Our recent “Future of CIL” event ended with an almost unanimous show of hands in support of the question as to whether the audience thought we should tackle some form of land value capture system.
It was a very telling ending to an event entitled the “Future of CIL” with the CIL Review Chair, Liz Peace CBE.
The CIL context
The idea of CIL was, of course, that there would be a simple mechanism for levying a charge on all development, with no exceptions. Developers would know in advance of the fixed sum they had to contribute towards funding infrastructure and Local Authorities would have more money to fund it. Indeed, a fair and transparent method of land value capture from planning permissions.
In theory this sounded like a good idea. In practice however, as one of our audience members eloquently pointed out “CIL has been remarkably unfocused and simply an irritant”.
Since the CIL system began in 2010 there have been amendments and technical changes nearly every year, huge disparities in take up and a general disappointment as to the revenues raised from it. In fact, as Liz Peace highlighted, a whole new industry was created around “working the CIL system”.
It is no wonder that the Government commissioned a review.
Whilst the discussion in the room focused on several elements of the identified remaining challenges of CIL, the audience was particularly interested in two aspects.
The Neighbourhood Portion
Liz Peace felt that the Neighbourhood share allocated to Parish Councils (15%/25% of CIL receipts depending on whether a Neighbourhood plan was in place) was a “disaster” – taking away much needed funds for Local Authority priority infrastructure projects and for purposes that were often unclear. Indeed, I myself was asked at a recent meeting with a Shire Town Council (in an area with ongoing major development projects) as to whether they could use their portion for a flat for the Town clerk as they had few other ideas.
One member of the audience felt that a generous Neighbourhood share would perhaps make development more acceptable to communities. But our Chair (Celina Colquhoun, a senior barrister from No5 Chambers) pointed out that, from her experience, communities “will not be bribed”. Indeed, one London Planning Department head in the audience explained how, having just done their first round of neighbourhood allocations (which varied from new seats by a bus stop to sound proofing a music room) “probably” did not make Development in her area any more acceptable to her residents.
Another development expense
From the Developers in the room there was a clear message.
As one participant put it “I hate that I have to think how much I have to bribe [the Local Authority] with in order to get consent for [a] Development?”
The point was made that if the Government wanted to encourage development and help smaller housebuilders then the Review should have looked at how s.106 was a legitimate charge to mitigate the impact of development. CIL however, yet again, increased the costs of new development and was thus a disincentive.
Liz Peace felt that there must be a system that pays for whatever is needed to mitigate Development– a mechanism that is solely there for that, which a Developer pays and the Local Authority spends. She explained further that s106 got stretched and stretched and actually needed to be pulled back to what the legislation intended – a sum mitigating Development.
One further point raised by a London Borough senior officer, was that there was a difference between mitigation of development in policy terms and in voters’ eyes. The impact of development – pressures on schools and roads etc.- can be seen as both negative and positive. The problem was actually that monies were needed upfront in the planning stage of the Development to be seen “mitigate” from the start.
Liz Peace agreed that the issue of Local Authority borrowing was one that needed to be explored further (and pointed out that borrowing against CIL revenue was in the regulations but had never been enacted).
And what was the Government reaction to the review recommendations?
According to Liz – very little.
February’s Housing white paper announced that a statement on the reform of CIL would be made in the budget on 22nd November. So, we will just have to wait a little longer.
But whatever comes out from that budget, the Review author and our audience were clear – What is needed is something more radical – something that really and effectively deals with land value capture.
Planning Futures will seek to find answers to that conundrum next year.
Many thanks to our event chair, Celina Colquhoun (No5 Chambers), and to our speaker, Liz Peace. The audience comprised of a specially selected group of sector stakeholders including Local Authority members and officers, planning consultants, developers and land owners.