The Basics: What is Section 106?
Section 106 agreements (often called "S106") are legal contracts between property developers and local planning authorities. Named after Section 106 of the Town and Country Planning Act 1990, these agreements ensure that when new developments are built, they contribute to the local infrastructure and services needed to support them.
Think of it this way: when a developer builds 200 new homes, those homes will bring new families who need school places, GP surgeries, parks, and roads. S106 agreements make sure developers contribute to these services rather than leaving the burden entirely on existing taxpayers.
What Can S106 Money Be Used For?
S106 contributions can fund a wide variety of community needs, including:
- Affordable housing — Often the largest component, ensuring new developments include homes for people who cannot afford market prices
- Education — New school places or contributions to expand existing schools
- Healthcare — Funding for GP surgeries and health centres
- Transport — Road improvements, cycle paths, and public transport enhancements
- Green spaces — Parks, playgrounds, and nature reserves
- Community facilities — Libraries, community centres, and sports facilities
How S106 Differs from Council Tax
Unlike general council tax, S106 money comes with strict legal constraints. Each contribution must be spent on specific purposes outlined in the agreement, often within specific timeframes and geographic areas.
For example, if a developer pays £500,000 for "education infrastructure within 2 miles of the development site," that money cannot legally be spent on a school across town, no matter how much it might need funding.
The Scale of S106 in the UK
S106 contributions are significant. According to recent estimates, councils across England and Wales are collectively managing billions of pounds in S106 funds. Some individual councils hold over £50 million in unspent contributions.
This scale makes proper management crucial. When S106 money is well managed, communities get the infrastructure they were promised. When it's poorly managed, funds can sit unused or, in worst cases, be returned to developers when spending deadlines are missed.
How to Find Out About S106 in Your Area
Every local authority is required to publish an annual Infrastructure Funding Statement detailing S106 receipts and spending. You can usually find this on your council's planning pages.
Key information to look for:
- Total S106 funds received in the past year
- Total funds spent and on what projects
- Funds allocated but not yet spent
- Any funds returned to developers
Your Right to Know
As a citizen, you have the right to understand how developer contributions are being used in your community. The Local Government Transparency Code requires councils to publish spending data, and Freedom of Information requests can be used to obtain more detailed information.
If you're concerned that S106 money isn't being spent appropriately or is sitting unused, you can raise this with your local councillor or the council's planning department.
Looking Ahead: The Infrastructure Levy
The government has signalled plans to reform developer contributions through the Levelling Up and Regeneration Act 2023. A new "Infrastructure Levy" may eventually replace both S106 and the Community Infrastructure Levy (CIL), though the timeline for this change remains uncertain.
Until then, S106 remains a vital mechanism for ensuring development benefits the communities where it takes place.