CIL - Cost and Coverage
The Community Infrastructure Levy or CIL was set out in the Planning Act 2008 as a means for local authorities to raise funds from developers. The monies raised from the charge, which can be gained from any new developments in an authority’s area, must be spent on infrastructure – which is already a wide definition and in regards to CIL, the definition of potential “infrastructure” is especially wide, encompassing schools, flood defences, open space, transport, sporting and recreational facilities, play areas, parks, health and social care facilities or drainage systems, to name but a few. So what does this mean for developers?
Many local authorities held fire on drawing up their plans for the introduction of CIL before the General Election of 2010, to save themselves from potential wasted work: the Conservatives had hinted that they might abolish it, with Grant Shapps remarking of CIL “you can’t get blood out of a stone and it’s impossible to keep piling these costs on.”
However, the Coalition confirmed the retention of CIL in the Localism Act in November last year, with some tweaks, including the ability to ring-fence part of the CIL to go to third party groups. This ‘slice’ for third party groups, which has been described as ‘meaningful’, will go to town/parish councils – however, where in areas where there is no such authority, the district or unitary authority will need to consult with the local community about how this money should be spent – exactly how they will do this remains unclear. This should make consultation and engagement with local communities easier as it will allow monies to go to specific communities and Parish/Town councils, unlike with Section 106 contributions.
Now CIL has been fundamentally confirmed as the preferred system of raising funds from development moving forward, more and more authorities’ CIL schedules are now coming through the pipeline.
Another area that’s important to clarify is that CIL, while still being expected to run alongside Section 106 contributions, is likely to become the predominant way councils raise money from developers – with the role of 106 contributions to be curtailed, to some extent. Section 106 monies will only be raised to cover those costs directly caused by the development itself, while CIL can be used to cover more general spending. It has been made clear that developments will still have to be viable. In other words: there will be no double charging.
There was some debate in the Lords during the Committee stage of the Localism Bill about whether or not developers would be able to ‘offset’ an amount of affordable contribution from a Section 106 payment off of any CIL which an authority would be planning to raise, thereby reducing the amount in total that a developer would pay. There was concern from the Government that the imposition of too many charges and levies on proposed developments could make the potential affordable contribution of a site unviable, and therefore they were looking at ways of mitigating this.
Portsmouth, Poole, Mid Devon, Redbridge, Shropshire, Plymouth and Havant are just some of the councils who have published CIL documents at various stages of development. For a more comprehensive list, the Planning Advisory Service has a good overview here along with links to current documentation.
As more and more councils are publishing and adopting their CIL schedules, we are beginning to understand how some councils will be using CIL as an instrument to encourage development in areas of importance to them.
Technically, the Levy can be raised against any building that people normally go into, it is up to local authorities to decide what level is raised on different types of development – if anything at all.
Portsmouth City Council, for example, have made the decision in their Charging Schedule – found here – that they will raise no money from a CIL on B1(a); B1, B2, B8 office use or on D1 Community Uses – by just setting the CIL rate as £0 per m2. They have also introduced a more favourable rate for in-centre A1 – A5 development. They are hoping to encourage development which encourages employment, while at the same time providing support for city centres and facilities for local communities.
While we haven’t seen how the CIL will work in practice in Portsmouth yet, it will be interesting to see whether development in the areas where the rate is lower, or non-existent, picks up from April onwards.
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