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Whitehall's inertia on infrastructure funding is merely slowing councils down

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LGC’s essential daily briefing.

LGC analysis has today shown that just under half of all district and unitary councils are currently charging a community infrastructure levy (CIL), raising just over £1bn between them in less than four years.

The CIL is a charge on all new development, raising money for affordable housing and local infrastructure projects. It was described two years ago as “the government’s preferred means of collecting developer contributions”.

LGC contacted 171 councils which reported that they did not collect the CIL to ask for their reasons why not, and for the means by which they otherwise collected funding for infrastructure.

One of the main findings was that almost every council which responded said that they still negotiated section 106 agreements with developers. Section 106 agreements have often been criticised for their opacity, complexity and the ease by which developers can negotiate their way out of paying their fair share.

The CIL, by comparison, was designed to remove the need for a case-by-case negotiation by introducing a register which the local planning authority can refer to when drawing up the developer’s contribution. It was originally designed to be used alongside, not instead of, section 106 agreements and help speed up development by removing the need for complex negotiations.

Viability

Yet LGC analysis has found an obvious geographical split in England with 69% of all CIL raised between 2014 and July 2018 concentrated in the south east. The Greater London Authority alone raised £490m in that period, compared with only £11m in the East Midlands.

One of the main reasons for this was flagged time and again in councils’ responses to LGC’s survey: viability (or a lack of it).

Boston BC chief executive Phil Drury said the reason his authority had not introduced the levy was because individual site viability was seen as “challenging”. Local calls for affordable housing and flood risk mitigation - on top of the obligatory concerns related to design, health, education and highways - all meant that off-site contributions are seen locally as “undeliverable and/or [un]affordable”.

A spokesperson for Rochdale MBC agreed with this point, saying the CIL “works better in areas where there are high land values” and dissuades development in areas in need of regeneration.

Uncertainty

Another concern can be found in Eastleigh BC’s infrastructure delivery plan, which cited concerns over the “large number of exempt forms of development”, alongside “uncertainty surrounding ever changing regulations”.

This point was the third most common reason given by councils. A report that went before North Devon DC on 2 May 2017 cited a 2016 report by the CIL review team, led by Liz Peace, which “proposes certain quite fundamental changes” to the levy. The council was recommended to await the government’s response to that report before deciding any next steps.

That response finally came when the government responded on 29 October to its consultation from March. In that document, the Ministry of Housing, Communities & Local Government said: “The complexity and uncertainty of the current system of developer contributions is acting as a barrier to the delivery of housing,” before announcing potential changes to the CIL.

“Draft amendment regulations” to the CIL will be put to another consultation “in due course”. While this, in the words of Yes Prime Minister’s Sir Humphrey, might mean “months of fruitful work” for the civil service it is doing little to let councils get the most out of the CIL and the developments they are under pressure to deliver.

Local problems

Of the 171 councils which did not collect the CIL, LGC found that 80 did not retain a local plan - a vital requirement in the implementation of a levy. This is expected to change soon, however, following a government directive that all authorities must now produce a plan - or expect intervention.

Yet while central government appears to be responding to its response on the CIL ad nauseam, councils in less affluent areas are having to rely on section 106 agreements through which developers are more able to negotiate lower and lower rates of funding and affordable housing.

If the country does build more than 300,000 new homes a year by the middle of the next decade it is likely to be in spite of certain elements of government policy, not because of it.

By Robert Cusack, reporter

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