£1bn of taxpayers money is subsidising planning applications, councils claim

Current rules mean some of the costs of building luxury developments are being picked up by the public

Councils process an average of 486,000 planning applications every year (Daniel Lynch)

Up to £1bn of taxpayers’ money is being spent subsidising the cost of planning applications from property developers and others, local councils have revealed.

The Local Government Association (LGA), which represents more than 400 local authorities in England and Wales, said councils are currently having to fork out £200m each year to process applications – totalling £1bn over the next five years.

Because planning fees are set nationally, many councils are not able to charge enough to cover the cost of processing the 486,000 applications that the average authority receives every year.

Instead, the difference must be covered through council tax – in some cases meaning local people subsidising applications for luxury developments.

The LGA says the cost of up to a third of all planning applications since 2012 has been paid by councils, diverting scarce resources away from local services. The money could instead be used to help build 8,500 new homes, it said.

The Government has already promised to giving councils the ability to increase planning fees but the changes are not expected to come into force until later this year at the earliest.

Setting planning fees centrally was designed to stop a postcode lottery among authorities and to prevent charges being set so high that they discourage house-building.

Cllr Martin Tett, LGA Housing spokesman, said: “It is wrong for communities to keep being forced to spend hundreds of millions each year to cover the cost of all planning applications.

“Councils are working flat-out to approve almost nine in ten planning applications, with the majority processed quickly.

“But the shortfall in the amount of fees councils can charge and the cost of processing applications is heaping further pressure on the stretched planning departments which are so crucial to building the homes and roads that local communities need.

“Councils need to be able to recover the actual cost of applications and end such a needless waste of taxpayers' money.

"Locally-set fees would also allow councils to prevent increased costs being passed on to residents, while developers could contribute more to maintain high-quality planning decisions, and improve the ability of councils to speed up the planning process.

A Department for Communities and Local Government spokesperson said: “This Government is committed to giving local authorities the tools they need to drive new housing and build the right homes in the right places.

“All councils have now accepted the 20 per cent planning fee increase announced in the Housing White Paper, and we are introducing regulations this Autumn."