What can Scotland learn from England and Wales’ experience with the Community Infrastructure Levy?

The last few weeks has seen plenty of top level discussion about the outcomes of the independent Planning Review. This blog kicks off a series in which we will aim to open the discussion about some of the specific recommendations in the panel’s report.

 

Recommendation 18 of Empowering planning to deliver great places says…

“Options for a national or regional infrastructure levy should be defined and consulted upon”

Crucially, in the detail, the recommendation says that these options should ‘draw on the lessons learned from the Community Infrastructure Levy (CIL) in England and Wales…’. So, what are these lessons?

England and Wales are currently awaiting a substantive response to this question themselves, a review into the functioning of CIL being underway. However, given the amount of evidence available we don’t think that it is premature for Scotland to look south of the border and consider if a CIL-style system could work here.

Like in Scotland, there has been serious concern in England and Wales that planning obligations have not addressed the pressures of growth on existing infrastructure.

CIL was supposed to open up development opportunities by creating an income stream for the infrastructure needed to support growth. It was also supposed to create certainty for developers in terms of infrastructure contributions, as the levy due on development would be clear in advance of the application process beginning. To establish a clear difference in purpose between CIL and planning obligations, following the introduction of the levy no more than five planning obligations would be ‘pooled’ to pay for any single piece of infrastructure. Any shortfall in funding would then be met from the CIL pot.

CIL was introduced in England and Wales through the Planning Act 2008, and then implemented through the Community Infrastructure Levy Regulations 2010. Under the regulations, each local authority is able to produce a ‘charging schedule’, specifying the amount of CIL that would be charged across all types of development over 100m².

Six years after its implementation, take up of CIL across local authorities is still patchy. Adopted Charging Schedules tend to be clustered in South East England and urban areas, where land values are higher. There is no doubt that the amount of money raised by CIL is still a small contribution to infrastructure funding.

The relationship between planning obligations and CIL, especially with regards to the ‘pooling restrictions’ has been a particularly challenging issue. The practical response to this challenge is to ‘zero rate’ certain types of large complex development, meaning that planning obligations can be maximised to meet the specific infrastructure needs associated. However, on major phased developments, delivery through several planning consents means that securing the funds to pay for their supporting infrastructure through just five planning obligation agreements has proved difficult.

As affordable housing contributions are also excluded from CIL, this means that there can be tension between securing funding for affordable housing and funding for the infrastructure needed to made development workable.

The tension between affordable housing and infrastructure delivery has impacted on the effectiveness of CIL in a further context: For those local authorities with particularly high housing need, but lower demand, the continued use of planning obligations is often preferred to CIL. In these places delivering affordable housing numbers is a higher priority than meeting the extra infrastructure demands brought about by housing growth.

Clearly, forcing local authorities to choose between meeting housing need and funding infrastructure is not a long term solution. This is arguably especially true in Scotland where there is a need for frontloaded infrastructure development which opens up opportunities for development. If development is delayed or cancelled, this clearly has a knock on effect for CIL receipts, and therefore the delivery of much-needed infrastructure.

On a positive note, CIL has presented an opportunity for some local authorities to devolve decision making to communities. Crowdfund Plymouth sees some CIL money used to fund community led projects throughout the city. Given current moves among some local authorities in Scotland towards devolving some budgeting decisions to communities, an infrastructure levy might be a way of increasing the slice of the pie that communities are able to distribute.

The recommendation in Empowering planning to deliver great places refers to a ‘regional or national’ levy, so clearly the independent panel does not envision an exact copy of CIL in place in Scotland. However, the lessons about the reliability of levy funding, and competition between different developer contribution streams, are undoubtedly relevant. There are good arguments for streamlining the way that developer contributions are collected, and decisions made on how they are distributed. But, the implementation of CIL in England has not (either by design or coincidence) increased the amount of land value uplift captured for the public benefit. As Scotland faces infrastructure funding challenges, this is an important consideration to bear in mind.

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