Agenda item

To approve the Section 106 indexation write-off.

That the write-off of DEBT109301 for £74,694.95, DEBT109302 for £44,533.22 and DEBT109303 for £39,491.73 be APPROVED. 

104.1         Attention was drawn to the report of the Associate Director: Planning, circulated at Pages No. 107-120, which asked Members to approve the write-off of DEBT109301 for £74,694.95, DEBT109302 for £44,533.22 and DEBT109303 for £39,491.73.

104.2         The Lead Member for Built Environment explained that the report recommended the write-off of bad debt associated with Section 106 agreements tied to planning application 12/01256/OUT Land at Perrybrook.  It was important to recognise that where obligations were paid over the duration of a development’s build out, or not collected in full at the commencement of development, there was a system of indexation for financial contributions to ensure the sums ultimately collected reflected inflation.  In this instance, a mistake had been made and incorrect indexation had been applied to the sums calculated; whilst payment had been made, this was not the correct amount.  The mistake was historic and had only come to light in 2022.  Since that time, attempts had been made to recover the remaining amount from the developer but it was unrealistic to take the claim for the outstanding debt any further and it was therefore recommended they be written-off as set out in the report.  Whilst this was a totally unsatisfactory situation, she felt it was one which needed to be brought to a close.

104.3         The Chair felt this was a troubling situation but one which was no reflection on existing Officers who had been able to unpick what had happened and provide assurance there were no other examples of this type of situation so he was assured that it would not happen again.  The Lead Member stressed that the Associate Director: Planning was committed to reforming the whole system and there was a workstream within the Development Management Improvement Programme specifically in relation to Section 106.  She had sympathy with the Ward Members for Brockworth and felt that lessons needed to be learnt so it did not happen again.  A Member raised concern that Brockworth had an established need for this money and she asked where that would now come from.  In response, the Executive Director: Place explained that the Section 106 process allocated funds for specific projects; there was an evidenced need for the infrastructure improvements and that would continue to be sought from any future development.  In this particular case, it was about how the sum which had already been collected could be best used to create those facilities.  The Member questioned how Officers could be sure no other errors had been made in relation to other applications and questioned where the failure lay given that Planning, Finance and One Legal would all have been involved in the process.  In response, the Chief Executive advised that his understanding of the failure was that the Officer who had recognised the mistake had failed to progress it and had instructed the Finance team not to continue to issue creditor reminders.  By the time this had become apparent, that member of staff had left the authority.  The Executive Director: Resources had reviewed the process and senior management now looked at all debts over one year old to ensure Officers did not have the ability to do this.  It was unclear why the matter had not been pursued but it needed to be brought to a resolution which was the reason for the report recommendation.  The Chair felt there were two issues and, in terms of the indexing error, he recognised that mistakes happened within any organisation; however, the second element of greater concern was the process which the Chief Executive had addressed.  Whilst it was unpalatable, it was unfair to speculate when the member of staff was unable to defend themselves so Members needed to accept what had happened and ensure there was a robust procedure in place to deal with this in future.  In terms of the first point, the Associate Director: Planning advised that the more worrying issue was that there was a Section 106 Agreement with specified indexation supported by the applicant and yet, for whatever reason, the Officer had applied a different indexation and the invoice which had gone out to the developer had not specified the basis for the calculation of that sum either.  The purpose of a legal agreement was to set out the requirements in black and white so, even if it was a junior member of staff, they would simply state what was stipulated. 

104.4         A Member raised concern that the issue had taken a long time to come before Members and he would like to see this further investigated by the relevant Committee.  The Lead Member for Built Environment explained that the length of time was a reflection of the effort put in to try to reclaim the money.  A Member indicated that, as Ward Councillor for the area impacted, she would like to have known about this situation from the outset; she had only found out when the Agenda for the meeting was published.  In response to a query, the Chief Executive confirmed that the previous Lead Member for Built Environment was unaware of the situation at the time and clarified that it had only become known to Officers during this financial year.  Several Members expressed the view that Members would benefit from training in relation to Section 106, how it was calculated, indexation etc. and the Executive Director: Place advised there was a commitment in the Member Induction Programme to deliver training on Section 106 generally and he undertook to discuss with the Lead Member and Associate Director: Planning the potential of using this example as an opportunity to test and increase awareness and involvement of Members, even if that was at a very basic level in the first instance. 

104.5         It was proposed, seconded and