Briefing: What the latest changes to CIL rules could mean on the ground

Latest proposed changes to regulations aim to instil greater transparency and certainty in the CIL regime, says Murray Bridgwater.

Infrastructure: tariff changes in the pipeline
Infrastructure: tariff changes in the pipeline

Q What does the government seek to achieve through the draft changes to the Community Infrastructure Levy (CIL) regulations launched before Christmas?

A The government has three core objectives: reduce complexity and increase certainty in the system; increase market responsiveness of the levy; and improve transparency for communities and developers.

Q How will removing the pooling restriction for section 106 contributions impact practitioners?

A Removing pooling restrictions, which limit councils from using more than five section 106 planning obligations for a single infrastructure project, is the most significant change for local authorities. The original intention of the pooling restriction was to act as a stick to make local authorities take up CIL by restricting "tariff type" section 106 obligations, and to avoid "double dipping" by preventing section 106 contributions and CIL being used to fund the same infrastructure project. In practice, the pooling restriction has sometimes had distorting effects. There have been cases where otherwise acceptable developments have been refused on the basis that there was no mechanism to mitigate site-specific impacts in instances where the five-obligation limit had already been met. As the 2016 government-appointed CIL review group report correctly pointed out, the tests in CIL Regulation 122 outline the required links between section 106 contributions and development. Thus there is already a distinction between providing for general cumulative infrastructure over a wide area, for which CIL is intended, and site-specific mitigation through section 106. Together with the new requirement in the draft regulations for councils to publish an infrastructure funding statement, this should ensure that in future it will be clear how authorities are intending to spend their section 106 and CIL receipts, thus easing the concerns over "double dipping".

Q How important is the change on indexation likely to be for CIL receipts and monitoring?

A To address the need to increase market responsiveness, and in particular to reduce the gap between levy rates being set and developments subsequently changing in value, the amendments propose new indexation arrangements. For residential development, the government proposes indexing the levy to a three-year smoothed average of the annual local house price index. This is to address the risk of volatility of house price index data, while retaining the close link with changes over time to the viability of development. For indexation of the levy on nonresidential development, the government proposes indexing to the consumer price index. This is a national index and it is proposed that there will not be any smoothing of the data. It is difficult to predict whether the proposals will have a significant impact on the value of CIL receipts at this stage. However, the proposed mix of indices will undoubtedly make actually calculating liabilities more complex, particularly for larger mixed-use schemes.

Q How useful a tool is CIL for enabling local planning authorities to collect funds for infrastructure generally?

A For local authorities such as Islington, CIL is still a useful mechanism for securing funding for infrastructure that can be used to mitigate and support development throughout the borough. It can be pooled to support the delivery of more strategic infrastructure in the borough as well as being used for match funding in funding bids, while the neighbourhood portion also means it can deliver useful infrastructure at the local ward level. CIL also reduces the complexity and negotiations required for our section 106 agreements because we no longer seek contributions for general infrastructure improvements.

Q What is the impact of multiple alterations to the regulations?

A This round of modifications proposes wide and varied changes, which reaffirms the need for a single consolidated version of the regulations. Interpreting the regulations through revisions is challenging not only for those of us who use them on a daily basis but particularly so for smaller organisations such as self-builders. Murray Bridgwater is a CIL officer at Islington Council

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