In recent weeks, the first wave of preliminary draft charging schedules have been published under regulation 15 of the CIL Regulations. The levy began as an alternative (fairer/more transparent/more efficient) to section 106 obligations, following on from the unpopular concept of the Planning Gain Supplement. However, it should now be seen as one of the new tools at local authorities’ disposal in the context of raising finance to invest in infrastructure and thus stimulate and facilitate economic growth. In terms of raising revenue for investment, CIL will sit alongside New Homes Bonus and, when it arrives, Tax Increment Financing, to say nothing of the potential benefits from relocalising business rates.
Although the practical benefits of CIL are clear (it will raise more cash, is more flexible and reduces the need for section 106 agreements etc) its central purpose is what makes it so compelling (even without the legislative imperative!). Whereas s 106 obligations focus on impact mitigation, CIL is all about making one’s proportionate contribution to the cost of infrastructure – so impact is irrelevant. The charging authority can cast the scope of CIL very widely so that developments may need to bear the cost of a much greater range of infrastructure than they have been used to. In addition, future CIL receipts can be leveraged to support borrowing.
The preliminary draft charging schedules are striking in how different they are even in fundamentals. For example, Shropshire propose differential rates by geography – but with a nil rate for nonresidential development. The Mayor’s CIL, for Crossrail, also differentiates on area – with the benefit of a nil rate going to health and education. None of the drafts proposes widening the relief to charities to allow their investment properties to benefit from discretionary relief under regulation 44 and at least one of the authorities proposes that local infrastructure will still be funded out of section 106 obligations. No doubt these variations are to be expected since CIL will reflect local priorities and circumstances, but it will be interesting to see how, over time, the market responds.
These emerging charging schedules should not deflect attention from what the CIL regulations already require. Section 106 obligations which do not meet the now statutory tests (necessity/ direct relationship/fair and reasonable in scale and kind) should not feature in the decision to grant planning permission. This is the case even where obligations reflect local “standard charge” policies – in those cases, the tests must still be applied to the development under consideration. The secretary of state approaches section 106 obligations on that basis and so will want to be satisfied that the CIL regulations are satisfied before taking an obligation into account.
Section 106 agreements and undertakings will still have a part to play even in the CIL world. There may well be site specific obligations which are needed – or CIL in a particular area may not be intended to raise monies for all infrastructure, leaving developments still having to deal with their impacts in the traditional way. However, developers and local authorities will also need to make sure they meet the requirements of regulation 123(3) (which limits the number of planning obligations per infrastructure project/type). Since the CIL regulations came into force in April 2010, the scope for challenging planning permissions for failure to comply with the regulations is apparent.
Whether CIL can fulfil expectations and help to bring development forward more quickly remains to be seen. Resourcing infrastructure provision must be a priority – but so must resourcing the planning system. Local authorities should, in addition to looking at CIL, also aim to provide a planning service (across the board, and to include additional services like legal, environmental health and highways) which can deliver, and to pass the full cost of that on in application fees – assuming the Government’s recent consultation takes forward into legislation the decentralisation of planning fees.