It is a well-established principle that developers should make contributions to mitigate the impact on a community of a development for which they are seeking planning permission. The current rules are set out in section 106 of the Town and Country Planning Act 1990, Circular 1/97 and case law. However, the level of such contributions, and the community causes the local authority can spend the contributions on, continue to be controversial. The controversy is not helped by the fact that case law and the circular create different tests for what can lawfully be required as a prerequisite to the grant of planning permission. The courts have held that it is lawful for local planning authorities to accept contributions volunteered by developers as long as there is more than a minimal connection between the contribution and the development. In contrast, the circular sets out a more restrictive test for what local authorities can insist on. It requires contributions to be necessary to make the development acceptable in planning terms.
A consultation paper, Contributing to Sustainable Communities – A New Approach to Planning Obligations, by the Office of the Deputy Prime Minister (ODPM) criticised planning agreements as being too time-consuming to negotiate, too complex and too expensive. The paper, published in November 2003,contained proposals for an optional planning charge (OPC) to supplement the traditional planning agreement and for making the system of negotiating planning agreements quicker and more transparent. The level of the charge would be set by local authorities in local development documents and developers would be able to choose whether to pay the charge or enter into a traditional planning agreement. The new proposals did find their way into the Planning and Compulsory Purchase Act 2004 but have not yet been brought into force by government regulations.
