Overview

Foreword

This consultation is being carried out at the direction of the Secretary of State for Northern Ireland with the intention of understanding how certain measures can be used to support budget sustainability and raised additional revenue.

As set out in the document “Financial context for revenue raising consultations” published by the Department of Finance, the Northern Ireland Public Sector is facing very challenging financial circumstances.  The revenue raising proposals are intended to help to generate more income for Northern Ireland departments or alleviate the level of public subsidies historically provided for public services in order to improve the sustainability of Northern Ireland’s public finances across all departments.

All relevant departments have been instructed to make the necessary preparations for the launch of public consultations.  This will ensure that each consultation launch can be timely and will give the public and all interested stakeholders an opportunity to consider the range of options being examined and feed in their views.

This consultation focuses on the Department for Infrastructure’s proposed increase of private street fees and seeks views on the potential establishment of additional revenue raising opportunities permitted within the Private Streets legislation but not previously enacted.

In October, the Department of Finance published an overarching document to set out the financial context for the consultations. The document is available on the Department of Finance website.  

Introduction and Background

1. 1. The Private Streets (NI) Order 1980 (the Order) and the Private Streets (Amendment) Order 1992 provide the statutory basis for the adoption of new development roads, including street lighting and road drainage systems.
2. 2. Only those carriageways and footways, cycle tracks, footpaths, visibility splays and verges that the Department considers necessary for public access and passage, will be adopted.
3. 3. The adoption of these roads is subject to them being laid out in accordance with the Creating Places' design guide and constructed to the standards set out in the Private Streets (Construction) Regulations (NI) 1994.
4. 4. Where the development requires the laying out or construction of streets, the Department shall determine the width, position and arrangement of the streets.
5. 5. The Order further provides for the Department to adopt the determined road layout on satisfactory completion by the developer. Developers are required to enter into an Agreement with the Department so that, on satisfactory completion of the road construction, the roads become public roads. The Agreement is normally provided under Article 32 of the Order. 
6. 6. It is illegal for a developer to commence works on a new development which has received planning permission and been subject to a private streets determination, without having an Article 32 Agreement and bond in place with the Department. A bond is normally a surety provided by a bank or other approved surety provider such as The National House Building Council but on occasions can be a cash deposit. The bond may be used by the Department to bring the development up to adoption standard and adopt the site, should the developer for any reason fail to complete the development.
7. 7. The Department’s consideration on whether to adopt a new road within a residential development depends on the size of the development. Access roads serving new developments of more than 5 dwellings will normally be determined and subsequently adopted.  Access roads serving between 3 and 5 dwellings may also be determined and subsequently adopted. However, access roads serving 1 or 2 dwellings will not normally be determined for adoption, as such accesses will not require the laying out of streets or associated inspections and as such are exempt from Private Streets fees.
8. 8. On average, over the past three years, the Department has entered into 270 no. Private Streets agreements with developers each year.
9. 9. Article 3(10) of the Private Streets (Construction) (Amendments) Regulations (NI) 2001 states “The person by whom or on whose behalf the [development] plans were deposited shall bear any expenses incurred in carrying out inspections, investigations and tests and the taking of samples.”

Current Policy in Northern Ireland

1. 10. Private Streets Inspection fees are set in accordance with the Departments Policy Statement Director of Engineering Memorandum DEM 59/03 – Private streets Inspection Fees after Oct 2003. The fees payable were established in 2003 following consultation with the Construction Employers Federation at that time. The fee mechanism is based upon a simple sliding scale of fees based on the bond value of each development. The fee mechanism was adopted following recognition that the administrative process required to record all Department staff time spent carrying out Private Streets duties and to separately charge this time against each development/developer would be excessively burdensome for both the Department and developers. The Department is content that this remains an appropriate mechanism on which to base fee recovery calculations.
2. 11. The Private Streets fee mechanism currently calculates for each phase of a development that is bonded as:

• a flat fee of £1,000;
• plus 2% of the bond (or deposit) value;
• up to a maximum fee of £5000 for any bonded length.

1. 12. The fee covers inspection of road construction within the adoptable area, street lighting installation, materials testing and normal administration costs.
2. 13. Inspection fees are non-refundable and are payable in advance of works commencing on site, when the bond documents are deposited.
3. 14. Inspections are completed on a cyclic basis and for road bond reductions at four key stages during construction at 50%, 70%, 90% and 100% completion of the infrastructure works. Further inspections may be required at other key stages such as covering of road drainage or laying of road surfacing. All inspections are focused on ensuring new developments are constructed in a safe and sustainable manner.
4. 15. There are between 200-300 bonded areas processed by the Private Streets section every year.  The bonded areas often have multiple streets within them that require inspection. 

Other areas of the UK

1. 16. Section 38 of the Highways Act 1980 gives highway authorities in England and Wales the power to adopt new highways by agreement. A fee is normally payable by the developer to the highway authority to cover its reasonable costs in checking the design and supervising the construction of the works.
2. 17. How the fee is calculated is a matter for individual councils and fees can vary from council to council. For Example, Surrey Co Council fees are based on an agreement fee of 12% of the agreed cost of works will be levied, with a minimum fee of £2,500¹
3. 18. Salford Council’s fees are based on the fee for the proposed adoptable roads in a development and calculated in accordance with Salford City Council's fee structure.  Currently set at 8% of the council's estimated cost of the S38/S278 works (but this is subject to change). Note that additional fees may be charged for checking any major changes to the designs or where there are significant changes to construction works programme²

Current Cost Recovery

1. 19. Managing Public Money Northern Ireland Section 6.1.2 indicates that normal practice is to charge for full cost recovery. There are some exceptions to this direction which include subsidised services, where departments decide to spend public resources on lowering costs for some or all consumers of public services.
2. 20. Private Streets section within DfI Roads are responsible for a wide range of functions. Based on a fully staffed Private Streets inspection structure completing works in compliance with legislation and Departmental inspection policy, the total staff cost to the Department in exercising all Private Street functions is £2.6 million. The proportion of works directly related to the administration of Private Streets bonds, carrying out inspections, investigations and tests and the taking of samples for private streets work and which is recoverable under the legislation is estimated to be 50% which equates to £1.3 million. The remaining 50% of staff time is spent dealing with other Private Street responsibilities, enforcement work and non-chargeable administration work.
3. 21. Over the past three years, the Department have received, on average, some £360,000 each year.  Details of fee income received is presented in the Table 1 below.

Table 1 – Annual fee income for Private Streets function

1. 22. In January 2023, the Department increased the cost of developer bonds by approximately 75%. This increase in bond values will uplift the Private Streets income received by the Department as the Private Streets fee is directly linked to the bond value (£1,000 plus 2% of the bond to a maximum of £5,000). It is estimated that the uplift in bond rates will increase the projected 2023/24 Private Streets fee income to approximately £440,000.
2. 23. At present, there is a substantial shortfall between the Department’s Private Streets costs for inspections (£1.3 million) and the associated fee income received. Over the past 3 years, cost recovery has been on average 28%. With the uplift to bond values, cost recovery is projected to increase to 34% but there will continue to be a significant proportion of staff costs for Private Streets inspection works that are not covered by the fee charged by the department. The shortfall is currently covered by the Departments resource budget which in turn reduces the funds that are available for other, often safety related work, such as road maintenance.

Why your views matter

The consultation can be responded to in full or in part, guided by where your interest lies. Each option should be considered independently of the other (the options are not designed to be a package of measures). You may find it helpful to answer questions as they arise at the end of each option.

We know that not everyone will wish or feel able to answer all the questions in this consultation. You are encouraged to answer the questions you would like to respond to, but you don’t have to respond to all of them. There are some questions to be answered on the ‘About you’ page. Once these have been completed you may submit your response.

In developing each option, we have undertaken research on how fees are calculated in neighbouring jurisdictions. We have also completed a Section 75 equality screening assessment form. As part of the consultation process and in line with our duties under Section 75 of the Northern Ireland Act 1998 and Rural Needs Act (Northern Ireland) 2016, we will continue to assess the equality impacts of our proposals on Section 75 Groups and those living in rural areas on an ongoing basis. We would welcome responses on potential equality and rural needs impacts you feel we may not have included.

What happens next

Following the closing date, all responses will be analysed and considered along with other available evidence to inform recommendations from our ongoing review of Private Streets fees.

It will then be up to the relevant decision maker (e.g., Minister) to consider how to proceed with the change to Private Street fees. They will then decide whether to proceed with the change, how to do this, and the timing of the introduction of the change to Private Street fees.