Planning matters

The Planning and Infrastructure Bill has been published and it proposes further changes to the planning fee regime. Planning fees have been the subject of a few amendments in recent years as the Government has sought to respond to shortfalls in funding for local planning authorities (LPAs) and improve the performance of the planning service. The most recent changes to fees, including the first year of indexation, come into force on 1 April 2025 and are discussed in further detail here. The provisions in the Bill discussed in this blog will require secondary legislation before they come into force. It is anticipated further details of a local fee setting model and the benchmarking of associated costs will be consulted on in due course.

The Planning and Infrastructure Bill proposes amending the Town and Country Planning Act 1990 to give LPAs autonomy to set planning fees themselves to a maximum, but not exceeding cost recovery levels. This provision will apply to all applications where there is currently a planning-related fee payable. This approach follows that was set out in the Government’s proposed reforms to the National Planning Policy Framework and other changes to the planning system, which was published for consultation in July 2024. That consultation included different approaches to localising planning fees, more detail on this can be found here.

It seems clear that the Government has taken the route of full localisation by allowing LPAs to set their fees to a maximum of cost recovery levels. The ‘Factsheet’ published alongside the Bill, sets out the rational for this change:

The Factsheet adds that:

A potential concern is that this proposal could reward those LPAs that run their services inefficiently and penalise those that run a lean and efficient service so the former can charge more whilst the latter have to charge less. Developers in particular highlighted their concerns in the consultation on these measures, arguing that widespread variation in fees would make it difficult for them to financially plan and there were worries that LPAs could raise fees significantly. It was also recognised that there will be spatial variability in costs incurred by LPAs at a regional scale - clear parameters will need defining to ensure LPAs within the same geographic region maintain somewhat of a standardised approach for assessing associated costs to reflect combined authority boundaries.

It seems the Government has taken on board some of these concerns in the first reading of the Bill.

To safeguard against exceedance of cost recovery, the Bill affords the Secretary of State powers to intervene and direct LPAs to amend planning fees or charges. Indeed, the Secretary of State may intervene if fees are considered disproportionately too high or too low, or if the requirements for setting or varying fees are not adhered to. It is proposed that this would comprise a two-stage process, with the Secretary of State first directing the relevant charging authority to undertake a review of the level of fee or charge, and provide appropriate evidence for the result of the review. Subsequently, if following review, the fee or charge remains set at a level not considered appropriate by the Secretary of State, an imposed fee or charge can be set directly by the Secretary of State, as considered appropriate.

Interestingly, the Bill also introduces scope for a retrospective refund mechanism, whereby the charging authority would be responsible for reimbursement of applicants where any inappropriate fee or charge is reduced as a result of the Secretary of State intervention.

The Bill outlines that cost recovery will cover the expenses incurred by the LPA carrying out their planning function related to processing and determining of planning applications, including other technical specialists within the LPA that contribute to planning decisions. How ‘cost recovery’ will be quantified, and importantly standardised, between LPAs is not yet established. The Government’s February 2025 response to the 2024 national planning policy consultation said “We will also undertake a benchmarking exercise to establish a robust baseline for full cost recovery of fees and to inform a national default fee. We will consult further on the details of local fee setting model and the benchmarking of costs in due course”. This appears to be specific ringfencing of planning fees in all but name as the Explanatory Memorandum for the Bill is clear the planning fees cannot cover wider planning services such as plan-making or enforcement [1].

This move will no doubt be welcomed by many in the industry who voiced their frustration in relation to the lack of ringfencing for planning fees in the recent amendments to the Town and Country Planning (Fees for Applications, Deemed Applications, Requests and Site Visits) (England) Regulations. The Government is clear that the localisation of fee setting will provide LPAs with greater flexibility to deliver an effective planning service, in a manner that is clearly justifiable and based on actual costs incurred. This should give many in the development sector confidence that increased planning fees will result in a better planning service rather than fees being lost to other council departments.

The Bill does not refer to the setting of fees for pre-application advice services or Planning Performance Agreement (PPA) services, which are currently localised. Importantly, the intersection between the recovery of application fee costs and additional revenue raised through PPAs will need careful consideration, given that a direct function of PPAs is to safeguard supplementary finances for necessary resourcing on large scale planning applications. PPA services were highlighted in the NPPF consultation response as a service which will help ensure applications can be determined in timely and effective manner. The consultation response also outlined plans to develop secondary legislation to enable cost recovery for relevant services provided by local authorities in relation to applications/proposed applications for development consent under the Planning Act 2008.

Additionally, no commentary is provided on the incorporation of third-party review costs within localised fee setting, required when LPAs do not have in-house resourcing for technical reviews such as viability or daylight/sunlight. However, such reviews are typically borne directly by the applicant in addition to application fees.

The decision by the Government to pursue the localisation of planning fees will undoubtedly divide opinion, as the responses to the July 2024 consultation reflected. Despite the fact that LPAs will only be allowed to charge up to cost recovery levels, developers will be keen to ensure that this translates into a better and more responsive planning service and the first version of the Bill also makes this expectation clear. As outlined above, further detail will need to come forward before LPAs and developers can gain a real sense of how locally set fees will impact the industry. Further detail will be provided in the consultation exercises that will inform secondary legislation. While the intended approach might emerge fairly swiftly, the approaches to benchmarking, including how localisation of fees might be viable; how full cost recovery will be achieved (while recognising current differences in LPA efficiencies); and avoiding competition between LPAs, may well take some time to resolve.