Section 278 agreements: scope, bonds and commuted sums
A section 278 agreement is a design and approval process, not paperwork that follows a decision. The three cost heads developers underestimate are check and supervision fees, the bond, and commuted sums.
A section 278 agreement is the legal contract under which a developer funds highway works that the highway authority permits to be carried out in the public highway. It sits under section 278 of the Highways Act 1980 and it is separate from the planning permission, separate from any section 106 agreement, and separate from the section 38 agreement that deals with adopting new estate roads. Most programme slippage on a consented scheme comes from treating the section 278 agreement as paperwork that follows the decision rather than as a design and approval process in its own right.
Three cost heads catch developers out: the authority's design check and supervision fees, the bond, and commuted sums for anything the authority does not want to maintain forever.
What the agreement covers
Section 278 covers works in or affecting the existing public highway. A new vehicular access, a right turn lane, a signalised junction, a pedestrian crossing, footway widening, a bus stop relocation, kerb realignment and street lighting alterations all fall within it.
What it does not cover is important. New roads inside the site that are intended for adoption go through a section 38 agreement, with its own design standards and its own bond. Where the development requires a change to parking restrictions, a waiting restriction or a speed limit, a traffic regulation order is needed, and that is a separate statutory process with its own consultation and its own risk of objection. Where the scheme stops up or diverts a highway, an order under section 247 of the Town and Country Planning Act 1990 is required, usually applied for after permission is granted.
On the strategic road network the counterparty is National Highways rather than the local highway authority, the design standards are different, and departures from standard need formal approval. The circumstances in which that body objects are set out in the note on when National Highways objects.
Technical approval comes first
The sequence that works is technical approval, then agreement, then works. Submitting a general arrangement drawing with the planning application is not technical approval, and a planning condition requiring the access to be built to the authority's satisfaction does not shorten the process.
Technical approval typically runs through:
- Submission of detailed design drawings, construction details, drainage design and street lighting design.
- A road safety audit at the design stage, with a designer's response to each recommendation, and further audits after construction and after a period in use.
- Structural approval where any structure, retaining wall or culvert is involved.
- Agreement of the construction specification and testing regime.
- Approval of the traffic management arrangements for the works themselves.
Statutory undertakers sit inside this. Diverting a water main, a gas service or a cable requires quotations and programme from each undertaker, and those are long lead items that no amount of pressure on the highway authority will accelerate.
Fees, supervision and inspection charges
Authorities recover their costs. Expect separate charges for checking the design, for preparing and completing the legal agreement, and for supervising and inspecting the works. Many authorities publish a scale of charges, commonly expressed as a percentage of the estimated works cost, and the published scale is the figure to budget against rather than an estimate from a previous scheme in another county.
Ask for the current scale in writing at the pre-application stage and build it into the appraisal. The same applies to road safety audit fees, which are sometimes charged separately, and to any requirement for the authority's own consultants to carry out the audit.
One practical point. The works cost estimate on which the fees are calculated is usually the developer's, and it is reviewed. An optimistic estimate produces a fee uplift later rather than a saving.
Bonds and securities
The authority will require security so that it can complete the works if the developer fails to. The usual forms are a surety bond from an insurer or bank, or a cash deposit held by the authority.
Two details matter for the appraisal. The first is the bond amount, which is the estimated cost of the works plus an allowance, so it is higher than the construction budget. The second is when it is released, which is normally after the works are certified complete and a maintenance period has run, often twelve months, during which defects are made good at the developer's cost.
A bond ties up facility headroom for the whole of that period. For a small developer that cost is real and it is routinely left out of the cashflow.
Commuted sums for future maintenance
A commuted sum is a capital payment covering the extra whole-life cost of maintaining something the authority would not otherwise have chosen. The items that attract one are predictable: non-standard paving materials, street trees in the highway, decorative or heritage lighting, structures such as retaining walls and culverts, and drainage features within the highway boundary.
The negotiation is almost always about design rather than price. Specify a standard bituminous surface and a standard lighting column and there is usually no sum. Specify granite setts across an access because the conservation area officer asked for them and there will be. Where two officers in the same authority want different things, get that resolved before technical approval rather than after.
Commuted sums under a section 278 agreement are distinct from the monitoring and administration charges that attach to planning obligations, which are covered in the note on travel plan contributions and monitoring fees.
Programme from offer to completion
A realistic programme for a modest access and footway scheme runs through pre-application discussion, detailed design, technical approval with at least one round of comments, the stage one road safety audit and designer response, legal drafting, execution of the agreement, bond provision, then a works window agreed with the authority that avoids school terms, festive embargoes and other works on the same corridor.
Treat each of those as a separate item with its own duration. The honest uncertainty is the technical approval loop, because the number of comment rounds depends on how complete the first submission is and on the authority's workload, and neither is within the developer's control.
Where occupation is tied to completion of the works by a Grampian condition, the programme risk lands on the sales programme. The relationship between the condition and the agreement is set out in the note on how section 278 agreements follow a permission.
Where these agreements go wrong
Scope creep is the most common problem. The works described in the transport evidence at application stage are often indicative, and the authority's detailed requirements can be wider. Pin the scope down in the transport work rather than leaving it to technical approval, because by then the permission is granted and the negotiating position has gone. The level of detail needed depends on whether the scheme warranted a Transport Assessment or a shorter statement.
Third party land is the second. A visibility splay or a footway tie-in that falls outside both the site and the highway boundary needs a land interest, and the land registry check should happen before the access design is fixed.
The third is sequencing against other consents. Utility diversions, traffic regulation orders and stopping up orders each run on their own clock, and they do not run in parallel as neatly as a bar chart suggests.
Enter your postcode on PlanScope to see which transport and highways reports a site is likely to need before you commit to an access design.
This is general guidance, not legal advice; check the position with your local planning authority, the highway authority or a qualified professional before relying on it. PlanScope provides AI-assisted draft reports for planning applications. Reports should be reviewed before submission. We do not guarantee planning approval.
Frequently asked questions
What is the difference between a section 278 and a section 38 agreement?
Section 278 of the Highways Act 1980 covers works in or affecting the existing public highway, such as a new access, a junction or footway widening. Section 38 covers the adoption of new roads built inside the site. They have different design standards, different legal drafting and separate bonds, and a scheme may need both.
What is a commuted sum for?
It is a capital payment covering the extra whole-life maintenance cost of something the highway authority would not otherwise have chosen. Non-standard paving, street trees in the highway, decorative lighting, structures and highway drainage features all attract one. Specify standard materials and there is usually no sum, so the negotiation is about design rather than price.
When is the bond released?
Normally after the works are certified complete and a maintenance period has run, often around twelve months, during which defects are made good at the developer's cost. The bond amount is the estimated works cost plus an allowance, so it exceeds the construction budget, and it ties up facility headroom for the whole period.
Can a planning condition replace the agreement?
No. A Grampian condition requiring the access to be completed before occupation makes the works a precondition of development, but the works themselves still need technical approval and a section 278 agreement. The condition shifts programme risk onto the sales programme rather than shortening the highway authority's process.
Do I need a traffic regulation order as well?
If the development requires a change to waiting restrictions, parking controls or a speed limit, yes. A traffic regulation order is a separate statutory process with its own consultation period and its own risk of objection. Stopping up or diverting a highway needs an order under section 247 of the Town and Country Planning Act 1990.
Sources and further reading
This article is general guidance about the planning system in England and, where stated, the rest of the UK. It is not legal or professional advice. Check your local planning authority’s validation requirements and take professional advice for your specific site.