Community Infrastructure Levy (CIL) comes closer: new plans outlined

Housing and Planning Minister John Healey has outlined how councils will be able to raise a new levy, The Community Infrastructure Levy (CIL), to help fund economic growth and lay the foundations for future success of local areas.

The CIL is a new power that allows councils to raise funds from developers alongside new building projects to help build infrastructure, such as new schools, hospitals, roads and transport schemes as well as libraries parks and leisure centres.

The RTPI has welcomed the Government’s announcement of the new CIL regulations, following a consultation in which the Institute pointed out flaws with the proposals – particularly an apparent lack of thought about how the new scheme would work in Wales, and a lack of time for transition.

The planning profession, says the RTPI, along with local authorities and the development industry, now need to get on with delivering the system to ensure that key infrastructure is provided to support much-needed economic growth, and this will be the true test of the new legislation.

The RTPI will be assisting CLG in the preparation of the guidance needed to ensure that planning authorities are encouraged to move to using the new system and are confident in their ability to do so.

The new system heralds the end for unpredictable charges attached to planning permissions. From April, Section 106 agreements will only be permitted if they are directly related to the new developments. By the year 2014, Section 106 agreements will be scaled back further to ensure they operate effectively alongside CIL.

Key improvements to the final regulations include:

• allowing up to 100 per cent CIL relief in exceptional circumstances for developments that would otherwise not proceed
• allowing payments of CIL to be made in-kind in the form of land provided that land is transferred with the intention of providing infrastructure
• doubling the standard payment period to 60 days to ease cash flow for developers; and allowing payment by instalments in many cases
• introducing the potential for local authorities to borrow against future CIL receipts to allow infrastructure provision to be unlocked earlier in development, subject to the overall fiscal position of the country
• providing additional reliefs for developing charities in line with the Government's commitment to the voluntary and community sector
• providing 100 per cent exemption from CIL for most types of affordable housing
• enabling authorities to draw the administrative costs of CIL from CIL receipts, subject to a 5 per cent cap to maximise revenue for infrastructure.

The new system will give developers certainty over the contributions they have to make to support local communities when they plan projects, ensuring that developers pay a fair share towards new local services that are needed. The regulations, published in Parliament today, allow councils to potentially raise an extra £700m a year, where councils choose to use the new power.

John Healey said: 'The Government is helping housebuilders on the road to recovery by kick-starting work on construction sites and making sure the affordable homes that families need get built.

'However, it's not enough to build more homes. We need high quality neighbourhoods where local families can live and benefit from first class schools, roads, parks and leisure centres. That's why I'm confirming today that we will support communities by giving councils the tools they need to raise money for vital infrastructure.

'The new levy will be a big improvement to the existing system. It puts an end to site by site deals, which can be lengthy and uncertain. Many councils don't get the contribution to new infrastructure their area needs at present. CIL will bring improved transparencies for communities who will know what infrastructure is needed and how it will be funded, and fairness and predictability for developers.'

John Healey added: 'The case for this change is strong as under the current system only one in 16 (six per cent) of all planning permissions bring any contribution to the cost of supporting infrastructure, when even small developments can create a need for new services. In the future, all but the very smallest developments will contribute towards coping with the extra pressure put on services.'

CIL will enable councils to make sure all new building projects pay a fair share towards coping with the extra pressure on services brought about by new development, ensuring those who benefit financially when a planning application is approved give something back to the local community by funding local infrastructure.

The Community Infrastructure Levy (CIL) regulations will now be laid before the House of Commons and, subject to approval by MPs, come into force on 6 April 2010.

The start of CIL's implementation will mark the end of over two years of intensive work on the statutory framework underpinning CIL. The consultation ended on 23 October 2009 and 392 responses were received from across the development industry, local and regional government, and from voluntary and community bodies. The consultation showed that the CIL concept continues to enjoy broad support from both developers and local authorities as a faster, more certain, transparent and fairer system than the present negotiated system of planning obligations which causes delay. The final regulations can be found at: www.communities.gov.uk/publications/planningandbuilding/infrastructurele....

The Government will now move to the next phase of delivery, this will include: a new policy on planning obligations to reflect the introduction of CIL and deliver the Government's commitment to streamline planning policy; this policy will form an Annex to the new Development Management PPS on which the Government launched a consultation in December 2009; new guidance to support local authorities considering introducing CIL; discussions with the Local Government Association and other stakeholders already underway to establish what other support and tools are needed by local authorities to introduce CIL.