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Town and Country Planning Act 1990 (Section 106 Agreements)

Volume 488: debated on Tuesday 3 March 2009

3. What estimate she has made of the sums local authorities have received under agreements under section 106 of the Town and Country Planning Act 1990, which are held in local authority bank accounts. (259886)

Information on moneys collected by local authorities in this way is not held centrally. Government policy is clear that local authorities should not amass significant levels of unspent developer contributions without good reason.

I might be able to help my right hon. Friend. The Library suggests that about £4 billion of section 106 money is held, and I can say that in my own authority of Chorley, which is a small district authority, almost £9 million in section 106 money is held. As I have mentioned before, we know that there is £3.5 million that can be spent on social housing that is not being spent at present. A new railway station or community centre could be built, as could many other facilities. That would get those in the construction industry back to work, and it would provide the social housing that is needed, as we have an increasing housing waiting list in Chorley. What can my right hon. Friend do to make sure that this money is spent not just in Chorley, but throughout the country, to get us out of this recession now?

I am grateful to my hon. Friend, who I know has a long-standing concern with this issue. I think there is perhaps a slight misunderstanding here, as the figures that the Library will have given him are for the totality of section 106 money across the country, and we understand that about 90 per cent. of that is not cash going to the local authority, so to speak, but direct provision of various agreements and planning obligations, and only some £340 million—although that is still a substantial sum—is available through cash contributions, which must, of course, be used or returned for the appropriate purposes.

I understand completely the point that my hon. Friend makes about wanting to see better use of this money. We give strong guidance to local authorities, and I think he would like to know that, in no small part as a result of his questions on the matter, we have commissioned new research to investigate the use and value of planning obligations for the last full year for which we have data available—2008—and that it will report in the summer. In addition, I have asked my officials to have some research done to understand better the scale and extent of unspent section 106 contributions and to explore the feasibility of pursuing further our work with local authorities to ensure that such money is used for the intended purposes.

Does the Minister accept that section 106 money and other incomes that all local authorities have put into bank accounts are being adversely affected by the significant drop in interest rates, which is leaving a significant shortfall in the income that local authorities can spend? Do the Government have any plans to tackle that problem, which is no fault of local authorities?

We are indeed helping local authorities to manage their moneys, with greater investment in authorities and more freedoms and flexibilities, and we are giving what advice and support we can. 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. We are anxious to help local authorities maximise the use of their resources.

The Minister will not be aware that £160,000 of section 106 money from one development has sat in Manchester city council’s bank account for possibly up to four years because of the rules and regulations on how it can be spent. Will she commit to simplifying the rules, so that this money can be spent more quickly?

If the hon. Gentleman would like to write to me about the matter, I shall certainly inquire into why such moneys are tied up. As I say, this situation is not the norm, but it is clear that he is aware of some of the issues in his own local authority area. We are encouraging all local authorities to keep and publish records so that local communities can be aware of what resources are available and press to make sure that they are used well.

May I, too, associate myself with the remarks that have been made in all parts of the House? I am sure that the whole Cameron family are in everyone’s thoughts this afternoon.

The fall in section 106 receipts is having a massive impact on affordable and social housing development locally. Could the problem not at least be tackled in part by freeing up councils to start rebuilding council homes? The Prime Minister indicated at the end of January that local authorities could play an important role in delivering social housing, but rather than just the promise of yet another report, do we not desperately need action to be taken now?

I just say gently to the hon. Lady that we are already consulting on regulations that would allow local councils to do precisely that; of course one must never anticipate the outcome of consultation, but I anticipate that it may well be possible that we can go ahead in the near future.

It is five years this month since the Government’s own Barker review identified the problems that arise from reliance on the section 106 system and its attendant complexities as a means of driving development. Since then, the Government have added to those complications with measures such as the community infrastructure levy. Against that background and the decline in receipts, to which reference has been made, is it not better to move away from that complicated regime and a system of top-down development targets to one of incentivising local communities and local authorities to accept development by allowing them to keep some of the proceeds that arise to their own tax base from encouraging development?

I think that the hon. Gentleman left out an important development: in the meantime the Government have made available some £8 billion of resources for investment in housing. That is twice as much as the amount that was available in the previous period, which was itself substantial. I think that he was probably referring to the proposals, in so far as one can call them that, in the Conservative party’s latest publication of its policies—[Interruption.] I accept that it is a very short read. It is perhaps not entirely well-founded in the statistics that it cites, but I am sure that we will be examining it in future in the House.