Two Mechanisms, Different Approaches
When developers build in England, they may be required to contribute to local infrastructure through two main mechanisms: Section 106 (S106) agreements and the Community Infrastructure Levy (CIL). While both aim to ensure development pays its way, they work very differently.
Section 106: The Bespoke Approach
Section 106 agreements are legal contracts negotiated between developers and local planning authorities for each individual development. Think of S106 as a bespoke solution, tailored to address the specific impacts of a particular project.
Key characteristics of S106:
- Negotiated case-by-case — Each agreement is unique, reflecting the specific circumstances of the development
- Site-specific mitigation — Contributions must directly relate to the impact of that particular development
- Flexible scope — Can cover affordable housing, education, healthcare, transport, and more
- Triggered payments — Money is typically paid at agreed milestones (e.g., completion of the 50th home)
CIL: The Standardised Charge
The Community Infrastructure Levy, introduced through the Planning Act 2008, takes a different approach. It's a fixed charge based on the size and type of development, set out in a published tariff.
Key characteristics of CIL:
- Non-negotiable rates — Developers pay according to a published charging schedule (£ per square metre)
- Wider infrastructure funding — Can be spent on any infrastructure identified in the council's Infrastructure Delivery Plan
- Transparent calculation — Simple formula: net additional floor space × CIL rate
- Fixed payment timing — Typically due within 60 days of development starting
Side-by-Side Comparison
| Aspect | Section 106 | CIL |
|---|---|---|
| Nature | Negotiated agreement | Fixed tariff |
| Flexibility | High — terms are negotiable | Low — rates are fixed |
| Spending scope | Site-specific mitigation only | Any identified infrastructure |
| Affordable housing | Yes — primary mechanism | No — excluded from CIL |
| Payment timing | At agreed trigger points | 60 days from commencement |
| Predictability | Lower — depends on negotiation | Higher — known in advance |
How They Work Together
Despite early expectations that CIL might replace S106, the two systems now coexist. In areas where CIL has been adopted, S106 has been scaled back but remains essential for:
- Affordable housing — Still delivered exclusively through S106
- Site-specific requirements — Highway access, on-site open space, ecological mitigation
- Larger developments — Where impacts cannot be adequately addressed through CIL alone
To prevent "double dipping," councils must publish lists of infrastructure types funded through CIL, ensuring developers don't pay twice for the same improvements.
The Management Challenge
For local authorities, managing both S106 and CIL creates complexity. Each S106 agreement has unique terms, trigger points, and spending constraints, while CIL has different reporting requirements and allocation rules.
Many councils still track these obligations in spreadsheets, making it difficult to maintain visibility over deadlines, allocate funds appropriately, and report accurately.
Looking Ahead: The Infrastructure Levy
The Levelling Up and Regeneration Act 2023 introduces a new Infrastructure Levy intended to eventually replace both S106 and CIL. The aim is to create a simpler, more predictable system while maintaining or improving infrastructure delivery.
However, the timeline for implementation remains unclear, and both S106 and CIL will continue operating for the foreseeable future.