County councils raise concern for infrastructure funding under plans to replace section 106

The County Councils Network has cautioned that Government plans to replace section 106 contributions with a new infrastructure levy risks reducing the amount of funding available for roads, schools and medical centres.

The warning comes in a new report published by CCN and Pragmatic Advisory that sets out a number of concerns about the developer contributions system, including a fear that the proposed reform will be a "jack of all trades" that will leave little money for infrastructure.

Under the current system, Section 106 contributions from developers provide funding for affordable housing as well as site-specific infrastructure, while the Community Infrastructure Levy (CIL) also raises funds for large-scale infrastructure.

Plans to replace the current approach have been set out in the Levelling Up and Regeneration White Paper and will involve the introduction of a new infrastructure levy, which will be spent on a wider array of things, including affordable housing and local council services. But the report warned that this may see spending on infrastructure improvements reduce.

It also noted that presently two-thirds (66%) of developer contributions are spent on affordable housing, with less than a quarter going to roads, schools, transport, community spaces and medical centres.

The CCN warned that the Government must ensure that there is sufficient funding left over in the new system to build infrastructure to support new homes and that the proposed reforms risk "simply replacing one broken system with another".

The report recommended the new system has a greater focus on capturing funds for infrastructure such as roads and public services.

It also argued that the clauses of the bill which permit the levy to be used for purposes other than infrastructure or affordable housing should be removed as this could divert funding, which is already inadequate, to other services.

In 'two-tier' county areas, there should also be a statutory duty for district councils to work with their county councils to prepare levy-setting, the report added.

Additionally, the report said that there should be closer' partnership working', with authorities coming together at the county or combined authority level to draw up long-term strategic visions for their areas, bringing back 'strategic planning' to county areas. This would "better capture infrastructure funding from the planning system" and ensure that funding is used on projects that will have the greatest impact.

It added: "These visions, which should align with Local Plans prepared by district councils, would map out broad locations to direct housing growth and supporting infrastructure needs over a long period of time and should identify a funding package to construct and finance the infrastructure needs set out."

Cllr Roger Gough, Housing and Planning Spokesperson for the CCN, said that both national and local government recognise that the current developer contributions system is "unfit for purpose so attempts to reform the system are admirable".

"But as today's report shows, the new infrastructure levy in its current guise could be a jack of all trades; potentially replacing one broken system with another," Cllr Gough warned.

"We are concerned there could be even less money for infrastructure under the new system with these projects treated as an afterthought.

"With average house prices in rural county areas the highest in the country outside of London affordable housing provision is vital but the government must ensure there is funding left over for vital infrastructure and public services so we can grow and create sustainable communities."

The Levelling Up and Regeneration Bill has passed its second reading in the House of Lords and is currently at the committee stage.

Adam Carey