Councils will be required to report annually on how developer contributions have been spent as part of a government drive to make the processes surrounding the community infrastructure levy “simpler and more transparent”.
The community infrastructure levy is designed to ensure that developers are required to pay for extra roads, schools, GP surgeries and parkland needed to cope with an influx of residents on new developments, but the current system has been criticised for its complexity and lack of transparency.
Draft regulations laid before parliament by the Ministry for Housing, Communities & Local Government on 4 June also set out plans to remove the restriction preventing councils from using more than five section 106 obligations to fund a single infrastructure project, known as the pooling restriction.
The government said this could have “distortionary effects” and lead to otherwise acceptable sites being refused planning permission.
Housing minister Kit Malthouse said the changes, which are intended to accelerate the planning process to help meet the government’s ambition to deliver 300,000 extra homes a year by the mid-2020s, will simplify “confusing and unnecessarily over-complicated rules”, so that “communities know exactly how much developers are paying for infrastructure in their area”.
He said the reforms ensure that councils and developers “don’t shirk their responsibilities”, allowing residents to hold them account – and “free up councillors to fund bigger and more complicated projects over the line”.
The government claims that developers were charged £6bn in contributions in 2016-17.
The government says the legislation will also make it faster for councils to introduce community infrastructure levies in the first place, so areas can benefit from getting the infrastructure they need in good time. This will include reducing the burden of consultation required to introduce or raise the levy.
Richard Blyth, head of policy at the Royal Town Planning Institute, described the end of the section 106 pooling requirement was a “small, but very useful” change. However, he described the idea that you can pay for infrastructure through land value as “very dubious”, especially in large sections of the country without significant land value.
“This housing policy is based on ideas relevant in expensive parts of the country and not elsewhere. It’s ludicrous to say there’s all this extra money you can channel through infrastructure.”
Last November, joint analysis by LGC and the Association for Consultancy and Engineering (ACE) showed that more than half (53%) of councils had not introduced a community infrastructure levy, with many of them blaming concerns over viability.
The chief executive of the Town & Country Planning Association (TCPA) Fiona Howie said their “overarching concern” is that “mechanisms like the community infrastructure levy and section 106 work in some areas where the housing market is buoyant, the uplift in land values generated through the planning system is high and so developers are willing and able to pay planning obligations because schemes remain viable”.
“It is a much bigger challenge in areas where house prices are low and the uplift in land values is more marginal,” she cautioned. “In these places money available through planning obligations remains limited. The changes in the secondary legislation won’t change that, but the requirements to report on the worth of contributions and what they are spent on might highlight the disparity more clearly.”