Section 278 and section 38 costs on a small scheme
Section 278 and section 38 agreements carry fees, bonds and commuted sums well beyond the cost of the works. Here is how to budget them on a scheme of a few plots.
Budget for highway works as a separate line from the build, because the section 278 cost is rarely just the cost of the tarmac. On a small scheme you are paying the highway authority for design checking, for agreement drafting, for site supervision, for a bond that ties up cash until adoption, and often for a commuted sum towards maintaining anything the authority would not otherwise have to look after. The works themselves can be the smaller half of the number.
Two agreements do different jobs. Section 278 of the Highways Act 1980 lets a developer pay for alterations to an existing public highway: a new bellmouth, a footway widening, a right turn lane, a crossing point. Section 38 is the route by which a new street built as part of a development is adopted as public highway and maintained at public expense from then on. A four-plot cul-de-sac with a new access off a classified road can need both.
What each agreement actually covers
A section 278 agreement is a contract to carry out works in the existing highway. It sets out the approved drawings, the standard of construction, the inspection regime, the insurance and indemnity position, and the payment mechanism. The works are usually built by the developer's contractor under supervision, though some authorities still insist on their own term contractor for anything touching traffic signals or a classified road.
A section 38 agreement covers a street the developer builds to adoptable standard on land the developer owns, which the authority agrees in advance to adopt once it is finished and has survived a maintenance period. It carries a longer tail: technical approval, construction, a provisional certificate, a maintenance period of usually 12 months, then a final certificate and adoption.
Where a scheme is a single dwelling on an existing frontage, neither may be needed. A domestic vehicle crossing is normally handled under section 184 of the same Act through the authority's own crossings team, at a published price.
Design check and supervision fees
Highway authorities recover their staff costs through a fee, and almost all of them publish the scale. It is normally expressed as a percentage of the estimated cost of the works and split between technical approval of the design and inspection during construction, with the legal team's drafting charged on top. Because it is a percentage, the fee moves with the works estimate, and an early estimate that understates the works will produce a shortfall the authority asks for later.
Ask for the scale in writing at the pre-application stage. Ask two further questions at the same time: whether road safety audits are charged separately, and who pays for the traffic management and any temporary traffic regulation order. Stage 1 and 2 road safety audits sit with the design, stage 3 follows construction, and the audit team has to be independent of the designer, so that is another appointment to budget.
Bonds and what they tie up
The authority will require security for the works, normally a surety bond from a bank or an insurer, occasionally cash. The bond is usually set at the full estimated cost of the works with an allowance for inflation and for the authority's cost of completing the works itself if the developer fails.
For a small developer the bond premium is a real annual cost and the bond stays in place until adoption, which on a section 38 means until the final certificate after the maintenance period. That can be three or four years after the road is finished if the last plot sells slowly, because authorities often will not start the maintenance period until the street is substantially complete and the construction traffic has stopped.
Commuted sums for future maintenance
A commuted sum is a one-off payment for the extra cost of maintaining something the authority did not ask for. Block paving instead of bitmac, street trees, grass verges, non-standard lighting columns, a structure such as a retaining wall or a culvert, and increasingly drainage features that fall to the authority all attract one. Formulae vary by authority and most publish theirs.
The practical lesson is a design one. Every non-standard material in the street plan is a payment, and on a small scheme a short run of decorative paving at the entrance can cost more in commuted sums than it adds in sales value. Where the planning officer is pressing for a particular surface on design grounds and the highway officer is pricing it, get both in the same conversation before the layout is fixed. The Design and Access Statement is the right place to record why a material was chosen, and it helps to have that reasoning written down when the commuted sum is negotiated.
Timing against the build programme
Highway agreements are slow, and they usually sit behind a condition. A Grampian condition typically prevents occupation, and sometimes prevents any development, until the section 278 agreement has been entered into and the works completed. That makes the agreement a programme item rather than a paperwork item.
A workable sequence looks like this:
- Raise the access design at pre-application and confirm which agreements apply.
- Submit the planning application with an access drawing that the highway officer has already seen.
- Start technical approval as soon as permission is granted, in parallel with discharging other conditions.
- Get utility diversion quotations early, because those quotes are the longest lead item and the largest unknown.
- Complete the agreement and put the bond in place before the contractor needs the highway.
Utility diversions deserve their own line. A statutory undertaker quote for moving a gas main or a set of ducts is priced by the undertaker, cannot be shopped around, and routinely arrives months after it is requested. On a small scheme it is the item most likely to break the budget.
Doing the works yourself against paying a contribution
Where the works are small, some authorities will accept a financial contribution and do the work themselves, often bundled into their own programme. That removes your bond, your supervision fee and your contractor risk, and it removes your control of the timing. Where occupation is tied to completion of the works by condition, handing the programme to the authority can be the wrong trade.
The reverse case is a scheme where the works are substantial and the developer's contractor is already on site with the plant. Building them under a section 278 usually costs less, and you keep the sequence.
There is one honest uncertainty here: authorities differ widely in how they price supervision, and a percentage that looks modest against a large works package can look punitive on a job worth a few tens of thousands. Get the number before you commit to the access strategy.
Contingency, and what to carry
Carry a contingency on highway works that is larger than the one you carry on the build. Ground conditions in the verge, unrecorded apparatus, a drainage connection that turns out to need a new gully run, and an audit recommendation that adds a length of kerb are all common. Where the access strategy depends on visibility splays across third party land, the cost of securing that land is a highway cost too, and it is the one that kills small schemes.
Set the budget out in the planning submission where access is contentious. A Transport Statement that shows the access can be built within land in the applicant's control, with the agreement route identified, answers the highway officer's first question before it is asked. Our note on what pre-application advice charges buy covers how to use that stage to pin the fee scale down, and the guide to CIL on a new dwelling deals with the other payment that lands at the same moment.
This is general guidance, not legal advice; check the position with your local planning authority or a qualified professional before relying on it. Fee scales, bond requirements and commuted sum formulae are set by each highway authority and change, so work from the current published schedule.
See PlanScope pricing if you want the supporting statements drafted before you commit consultant time. 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 to an existing public highway paid for by a developer, such as a new access or a footway alteration. Section 38 is the agreement under which a new street built by a developer is adopted as public highway. A scheme with a new estate road off a main road can need both.
How is the highway authority's fee calculated?
Most authorities publish a scale expressed as a percentage of the estimated cost of the works, split between technical approval of the design and inspection on site, with legal drafting charged separately. Because it is a percentage, an understated works estimate produces a shortfall later. Ask for the current published scale at pre-application stage.
How long does a section 38 bond stay in place?
Until adoption, which follows the final certificate at the end of the maintenance period. That period is commonly 12 months and usually does not start until the street is substantially complete and construction traffic has stopped. On a slow-selling site the bond can remain in place for three or four years after the road is physically finished.
What are commuted sums for?
They pay for the extra cost of maintaining anything non-standard that the authority will inherit, such as block paving, street trees, verges, decorative lighting columns, retaining walls or drainage features. Formulae vary by authority and most publish theirs. Non-standard materials at the street entrance can cost more in commuted sums than they add in value.
Can I pay the council to do the highway works instead?
Some authorities accept a financial contribution for small works and carry them out themselves. That removes the bond, the supervision fee and the contractor risk, but it also removes your control of timing. Where a condition ties occupation to completion of the works, giving up control of the programme is often the worse deal.
Do I need a section 278 agreement for a dropped kerb?
Usually not. A domestic vehicle crossing is normally dealt with under section 184 of the Highways Act 1980 through the authority's crossings team at a published price, rather than through a full section 278 agreement. Larger accesses, junction alterations and anything affecting traffic signals will need the section 278 route.
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.