Section 106 contributions for the funding of NHS services
12 April 2023
A recent case has explored the lawfulness of requiring a developer to pay a section 106 contribution for funding of treatment and services within an NHS Trust. It was held that the developer could not lawfully be required to contribute towards NHS services. Whilst the case did not resolve whether such a contribution could ever be lawful, Mr Justice Holgate raised interesting observations regarding the principle of section 106 contributions to fund NHS services for new housing developments, and section 106 obligations more generally.
In R. (on the application of University Hospitals of Leicester NHS Trust v Harborough DC)  EWHC 263 (Admin), the local NHS Trust issued a judicial review against Harborough District Council’s grant of planning permission for 2,750 dwellings on the grounds that the Council had erred in law by not requiring a section 106 contribution to mitigate the impact on NHS services from new residents. The Trust had requested £914,000 to fund delivery of health care to mitigate the additional demands upon its service and to provide funding for additional staff, drugs, material and equipment. The Trust’s case “related to an alleged funding gap during the first financial year in which a new resident occupies a dwelling on the site” (paragraph 15 of the judgment).
The Council had not accepted that the Trust’s case for the “funding gap” had been made out and therefore concluded that the request could not be justified and planning permission ought to be granted without the requested contribution. The Court held that the Council had acted reasonably in concluding that the Trust had not shown there was a funding gap and therefore it could not be shown that the contribution was necessary to make the development acceptable in planning terms.
The Trust lost its challenge on all grounds.
Of particular interest in this case are the “the wider issues” raised by the challenge. Holgate J states:
140 “…the contribution would relate to people who are new to the Trust’s area. But those people are entitled to such services wherever they may live in the country …. The obligation to provide, and financial responsibility for, those services lies with the NHS…
141. The question therefore arises how could an applicant for planning permission for a new development be required lawfully by a system of land use planning control to contribute to the funding of treatment within the NHS? It is well established that planning permission cannot be bought and sold, for example, by making a payment for community purposes unrelated to the development authorised…”
147. “But what if in a future case a NHS trust could demonstrate that it would suffer a funding gap in relation to its treatment of new residents of a development during the first year of occupation? On one level it would be a matter for the judgment of the local planning authority as to whether the three tests in reg.122(2) of the CIL Regulations 2010 are satisfied and whether it would be appropriate to require a financial contribution to be made, after taking into account other requirements and any impact on the viability of the scheme. But all that assumes that there is no legal (or other) objection to a contribution of the kind sought in the present case. The argument in this case does not enable the court to decide that issue as a legal question. This judgment should not be read as deciding that there would be no legal objection”.
Whilst the question put to the court was not whether an NHS contribution could ever be lawful, Holgate J commented that if there is a “systemic problem” in the way national health funding is distributed, “this may raise the question in other cases whether it is appropriate to require individual development sites across the country to make section 106 contributions to address the problem… these issues merit further consideration as a matter of policy outside the courts and even outside the planning appeal system” (paragraph 151 of the judgment).
It is clear that there are therefore serious questions and doubts as to whether a section 106 contribution to fund NHS services can be justified as a planning obligation. For now, the answer is “no”. This case acts a reminder that planning permission cannot be bought and sold, and that Regulation 122 of the Community Infrastructure Levy Regulations 2010 must be satisfied for all section 106 contributions to mitigate the risks of a legal challenge to a grant of planning permission.
The content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article please contact the author in the first instance. Law covered as at April 2023.