Pooling Contributions: Regulation 123 of the Community Infrastructure Levy Regulations 2010

The Review Panel appointed by the Department for Communities and Local Government has recently concluded the first stage of the "Community Infrastructure Levy Review".  One of the issues the Review Panel were specifically asked to review was the relationship between the Community Infrastructure Levy ("CIL") and Section 106 of the Town and Country Planning Act 1990 in the delivery of infrastructure. This included considering the role of  Regulation 123 of the CIL Regulations, which relates to  a Local Authority's infrastructure project  list and the restriction on pooling planning obligations.

Since  April 2015, when determining planning applications, Local Planning Authorities (or Inspectors) have not been entitled to take into account a financial contribution "for the funding or provision of an infrastructure project" where five or more separate planning obligations have already been sought for the funding or provision of that project from other sources  (i.e. financial contributions secured in other Section 106 agreements). All payments, counting back to 6 April 2010, are taken into account. Such payments are commonly referred to as "pooled contributions".

Pre-CIL, Section 106 agreement regime "pooled contributions" provided Local Planning Authorities with a useful mechanism for accumulating funds for infrastructure projects. The Government clearly recognised that when drafting the CIL Regulations, and by taking away the ability to accumulate such funds, many Local Planning Authorities have been obliged to adopt CIL. However, some Local Planning Authorities have either  refused, chosen not to, or have simply failed to adopt a CIL schedule prior to April 2015.

In many cases where financial contributions are sought, Local Planning Authorities without a CIL schedule have simply "carried on regardless".  Permissions continue to be granted and "pooled" funds collected. One risk to a developer is the potential for challenge - which is a possibility but, arguably, easily rectified by the Council withdrawing any such request for contributions through a Deed of Variation to the Section 106 agreement. 

However, the interaction of CIL and the Section 106 agreement regime, does cause problems in certain instances, particularly where contributions do need to be made to ensure the impact caused by the development proposal is adequately mitigated.  

This is because the National Planning Policy Framework (paragraph 118) directs the decision maker to refuse planning permission in circumstances where impact is not adequately mitigated. Even where an area wide strategy has been adopted by a Council and mitigation measures are set up, Regulation 123 and the advice in NPPF paragraph 118, may still result in a refusal. 

For example, if there has been more than five previous payment obligations towards mitigation measures where there is significant impact on a protected habitat from other development in the area, this has led to subsequent applications being refused. This is because the 'sixth' and subsequent contributions cannot be taken into account for the purposes of granting planning permission.  This has the effect of leaving the applicant with no mechanism for adequately mitigating the impact of its development on the protected habitat.

The Home Builders Federation have suggested in their response to the Community Infrastructure Levy Review Panel's questionnaire that the restrictions on pooled contributions ought to be repealed.  That would solve the problem highlighted above, however, it may very well invite the mass rejection of CIL schedules in favour of the "old fashioned" pre-CIL Section 106 agreement regime?  No doubt the review will find some middle ground and hopefully it will suggest amendments allowing Local Authorities to recover some, if not all, of their "pooled contributions" through section 106 agreements.

The Review Panel enters into the oral evidence sessions and meetings through January and February 2016 with a report to Ministers sometime in March/ April 2016.