There's gotta be something better than this: CIL breaks the link between new development and infrastructure provision - and this is a problem.
If you have not read today's Property Week, I thoroughly recommend it. One of the lead features is an investigation into the rate at which London Boroughs are spending their CIL receipts, based on the Infrastructure Funding Statements published last December.
The investigation shows that a significant number of London Boroughs have accumulated large amounts of CIL funding, which has yet to be allocated - let alone spent. Whilst London, as a general rule, collects the largest amount of CIL this is a pattern that could well be repeated in councils across the country. Not least because one in five Councils have yet to actually publish their infrastructure funding statements.
This failure to allocate CIL funding to any particular project raises an important question: Is CIL actually undermining the very objectives it was bought in to achieve in the first place?
Can I remember how this song and dance began?
When CIL was first introduced, it was intended to be " fairer, clearer, more legitimate and more predictable*" than raising funds for infrastructure through s.106 Agreements. Whilst most practitioners would agree that it hasn't exactly turned out this way, the idea that CIL is somehow more transparent and accountable to local communities than s.106 Agreements persists in Government thinking. This can be seen in the Planning for the Future white paper**. Whilst MHCLG accepts that "many local authorities have been slow to spend Community Infrastructure Levy revenue on early infrastructure delivery"** they persist in their belief that, with some tweaks, a revised version of the Levy " will be more transparent than Section 106, and local communities will have more control over how it is spent".*!
Hey, Big Spender....
The difficulty with this viewpoint is that neither the current version of CIL, nor the proposed Infrastructure Levy floated in the White Paper, place any obligation on local authorities to spend CIL Receipts on infrastructure. At present, the funds are simply ringfenced, so that they can't be used for anything else - which leads to the situation that Property Week has uncovered. Councils building up large reserves of cash which are not allocated to any specific project.
This stockpiling effectively breaks the link between the new developments being permitted, and coming forward in an area, and the provision of the infrastructure needed to support them. This is a major problem, as one of the primary reasons that local communities rally against the provision of new developments is the perceived lack of adequate infrastructure to support them. If you read the objection letters for any major scheme, concerns over traffic, the capacity of the road network, school places and capacity of GPs surgeries will feature heavily.
There's gotta be something better than this...
s.106 Agreements contain mechanisms that ensure the money provided by the developer for local infrastructure "necessary to make their development acceptable in planning terms" is spent on the provision of that infrastructure within a reasonable time period (usually five to ten years of receipt). If it is not, then Councils have to return the funds.
This provides both an incentive on local authorities to bring the infrastructure forward, and a mechanism that developers, and councils alike, can use to reassure local communities that the promised infrastructure will be forthcoming.
There is no such mechanism in place with CIL. The funds instead seem to disappear into a black hole, with no indication of when they will be spent or which projects they will be allocated to. Even if the funds are being saved up to fund major infrastructure projects at some point in the future; this will not do much to help those residents who live in the immediate vicinity of a scheme, who are struggling to find an acceptable school place or get a doctors appointment in the short term. As such, in its current format, CIL is extremely unlikely to assist with the long term goal of bringing local communities around to the idea that new development schemes are to be welcomed.
The proposed revisions to CIL are not particularly helpful in this regard, as rather than providing greater transparency or accountability on Councils to deliver infrastructure, they actually propose the opposite.
Where am I going? and what will I find?
Proposal 22 in the White Paper suggests that the ringfencing of CIL funding should end. Instead local authorities should be given greater flexibility over the use of CIL funding "allowing them to spend receipts on their policy priorities, once core infrastructure obligations have been met". MHCLG does not define 'core infrastructure obligations', but does suggest that one 'policy priority' that could benefit from CIL funding would be 'reducing council tax'.
If anything, the Property Week investigation seems to demonstrate that government policy is going in the wrong direction on this point. Rather than continuing to weaken the connection between new development and the provision of infrastructure, we should be looking to strengthen it.
S.106 Agreements, for all their flaws, do at least seek to ensure that the infrastructure projects required to make a development acceptable in planning terms will be delivered within a specified time frame. Unless or until we can say the same about CIL, the stockpiling of funding is likely to remain extremely controversial
*CIL – Ministerial Foreword (July 2009) CLG Community Infrastructure Levy: Detailed proposals and draft regulations for the introduction of the Community Infrastructure Levy Consultation.
** para 4.4
*! para 1.23
Not a penny of the £101m Tower Hamlets was still holding onto at the end of the 2019/2020 financial year had been allocated to anything in its IFS; Westminster’s IFS refers to £226.7m in unallocated funds out of its £250m unspent total; while Brent’s refers to £86.46m in unallocated funds out of its £120m unspent total.”
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