Section 278 and section 38 against section 106
A major scheme usually needs all three instruments. The difference that matters to a developer is which carries the bond, which carries the fees and which sits on the critical path.
Section 278 vs section 106 is the wrong framing, because a major scheme normally needs both, plus a section 38 agreement if any road is to be adopted. The three instruments do separate jobs. Section 278 of the Highways Act 1980 lets a developer pay for and carry out works in the existing public highway. Section 38 of the same Act provides for a new road built by the developer to be taken over by the highway authority. Section 106 of the Town and Country Planning Act 1990 binds land to planning obligations, including the obligation to enter into the other two.
What a developer actually needs to know is which one carries the cost, which one carries the bond, and which one sits on the critical path. Those answers differ, and the sequencing errors cost more than the fees.
Three agreements with three purposes
A primer on the legal scope of each is set out in our note on which agreement secures what. The short version, for budgeting purposes:
| Instrument | Counterparty | What it covers | Security required |
|---|---|---|---|
| Section 278 | Local highway authority, National Highways or Transport for London | Alterations to the existing public highway | Bond or cash deposit, plus fees |
| Section 38 | Local highway authority | Adoption of new estate roads and associated drainage | Bond, plus a maintenance period |
| Section 106 | Local planning authority, sometimes with the highway authority as a party | Contributions, restrictions and covenants binding the land | Usually none, but payment triggers bite |
The highway authority is often a different body from the planning authority. In two-tier England the county is the highway authority and the district determines the application, which means two negotiations running at different speeds with different officers and different legal teams.
Works in the existing highway under the 1980 Act
Anything beyond your boundary and inside the adopted highway is section 278 territory: a new priority junction, a signalised access, a right turn lane, a pedestrian crossing, a bus stop relocation, footway widening, or a dropped kerb at scale.
The process has stages, and each takes time. A technical approval submission with drawings and calculations. Road safety audit, usually at more than one stage, with designer responses. Agreement of the works cost, the authority's fee for checking and supervising, and the bond value. Then the legal agreement, then a works programme with traffic management approvals on top.
Fees and bond percentages are set by each authority and published in its own fee schedule, so check the current figures for the authority you are dealing with rather than carrying an assumption across from a previous scheme. The common surprise is not the fee but the commuted sum: a request for a capital payment to cover future maintenance of something the authority does not want to maintain in perpetuity, such as a structure, a signalised crossing or a landscaped island.
Where your access is onto the strategic road network, National Highways is the relevant body and the timescales stretch. Build that into the programme from the start rather than discovering it at the technical approval stage.
Adoption of new estate roads
Section 38 matters only if adoption is the intention. Many schemes now keep roads private, managed by a company funded by estate charges, which removes the bond and the adoption standard but creates a management arrangement the planning authority may want secured by the obligation.
Where adoption is intended, the road has to be built to the authority's design standard from the outset, which affects geometry, construction depth, lighting, drainage and street trees. A layout drawn to a design code and then offered for adoption usually needs reworking, because the adoption standard and the design code pull in different directions on carriageway width, radii and tree pit positions.
The bond is released in stages, and the maintenance period runs after provisional certification, commonly twelve months, before final adoption. Model the bond as tied-up capital for the whole period rather than as a fee.
Financial contributions through a planning obligation
Highway contributions sit in the section 106 agreement: sustainable transport contributions, travel plan monitoring fees, bus service support, cycle infrastructure off site, and sometimes a contribution towards a scheme the authority intends to deliver itself rather than works you carry out.
Each has to satisfy the statutory tests for a planning obligation: necessary to make the development acceptable, directly related to the development, and fairly and reasonably related in scale and kind. A contribution towards a junction improvement already programmed and funded, with no link to your trip generation, fails the first test. The place to win that argument is in the transport evidence, which is why a well-scoped Transport Assessment does more for the obligations negotiation than any amount of drafting.
Obligations also carry mechanics that affect cash flow: indexation from the date of the agreement, payment triggers tied to occupation numbers, and spending deadlines after which unspent money is returned. Ask for the return provision. Authorities grant it more often than developers request it.
Bonds, fees and commuted maintenance sums
Four cost lines recur, and only one of them is the works.
- The works cost itself, priced from the approved technical design rather than from the planning drawing.
- The authority's fees for technical approval, supervision and inspection, set as a percentage of works cost in most published schedules.
- The bond or cash surety, held until the works are certified, which is capital you cannot deploy elsewhere.
- Commuted sums for future maintenance of assets the authority will take on but does not wish to fund.
An illustrative sequence for a 120-home scheme with a new signalised access and an internal estate road offered for adoption: a section 278 agreement for the access with its own bond and fees, a section 38 agreement for the internal road with a separate bond and a twelve month maintenance period, and a section 106 agreement containing a covenant not to occupy until the access works are certified complete. Three agreements, two bonds, one critical path.
Sequencing them against the conditions
The order that works is this.
- Settle the access design in principle before you submit, with the highway authority's informal comments on record.
- Negotiate the section 106 while the application is being determined, including the covenant that triggers the section 278.
- Start the section 278 technical approval process immediately on resolution to grant, not on issue of the decision notice.
- Enter the section 38 agreement before the estate road is built, because retrofitting an adoption standard is expensive.
- Discharge the pre-start conditions, then open the site.
Step three is where most programmes slip. A section 106 covenant that prohibits development until a section 278 agreement has been completed hands control of your start date to a third party, and the technical approval process cannot be compressed by pressure. Where the covenant can instead be drafted to prohibit occupation rather than development, the whole programme loosens.
Also read the conditions against the agreement. A condition requiring highway works before first occupation and an obligation requiring them before thirty occupations are in conflict, and the stricter one governs. That sort of mismatch is common enough to be worth a deliberate check, in the same way that questions about whether an obligation still serves its purpose arise later and are dealt with in our note on discharging a section 106 obligation that no longer serves.
Who negotiates each and when
The planning consultant leads the section 106 with the planning authority, with the transport consultant supplying the evidence and the solicitor drafting. The highway engineer leads the section 278 and section 38 technical process with the highway authority, usually with a specialist approvals consultant on larger schemes. Nobody owns the interface between them, which is why it fails.
Appoint one person to hold the interface. Their job is narrow: keep the covenant wording in the obligation consistent with what the technical process can deliver, and keep the conditions consistent with both. On a scheme of any size that role repays itself in weeks of programme.
This is general guidance, not legal advice. Check the position with your local planning authority or a qualified professional before relying on it. If you are scoping the evidence base behind all this, enter your postcode on PlanScope to see which reports a site is likely to need.
PlanScope provides AI-assisted draft reports for planning applications. Reports should be reviewed before submission. We do not guarantee planning approval.
Frequently asked questions
Do I need a section 278 agreement and a section 106 agreement?
On most major schemes, yes. The section 106 agreement binds the land and often contains a covenant requiring you to enter into the section 278 agreement before development or occupation. The section 278 agreement with the highway authority then governs the works themselves, the fees, the bond and the supervision arrangements.
What is the difference between section 278 and section 38?
Section 278 of the Highways Act 1980 covers works to the existing public highway carried out at a developer's expense, such as a new junction or crossing. Section 38 provides for a new road built by the developer to be adopted by the highway authority, which means building to the adoption standard and posting a bond released after a maintenance period.
What is a commuted sum?
A capital payment to the highway authority covering future maintenance of an asset it will take on but does not wish to fund from its own budget, such as a structure, a signalised crossing or a landscaped island. Amounts and the assets attracting them are set by each authority, so check the published schedule for the authority involved.
Can a council require a contribution towards works it was already funding?
An obligation has to be necessary to make the development acceptable, directly related to it and fairly and reasonably related in scale and kind. A contribution to a scheme already programmed and funded, with no link to your trip generation, struggles on the first test. Transport evidence is where that argument is won.
How do I stop the section 278 delaying my start on site?
Negotiate the covenant wording. An obligation preventing development until a section 278 agreement is completed hands your start date to the highway authority's technical approval timetable. A covenant that prevents occupation instead, or that allows enabling works, keeps the programme in your control while the approval process runs.
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.