changing with improved working relationships among the public sector bodies involved, planning authorities’ and key agencies’ experiences of working with each other varies. Planning authorities report inconsistency in the advice given by key agencies. For example, they report inconsistent advice being given by different officers from the same key agency, and key agencies taking different approaches in the way they respond to consultations on development planning and development management. Key agencies also report variation in their relationships with planning authorities, with authorities differing in when and how much they engage.
36. Key agencies are seeking to be proportionate and are generally less involved than previously in providing detailed assessments of applications. For example, Historic Scotland has removed the need for planning authorities to consult them on certain types of listed building consent applications (Case study 2). 
Case study 2
Historic Scotland’s removal of duty to notify arrangements for listed buildings

To speed up decision-making on listed building consent applications, Historic Scotland has introduced a scheme that gives planning authorities the option to make their own decisions on applications relating to certain works to B-listed buildings without first consulting Historic Scotland. This reduces the time taken on applications as it removes the 28-day notification period to Historic Scotland from the end of the process. 

Piloted in 2008 with Glasgow City Council, City of Edinburgh Council, and Perth & Kinross Council, the scheme allowed these authorities to use their own expertise to make decisions on certain types of applications for B-listed buildings and Historic Scotland monitored the activity.
 
The scheme became available nationally in 2010. To date,12 planning authorities have joined the scheme.
 
Source: Audit Scotland

37. The number of specialist staff in planning authorities is small. Planning authorities without specialist staff, such as ecologists or flood experts, are concerned about the reduction in the levels of specialist support provided by key agencies, as they have to get this support from other sources, for example by using consultants. There are examples, however, of planning authorities working with key agencies to ensure specialist input is provided where necessary (Case study 3). There are also some examples of planning authorities sharing resources, although these are limited. For example, East Ayrshire, North Ayrshire, and South Ayrshire Councils have developed a joint planning unit to carry out research and provide specialist advice for the three councils. 
Case study 3
Joint working between SEPA and Loch Lomond & The Trossachs National Park Authority

Since 2011, a SEPA planner has been based in Loch Lomond & The Trossachs National Park Authority for one day a week. The SEPA planner works with planning teams and provide support and advice on development issues as they arise, rather than through traditional means of correspondence and meetings. 

Loch Lomond & The Trossachs National Park Authority is currently developing supplementary guidance for its local development plan on flood risk and renewable energy and the SEPA planner is heavily involved in this work. Loch Lomond & The Trossachs National Park Authority feels the arrangement is beneficial in terms of providing training opportunities for its staff on particular topics that SEPA has expertise in.

Source: Audit Scotland

Progress in establishing strategic and local development plans has been slower than expected
The introduction of four new strategic planning authorities has made development planning more complex
38. A key aim of modernisation was to have a plan-led system, where development plans set the context for all planning activities and decisions. The purpose of the SDPAs is clear – to produce strategic development plans for the four city regions. However, the changes in roles and responsibilities in the strategic planning process have made development planning more complex and risks placing an increased burden on already stretched resources.
39. Each SDPA operates with a small core staff and relies on input from staff from each constituent council. Glasgow and Clyde Valley, and TAYplan have formal arrangements for arranging staff support. Aberdeen City and Shire, and SESplan do not have formal arrangements and staff support is negotiated on an informal basis. This does not provide certainty or enable effective business planning for either of the SDPAs or their constituent councils. 
40. The strategic development planning process started at different times for each of the SDPAs. For example, Aberdeen City and Shire SDPA started later than the others did, as its structure plan was being finalised when the changes to development planning were being implemented.20 All four plans will be in place in the next two years:
•	Glasgow and Clyde Valley SDPA – October 2011
•	TAYplan – November 2011
•	SESplan – July 2012 
•	Aberdeen City and Shire – June 2013. 
41. Joint committees, made up of elected members from each constituent council, are responsible for making decisions about priorities for development and new plans. In each SDPA, reports and plans are presented to the joint committee as well as relevant committees within each constituent council. This adds to the workload of committees but also affects the time taken to progress SDPA reports, as all committees must ratify these and meeting cycles can be lengthy. For example, in Fife Council seven area committees and a Fife-wide planning committee consider and ratify outputs from two SDPAs (TAYplan and SESplan) and this adds time to the process.
There are already delays in preparing strategic and local development plans
42. The Scottish Government expects the strategic and local development plan process to take almost three years to complete. Planning authorities manage the process and set their own milestone dates and publish a timetable for producing key outputs each year. 
43. The Scottish Government provided indicative timescales for each stage in the development planning process except the main issues report stage. The main issues report provides the foundation for the proposed development plan. It involves a number of activities including consulting the public and carrying out assessments covering a range of issues including housing needs and demand (assessing the long-term need for all types of housing in an area and the likely demand), transport and the environment. With no indication of how long the main issues stage is expected to take, there is little certainty about when new plans will be in place and how any delays at this stage, and their consequences, will be dealt with. 
44. There have been delays in producing main issues reports and proposed strategic development plans. TAYplan and Glasgow and Clyde Valley report that they will submit their proposed plan in line with original timescales but Aberdeen City and Shire reports that it will do this six months later than originally anticipated and SESplan three months later than anticipated (Exhibit 5).
45. Delays are partly attributed to difficulties in preparing the main issues report. Housing needs and demand assessments have taken more time than expected. In some cases, bringing planning and housing professionals from the constituent councils together has reportedly been difficult due to a previous lack of cross-departmental working and the complexity of the task. Other reported factors causing delays include difficulties identifying and agreeing cross-boundary priorities and resourcing issues, including lack of availability and high staff turnover.
46. All local development plans will be published by 2014 but there is a risk this will change. Almost two-thirds of planning authorities have already delayed the dates for submitting the proposed plan to Scottish ministers. There is a risk of further delays for those authorities in SDPA areas. For example, Scottish Borders Council expects to submit its local development plan two years later than planned due to delays with SESplan producing its proposed plan.
Delays undermine the new approach to development planning
47. Delays in submitting development plans for examination affect the Scottish Government, as it is responsible for examining new plans. Planning authorities and the Scottish Government need to work together to ensure that the submission process is carefully managed to avoid a strain on resources and a backlog of plans at the examination stage. 
48. Delays in the strategic development plan and local development plan processes will mean that, in most planning authorities, planning decisions are being informed by out-of-date structure and local plans. This presents a risk for both planning authorities and the Scottish Government and makes it more difficult for planning authorities and key agencies to make informed decisions about development proposals. To achieve a plan-led system, there must be better progress in producing strategic and local development plans.
The full potential of modernisation will not be realised until all changes have been rolled out
49. The 2006 Act introduced a large number of changes to both development management and development planning. The Scottish Government has implemented almost all of these changes. However, there are some areas where the changes have not yet been fully realised or been implemented. For modernisation to reach its full potential, it is important these areas are addressed.
Decision-making should be delegated but the extent of this varies
50. The Scottish Government expected planning authorities to make more effective use of delegated decision-making powers, to ensure more proportionate use of planning officers’ and elected members’ time. By delegating more decisions to planning officers, elected members can focus on applications that are more complex and challenging. Where there is limited delegation, there is a risk that planning officers’ and elected members’ time is not being used appropriately or proportionately, and that it may take longer than necessary to make decisions on planning applications. It also means that most appeals will continue to be made to Scottish ministers which subsequently weakens the local review process.
51. A review of planning schemes of delegation indicates that the scale of delegation varies among planning authorities. In some planning authorities, the majority of decisions are delegated to planning officers while in others, elected members are more involved. The areas in which planning authorities vary the most is in how they deal with objections to applications and the extent to which members can refer applications to committee. For example, 14 authorities allow any member to refer an application to the planning committee for decision; three authorities require a minimum number of members for an application to be referred; and 16 authorities do not allow members to refer applications.
Local review bodies are largely untested
52. In 2009, elected members gained new responsibilities for reviewing planning decisions made by officers through the local appeals process.  Local Review Bodies (LRBs) have been set up in each planning authority and involve a small number of elected members – usually a subset of the main planning committee. Where a planning applicant wishes to appeal a planning decision that has been made by a planning officer, elected members of the LRB independently review the decision. They decide whether to uphold or overturn the original planning decision. They do this in a public meeting and without a recommendation by planning officers.  All other types of appeals continue to be heard by Scottish ministers.
53. LRBs are intended to reduce the number of appeals to Scottish ministers, to increase local accountability and to ensure resources are used effectively and proportionately. However, their introduction has increased demands on planning authorities. Although planning staff are not involved in the case review, council staff are responsible for providing support to LRBs throughout the appeal process.  Elected members’ workload has also increased with site visits and attending LRB meetings. There is also an increasing requirement for them to know more about the more technical aspects of planning. 
54. In 2009/10, the first year of the new process, there were 101 local appeals in two-thirds of LRBs.21 In the same year, there were 777 appeals to Scottish ministers, a reduction of 26 per cent from 2008/09.22 This may reflect a shift in appeals towards LRBs as well as the decline in the number of planning applications.
It is taking a long time to implement the final important legislative changes
55. The main changes to development planning and development management have been in place since February and August 2009, respectively. While there has been an incremental approach in making changes to the system, the key legislative changes to introduce general and householder permitted development rights have taken longer to implement than expected. 
56. General and householder permitted development rights set out the circumstances in which planning permission is not needed, for example a minor change to a house. The Scottish Government has predicted that the introduction of householder permitted development rights will reduce the total number of planning applications by eight per cent, meaning planning authorities should be able to re-allocate resources and deal with applications more quickly. However, there is a risk that planning authorities will continue to have to deal with requests for advice and assurances from the public that planning permission is not required.
57. The Scottish Government has carried out two consultations on permitted development rights for householders and one consultation on general permitted development rights. There have been difficulties in determining what should and should not be included and how permitted development will work in practice. The Scottish Government has worked closely with Heads of Planning Scotland in preparing the regulations. However, it is likely that full permitted development rights will not be in place before early 2012, three years later than expected.
A national electronic system for planning has been implemented 
58. In 2009, ePlanning, a national web-based system to provide planning information, submit and receive planning applications and provide online access to new development plans and consultation was introduced (Exhibit 6). It was not part of the modernisation programme but was implemented at the same time. It is expected to improve the planning system by reducing the time taken to administer and process applications and provide the general public with greater access to information about developments in their area.  
Use of ePlanning has surpassed Scottish Government targets
59. In 2010/11, 27 per cent of planning applications were submitted online, which is significantly higher than the Scottish Government’s target of six per cent.23, 24 However, use varies across planning authorities, for example eight per cent of applications to Dumfries & Galloway Council were made online, compared with 45 per cent of applications to Orkney Islands Council and 48 per cent to Loch Lomond & The Trossachs National Park.
60. Before the national ePlanning project, City of Edinburgh Council and Scottish Borders Council had their own separate systems in place. However, Scottish Borders Council now uses the national system and City of Edinburgh Council has plans to do so.
61. ePlanning presented an opportunity for planning authorities to review or change their business processes to identify new or improved ways of working. Some planning authorities have done this, for example Loch Lomond & The Trossachs National Park Authority carried out exercises to identify improvements and streamline activities (Case study 4).
Case study 4 
Preparing for ePlanning in Loch Lomond & The Trossachs National Park Authority

In 2007, Loch Lomond & The Trossachs National Park Authority started preparing for the introduction of ePlanning and a dedicated project manager was appointed to lead the project.

The project involved:

•	appointing consultants to assess Loch Lomond & The Trossachs National Park Authority’s existing business processes, to identify areas where efficiency savings could be made and areas for improvement
•	providing training to elected members and staff 
•	implementing ePlanning by setting up a small team of users, for example planning officers, to test the system and develop user guides, such as a planning application procedure manual
•	ensuring that ePlanning fitted with the changes arising from modernisation and modifying the ePlanning system to address the changes. For example, to enable Loch Lomond & The Trossachs National Park Authority to carry out neighbour notification electronically.
Loch Lomond & The Trossachs National Park Authority considers that its ePlanning project has improved the way it deals with planning applications and has made planning information more accessible to the public. 
 
Source: Audit Scotland

Users are willing to use ePlanning
62. Our survey found that frequent users of the planning system – agents and developers – were most likely to have made an application online. Thirty-seven per cent of agents submitted their most recent application online along with 27 per cent of developers. Businesses and householders were much less likely to have used ePlanning, with only 17 per cent and five per cent respectively submitting their most recent application online. The main reason for not using ePlanning was that they felt the system did not meet their needs.
63. However, awareness of ePlanning among all users is high and a majority of all users said they would consider making their next application online. Applicants who have made an online application were positive about the experience with most finding it easy to use and understand.
ePlanning is expected to deliver efficiency savings
64. The Scottish Government originally estimated efficiency savings for the public sector of £16.7 million over ten years from ePlanning. This assumes that the number of applications submitted online rose to 63 per cent. These savings were made up of cash (£5.3 million, 32 per cent) and staff (£11.4 million, 68 per cent) savings.25 Staff savings were expected to be time-releasing, as less time would be spent on administration and correspondence with applicants. 
65. During the early stages of ePlanning, the Scottish Government developed a model to track the benefits of the system. This is based on a savings figure for each application made online and does not include the wider aspects of ePlanning such as online development plans. The model has recently been updated and the Scottish Government plans to share this with planning authorities to enable them to calculate local savings. Between 2009/10 and 2010/11, the Scottish Government calculates that £2.2 million has been saved through ePlanning.26 
66. Feedback from planning authorities about ePlanning is generally positive. There are some concerns about its functionality, for example being unable to amend applications electronically causing the applicant to re-submit. There are also mixed views about whether it is making the process quicker. A full programme evaluation, to measure the impact of ePlanning on all service users and to assess efficiency savings across the whole system, has not been carried out and there are no plans to do so. 
More effort is needed to ensure communities’ views are heard

67. Planning authorities are expected to seek communities’ views in shaping strategic and local development plans and must ensure the public are consulted about major new developments before an application is made (pre-application consultation).27 This ensures communities have their say about developments that may affect their neighbourhood.
68. Community councils are statutory consultees in the planning process. However, the level of engagement among planning authorities and community councils varies. In some planning authority areas there are many community councils while in others there are very few, which means there is a risk that community views are not being heard. Where there are no or very few community councils, planning authorities should seek communities’ views in other ways. For example, by consulting with other community groups or carrying out surveys. Dundee City Council is using its local community planning network to reach community groups to get their input to the local development plan. TAYplan has used public events and work with school groups to help inform the strategic development plan (Case study 5).
Case study 5
TAYplan’s engagement with the public in developing their strategic development plan

As part of the development of their main issues report, TAYplan engaged with a wide range of people from its community. Its aim is to ensure that those with an interest in the area, for example members of the public, businesses, and organisations including community groups, have an opportunity to contribute their views before decisions are taken. 

A variety of methods were used including:

•	workshops with pupils in local schools
•	adverts in local newspapers
•	news releases to publicise events and progress in local newspapers, and on local radio and websites
•	posters and leaflets in public venues such as libraries and community  notice boards
•	information events and drop-in sessions at a range of times with TAYplan staff on hand to answer questions
•	briefings for community councils and elected members.
TAYplan received positive feedback from the public and other stakeholders about the methods used and have used a similar approach for the proposed plan.

Source: Audit Scotland

69. Some planning authorities are concerned that community councils are not wholly representative of communities or do not have the capacity to contribute fully to the planning process. With increasing demands being placed on community councils by the planning system, planning authorities must consider how best to support and engage them and the wider community.  
70. There are opportunities for communities to become involved before a planning application is made and during the application process. For major developments, developers are expected to work with the community to find out what people think about a proposed development. Planning authorities are uncertain about the level of involvement they should have at this early stage and approaches taken to support this process vary. It ranges from offering no support to applicants beyond providing a list of community councils, to actively providing advice and working with applicants to discuss methods on how they can engage with the community.  
Recommendations
The Scottish Government should:
•		evaluate the modernisation programme and ePlanning to assess whether they are achieving their aims and objectives
•		evaluate whether the planning system is contributing to sustainable economic growth
•		work with strategic development planning authorities and planning authorities to plan and manage the submission of strategic and local development plans, to minimise further delays and avoid a bottleneck of plans at examination stage 
•		set out a clear timetable for the introduction of new regulations and guidance for permitted development rights
•		work with planning authorities to monitor use of ePlanning and quantify efficiency savings.
Key agencies should:
•		ensure the approach being taken and advice given by officers is consistent
•		collect, monitor and report on their input to development planning and development management, so that the full extent of their involvement in the planning system is known
•		work with planning authorities to develop a shared understanding of roles, responsibilities and expectations.
Strategic development planning authorities should: 
•		monitor progress against key milestones and ensure any delays are minimised
•		agree resource requirements with constituent councils and put in place formal arrangements or protocols to support this
•		work with key agencies to develop a shared understanding of roles, responsibilities and expectations
•		ensure processes are in place to enable and support better and more creative engagement with community councils and the wider community.
Councils and national park authorities should:
•		monitor progress against local development plan key milestones and ensure any delays are carefully managed
•		review their schemes of delegation to ensure the decision-making process is as efficient as possible
•		promote the benefits of ePlanning to applicants and the general public
•		work with key agencies to develop a shared understanding of roles, responsibilities and expectations
•		work with the Scottish Government to monitor use of ePlanning and quantify efficiency savings
•		ensure processes are in place to enable and support better and more creative engagement with community councils and the wider community.

11	Delivering Planning Reform, Scottish Government, 2008.
12	The partnership included CBI Scotland, COSLA, Heads of Planning Scotland, Homes for Scotland, the Royal Town Planning Institute, the Scottish Property Federation and SOLACE.
13	Development Management System: Report of One Year Review, Scottish Government, September 2010.
14	Delivering Planning Reform, Scottish Government, 2008.
15	Transport Scotland’s performance against time targets is based on local applications. In the past two years, Scottish Water’s performance in meeting time targets has declined by one per cent. SNH’s performance in meeting time targets has declined by one per cent over the past three years.
16	Delivering Planning Reform, Scottish Government, 2008.
17	Delivering Planning Reform – Key Agency Progress Report, Scottish Government, 2011.
18	Ibid.
19	Delivering Planning Reform, Scottish Government, 2008.
20	Aberdeen City and Shire followed the transitional arrangements for its joint structure plan which was published in 2010. 
21	A third of LRBs did not receive any appeals in 2009/10. Planning Performance Statistics, Scottish Government, 2010.
22	Review of the Year 2009-10, Directorate of Planning and Environmental Appeals, Scottish Government, October 2010.
23	Scottish Government, August 2011.
24	ePlanning Efficient Government Programme Business Case (v6.0), Scottish Government, 2008.
25	ePlanning Efficient Government Programme Business Case (v6.0), Scottish Government, 2008.
26	Scottish Government, August 2011.
27	Scottish Planning Policy, Scottish Government, 2010.

Part 3. Assessing performance

Time is currently the only way to measure performance and a more comprehensive framework is needed.

Key messages
•		Despite modernisation and falling numbers of applications, few councils are performing well against timescales set for processing planning applications. However, time is only one indicator of performance and a more comprehensive performance measurement framework is needed.
•		While expectations for the time taken to process applications are not being met, users are generally satisfied with the planning system.
The number of planning applications has fallen in the last six years
71. In 2009/10, planning authorities decided 40,495 applications for planning permission.28 Councils accounted for 99 per cent of these; Loch Lomond & The Trossachs National Park Authority decided
325 applications and the Cairngorms National Park Authority decided 51. Unlike councils and Loch Lomond & The Trossachs National Park Authority, the Cairngorms National Park Authority does not receive planning applications directly, but can call in applications which have been made to councils within the park boundaries.
72. Between 2004/05 and 2009/10, the number of planning applications decided by councils fell by 29 per cent (Exhibit 7). The decline was more prominent after 2007/08, most likely as a result of the economic downturn. The Scottish Government changed the definitions for planning applications in August 2009. The threshold for classifying an application as ‘major’ was raised meaning that fewer applications are classified as major. It is therefore not possible to directly compare application data pre-August 2009 with post-August 2009 data.29
73. Twenty-nine councils experienced a decrease in applications between 2004/05 and 2009/10, ranging from a 15 per cent reduction in Perth & Kinross to 52 per cent in Argyll & Bute. Comhairle nan Eilean Siar, Inverclyde, and Orkney Councils experienced an increase in applications of eight per cent, 20 per cent and 16 per cent respectively.
The number and type of planning applications varies across councils
74. The number of planning applications decided by councils in 2009/10 ranged from 276 in Clackmannanshire Council to 3,589 in Highland Council (Exhibit 8).  Five councils – Aberdeenshire, City of Edinburgh, Fife, Glasgow City and Highland – decided almost 40 per cent of all applications. This is unsurprising as these councils account for 37 per cent of Scotland’s population. Relative to their population, rural and island councils decide the most applications (Exhibit 9). 
Most applications are for local developments
75. In 2009/10, 98 per cent of applications decided were for local developments, of which almost half (45 per cent) were from householders. Only two per cent were for major developments. The proportion of applications for householder, local and major developments varies across councils. In some councils (for example, East Dunbartonshire Council and East Renfrewshire Council) householder applications accounted for the majority of applications, while in others they accounted for the least (for example, Orkney Islands Council and Comhairle nan Eilean Siar) (Exhibit 10). Factors that influence the number of householder applications include the proportion of owner-occupied properties and the type and value of homes in an area.
Despite the small number of applications, major developments take up a large proportion of planning officers’ time
76. It can be hard to predict the number of major applications that a planning authority will receive. The recent economic climate has made it difficult for developers and there are fewer opportunities for new development. Major applications represent a small proportion of total applications received but they vary in size, type and complexity and can account for a large proportion of planning officers’ workload over a long period. Pre-application work with developers may allow better business planning for handling major applications, as applications are made at least 12 weeks after a pre-application notice and the formal pre-application consultation period with communities has taken place. 
Decisions on planning applications are taking longer than expected
77. If the decision to grant or refuse planning permission has not been taken within either two months (for a local application), or four months (for a local application needing an environmental impact assessment or a major application), then the applicant can submit an appeal. 
78. Before modernisation, there were targets for the percentage of applications decided within these timescales. The Scottish Government no longer uses these targets.30 However, it continues to monitor the numbers of applications decided within two and four months as an indicator of performance. Despite the removal of Scottish Government targets, the time taken for making planning decisions remains important. Five councils (Aberdeen City, Aberdeenshire, Argyll & Bute, Falkirk and Highland) are using the timescale as an indicator in their Single Outcome Agreements to measure and report performance against the first national outcome.31 
79. Over the past six years, performance in deciding local applications within two months has remained fairly constant. In 2009/10, 65 per cent of local applications were decided in two months compared with 63 per cent in 2004/05. In comparison, performance in deciding major applications in four months has declined from 52 per cent in 2004/05 to 38 per cent in 2009/10.
80. In the second half of 2009, the period immediately after modernisation, performance in deciding major applications declined, with only 30 per cent of major applications decided in four months.32 This compares with 45 per cent in the first half of 2009. However, this may be due to changes in the definitions for applications. The threshold for major applications was raised meaning that applications assessed against the four-month timescale were likely to be larger, more complex applications than previously.
Performance varies across councils
81. Some councils perform better than others in meeting the two and four month timescales. In 2009/10, performance in deciding local applications in two months ranged from 37 per cent in Moray to 96 per cent in Clackmannanshire.  Performance varied even more widely in terms of deciding major applications in four months, from zero per cent in Angus (seven major applications in 2009/10), Moray (16 applications), and Orkney Islands (one application) to 80 per cent in East Renfrewshire (ten applications) and 100 per cent in Clackmannanshire (seven applications).
The full impact of modernisation on the time taken to make planning decisions is not yet known
82. The impact of recent changes on the time taken to decide planning applications remains to be seen. Some councils reviewed their structures and business processes. For example, Scottish Borders Council reviewed how its committees were involved in planning applications and reduced it from five committees to one. Planning officers and managers have been involved in many activities to prepare for changes, reducing the time available to deal with applications. 
83. There have been few major applications in the last two years. This means it is difficult to assess whether pre-application engagement and other new processes are reducing the time taken to make decisions. Processing applications for major developments within four months remains challenging due to the complex nature of applications and the information and assessments that are needed. It is unlikely that recent changes will result in a significant improvement against the four-month timescale. 
84. The changes to general and householder permitted development rights are not yet available, therefore councils are continuing to process higher numbers of householder and other local applications than expected. Until additional permitted development rights are introduced, it will not be possible to assess the full impact of modernisation on the time taken to decide planning applications.
85. Planning authorities and other stakeholders report that there are a number of other factors that may continue to add time to the process for assessing applications, including:
•	poor-quality applications and missing information
•	incomplete or invalid applications being submitted with additional information provided by applicants on a piecemeal basis
•	non-payment of advertising fees by the applicant, which prevents a decision being finalised 
•	high number of objections to be investigated and reported
•	planning committee meeting cycles
•	consultation with key agencies and other council departments taking longer than expected
•	additional assessments, for example environmental or transport assessments
•	negotiations about legal agreements between the council and developers, which can take many months.
Users are generally satisfied with the planning system but not with the time taken to process applications or respond to enquiries
86. Overall, users (householders, agents, businesses, and developers) are satisfied with the planning application process (Exhibit 11).33 Twenty-eight per cent say they are very satisfied and 49 per cent are fairly satisfied.
87. Despite high levels of satisfaction across each group, a third of users felt they had not been kept well informed throughout the planning process and that enquiries were not dealt with in a reasonable timescale. In particular, householders, who are less familiar with the planning process than other users, were frustrated at being unable to speak regularly with a planning officer and have each step of the process explained. 
88. Most householders (71 per cent) stated that they had their application dealt with in the expected timescales set out by the council. Few developers stated that they had their application dealt with in the expected timescale but understood the reasons for delays. Only 54 per cent of businesses and developers and 64 per cent of agents were satisfied with the length of time taken to decide their planning application. 
The number of staff in planning departments has reduced
89. Councils have reduced staff numbers in recent years in response to budget pressures. Between
July 2008 and July 2010, 177 planning staff left (seven per cent), 75 per cent of whom were professional planners.34 In July 2010, there were 2,129 people in post in planning departments and 91 vacant or frozen posts. The level of staff reduction differs across councils, for example two per cent of planning department staff left West Lothian Council and 29 per cent of planning staff left Dumfries & Galloway Council. We are not aware of the full extent of any further staff reductions made after July 2010. However, Scotland’s public finances: addressing the challenges report highlighted that reducing workforce costs is likely to be a significant source of savings for councils in coming years.35 In August 2010, councils implemented a two-year pay freeze covering 2011/12 and 2012/13 with many councils also operating voluntary redundancy schemes to reduce staff numbers.
90. Councils and other stakeholders are concerned that the decreasing numbers of planners may have a negative effect on the planning system. It also means there are fewer officers dealing with planning applications, making it more challenging to make planning decisions within the expected timescales.
A more comprehensive performance measurement framework is needed
91. Although time taken to make a decision on an application has implications for the appeals process and is important to users, it offers a very narrow assessment of performance. In particular, it does not consider the complexities of proposed developments and the decision-making process. For example, development that is considered contentious may involve a lot of work in dealing with community concerns and objections, there may be specific assessments to be carried out, or the development may be complex in terms of size and scale. 
92. Many aspects of development management are not currently monitored, assessed or reported, for example pre-application activities, community engagement and the local appeals process. Performance should be assessed across a broader range of measures that gives a more comprehensive view of how the planning system is performing. A mix of quantitative and qualitative measures could include (Exhibit 12):
•	Speed of processing applications – how long does it take to process different types of applications and how does this compare to others?
•	Spend per application – what does it cost to process the different types of applications and how does this compare to others?
•	User satisfaction – to what extent are users satisfied with their experience?
•	Extent of, and quality of community engagement – to what extent were communities involved in contributing to applications affecting their local area and what effect did this have on the final outcome?
The Accounts Commission will consider this when reviewing the Statutory Performance Indicators later in 2011.
93. Currently, planning authorities monitor performance in a variety of ways, including performance against time taken and service improvement plans. These plans have been mandatory since 2009 and set out actions to be undertaken, target timescales and whether they have been achieved. There are also examples of quality assurance and peer review activities (Case study 6). Using potential performance measures such as those described previously would increase the scope for benchmarking performance with other authorities.
Case study 6
Peer review in Scottish Borders Council 

Scottish Borders Council’s planning service uses a peer group to review current planning applications. The group was set up to champion design and quality of developments, and ensure that staff resources are focused on major and complex developments.

The group is made up of senior managers within Planning & Regulatory Services and colleagues from other departments contribute occasionally.  The group reviews the weekly list of applications received by the council and highlights any key issues that may influence decisions on an application so that relevant officers and applicants are aware of these as early as possible. The group also carries out case reviews with planning officers and provides advice to planning officers. It is intended that the group will extend its remit and review developments on the ground, to identify best practice in areas including rural conversions, housing in the countryside,
and house design.

The council reports many benefits of the group, including the support for staff, improved design and quality of applications and clarity of policy interpretation.

Source: Audit Scotland

A project management approach to major applications offers a way of assessing and improving performance 
94. Processing a major application in four months can be difficult due to their often complex nature. Certainty about the time needed to decide a planning application is important. Therefore using a project management approach to manage the application process provides certainty and clarity to the council, key agencies, developers and the wider community about what work should be carried out and when decisions will be made. The parties can agree a suitable timescale, which may be longer than four months, and the application is processed to this timescale. Using a project management approach may also provide an alternative means of assessing performance in handling major applications.
95. A shared project plan or processing agreement, detailing the key stages in the application process, key milestones and responsibilities can be developed at the pre-application stage and provides a plan for the assessment of a planning application. City of Edinburgh Council uses processing agreements to manage the handling of major applications but there is little evidence of them being used elsewhere (Case study 7).
Case study 7 
City of Edinburgh Council’s use of processing agreements

Developed at the pre-application stage, a processing agreement sets out the key stages in the application process, key milestones and the responsibilities of each party at each stage. Scottish Government guidance states that processing agreements can offer greater transparency in decision-making, greater predictability and certainty over timing, and clarity about information requirements.

In 2008, City of Edinburgh Council started using processing agreements and now uses them for all major applications and for other applications, where requested. Its aim is to encourage joint working between the council and developer and to better project plan the pre-application and application processes.  

The council initially experienced reluctance among applicants but many now consider a processing agreement a key part of the process. The council has reported many benefits in using processing agreements including increased transparency about the application process for applicants, communities and elected members, and greater certainty over timescales for decision-making for the applicant and the council.

Source: Audit Scotland

There is limited use of benchmarking
96. The four city councils – Aberdeen City, Dundee City, City of Edinburgh and Glasgow City – carry out benchmarking activities with each other, meeting twice a year to compare performance figures, practices and experiences to improve planning services. However, there is little evidence of it being done elsewhere. There is a need for councils to benchmark their performance to identify areas of good practice or areas for improvement.  There is also scope for councils to identify benchmarking groups for different strands of development management activities or types of development, for example renewable energy developments.  
97. The Scottish Government, COSLA and Heads of Planning Scotland are working together to develop a new framework for measuring and reporting performance. This is currently being piloted in five authorities. A new performance framework would provide a useful mechanism that would enable benchmarking. With increased pressure on resources within planning departments, it is important for councils to agree what types of benchmarking would be most appropriate and add most value.
Recommendations
The Scottish Government should:
•		consider replacing the four-month timescale for deciding major applications and work with planning authorities to agree a new way of assessing performance for these applications as part of a new performance measurement framework for development management
•		consider including a measure of performance of the planning system in Scotland’s national performance framework.
Councils and national park authorities should:
•		ensure they use a project planning approach for managing major applications and agree key milestone stages and dates with applicants and key stakeholders
•		continue to work together, and with the Scottish Government, to develop a new comprehensive performance measurement framework that clearly links planning activities with national outcomes
•		consider benchmarking with each other where they experience similar levels and types of demand for planning activities, and share good and innovative practice.

28	The Scottish Government’s planning application statistics are based on the number of applications decided by planning authorities, not the number of applications received.
29  The 2006 Act changed the way developments are categorised. The new hierarchy of development came into effect in August 2009 and changed the thresholds distinguishing major and local developments. The threshold for classifying a major development is much higher than before. For example, major developments are now defined as a gross floor space that is or exceeds 5,000 square metres or a site area that is or exceeds two hectares. This was previously defined as 1,000 square metres or a site area equal to or exceeding one hectare. Local developments are now defined as a gross floor space less than 5,000 square metres or a site area of less than two hectares. This was previously defined as less than 1,000 square metres or a site area less than one hectare. This means that performance data prior to August 2009 is not directly comparable with data after August 2009.
30	Prior to the 2006 Act, national targets were in place – 80 per cent of all applications to be decided in two months, and 85 per cent in three months; 90 per cent of all householder applications were to be decided in two months, and 95 per cent in three months; and 80 per cent of all major applications were to be decided in four months.
31	In the Scottish Government’s Economic Strategy 2007, one of the approaches to the strategic priority of Infrastructure Development and Place was a planning and development regime with greater certainty and speed of decision-making. The first national outcome set out in the National Performance Framework is: ‘We live in a Scotland that is the most attractive place for doing business in Europe.’
32  Planning Performance Statistics, Scottish Government, 2010.
33	See Appendix 3 for information on the methodology used to survey users.
34	Data is from the Scottish Government’s Establishment Survey of planning authorities carried out in September 2010. The analysis is based on returns from 27 planning authorities.
35  Scotland’s public finances: addressing the challenges, Audit Scotland, 2011.

Part 4. Financing the planning system
Time is currently the only way to measure performance and a more comprehensive framework is needed.

Key messages
•		The funding model for processing planning applications is becoming unsustainable as the gap between income from fees and expenditure increases, putting greater pressure on already constrained council budgets.
•		Councils have limited information about the costs of processing planning applications. This limits their ability to understand and reduce these costs.
•		The Scottish Government sets planning fees but these are not based on accurate cost information.
Councils spent over £100 million on planning in 2009/10
98. In 2009/10, councils spent £105.5 million on planning. They spent £50.9 million on development planning and £54.6 million on development management.36 Over three-quarters of spend on development management (£41.5 million) was spent on processing 40,119 planning applications. The remaining £13.1 million was spent on other development management activities such as pre-application engagement with developers and key agencies, handling appeals and making sure that development is carried out correctly.37  
99. Over the six years to 2009/10, total spending on processing planning applications increased from £31.4 million to £41.5 million – a 17 per cent real terms increase. This has happened over a period when the number of applications has fallen.  The reasons for this increase are not clear.
Income from fees for planning applications is falling
100. The Scottish Government sets planning fees and expects these to cover the total cost of processing planning applications.38 Fees only apply to certain types of application and there are exemptions, for example listed building consent and other heritage and conservation work. Fees do not cover other development management activities such as pre-application work, appeals and enforcement, nor do they cover the input by other parts of a council. For example, the roads department may often contribute to assessment of planning applications.39 Although fees in Scotland have risen by 40 per cent in the past six years (above the rate of inflation), they still differ from those charged across the rest of the UK. In particular, the maximum fees for major applications are much lower in Scotland – £15,950 – than in England, Wales and Northern Ireland where the maximum fees are £250,000 (Appendix 2).40 
101. In 2009/10, £23.3 million was received by councils’ development management services. Eighty-nine per cent of this was income from planning application fees and the remainder from other rents and charges (for example, advertising fees). 
102. Income from fees has fallen in the last six years by 28 per cent in real terms, in line with the falling number of applications. With fewer major applications, councils are receiving less fee income.
103. There is variation in the level of income from fees that councils receive. For example, Highland Council received the highest number of applications in 2009/10 but did not receive the highest fee income (Exhibit 13). This is most likely due to the variations in the types of applications received, and the proportion of large local or major developments, which attract a higher fee (see Exhibit 10, Part 3).
The gap between income and expenditure is widening
104. There is an expectation that the costs of processing planning applications are recovered from
fees. Over the six years to 2009/10, the overall gap between income and expenditure has increased in real terms from £6.7 million to £20.8 million (Exhibit 14, page 32). In 2009/10, 50 per cent of expenditure on processing planning applications was offset by income from fees, compared with 81 per cent in 2004/05. During this time, fees in Scotland rose by 40 per cent while the total number of planning applications fell by 29 per cent. The balance has to be met from councils’ central budgets, which are already under increasing pressure both from rising demand and increasing costs.41  
105. Councils vary in how much of their expenditure is recovered from income from planning fees. This ranges from 26 per cent of expenditure covered by fees in Clackmannanshire Council in 2009 to 119 per cent in Perth & Kinross Council. The Scotland average is 50 per cent. In 2009/10, almost two-thirds of all councils had less than half of their expenditure on processing planning applications offset by planning fees (Exhibit 13).
Councils have limited information about the cost of processing individual planning applications 
106. Setting realistic planning fees is limited by the lack of accurate cost information. Councils have little or no information about the cost of processing planning applications. Understanding costs is a necessary first step in identifying where efficiencies can be made to reduce expenditure. Staff time is the main cost associated with processing planning applications or other development management activities. However, councils do not have accurate information about time spent on processing planning applications and there is little evidence of time recording systems being used to capture this.
Fees must be set using accurate cost information
107. In 2010, the Scottish Government increased planning fees by ten per cent and is currently reviewing the fee structure and fee levels.42 Fees have previously been set using historic expenditure data rather than accurate cost information, which means that fee levels often lag behind current financial circumstances.43  
108. The recent changes to development management have introduced more activities to the planning application process such as neighbour notification, and fee levels were not adjusted to reflect this. There needs to be greater clarity about what the fee is expected to cover and if full cost recovery is expected for all applications. Other new development management activities such as local review bodies and pre-application work with developers and key agencies are currently not covered by the fee but represent a cost to councils.
109. The Scottish Government and planning authorities must work together to agree an appropriate fee structure that will support councils to deliver services and set fees that will not put off prospective applicants.
Recommendations
The Scottish Government should:
•		clarify what activities planning fees cover, taking account of new activities that were introduced by modernisation which have created additional costs for councils
•		work with planning authorities to agree an appropriate fee structure that covers authorities’ costs in processing planning applications.
Councils and national park authorities should:
•		collect, monitor and report data on cost of development planning and development management, to help inform the setting of planning fees and to help make decisions on how resources can be used effectively. This should include information on staffing and time spent on development planning and development management, broken down by activity. It should also include other costs such as legal, committee and specialist support services provided by other parts of the council or national park authority
• 		use existing expenditure and income data and historical data on planning applications received, to forecast future demand and resource requirements.

36	Local Government Financial Return, Scottish Government, 2010. The data have been verified with all 32 councils.
37	There are limitations to the local government financial return data. There are variations in context and accounting practice in councils and returns are often not completed on a consistent basis. In addition, the costs incurred by other departments that contribute to the planning process, for example roads, are not captured in the return. Research carried out by the Scottish Government in 2005 and 2009 discusses these limitations in detail: Resourcing the Planning System, Scottish Government, 2005; and Review of Fees for Planning Applications, Scottish Government, 2009. 
38	Guidance notes for completing 2009-10 local financial returns (LFRs), Scottish Government, 2009.
39	Fees do not apply to all applications and exemptions include: applications for listed building consent; local authorities’ proposals for their own developments which are subject to regulations made under Section 263 of the 1997 Act; consultations about Crown development under the procedure laid down in SDD Circular 21/1984; applications for certificates of appropriate alternative development; and applications to lop or fell trees subject to tree preservation orders.
40   The Town and Country Planning (Fees for Applications and Deemed Applications) (Scotland) Amendment 
        Regulations  2010; A Guide to the Fees for Planning Applications in England – February 2010 taken from
        www.planningportal.gov.uk; The Town and Country Planning (Applications and Deemed Applications) Fees    
        (Amendment) Wales Regulations 2009; and The Planning (Fees) (Amendment) Regulations (Northern Ireland) 2011.
41	Scotland’s public finances: addressing the challenges, Audit Scotland, 2011.
42	Resourcing a high-quality planning system: a consultation paper, Scottish Government, 2010.
43	Review of Fees for Planning Applications, Scottish Government, 2009 and Resourcing the Planning System, Scottish Government, 2005.

Appendix 1.
Planning application process 

Pre-application consultation		Pre-application discussions

Submission of application

Processing of application

Publicity				Consultation			Neighbour notification

Consideration by Planning Committee				Consideration by planning officers

				Decision on application

				Appeal (if required)

Source: Development Management Procedures, Circular 4: Scottish Planning Series, Scottish Government, July 2009

Appendix 2.
Fees for planning applications in the UK
The levels of fees for planning applications varies across the United Kingdom.
Type of development	Fee in Scotland	Fee in England	Fee in Wales	Fee in Northern Ireland	
Building a home	•	£319 for each home, up to a maximum of £15,950  	•	£335 for each home, up to 50 homes
•	£16,565 for over 50 homes plus  £100 for each additional home over 50 homes, to a maximum of £250,000

	•	£330 for each home, up to 50 homes
•	£16,464 for over 50 homes plus £84 for each additional home over 50 homes, to a maximum of £250,000	•	£400-800 for a single home
•	£335 for each home for 2 or more homes, up to 50 homes
•	£16,750 for over 50 homes plus £100 for each additional home over 50 homes, to a maximum of £250,000	
Changes to existing homes	•	£160 for one home
•	£319 for two or more homes	•	£150 for one home
•	£295 for two or more homes	•	£166 for one home
•	£330 for two or more homes	•	£267 for each home	
Creating floor space	•	£160 up to 40m2
•	£160 between 40m2 and 75m2
•	£319 for each additional 75m2 for floor space over 75m2, up to a maximum of £15,950 	•	£170 up to 40m2
•	£335 between 40m2 and 75m2
•	£335 for each 75m2 for floor space between 75m2 and 3,750m2
•	£16,565 for a floor space in excess of 3,750m2, with an additional £100 for each additional 75m2, up to a maximum of £250,000	•	£166 up to 40m2
•	£330 between 40m2 and 75m2
•	£330 for each 75m2 for floor space over 75m2, to a maximum of £250,000	•	£170 up to 40m2
•	£335 between 40m2 and 75m2
•	£335 for each 75m2 for floor space between 75m2 and 3,750m2
•	£16,750 for a floor space in excess of 3,750m2, with an additional £100 for each additional 75m2, up to a maximum of £250,000	

Appendix 3.
Audit methodology
The focus of our work was on two main areas – the overall progress made in modernising the planning system, and the impact that modernisation is having on councils’ performance in managing planning applications. In Part 1, we introduced the planning system and the changes introduced by modernisation. In Part 2 we focused on evidence obtained from organisations involved in planning, to assess the progress made in modernisation of the planning system. Our analysis in Parts 3 and 4 focused on development management in councils, assessing performance and finance.
Our audit had four main components:
•	in-depth fieldwork with five planning authorities and interviews with a range of organisations, both public and private sector, involved in the planning system
•	analysis of existing data including local financial returns and Scottish Government planning data
•	a survey of users of the planning system to examine users’ experiences and perceptions of modernisation
•	desk research of existing performance and financial information relating to the planning system.
In-depth fieldwork and interviews
We conducted in-depth fieldwork in five planning authorities – Comhairle nan Eilean Siar, Dundee City, Falkirk, Renfrewshire, and Scottish Borders Councils in March 2011. In each council, we interviewed planning managers, planning officers, and elected members. In Dundee City, Falkirk and Scottish Borders Councils, we also interviewed community council representatives. The aim was to examine progress made in implementing the changes introduced by modernisation and understand the impact of the changes on the councils.
We also interviewed the key stakeholders involved in the planning system:
•	the six key agencies – Architecture and Design Scotland, Historic Scotland, Scottish Natural Heritage, Scottish Water, Scottish Environment Protection Agency, and Transport Scotland
•	the four strategic development planning authorities – Aberdeen City and Shire, Glasgow and Clyde Valley, SESplan, and TAYplan
•	the two national park authorities – Loch Lomond & The Trossachs National Park Authority, and Cairngorms National Park Authority
•	Scottish Government – Department for the Built Environment and the Department for Environment and Planning Appeals
•	COSLA
•	Planning Aid in Scotland
•	Royal Town Planning Institute
•	SOLACE
•	Private sector organisations – Federation of Small Businesses, Homes for Scotland, and the Scottish Property Federation.
Analysis of existing data
We analysed existing financial and performance data on the planning system in Scotland. We used local government financial returns to examine council’s income and expenditure on planning. However, there are limitations to the local government financial return data. There are variations in context and accounting practice in councils and returns are often not completed on a consistent basis. In addition, the costs incurred by other departments that contribute to the planning process, for example roads, are not captured in the return. We also analysed national performance data published by the Scottish Government to examine performance in deciding planning applications across all councils, and to examine the characteristics of demand, such as volume and type of applications, and the factors which might affect these in each council.
User survey
We commissioned Ipsos MORI to carry out a survey of users of the planning system. A telephone questionnaire was carried out with four main groups of users that had made a planning application in the last two years:
•	150 householders
•	175 agents that submit applications on behalf of clients
•	52 businesses
•	37 developers.
Thirty-eight in-depth telephone interviews were also undertaken with agents, developers and businesses, and two focus groups were conducted with householders.  
The full report from the survey of users of the planning system is available separately on the
Audit Scotland website www.audit-scotland.gov.uk
Desk research
We researched existing information to examine areas including the work of the key agency group and individual key agencies, and progress of SDPAs and planning authorities in developing new plans. We reviewed 34 planning schemes of delegation and a sample of planning committee papers. We reviewed key documents related to ePlanning and the efficient government programme as well as research reports covering planning fees and challenges of the planning systems across the UK.  

Appendix 4.
Project advisory group membership
Audit Scotland would like to thank the members of the project advisory group for their input and advice throughout the audit.
Member	Organisation	
Alan Lundmark	Director of Planning and Communications, Homes for Scotland	
Andy Kinnaird	Planning Performance Policy Manager, Scottish Government	
Craig McLaren	National Director, Royal Town Planning Institute	
David Leslie	Development Management Manager, Heads of Planning Scotland (City of Edinburgh Council)	
David Melhuish	Director, Scottish Property Federation	
Jonathan Moran	Development Management Manager, Transport Scotland	
Kathy Cameron	Policy Manager, Environment and Regeneration, Convention of Scottish Local Authorities	
Petra Biberbach	Chief Executive, Planning Aid Scotland	

Note: Members of the project advisory group sat in an advisory capacity only. The content and conclusions of this report are the sole responsibility of Audit Scotland.