Press release

Councils at risk of losing £1.4 billion in 'lost' Planning Obligation income

Published 29 June 2010

29 June 2010 -- London, UK -- Councils across the country are losing an estimated £1.4 billion between them in potential infrastructure and development funding as a result of the complexities around managing planning obligations negotiated between developers and local authorities – so-called Section 106 agreements, announced IDOX group (AIM: IDOX) at today's Royal Town Planning Institute conference.

While there are no national statistics collected on the total value of extant Section 106 agreements, around one third of the 360 councils in England and Wales submitted returns on Section 106 values to the Chartered Institute of Public Finance & Accountancy (CIPFA). A straight extrapolation of their returns reveals that in 2007/08, councils across England and Wales had access to a total of £27.9 billion of 'unspent' value from Section 106 agreements on their books. Even though 2007/08 was a difficult year for developers, councils also managed to negotiate an estimated £2.7 billion in new S106 value in that year.

Based on this data and evidence from some of its 300 Council clients, IDOX have calculated that around 5% of this total value is lost as a result of problems in tracking paperwork from these deals and because of issues linked to changes in Council personnel, problems with IT, changes in management information systems and lost files.

"Having a knowledge base and keeping track of the funding and 'equivalent value' negotiated from developers under Section 106 of the Planning Act is one of the most complicated challenges facing councils" explained Richard Kellett-Clarke, IDOX CEO. Some Councils, particularly those responsible for larger urban areas, will negotiate significant sums each year such as Lambeth Council which signed 84 agreements in 2007/8 with a total net value exceeding £15m. Between 2000 and March 2009, Birmingham City Council entered into 559 separate Section 106 agreements. Only 58% of those agreements worth £46.4 million are complete or 'live' – where all funds or equivalent value has been received – while more than 166, worth £43.6m or more, are yet to be implemented.

While the size will vary by Councils, the complexities of managing and retaining this value are coming into sharp focus at a time when local authorities are planning how best to respond to or make up the difference for the £1.165 billion budget cut announced by the Government.

Tracking and ensuring delivery of the benefit is an issue when some building projects are complex and can take more than 10 years to come to fruition. It is not uncommon for a high value or major development to involve as many as 10 or 15 separate Section 106 funded projects, each with different timescales and specific arrangements for delivery. With project delays, and changes in both management information systems and Council personnel, the value from some agreements is lost, primarily because there is no formalised arrangement for councils to track the process.

Richard added "We work across more than 300 councils helping them improve their provision of various services, and we have been surprised by the number of officials in the past year that have told us about the difficulties in managing the Planning Obligation value stream. Based on our research we estimate that at least 5% of deliverable Section 106 value – some £1.4 billion - is being lost by councils due to these enormous difficulties"

To limit losses and help Councils better manage this risk, IDOX has developed a simple tracker software solution designed specifically to address these challenges. The product, which can also track Community Infrastructure Levies, has already been taken up by 10 councils across the country in the few months since its launch. It integrates seamlessly with existing council IT systems.

"Our thinking was to develop a solution that gives all council stakeholders a transparent 'snapshot' of all obligations due, agreements that are in place and project trigger points. This is a local solution reflecting local circumstances, and putting a stop to this leakage of value is vital given the current pressures on infrastructure budgets" concluded Mr Kellett-Clarke.

Ends

For more information, please contact:

Andy Achimu
andy.achimu@collegehill.com
College Hill
Phone: 020 7457 2049

About IDOX group - IDOX group is a specialist information and knowledge management company focusing on the development and delivery of software products and content for information and knowledge sharing for information professionals at all levels and consultancy services for local authorities and related bodies.

From standalone solutions for individual functions through to integrated corporate solutions, the company's market leading IDOX, UNI-form and Plantech portfolio delivers improved data quality, stream-lined information-sharing, enhanced employee productivity and increased responsiveness to the public.

IDOX group is headquartered in London with offices in Glasgow, Manchester and Newbury, United Kingdom.