Council set to receive millions from developers

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Major changes to a levy which makes developers pay money towards ‘public improvement projects’ have been approved by Sheffield Council – which could more than triple the £1.2 million the authority receives.

Builders of large schemes are obliged to make payments under section 106 of the Town and Country Planning Act, which are used to pay for schemes ranging from improving roads and extending schools to creating better parks.

But the Government wants councils to replace Section 106 with an alternative community infrastructure levy by 2014.

The new levy would also include payments made separately by developers, such as those for building new affordable housing, and would be expanded to include developers of smaller projects who do not have to pay the section 106 levy.

Peter Rainford, of Sheffield Council’s planning department, predicted the change, approved by the council’s cabinet, could ‘yield significant financial benefits for the city’.

He told councillors: “We believe the new levy could result in contributions of £4m per year compared with the average of £1.2m from Section 106 contributions.”

The council is proposing to spend the extra cash on projects such as environmentally-friendly transport schemes, extra housing and school places.

The new levy would accrue extra funds because it would be charged on ‘all but very small schemes’, whereas section 106 contributions only come from the largest planning applications, which account for an average of just six per cent of schemes.

But the new policy, to make more developers pay towards public projects, comes weeks after a council report showed developers were struggling to pay existing section 106 payments, with the authority owed more than £500,000.

Amounts of up to £170,000 are owed by several developers which went into administration before their projects could be built.

Officers plan to collect the funding if new companies take on the mothballed development schemes