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New Infrastructure Levy will help communities thrive and give developers certainty

Published 5 August 2008

Housing and Planning minister Caroline Flint announced further details of the Government's plans for a groundbreaking Community Infrastructure Levy (CIL) today, which will support local communities by raising funding for new schools, hospitals, transport schemes, libraries, parks and leisure centres.

CIL will be in addition to Government funding and will empower local authorities to better support and unlock growth by levying a charge to help deliver the infrastructure needed to support the development of their area - helping to create more attractive places to live and work.

CIL will be discretionary for local authorities, increasing their flexibility to shape their communities and support growth. Crucially, the levy will also offer greater certainty to industry because charges will be consulted on, independently examined, and published in a local charging schedule. This will provide a step change from the existing system of lengthy negotiated agreements, creating transparency, fairness and certainty for the development industry, and ensuring that CIL levels stimulate, rather than choke development.

The Government will invite further views on the design of the levy through public consultation later this year. Today's announcement sets out important strands of policy, following discussions between Caroline Flint, developers and local government.

  • Local authorities will be empowered to introduce CIL from next year, as a discretionary tool. They will be able to decide whether the circumstances in their area make the introduction of CIL appropriate and at what level to propose setting the charge.  CIL will not result in any "big bang" change for the development industry.
  • Charges should encourage and enable development, offering certainty to industry while recognising the sensitivities and commercial realities of development. To aid this, charges could be reviewed and revised if economic circumstance change, or may even be automatically linked to economic indicators such as the rate of inflation. The Government will continue to explore the case for allowing variable rates within one charging schedule.
  • CIL should only be levied where there is a genuine infrastructure need to support development of the area. Decisions to levy a CIL should go hand-in-hand with a considered approach to infrastructure planning, as endorsed by Planning Policy Statement 12, to ensure that contributions work towards delivering the future vision of each local area.

As a result of the progress made in developing a locally-led approach to funding sub-regional infrastructure, the Government has decided that the powers for Welsh Ministers and the Secretary of State to charge CIL are no longer required.

Caroline Flint said:

"Almost all development creates some need for infrastructure and services so it is only right that development contributes a fair share alongside the billions of pounds of investment the Government is putting in.

"CIL will provide vital additional funding for the new infrastructure our communities need, helping them to grow in a sustainable way.

"Developers need as much certainty as possible given the current challenges they face from the international credit crunch, which is why I have been working closely with the industry and local government to ensure that CIL will deliver what is needed whilst giving more certainty and confidence compared to the current system."

There will also be improvements to section 106 agreements, which are used to mitigate the impacts of development proposals and secure affordable housing in new developments. Currently 52% of permissions for new major residential development do not include a section 106 agreement.

Three new steps will help clarify how section 106 agreements can be used effectively and appropriately. Firstly, a new model s106 agreement will be produced in conjunction with the Law Society; secondly, a practitioners' forum will be established to share best practice and, thirdly, a new toolkit will help all councils accurately assess their affordable housing needs.

To help people improve their homes the Government is also removing the need for planning permission on small household extensions and improvements such as solar panels. And all householder applications for home improvements will be exempt from CIL.

Notes to Editors

1. The Community Infrastructure Levy Policy Document is published today and available here: www.communities.gov.uk/publications/planningandbuilding/communityinfrastructurelevy

2. Also published today:

Valuing Planning Obligations in England: Update Study for 2005-06
 www.communities.gov.uk/publications/planningandbuilding/obligationsupdatestudy

Common Starting Points for Section 106 Affordable Housing Negotiations
www.communities.gov.uk/publications/planningandbuilding/commonstartingpoints

3. Government, in its 2007 Comprehensive Spending Review, increased its financial commitment to backing infrastructure. Indeed, infrastructure needs are sufficiently important that the Treasury will continue to prioritise infrastructure funding as it balances competing priorities for public funds, regardless of the potential of CIL. The scale of expenditure on infrastructure is huge. For example, the 2007 Comprehensive Spending Review provided increased investment over the next three years to support the needed infrastructure for housing:

  • £1.7 billion targeted funding for infrastructure in growth areas, the Thames Gateway new growth points and eco towns by 2016, including a £300 million Community Infrastructure Fund for transport schemes supporting housing growth
  • £510 million for the new Housing and Planning Delivery Grant, to incentivise local authorities to increase housing supply and help bring forward local development frameworks.

4. This is on top of the increases in mainstream Government funding for public services infrastructure announced in the 2007 Comprehensive Spending Review. Annual spending on education is projected to rise by over £14.5bn by 2010-11; spending on the NHS by over £19bn; spending on transport by nearly £3.6bn; total spending on new housing of at least £8bn over the next three years and spending on local government by £2.6bn.  This is a substantial public sector investment aimed at ensuring the sustainability of our communities over the coming years.

5. Estimates as to how much the CIL will raise depend heavily on the number of planning authorities who choose to take it up and the levels at which charges are set in each area. However, the Government believes that it has the potential to raise hundreds of millions of pounds per year of extra funding each year for infrastructure, on top of the public sector investment described above.

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