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Planning obligations caused rise in infrastructure investment

Private developers spent £5bn on the country’s local infrastructure in 2008, researchers from the University of Sheffield have found.

Planning obligations have led to companies making substantial investments in roads, schools and affordable housing across the UK, according to a report commissioned by the Department of Communities & Local Government.

Contributions had risen from £2bn in 2003-04 to £5bn in 2007-08, largely because of the so-called S106 agreements that force private companies to invest in infrastructure in return for contracts.

The deal has had a huge impact on the construction of affordable housing, with almost two-thirds of all new builds being funded through the agreements.

“The last decade of this century has seen a very substantial increase in these contributions by developers.”

Tony Crook, study leader

Planners say the mechanism affords authorities greater bargaining power when negotiating contributions from private industry.

Study leader Tony Crook said: “The last decade of this century has seen a very substantial increase in these contributions by developers, facilitated by the significant increase in land values.

“The changes to S106 policy, including the new Community Infrastructure Levy which will come into operation in April this year, will bring more sites into the frame for contributing to infrastructure because the Levy will apply to all but householder applications and the smallest sites and therefore these proposals have the capacity for further raising the funds available for infrastructure.”

The study was a joint effort by officials from the university’s Department of Town and Regional Planning and the Department of Land Economy at the University of Cambridge. It is the third of its kind commissioned by the Department of Communities & Local Government. Relatively little was known about the value of the contributions beforehand.

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