Community Infrastructure Levy

One of the highlights of 2007 was the successful campaign to persuade the Government to abandon proposals for Planning Gain Supplement ("PGS"), effectively, a tax on development, rekindling earlier proposals over the decades from Labour Governments, last seen in Development Land Tax of the mid 1970's.

Although the present Government had paved the way with legislation in advance of PGS, a coherent lobby persuaded the Government to think again.

The current proposal is for a Community Infrastructure Levy ("CIL").  A timetable for its introduction is now highlighted in recent guidance issued by the Department of Communities and Local Government.  This clarifies current ministerial thinking on the new planning charge.

The intention is to create new powers to allow Councils to set a level of CIL for their particular area, after they have carried out an assessment of the needs of local infrastructure and consulted the local community.  It seems that each authority will have to produce a draft Charging Schedule, showing the rates of the Levy that might be set for the particular area, which are also to be subject to consultation.

Government guidance also indicates that the Levy will be set by reference to area plans produced by the Local Planning Authority (and which lead policy decisions on Planning Applications).  Apparently, CIL is not to be used for general expenditure by the Local Authority or to make good deficiencies in infrastructure - unless the use of these is likely to be made worse as a result of new development.  In other words, if infrastructure needs to be expanded or its use improved, CIL is likely to be used for that purpose.

Existing arrangements under Section 106 Town and Country Planning Act will continue to be applied and are intended to deliver more site specific infrastructure, including, in appropriate cases, affordable housing.

Considerable concern has been expressed by developers that there are no constraints or limits within which CIL may be raised and then used.  They are nervous that different local authorities will have their own requirements and that they will face the additional strain of being requested to make further contributions for infrastructure.  The current uncertainty makes it difficult to commit to future schemes, where a key element of an appraisal may well be missing or can only be guessed at.

There seems to be considerable disquiet that these limits remain unspecified.  Draft regulations for the proposed CIL will begin their consultation only in the autumn of 2008. 

The Government's aim is to have them finalised by the first quarter of 2009.  Regulations will need to be approved by the House of Commons before being enacted under what is currently the Planning Reform Bill, now making its way through Parliament.