CIL continues: an 'outbreak of democracy' and a fairer system to fund infrastructure, with more funds allocated to communities

New reforms will give more of the benefits of development to communities while providing more certainty for industry, Decentralisation Minister Greg Clark has announced. What The Guardian describes as an 'outbreak of direct democracy in local government', including referendums for directly elected mayors in England's big cities, will feature in the wide-ranging localism bill due to be published next week.

It has been stated that councils and communities will have more control over how new infrastructure in towns and cities is funded, and more of the money will benefit the neighbourhoods where new developments are built.

Mr Clark confirmed a Community Infrastructure Levy, introduced by the previous Government in April 2010, would be continued because it provides a fairer system to fund new infrastructure. The levy will give councils the option to raise funds from developers building new projects in their area, and provide a more certain and flexible system for housebuilders, cutting the costs of lengthy legal negotiations.

However, the levy will be reformed to ensure neighbourhoods share the advantages of development by receiving a proportion of the funds councils raise from developers. These will be passed directly to the local neighbourhood so community groups can spend the money locally on the facilities they want, either by contributing to larger projects funded by the council, or funding smaller local projects like park improvements, playgrounds and cycle paths.

The new system will be more transparent with levy rates set in consultation with local communities and developers, unlike planning obligations that are negotiated behind closed doors. Developers will know upfront exactly how much they will be expected to pay towards infrastructure, enabling them to work out costs earlier.

Decentralisation Minister Greg Clark said: 'Communities should reap the benefits of new development in their area and these reforms will put in place a fairer system for funding new infrastructure while also providing certainty for industry.

'Too little of the benefits of development go to local communities, and our ambition is to correct that with a reformed levy under genuine local control. Neighbourhoods will now get a direct cut of the cash paid by developers to councils - to spend how they wish to benefit the community, from parks and schools to roads, playgrounds and cycle paths.

'Our decentralising changes will also benefit developers through a system that is flexible, predictable and transparent while also cutting the red tape and bureaucracy faced by councils.

'Alongside the New Homes Bonus, this is another way to make sure communities benefit from development in their area. It will help change the debate about development from opposition to optimism.'

The bill will also remove ring-fenced grants so giving councils greater freedom to spend their reduced overall government money.

Eric Pickles, the communities secretary, and his decentralisation minister, Greg Clark, are determined to show that they will implement a localist agenda and not back off as communities secretaries have in the past.

But the department has won a battle against Downing Street by ensuring that a referendum will have to have been held before any of the mayors planned in 12 English cities will be appointed. The referendums are likely to be held in May 2012.

Pickles, thought to be a sceptic about local mayors, has told MPs: "Once we know the views of the people in those 12 cities, we will move on to the election of a mayor if people vote for that."

Many local government leaders are hotly opposed to mayors, but advocates argue it is the only way to revive interest in local government.

The bill will also include plans for people to be able to petition for referendums on any local issue, including pay of chief executives. But the bill will have to set out precisely what issues can be voted on and whether the results are advisory or binding. There will also be powers to hold ballots to block large council tax increases.

Community groups will also be given a right to challenge poorly run services. Some fear that private sector contractors will be given a green light to agitate to bid to run services and public facilities such as swimming baths, libraries, leisure centres and courts.

Critics also claim the reforms will transfer powers to unaccountable groups. The trend of localism, critics argue, is countered by plans to introduce national funding of schools, so cutting out local education authorities.

In other measures, the government will retain a Community Infrastructure Levy, introduced by Labour in April, to give councils the option to raise funds from developers building new projects in their area.

But a meaningful proportion of the levy will now be passed direct to community groups to fund smaller local projects such as park improvements, playgrounds and cycle paths.

The bill will also sweep away top-down targets, regional spatial strategies and formally abolish the Audit Commission. The bill will introduce a general power of competence for councils and set out plans to reform the complex housing revenue account.

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