Since coming into force in April 2010, the Community Infrastructure Levy (CIL) Regulations have been fraught with difficulty.
What are the main issues and what are the options for change?
A local authority can only charge CIL if it has adopted a charging schedule. The procedure for adopting a charging schedule can be costly, as well as time consuming. This has led to only a fraction of local authorities taking the decision to charge CIL. As such, there is no standard system of developer contributions across the country. Even where it has been charged, revenue raised has been significantly less than had been anticipated.
The CIL Regulations are also overly complicated, particularly the sections that relate to exemptions and reliefs. Local authorities are finding that they spend a huge amount of time in assessing whether or not these apply. Where they do apply, this time is spent in return for no CIL being payable.
The delivery of infrastructure is an issue under the current system.
All in all, the Regulations have not achieved their aim – to provide a faster, fairer, and more certain and transparent system of developer contributions to infrastructure.
A report by a group commissioned to look at the current system and recommend alternative approaches to developer contributions was released last month. It sets out four options for change:
The report recommends that all developments be subject to a tariff, which will be known as the Local Infrastructure Tariff (LIT). This will be set at a low level so there is no need for widespread exemptions or reliefs, making it easier to manage at an administrative level. It is suggested that there should be different rates for different types of commercial development, which are set as a percentage of the residential rate.
Larger sites will also be subject to a Section 106 agreement. The report focusses on residential developments, and suggests that large developments would be of more than ten units. Consideration will need to be given to what the criteria would be for commercial and mixed use developments.
In addition to LIT and Section 106 Agreements, combined authorities would be able to opt to charge a Strategic Infrastructure Tariff (SIT), which would be to pay for major pieces of infrastructure (in the same way that Mayoral CIL is being used to pay for CrossRail).
The report recommends that the new system be as simple as possible. For example, it suggests that the issues that have arisen from the existing floor space credit in the CIL system should be removed by simply charging LIT on the gross floor space in developments involving the replacement of an existing building.
The abolition of the pooling restriction is also proposed.
In recognition of the issues that have arisen under the CIL system in delivering infrastructure when it is required, the report recommends that:
The extent of the recommendations will require replacement of the current CIL Regulations. The report suggests that 2020, being the end of the current Parliament, would be an appropriate deadline for changes to be brought in. In the meantime, it is suggested that the CIL Regulations be amended to address the most pressing concerns of the current regime.
Katherine Evans, Head of TLT's Planning and Development team, said: "when CIL was originally introduced numerous issues emerged that required amending regulations to mitigate. Despite this mitigation, the introduction of CIL has been very varied across England and Wales with the south of England embracing CIL and the north of England largely ignoring it. Planning gain as a concept has been accepted in one form or another for decades. Any new system has to ensure that it is fair, doesn't stifle much needed development and delivers infrastructure in a timely fashion. The recommendation of the Panel tries hard to meet these objectives but only draft regulations will confirm whether or not these objectives are going to be met."
Contributor: Alexandra Holsgrove Jones
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