Community Infrastructure Levy and Allowable Solutions

The Community Infrastructure Levy (CIL)set by the Mayor has come into force in London and a number of other authorities are preparing their levies for introduction. What is the CIL and what is it for?

CIL is a charge levied on development that is additional. So if a new building replaces an old building that was bigger than it, no CIL is levied. If a new building replaces an old building that was slightly smaller than it, then CIL is paid on the difference. This applies to all uses and types of development, if it needs planning permission, then CIL applies. The purpose of CIL is to enable infrastructure to be funded in areas where development is planned but which needs infrastructure to enable it. The word infrastructure is used here in the widest possible sense.

The Community Infrastructure Levy makes it easier for local authorities to coordinate contributions towards larger infrastructure items that contribute to the wider development of their local area, which might not be provided otherwise. (Localism Bill, Community Infrastructure Levy impact Assessment)

In London there are two separate sets of CIL for development. A London wide CIL and a local CIL.The Mayoral CIL is intended to pay for Crossrail and is charged in a set of bands in different authorities across London, with the most money being charged from those areas more likely to be able to pay for it, but not necessarily those areas benefiting from it.

The Government will require local authorities to give a meaningful proportion of Community Infrastructure Levy money raised in a neighbourhood back to that neighbourhood, responding to their local needs. This will incentivise development as communities will see directly the benefits of development.(ibid)

The benefits of the CIL are assumed to be as follows

  • it is transparent, authorities have to publish the charges for CIL in advance, so developers can plan on that basis

Critically, the Community Infrastructure Levy reduces risk for developers, by providing them with upfront certainty about their potential liability. (ibid)

  • it is not negotiable so developers cannot argue it away, unless paying it makes the development unviable
  • it allows authorities to plan the development of infrastructure, and to use CIL to fund it, and they can move the money between projects without penalty
  • it allows authorities to set different levels of CIL for different types of development in different parts of their borough

The assumptions modelled in the Impact Assessment show that an income of £1.5Billion is expected to accrue from development if 95% of authorities take up the Levy. This also assumes 200k additional dwellings per annum.

This map shows the current agreements in place and highlights the way different authorities are already using CIL to promote development in some areas and use it to pay for infrastructure in others. It is interesting to note that in some areas the CIL levy is nearly ten times that in other areas.

What interests me is whether authorities will use CIL to fund Sustainable Infrastructure and also how this tax relates to the proposed 2016 Allowable Solutions mechanism. The Allowable solutions mechanism is intended to allow developers to mitigate the production of carbon dioxide emissions from their sites by paying into a local or national fund which would mitigate those emissions on their behalf. This is because doing this work jointly is likely to be much cheaper than doing it separately. An example would be, a single wind turbine added to a windfarm is likely to be much cheaper than building a single wind turbine in a new location.

Aren’t these two things really the same thing? Wouldn’t it make sense if all authorities responsible for collecting CIL had to have elements of sustainable infrastructure in their plans and simply add the Allowable Solutions monies to the CIL charges. This would obviate the need to create a separate charging/calculating/collecting mechanism for authorities and would make it simple for developers to calculate the costs of development. By sustainable infrastructure I mean any work carried out locally that would reduce CO2 emissions on a long term basis. This could include projects like:

  • waste collection and treatment
  • low and zero carbon energy generation
  • sustainable transport (Crossrail)
  • sustainable urban drainage
  • growing street trees to sequester carbon

Since these projects are likely to be needed for development anyway, and in many cases they add substantial value to areas, then I can see no reason why CIL and Allowable solutions cannot work together very effectively.

Advertisements

One thought on “Community Infrastructure Levy and Allowable Solutions

  1. Rory, I agree, but we need a definition of zero carbon to be confirmed and for the allowable solutions mechanisms to be agreed too. It would have been ideal for everything to be aligned, but no such luck. I’m also interested to see what happens when the SuDS bodies are set up, allegedly in October, and what fees they will be charging. Looks like another tier/different body than those who deal with CIL, so I think alignment unlikely, at least to begin with.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s