Planning Controls, Pay Day Lending and Betting Offices Analysis Report

Copyright

© Crown copyright, 2015

This publication is licensed under the terms of the Open Government Licence v3.0 except where otherwise stated. To view this licence, visit nationalarchives.gov.uk/doc/open-government-licence/version/3 or write to the Information Policy Team, The National Archives, Kew, London TW9 4DU, or email: psi@nationalarchives.gsi.gov.uk.

Where we have identified any third party copyright information you will need to obtain permission from the copyright holders concerned.

This publication is available at www.gov.scot

Any enquiries regarding this publication should be sent to us at
The Scottish Government
St Andrew’s House
Edinburgh
EH1 3DG

First published by the Scottish Government, February 2015
ISBN: 978-1-78544-124-0 (web only)

E-book in EPUB format first published by the Scottish Government, February 2015
ISBN: 978-1-78544-140-0 (EPUB)

E-book in MOBI format first published by the Scottish Government, February 2015
ISBN: 978-1-78544-141-7 (MOBI)

Published by the Scottish Government, February 2015

Produced for the Scottish Government by APS Group Scotland, 21 Tennant Street, Edinburgh EH6 5NA
PPDAS45061 (02/15)

EXECUTIVE SUMMARY

EXECUTIVE SUMMARY

The Scottish Government's consultation on Planning Controls, Pay Day Lending and Betting Offices invited views on whether, and how, the planning system can address concerns around the negative impact of over-provision or clustering of betting offices and pay day lenders on the character and amenity of town centres and shopping areas.

Specifically, views were invited on detailed proposals for changes to planning legislation. The changes as set out would mean that, in future, more changes of use of existing premises to betting offices or to activities involving pay day lending could require an application for planning permission.

A total of 35 consultation responses were received, reflecting a range of public and commercial interests as well as some views received from members of the public.

Overall, responses to the consultation were mixed. Some focused on the social impacts of problem gambling and of pay day lending, whilst others questioned the role and effectiveness of the planning system in seeking to control issues arising from the sale of financial products and services. Some respondents pointed out that the proposed changes could not apply retrospectively and therefore may be limited in effect.

A number of specific issues were raised concerning the detailed drafting of any future changes to legislation. In particular concerns were expressed in relation to the proposed extension of planning controls on pay day lenders – which are difficult to distinguish in planning terms from other financial institutions such as credit unions. Some respondents felt that more evidence and / or research was needed before any changes to legislation were made. Alternative approaches were suggested, including; maintaining the status quo; using existing powers more robustly; and changes to legislation in other areas (such as the Gambling Act 2005) which are reserved matters for the UK Government and UK Parliament.

A small number of respondents from the commercial sector expressed specific concerns that extending planning controls in the manner proposed could be perceived as a barrier to potential new entrants to the market, leading to a lessening of competition. This was alongside concerns about the impact of increased regulation on business activities.

In conclusion, and in light of stakeholder concerns regarding the operation and effectiveness in practice of the proposed changes, the Scottish Government does not intend to make any changes to planning legislation in respect of betting offices and pay day lending at this time. Within the planning system, we will however:

Continue to support the use of existing planning mechanisms to address concerns, including local development plan policies, where necessary, to guide planning authority decisions on planning applications for relevant changes of use. This follows the introduction in June 2014 of the Scottish Planning Policy containing new provisions on clustering and over provision;

Maintain an awareness of the growing experience in the use of these existing mechanisms within this new policy framework and consider their effectiveness in addressing proliferation issues.

Complete the Town Centres Planning Pilots which will look at developing material which can be used when considering planning applications or appeals for pay day loan shops and betting offices. Glasgow City Council and West Dunbartonshire Council are involved in this work, which will involve public consultation and the development of Supplementary Planning Guidance.

INTRODUCTION

Background

1. Concerns have been expressed in recent years about the levels of problem gambling and personal indebtedness, and the prevalence of betting offices and premises selling high interest short term loans – often referred to as pay day lending.

2. Whilst the regulation of gambling and financial services is currently a reserved matter for the UK Government and Parliament, the Scottish Government – following its Summit on 'Gambling and Pay Day Lending in Scotland's Town Centres and Neighbourhoods' – is taking forward a number of actions to address concerns about these matters within current devolved powers. This led to the publication, in August 2014, of the Scottish Government's paper entitled 'Planning Controls, Pay Day Lending and Betting Offices – Consultation Paper on Changes to Planning Legislation', which implemented the Scottish Government's commitment in its Action Plan[1] to consult on changes to planning legislation.

3. The Consultation Paper invited views on whether, and how, the planning system can address concerns around the negative impact of over-provision or clustering of betting offices and pay day lenders on the character and amenity of town centre and shopping areas. It followed the publication, in June 2014, of the revised Scottish Planning Policy (SPP[2]), which recognised these concerns and the role of planning in addressing them.

4. Thirty five individual responses were received to the August 2014 consultation paper. This report sets out the key themes and issues emerging from the analysis of consultation responses.

Overview of responses

5. Respondents have been categorised into broad groups as per table 1 below. A full list of all non-confidential respondents is included at Annex A.

6. The category 'public interest organisations' was taken to include charitable, advisory and religious groups. 'Commercial businesses' includes betting companies. 'Representative organisations' includes organisations which represent their sectors (including trade bodies) and includes a broad range of interest groups, from planners to pawnbrokers.

Table 1

Respondent Group

Number of responses

Total Individuals

4

Total organisations

31

Planning Authority

16

Public interest organisations

5

Commercial business

5

Representative organisation

5

Total

35

Analysis and reporting

7. Six out of 14 questions asked respondents to provide a yes/no or an agree/disagree response; however there was also the opportunity to explain answers. Where comments were made in response to individual questions these have been analysed and the main themes drawn out. Where respondents did not respond to individual questions but have indicated within their text their answer to one of the closed questions, these have been taken into account in the wider analysis.

8. The findings reported in the document are specific to this consultation exercise and can not necessarily be extrapolated to represent the views of the population at large.

9. Responses to this consultation will help inform the next steps for dealing with the issue of clustering of pay day lenders and betting offices on the high street within the planning system.

Business and Regulatory Impact / Equalities Impact

10. Views were invited on the partial Business and Regulatory and Equalities Impact Assessments which were included at Annexes A and B of the consultation report respectively. Questions 13 and 14 respectively of the consultation paper refer.

Public consultation

11. The consultation was issued electronically via the Scottish Government's e-mail alert to all those parties who have signed up to receive such alerts on planning topics (around 13,700). A list of commercial bodies and firms whose interests might be affected was also drawn up and, where contact details were available, a copy of the consultation was e-mailed directly to those organisations.

FINDINGS

12. The following chapters analyse and summarize the views expressed in responses. A full list of consultation questions is included for information, in Annex B.

Betting Offices

13. The first set of consultation questions dealt with betting offices.

14. The Scottish Government consultation paper proposed removing the reference to "betting offices" from Class 2 (financial, professional and other services) and adding "betting offices" to article 3(5) of the Uses Classes Order[3] ('UCO') which includes amusement arcades and hot food takeaways, uses not included with other uses in any of the use classes in the UCO (also known as 'sui generis' uses).

15. In addition, the General Permitted Development Order[4] (GPDO) would be amended so that while changes of use to betting offices may require an application for planning permission, changes from use as a betting office to other uses would not.

16. Respondents were asked:

Q1. Do you agree with this approach to dealing with betting offices? If not, please specify why not.

Table 2

Respondent Group

Agree

Disagree

No reply

Total Individuals (4)

2

1

1

Planning Authority (16)

10

4

2

Public Interest Organisations (5)

5

0

0

Commercial business (5)

2

3

0

Representative organisation (5)

1

1

3

Total

20

9

6

17. Of the individuals who responded to the consultation, two agreed, one disagreed and one didn't respond to this question. The individual who disagreed also pointed out that even if betting offices were 'sui generis', a planning permission for a betting office would not always be needed as sometimes a change from one use or class to another would not be a 'material' change requiring planning permission.One commercial business made a similar point. Another individual agreed with the approach from a technical standpoint, but queried why planning authorities would wish to do this and how effective it would be.

18. Of the commercial businesses who agreed, one stated that 'the industry' 'had not requested the removal of the so-called 'demand' test' from the licensing regime for gambling in 2007, and that since then there has been public concern around the issue. This respondent supported the proposed changes regarding betting shops.

19. Of the commercial businesses who disagreed, common reasons included:

clustering of betting offices is not an issue or is no more harmful than clustering of any other use;

there is not a causal link between the number of betting offices and levels of gambling;

the number of betting offices in the high street is self-regulating and numbers are and will continue to decrease;

evidence from planning authorities that Betting offices increase the vibrancy of town centres;

increased requirement for change of use applications thus increasing bureaucracy; and

risk of undermining competition in local markets.

20. Of the planning authorities who responded, ten agreed, whereas four disagreed and two did not respond to this question.

21. Of those who agreed, common reasons included:

Betting offices are readily distinguishable from other Class 2 uses.

They have more in common with 'sui generis' uses on account of their longer business hours, longer customer stay and the unique services they provide.

22. Despite agreeing, many respondents also made additional comments such as:

The changes would not make any difference with regard to those change of use applications [the authority] most frequently receives in connection with betting offices, i.e. changes of use from Class 1(Shops) to a betting office. Of greater significance is the recognition of the clustering and over-provision issue by Scottish Planning Policy.

No overall increase in betting offices had been noted in recent years.

There is a requirement for guidance so refusals can be defended by planning authorities.

The proposals represent an increased burden on planning authorities.

The proposals do not apply to existing betting offices so will not reduce clustering.

23. Of those who disagreed, reasons are summarised as follows;

There is no planning justification for the proposed changes.

Betting offices are not materially different from other uses.

Problems associated with gambling shops are not experienced on the high street itself.

The proposals don't affect existing shops so will not reduce clustering (this was also mentioned by a respondent who agreed with the proposals).

24. With regard to whether clustering was a problem on high streets, there were mixed views from planning authorities.

25. All of the public interest organisations who responded agreed with the proposals.

26. Of those who provided further comments, several focused on the social impacts of problem gambling and its impacts on individuals and communities. One organisation was particularly concerned with the impact of fixed odds betting terminals, the direct regulation of which is outside the scope of the consultation. Several responded that the proposals are an appropriate way to reduce the negative impact on the character of town centres.

Q2. Do you consider there to be a more effective approach to changes around betting offices? If so, please describe the approach.

Table 3

Respondent Group

Yes

No

No reply

Total Individuals (4)

2

0

2

Planning Authority (16)

4

11

1

Public interest organisations (5)

0

3

2

Commercial business (5)

3

2

0

Representative organisation (5)

0

0

5

Total

9

16

10

27. There were mixed views within commercial business as to whether the proposed approach was the most effective way to deal with the problem, or whether the status quo is sufficient. Those who advocated maintaining the status quo suggested that the issue could be dealt with through more robust usage of existing powers, or through using the GPDO, SPP and/or local development plans to limit non-class 1 uses on high streets. Others suggested the introduction of a cumulative impact test similar to that set out in the Licensing Act 2003 that could be inserted into the section 153 of the Gambling Act 2005 (a reserved matter).

28. Two respondents felt that the number of betting offices on the high street was self-regulating. One respondent also pointed out that betting offices offer benefits to the economy in terms of employment and tax, and these benefits should not be sacrificed on religious or moral grounds.

29. A frequent comment from planning authorities responding to this question was that there was no alternative approach apparent within the planning system. A number of authorities commented that the situation should be controlled through the licensing and gambling regulations, either as well as, or instead of, the proposed changes.

30. Comments from remaining respondee groups included:

The Gambling Act 2003 doesn't allow local authorities to set maximum levels of gambling premises (or gaming machines) in their gambling policies.

Better education was a means of addressing the problem.

The Scottish government should encourage local authorities to use powers of wellbeing as a wider approach to tackling the issue of clustering.

Summary

Whilst respondents overall indicated that the proposed changes represented the most suitable mechanism available for use within the planning system, many respondents questioned whether planning should be used to deal with the issue.

There was a feeling from some planning authorities and some commercial businesses that clustering was not an issue. A minority of representative organisations, individuals, and public interest groups provided additional comments on this issue.

Alternative approaches put forward included, amongst others: maintaining the status quo / using existing powers more robustly; the reintroduction of the so-called 'demand test' or similar for betting offices and other changes to gambling legislation, which is a reserved matter for the UK Government.

Pay Day Loans – Definition

31. Whilst the term 'pay day loan' is widely used, there is currently no agreed definition of the term. One example of an existing definition is that used by the Financial Conduct Authority ('FCA') who consider a pay day lender to be a lender offering high cost, short-term credit where:

Annual Percentage Rate (APR) is equal to or higher than 100%

Credit is provided for any period up to 12 months

Credit is not secured by a mortgage, charge or pledge

32. As the consultation paper outlined, it is not straightforward to identify a suitable definition of pay day lending for the purposes of the UCO, since any definition would need to be broad enough to catch those activities which are of concern, without capturing an unnecessarily wide range of activities associated with financial and professional services, such as those associated with traditional high street banks.

33. Respondents were asked:

Q3. Do you believe that a specific definition of PDL, similar to the FCA‟s definition [in paragraph 23 of the consultation paper] should form part at least of the exclusion of uses from the UCO? If so what should the definition be?

34. There was a fairly even spread between those who responded yes, those who responded no, and those who didn't reply to this question.

Table 4

Respondent Group

Yes

No

No reply

Total Individuals (4)

2

1

1

Planning Authority (16)

5

8

3

Public Interest Organisations (5)

5

0

0

Commercial business (5)

0

0

5

Representative organisation (5)

1

2

3

Total

13

11

12

35. Of those individuals who responded, two agreed with the definition, one suggesting that it should be used to control anyone selling pay day loans above credit union rates of interest. Two disagreed with the definition, the reason given by one being that it is not a planning matter.

36. None of the commercial businesses commented on this question.

37. All of the public interest organisations who responded supported the proposed definition. One stated that any definition would be arbitrary but that the FCA definition was the best option. Another felt that a narrow definition could allow some products or innovations to circumvent it. One respondent pointed out that the exclusion of deposit takers is a better way to protect what are perceived as more 'acceptable' lenders.

38. Of the planning authorities who responded to the consultation, five agreed, eight disagreed and three did not answer. Despite agreeing with the definition, some authorities pointed out that the definition contained criteria with no obvious link to planning. Of the planning authorities responding negatively to this question, reasons given included:

That types of uses of premises, rather than specific products or services, should be referred to in order to differentiate in planning terms from other similar uses.

The FCA definition is likely to only cover ancillary activities (i.e. not the main use in planning terms of the premises).

That it's not clear how such financial terms would be enforced by Planning Authorities.

That the features of the FCA definition bear no relation to the planning impacts of a proposal and are irrelevant to planning which is not about policing products.

39. A general theme was that, in planning terms, pay day lending is no different from other Class 2 (financial, professional and other services) uses, and that planning should not be used to control financial products. The point being that even with changes to the UCO, the planning system only requires planning permission where changes in use are 'material' in planning terms.

Summary

Overall there were mixed responses to this question, and a range of problems were identified in agreeing a definition which would be meaningful and enforceable in planning terms.

Respondents expressed a number of concerns regarding the role of the planning system generally and the difficulties in distinguishing between pay day lenders and other financial institutions in planning terms.

Pay Day Loans – Use classes order

40. The consultation sought views on two approaches to increasing the need for an application for planning permission where, in future, premises change use to activities involving pay day lending.

Option 1

41. The first approach, Option 1, sought to identify and exclude from Class 2 of the UCO those sorts of businesses likely to offer pay day loans and which are likely to cluster in shopping areas.

42. Respondents were asked:

Q4. Do you agree that Class 1: Shops should be excluded from any changes?

Table 5

Respondent Group

Agree

Disagree

No reply

Total Individuals (4)

3

0

1

Planning Authority (16)

12

2

2

Public Interest Organisations (5)

3

2

0

Commercial business (5)

0

0

5

Representative organisation (5)

3

1

1

Total

21

5

9

43. The majority of planning authorities agreed that any changes should not apply to shops, however, of these authorities, eight were generally against any changes to control pay day lending through the planning system. Two authorities responded negatively to this question, stating that a clear definition of what constitutes a pay day lending use is required.

44. Responses from public interest organisations were mixed. Those answering negatively to the question argued that any pay day lending activity in a shop should require planning permission in order to avoid incremental changes in the proportion of business coming from pay day lending.

45. No commercial businesses responded to this question. Three representative organisations agreed and one disagreed with the proposal to exclude shops from any changes.

46. A number of respondents expressed concerns generally regarding the role of planning controls in seeking to restrict the sale of pay day loans.

47. In considering Option 1 of the consultation paper, respondents were invited to consider:

Q6. What other activities which might be involved in PDL should be added to the exclusions? Please explain why and provide any examples.

48. Only two representative organisations responded. One stated that the definition should specify that only short-term, high interest credit requires planning permission. The second respondent felt it was unclear which uses would be excluded given the wide range of potential types of business that might engage in pay day lending to some degree.

49. No commercial businesses responded to this question.

50. Of the public interest organisations who responded, two also mentioned concerns where outlets hire or sell goods at high rates of interest.

51. Only six planning authorities commented on this question, the remainder either did not respond or stated that they had no suggestions to add. Comments from planning authorities included:

the potential for unintended consequences such as difficulties filling vacant units in town centres;

perceived difficulties in identifying which businesses are engaged in pay day lending, and the issue that businesses may make a positive contribution to the vitality of town centres whilst engaging in pay day lending as a side-line activity;

that pawnbroking and 'cash-for-gold' should be excluded from Class 2;

that the proposals generally are felt to complicate the UCO, and it is not appropriate to artificially distinguish in planning between outlets selling pay day loans and those that do not;

that the exclusion should be further minimised to include only those whose main business is selling pay day loans.

52. In further considering Option 1, respondents were asked:

Q7. What other exceptions to the exclusion of financial lending should be included (i.e. alongside "deposit takers")? Please explain why and provide examples.

53. Two representative organisations responded to this question. One was concerned at the need for clarity as to the extent to which pay day loans can be part of a business before planning controls become appropriate. There were also suggestions that the definition of pay day lending or the uses to be controlled should exclude lending secured by mortgage, charge or pledge.

54. No individuals, commercial bodies or public interest organisations responded to this question.

55. Eight of the planning authorities who responded to this question cited concerns that controlling lending is not a planning matter. It was suggested that changes to planning legislation were not appropriate and that other mechanisms should be used instead.

56. General comments included:

Current planning controls are sufficient to deal with over-provision, and issues surrounding the principle of providing pay day loans are not a planning matter.

There is a need to minimise the definition to target only outlets whose primary function is pay day lending.

Option 1 – Summary

Of those responses in favour of Option 1, respondents generally viewed this as being the 'least bad option,' with a number of problems being highlighted.

A recurring issue was the concern that if shops are excluded, businesses who are involved in pay day loans as a side-line could 'slip through the net' unless monitored.

The problems of identifying what is a side-line and the resources required to enforce / monitor this were highlighted as a further issue by some.

Option 2

57. The second option proposed in the Consultation paper was to limit the "financial services" included in Class 2 of the UCO to a number of more specific uses.

58. The proposed list of "financial services" to be included in Class 2 (i.e. financial service uses remaining in Class 2 alongside professional and other services) as set out in the consultation paper is:

"Accountancy services"

"Insurance Services"

"Deposit takers" – i.e. an entity with permission under Part 4A(permission to carry on regulated activities) of the Financial Services and Markets Act 2000) that includes accepting deposits, including-

a bank;

a building society within the meaning of section 119(1) (interpretation) of the Building Societies Act 1986;

a credit union within the meaning of section 31(1) (interpretation) of the Credit Unions Act 1979; or

a friendly society within the meaning of section 116 (friendly societies etc.) of the Friendly Societies Act 1992.

59. The above list was proposed as these uses were considered unlikely to raise the same sorts of planning concerns as a pay day loan shop. However, this approach would not include explicit exemptions for "professional services" or "other services" which may be engaged in some "financial services" as part of an overall package of services, for example estate agents or solicitors' offices.

60. As with other mixed uses, it would be for the planning authority in individual cases to consider whether the extent of any financial services provided by such premises was a material change of use requiring planning permission.

61. Respondents were invited to respond to the following questions in considering Option 2:

Q9. Should the exclusions from the UCO be extended beyond those described in this option? If so please explain and provide examples.

Table 6

Respondent Group

Yes

No

No reply

Total Individuals (4)

0

1

3

Planning Authority (16)

1

12

3

Public Interest Organisations (5)

1

1

3

Commercial business (5)

0

0

5

Representative organisation (5)

0

0

5

Total

2

14

19

62. The majority of responses received came from planning authorities, the majority of whom answered 'no' to this question. Additional comments from authorities included that they did not support the overall approach and / or that existing controls were adequate.

63. The only individual who responded to this question queried the benefits of the approach to land use planning and pointed out that existing policies are in place to control over-provision.

64. Respondents were then asked, again in relation to Option 2:

Q10. What other exceptions to the exclusion of financial services should be included (i.e. alongside "deposit takers" etc.)? Please explain and provide examples.

65. No individuals, commercial businesses or public interest organisations replied to this question.

66. Only one representative organisation replied, reiterating support for Option 2.

67. Of the planning authorities who responded, one mentioned that as far as possible, the definition should avoid financial services more generally. A recurring response mentioned by eight planning authorities was that this is not a matter for planning controls or that existing controls were sufficient to regulate the situation.

68. Finally, in considering Options 1 and 2 as outlined in the consultation paper, respondents were invited to indicate which of the proposed two options they preferred:

Q11. Which approach would you prefer, Option 1 or Option 2? Please explain your answer.

Table 7

Respondent Group

Option 1

Option 2

Neither

No reply

Total Individuals (4)

1

0

0

3

Planning Authority (16)

3

6

7

0

Public Interest Organisations (5)

0

3

0

2

Commercial business (5)

0

0

0

5

Representative organisation (5)

2

1

0

2

Total

6

10

7

12

69. Seven planning authorities stated that neither option is preferable. Some added that both approaches complicate planning legislation unnecessarily, another felt that the proposed changes are about controlling products rather than land uses. One planning authority stated that it is too late to do anything about these stores, as they are already established on the high street and the proposed changes only deal with new applications or changes of use.

70. One individual responded to this question, indicating that Option 1 is preferable as it is more specific. No commercial businesses responded.

71. Of the representative organisations, three preferred Option 1, but pointed out that clear guidance is needed as to when the sale of pay day loans goes beyond the use of premises as a shop. One stated that Option 2 is clearer, and avoids new uses which might engage in pay day loans from falling through the net.

72. Of those public interest organisations who stated a preference for Option 2, one considered that it would allow the planning authority to make a judgement of issues for each individual case. Another felt that Option 2 would be easier to enforce. One respondent felt that Option 1 was too broad and could catch uses which are not of concern.

73. Respondents were then asked for any other comments:

Q12. Do you have any other comments or suggestions? Please elaborate.

74. The majority of responses to this question came from planning authorities and representative organisations. Comments included:

The view that a clearer definition of pay day lending is required, and that the problem cannot be tackled by planning in isolation.

One planning authority reiterated their support for the proposals and the policies now in place through the SPP. The authority had attempted to control clustering through their local plan policies but refusals had been overturned at appeal.

Guidance or a circular should accompany any changes to legislation.

Unlike other sui generis businesses, pay day lenders do not generate noise, activity or traffic affecting surrounding businesses.

A view that, whilst concerns around clustering are understood, the planning system is not the appropriate mechanism to deal with these. Some respondents suggested changes to the financial system were more appropriate. The promotion of education and advice, and a refusal to rent council owned property to betting offices or pay day lenders were also identified as alternative solutions.

Clustering can be addressed using local development plan policies.

The view that a competition assessment would be required as part of an evidence – based approach.

The view that more research was required into possible unintended consequences of the proposals.

Summary

Option 2 appeared to be more popular than Option 1, however the majority of respondents did not answer this question or thought that neither option was preferable;

Of those responses in favour of Option 2, there was a broad agreement that the list of inclusions was appropriate;

A number of planning authorities expressed concern as to whether planning was the best way to deal with the issue;

Concern was expressed regarding the effect of the proposals on competition and the view that further research and a competition assessment was required.

Pay Day Loans – Clustering

75. Linked to the previous sections, respondents were asked whether Option 1 (question 5) and Option 2 (question 8) were effective and proportionate in addressing concerns regarding the clustering and over-provision of pay day lenders.

Q5. Do you think this would represent an effective and proportionate approach to addressing the concerns about clustering and over provision of pay day lenders? If not, why not?

Table 8

Respondent Group

Yes

No

No reply

Total Individuals (4)

0

3

1

Planning Authority (16)

2

14

0

Public Interest Organisations (5)

2

2

1

Commercial business (5)

0

1

4

Representative organisation (5)

1

1

1

Total

5

21

7

76. The majority of respondents overall, including most planning authorities, responded negatively to this question.

77. Of the three individuals who responded "no", one respondent acknowledged that action was needed in other areas, while the other two felt that such planning changes were entirely inappropriate. The recurring theme was that sufficient powers were felt to already exist within planning to address concerns regarding clustering.

78. No commercial businesses responded to this question.

79. Responses from representative organisations were mixed. One respondent answering 'yes' to this question indicated that their response was contingent on the definition of pay day lending being such that pawnbroking would not be affected. Other respondents expressed concerns generally regarding the uncertain effect of the changes and queried the role of planning controls in seeking to control pay day lending.

80. Of the public interest organisations – two responded yes, one commenting that this was subject to shops being included so any pay day lending requires planning permission.

81. The majority of responses from planning authorities to this question were negative. Additional comments from those who responded include:

A view that pay day loans are not capable of being controlled through planning as it is a product not a land "use", and that licensing or some other legislative approach was needed;

A view that the approach would not work in practical terms or that ancillary pay day lending would not be controlled;

That changes of use of premises within Class 2 to these uses is a limited occurrence.

82. In respect of Option 2, respondents were further asked:

Q8. Do you think this would represent an effective and proportionate approach to addressing the concerns about clustering and over provision of PDL? If not, why not?

Table 9

Respondent Group

Yes

No

No reply

Total Individuals (4)

0

3

1

Planning Authority (16)

0

14

2

Public Interest Organisations (5)

4

0

1

Commercial business (5)

0

0

5

Representative organisation (5)

0

1

4

Total

4

18

13

83. Of the individuals to respond, there were concerns regarding this approach as a means of trying to control types of lending; concerns included that some unintended uses would be caught unnecessarily; and, that the approach would not capture pay day loans where these were an ancillary use.

84. Of the representative organisations who responded, one felt the proposals go too far and are likely to restrict competition. Another commented that it's difficult to see how planning can control financial products and further research is required into the likely effects of controls.

85. No commercial businesses responded to this question.

86. Generally, public interest organisations respondents were in favour of the approach. For example, one respondent felt the proposals would ensure that potential pay day loan outlets were at least considered.

87. Finally, a majority of planning authorities considered the approach was not effective and proportionate in seeking to address concerns about clustering and over provision of pay day lending. Reasons given included:

A view that it is not for planning to control financial services or lending activities and that over-provision of premises can be controlled via current planning mechanisms.

One authority commented that there are few changes within Class 2 in their area, so existing powers are sufficient to control the situation.

A view that there is no evidence of a problem

The proposed controls are likely to increase the number of vacant premises.

The view that a clearer definition of clustering and over provision is required

Business & Regulatory Impact Assessment ('BRIA')

88. Comments were invited on the draft partial BRIA which accompanied the consultation. Respondents were asked the following question:

Q13. BRIA – Can you identify likely costs and benefits associated with the potential changes discussed in this paper which should be covered in the BRIA?

89. Eleven respondents commented specifically on this question, including six responses from planning authorities and three from commercial businesses and representative organisations.

90. Planning authorities generally concluded there would be some additional planning applications arising from the extension of planning controls. It was considered that these would give rise to some additional resource implications for planning authorities and for the Scottish Government's Directorate for Planning and Environmental Appeals with associated new procedural and financial requirements also falling to businesses in submitting a planning application.

91. Responses from commercial businesses and representative organisations included comments on impacts on Competition, including possible barriers to new entrants to the market associated with the uncertainty and costs of submitting a planning application, and a possible refusal.

Equalities Impact Assessment 'EQIA'

92. The consultation was accompanied by a partial equalities impact assessment report.

93. Respondents were invited to provide their views on any equality issues that may arise from the proposed legislative changes:

Q14. Please provide details of any specific issues for any of the equality groups (including race, disability, age, sexual orientation, gender or religion and belief) which you think may arise in relation to the potential changes discussed in this paper.

94. There were only five responses to this question, two from planning authorities, three from public interest organisations, one from a representative organisation and one from an individual.

95. One planning authority simply said that the EQIA was robust, whilst another stated that the proposed changes would not have implications for the authority's policies in this regard.

96. The response from the representative organisation pointed out that the EQIA should take account of the view that high street pay day lenders attract a different demographic to online providers and include a higher proportion of women and ethnic minorities. Three public interest organisations made similar points, highlighting research that indicates that women; 'older customers'; ethnic minorities; 'social renters'; part-time and unemployed workers; and those with no bank accounts' are more likely to use pay day lenders. Limiting the number of pay day loan outlets was consequently felt likely to affect these groups more than others.

97. Two of the public interest organisations who responded also pointed out that men are more likely to experience problem gambling than women. One response from a representative organisation highlighted similar issues adding that those with psychiatric disorders or with signs of alcohol dependence are also more likely to be problem gamblers. Overall, responses from these groups felt that not attempting to tackle the issue of problem gambling through the proposed changes discussed would be an equality issue.

98. The individual who responded to this question made the point that the proposed legislation aims to protect vulnerable groups and is therefore to be welcomed.

CONCLUSIONS

99. Overall, responses to the consultation were mixed.

100. There were concerns expressed as to whether the planning system was the best way to deal with problems of the over provision and clustering of betting offices and pay day lenders, and how effective the proposed mechanisms would be. These concerns were raised in particular by planning authorities and those with knowledge of the day-to-day operation of the planning system.

Specifically in relation to Pay Day Lending, there was a clear view that the proposals did not represent an effective and proportionate approach to addressing concerns about clustering and over provision. Of particular concern was the ability to distinguish in legislation between Pay Day Lenders and other financial institutions. Difficulties in identifying Pay Day Lending as an ancillary activity and the resources required to enforce / monitor this were also raised.

In relation to Betting Offices, responses overall indicated that the proposed legislative changes represented the most suitable mechanism available for use within the planning system. However, many respondents questioned whether planning was the appropriate means for dealing effectively with these issues.

Alternative approaches proposed included, amongst others, maintaining the status quo / using existing powers more robustly; the reintroduction of the so-called 'demand test' for betting offices and other changes to gambling or financial regulation, which are reserved matters for the UK Government and UK Parliament.

101. Aside from the views specific to planning controls, there were other concerns about control generally:

There were differing views on the extent to which the clustering of betting offices was in evidence or indeed a problem on high streets, with commercial businesses and public interest organisations disagreeing on this point.

Some Commercial businesses raised concerns regarding the effect of the proposals on Competition within the high street. Some respondents generally expressed a view that further evidence was needed before any changes to legislation were made.

102. In conclusion, and in light of stakeholder concerns regarding the operation and effectiveness in practice of the proposed changes, the Scottish Government does not intend to make any changes to planning legislation in respect of betting offices and pay day lending at this time. Within the planning system, we will however:

Continue to support the use of existing planning mechanisms to address concerns, including local development plan policies, where necessary, to guide planning authority decisions on planning applications for relevant changes of use. This follows the introduction in June 2014 of the Scottish Planning Policy containing new provisions on clustering and over provision;

Maintain an awareness of the growing experience in the use of these existing mechanisms within this new policy framework and consider their effectiveness in addressing proliferation issues.

Complete the Town Centres Planning Pilots which will look at developing material which can be used when considering planning applications or appeals for pay day loan shops and betting offices. Glasgow City Council and West Dunbartonshire Council are involved in this work, which will involve public consultation and the development of Supplementary Planning Guidance.

Annex A - List of respondents

Annex A – List of respondents

National Pawnbrokers Association

William Hill Organisation

Betfred

Fife Council

Michael Dolan

West Dunbartonshire Council

Falkirk Council

Dundee City Council

Michael Hyde

Argyll and Bute Council

Inverclyde Council

Scottish Borders Council

Dumfries and Galloway Council

Highland Council

West Lothian Council

Dowanhill, Hyndland and Kelvinside Community Council

Renfrewshire Council

Citizens Advice Scotland

Fa'side Area Partnership, East Lothian

Perth and Kinross Council

North Ayrshire Council

Consumer Finance Association

Kezia Dugdale MSP

Church of Scotland

East Renfrewshire Council

The Salvation Army

South Lanarkshire Council

Power Leisure Bookmakers Limited (t/a Paddy Power)

Coral Racing Limited

East Dunbartonshire Council

Scottish Property Federation

Ladbrokes plc

Royal Town Planning Institute Scotland

David Leslie

Convention of Scottish Local Authorities

Annex B - Consultation Questions

Annex B – Consultation Questions

Q1. Do you agree with this approach to dealing with betting offices? If not, please specify why not.

Comments

Q2. Do you consider there to be a more effective approach to changes around betting offices? If so, please describe the approach.

Comments

Q3. Do you believe that a specific definition of PDL, similar to the FCA's definition in paragraph 23 above, should form part at least of the exclusion of uses from the UCO? If so what should the definition be?

Comments

Q4. Do you agree that Class 1: Shops should be excluded from any changes regarding PDL? If not, why not?

Comments

Q5. Do you think this would represent an effective and proportionate approach to addressing the concerns about clustering and over provision of pay day lenders? If not, why not?

Comments

Q6. What other activities which might be involved in PDL should be added to the exclusions? Please explain why and provide any examples.

Comments

Q7. What other exceptions to the exclusion of financial lending should be included (i.e. alongside "deposit takers")? Please explain why and provide examples.

Comments

Q8. Do you think this would represent an effective and proportionate approach to addressing the concerns about clustering and over provision of PDL? If not, why not?

Comments

Q9. Should the exclusions from the UCO be extended beyond those described in this Option? If so please explain and provide examples.

Comments

Q10. What other exceptions to the exclusion of financial services should be included (i.e. alongside "deposit takers" etc.)? Please explain and provide examples.

Comments

Q11. Which approach would you prefer, Option 1 or Option 2? Please explain your answer.

Comments

Q12. Do you have any other comments or suggestions? Please elaborate.

Comments

Q13. BRIA – Can you identify likely costs and benefits associated with the potential changes discussed in this paper which should be covered in the BRIA?

Comments

Q14. EqIA – Please provide details of any specific issues for any of the equality groups (including race, disability, age, sexual orientation, gender or religion and belief) which you think may arise in relation to the potential changes discussed in this paper.

Comments

Annex C - Glossary

"material" – used in ‗material change of use' or whether activities are ‗materially different' from one another. Planning permission is required for, as well as new buildings and structures, ‗material changes in the use of land or buildings'. Whether a change of use is material will depend on factors such as the current use, the proposed use, the location of the site and its surroundings and its impacts on the amenity and environment of the area.

GPDO/ General Permitted Development Order – This legislation grants a Scotland wide planning permission for various developments, subject to certain restrictions and conditions – known as permitted development rights. It removes the need to apply to the planning authority for planning permission for development specified in the order. It includes certain changes of use. For example, a building used as a hot food takeaway or café or restaurant can change to various activities associated with financial, professional and other services without an application for planning permission. This is on the basis that the latter would have less impact on the amenity and environment of an area than the former. Directions can be made by planning authorities restricting permitted development rights.

Local development plan – amongst other things, this plan sets the detailed local policy context for decisions on planning applications. Decisions on planning applications require to be made in accordance with the development plan for the area (the local development plan and, in city regions, the strategic development plan) unless material considerations indicate otherwise. Further information on material considerations can be found in Annex A of Circular 3/2013: Development Management Procedures[5]

UCO/ Use Classes Order – This legislation groups uses of land and buildings with similar impacts on the environment and amenity into classes. It specifies that planning permission is not required for changes between uses within the same class. For example, Class 1: Shops and Class 2: Financial, professional and other services. Betting offices and most uses associated with pay day lending are included in Class 2 of the UCO, alongside uses such as banks, lawyers' offices, and credit unions.

Footnotes

1 http://www.scotland.gov.uk/Topics/Built-Environment/regeneration/towncentres/ PayDayLendingActionPlan

2 http://www.scotland.gov.uk/Topics/Built-Environment/planning/Policy

3 The Town and Country Planning (Use Classes) (Scotland) Order 1997

4 The Town and Country Planning (General Permitted Development) (Scotland) Order 1992

5 http://www.scotland.gov.uk/Publications/2013/12/9882