In this month’s Newsletter John PughSmith looks at the quiet revolution that is gathering pace in the legislation and other initiatives affecting the variation of Section 106 obligations as the Coalition Government encourages a more pro-active approach towards stalled development.
Since 25th November 1991 Section 106A of the Town and Country Planning Act 1990 has provided for the modification or discharge of planning obligations upon application. Applications to the relevant local planning authority can be made by any person against whom an obligation is enforceable (which would include the successors in title to the original parties to the planning obligation). However, the scope for modification/ discharge has remained limited as the local planning authority may only determine that a modification or discharge should be allowed if either the specific obligation no longer serves a useful purpose, in which event it can be discharged, or, even though the obligation still serves a useful purpose, it can continue to serve that purpose just as well with the modification sought. Accordingly, a broad renegotiation of the planning obligation has never, generally, been achievable although a change in planning circumstances may have rendered certain obligations redundant and therefore suitable for removal. Moreover, under Section 106A, unless agreed by the local planning authority, applicants have had to wait until their Section 106 planning obligation was 5 years old before they could can apply. Although there is a right to appeal unsuccessful applications under Section 106B few appeals have been successful, mainly due to the wide ambit of the “useful planning purpose” test.
Furthermore, on 6th July 2011, in Millgate Development Limited v Wokingham Borough Council  EWCA Civ 1062 the Court of Appeal re-stated the hard-line approach that the law took to planning obligations within that first five year period under Section 106A(1) (a), that they are enforceable as a contract; so unless the local planning authority are prepared to agree a change the covenator is stuck with the terms. There, Millgate’s written representations appeal for a small residential development had been allowed but with the Inspector finding that as the Council’s requested contributions for off-site leisure, library, education and highways did not meet the test of necessity he attached little weight to Millgate’s submitted Undertakings. It should be noted that the Council had simply not submitted evidence in support. Furthermore, the Undertakings had not been made conditional upon the Inspector’s findings. Following Millgate’s request for the Undertakings to be discharged the Council decided to enforce full compliance. Following the issue of judicial review proceedings it emerged from the Council’s evidence that it could no longer justify all the contributions sought as being “necessary” despite a requirement so to do under the relevant development plan policies. However, the Council had belatedly asserted that it would make a refund of any overpayments. Holding that the exercise under s.106A(1)(a) of the Town & Country Planning Act 1990 did not engage the statutory presumption under s.38(6) of the Planning and Compulsory Purchase Act 2004 to revisit the development plan policy bases of necessity and reasonableness the Court of Appeal agreed with the first instance judge that the Council had needed only to show “a useful planning purpose”. As it still could that was sufficient and no more rigorous exercise was required. It would also still be open to Millgate, nonetheless, to raise whether the sum claimed under each head came within the terms of the Undertaking as a partial defence in subsequent civil enforcement proceedings. Though hypothetical, as no sums had actually been paid, the Court also acknowledged that the Council’s legal ability to refund any overpaid contributions and that this arose as a subsidiary power under section 111(1) of the Local Government Act 1972.
However, a Government, anxious to unlocked “stalled developments” is now trying to soften this approach. First, came the announcement on 13th August 2012 from the Secretary of State for Communities and Local Government of the release of a Consultation Paper on its proposals to give developers the option to ask councils to renegotiate s106 deals if they were agreed prior to April 2010. Secondly, was the setting up of a team of “Section 106 brokers”, teams of intermediaries that would offer a “free-of-charge” advice and support service to councils and developers to help kick-start the renegotiation of section 106 agreements. The Ministerial Statement explained that the Communities Secretary was concerned that too much development is being stalled because of “economically unrealistic” section 106 agreements negotiated between councils and developers at the height of the housing boom. The experts would provide technical expertise to unlock negotiations, act as go-betweens in disputes and would offer access to a range of support services.
This initiative led, last Autumn, to the formation of a panel of independent mediators, and, later to the appointment of a project administrator from the Homes and Communities Agency (HCA) and the invitation for submission projects. The HCA and mediator, in turn, can draw upon a panel of expert surveyors to provide valuation appraisal and advice. The first few projects are now underway and “dialogues” commenced with cautious optimism being expressed as to the ease with which the introduction of an externally funded neutral facilitator can “kick start” negotiations. Mediation practice and procedure is set out in a Short Guide, endorsed in June 2011 by the (then) Planning Minister, Bob Neill MP, produced by the National Planning Forum ( http://www.natplanforum.org.uk/projects. html) following the completion of its own research project.
The Government’s response to its Consultation Paper (Renegotiation of Section 106 planning obligations) then led to Town and Country Planning (Modification and Discharge of Planning Obligations) (Amendment) (England) Regulations 2013 which came into operation on 28thMarch 2013. These Regulations now enable an application under section 106A(1) of the Town and Country Planning Act 1990 (and a subsequent appeal under section 106B) for modification or discharge of a planning obligation dated before 7thApril 2010. This change does not affect any planning obligations where the five year period has already expired (which can already be the subject of an application for modification or discharge) or any planning obligations entered into after 6thApril 2010, which will still not be able to be modified or discharged other than by agreement with the local planning authority for a period of five years from the date of the obligation. The cutoff date of 6th April 2010 reflects the date on which the Community Infrastructure Levy Regulations 2010 came into force, in which Regulation 122 placed on statutory footing the requirement that (from that date onwards) any planning obligations sought by a local planning authority in consideration of the grant of planning permission must be necessary to make the development acceptable in planning terms, directly related to the development fairly and reasonably related in scale and kind to the development
Further, from 25th June 2013 until 30th April 2016, there is the ability to vary affordable housing obligations which, by Section 7 and Schedule 2 of the Growth and Infrastructure Act 2013 ,have inserted new Sections 106BA, BB and BC into the 1990 Act. These sections introduce a new application and appeal procedure solely for the modification or discharge of planning obligations which relate to the provision of affordable housing on the basis of “economic viability”. The modified planning obligation must contain provision to ensure that if development is to continue past that time, there will be a reversion to the original affordable housing requirements i.e. those contained in the planning obligation before the first application under section 106BA was made in relation to it. The variation must be to the original requirements to ensure that they will not apply to that part of the development that is commenced in the three year period, and may make such variations as are necessary to ensure their effectiveness. An explanatory guide published by the Department for Communities and Local Government, Section 106 affordable housing requirements – review and appeal (April 2013, provides further guidance, including on the presentation and form of appraisal material.
Whether, taken together, these initiatives will deliver, and, in time the level of growth required to win at the polls in May 2015 has yet to be seen. Certainly, it will be determined not just by the willingness and ability of local planning authorities to negotiate but also the realism of developers and funders to respond positively and with the appropriate information for truly informed judgments to be made by all concerned. However, whilst disagreement and conflict are inherent within a process that has to address competing demands on land, conflicting policy objectives and rival public and private interests and expectations if resolution through dialogue can continue to be encouraged then, truly, a quiet revolution in our planning process will have started to take place.