Just under half of England’s district and unitary councils are currently charging a community infrastructure levy (CIL) in part due to concerns over a lack of viability and a sense of uncertainty over government policy, joint analysis by LGC and the Association for Consultancy and Engineering (ACE) shows.
Just 152 (47%) of all councils which could charge a levy are doing so, collecting a combined total of £1bn between 2014 and July 2018. Of that total amount, just under £500m has not been spent.
The levy was described in a government review in October 2016 as “the government’s preferred means of collecting developer contributions to infrastructure investment”. It was designed to be used “alongside a scaled back system of section 106 planning obligations”, funding agreements agreed on an individual basis between developers and local authorities.
The Ministry of Housing, Communities & Local Government last month responded to its consultation on making improvements to the operation of the CIL. The ministry said: “The complexity and uncertainty of the current system of developer contributions is acting as a barrier to the delivery of housing.”
The reforms it plans to introduce will “provide clarity and certainty to developers around the contributions they are expected to make”.
Some of these improvements include revisions that will “streamline” the CIL process.
However, many councils told LGC they do not charge a CIL due to concerns over viability as the charge is reportedly more effective in areas with high land values.
A spokesperson for Redcar & Cleveland BC, which piloted the CIL in 2012, said repeated, detailed assessments have “concluded that the local development market would generate less income for the council via a CIL funding mechanism than currently being achieved through the existing section 106 arrangement.”
Eastleigh BC bemoaned the CIL’s “complexity”, how “time-consuming” it would be to introduce it and uncertainty over changes to the way the levy operates. The council’s infrastructure delivery plan said “there is little to be gained in pursuing the introduction of CIL”.
Regional analysis of collection rates by LGC showed 69% of all CIL collected between 2014 and July 2018 was raised in London and the south-east.
east midlands cil
There was also a regional disparity in the collection rates of CIL, with two thirds of London’s 32 boroughs collecting the levy, compared to just one third of all 40 eligible councils in the East Midlands.
ACE chief executive Hannah Vickers said: “It’s clear that the original intention of the levy as a means of fairly raising money for supporting infrastructure is failing.”
To counter some of the viability issues, the ministry is proposing to consult on the “indexation of levy rates” to house prices.
The ministry has also decided to let combined authorities introduce a strategic infrastructure tariff, and encouraged member councils to pool their CIL receipts.