Planning Obligations and Pooling Restrictions: a Guide
Invicta Law’s Nagla Stevens explores how restricting the use of planning obligations is effecting supporting infrastructure and outlines the changes due to come into effect on 1st September:
The pooling restriction
There are several ways in which developers may be required to contribute towards infrastructure. This is intended to help with the impact of development and make it acceptable in planning terms.
Planning obligations in accordance with section 106 (‘the legal agreement between an applicant seeking planning permission and the local planning authority’) of the Town and Country Planning Act 1990, are one way of ensuring that infrastructure is in place to support new development.
However, regulation 123 of the Community Infrastructure Levy Regulations 2010 currently restricts the use of planning obligations for the purpose of funding or providing infrastructure.
This is done by limiting the pooling of contributions to deliver infrastructure from section 106 agreements to a maximum of five sites contributing towards a single piece of infrastructure.
Reasons behind the restriction on pooling
The intention of the government was to incentivise a move away from securing infrastructure through planning obligations and to move toward the use of the Community Infrastructure Levy (CIL).
CIL was intended to be a tool to help deliver infrastructure support within an area in respect of new development. The idea being that it would be a fairer and more transparent process, avoiding lengthy negotiation of planning obligations.
The impact of the pooling restriction
In practice, the pooling restriction has been causing a lack of infrastructure funding by preventing contributions, and adversely affecting the creation of infrastructure funding pools.
An example of which Invicta Law was recently instructed on:
The local planning authority assessed the value of a contribution to the cost of a new roundabout. This was based on the proportional impact that the development had when judged against the total background traffic growth and that from the Local Plan. Initially, that seemed to be a reasonable approach. However, the Highways Authority sought to share the entire cost of the scheme between the five identified development sites due to the restrictions on pooling.
The stark reality was that if the contribution from each of the five developments only related to their own individual percentage of the total traffic growth. This would mean the Highways Authority would end up with a shortfall in funds.
This would be equivalent to the remaining percentage in traffic growth that is not directly attributed to the five developments. It would therefore not work unless additional funding could be secured from elsewhere.
Risks and Challenges
In terms of the drafting of section 106 agreements, considered drafting has been key to managing the pooling restrictions. If the planning obligation relates to a generic contribution (for example, an unnamed primary school in the area), there is a greater risk that that the pooling restriction will be breached, than if contributions are pooled towards specific projects.
A further challenge for local authorities has been in respect of unimplemented planning permissions, because the pooling restriction is not linked to commencement of the development.
Unless and until the unimplemented planning permission has expired, local authorities have not been able to seek contributions beyond the five sites. Despite it being common knowledge that a development will never come forward.
Removal of pooling restriction
The government has now laid draft regulations before the House of Commons that the pooling restriction will be lifted as of 1st September 2019. The changes will give local authorities greater flexibility in securing the contributions needed, where there is no Community Infrastructure Levy charging schedule in place. This should help secure the delivery of infrastructure going forward.
The legislation is subject to the affirmative procedure and must be debated in and approved by the House of Commons before it comes into force before it becomes the law.
The Planning and Highways team is currently advising and has advised local authorities on a number of section 106 agreements.