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15th August 2012

Cost of compensation held relevant to decision to revoke or modify planning permission

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In a recent case, The Health and Safety Executive v Wolverhampton City Council, the Supreme Court ruled that, when local planning authorities are deciding whether or not to revoke or modify a planning permission, they can take into account the compensation which they could be required to pay to the developer if they did so.

The Council granted planning permission for four blocks of student accommodation close to a site used to store liquefied petroleum gas. The Health and Safety Executive was concerned that, due to the storage facility, there was a risk of harm to people at the development and asked the Council to remedy the situation by making an order to revoke the permission. In refusing that request, the Council took into account the fact that they would have to pay compensation to the developer.

The Health and Safety Executive challenged the Council’s decision and the case went all the way to the Supreme Court. Lord Carnwath first considered public authorities' powers in general. He felt that, as a custodian of public funds, an authority not only may but generally must have regard to the cost to the public of its actions; it should at least consider whether the cost is proportionate to the objective and take into account any more economic ways of achieving that objective.

Lord Carnwath then considered the specific power to revoke or modify planning permissions and determined that it did not require a different approach. He noted that statute requires, first, that a local planning authority should only revoke planning permissions if it is expedient to do so and, second, that, in exercising its power, the local planning authority should have regard to the development plan and any other material considerations. He concluded that expediency could encompass the cost consequences of revocation, as could the term “material considerations”. In the Court’s view, neither requirement limits the local planning authority to considering planning considerations; financial considerations, including potential liability to pay compensation, are relevant.

The power to revoke or modify planning permissions is already rarely used by local planning authorities and it seems that this decision will make it even more unlikely. For further information, please contact Gemma Harris on 01223 461155 or on