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Time to kiss goodbye to CIL?


There is a growing consensus that the Community Infrastructure Levy (CIL) is simply not fit for purpose and should be radically overhauled or even abandoned.

The genesis of CIL under the previous Labour Government was an understandable reaction to the even less palatable Planning Gain Supplement (PGS). CIL was designed in very different economic circumstances and was intended to act as a tool to collect greater funding for infrastructure in a fairer, faster and more transparent way than under Section 106.
However, in practice, it is emerging that CIL is unlikely to collect the level of contributions initially anticipated, largely due to current viability circumstances and lower than anticipated charge rates together with an increasing number of exemptions. In addition, CIL has always only ever been a collection mechanism for pooling contributions into a common pot.  While the funding of infrastructure is the principal objective of CIL, there is no guarantee that CIL will pay for, let alone deliver, the required infrastructure.
Furthermore, where CIL is introduced, planning authorities are inevitably tempted to seek to secure certain on-site infrastructure and benefits through Section 106 in addition to CIL.  While not unlawful, this has led to accusations by developers that there is an additional financial burden that acts as a barrier to development.

Badly drafted

When introduced in 2010, the CIL Regulations were badly drafted and unnecessarily complicated. There have now been three further sets of regulations published in 2011, 2012 and 2013 to amend the 2010 Regulations, with a further consultation paper issued in April 2013 proposing around 25 further amendments.
These most recent amendments respond, finally, to a range of issues raised by the property industry at the outset of the CIL debate. Importantly, they introduce a number of further exemptions, including extending relief from CIL for affordable housing, exceptional circumstances and self-build housing. In addition, the introduction of payments in kind where on and off-site infrastructure may be set off against CIL is a welcome change. However, all of these measures further reduce the amount of CIL that is to be paid into the infrastructure funding pot.

"It is time to face the fact that CIL has become more of a hindrance than a help to development"

The recent consultation paper also proposes the postponement (by a year) to April 2015 of the drop dead date by which planning authorities are to prepare their charging schedules (and lose the opportunity to pool more than five planning obligations for the finding of infrastructure). The April 2015 date is conveniently just before the General Election and it seems that both the coalition Government and the Labour Party have an increasing appetite to review the levy.
The scope of these most recent proposals implies a general acknowledgment that CIL has run its course. As a consequence, a number of planning authorities have put their CILs on hold pending the outcome of the latest consultation, expected later this Autumn.

A fresh fix

However, the vexed issue of infrastructure funding will not go away, and there is much good work that has been done under CIL that should not be wasted. An easy immediate fix, and one which is entirely consistent with the Localism agenda, would be to give planning authorities the choice of whether or not to introduce CIL.
Regulation 123 of the CIL Regulations currently has the practical effect of making the introduction of charging schedules mandatory. Amending Regulation 123 to remove the restriction on pooling of Section 106 obligations to fund infrastructure would allow those authorities who wish to rely on the tried and trusted Section 106 approach to do so. Section 106 also provides greater certainty to developers and local authorities that infrastructure will be provided when needed, or development should not proceed.
Stephen Webb is a partner at SJ Berwin LLP. He is a qualified solicitor and town planner, and advises private and public sector clients on all aspects of planning 


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