7 April 2015
New Limit Introduced on Pooling Section 106 Contributions

Changes to planning regulations came into force on the 6 April which place new restrictions on how local authorities can raise funds from owners or developers of land undertaking building projects in their areas. 

The changes are intended to encourage more widespread use of the Community Infrastructure Levy (CIL) as a means by which to finance local infrastructure projects, instead of through Section 106 Planning Obligations.

CIL has been designed by the Government to be a fairer, faster and more transparent way of raising money than S106 contributions, which are frequently negotiated on a case-by-case basis.

The National Planning Policy Framework already restricts the use of S106 contributions to instances where all of the following tests can be met:

  • necessary to make the development acceptable in planning terms;
  • directly related to the development; and
  • fairly and reasonably related in scale and kind to the development.

However, the latest changes further limit the ability of councils to pool contributions required through S106 Agreements to the extent that they are no longer able to ‘pool up’ more than five S106 contributions to pay for any one local infrastructure project or type of infrastructure.  The restriction applies to all S106 contributions made towards infrastructure improvements since the CIL Regulations were originally introduced on 6 April 2010.  Contributions towards affordable housing and site-specific improvements are however unaffected by the changes.

The greatest impacts of the changes are likely to be experienced by councils which don’t have a CIL Charging Schedule in place.  Of the 39 local authority areas which make up the North West region, there are presently only five that have an adopted Charging Schedule (Chorley, Preston, South Ribble, Trafford and West Lancashire). 

Within the 34 areas which don’t currently have CIL, one of the main risks is that planning applications here which might previously have relied upon the use of a S106 contribution to make a development acceptable could potentially now not be determined (or theoretically even refused) in the event that five or more separate obligations have already been provided to fund a particular infrastructure project or type.  Plainly, this could have the effect of stalling new developments throughout the region, including much-needed new housing. 

Alternatively, councils that have used up their five S106 allocations to fund a particular infrastructure project or type may decide to press on and continue granting permissions, waiving the requirement placed on developers to provide contributions in doing so.  The risk with this approach is that it could prevent councils from providing the infrastructure required as a result of new development (in relation to schools, public open space, etc).  It may also put planning approvals at risk of challenge by objectors or rival developers, on the grounds that the infrastructure contribution considered necessary to make a particular development proposal acceptable for planning purposes hasn’t been provided.

A key test for councils that don’t have a CIL Charging Schedule in place (or are not close to adopting one) will be to find ways to circumvent these threats posed by the new regulations.  One potential solution could be to split infrastructure projects or types up into several component parts, which could each be funded by up to five pooled S106 contributions.  For example, a council with a generic programme aimed at improving sports pitches in a local area could decide to divide this up into a series of more specific projects, such as constructing changing rooms at one facility, or improving drainage at another.        

It may be some time before the precise implications of the amended regulations become clear.  In the short term at least, it would seem that they will present most councils in the region with an additional challenge to grapple with as they seek to deliver the new development that their local areas require, whilst also ensuring the local infrastructure needs of their communities are properly met.

If you have any queries, please get in touch.


Philip Grant
T: 0161 831 5865 E:
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