Local authorities are warning against a belief that they hold a multi-billion pound pot of Section 106 money which could be used to fund infrastructure spending during the recession.
The issue surfaced at Commons question time when Chorley MP Lindsay Hoyle claimed that councils currently hold £4bn in unspent Section 106 money from planning gain agreements. He said the money should be spent on social housing and transport facilities to get the construction industry back to work and help the country out of recession.
But housing minister Margaret Beckett pointed out that 90% of the money held is earmarked for specific planning obligations and direct provision of agreed facilities. She estimated only around £340M is held in cash and said research has been commissioned on how Section 106 money has been spent, which will report in the summer. A further study by her department will look at unspent monies and how it can be used for its intended purposes.
‘We have commissioned this research to assess the scale of any problem that there may be because it is our understanding that it is not the norm for local authorities to accumulate moneys in this way – indeed, it would be contrary to our guidance – unless they have some particular long-term infrastructure project for which they are pooling resources,’ she said.
This point is confirmed by the Planning Officers Society which points out that most Section 106 money is accumulated for specific purposes and that councils sometimes have to hold money from several projects before it is spent on a related facility like an access road.
‘It’s quite common for there to be a requirement to pay the money back if the works aren’t undertaken,’ said Society spokesperson John Silvester. ‘It’s also good practice to have an implementation officer to make sure it’s monitored and the works are implemented.’ He also points out that Section 106 income is declining sharply in the current economic climate.
Register now for full access
Register just once to get unrestricted, real-time coverage of the issues and challenges facing UK transport and highways engineers.
Full website content includes the latest news, exclusive commentary from leading industry figures and detailed topical analysis of the highways, transportation, environment and place-shaping sectors.
Use the link below to register your details for full, free access.
Already a registered? Login
