Waiting with bated breath for CIL reformNovember 22, 2017
Sara Parkinson, Programme Director, London First
With the arrival of Budget day, the development and planning sector will be keen to see the government make a firm commitment to review the planning gain system comprising Community Infrastructure Levy (CIL) and Section 106.
Following calls from the industry in the past decade, the CIL regime was introduced in 2010 with the aim of simplifying the planning process, enabling local planning authorities to set a fixed, non-negotiable charge or a planning tax for each square metre of new development floor space created.
This was intended to create a faster, fairer, more certain and transparent means of collecting developer contributions to infrastructure. This meant individually-negotiated Section 106 planning obligations would be scaled back significantly, and generally only used for affordable housing or site specific improvements.
In setting CIL, the local authority can vary the charge for different types of development (for example housing, office, retail) and for location (for example where land values will support a higher charge).
The charges are index linked for the period from publication of the local authority’s schedule of charges up to the date the planning permission is granted and are payable upon commencement of development.
In 2012 the London Borough of Redbridge introduced the first London CIL and was followed shortly by Mayoral CIL, a London-wide CIL to fund Crossrail. More London boroughs followed suit, with varying charges. Far from being simple, the CIL process was fraught with problems including complex regulations and difficulty in calculating the rates.
In areas where CIL rates are high, there has been an impact on viability which has created tension with the delivery of affordable housing, a priority for London and the UK.
Despite amendments to the CIL regulations every year since 2010 (apart from last year), the CIL regime is still not operating efficiently. This was acknowledged by the Government in November 2015, and an independent review, led by Liz Peace CBE, was established. The Review Panel’s report was finally published alongside the Housing White Paper at the end of 2016.
London First supports the simplification of CIL and, in principle, a low flat rate, and have setup a working group to test the reviews recommendations and how they can be applied in London. A short paper has been prepared, which was discussed with the Department of Communities and Local Government.
Put simply, we have found that the proposed methodology for calculating the local infrastructure tariff (LIT) on a range of development types (using development projects that are either complete or in the pipeline) in London would increase the scale of the charges, in some cases by a factor of 5 or 6.
Whilst we are not expecting a specific mention of CIL in the Chancellor’s statement – we are hopeful that we will see a firm commitment to CIL reform within the budget papers and a consultation on the detailed reforms to follow. Following many years of lobbying, it is about time that this conservative government addresses the fundamental issues in the planning gain process that are impeding housing and affordable housing delivery.