Is this really the end for section 106?

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Will the new national infrastructure levy replace section 106, or could it reappear under a new guise? Jacqueline Backhaus examines the Government’s planning white paper

Consultation closed on 29 October on the Planning for the Future white paper, which proposed reforms to modernise the planning system. Some of the most radical ideas suggest replacing both section 106 (s106) planning obligations and the community infrastructure levy (CIL) with a single national infrastructure levy. 

While we await the detail, there are concerns as to whether this will provide a simple and effective system to secure the delivery of local affordable housing, sustainable transport and other local infrastructure.

Delays in planning permissions due to s106 negotiations are not uncommon, but delay is often due to site-specific negotiations that take account of detailed viability issues. Replacing s106 with a mechanism that secures necessary infrastructure and allows for site-specific mitigation would not be easy. Testament to this is the CIL regime, introduced in 2010 after years of debate – remember planning gain supplement – and which sought to address identical concerns. CIL is largely perceived to have failed due to its complexities and inflexibilities. 

Many will be pleased to see the back of CIL and developers will no doubt welcome changes such as payment of the new levy at the point of occupation. But the government will need to learn lessons from the CIL experiment. Viability issues and local priorities mean that a consistent and simple system will be extremely difficult to implement. Questions remain over how the new levy would work in areas with lower land values. Some may be unable to recover sufficient developer contributions to pay for new infrastructure with a fixed levy, meaning more prosperous areas benefit, widening the infrastructure divide.  

The white paper envisages delivery of infrastructure sitting with local authorities. They will be able to borrow against the levy to fund new infrastructure but may be reluctant to do so if expected levy receipts do not cover forecast expenditure.  

All this could have a significant impact on developments and local communities where infrastructure needs are considered necessary to make a development acceptable in planning terms. Developers may find themselves restricted from starting work and may miss the flexibility that s106 offers.   

While the white paper appears determined to abolish s106, a footnote states that “a Section 106 planning obligation could still be used to secure a covenant on the land, where necessary” for onsite affordable housing. This appears to keep the door open for s106 in some form, albeit not for wider infrastructure delivery.

One issue not addressed in the white paper is the upside of the s106 system. A government-commissioned study, Incidence, Value and Delivery of Planning Obligations and Community Infrastructure Levy in England 2018-19, published the same month, acknowledged that “developers value the flexibility of s106, allowing both parties to reach pragmatic solutions to site-specific issues, even though the negotiation of s106 planning obligations can result in delay”.  

To name but a few, s106 can secure local employment, sustainable transport mitigation, highway improvements, delivery and management of open space and community facilities, carbon offsetting and connection to district energy networks, plus mitigation of any impact on biodiversity and protected assets. Once again, s106 seems to be in the firing line and its vital and flexible role in delivering infrastructure provision and many other community benefits have been completely overlooked.

That’s why s106 is more likely to be reformed or to reappear under a new guise than be abolished completely.  

Jacqueline Backhaus is a partner at Trowers & Hamlins

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