The recommendation is included in the final report of the CIL review team, chaired by former British Property Federation chief executive Liz Peace, which was published today alongside the Housing White Paper.
The white paper says that the government "will examine the options for reforming the system of developer contributions including ensuring direct benefit for communities" and will respond to the review and "make an announcement at Autumn Budget 2017".
The review concluded that CIL, as currently configured, "is not fulfilling the original intention of providing a faster, fairer, simpler, more certain and more transparent way of ensuring that all development contributes something towards cumulative infrastructure need and that it has also disrupted and complicated the section 106 arrangements which, though much criticised, actually worked reasonably well for many sites".
The review concluded that wholesale abolition of CIL is "not a practical option". "To do so would create a hiatus and uncertainty which could materially set back the government’s ambitious housing plans".
However, the review did conclude that an alternative, and new, approach to developer contributions is required.
The review proposes a "twin track" system of a new low level tariff, combined with section 106 for larger sites, "that captures the best of both worlds, optimises the contributions for those smaller sites which may not otherwise be contributing in a section 106 system and also ensures the more substantial infrastructure needs of larger developments are met in a timely manner by those best placed to do so".
The low level infrastructure tariff would provide a means of ensuring that all development makes some contribution to the wider cumulative infrastructure need in an area that comes from development pressures generally, the review says.
Larger developments, which require direct mitigation to make them acceptable in planning terms or very specific major infrastructure on or close by the development, "would be subject to an additional section 106", the report says.
"Overall, we believe this approach is likely to raise more money for infrastructure in aggregate by optimising LIT and Section 106s," the report suggests.
"Moreover, by allowing for the timely delivery of infrastructure to support larger schemes it will unblock major development, thus supporting the government’s growth agenda and at the same time dealing more effectively with the very issues that make development unpopular."
The Housing White Paper says that, in addition to considering longer-term reform, the government believes there is scope to make changes to section 106 agreements in the short term to "address practical issues in the operation of agreements raised by local planning authorities and developers".
"This will include consulting on standardised open book Section 106 agreements, to reduce disputes and delays, and on how data on planning obligations could be monitored and reported on to increase transparency," the white paper said.
A New Approach to Developer Contributions: A Report by the CIL Review Team is available here.