Contributions from developers can be secured to support the increased demands on services created by new developments. These Section 106 agreements can provide facilities such as affordable housing, schools, leisure amenities, town centre improvements and new roads or transport schemes.
The report recognises that there are often valid reasons for the disparity and acknowledges some limitations inherent in the process. But overall it concludes that, in order to operate the system most effectively, councils need detailed policies setting out what they expect to achieve through Section 106 agreements, as well as processes to ensure that applications are dealt with consistently. In addition, councils could improve their understanding of the financial impact of their policy requirements on new development - such as affordable housing or school places - in order to judge whether they are reasonable and achievable.
Steve Bundred, chief executive of the Audit Commission, said: 'Councils with weaknesses in their approach to Section 106 agreements are less likely to secure community benefits. This report aims to help councils implement effective changes, encourage them to adopt a strategic approach and to test the financial impacts of their policies on developments.
'Developing a comprehensive set of policies and supporting procedures will require time, commitment and resources, but our report and the range of guidance we have produced will help councils move forward and eventually secure the rewards.'
As a result of its findings, the Audit Commission has produced guides and checklists to help local authorities improve (www.audit-commission.gov.uk/planning). It has recommended that councils develop Section 106 policies and procedures and that they make sure council leaders understand how potential developer contributions can help create sustainable communities.
The Audit Commission makes its recommendations against a backdrop of changing national policy. Future economic conditions and a range of proposed policy developments, including the proposed Planning Gain Supplement, have potential implications for councils' approach to Section 106 agreements. But the commission's view is that councils should act now to strengthen their policies and procedures because that should stand them in good stead for current, and future, systems. This is particularly important for councils starting from a relatively low base.
As part of the planning process, a local planning authority and a developer may enter into a legal agreement to provide infrastructure and services on or off the development site that can not be secured through planning conditions. This is called a Section 106 agreement.