Last November, a Court of Appeal ruling raised some interesting issues for developers, highways engineers and asset managers alike. The case centred around the question of whether on-going maintenance costs of highway infrastructure delivered by developers can lawfully be incorporated into Section 38 Highways Agreements.
By way of background, Section 38 of the Highways Act (1980) provides a mechanism by which the local highway authority may agree to adopt infrastructure constructed by developers as “a highway maintainable at the public expense”. By entering into such an agreement, the developer’s liability to maintain the highway is extinguished and the responsibility for the road passes to the local highway authority. Understandably, the local highway authority will be keen to ensure that any highways it adopts have been constructed to their satisfaction, to a specified standard, to minimise ongoing maintenance costs and thereby the burden on the public purse.
Regardless of how well a new piece of infrastructure has been constructed, all new publicly adopted highway will add to the outgoings of a local highway authority, almost from day one of its adoption. Section 41 of the Highways Act 1980 imposes a duty on the highway Authority to maintain those roads, footways and cycletracks that are ‘Highways maintainable at public expense’. In order to demonstrate compliance with this duty and to identify defects, the need for routine/planned maintenance work and any unlawful obstruction/interference with the highway, highway authorities commonly establish a regime of highway inspections. To ensure a consistent approach, a formalised system that prescribes the frequency of inspections and the method of assessment, recording and actioning of highway defects is usually adopted, with local policy documents justifying any departures from the guidance provided by “Well maintained highways”. As the network grows, so too do the costs of inspection and maintenance.
Many highway authorities seek to mitigate the additional costs that accompany the expansion of the highway network by seeking commuted sums for future maintenance costs when negotiating section 38 agreements with developers. In the case of Redrow Homes Ltd. vs. Knowsley Metropolitan Borough Council, the developer sought to challenge the Highway Authority’s stance that it wouldn’t enter into a S38 agreement without payment of a fairly modest commuted sum to offset future maintenance costs. The outcome of the ruling was that the Council’s position was upheld – a result that will have come as a great relief to many cash-strapped local highway authorities.
However, the conclusion of the case wasn’t viewed so positively by the development industry, who anticipate that the practice of seeking commuted sums for maintenance will now become more widely adopted by highway authorities in the course of S38 negotiations. Many commentators have pointed out that there are only so many contributions that a development can make before its economic viability is called into question. The fact that S38 negotiations are conducted by the Highway Authority, often a completely separate body to the Planning Authority, undoubtedly introduces unwelcome uncertainty into the development process. In order to reduce the risk of viability concerns arising at a very advanced stage of the planning process, it seems reasonable to expect that developers will wish to enter into S38 negotiations at a much earlier stage in the future.
If any of the above has inspired you to learn more about the legal framework affecting transport practitioners, or indeed the development planning system, our next two courses could be right up your street.
Head of Technical Development, PTRC