Planning Fraud Risks
Introduction
What is planning fraud?
The planning system exists to ensure, amongst other things, that the development of land is managed in the public interest. It aims to direct and control the type and volume of development that occurs, in order to ensure the sustainable creation of places in which people want to live, work and invest.
However, the planning system is susceptible to potential fraud and corruption. For example:
- developers or individuals wishing to advance their own interests may attempt to influence planning decisions;
- planning applicants may make false or misleading statements in planning applications, or provide false supporting documentation;
- planning officials and decision-makers may manipulate the planning process to the advantage of themselves or a third party; or
- planning officials and decision-makers may be subject to undue influence from third parties in relation to planning decisions.
“Planning is an inherently high risk area of public service delivery..…There is no other part of the public sector which is more open to the possibility of conflicts of interest, collusion and impropriety.”
Source: NI Public Accounts Committee, February 2010
Overview of the planning system in Northern Ireland
Under the Planning Act (NI) 2011, responsibility for delivering the main operational planning functions passed from a central government department to local councils in April 2015. These functions include:
- development plans – creating a plan that sets out a vision of how the council area should look in the future, by deciding what type and scale of development should be encouraged and where it should be located;
- development management – determining whether planning applications for particular development proposals should be approved or refused; and
- planning enforcement – investigating alleged breaches of planning control and determining what action should be taken.
The Department for Infrastructure retains responsibility for planning legislation, regional policy, oversight of the development plan process, and making decisions in relation to a small number of regionally significant planning applications and called in applications.
A key element of the planning process is the role of statutory consultees. Planning authorities may not have the necessary in-house expertise to assess some technical or specialist aspects of planning applications. Planning legislation therefore identifies a number of organisations that must be consulted in certain circumstances. They are the Department for Infrastructure, the Department of Agriculture, Environment and Rural Affairs, the Department for Communities, the Department for the Economy, NI Water, the Health and Safety Executive for Northern Ireland, Northern Ireland Housing Executive and local councils (for applications which are determined by the Department for Infrastructure).
Whilst this Guide is directed primarily at planning authorities (local councils and the Department for Infrastructure), statutory consultees should also be aware of its content and the key risks and controls that might apply to their role.
Why produce a guide on planning fraud risks?
In February 2022, the NIAO published a report on Planning in Northern Ireland. Following a series of Public Accounts Committee (PAC) hearings, the PAC published its own report in March 2022. It expressed concerns about the lack of transparency of the planning system and highlighted the importance of making planning decisions “within a framework of high ethical values”.
In addition to fraud and corruption risks within the planning system, there is also the risk of fraud being committed against the planning system. Planning authorities need to be alive to the potential risks from third parties and have controls in place to mitigate those risks.
“The planning system lacks transparency, leaves decision-makers ill-equipped to defend themselves against allegations of corruption and contributes to mistrust.”
Source: NI Public Accounts Committee, March 2022
Purpose of the Guide
The purpose of this short Guide is to raise awareness across local government in NI about what planning fraud might look like, the conditions that might give rise to planning fraud risks, and the controls that can be put in place to combat the risks. It is relevant for councillors, planning committee members and any staff within organisations who are involved in any way, no matter how small, in the planning process.
The Guide will also be useful for auditors reviewing planning arrangements, helping them to see the warning signs (or “red flags”) of potential fraud. Internal audit in organisations have a key role in providing assurance over the design and operation of the controls put in place by management across the planning process.
General risks and controls
Risk/red flag
Planning authorities may not have a robust system of internal controls in relation to their planning function.
Mitigating controls
- A robust system of internal controls should be in place, including separation of duties, effective supervision, management oversight and transparent and well documented decisions - see Internal Fraud Risks guide, NIAO, 2022.
- Internal controls must be tested regularly to ensure they are operating effectively
Risk/red flag
Planning decision-makers may be unclear as to what is acceptable conduct in terms of proper planning decisions.
Mitigating controls
- Planning authorities must have clear guidance in place, in terms of policies and procedures for the planning process. This guidance must be readily accessible and understood by all those involved in the planning process.
- Councillors and planning officials must have a sound understanding of the legal requirements around planning decisions, reinforced through regular awareness training.
- Planning authorities should ensure councillors and planning officials receive regular training on probity in decision-making.
Risk/red flag
Planning decision-makers may be unclear as to the wider ethical and governance framework of the planning authority
Mitigating control
- Planning authorities should have a comprehensive set of complementary policies such as conflicts of interest, gifts and hospitality, anti-fraud and raising concerns. Planning decision-makers must be familiar with these policies and adhere to them.
Risk/red flag
Lack of transparency may lead to the perception of impropriety.
Mitigating control
- The process for arriving at planning decisions must be open, transparent and impartial.
Risk/red flag
Undocumented meetings may lead to the perception of impropriety.
Mitigating control
Councillors or senior officials involved in pre-application (or other) discussions with third parties should be accompanied by a planning officer who should document the meeting for the case file, noting the issues raised and the advice given.
Risk/red flag
Lack of clarity and comprehensive documentation around planning decisions may lead to the perception of impropriety or corruption.
Mitigating controls
- A planning committee's reasons for a planning decision must be clearly documented in the minutes of the meeting, particularly where the decision is contrary to a planning officer's recommendation or to the local development plan. A copy of the minutes must be placed on the planning application file/planning portal.
- Decisions contrary to a planning officer's recommendation or the local development plan must be based on sound planning considerations.
Risk/red flag
Planning authorities may not have a robust system of internal controls in relation to their planning function.
Mitigating controls
- A robust system of internal controls should be in place, including separation of duties, effective supervision, management oversight and transparent and well documented decisions - see Internal Fraud Risks guide, NIAO, 2022.
- Internal controls must be tested regularly to ensure they are operating effectively.
Risk/red flag
Planning decision-makers may not be provided with adequate and effective training for their role, including fraud awareness training.
Mitigating controls
- Planning authorities should ensure councillors and planning officials receive appropriate training for their role, both at induction and on an ongoing basis.
- Elected representatives should ensure they attend all NILGA-provided training in relation to the Code of Conduct, and any focused training on planning.
Risks/red flags
- Planning decision-makers may be subject to undue influence, either directly or indirectly, e.g., via social media pressure or party political pressure.
- Planning decision-makers may be subject to undue influence from third parties in relation to zoning of land in the development plan process.
Mitigating controls
- Planning authorities should ensure training for councillors and planning officials covers probity in decision-making and raises awareness of the undue influences they may face.
- Councillors and planning officials must have a clear understanding that planning decisions must be made in line with relevant planning legislation and guidelines and must be free from undue influences.
- Councillors and planning officials should notify their planning authority if they are subject to any direct or indirect undue influence.
Risk/red flag
There may be no system or process for councillors, officials or third parties to raise concerns about planning activities.
Mitigating controls
- Planning authorities should have a clear route for those seeking to make a complaint or raise a concern about the planning process and decisions. Complaints and concerns should be appropriately considered and addressed.
- Planning authorities should be aware of good practice guidance on effective arrangements for raising concerns – see Raising Concerns: a Good Practice Guide for the NI Public Sector, NIAO, 2020.
Risk/red flag
Available sanctions may not be imposed in cases where councillors breach the Code of Conduct.
Mitigating controls
- Meaningful sanctions must be employed as a deterrent against misconduct. The Northern Ireland Local Government Code of Conduct for Councillors details the enforcement procedures and sanctions available to the Northern Ireland Ombudsman, in their capacity as the Northern Ireland Commissioner for Complaints, to address concerns brought to their attention about councillors’ conduct.
Elected representatives
Risk/red flag
A councillor/planning committee member may seek to unduly influence a planning official in the proper exercise of their duties.
Mitigating controls
- Elected representatives must not abuse their position by seeking to bring undue influence to bear on planning officials, in relation to planning decisions. They must recognise and respect the complementary roles of elected representatives and officials in the planning process and adhere to the Local Government Employee and Councillor Working Relationship Protocol.
Risk/red flag
A councillor/planning committee member may seek to influence another councillor/planning committee member in the proper exercise of their responsibilities
Mitigating controls
- Elected representatives making planning decisions must do so in the interests of the council as a whole and not in favour of individual constituents or particular interests.
- Political group meetings or discussions must not be used to decide how councillors should vote on a planning application, as all applications must be considered on their own merits and councillors must make their own decisions.
Risk/red flag
A councillor/planning committee member may be offered, or may request, a bribe to influence a planning decision. (Note: A bribe or inducement can take many forms, e.g., cash, benefits in kind, the promise of votes at election time.)
Mitigating controls
- There should be a clear commitment from senior levels within the organisation to prevent bribery and corruption, and a clear statement of ethical values.
- A proportionate bribery and corruption risk assessment should be carried out and reviewed periodically.
- There should be arrangements in place for raising and reinforcing bribery and corruption awareness, as part of wider fraud awareness training.
- There must be a clear route for those wishing to raise concerns about actual or potential bribery and corruption.
- Particular care must be taken by elected representatives in pre-election periods to avoid any perception of influencing planning decisions in return for votes.
Risk/red flag
Planning applications submitted by councillors/planning committee members could lead to suspicions of impropriety
Mitigating controls
- Councillors must play no part in deliberations/decisions involving their own planning applications.
- Councillors in such a position should declare any such interest and leave the meeting when their application is being discussed.
Risk/red flag
A councillor/planning committee member may manipulate the planning system to the advantage of themselves/family member/friend.
Mitigating controls
- Councillors must adhere to due council process and not take any part in decision-making following submission of a planning application by themselves, a family member, friend or close associate.
- Any such interest should be declared, recorded and appropriately managed.
Risks/red flags
- A councillor/planning committee member may fail to declare an interest in a situation where they could use their public position for direct personal gain (e.g., in relation to land holdings).
- A councillor/planning committee member may fail to declare an interest in a situation where they could use their public position for indirect gain (e.g., for the gain of an employer, business associate, family member or friend, or by acting as a planning agent). [Note: Particular risk may attach to planning committee members who have advance knowledge of Local Development Plans and could use this to their own advantage or the advantage of others.]
Mitigating controls
- Conduct for Councillors. The Code includes guidance on registering and declaring both direct and indirect pecuniary interests. Declared interests must be properly managed. A key consideration is whether a member of the public, with knowledge of the relevant facts, would perceive that the interest would be likely to influence any decision.
- Planning authorities should consider publishing their registers of interests in an accessible format, to promote transparency.
- Planning authorities should be aware of good practice in managing conflicts of interest - see Conflicts of Interest: a Good Practice Guide, NIAO, 2015.
Risk/red flag
A councillor/planning committee member could be influenced in their official capacity due to a previous or prospective employment relationship, e.g. with a developer.
Mitigating controls
- Planning authorities need to be mindful of the “revolving door”. There must be clear guidance around such situations and effective management of any conflicts of interest, actual or perceived (see link to good practice above).
- Councillors involved in planning should receive training about the risks of abusing the “revolving door”.
- Planning authorities should have an agreed process to decide whether councillors who have employment links, past or present, with developers should be involved in the planning process. Any potential conflicts of interest must be identified and properly managed.
Risk/red flag
A councillor/planning committee member may be subject to undue influence if they accept generous gifts, hospitality or other benefits from e.g. developers.
Mitigating controls
- Councillors must ensure they do not accept frequent and/or generous gifts or hospitality, to avoid the reality or perception of undue influence.
- Planning authorities must establish clear guidelines/thresholds for the acceptance of gifts and hospitality, in the form of standing orders.
- Planning authorities should have a process in place for the declaration and management of gifts and hospitality, and publish their register of gifts and hospitality in an accessible format, to promote transparency.
- Planning authorities should consider the appropriate period of tenure for planning committee members, to protect councillors from the reality or perception of undue influence.
Planning officials
Risk/red flag
A planning official may not have the necessary capability and expertise to recognise key fraud risks within the planning process that they are administering.
Mitigating control
- Planning authorities should have clarity about the knowledge and skills required to properly administer the planning system while minimising key fraud risks, and take steps to ensure their planning officials have the necessary capability and expertise, e.g., through recruitment of the right people and provision of an ongoing programme of training and development.
Risk/red flag
A planning official may be subject to undue influence from an elected representative in the performance of their duties.
Mitigating controls
- Planning officials must be clear about their own role and that of elected representatives. They should be aware of the Local Government Employee and Councillor Working Relationship Protocol.
- Planning authorities must ensure they have robust procedures in place for planning officials who wish to raise concerns about undue influence from elected representatives
Risk/red flag
A planning official may be offered, or may request, a bribe to influence a planning decision.
Mitigating controls
- There should be a clear commitment from senior management to prevent bribery and corruption and a clear statement of ethical values.
- A proportionate bribery and corruption risk assessment should be carried out and reviewed periodically.
- There should be arrangements in place for raising and reinforcing bribery and corruption awareness, perhaps as part of fraud awareness training or via staff bulletins on the intranet.
- There must be a clear route for those wishing to raise concerns about actual or potential bribery and corruption.
Risk/red flag
A planning official may manipulate a planning fee to a lesser amount or process as a zero fee, in return for a bribe.
Mitigating control
- All fee calculations should be checked and confirmed by another planning official independent of the case.
Risk/red flag
Planning applications submitted by planning officials could lead to suspicions of impropriety
Mitigating controls
- Planning officials must play no part in decisions involving their own planning applications. Any such interest should be declared and appropriately managed.
- Planning applications submitted by planning officials should be determined by the council’s planning committee, in the interests of transparency.
Risk/red flag
A planning official may manipulate internal systems/processes for their own or a third party's advantage, e.g. to influence a planning decision to the advantage of themselves/family member/friend.
Mitigating control
- A robust system of internal controls should be in place, including separation of duties, effective supervision, management oversight and transparent and well documented decisions. Internal controls must be tested regularly to ensure they are operating effectively - see Internal Fraud Risks guide, NIAO, 2022.
Risk/red flag
A planning official may fail to declare an interest in a situation where they could use their professional position for personal gain (e.g. in relation to land holdings or by acting as a planning agent).
Mitigating controls
- There should be a comprehensive set of complementary policies, such as conflicts of interest, gifts and hospitality, anti-fraud and raising concerns.
- The planning authority's code of conduct must make clear which interests must be declared. Declared interests must be properly managed.
Risk/red flag
A planning official may be subject to undue influence if they accept generous gifts, hospitality or other benefits from developers or planning applicants
Mitigating controls
- Planning officials must ensure they do not accept frequent and/or generous gifts or hospitality, to avoid the reality or perception of undue influence.
- Planning authorities must establish clear guidelines/thresholds for the acceptance of gifts and hospitality.
- Registers of gifts and hospitality should be published on the planning authority's website, in an accessible format, to promote transparency.
Risk/red flag
A planning official could be influenced in their official capacity due to a previous or prospective employment relationship, e.g. with a developer.
Mitigating controls
- Planning authorities need to be mindful of the "revolving door". There must be clear guidance around such situations and effective management of any conflicts of interest (see link to good practice above).
- Officials involved in planning should receive training about the risks of abusing the "revolving door".
- Planning authorities should consider whether officials who have employment links, past or present, with developers should be involved in the planning process. Any potential conflicts of interest must be identified and properly managed.
Third parties
Risk/red flag
An applicant may make a false or misleading statement on a planning application.
Mitigating controls
- Planning officials must exercise due diligence when considering planning applications and not accept information at face value.
- Planning authorities’ planning application documentation should require the applicant to sign a declaration that all information provided on the form is accurate and truthful.
- Planning authorities should consider whether any sanctions might be imposed against those making false or misleading statements on planning applications.
- Planning authorities should ensure that fraud awareness training for planning officials highlights the fraud risks associated with third parties.
Risk/red flag
An applicant may provide false documentation in support of a planning application.
Mitigating controls
- Planning officials/statutory consultees should take reasonable steps to verify that official documents provided in support of planning applications are genuine, e.g. on official headed paper and properly signed.
- Planning authorities’ planning application documentation should require the applicant to sign a declaration that all evidence provided in support of the application is authentic, accurate and truthful.
- Planning authorities should consider whether any sanctions might be imposed against those submitting false documentation in support of planning applications.
Risk/red flag
A supporter of, or objector to, a planning application may make a false or misleading statement as part of their representation.
Mitigating controls
- Planning officials should exercise due diligence when considering representations in relation to planning applications.
- Planning authorities’ guidance to those wishing to comment on or object to a planning application should make clear that any statements made as part of their representation must be accurate and truthful.
- Planning authorities should consider whether any sanctions might be imposed against those making false or misleading statements when submitting representations about planning applications.
Risk/red flag
A supporter of, or objector to, a planning application may provide false documentation as part of their representation
Mitigating controls
- Planning officials/statutory consultees should take reasonable steps to verify that official documents provided as part of representations made in relation to planning applications are genuine, e.g. on official headed paper and properly signed.
- Planning authorities’ guidance to those wishing to comment on or object to a planning application should make clear that any documentation provided as part of an objection must be authentic and truthful.
- Planning authorities should consider whether any sanctions might be imposed against those submitting false documentation as part of representations in relation to a planning application
Risk/red flag
A planning agent may deceive a planning authority by falsifying documentation submitted in support of a planning application.
Mitigating controls
- Planning officials should take reasonable steps to verify that official documents provided by planning agents in support of planning applications are genuine, e.g. on official headed paper and properly signed.
- Planning authorities’ planning application documentation should require planning agents to sign a declaration that all evidence provided in support of the application is authentic, accurate and truthful.
- Planning authorities should consider whether any sanctions might be imposed against planning agents who submit false documentation in support of planning applications.
Risk/red flag
A planning agent may deceive both the party on whose behalf they are acting and the planning authority, by falsifying a planning decision document, thereby causing potential financial loss to both parties and possible reputational damage to the planning authority.
Mitigating control
- Planning authorities should consider having guidance on their website advising planning applicants who have secured planning permission via a planning agent to confirm the validity of the planning decision document directly with the planning authority, before incurring any further expense.
Useful sources
NI Local Government Code of Conduct for Councillors, DoE, May 2014
Application of the Councillors’ Code of Conduct with regard to Planning Matters, DoE, February 2015
Application of the Councillors’ Code of Conduct with regard to Planning Matters, summary of Dos and Don’ts, DoE, February 2015
Conflicts of Interest: A Good Practice Guide, NIAO, March 2015
NI Local Government Code of Conduct for Councillors: Guidance for Councillors from the NI Local Government Commissioner for Standards, NILGCS, May 2017
Managing the Risk of Bribery and Corruption: A Good Practice Guide for the NI Public Sector, NIAO, November 2017
Probity in Planning: Advice for councillors and officers making planning decisions, Local Government Association and Planning Advisory Service, December 2019
Probity and the Professional Planner, Royal Town Planning Institute, January 2020
Raising Concerns: A Good Practice Guide for the NI Public Sector, NIAO, June 2020
Permission Accomplished: Assessing corruption risks in local government planning, Transparency International, July 2020
Planning in Northern Ireland, NIAO, February 2022
Planning in Northern Ireland, Public Accounts Committee, March 2022
Case examples
Case example – close relationship between planning committee members:
A councillor who was a member of the planning committee applied for permission to replace an existing caravan with a dwelling. The application was recommended for refusal by officers because it was within an Area of Outstanding Natural Beauty. The chair of the planning committee used his casting vote to approve the application. The councillor concerned had declared an interest and left the room, but a complaint was made that the councillor and chair were friends.
The Ombudsman found that there had been ‘maladministration leading to injustice’. The only councillors who should have voted on the application were those whose relationship with the councillor would not lead a member of the public to think that their decision, because of that relationship, would be biased. The association between the two had not been confined to council business but included church functions, political events and mutual friends bringing the two families together regularly.
Source: Application of the Councillors’ Code of Conduct with Regard to Planning Matters, Department of the Environment, February 2015
Case example – close relationship between council leader and planning applicants:
The planning committee of Folkestone and Hythe Council voted against the recommendation of planning officers to reject plans for a new holiday resort at a farm near Folkestone, within an Area of Outstanding Natural Beauty. A Judicial Review in February 2018 ruled that the Council’s decision to approve the development was “irrational and unintelligible”. However, despite the ruling, the planning committee again approved the development, and a local campaigner secured a second Judicial Review of the decision. Media reports highlighted a close relationship between the Council leader and the planning applicants.
Speaking about the cost to the taxpayer, the chief executive of the TaxPayers’ Alliance said: “Maximum scrutiny should be applied to this case to ensure there is no conflict of interest, as the landowners and council leader openly admit to being friends and the council is going against the recommendations of its own officers”.
Source: Media reports, October 2018
Case example – corruption of elected representatives
In March 2002, the former Chair of Planning for Doncaster City Council was sentenced to four years in prison after receiving bribes, including a farmhouse valued at £160,000, from a property developer who also received a five-year sentence. A further 21 councillors were convicted of fraud during the police investigation. The Judge told the court that the scandal had betrayed the public’s trust and seen the “worst sort of corruption” – the undermining of previously honest and hard-working elected representatives. The Judge noted: “Public life requires a standard of its own. Power corrupts and corruption in government by those elected by the public strikes at its integrity and at the root of democracy.”
Source: UK Anti-Corruption Plan, HM Government, December 2014
Case example – abuse of position
There were allegations that a council leader in England replaced the planning committee Chairman because the committee had failed to approve a development that would have benefitted the council leader’s long-term friend. The replacement Chairman had previously supported projects by the same development company which was led by the council leader’s friend.
Source: Corruption in UK Local Government, Transparency International, October 2013
Case example – undeclared interest
A councillor was suspended from the planning committee for three months because he had spoken against an application for a snack bar but had failed to declare that he had a non-financial interest because he was an office bearer at the church which objected to the proposal.
Source: Application of the Councillors’ Code of Conduct with Regard to Planning Matters, Department of the Environment, February 2015
Case example – third party fraud (applicant)
A planning applicant, who was also a solicitor and a Deputy District Judge, submitted fictitious letters to a council in support of planning applications and was convicted of several fraud offences.
An investigation by Scarborough Borough Council found that the applicant had attempted to subvert the planning process. He had applied for planning permission to develop land at several locations within the Whitby area. It was alleged that he attempted to influence the planning office by submitting numerous items of correspondence purporting to be from members of the general public, in support of his applications. The letters and emails were found to have been submitted by the applicant using the names and addresses of others, without their permission. Police said the content of the correspondence was also entirely fictitious.
The Head of Economic Crime and Major Fraud at North Yorkshire Police said that the applicant was “a highly qualified judge who used his enhanced knowledge of the legal system to commit crime and deceive a number of public sector organisations.”
The applicant was sentenced to 20 weeks’ imprisonment suspended for two years, ordered to pay £2,747 in compensation and £7,285 in costs, and also ordered to do 200 hours of unpaid work.
Source: Media reports, November 2017
Case example – third party fraud (objector)
A woman objecting to a planning application forged letters which were accepted as genuine by a local government ombudsman. She sent letters to the former Teesdale District Council (objecting to planning permission and purporting to be from a local parish council) which formed the basis of a report by the ombudsman into possible maladministration.
The prosecuting barrister said the forgery….was tantamount to perverting the course of justice. He said: “She persisted with the lie that these were genuine documents, and her behaviour threw suspicion on a large number of people. Planning officers were investigated and people working for the parish council came under suspicion.”
The woman received a nine-month sentence, suspended for 18 months.
Source: Media reports, November 2015