A multi million-pound 'black hole' in council finances has been created by problems with the planning system, Scotland's spending watchdog has revealed.

Audit Scotland said that despite new laws in 2006 to modernize the system, the shortfall had still risen from £6.7m to £20.8m in the last six years - despite a 29% drop in the number of planning applications.

The watchdog also revealed that councils had to fill the gap between spending and the amount they got back from fees.

Chairman of the Accounts Commission, John Baillie, said: "Our planning system plays a key role in sustaining and growing our economy and shaping our communities. Two years ago, the most significant changes to Scottish planning law in decades came into force, as part of a drive to modernise and speed up the system.

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"Between 2009 and 10, councils decided on more than 40,000 planning applications - a drop of nearly a third on the number five years earlier.

"But local authorities say new arrangements which came into place with the new planning laws have placed an additional cost and burden on them. They also note that while the number of planning applications has fallen, so has the number of staff who deal with them. The number dropped from 1,700 in 2006 to 1,575 last year.

"The time taken to decide planning applications is not reducing and the gap between income and expenditure is widening and becoming increasingly unsustainable."

Scottish Planning Minister Aileen Campbell, also commented, saying: "Scotland's planning system has been through its most fundamental reform in 60 years and I'm encouraged that the Audit Scotland report recognises the Scottish government's leadership of this and the progress that's been made over the last few years.

"We are now concentrating on sharpening our focus on performance and delivery to make sure the planning system does all it can to support sustainable economic growth for Scotland.

"Some of the areas raised by the report are already being taken forward such as the reform of permitted development rights."

(JG/CD)