I have had the classic Stealers Wheel song* stuck in my head ever since DCLG and DfE issued their revised guidance on the funding of education places, earlier this month.

For those who missed it, Planning Resource has published a really insightful article on the issue, which can be accessed via the link below**. In short, however, both DCLG and DfE published guidance to the effect that developer contributions are now to be the primary source of funding for new school places - with central government funds playing a reduced role. 

Local authorities have been seeking contributions for education through s.106 agreements, and funding education facilities through CIL receipts, for some time.  The new guidance does, however, arguably raise the stakes. As the new guidance makes clear, developer contributions are expected to be the first port of call for new places, with central funding  only to be made available as a last resort. In fact, the guidance states:

" While basic need funding can be used for new school places that are required due to housing development, we would expect this to be the minimum amount necessary to maintain development viability, having taken into account all infrastructure requirements. Where you have a reasonable expectation of developer funding being received for certain school places,  and you have declared this in your SCAP return (or plan to do so), then basic need funding should not be considered available for those school places other than as forward funding to be reimbursed by developer contributions later"

Not only are education contributions to the prioritised, they are only to be reduced by the 'minimum amount necessary to maintain development viability, having taken into account all infrastructure requirements'.

This creates a new, and wholly unhelpful, conflict which could go to the heart of many s.106 negotiations. There is only so much money available in a development to fund new infrastructure and, in CIL charging authorities at least, the top slice of this in non-negotiable.  The remaining amount then needs to be divided up between a wide range of competing priorities, such as:

  •  The provision of open space and play areas
  •  Highways improvements
  •  Employment initiatives for local residents
  •  Environmental or habitats improvements
  •  The funding of community facilities such as libraries, scout huts, GPs surgeries; and (of course)
  • Affordable Housing

If education is going to be given a higher priority for funding, then something else is going to have to give. Rarely would the sacrifice be in the area of environmental or habitats requirements, as these are often dictated by European law, and the provision of play areas, employment initiatives or community facilities often do not free up enough money to make much of a difference to the bottom line. This leaves the usual whipping boy in these situations: affordable housing. 

In two tier authorities, the Local Council will have statutory authority for affordable housing, but not for education - which vests in the County Council. This sets up a direct conflict between the interests of the County and the District Council when it comes to agreeing the s.106 package for a development site - which is not helpful from a developer perspective.

The allocation of CIL receipts within a borough are not above the fray either, although this is an issue which is unlikely to bother developers at application stage (beyond colouring the views of local residents who are waiting on CIL funded infrastructure to be delivered). 

There is a statutory requirement within the CIL regulations that local authorities pass 15% of receipts arising from the development in their area on to the Parish Council (rising to 25%, where a neighbourhood plan is in place). This could be argued to effectively push funding for education even further down the priority list, as the County Council will lose out on the top slice of CIL funding, which has been reserved for parish council projects - such as improving local playgrounds. The remaining CIL receipts then have to be divided amongst all of the Council's priority infrastructure projects, once again pitting education funding up against other Council aspirations - such as road improvement projects or a desire for new leisure facilities.

For s.106 contributions this impasse can be partially resolved, in some parts of the Country at least, by the Community Infrastructure Levy Regulations*!.  Most Councils have included Education on their regulation 123 lists, which means that, as a general rule, s.106 contributions should not also be used as a source of funding. Unfortunately, the Government's latest proposals for CIL reform include scrapping the rule against double dipping entirely, which opens up the possibility of a land grab for s.106 monies by education authorities who are desperate for extra funding. 

I guess we will have to wait and see how things plays out; but in the words of the classic song... I am...

"Trying to make some sense of it all, 

But I can see that it makes no sense at all,

 Is it cool to go to sleep on the floor,' 

Cause I don't think that I can take anymore 

Clowns to the left of me, jokers to the right, 

Here I am, stuck in the middle with you"

* The original, not the Louise Redknapp cover, which is best forgotten.

** it is behind a paywall though.

*! - I know, I never thought I would be using CIL as a solution to, rather than a cause of, problems either