Section 106 and Transport Contributions: What Developers Get Asked to Fund

Planning permission is rarely the last cost.

For most schemes of any size, a Section 106 agreement sits alongside the consent, and a sizeable share of what it contains relates to transport. Bus contributions, travel plan monitoring, highway works, cycle infrastructure, sometimes a contribution towards a scheme several miles away.

Some of those requests are well founded. Some are not. Knowing which is which is worth real money.

What Section 106 is for

A Section 106 agreement is a planning obligation attached to a consent under the Town and Country Planning Act 1990. It exists to make development acceptable that would otherwise be refused.

That framing matters. An obligation is not a fee for permission and it is not a general contribution to council funds. It has to be doing something specific about an effect the development creates.

Transport obligations divide broadly into two kinds. Works, where the developer builds something, usually through a separate Section 278 or Section 38 agreement. And financial contributions, where the developer pays and the authority delivers.

The three tests

Regulation 122 of the Community Infrastructure Levy Regulations sets out three tests. An obligation must be necessary to make the development acceptable in planning terms, directly related to the development, and fairly and reasonably related in scale and kind to it.

All three have to be met. This is a legal requirement, not guidance, and an obligation failing any of them cannot lawfully be taken into account.

In practice the tests are where most of the negotiation happens. A contribution towards a bus service the site will actually use is directly related. A contribution towards a junction improvement several miles away, on a route the development barely affects, is harder to justify. A round figure with no calculation behind it struggles on the third test.

Asking how a figure was derived is a reasonable question, and one that authorities should be able to answer.

What gets requested for transport

The common items are fairly consistent across authorities.

Bus service contributions, either towards a new service, an extended route, or supporting an existing one through a period where the development builds out.

Travel plan monitoring fees, covering the cost of the authority checking that agreed measures are delivered and surveying travel behaviour afterwards.

Sustainable transport vouchers or incentives, sometimes provided directly to occupiers.

Cycle and pedestrian infrastructure beyond the site boundary, connecting it to an existing network.

Traffic regulation orders, covering the cost of promoting and making them where the development requires changes to parking restrictions or speed limits.

Highway maintenance contributions in some areas, though these are more contentious.

Where CIL and Section 106 overlap

Where an authority charges the Community Infrastructure Levy, the position changes.

CIL is a fixed charge per square metre used for infrastructure across the area. Section 106 handles site-specific matters. Authorities publish a list of what CIL funds, and an item on that list should not also appear as a Section 106 request.

Double charging does happen, usually through oversight rather than intent. Checking a draft heads of terms against the authority’s own CIL list is a straightforward exercise that occasionally saves a substantial sum.

When to start the conversation

Late is expensive.

Obligations negotiated after a resolution to grant are negotiated from a weak position, because the alternative to agreeing is delay. Obligations discussed during pre-application, when the scheme is still movable, are a different conversation.

Early discussion also allows design to respond. If a contribution is being sought because of a shortfall in accessibility, improving accessibility within the scheme may reduce or remove the need for it. That option disappears once the layout is fixed. This is one of the arguments for pre-application engagement.

Evidence changes outcomes

The strongest position on a contested contribution is usually evidential rather than legal.

If an authority seeks a bus contribution based on an assumed level of car use, and the site’s own trip generation and accessibility analysis shows something different, that analysis is what moves the figure. The same applies to junction contributions where the development’s share of traffic at that junction can be quantified.

A transport assessment prepared with this in mind does more than support the application. It sets the baseline the obligations are argued from.

Practical points on the agreement itself

A few things worth attention in drafting.

Trigger points, meaning when payment falls due. Commencement, occupation of a set number of units, or a fixed date each behave differently for cash flow.

Indexation, and which index applies. Over a long build programme this compounds.

Clawback provisions, so unspent contributions return to the developer if the authority does not deliver within an agreed period.

Phasing, where a scheme builds out over years and obligations should track delivery rather than all falling at the start.

Getting the transport case right first

Section 106 negotiations are shaped by the transport evidence sitting underneath them. Where that evidence is clear and locally grounded, requests tend to be proportionate. Where it is thin, requests fill the gap.

Examples of how this plays out across different scheme types can be seen in TPA’s project experience.

If you have a scheme where transport obligations are likely to be significant, it is worth testing the position before heads of terms are agreed. You can speak to the team through the London office, the Bristol office, the Cambridge office, the Norwich office or the Welwyn Garden City office.