Section 278 works or a section 106 contribution

When a scheme needs work done to the public highway, the developer builds it under an agreement with the highway authority made under section 278 of the Highways Act 1980. When the scheme needs money towards something the council will deliver elsewhere, that is a financial contribution secured by a planning obligation under section 106 of the Town and Country Planning Act 1990. The section 278 or section 106 highways question is really a question about who is holding the shovel.

Both can appear on the same permission, and frequently do. What causes trouble is assuming that one agreement covers the other, or that the planning officer who negotiated the obligation speaks for the highway authority.

What section 278 covers and who contracts

A section 278 agreement lets the highway authority allow works to be executed on the public highway, with the developer paying. In practice the developer's contractor builds the works under the authority's technical approval and supervision, and the authority signs them off.

Typical content is the site access, a new junction or its widening, a right-turn lane, signal modifications, a footway crossing, a bus stop relocation, traffic calming, and signing and lining.

Your counterparty is the highway authority, not the planning authority. In a two-tier area that is the county council. On a trunk road or motorway it is National Highways. In London it may be Transport for London for the red route network and the borough otherwise. Those bodies have their own approval processes, their own fee scales and their own timetables, none of which are bound by the planning determination period.

What a section 106 contribution covers instead

A planning obligation secures things the authority will deliver or that need to be controlled over time: a sustainable transport contribution, bus service funding, a travel plan monitoring fee, a contribution towards a cycle route two streets away, or a car club space.

The obligation has to meet the three statutory tests in regulation 122 of the Community Infrastructure Levy Regulations 2010. It must be necessary to make the development acceptable in planning terms, directly related to the development, and fairly and reasonably related in scale and kind. A contribution that fails any of those cannot lawfully be taken into account.

The restriction on pooling more than five obligations towards a single item of infrastructure was removed in 2019, so authorities can now pool contributions freely, which is why contributions towards larger off-site schemes reappear in heads of terms.

A useful drafting device sits between the two regimes. The obligation frequently requires the developer to enter into a section 278 agreement and complete the works before a stated trigger, which puts the highway works inside the planning enforcement machinery without the planning authority having to deliver them.

Section 38 adoption and where it fits

Section 38 of the same Act deals with new streets inside the development that are to become public highway. It is an adoption agreement rather than a works agreement, and it runs alongside the section 278 where there is one.

The sequence is: build the estate roads to the authority's specification, complete them, enter a maintenance period during which defects are your responsibility, then adoption. A surety bond covers the authority against your failure to finish, and it is released in stages.

Roads that will stay private do not need a section 38 at all, but private roads bring a management company, an estate charge and a purchaser's solicitor asking about it. That is a sales decision as much as a planning one.

Bonds, commuted sums and inspection fees

The headline construction cost is rarely the whole cost.

Commuted sums catch people out. Street trees in the footway, a non-standard surfacing material, an attenuation feature in the verge, a structure or an uncommon lighting column all attract a sum covering future maintenance, and the formula can produce a larger figure than the item cost to build.

Programme risk when the highway authority is separate

This is the real difference between the two routes, and it belongs in the programme rather than in a footnote.

A section 106 contribution is a payment. Once the deed is signed and the trigger arrives, you pay it, and your programme is unaffected.

A section 278 is a construction project on somebody else's asset. It needs detailed design, technical approval, road safety audits at the design and post-construction stages, agreement of a road space booking, utility diversions with their own lead times, and sometimes a traffic regulation order with a statutory consultation period. Each of those has a queue in front of it.

Start the technical design during the planning application rather than after it. Authorities will engage early, and the information you get back will often change the layout at the access, which is far easier to absorb before the drawings are approved.

Conditions that tie occupation to completed works

Most highway works are secured by a condition preventing occupation until the works are complete, sometimes drafted as a Grampian condition prohibiting development until an agreement is entered into.

Read those triggers against your sales programme. A condition preventing occupation of any dwelling until a signalised junction is complete puts the whole cash flow behind a piece of infrastructure you do not fully control. Negotiating a phased trigger, first occupation of plot 50 rather than plot 1, is a conversation worth having at the drafting stage and almost impossible afterwards.

Where the works serve a later phase, say so in the heads of terms and get the trigger drafted against that phase.

Budgeting for the whole package

An illustrative example: a scheme of 80 dwellings with a new priority junction, 120 metres of footway, a bus stop relocation and a contribution towards a cycle route. The section 278 package covers the junction, footway and bus stop, with technical approval and inspection fees, a safety audit at each stage, a utility diversion for a gas main under the verge, and a commuted sum for four street trees. The section 106 covers the cycle route contribution and a travel plan monitoring fee. Two agreements, two counterparties, one programme. This example is illustrative rather than a real case.

Put the following in the appraisal as separate lines rather than one allowance: works construction cost, design and approval fees, safety audits, inspection fees, utility diversions, commuted sums, bond costs and the financial contributions themselves. Then put a date against each.

Where the numbers threaten the scheme, a viability assessment prepared to recognised professional standards is the evidence an authority will expect, and councils usually look for a suitably qualified author with professional review before submission. The transport evidence underpinning the works normally sits in a transport assessment, which is where the junction capacity work and the trip distribution live.

To see what an authority has actually collected and spent on infrastructure locally, infrastructure funding statements explained covers how to read the published record. On smaller schemes the obligations are usually narrower, and open space and play space contributions on small schemes sets out the common heads of terms.

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.

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