Working with non compliant – but non material – obligations

As the planning community waits for the Government to respond on the consultation on reforming developer contributions, the issue of the interrelationship between the Community Infrastructure Levy and Section 106 obligation agreements remains problematic.  Last year's Amstel Group decision brought some welcome clarification to this issue and Sue Chadwick and Clare Mirfin summarise the legal issues leading up to the decision - and its practical implications.

"Problematic though it may be" [1]: 

Assessing the weight of planning obligations has been an issue since the landmark House of Lords ruling in Tesco Stores [2], which confirmed that 'necessary' could be interpreted to allow a wide range of planning benefits to be taken into account when deciding applications: “If it has some connection with the proposed development which is not de minimis, then regard must be had to it". This relaxed approach to the range of benefits that could be secured under a section 106 agreement ended with the 2010 Community Infrastructure Regulations, and the legal requirement that a planning obligation could only "constitute a reason for granting planning permission" if it was (a) necessary to make the development acceptable in planning terms; (b) directly related to the development; and (c) fairly and reasonably related in scale and kind to the development.

As well as creating a new statutory threshold for taking obligations into account the CIL Regulations set up an interesting question - if an obligation was not strictly ‘necessary’ and could not be a reason to grant permission, was it still a material consideartion at all?  

Derwent Holdings Ltd v Trafford Borough Council [3] included a challenge to the grant of a permission for a superstore on the current Old Trafford cricket ground and an allegation that there was an 'impermissable" link between it and the funding of a new ground. The judge dismissed the challenge, ruling that the obligation in question "could well be justified in planning terms and under Reg. 122." Two subsequent decisions continued with this relaxed approach: In the 2012 Welcome Break case [4] Bean J commented that "There is nothing novel in regulation 122 except the fact that it is contained in a statutory instrument" followed by the ruling in Hampton Bishop [5] where Hickinbottom J ruled that "planning decision-makers can take into account off-site benefits of a proposed development provided that such benefits are related to or connected with that development in a real (as opposed to fanciful or remote) way".

The Working Title case of 2016 [6] signalled the beginning of a tougher approach when Gilbart J noted that: "It is clear that the question of what is "necessary" is now a test in law, which it was not beforehand." This stricter approach was duplicated in the 2017 Forest of Dean [7] Court of Appeal decision involving a proposed donation to the community of a proportion of the turnover derived from a wind turbine. The court confirmed that a donation to a community fund could not be a material consideration in planning terms as it had no general socio-economic benefit but was a mere community inducement. The court also ruled that: 1) to be material, a matter must have a planning purpose and fairly and reasonably related to the permitted development - a narrower test than that applied in Tesco; 2) that planning policy could not "convert something immaterial into a material consideration for planning purposes"; and 3) distinguished between the "statutory" requirement for necessity in the CIL regulations and its status as a policy criterion in the Framework.

Justice Lang made her own contribution to the debate in cases decided in March and May 2018. In Amstel Group [8] an Inspector refused permission on appeal for a residential development. During the appeal the applicant submitted a unilateral section 106 agreement that provided land for a new primary school, a commitment by the Norwich Diocesan board to construct a new primary school, open space, affordable housing and financial contributions toward cycle infrastructure and a local library. The Inspector ruled that the school was not “necessary” and therefore was not compliant with Regulation 122 and could not be treated as a reason for granting planning permission. Lang J ruled that the Inspector's approach was correct in terms of analysing the weight of the new school against Regulation 122. However she noted that the Inspector "had to give separate consideration to the benefits of the new school…in assessing the overall planning balance" and the failure to carry out this separate assessment was a legal error - a public benefit could have planning weight even when it was non-compliant with Regulation 122.

Two months later Lang J ruled on the Good Energy Generation case [9] considering a range of benefits offered in connection with an application for a wind farm including a community investment scheme; and a reduced electricity tariff, both open only to local residents and considered whether the local authority had acted correctly in giving them no weight as planning considerations. Lang J restated the principle established in Forest of Dean that a matter would not be material simply because it was included in a planning policy. She also made it clear that decision makers had to recognise that the CIL regulations were in force and that their tests were "more stringent". She ruled that:

• The local tariff was essentially an inducement to make the proposal more attractive to local residents and to the local planning authority. The scheme was not necessary to make the development acceptable in planning terms under regulation 122 of the CIL Regulations 2010:
• The lack of details about the community investment scheme “combined with uncertainty about the scheme's commencement and long-term future, meant that the connection between the benefit and the development was remote and uncertain, rather than real… plainly was not necessary to make the development acceptable in planning terms, applying regulation 122 of the CIL Regulations 2010.”.

The HJ Banks decision [10] came out in November last year and was a welcome clarification of the current position. Ouseley J considered a challenge to an Inspector’s decision to grant planning permission on appeal for a surface mine in Northumberland. The permission was quashed on the basis of errors of law made by the Inspector - but the case also dealt with a wider point about the significance of planning obligations that did not satisfy the CIL regulations.  

The Inspector had divided the obligations into those which did comply with the requirement in regulation 122 and those which did not and so could not "constitute a reason for granting planning permission”. This was challenged on the basis that it was unlawful for the Secretary of State to give ‘moderate weight’ to planning obligations including a contribution to a skills fund, in the decision making process even where they were not CIL compliant.

Ouseley J identified two issues. One of them - whether a contribution to a skills fund which was clearly not Regulation 122 compliant was a material consideration at all - was answered relatively easily. Referring to the Forest of Dean case he noted that "the fund could be spent on any community benefit without any restriction… desirable no doubt but immaterial in planning terms". The Inspector's decision to give it even moderate weight was unlawful.

The second question identified was "can a planning obligation which is not CIL compliant be a material consideration?" Although his initial view was that "the language of regulation 122 should be interpreted as if it forbad a non-compliant CIL from being a material consideration" he went on to note that the Regulation 122 test was different from that used to assess materiality in planning terms or the lawfulness of conditions. As a result, he ruled that it was not an error of law to apply "differing treatments" to, on the one hand obligations that were material and CIL compliant and on the other obligations which failed the Regulation 122 tests but were still material planning considerations. Ouseley J also acknowledged that the distinction "may not be easy to operate in practice" leaving practitioners in a potentially awkward position. 

For anyone facing the conundrum of how to deal with planning benefits that are non-CIL compliant, options available for ensuring that the decision complies with the statutory test includes:  

• Ensuring that any report to committee or advice to members is clear that the benefit is not 'necessary' to enable the permission to be granted and is a general rather than a planning benefit.
• If the benefit is included in the related section 106 agreement, ensuring that it is listed separately to those obligations that comply with the Regulation 122 tests and referred to as community or non-planning benefits.

The current consultation on changes to the CIL regulations proposes removing the 'pooling restriction' in Regulation 123 with the aim of enabling local authorities "to approve development that may otherwise have been refused." This may or may not be the outcome but Regulation 122 remains in force and will require careful treatment.  

Sue Chadwick is a strategic planning adviser and Clare Mirfin is a Senior Associate at Pinsent Masons. Sue can be reached on 020 7490 9685 or This email address is being protected from spambots. You need JavaScript enabled to view it., while Clare can be reached on 020 7490 6229 or by email.

[1] HJ Banks & Company Ltd v Secretary of State for Housing Communities And Local Government [2018] EWHC 3141 (Admin) (para 60)

[2] Tesco Stores Ltd v Secretary of State for the Environment & Ors [1995] UKHL 22  

[3] Derwent Holdings Ltd v Trafford Borough Council [2011]

[4] R (Welcome Break Group Limited) v Stroud District Council [2012] EWHC 140 (Admin),

[5] Hampton Bishop Parish Council, R (On the Application Of) v Herefordshire Council [2013] EWHC 3947 (Admin)

[6] Working Title Films Ltd, R (on the application of) v Westminster City Council & Anor [2016] EWHC 1855 (Admin)

[7] Wright, R (on the application of) v Forest of Dean District Council Resilient Energy Serverndale Ltd [2017] EWCA Civ 2102

[8] Amstel Group Corporation v Secretary of State for Communities and Local Government & Anor [2018] EWHC 633

[9] Good Energy Generation Ltd v Secretary of State for Communities And Local Government & Anor [2018] EWHC 1270 (Admin)

[10] HJ Banks & Company Ltd v Secretary of State for Housing Communities And Local Government [2018] EWHC 3141 (Admin)