With the Government’s announcement that 20 authorities are to join the Community Infrastructure Levy Front Runners Project, councils and applicants are going to have to get to grips with the new system.  One key issue is whether a planning obligation can be a reason to grant permission.  We are all getting familiar with Regulations 122 and 123 which tell us that the policy tests must be met, and we have posted about some of the appeal decisions coming out.  But this post is about the “five or more planning obligations” point.

Reg 123(3), as amended, says that where an obligation funds an infrastructure project or a type of infrastructure, then it cannot be taken into account if there have been five separate obligations on or after 6th April 2010 which relate to planning permissions in the charging authority’s area and fund that project or type of project.

There are a couple of issues here where we need to take care. First, how will we find the obligations?  It’s not as bad as it was.  Until amended following representations I led through The Law Society’s Planning and Environmental Law Committee, the five obligations could have been made at any time, going back at least to 1991 when the term planning obligation was introduced.  But there is no central register of obligations in any authority, so some detective work is going to be needed.  Perhaps authorities should look at keeping a voluntary register.

The second issue is around the phrase “planning obligation”.  What is a planning obligation?  Although we commonly describe the s.106 agreement as a planning obligation, it is actually the instrument containing the obligation or obligations.  It seems to me that each promise under s.106(1) is an obligation.  Have a look at the wording of s.106 if you don’t believe me.  So it’s not enough just to count up the s.106 agreements.

Secondly, you can have more than one obligation for each payment.  Take for example an obligation to make a payment towards schools.  When drafting a planning obligation to make a payment it is common and good drafting not only to provide for the payment to be made on a certain date or event, but also to prohibit further development until the payment is made.  That way, there is a very strong incentive to pay.  The wording would go something like “On occupation of the xth dwelling, to pay £y to the local planning authority, and not to occupy more than x dwellings until such payment has been made”.

Lawyers use approaches like this all the time, not just in planning agreements.  It looks after the receiving client’s interest. But each of those promises is a separate planning obligation, under s.106(1)(a) and (d) respectively.  So, for very good reasons, one payment has used up two obligations under Reg 123.  The alternative is just to include the promise to pay, and sue on that if the owner fails to pay. But what if the owner hasn’t got the money?  Or just include the prohibition, and seek the injunction until payment is made.  But injunctions are discretionary remedies.

What, you might ask, is the point of Reg 123(3)?  My understanding is that it is there because the last Administration decided that CIL not s.106 was the way to fund infrastructure.  So they said no more than five payments should be obtained through s.106 agreements.  That’s a number picked at random.  I have never followed however why local authorities should be forced into CIL, and perhaps the current administration might like to reflect on that in the spirit of localism.  As it is, this complication makes CIL more attractive owing to the difficulties inadvertently introduced by the CIL Regulations.