Defining Developer Contributions—progress and lessons learned on CIL

Defining Developer Contributions—progress and lessons learned on CIL

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At the Westminster Briefing ‘Defining Contributions’ on 17 August 2016, developers, local planning authorities (LPAs) and solicitors discussed the progress, success stories and challenges of the community infrastructure levy (CIL) regime so far. Although CIL is proving effective in many areas of the country, some LPAs are reluctant to introduce it, as potential funds are outweighed by administration costs and resource needs.

What is the progress on CIL so far?

Laurence Martindale, head of local infrastructure planning—infrastructure division at the Department of Communities and Local Government (DCLG) summarised the uptake of CIL by LPAs:

  • there are currently 127 LPAs charging CIL
  • a further 88 LPAs have 'taken steps towards adopting CIL' (although it later transpired that this figure included LPAs who had considered and dismissed the decision to introduce CIL)
  • CIL is further advanced in the south and east of the country
  • there is almost complete CIL coverage in London

How effective has CIL been?

Key points on the effectiveness of CIL included:

  • CIL was only ever intended to produce a contribution to infrastructure costs
  • CIL is yielding between 5–20% of funding required
  • viability testing means that only residential and retail development are attracting a significant CIL charge (other developments generally low or zero rate)
  • Mayoral CIL has worked well
  • CIL has produced certainty in terms of rates/transparency
  • CIL is working best for charging authorities where it has 'bedded down', ie been in place for a few years

What problems have been identified?

Wokingham Borough Council (WBC) relayed a success story of the operation of CIL in its area, emphasising that 'CIL is working!'. However, WBC, other LPAs and a representative from the CIL review panel identified a number of challenges with the current system, relating to:

  • rate-setting—rates vary hugely across the country. LPAs at the conference quoted rates of between £49–£350 per sq m—this means that CIL is much more profitable for some LPAs than others
  • administrative burdens—'too many forms!'. The administrative burdens and costs involved in the collection process in particular has prevented some LPAs from adopting CIL—the resources in different LPAs are hugely varied and, in some cases, the number of staff in planning teams appears to have affected the decision as to whether to adopt CIL
  • complexity of the regulations
  • relationship with agreements under section 106 of the Town and Country Planning Act 1990 (TCPA 1990) and the pooling restrictions
  • statutory environmental mitigation (eg SANGS)
  • exemptions and reliefs—there are too many exemptions and reliefs, which not only causes confusion, but means that some LPAs cannot make enough money to justify the resources required to monitor and collect CIL—in particular, WBC explained that there were a lot of extensions over 100sq m in their area, which are heavy on administration but attract no CIL
  • paying CIL alongside affordable housing contributions is making development unviable
  • assumption of liability is not a validation requirement
  • in CIL appeals, the Valuation Office Agency has made planning decisions, which should have been made by the Planning Inspectorate
  • the scope for using payment in kind for infrastructure is ‘vanishingly’ small. WBC tried to use it in conjunction with willing developers and considered that although it could be a useful tool, the drafting of Regulation 73A of the Community Infrastructure Levy Regulations 2010, SI 2010/948 renders it meaningless (section 73A only allows infrastructure payments where, among other things, the LPA is satisfied that: the person liable to pay CIL has, or is likely to have, sufficient control over the land on which the infrastructure is to be constructed to enable them to provide the infrastructure—the infrastructure to be provided is not necessary to make the development granted permission by the relevant permission acceptable in planning terms)
  • LPAs have to make commitments to delivery of strategic enabling projects clear or development will stall
  • the requirement to pass on a ‘meaningful proportion’ of CIL to the local communities that receive development can be problematic because parish councils are often small organisations ill-equipped to deal with large amounts of infrastructure funding due to a lack of staff/knowledge/skills to prioritise/commission/finance—It can be a significant drain on infrastructure packages on sites that affect more than one parish

What progress has been made on the review of CIL?

The government confirmed in November 2015 that an independent group would conduct a review of CIL. The CIL review panel were asked to:

  • assess the extent to which CIL provides an effective mechanism for funding infrastructure
  • recommend changes that would improve its operation in support of the government’s wider housing and growth objectives, and
  • look at the relationship between CIL and TCPA 1990, s 106

Progress to date on the review includes:

  • November 2015 to January 2016—submissions on the questionnaire
  • January to March 2016—face to face sessions with a range of stakeholders
  • March 2016 to date—brainstorming and report writing sessions

DCLG confirmed in the session that the outcome of the review was expected 'later this year', but could not give any further details. It is thought that some LPAs may be slowing down their progress in adopting CIL because they are waiting to see what comes out of the report.

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About the author:

Jen is a solicitor specialising in planning law. She has experience in relation to a range of planning topics, including environmental impact assessment, section 106 agreements, highways orders, compulsory purchase, freedom of information issues, inquiries, judicial review, the Localism Act 2011, the National Planning Policy Framework and major infrastructure projects. After qualifying at Ashurst, Jen worked at Bevan Brittan and subsequently at CMS Cameron McKenna as an associate in the planning team. She worked as an external author for LexisPSL before joining the team in November 2010. She has written for a variety of legal publications, including the New Law Journal, Utilities Week, Planning Resource and The Lawyer. Jen regularly appears on Talking Law videocasts providing legal updates on planning law.