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22/09/2016

Can anyone help with CIL?

Words:

It’s more than six years since the Community Infrastructure Levy (CIL) Regulations 2010 came into force. Daniel Murphy asks: Have they helped or hindered development?

When introduced, CIL was promoted by the government as a new way by which local authorities could raise funds from developers to fund new infrastructure projects within their area.

It was also promoted to developers as a way in which they could calculate the upfront costs of new development to provide certainty before starting work. CIL sought to provide a faster, fairer, more certain and transparent means of collecting developer contributions to infrastructure than individually negotiated Section 106 planning obligations, which can take months – sometimes years – to agree. This means that infrastructure funding hasn’t often been available when it has been needed.

CIL essentially bypasses this process and allows local authorities to set a charge on certain forms of new development. Since their introduction, the CIL regulations have proved to be a regular topic for discussion amongst planners and lawyers alike. It would appear to most that they are unwieldy and hard to navigate. Most of us have attempted to translate the regulations into plain English for our clients, with some reasonable success. However, there are parts to the regulations which, being polite, are very vague.

“Until CIL issues are resolved, we are finding that clients are not prepared to commence development, as payment of the levy crystallises once development commences”

The lack of clarity means that we are constantly having to hypothesise scenarios to figure out what the outcome may be, often concluding that there is no clear-cut answer. This result isn’t particular useful for our clients.

Given the relative youthfulness of these regulations, there is little by way of case law to assist lawyers or planners on points of interpretation. There is guidance on CIL in the online Planning Practice Guidance, which sets out a useful summary of how the regulations operate. However, as with the National Planning Policy Framework, the guidance provides limited interpretation to assist planners and lawyers when specific issues arise.

This free rein of interpretation inevitably creates its problems, with our recent experience with CIL covering debates on the formula for calculating CIL liability, considering how the various reliefs can be applied and the effect on CIL liability for a phased development. Discussion on these points often takes a lot of toing and froing between local authorities, clients and colleagues.

Until CIL issues are resolved, we are finding that clients are not prepared to commence development (as payment of the CIL liability crystallises once development commences). As the professional team, we are faced with the difficult task of guiding our clients through the grey areas and trying to keep development on track and viable. We are all acutely aware of the need to ensure developments remain viable, which will often mean that clients don’t want to incur legal costs arising from a challenge on CIL liability. Ultimately, whether or not a contested CIL liability is accepted or challenged will be a commercial decision for our clients.

Change, however, may be afoot. In November 2015, the government appointed Liz Peace to head an independent review of the CIL regulations to assess the extent to which CIL has provided an effective mechanism for funding infrastructure. The government is yet to publish this report, however, it is understood that the review considered all options, including abolishing CIL. Until publication, it is unlikely that we will see any fundamental legal challenges or changes to the CIL regulations. For the time being it will be business as usual for us all – i.e. debating with colleagues on the meaning of a particular word in the regulations.

Daniel Murphy is a former town planner turned planning lawyer with Shoosmiths in Manchester

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