Steven Abbott Associates Backs Decision to Delay CIL Introduction

Comments from Steven Abbott, Partner

“With the recent announcement that the UK has now officially entered a period of recession, the Government decision to push back the introduction of the Community Infrastructure Levy (CIL) provides some respite for our beleaguered developers and in particular house builders.

The Government had originally intended to introduce CIL powers as early as this Spring, however the current economic climate has forced a re-think, and the Government has now announced that it requires more time to consult and consider secondary legislation – with powers now not expected to come into effect until October at the earliest.

The Planning Act 2008, which was passed at the end of November, provides the primary legislation for CIL. The concept of the Levy is simple; a standardised local tariff which operates on a cost-per-unit basis, with the funds raised directed towards creating or improving infrastructure to match the demand created by development. For developers who are already familiar with Section 106 Agreements the roof tax is alright in principle; where previously they could face a wish list in terms of the matters to which they would be expected to contribute towards, the standardised costs introduced through the CIL could allow easier forward planning and budgeting.

On the flip side however, a standardised cost may be too simplistic to be fair. In an area where land values are not understood properly or vary significantly, the tariff may be the deal-breaker for a development going ahead or not; in parts of Lancashire for example, developers face demands of £4K per house, which in isolation doesn’t sound too onerous, but on a 100-unit scheme this will introduce an additional £400K on top of their land and build costs. This can be in addition to other financial burdens through the mix of uses and tenures required on sites, 106s and highways act payments.

The CIL model was designed at a time when the economy was booming and developers were making good profits, however with margins now squeezed, this simply isn’t the time to enforce yet another financial obligation – particularly as calls are already being made for the financial burden of excessive planning obligations to be scrapped.

Aside from the cost there are additional questions to be answered before the CIL is introduced. The principle of negotiating contributions towards infrastructure relevant to development is long established, however, the notion of setting a tariff for infrastructure which may have little relevance to particular developments is not. Setting aside the fairness of that, or the practical and legal difficulties in taking money to fund something miles away, perhaps even in another Local Planning Authority area, we need further information on the parameters for the tariff; clarification on where exactly the funds can be directed and where the ceiling will be set. Concerned developers are already asking the Government to confirm whether the money will be guaranteed to deliver the infrastructure for their developments or if it could be diverted to pay for vague, uncommitted and untested projects, and whether local authorities could potentially set the levy so high that it actively discourages development.

Indeed, one further concern is the way in which some LPAs have jumped the gun, not just in terms of CIL becoming law but outside the Local Development Framework (LDF) process. In particular some LPAs have been aggressively pursuing developers for contributions on the back of informal policy documents, and as though all was well with the economy. On both counts it is time to take stock and take a more reasonable line. Until CIL is formally adopted after a proper period of consultation, LPAs should revert to conventional and fair planning obligation negotiations – speeding up the delivery of viable schemes.”