Q&A: North Somerset Council reveals plans for unspent £13million
PUBLISHED: 08:00 20 May 2016 | UPDATED: 11:55 20 May 2016
North Somerset Council has defended the way in which it invests money gained from new housing developments across the district, after the Mercury revealed the authority had more than £13million of this money in its reserves.
The cash in question, known as section 106 (s106) contributions, is given to the council by developers to offset the impact which new homes could have on communities. It is then spent on improvements to things such as schools, leisure centres, highways and parks.
The Mercury revealed last week the authority has more than £13million of s106 money in its reserves, and more than a third of this cash had not been formally allocated to any specific projects. The council has since answered the following questions relating to its use of s106 money.
What does the council plan to do with the £4million in its reserves which has not been allocated to anything?
A council spokesman said: “The council does not actually have this money in its general reserves. The £4million is ring-fenced under agreements with developers for projects to mitigate the impact of their developments. Under this system the council is fully aware of what each contribution is to be used for and this is stated within each of the legal agreements.
“Officers across all departments regularly review and assess all contributions, both before and after the contributions have been received, and do have plans on how the funds will be spent. In most cases these sums have been ‘internally earmarked’, although may not have been formally agreed.
“Each s106 agreement is drawn up to ensure the needs of the community are met as a result of the development.
“A lot of s106 contributions have clauses which allow us time (often up to 10 years) to spend the monies. This allows time to carry out a proper planning and consultation process.
“This offers flexibility to ensure the best use of the contribution is gained, as it could be combined with other resources in order to deliver a better solution.
“In some cases it is necessary to undertake processes, such as design of the schemes on which contributions will be spent, tendering for contractors to undertake work and obtaining planning permissions or other approvals, and these can take time.
“We monitor regular reports showing the value of s106 contributions – both held and those which could be received at some point in the future, if the planning obligations are fulfilled. This allows us to review and assess such contributions and plan how the funds will be spent.”
What the council is spending s106 cash on
The authority said the following major schemes had been approved within its capital investment programme and would be funded by the £8.5million of s106 cash already earmarked to future projects:
* Mendip Green Primary School (improvements)
* Flax Bourton Primary School (improvements)
* Churchill East cluster (extra school places)
* Portishead secondary school places provision
* Schemes for children aged two and three in Weston
* Early years funding across the district
* Affordable housing schemes
* The Campus community provision
* Hutton Moor leisure centre accessibility
* Bus rapid transit schemes
* West Wick roundabout signalisation
* MetroWest rail phase one (reopening the Portishead to Bristol railway
* St Georges open space project
* Strategic flood solutions
The council added it could appear to be slow in spending s106 money because it must wait for funding to come from other sources to help pay for projects.
Its deputy leader and executive member for housing, Elfan Ap Rees, said: “One example of how we might use s106 money is that we are currently looking at works at one of the traffic light-controlled junctions on the A370 in Weston – colloquially known as ‘malfunction junction’ – to reduce the congestion issue during the evening rush hour of vehicles going into Worle.
“Preliminary costs for this scheme are around £1million, which could come from s106 monies from the Weston Villages development.
“The point here is that s106 money would have to build up over a number of years as the development expands and sometimes more than one pot of s106 money is needed to carry out a piece of work.”
The council says it has never been forced to return any s106 money which was not spent within the specified timeframe.
We asked the council to explain how the process of receiving s106 money works – and why s106 money cannot be used to offset wider budget and spending cuts.
The council’s spokesman told the Mercury s106 contributions are completely separate from the authority’s revenue budget decisions – and added s106 sums can only be called for if specific planning necessities are identified and met.
The spokesman said: “The majority of s106 contributions are one-off sums required to deliver strategic infrastructure, which is largely classified as ‘capital’ in nature. The council follows prescribed accounting regulations which prohibit the use of capital resources to fund operational revenue budgets.
“Contributions are received from developers and must be spent in accordance with the terms defined within the formal legal S106 agreement.
“The terms are often very specific and mean contributions cannot simply be spent on ‘anything’ – they must relate to the additional investment required as a result of the development being delivered.
“Each legal agreement says what we can spend the contribution on and when we can spend it.”