Planning fees push beyond cost recovery for local services

The news

The Ministry of Housing, Communities and Local Government launched a consultation in March 2026 proposing a national default fee schedule at 90 per cent of processing costs, with options for local authorities to set higher charges. This follows fee increases of 3.8 per cent announced for April 2026, linked to the Consumer Price Index by MHCLG figures. The National Association of Local Councils responded by calling for fees to exceed cost recovery to fund under-resourced enforcement and simplify structures for applications including biodiversity and section 106A.

What's at stake

Local planning departments face chronic underfunding, with social care and homelessness consuming 60-70 per cent of council budgets according to local government analyses, leaving non-statutory services like planning squeezed. Planning decisions often lead to costly judicial reviews, with councils paying hundreds of thousands in taxpayer funds for overturned refusals as seen in recent Bristol cases. Developers submit thousands of pages per application, facing delays from overlapping policies, while England saw record lows in housing starts amid these pressures.

The proposals affect all applicants from household extensions to major developments, with fees currently covering only a fraction of costs. Councils handle hundreds of thousands of applications yearly, but staffing shortages mean average processing times stretch beyond targets. Small builders and homeowners bear initial costs passed to buyers, while larger schemes tie up section 106 contributions for infrastructure.

National scope means every English council could adopt varied fees, potentially raising millions but risking uneven development rates across regions.

The case for

Higher fees generate revenue to fund enforcement teams, pre-application advice, and monitoring, ensuring planning decisions stick without expensive appeals. Under current cost recovery, enforcement remains starved, allowing rogue developments to proliferate and undermine community trust in the system. Comparable models in other sectors like environmental permits charge above processing to cover compliance, reducing long-term burdens on taxpayers; Scotland's simplified fees have sped decisions without deterring viable projects. Fully resourced services cut judicial review costs, which hit hundreds of thousands per case, and support biodiversity checks vital for net-zero goals.

The case against

Elevated fees hit small developers and homeowners hardest, with even simple submissions like single-page extensions costing £700, pricing out modest projects and exacerbating housing shortages. Developers pass costs to buyers, inflating new home prices at a time when starts are at record lows due to regulatory paralysis. Post-2025 fee doublings already slowed processing by 4-6 weeks despite aims to accelerate building; further rises risk stifling growth, as seen in areas where high charges correlate with stalled sites. Industry groups warn simplified structures fail to offset added burdens like nutrient pollution mitigation running thousands extra.

Why it matters now

Approval shifts funding from central grants to applicants, enabling faster enforcement and fewer delays if revenues materialise. Rejection keeps fees near 90 per cent costs, perpetuating backlogs and council tax hikes to plug gaps. Outcomes shape the 2026 Autumn Statement and local elections, influencing housing targets amid Labour's growth agenda.

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