Building chief Muir hits out at 'catastrophic' planning rules

Builders have long been required to stump up money for roads, street lighting and even schools constructed around their developments as part of gaining planning consent from local authorities.

But John Muir, chairman of the eponymous Fife-based building and investment group, thinks the planning systems needs reform to help revive Scotland's crippled construction sector.

Muir told Scotland on Sunday: "Although reforms are under way to make the planning system quicker, the reality is somewhat different and the jury is out as to whether they will accelerate the system.

"Local planners say they need roads, affordable houses, schools and community facilities – and Holyrood has encouraged councils to get developers to build some of these facilities as part of their planning consent.

"That was always ridiculous but today it is catastrophic. Builders can't see how they can move projects forward because the costs are high and the profit margins are too tight."

Muir added: "Having a longer time to pay is a help, but here is an industry that is bust. Councils need to be more realistic and lower the burden on developers."

His comments came as Muir Group unveiled a 60 per cent rise in pre-tax profits to 1.75 million, the 35th consecutive year in the black, as the company continues to recover from the recession, with group turnover holding steady at 78m.

Muir said all parts of the business had contributed to the profit, with the group's housebuilding arm swinging from a loss of 3.5m in 2008 to a small profit of 1,000 last year.

The property development business, which includes industrial and commercial work, swung from a loss of 911,000 to a 131,000 profit, boosted by joint ventures with Deanway Development in Edinburgh and Stockland in Aberdeen.

But profits at the group's construction arm fell from 4.5m to 2.5m as margins were squeezed, although the firm said the performance was still "great" given market conditions.

Muir said: "It doesn't look like it from the profits but, in real terms, this has been the hardest year that I've seen in 35 years of business.

"While 2008 was the year that the private housing sector collapsed, 2009 was when the crunch hit main contracting. Contractors are now scrambling for business and can't find enough business to even stand still. We've ridden out that storm by working with partners through our joint ventures."

Michael Levack, chief executive of the Scottish Building Federation, said: "We welcome the work the Scottish Government is undertaking to improve and streamline the planning system.

"But it's not just a question of rules and processes. In parallel with this, we need to work together to change planning culture at the grass roots level so we have a planning system that is more responsive to the needs of today."

A spokesman for the Convention of Scottish Local Authorities (Cosla) said that councils and developers were "all in this together".

He added: "It is not our fault that banks will not lend at the moment, nor is it our fault the damage the banks did to the general economy.

"Councils do acknowledge and have some sympathy for the position developers find themselves in and that is why we are working with the Scottish Property Federation, Homes for Scotland and other stakeholders to look at what can be done and to explore new processes for resolving infrastructure pressures.

"However, the context in which these discussions are taking place must be recognised and the direction of travel in relation to public finances is well documented."