Introduction of an Infrastructure Charging Mechanism in Scotland: research project

1 Introduction

1.1 Background

Following the publication of the independent review of the Scottish planning system in 2016, the Scottish Government appointed Peter Brett Associates ( PBA) to lead a research project to identify and assess the options for the introduction of an infrastructure charging mechanism across Scotland. The PBA-led multi-disciplinary team comprises TradeRisks, Brodies LLP and Cushman & Wakefield (Stages 1 and 2 only), leading organisations who are experienced in the field of infrastructure funding delivery and the legal applications of such actions.

Sustainable economic growth and housing delivery are key priorities for the Scottish Government. To contribute towards this, the principles of an improved and fairer system, with greater transparency, certainty and efficiency needs to be considered to secure funds towards infrastructure delivery.

This research project focuses on the options for an infrastructure charging mechanism to be applied through the planning system in Scotland. It sets out the pros and cons of the identified options and includes a potential route map towards potential implementation.

The Scottish planning system is currently under review. The report of the Panel appointed by Scottish Ministers to review the system – ‘Empowering Planning to Deliver Great Places’ (31 May 2016) – clearly states that, “Our review has concluded that linking infrastructure with planning development is the most significant challenge for the Scottish planning system at this time.” This research project focuses on the options for an infrastructure charging mechanism to be applied through the planning system in Scotland. Stage 1 and Stage 2 of this research has since informed the Scottish Government’s consultation Document ‘Places, People, and Planning’ (2017), Proposal 14 of which stipulates the formulation of a levy through enabling powers.

Pending the outcome of consultation, this Research and the Project Team will aid in progressing the technical and legal development of the charge.

1.2 Research Study Stages

The research study is based on the following three stages:

• Stage 1 – Baseline, Initial Consultation and Identification of Priorities including a focused literature review, desk based assessment to establish the broad scope of legislative requirements, establish a key stakeholder group to be agreed with the client team, undertake initial consultation exercise with the key stakeholder group members, to explore the issues and options of a charging mechanism, including with the Department of Communities and Local Government ( DCLG) Community Infrastructure Levy ( CIL) Team representatives and CIL review research team in relation to the performance of CIL and the output of the review work, and to develop a set of key priorities for the establishment of a charging mechanism within the Scottish context.

• Stage 2 – High Level Options, Stakeholder Workshop and Consideration in the Consultation Paper, including the identification of high level options for the introduction of an infrastructure charging mechanism within the Scottish planning system, and re-consult the Key Stakeholder Group to gather views on the identified options through a Workshop session.

Stages 1 and 2 outputs have been used to inform the consultation paper which was consulted on in 2017.

As the research has evolved, it has highlighted the importance of deliverability of the identified mechanism. It is therefore important that Stage 3 presents a balance of options for Ministers to consider, taking into account the practicalities which are at play. Stage 3 therefore considers two options which are variations of the Infrastructure Growth Contribution ( IGC) Model : firstly, an option requiring legislative changes, that is, the Central Co-ordinated Option ; and secondly, a Local Co-ordinated Option .

Stage 3 – Process & Delivery, to identify and prepare a case for two mechanisms with different degrees of delivery requirements, and to develop a framework for those mechanisms that best meet the key priorities for a potential charging mechanism. The framework considers process elements, including calculating and applying the charge and delivery of the mechanisms, including a timeline for the preparation of the charge.

Process for Charge Calculation / Evidence Base

• Consider the process of infrastructure assessment, prioritisation and costing to inform the charge mechanism;
• Consider the process for establishing the infrastructure funding gap within the identified geographic areas;
• What role would viability considerations have in establishing the charge; and
• Process of consultation and independent scrutiny for establishing the charge.

Process for Applying the Charge

• What types of infrastructure would the charge fund?
• How/when would the charge be applied?
• Which developments would be liable to pay the charge? Requirement for exemptions?
• Consider the options for securing / enforcing the charge; and
• Consider the scope for utilisation of charge funds within or out with the geographic area within which they were collected.

Factors for Delivery

• Relationship between the charge and a wider Infrastructure Fund / infrastructure funding mechanisms;
• How to address issues around certainty over the payment of charge and the delivery of identified infrastructure items;
• What role would front funding have to complement an infrastructure charging mechanism?

• Identify the potential risks to infrastructure delivery resulting from a lack of charge receipts or cost over-runs and consider measures to manage the risks; and
• Consider issues around on-going maintenance costs of delivered infrastructure.

This report addresses Stage 3 of this research, which together with Stage 1 & 2, will be taken into account in the drafting of a future Planning Bill.