Community Infrastructure Levy: Will proposed reforms boost local construction?

Author: Karen Lush – Glenigan community and amenity expert

As new government reforms to the Community Infrastructure Levy (CIL) are approved by Parliament this week, we examine the proposed amendments and discuss whether they will provide more flexible support for local development.

What is the Community Infrastructure Levy?

The Community Infrastructure Levy (‘the levy’) came into force in April 2010. It allows local authorities in England and Wales to raised funds from developers undertaking new building projects in their area.  The money can be used to fund a wider range of infrastructure, needed as a result of development. This includes new or safer road schemes, flood defences, schools, hospitals and other health and social care facilities, park improvements, green spaces and leisure centres.

The benefits of the levy

The government claims that this tariff-based approach provides the best framework to fund new infrastructure to unlock land for growth.  The Community Infrastructure Levy is fairer, faster and more certain and transparent than the system of planning obligations, which causes delay as a result of lengthy negotiations.  Levy rates will be set in consultation with local communities and developers and will provide developers with much more certainty ‘up front’ about now much money they will be expected to contribute.

Under the system of planning obligations, only 6% of all planning permissions brought any contribution to the cost of supporting infrastructure when even small developments can create a need for new services.

The CIL also has a far greater certainty.  It provides the basis for a charge in a manner that the planning obligations system alone could not easily achieve; enabling, for example, the mitigation of cumulative impacts from development.

More changes to the levy due in 2014

Following a consultation in October 2013, the government announced a raft of amendments aimed at making the CIL “workable and effective”. These include:

• Ensuring people building or extending their own homes are exempt from the levy.
• Bringing more buildings back into use without incurring a levy charge by changing the vacancy test.
• Extending the date when councils can no longer use pooled Section 106 agreements by one year.
• Allowing councils to accept levy payments in kind from developers providing infrastructure instead of cash or land to ensure timely delivery of infrastructure.

The levy at work

The CIL has the potential to raise an estimated £1 billion a year of funding by 2016 to support growth locally. The government claims it gives councils more choice and flexibility in how they fund the infrastructure that their communities want and need.

A recent construction project impacted by the levy is the redevelopment of the former QinetiQ site at Christchurch in Dorset (Glenigan Project ID: 11339458), which was granted outline planning permission in June 2013. The new development will include a 5,000 sq m Asda food store, a fitness facility and 25 affordable homes.

As part of the planning agreement, developers Quantum Group pledged to invest £1 million in a new non-for-profit organisation, The Christchurch Foundation Trust, which aims to work with residents and businesses “to generate funds and opportunities that support Christchurch’s economic, social and environmental growth”.

Projects such as these present a clear benefit to the community, however the size of the levy has often been a point of contention between developers and local authorities and any changes to the CIL are closely monitored.

Two big questions remain:  will these be the last reforms before the next general election? And, more importantly, will this new, streamlined CIL succeed in making local authorities more development friendly?

For more information about construction within the community and amenity sector, contact Karen Lush at Glenigan on 01202 786728.

Are you satisfied with this latest bout of CIL proposals or would you like to see further amendments? Let us know your thoughts on Glenigan’s social media channels via the icons at the top of the screen.