1. S106, Developer Contributions
& Delivering Infrastructure
Steve Dennington
Plan Making Team Leader (Deputy
Service Head – Spatial Planning)
LB Croydon
Chair ALBPO London – Development
Plans

2. S106 Origins
The history of various compensation and betterment laws is not a happy one,
as generally they have not been successful. The main milestones have been:
 The Uthwatt Committee into compensation and betterment (1942)
 The 1947 Planning Act, introduced a development charge to capture
planning gain – abolished by the 1954 Town and Country Planning Act
 Compulsory Purchase Act 1965 introduces compulsory purchase
provisions
 Town and Country Planning Act 1971 – introduced S52 agreements (now
S106 of 1990 Act)
 Community Land Act 1975 allowed for the taking into public control of
development land
 Development Land Tax Act 1976 attempted to tax development value from
land

3. S106 Rules
 Statutory tests (Reg 122 of 2010 CIL Regs as amended):
 Necessary to make the development acceptable in planning terms
 Directly related to the development
 Fairly and reasonably related in scale and kind to the development
 What they can do:
 Mitigating harm (eg highway works or education & health
contributions)
 Compensating for loss (eg public open space and play equipment)
 Properly controlling the development (eg securing social housing
element)
 Relationship with CIL:
 Regulation 123 List of infrastructure items
 Pooling restrictions (post March 2015 from 2010 )

4. Setting S106 formulae
 Works well when there is a close relationship between
development generally and the need for additional
infrastructure
 Having formulae makes the negotiation process much easier
 You must demonstrate two things:
 There is no existing capacity that can serve the
development
 The development creates the need for that infrastructure
 HUDU model in London
 The benefits of publishing your approach

5. Negotiation tips
 Start negotiations as early as possible – Pre App /
S106 & CIL guidance / model S106 Agreements
 Frontloading contributions reduces the potential
S106 pot – think cash flow and when obligation are
actually needed
 Viability: the three most important things to
remember:
 It’s an opinion and not a fact – basic understanding needed
 It’s dynamic – the numbers will change over time
 Impacts still have to be mitigated – its not a get-out-of-jail-
free card

6. Getting it drafted & signed
 Negotiate the heads of agreement in pre-application stage
 Draft the agreement in the application stage so it’s ready to
sign once a decision is taken
 Use the Planning Bar proforma for the main body and publish
your obligation proforma on your website
 Be firm with your lawyers and if necessary get the applicant to
do the same – they can waste a lot of time arguing about
marginal issues
 Developers can “take their foot off the metal” once a scheme
has been to planning committee
 Having a resolution “That, if by [X date] the legal agreement
has not been completed, the Director of Planning is delegated
authority to refuse planning permission” will focus their
attention, provided you stick to it!

7. Collecting the cash
 You MUST monitor your S106 agreements so that
you know what you are owed and when
 Monitoring also enables you to manage the number
of pooled contributions when CIL is in place
 Since putting this in place in Croydon we have
recovered circa £3.5M that was owed to us
 A simple set of proforma letters will often work
without the need to get heavy with solicitors,
especially when interest and indexation is attached
to the agreement.

8. Spending the money
 Bizarrely, this seems to be the hardest bit
 It is a whole Council task
 Set up a body (Infrastructure Finance Group) that can
act as the place where these discussions / approvals
take place and ensure conformity with the S106
agreement and legislation
 It’s about delivering your Council’s strategic capital
priorities and the Infrastructure Delivery Plan that
supports your Local Plan
 Also involves engagement with third parties who
have responsibility for delivering infrastructure

9. Review & monitoring
 Authority’s Monitoring Report
 You must report collection and spending of CIL
 Reporting (voluntarily) collection and spending of
S106 is a very good discipline
 Whilst increased development values may enable
you to increase your CIL rates, being able to
negotiate a greater affordable housing contribution
may be a better policy option
 What are your plans for S106 post March 2015?

10. S106 & CIL
 CIL was introduced as a solution to S106 with provisions in the
legislation that sought to “put a spanner in the works” of S106 (ie the
limits on pooling)
 CIL and S106 are good at different things:
 CIL is an efficient up-front pooling mechanism – brings in more
money to an LPA because nearly everyone pays something, rather
than just a few paying; as little as 7% of developments have S106 …
… however, CIL does have a high set-up cost that can make it
uneconomic for many small local planning authorities to
implement.
 S106 can be a good, flexible tool to deal with specific issues that
are related to the actual development, rather than development
generally …
… however, S106 does have high transaction costs (eg legal fees
and negotiation time) that render it uneconomic for small
developments.

11. The challenges
Infrastructure that is
necessary because of
development generally
Infrastructure that is
necessary because the
need for it is caused by
a particular
development or group
of developments
Mitigation or
compensation that is
necessary to enable a
development to
proceed
Securing affordable
housing to meet the
housing needs of an
area
INFRASTRUCTURE OTHER (NON-INFRASTRUCTURE) MITIGATION

12. How might we fix it?
POS believes that any solution should have the following
characteristics:
 The intention for CIL to be funded via the land value rather than
through development finance should be clearly stated by government
and become a clear feature of the CIL setting process and
Development Management viability assessments
 There should be a basic national levy rate that can be easily adopted
 Alternative levy rates should follow the current CIL setting process
 Flexibility between levy and agreements should be a standard feature
of the system subject always to the levy amount being the minimum
payable in any circumstances
 A new combined system needs a new name to give it a fresh start

13. What would it look like?
Development Management Agreement
Development
Management Levy
Infrastructure that is
necessary because of
development generally
Infrastructure that is
necessary because the
need for it is caused by
a particular
development or group
of developments
Mitigation or
compensation that is
necessary to enable a
development to
proceed
Securing affordable
housing to meet the
housing needs of an
area
INFRASTRUCTURE OTHER (NON-INFRASTRUCTURE) MITIGATION

14. Options for levy LPAs
 For non-major development, a compulsory levy would apply for
infrastructure. An agreement could apply to:
 Mitigation or compensation that is directly necessary to enable a development to
proceed
 Securing affordable housing
 For major development, the levy would apply plus an
agreement to secure:
 Infrastructure that is necessary because the need for it is caused by a particular
development or group of developments
 Mitigation or compensation that is directly necessary to enable a development to
proceed
 Securing affordable housing
Plus if the LPA considered it appropriate adjustment could be made in response to
viability issues between the levy and the agreement, subject always to the levy sum
being the minimum payable.

15. Options for non-levy LPAs
 For non-major development, neither the levy nor an
agreement would apply for infrastructure. An agreement
could apply to:
 Mitigation or compensation that is directly necessary to enable a
development to proceed
 Securing affordable housing
 For major developments, an agreement to secure:
 Infrastructure that is necessary because the need for it is caused by a
particular development or group of developments
 Mitigation or compensation that is directly necessary to enable a
development to proceed
 Securing affordable housing

16. S106 Updates
 S106 Monitoring Fees – Oxfordshire Judgement
 Monitoring fee not justified under CIL Reg 122
 Monitoring of S106 in most cases is a function of the
Council
 Standardised monitoring fees with no relationship to the
scale of the development, or the monitoring task involved
are unjustified
 Monitoring fees, could be justified if the scale of the
development, or the monitoring task involved justify a
specific monitoring fee
 Implications remain to be seen as many Councils operate
Standardised monitoring fees

17. S106 Updates
 S106 speeding up negotiations – DCLG consultation
 Belief agreeing S106s is delaying the planning process
 Expectation of early S106 engagement
 Greater use of standardised clauses
 Support for local S106 signing time limits
 Agreeing time extension is advocated
 S106 monitoring and assignment transparency
 Entertaining primary legislation to unblock stalled S106s
 An automatic / deemed solution – workable though
 Engage external dispute resolution – mediation – final
conclusion on the matters

18. Questions