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A MAJOR overhaul of Scotland’s planning system has failed to cut delays and left a £20 million black hole in council finances, a public spending watchdog has found.

Audit Scotland said it could not fully account for the rise in expenditure by all 32 local authorities on planning applications in the past six years – despite the number of applications dropping by almost a third.

Efforts to modernise the planning system, which was seen as “complex, over-bureaucratic and slow to respond” to local economic needs, were at the heart of the Planning Act of 2006.

Business leaders complain that delays in passing applications for new developments strangle economic growth.

But the report has found that, over the past six years, performance in deciding local applications in two months has “remained constant”.

It adds: “In the second half of 2009, the period immediately after modernisation, performance in deciding major applications declined, with only 30 per cent of major applications decided in four months.”

John Baillie, chairman of the Accounts Commission, said: “The time taken to decide planning applications is not reducing, and the gap between income and expenditure is widening and becoming increasingly unsustainable.

“Councils lack detailed information on the costs of handling planning applications. Understanding these costs and why they have increased is a necessary first step in identifying where efficiencies can be made. Councils need to make progress on this as a matter of urgency.”

The £400m Aberdeen western bypass road is among the major projects caught up in the system, despite getting the go-ahead by Scottish ministers in December 2009. A final court decision is expected in December.

The report also finds that over the past six years, the gap between income and expenditure rose from £6.7m to £20.8m.

It states: “In 2009-10, 50 per cent of expenditure on processing planning applications was offset by income from fees, compared with 81 per cent in 2004-5. During this time, fees in Scotland rose by 40 per cent while the total number of planning applications fell by 29 per cent.

“The balance has to be met from councils’ budgets, which are already under increasing pressure.”

The biggest spike in expenditure came in the year that the reforms were introduced, and remained much higher than before in the following years.

Alison Hay, Cosla spokeswoman for regeneration and sustainable development, said councils are facing issues such as a falling workforce and concerns over planning fees.

“Cosla is presently in discussions with the Scottish Government about many of these issues,” she said.