With much residential development across the country now effectively on hold as a result of the credit crunch, the home building industry has called for the planning system to be more responsive to the new economic reality and for local authorities to be adequately resourced to unlock investment in infrastructure.

The demands were made in written evidence submitted to the Scottish Parliament's Local Government and Communities Committee by Homes for Scotland (the organisation which represents companies providing 95% of the country's new homes) ahead of its consideration of the National Planning Framework 2 (NPF2).

Whilst acknowledging that a great deal has already been done to put in place a modernised housing and planning delivery framework, Homes for Scotland's Director of Planning Allan Lundmark said: "New home output is falling dramatically. Indeed we believe 2009 could see this drop as low as 12,000 – half the annual average. In a very real sense, therefore, every development plan in Scotland has been rendered out of date by the events of the last 12 months.

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"Land release policies contained in the most up-to-date development plans were formulated during a period of economic growth, rising house prices and increasing land values with an expectation that the home building industry would provide funding for road improvements, public transport, drainage systems, affordable housing and schools. Mr Lundmark said as a result of falling land prices, coupled with a major market correction in house prices, this is no longer viable.

"Local planning authorities and the development industry therefore require clear, unambiguous guidance from Government on the funding of infrastructure.

"NPF2 could be the vehicle to signal alternative models, such as Tax Incremental Finance which allows infrastructure to be funded by borrowing against future Council and business tax receipts arising from the development concerned. NPF2 might also address the role of the Scottish Futures Trust in supporting new development," he said.

Mr Lundmark concluded: "What the National Planning Framework MUST NOT do is continue to remain silent on these matters."

(GK/JM)