Local planning authority’s decision not to require s106 payment to NHS Trust upheld

28th February 2023

In the recent case of R (on the application of University Hospitals of Leicester NHS Trust) v Harborough DC [2023] EWHC 263 (admin) the High Court has dismissed a challenge to a local planning authority’s decision to grant planning permission for up to 2,750 dwellings without requiring the developers to make a contribution to the local NHS Trust under s106 of the Town & Country Planning Act 1990.

The trust had requested a financial contribution of £914,452 from the developer towards the cost of health care provision for the residents of the development. It was operating at full capacity and argued that the new development would give rise to a shortfall in grant funding since that funding is based on the previous year’s activities. It was argued that there was a “funding gap” in that forward funding does not take into account population growth attributable to new housing developments, and a subsequent increase in demand for health services, until the year following the impact.

The local planning authority decided that the trust’s request did not meet the requirements of s122 of the Community Infrastructure Levy Regulations 2010. The local authority felt that the trust had failed to show that their funding arrangements could not address the issue of population growth satisfactorily. It felt that the planning system or developer was being asked to subsidise the trust for the effects of the operation of the NHS’s funding mechanisms, rather than mitigate the impacts of the development. The local authority concluded that the trust had failed to establish that the requested funding was necessary, or that it served a planning purpose.

The High Court held that this was a “perfectly rational and unsurprising judgement for the authority to have made”. The local authority was entitled to consider whether there was a funding gap for the trust in relation to the costs of treating new residents, and were entitled to come to the view that the trust had failed to provide sufficient information to show that there was such a gap.

The court went on to say that 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, it would be a matter for the judgment of the local authority as to whether the it would be appropriate to require a financial contribution to be made. That is assuming that there is no legal – or other – objection to a contribution of the kind sought in the present case. The court made it clear that the arguments before it did not enable it to decide this issue, and therefore this judgment cannot be read as deciding that there is no legal objection to NHS contributions in general.

Whilst the court stopped short of determining whether s106 obligations in respect of NHS services are lawful, this case provides valuable guidance as to the appropriate approach to requests for such contributions in the determination of planning applications. While it is ultimately a matter for the judgment of the local authority, this case casts doubt over whether claims for s106 contributions for NHS funding will stand up to scrutiny.

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