Ministers' political priorities for CIL have blunted its effectiveness, by Jamie Carpenter

In a book published a couple of years ago, the former Labour home secretary Charles Clarke explored the concept of the 'too difficult box'. The book's chapters examine seemingly intractable issues such as social care funding, pensions and media regulation, which politicians are unable to crack.

The book could quite easily have featured a chapter on how best to secure funding from developers to ensure that the infrastructure required to support new development is provided.

Post-war history is littered with attempts to do just that, with short-lived national development taxes introduced in the 1940s, 60s and 70s. The current mechanism, the Community Infrastructure Levy (CIL), was introduced by the Planning Act 2008, after earlier proposals to replace section 106 with first an Optional Planning Charge, and then a Planning Gain Supplement, were considered and then dropped by Labour ministers.

But could CIL’s days now be numbered? The report of a government-commissioned review, published alongside last week’s Housing White Paper, says that the mechanism has failed. CIL is "not fulfilling the original intention of providing a faster, fairer, simpler, more certain and more transparent way of ensuring all development contributes something towards cumulative infrastructure need", the report concludes.

The panel recommends that CIL is replaced with a twin-track system. All developments would be subject to a "streamlined low-level tariff", known as the Local Infrastructure Tariff (LIT). Larger developments would be subject to an additional section 106, under the review panel’s proposals.

All eyes are now on the government, which has promised to respond to the review in the Autumn Budget. Its decision to keep its cards close to its chest until then has frustrated some practitioners, who believe that authorities may choose to pause work on CIL until they know whether or not the levy has a future.

However, ministers are right to proceed with caution. Observers agree that one of the problems with CIL is that its implementation was botched, with the publication of regulations to iron out glitches in the system becoming an annual event. Should the government decide to take forward the recommendations of the review panel, it should do everything in its power to avoid the same happening again.

The fact that ministers have decided to give themselves more time to respond to the review - planning minister Gavin Barwell had committed to including a response in the white paper - may also reflect the fact that the review contains some difficult messages for the government to swallow.

For example, the review recommends that the new LIT should apply to practically all development, with no, or very few exemptions. This might prove unpalatable for ministers, who have, for political reasons, sought to support some forms of development, such as self-build homes and Starter Homes, by exempting them from the levy.

The review’s panel report says that such exemptions are a key reason why CIL has failed to raise as much money as was envisaged by government when it was first introduced. "A number of local authority respondents suggested that their expected CIL income had reduced by some 50 per cent because of exemptions," the report said.

The government also has a decision to make about the extent to which it wants to use CIL as a tool to increase local residents’ support for development. While appearing to accept that the government is unlikely to be willing to scrap measures that divert a portion of CIL receipts to parishes and neighbourhoods, the review panel says there is a "lack of evidence" to suggest that this "makes development any more acceptable at a local level". A continuation of the current arrangements "will lead in many instances to already scarce and oversubscribed resources being diverted into projects that do not ease the pressure on existing infrastructure and consequently do not actually improve the conditions for local communities," the review suggests.

However, it would be a surprise should ministers get cold feet on CIL’s neighbourhood portion, particularly as the Prime Minister has suggested that the government could perhaps go further, even using CIL to make direct payments to households affected by development in their communities. The white paper underlines that "ensuring direct benefit for communities" remains a priority for the government, saying that its deliberations over the future of CIL will take this into consideration.

Practitioners will now have to wait until the Autumn Budget to see whether ministers can square the circle between the review’s recommendations, and their own political priorities for the system. If they can’t, the issue of how to best secure funding from developers for local infrastructure seems likely to remain firmly locked in the "too difficult box" for the foreseeable future.

Jamie Carpenter, deputy editor, Planning //

Liz Peace, the chair of the government's CIL review panel, will speak at next month's National Planning Summit. Click here for further details.

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