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Infrastructure levy rethink

Property groups have welcomed a change to the Planning Bill that removes a controversial link between the level of the new community infrastructure levy (CIL) and the increase in land value once planning permission has been granted.

The link had been vigorously opposed by industry lobby groups comprising the British Property Federation, the Major Developers Group, London First and the Home Builders Federation.

CIL, a contribution from developers towards providing infrastructure like local transport and social facilities for new developments, has been the subject of much parliamentary debate. The government has today tabled a series of amendments to address concerns raised in the House of Lords during the Planning Bill’s committee stage.

If the changes are accepted by the Lords, CIL will be calculated with reference to local infrastructure needs and economic viability of development in the area, rather than increases in land value.

The issues around using land value increases as a basis for assessing viability are particularly complex. For instance, on a mixed development of homes and retail, there would be different value uplifts and differing demands for infrastructure. Using a crude value based measure to assess CIL could have been confusing for councils and created the damaging impression that CIL was a tax on land value uplift rather than a fair contribution from developers to pay for local infrastructure.

Liz Peace, chief executive of the British Property Federation, said:

“We welcome the government’s desire to listen to our concerns and ensure that in the longer term CIL delivers the necessary support for our communities – but in a way that does not deter development, nor create the impression that this is a centrally imposed development land tax. We were concerned that the bill did not make this clear enough before, so this is a positive change.

"There are still a number of other areas of concern that the industry has with CIL, particularly the need to find a sensible mechanism for dealing with genuine exceptional cases where the levying of CIL would make a scheme unviable. It remains our view that such cases are best dealt with within the existing planning system. We have the Government’s assurance that they will continue to work with us to resolve this and other matters during the regulatory stages of the Bill and consequently we have agreed not to pursue further amendments to the primary legislation.

"We have also made clear to Government that in the current economic climate the scope for achieving any significant contribution to infrastructure is virtually nil and that what the industry needs at the present time is a range of measures to take cost out of the development process, such as a streamlining of the planning process, not a set of new demands that will make any development that we can get off the ground unviable. In this respect, work on the details of a CIL has to be regarded as a long term project, not one that is going to make a huge amount of difference for the next few years at least."

Francis Salway, chief executive of Land Securities and president of the British Property Federation, said:

"Government officials and industry representatives have worked hard to agree how we can get the best out of CIL and today’s amendments recognise this. They also demonstrate the willingness of officials to engage in an open and constructive dialogue with the industry. The provision of suitable infrastructure is vital in supporting new development and this is why the industry has firmly backed the tariff-based approach. The removal of the land value clauses is very positive, but the industry still has some areas of concern which the BPF will continue to discuss with Government."

For more information or interviews contact

Andrew Teacher – 020 7802 0113 / ateacher@bpf.org.uk
Maddie Williams – 020 7802 0364 / mwilliams@bpf.org.uk

Notes to editors

The BPF has been working closely with the Major Developers’ Group, London First and the Home Builders’ Federation on the CIL legislation.

This industry coalition original helped to convince the government to drop the planning gain supplement in favour of a tariff approach, which has been adopted through the introduction of the CIL in the Planning Bill.

The bill is shortly to have its report stage in the House of Lords.

The government’s amendments can be viewed at http://www.publications.parliament.uk/pa/ld200708/ldbills/084/amend/ml084-irc.htm