On 9 December 2015 the British Property Federation (BPF) hosted a fascinating event, 'CILLY Season' which considered the Government's Community Infrastructure Levy (CIL) review.
Speakers included the Deputy Director of Planning from the Planning Directorate, Director of Quod – a CIL Expert Group, the Group Land & Planning Director at Barratts, an Acquisitions Director from Unite and two planning lawyers from Dentons.
CIL – which has so far been adopted by only a third of local authorities, albeit with another third currently in the process of signing up or thinking about it – came in for serious criticism from all sides. Even the Planning Directorate was lukewarm in its defence – explaining that the review was the opportunity to make changes and that it had suffered from changes under three different administrations – Labour, the Coalition and Conservative. There was also a general sense that, for all its many faults, CIL was better than some of the alternatives that had been proposed. Nonetheless, a sizeable minority of the audience would vote for its abolition.
Among the various criticisms the following were some of the most trenchant:
- CIL is not being used for its original purpose of funding infrastructure to support the relevant development. In many cases it was not being spent at all, as there is no obligation on Local Authorities to spend it. In others it is being used to fund existing infrastructure projects rather than new ones or even for improvements to the public sector – flower beds in the town square, as it was dismissively described.
- The amount of contradictory and confusing legislation and regulation made interpretation extraordinarily difficult and people reached very different views and came to very different conclusions on the same wording. It was explained that the regulations had to be amended every year just to make it work – and the Localism Act confused interpretation even further. Perhaps most damningly, Phil Barnes of Barratts explained that he was a CIL expert: 'Less than 100 people in the country know more about CIL than I do', he said, 'and I don't have a clue about how the rate is worked out !' There is no consolidated version of the regulations and published Government guidance does not reflect the most recent changes.
- Delay in the process mean that CIL can take more time to resolve than the entire planning process, and it can be also used by Local Authorities to determine what is delivered rather than for its proper purpose. (Although it was pointed out that its purpose has changed over the years as a result of political tinkering).
- Its application can be arbitrary and unfair. The process of making deductions for demolition could be dependent on timing and produce unexpected results. While a decision can be appealed the appeal is automatically determined if development is commenced, with the result that developers are faced with an impossible choice – a modern version of Morton's Fork.
- The boundaries between CIL, s.106 and affordable housing are fluid, which is very far from the original intention. Consequently it is arguable whether CIL does in fact bear down on the price at which the land is sold to the developer, as intended. The other consequence can be a reduction in the amount of affordable housing which could be justified once the viability assessments are carried out.
- It is clear that some Local Authorities are using CIL, rather than the Local Plan, to determine the nature and amount of certain types of development. Charges can vary enormously between neighbouring authorities. Unite were loud in their condemnation of the effect this can have on the provision of student housing for which there is a high demand, although it is unpopular with some authorities.
They gave two examples:
- Tower Hamlets – the CIL rate for hotels is four times less than that for student housing;
- Also in Tower Hamlets the CIL rate for student housing is six times higher than in the City of London.
This is partly driven by the perceived higher yield and therefore higher land values for this use. One consequence is that Unite have no scheme for student accommodation in London after 2016.
The panel concluded with a series of wish lists, in particular:
- Accountability on Local Authority CIL spending;
- A review of different CIL charging rates;
- Delivery of infrastructure should be identified in advance and CIL payments used to fund it;
- A consolidated version of the regulations should be provided;
- One CIL rate for all uses;
- A review of deductions for demolition;
- Abolition of s.106;
- CIL to be used to fund affordable housing.
Many thanks to the BPF for arranging an excellent seminar and for fortifying an audience largely stunned into silence with mince pies and mulled wine.