Section 106 – How it Works

Camden employ two methods of legalised bribery – the Community Infrastructure Levy, and Section 106.

Section 106 derives its name from the 106th Section of the Town and Country Planning Act 1990, which empowers local authorities to require applicants to pay a fee in return for their application being approved, along with other obligations. The essence of the payment is to ‘make an application which would normally be unacceptable, acceptable’. In other words, it is a way to pay for an unacceptable application to be approved.

The Community Infrastructure Levy is a tax which works as a payment per square footage of a new development’s floorspace. The money is supposed to be ring-fenced for infrastructure benefitting the community, just as the name suggests. Whilst the Community Infrastructure Levy (CIL) is becoming a greater source of income for Camden, we will focus on the Section 106 which is altogether more flexible and has been used to devastating effect over the past decade by Camden.

How Section 106 is Supposed to Work

Section 106 is officially meant to empower local authorities to, in a way, reshape a planning application which would normally be rejected, into one that would be accepted. This is essentially meant to streamline the application process by allowing a local authority to turn an application into one that it agrees with, rather than outright rejecting an application. Without this in place, an applicant would have to make a second application after taking advice from Camden on why the initial application was in fact rejected.

This can already be done to a large extent by simply approving an application subject to amendments.

To give a real life example, a resident of Gower Street applied to make an extension to their Georgian townhouse into their back garden. The BCAAC protested about the harm that it would cause to the appearance of the conservation area. As a result Camden changed the application so that the extension could not be seen from the public realm, and approved that application instead. This is a perfect example of how planning should work, and does work in Camden when no money is involved.

However there may be other harmful effects of a development which cannot be solved by making a simple amendment, and this is especially true of large developments. Large applications can also be so complex that Camden’s planners do not have a sufficient level of expertise to make amendments.

The following is an example where amendments cannot solve a problem posed by a development.

An application to build more houses in an area will increase the demand at local amenities, such as a local gym. If an increase in housing increased the local population by 20%, then residents might complain that their gym would become oversubscribed, as it struggles to cope with a sudden 20% increase in demand. The only way to answer this objection in terms of making amendments to an application would be to either:

  1. Reject the application, or force the developer to decrease the provision of housing. But no matter how far the provision in housing is cut down, there will still be an increase in the demand for the gym. If the provision of housing is halved, the increase in demand for the gym would still be 10%. So there is no real way to address this problem satisfactorily, except to reject the application.
  2. Ignore the residents. Simply approve the application and turn a blind eye to the problems that will be faced by the gym and community. Planners could easily do this by making a reference to various policies and the housing crisis. The gym would be helpless.

Thus there was no real way to address the problems that a development caused to the local community simply by making amendments.

This is where Section 106 comes in.

Broadly speaking, Section 106, or planning obligations, as they are called, allow a local authority to say in the above situation: ‘we will approve your application, but you must pay for the local gym to increase its capacity by 20%. We have hired an architect to assess how much it will cost to make an extension to the gym, which will increase its capacity by 20%, and you will pay us this amount. We will use this money to pay for the extension, and if it costs less than we thought, we will give you the rest of the money back. If you don’t pay us this money, your application will be rejected.’

Note that this sort of ‘obligation’ does not do anything to the application itself. It simply makes the applicant use some of their money to pay for things for the local community – and those things must be directly related to the harm that the development is causing.

It can be a very just way to solve the impacts that a development might have on a local community. In the above example, it simply makes sense. Rather than the local authority simply looking at an application and its merits in terms of policy, the local authority can listen to local concerns, assess the varied and wide-ranging impacts that a development might have to the local area, and make the applicant pay to make good any harm caused.

The example of the gym shows how Section 106 payments are supposed to work in general. It exemplifies two principles which always apply:

  1. Payments should be made to address harm directly caused by a development. In the example, the local gym is directly affected by the development, so a Section 106 payment can be used to address the problems. It would not be appropriate to pay to extend a gym miles away from the development, as it would be unrelated to the application.
  2. Payments should be proportionate to the harm caused and the scale of the development. In the example, the provision of housing increases the local population by 20%, so the Section 106 pays to increase the gym’s capacity by 20%. It would be inappropriate to force the developer to pay for a 100% increase in capacity.

How Camden Pervert the System

In Camden’s hands, Section 106 has become a monster which, rather than acting to patch up problems caused by a development, actually itself becomes the focus of the development. The issue is that Section 106 allows money to flow from a developer to the local authority. Camden sees this flow of money, eyes the burgeoning pockets of developers, and hatches a scheme to extract millions and hoard it in a savings account. They directly ignore the two principles and simply demand huge payments to be made into a multi million pound savings account. The money is not then spent on anything directly related to the development.

It is safe to say that Section 106 in Camden has become a legalised bribe.

Camden have raised more than £60M over the past decade from Section 106 in Central London alone. At one point Camden held almost £100M in Section 106 savings. This is big money, even for Camden. Camden’s total expenditure amounted to £840M in 2018/19.

The graph above shows how Camden have been stockpiling these funds. The green shows their savings, whilst the red shows expenditure. Camden have recently begun to tack on ‘planned expenditure’ to disguise the game, but the immense discord between the red and the green is clear. This is especially true in early years such as in 2013/14, where Camden appear to hold about 25 times as much money in Section 106 savings than they spend.

The fact that there should even be such a thing as Section 106 savings really highlights how far Camden have mutilated the system. As Section 106 payments should be spent offsetting harm caused by a development, there’s no justification for hoarding this money. Making a simple analogy, it is as though someone receiving housing benefit does not spend this money on rent but instead keeps it in a savings account.

Whilst in recent years they have begun to spend more, the funds are not spent to offset the harm of any one development, but simply on various vanity projects not related to any development. Certainly, the money is not spent to offset the very localised harm that developments cause to a community, the money instead being transported to projects miles away. In fact the system is so far perverted that it is not even possible to tell exactly how expenditure is linked to income.

The red in 2018/19 shows a record expenditure of just over £30M. However about half of this (£14.4M) was spent on the West End Project, a rejuvenation of a strictly commercial area. How this is benefitting any community or offsetting the harm of any development is anyone’s guess.

The huge disparity between the justness of the example with the gym, and the way that Camden goes about things, stockpiling funds and throwing them at things like the West End Project, highlights just how out of control the local authority has become in this regard. Faced with budget cuts, rather than find ways to genuinely make services more efficient, Camden have taken to prostituting their land, communities, and heritage, to fund a celebrity lifestyle, at the cost of its people.

This is the rotten core of Camden, genuinely immoral.

How it Works in Practice

Camden work to secure the maximum payment possible from a Section 106 by encouraging stupendous development. How does this work?

Developers with money are encouraged to overdevelop their site, and ignore planning policy. As a Section 106 payment should be ‘proportionate’ to the development itself, a larger development will carry a larger Section 106. Big buildings carry big payouts for Camden, so big buildings are encouraged – the bigger the better.

This is why we see so often that there are different rules for applicants with money in Camden.

The local community usually then kick up a great fuss about all the harm that a development will cause to their area. This is then used as further justification for securing the maximum Section 106 payment, to ‘offset’ the harm which is being so well advertised by the community.

Whilst local groups, national groups, and the community all cause a great fuss, the development slowly grows to scales beyond what was initially advertised. How this happens is not clear, but it is safe to assume that either officers or councillors are letting it be known that a large development will be approved – two more storeys may be worth a further £200,000 after all. There are also great precedents set by the way that other large developments have recently gone in Camden. Whatever happens, developers get the idea that they should bloat their application to the greatest size possible.

During the consultation period, the community and various groups such as the BCAAC or Historic England will make significant objections.

The planning officer then has a duty to consider whether an application which would not be usually be acceptable, could be made acceptable through a Section 106. Ah, but of course this application is manifestly unacceptable as all the protests from the community have shown! But then, if it is so unreasonable, an accompanying Section 106 should be proportionately large. Well, says the planner, I shall recommend this application for approval subject to a Section 106 being agreed.

In this way, the community inadvertently help Camden to bloat the Section 106.

The application is then Granted subject to a Section 106 legal agreement. And the Section 106 negotiation is where all the fun is to be had.

The last few words are so often overlooked by the community when a much hated application is granted, but they carry all the information about why the application was approved and why it grew to be so hated in the first place.

The more unreasonable and ridiculous an application, the greater the Section 106. Right from the beginning, if a large development is on the table, officers know that it shall be approved subject to a Section 106. It is just about fattening the turkey for Christmas and the community kicking up a great fuss helps to fatten the turkey considerably.

But Where does the Money Go?

This whole scheme might not be so bad if the money raised through development – which can be as much as £2M or so – actually went back to the community to address all the concerns raised. However, the money is stored in a savings account, with rarely a penny seen by the community. After the community so helpfully raise all their concerns, and Camden use it as justification for raising funds through Section 106, the community are left high and dry with all the problems caused by the development, and no compensation. The community are then faced with the bleak prospect of years of construction work and perhaps a huge blot in the view from their window indefinitely, or even a window being completely obstructed.

In an absolutely shameful turn of events, we even find that these residents, asking politely for small changes to offset the harm caused by the development – such as new trees being planted, double glazing, or a living wall – are flatly refused on the grounds that the local authority is stretched enough as it is – ‘austerity’. This is despite the whole point of a Section 106 being to pay for such mitigations, and Camden holding tens of millions in savings for these things.

The money is then eventually spent on various projects politically motivated or otherwise wasteful. Currently Camden still hold about £65M in Section 106 savings. Central London, except for the ridiculous West End Project, does not see any of the benefits of the Section 106 empire. The money is instead often transported further north.

Viability: How Developers Can Wiggle out of Payments

‘Viability’ is a big word in development. It broadly means whether a development is profitable or not. A viable development is one that brings profit to a developer.

However its meaning and usage are a little more sinister than first appears.

Developers are coaxed into signing lucrative Section 106 agreements to get their application across the line. However as time passes, developers may be less keen on all the things which they agreed to pay for initially. After building commences, developers then think about how they can shrink the Section 106 payment.

The problem is that during the decision-making stage, the ball rests in the local authority’s court. The local authority can dream up various payments for various things, running into the millions, and if then the developer disagrees, they may see their application rejected.

But once construction starts, the balance of power shifts significantly. Local authorities have a duty to ensure that once development begins, it is completed. This is even more significant in Bloomsbury, where heritage is affected. It is highly undesirable for work to begin but not end, or for construction to take a decade rather than three years.

This is where viability comes in.

At some point, a developer may complain that due to unforeseen circumstances the development is going to cost more than planned. So much so in fact, that the viability of the development is threatened. If the viability of the development is threatened, this is akin to saying the development might have to be abandoned, or at least significantly delayed. This would be disastrous for the local authority.

So, says the developer, how about reducing that Section 106 payment to help us along?

In fact not only are Section 106 payments shrunk, but many of the conditions which may have been placed upon an application subject to its approval – amendments, such as a living wall, or solar panels – may be waived in the name of viability.

This technique is so common and lucrative for developers that there exist whole companies simply for the purpose of shrinking Section 106 payments.

During the application process, developers will also use viability and such companies to try and shrink their Section 106 in advance.

This, in effect, is why we see promises of ‘400 new affordable homes’ broken in favour of a new bicycle rack or pedestrian crossing instead.

Is There Anything Good in All This?

Unfortunately, not really.

Section 106 was fundamentally meant to bring benefits to the community. Camden take a very loose interpretation of this, believing that any money they spend anywhere benefits the community. But of course they are wrong.

However that does not mean to say that the millions which they store couldn’t be spent on those things which the community really do need and want. There are two parts to Camden’s dodgy practice:

  1. The fact that they exploit the planning system to raise funds, thereby subverting local democracy.
  2. The fact that those funds are largely wasted.

Whilst the spending of those funds do benefit some people – for example the millions contributed towards affordable housing – a huge proportion of funds are spent on useless projects, the West End Project being the perfect example. A mile of granite will benefit nobody, except the ego of the Cabinet.

The funds raised at the expense of one community should not be used to benefit another in any circumstance. This practice is bordering on criminal.

This all comes back to the recurring question of: ‘Who does Camden serve?’ If Camden properly respected our communities and heritage in Bloomsbury and levered out huge payments from small and appropriate developments to spend them on local priorities they would be hailed as heroes. But rather than catering to the needs and wants of its people, Camden approves inappropriate development for money which is spent on things that we don’t want.

Whilst there are plenty of horror stories which have no doubt been created by the greed for a large Section 106, there are also plenty of small developments which each raise a small Section 106. These add up in the end to some millions and harm nobody. This revenue could be used to good effect.

However the horror stories which do exist have fundamentally transformed some people’s lives for the worse. There can be no justification for this no matter how large the Section 106. The further insult that the Section 106 is not spent on those communities which have been seriously injured is unforgivable.

Tens of millions which have already been wasted on the West End Project, and this is an unforgivable waste of valuable public money which can never be regained.

A greater awareness of the Section 106 among the communities of Bloomsbury and beyond should help significantly to make the whole process more transparent in the future. Communities can, rather than fight a development tooth and nail, demand that the Section 106 is used to pay for this that and the other which they have identified will need addressing. Communities, on their local scale, could take advantage of the planning system in a positive way, in a similar fashion to how Camden does currently.

Above all, an awareness of exactly how and why communities are being exploited will help to put political pressure on Camden’s Cabinet to behave honourably in the future. Communities could perhaps get Camden to spend a few million on Bloomsbury and its people, to pay back the £60M already raised from their heritage. The claims that destruction is necessary to pay for council homes has been shown to be entirely false. Very few believed this in the first place, but now we know exactly what the truth of the matter is and we can use this knowledge to better hold Camden to account.

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