Developers and RTPI voice concerns over the current form of Community Infrastructure Levy (CIL)

Developers have warned that the Government's plans for a new development levy could hold up delivery of new homes and communities. The British Property Federation (BPF) has reservations about the Community Infrastructure Levy (CIL), more details of which have recently been published by ministers. The RTPI has also voiced concerns: the CIL guidelines must contain a clause allowing funding to be recovered by those who have paid the CIL if local authorities fail to deliver the promised infrastructure in a reasonable time frame.

The Government has announced that local authorities will be able to charge a CIL from next year. The levy is designed to ensure that those businesses set to benefit from development contribute to the installation of essential infrastructure like roads, schools and sanitation networks which are delivered by local authorities.

RTPI Policy Director Rynd Smith said: 'It is right that those businesses which will benefit from development help pay for the underlying public infrastructure which the development requires. However, where businesses have been asked to help fund a specific project they are entitled to expect their contribution to be used to meet the broad purposes of the levy. They should also be entitled to take steps to recover a proportion of the levy if the funding has not being appropriately spent in a reasonable time frame.

The community infrastructure levy (CIL) was conceived as a replacement for the universally opposed planning gain supplement (PGS) which sought to tax development based on the uplift in land value.

The BPF is concerned that CIL leaves a number of crucial questions unanswered, particularly where officials outlined that the concept of CIL would be linked to the 'actual or expected increase in value arising from planning permission'.

Developers have long believed that placing an emphasis on increases in land value distorts the intended purpose of CIL: to raise funds for infrastructure. The BPF feels it ignores factors other than land value that also impact on the viability of a development and the affordability of the CIL payments.

The BPF is worried that a number of issues remain unclear and has highlighted fears that the levy could be set at a level which could delay or halt the creation of new homes and commercial development.

The federation has argued strongly that the CIL charging schedule should be a development plan document so that the levy can be part of the planning application process. If that is the case, disputes about CIL could be subject to appeal to the Planning Inspectorate. This would be an important safeguard, the BPF has argued.

Michael Chambers, BPF director of regeneration and development, said: 'We believe that CIL has the potential to offer speed and certainty to the process by which developers contribute to the infrastructure our towns and cities need - but it must be implemented in a sensible manner.'

He added: 'We welcome the latest document but it is clear that a lot more work on CIL needs to be dome. The skeleton of a CIL system is in place but we still have concerns about crucial areas of detail, such as how local authorities will assess the viability of a CIL charge and the extent to which CIL will really operate within the planning system.'

Housebuilders have also welcomed the opportunity to be consulted on how the levy, due to be introduced next year, will work in practice.

The Royal Town Planning Institute has urged ministers to make sure the CIL guidelines contain a clause which allows funding to be recovered by companies paying the levy if local authorities fail to deliver the promised infrastructure within a 'reasonable' timeframe.

Meanwhile energy companies and the Environment Agency are continuing to argue the case that key energy and flood protection infrastructure should be exempt from the proposed new charge.

The Government will invite further views on the design of the levy through public consultation later this year.

A Communities and Local Government spokesperson said: 'CIL will be a discretionary tool for local authorities and they will decide whether the circumstances in their area make the introduction of CIL appropriate and at what level to propose setting the charge.

'The levy will also offer greater certainty to industry because charges will be consulted on, independently examined and published in a local charging schedule; if economic circumstances change they could be reviewed and revised.

'This will provide a step change from the existing system of lengthy negotiated agreements, creating transparency, fairness and certainty for the development industry, and ensuring that CIL levels stimulate, rather than choke development.'

The BPF’s main concerns are:

• CIL should be calculated and levied in a manner which does not halt development. If CIL is set too high then we will not get the new homes and commercial development that are needed to support economic growth. The Bill does not adequately reflect his point. It refers to CIL being set with regard “to actual or expected increase in value arising from planning permission”. Placing an emphasis on increases in land value distorts the intended purpose of CIL - which is primarily to raise funds for infrastructure – and ignores the factors other than land value that impact on the viability of a development and the affordability of CIL.
• If CIL is to work efficiently and effectively then the existing planning system must be used as the structure through which CIL is planned and charged. If CIL is not as firmly rooted in the planning system as it could it might become too blunt an instrument to deal with the unique circumstances that are inherent to every development project. We are deeply concerned about the suggestion not to have the CIL charging schedule as a development plan document. If CIL charging schedule were to be development plan document it would benefit from being a material consideration at the determination of a planning application. This would allow the existing planning appeal system to be used as a safeguard to allow developers to legitimately appeal to the Planning Inspectorate where disputes about CIL have not been dealt with satisfactorily. In the CIL document, the Government has floated the idea of allowing for exceptional cases but has provided insufficient detail about how this would work in practice.
• CIL requires developers to provide local authorities with what is effectively a vast pool of money to spend on infrastructure. We would like to see far more detail about how the government will ensure that this infrastructure is delivered in a timely manner.