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It is a well-established principle that developers should make contributions to mitigate the impact on a community of a development for which they are seeking planning permission. The current rules are set out in section 106 of the Town and Country Planning Act 1990, Circular 1/97 and case law. However, the level of such contributions, and the community causes the local authority can spend the contributions on, continue to be controversial. The controversy is not helped by the fact that case law and the circular create different tests for what can lawfully be required as a prerequisite to the grant of planning permission. The courts have held that it is lawful for local planning authorities to accept contributions volunteered by developers as long as there is more than a minimal connection between the contribution and the development. In contrast, the circular sets out a more restrictive test for what local authorities can insist on. It requires contributions to be necessary to make the development acceptable in planning terms.

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