Section 278 agreements and how they differ from section 106

A section 278 agreement highways arrangement is a contract with the highway authority to carry out works in the public highway at the developer's expense. A section 106 agreement is a planning obligation enforceable against the land, entered into with the local planning authority, which can secure money or restrict how the land is used. They do different jobs, they are signed with different bodies, and on a two tier site they are signed with two different councils.

The confusion arises because a section 106 obligation frequently requires the developer to enter into a section 278 agreement before occupation. One document points at the other, and people start treating them as a single process. They are not, and the money flows differently.

What section 278 authorises

Section 278 of the Highways Act 1980 lets a highway authority enter into an agreement with a person who will derive benefit from works to the highway, under which that person pays for the works. The works themselves are highway works: a new priority junction, a signalised access, a right-turn lane, a pedestrian crossing, footway widening, a bus stop relocation, kerb realignment, drainage alterations, lining and signing.

Two features matter in practice. The works are in or affect the public highway, so the highway authority controls the design and usually the delivery. And the agreement is with the highway authority, which in a two tier area is the county council, while the planning permission comes from the district. In a unitary area both sit in the same organisation but rarely in the same team.

Section 278 does not create a planning obligation and it does not run with the land in the way section 106 does. It is a contract.

Who the agreement is with, and who else gets involved

The counterparty is the local highway authority, unless the works affect the strategic road network, in which case the national highways body is involved and its own processes apply. Where the works affect a trunk road or a motorway junction, expect a longer approval route and a separate agreement.

Statutory undertakers come into it as soon as the works touch their apparatus. Diverting a water main, a gas main or a high voltage cable to build a junction is a separate commercial process with its own lead times, and those lead times routinely exceed the highway authority's own. The cost of diversions is frequently the largest single line in a section 278 budget, and it is the line most often underestimated at appraisal stage. The treatment of highway works costs in a development appraisal matters here, because a diversion quote received after the viability case has been argued is a problem with no good solution.

Designing and approving the works

The sequence is technical approval, then legal agreement, then construction under the authority's supervision.

1. Preliminary design, usually submitted with or shortly after the planning application, enough to show the access works are deliverable within the available highway land and visibility.
2. Detailed design to the authority's standards, with departures from standard identified and submitted for approval where they arise.
3. Independent road safety audit at the stages the authority requires, with a designer's response to each recommendation. This is specialist work commissioned separately and is not one of the 66 PlanScope report types.
4. Technical approval of structures, drainage connections and street lighting where those are involved.
5. Agreement engrossed, bond and fees paid, works started under inspection.

The design evidence submitted with the planning application has to be good enough to support the access in principle. That is usually a general arrangement drawing with visibility splays, swept path analysis for the largest expected vehicle, and the trip generation and distribution work in a Transport Assessment or Transport Statement. Officers do not need the detailed design at application stage, and submitting it early can cost you flexibility.

Bonds, fees and commuted sums

Three charges sit on top of the works cost, and all three are routinely left out of early appraisals.

A bond or surety, taken so that the authority can complete the works if the developer fails. It is commonly set as a proportion of the estimated works cost and released on completion.

Authority fees for checking the design, administering the agreement and supervising construction on site. These are usually a percentage of works value, published in the authority's own fee schedule, and they vary considerably between authorities. Check the current schedule rather than applying a figure from a previous scheme.

Commuted sums, which are payments towards future maintenance of items the authority will adopt but would rather not maintain at its own cost: structures, non-standard surfacing, trees in the highway, traffic signals and sustainable drainage features in highway land. A commuted sum for a set of signals can run into six figures and it is non-negotiable in many authorities.

Section 38 adoption and how it sequences

Section 38 covers the streets inside your site that you want the authority to adopt. The developer builds them to the authority's specification, the authority inspects during construction, and after a maintenance period the streets are adopted and become publicly maintainable.

The two agreements usually run together on a residential scheme: section 278 for the junction onto the existing road, section 38 for the estate streets behind it. They are often engrossed as a single combined agreement, which is convenient and sometimes hides the fact that the obligations and the bonds are separate.

Where you do not want adoption, the streets stay private and a management company maintains them, which has consequences for the service charge, for refuse collection and for the authority's view on street lighting and drainage. Say which you intend in the planning submission, because the answer affects the drainage adoption position and therefore the drainage strategy.

Where a section 106 contribution is used instead

Some highway improvements cannot sensibly be built by a developer. A contribution towards a scheme the authority will deliver, a payment towards bus service support, a travel plan monitoring fee, funding for a traffic regulation order: these go into a section 106 obligation as a financial contribution, tested against the statutory tests that an obligation must be necessary to make the development acceptable, directly related to the development, and fairly and reasonably related in scale and kind.

That test is where contributions get argued. An authority asking for a contribution to a junction improvement five kilometres away on a scheme of twelve houses will struggle on the second limb. The evidence that supports or defeats the request is the trip distribution work, and that argument is won in the transport evidence rather than in correspondence about the obligation. Where the contributions bear on scheme economics, they belong in the Viability Assessment and the format in which a viability appraisal is submitted determines whether an officer can test them at all.

Illustrative example

A 60 dwelling scheme takes access from a classified road. The highway authority requires a new ghost island right-turn junction, 90 metres of footway and a bus stop upgrade under section 278, and adoption of the estate streets under section 38. The planning permission is conditioned so that no dwelling is occupied until the section 278 works are complete, and the section 106 obligation requires the developer to enter into the section 278 agreement within six months of the start of works. A statutory undertaker diversion for a water main across the junction adds four months to the programme. This example is illustrative and is not based on a real scheme.

Programming the agreement against the build

Put the section 278 on the critical path and treat the undertaker diversions as the long lead item. The pattern that causes trouble is a Grampian condition preventing occupation until the highway works are complete, combined with an agreement that has not been engrossed eighteen months after permission.

Three practical habits:

• open the technical approval conversation at pre-application stage, with the preliminary general arrangement drawing
• get undertaker enquiries in before you fix the junction design, not after
• budget the fees, bond and commuted sums as separate lines from the works cost

One honest uncertainty: authorities differ widely in how long technical approval takes and in what they charge for supervision, and there is no national schedule to work from. Ask the authority for its current fee schedule and typical approval timescale in writing before the appraisal is finalised.

Supporting documents for a scheme with highway works span transport, drainage and viability. Browse the PlanScope report types to see which ones apply at your scale.

This is general guidance, not legal advice. Highway agreements and road safety audits require suitably qualified professionals, and for specialist technical reports, qualified professional input may be required. PlanScope provides AI-assisted draft reports for planning applications. Reports should be reviewed before submission. We do not guarantee planning approval.