Unilateral obligations came in to being in 1991, when section 106 of the Town and Country Planning Act 1990 was amended to allow anyone to enter into a planning obligation by agreement or otherwise. The phrase "or otherwise" is the only hint that planning obligations do not need to be the subject of an agreement. But it is enough to confirm what had always been the case - that an undertaking is as good as an agreement in delivering planning obligations. On the face of the act, planning agreements and unilateral undertakings are treated identically.
Before 1991, section 106 agreements needed to involve local planning authorities. On appeals in particular, this caused problems where councils refused to enter into planning agreements, leading to "minded to grant" decisions and then delays before planning permission could be issued. The amendments were meant to remove that logjam.
Parties advised to agree terms
Circular 05/2005 urges planning authorities and developers to settle planning obligations by agreement. It notes that unilateral undertakings should be used where the developer needs no reciprocal obligation from the local planning authority and it is possible to identify likely requirements in advance - usually where detailed development plan policies contain standard charges.
Applicants making a financial contribution will often want to ensure that the infrastructure justifying the contribution is provided. If land is being transferred, they will want to make sure that it is only used for the proposed purpose. In either cases if the money or land is not properly used, they will want it to be returned. Since the contribution or land may be required to deliver environmental mitigation, the lack of any commitment from the planning authority may affect any judgement about the environmental impact of a scheme.
Developers have sought to provide a solution to this lack of reciprocity. Unilateral undertakings often include a condition requiring planning authorities to serve notice to bring them into effect and confirm that they will comply with terms. Conditions will often involve restrictions on the use of contributions or use of land, impose administrative reporting requirements, and require reimbursement of unspent monies. Properly drafted, this can make a unilateral undertaking broadly the equivalent of an agreement.
Unfortunately, ministerial policy appears to be standing in the way of this approach. In an appeal this year involving the Forest of Dean District Council (DCS Number 100-053-395), the secretary of state looked at relatively standard clauses in various undertakings. The obligations only came into effect after the council served a notice of compliance with the terms of the unilateral offer.
The secretary of state decided that this approach was inconsistent with the Circular. She imposed a condition precedent making the offer an obligation on the planning authority, rather than an undertaking for its benefit. She noted the risk that the Council might not serve the relevant notice, in which case the planning benefits required to make the scheme acceptable in policy terms would not be delivered.
In law, there is no reason to take such a restrictive approach. Many planning authorities willingly accept conditions precedent setting out what they must do to justify the payment of the contribution. Only where schemes reach the secretary of state is there is an impasse. Ironically, this approach rewards bad behaviour. Authorities that refuse to enter into a planning agreement on appeal can insist on an undertaking that impose no obligations on them at all.
Circular review offers answer
A more reasonable planning authority entering into a planning agreement will be subject to obligations, dispute resolution provisions and other partnership requirements. As well as rewarding poor practice, a one-sided unilateral obligation sets a framework for future distrust - hardly the best environment in which to deliver high quality development.
A far better approach would be for the secretary of state to review any conditions in a unilateral obligations and decide whether they are reasonable. Even better, she could issue a set of standard conditions for use in future undertakings. Since Circular 05/2005 will have to be revised to take account of the emerging community infrastructure levy, the opportunity should be taken to simplify the residual elements of section 106 agreements and undertakings.
This article was published in Planning Magazine – 12 September 2008