The Planning for the Future white paper published in August 2020, setting out the Government's proposals for "once in a generation" reform of England's planning system, has proved controversial. This briefing from the House of Commons Library examines those proposals and the other planning changes already made during the Covid-19 pandemic.
Documents to download
Community Infrastructure Levy (1 MB, PDF)
History of the Community Infrastructure Levy 2010 – 2014
A system of charging for infrastructure associated with development has long been in place through section 106 agreements – sometimes known as “planning obligations” or “planning gain” . This system stems from agreements made under section 106 of the Town and Country Planning Act 1990, as amended. They are agreements made by negotiation between the developer and the local planning authority (LPA) to meet concerns that an LPA may have about meeting the cost of providing new infrastructure or about the impact on the local area. These agreements can require that, for example, the developer must provide, or pay for, a certain number of affordable homes in order to be given planning permission to build a development of market value homes. Section 106 agreements are legally binding and may be either in cash or kind.
The Community Infrastructure Levy (CIL) became the Labour Government’s preferred way of obtaining finance from developers for infrastructure. It was brought into force on 6 April 2010 by the Community Infrastructure Levy Regulations 2010, made under section 206 of the Planning Act 2008. The idea was that local authorities could choose the rate for the levy in their area, set at a rate per square metre. Variations were to be allowed between different areas within the planning authority, as well as by different intended use for development. It was envisaged that it would create a more transparent system, whereby developer contributions could be calculated upfront.
The Regulations empowered local authorities to impose a levy but did not compel them to do so. Local authorities can still use section 106 planning obligations, which remain an option, although the 2010 Regulations did introduce restrictions on their use.
The CIL as an incentive for house building
In January 2013, the then Government announced that in areas where there was a neighbourhood development plan in place, the neighbourhood would be able to receive 25% of the revenues from the CIL arising from the development that they had chosen to accept. The money would be paid directly to parish and town councils and could be used for community projects such as re-roofing a village hall, refurbishing a municipal pool or taking over a community pub. Neighbourhoods without a neighbourhood development plan but where the CIL was still charged would receive a capped share of 15% of the levy revenue arising from development in their area. The Government made clear that the aim of this was to incentivise house building.
This incentive came into force on 25 April 2013, through the Community Infrastructure Levy (Amendment) Regulations 2013.
Changes to the CIL in 2014
In April 2013, the Government published a consultation on further CIL reforms. The consultation proposed (amongst other things) to give relief from paying the CIL to homes built or commissioned by individuals, families or groups of individuals for their own use and that would be owner-occupied. The aim was to make it cheaper for people to self-build their own homes.
The Government responded to the consultation in October 2013. It confirmed that it would proceed with the majority of the proposals, including the proposed exemption from the levy for self-build homes.
The Community Infrastructure Levy (Amendment) Regulations 2014 brought all of these changes into force as of 24 February 2014.
More recent reviews and consultations
2015 Review of the CIL
In November 2015, the Government commissioned a review of the CIL.
The independent review group submitted its report to Ministers in October 2016. The report called for a new approach to developer contributions and recommended a twin track approach – combining a low level local infrastructure tariff (LIT) and Section 106 – describing this as “the best of both worlds”.
The Autumn Budget 2017 document set out how the Government wished to proceed in amending the CIL and section 106, subject to a further consultation. In the document’s section on the Cambridge – Milton Keynes – Oxford corridor (for example), the Government said that it would encourage authorities to make use of existing powers and to consider introducing a strategic infrastructure tariff, to sit alongside the CIL.
Consultation in March 2018
In March 2018, the Ministry of Housing, Communities and Local Government (MHCLG) launched a consultation on supporting housing delivery through developer contributions. This consultation document set out the perceived shortcomings of the current system and listed the Government’s five objectives for reform:
- reducing complexity and increasing certainty
- supporting swifter development
- increasing market responsiveness
- improving transparency and increasing accountability and
- allowing local authorities to introduce a Strategic Infrastructure Tariff to help fund or mitigate strategic infrastructure.
One area where change was proposed was setting the rate for CIL, where the consultation set out to overcome issues around setting CIL rates based on the type and scale of the proposed development and differences in the uplift in land values on granting planning permission. It therefore proposed that rates should be based on the existing use of land. The consultation also raised the possibility in the longer term of determining developer contributions nationally and making them non-negotiable.
MHCLG’s response to the consultation was published in October 2018.
Technical consultation in December 2018
Most recently, a technical consultation on draft regulations to reform developer contributions ran from December 2018 to January 2019. In it, the May Government set out its proposals around reducing complexity and increasing certainty, increasing market responsiveness (through indexation of CIL rates), improving transparency and increasing accountability, delivering starter homes and other technical clarifications.
The summary of responses to this consultation and the Government’s view of the way forward was published in June 2019.
The regulations enacting the changes are the Community Infrastructure Levy (Amendment) (England) (No. 2) Regulations 2019.
Adopting the CIL
Local planning authorities must publish details of any draft charging schedule and agreed charging schedule for the CIL on their website.
A study commissioned by MHCLG estimated that developer contributions through CIL were worth £945 million in 2016/17.
The CIL in London
The London boroughs and the Mayor of London all have powers as CIL charging authorities.
The levy in Greater London (MCIL1, since superseded) applied to developments consented on or after 1 April 2012, and was collected by London boroughs once development commenced. The Mayor designated that the CIL would be used to raise £300 million towards the delivery of Crossrail. Listing the infrastructure projects or types of infrastructure that the Mayor intended to fund in whole or in part by CIL also allowed the continued use of planning obligations (section 106 agreements) for other projects or types of infrastructure.
The second iteration of the Mayoral CIL (MCIL2) came into force on 1 April 2019, superseding MCIL1. MCIL2 will be used to fund Crossrail 1 (the Elizabeth Line) and Crossrail 2. The Mayor of London/London Assembly website explains the difference between MCIL1 and MCIL2.
Separate to the Mayoral CIL, each London borough is also entitled to set its own CIL charging schedule to gather funds to pay for new infrastructure within that borough. Although this will be an additional charge for development, boroughs must show that they have considered the Mayoral CIL when setting their own charge.
This note sets out all these issues in more detail. It applies to England and Wales only.
- For information about planning systems around the UK, see the Commons Library briefing Comparison of the planning systems in the four UK countries: 2016 update
- For more information on section 106 agreements, see the Commons Library briefing Planning obligations (section 106 agreements)
- Other Commons Library briefings on various matters to do with planning are available on the topic page for housing and planning
Documents to download
Community Infrastructure Levy (1 MB, PDF)
On Thursday 8 October, Bob Seely will introduce a debate in the House of Common Chamber on the formula used to determine new housing allocations in local areas. This is a debate determined by the Backbench Business Committee.
This note sets out the background to the Government's policy on freeports.