Many local planning authorities will be aware that Reading Borough Council has recently faced an inquiry into where funds it had received by way of section 106 contributions have been spent.
Councillors had claimed that they were unable to trace the receipts and an independent examination was commissioned. It was alleged that the funds, rather than being used for infrastructure provision as agreed in the various planning agreements, had been used to cover general budget cuts or to fund unrelated projects. The outcome of the report is being considered by borough council officers.
Whatever the outcome of the investigation at Reading, planning authorities should make sure that their affairs are in order so that they can account for section 106 monies - not least because many section 106 agreements will require the planning authority to provide sufficient documentation to account to a developer for the use of the funds, if so requested.
Authorities should also bear in mind that, if section 106 agreements require deposited monies to be put into a separate bank account, which the authority can then use for certain infrastructure works, it is possible that a trust will be set up, of which the developer is a beneficiary until the monies are spent.