Q21. When new development happens in your area, what is your priority for what comes with it?
[More affordable housing / More or better infrastructure (such as transport, schools, health provision) / Design of new buildings / More shops and/or employment space / Green space / Don’t know / Other – please specify]
Local authorities need the ability to create communities that have the necessary social and physical infrastructure for current and future residents. Local authorities, through engagement with their communities, are best placed to decide what will be prioritised in their area.
Q22a Should the Government replace the Community Infrastructure Levy and Section 106 planning obligations with a new consolidated Infrastructure Levy, which is charged as a fixed proportion of development value above a set threshold?
[Yes / No / Not sure. Please provide supporting statement.]
Councils play a central role in driving regeneration, revitalising communities and creating the right mix of homes and jobs to enable them to thrive. It is vital that new occupants of homes and wider communities get the infrastructure they need, and that councils are able to source sufficient funding for this infrastructure in line with Local Plan ambitions.
It is important to point out that the existing Community Infrastructure Levy (CIL) proposed in Proposal 19 is one tool available to councils but it does not and cannot meet the whole infrastructure needs in an area and generally constitutes a low proportion of infrastructure funding. When CIL was first introduced it was based on the principle that all development would contribute to infrastructure across an area. Unfortunately, the Government’s execution of CIL, including the list of regulations and subsequent changes to these (including a number of national CIL exemptions) have limited its effectiveness as a tool to raise funding for infrastructure to support new development.
Without seeing further detail, it is difficult to take a view on whether the government should introduce a new consolidated Infrastructure Levy. We are concerned at first sight that the proposed Infrastructure Levy will also not be able to fund all necessary infrastructure, as well as affordable homes requirements, which will inevitably result in difficult trade-off decisions needing to be made.
In particular, it is unclear what impact these reforms would have on the overall level of developer contributions and their distribution across the country, or on the number of on-site affordable homes provided. The huge variance in final development value of developments across the country, even within individual local authority areas, could result in some areas having greater capacity to benefit and fund local infrastructure needs and secure affordable homes than others.
It is crucial that local government is involved in the design of any new system for securing developer contributions. Councils will also need additional resources in order to successfully meet any new responsibilities.
Finally, whilst the existing systems of CIL and section 106 planning obligations is far from perfect, it is a well understood mechanism for securing infrastructure contributions, including affordable housing. There is a risk that a fundamental change to the existing system and uncertainty about the government’s strategic direction on the future of securing developer contributions results in a hiatus of development, as developers wait to see what a new system looks like. It may also result in delay and additional costs to councils who are already in the process of developing a CIL, as well as acting as a disincentive to those considering putting a CIL in place.
Q22(b). Should the Infrastructure Levy rates be set nationally at a single rate, set nationally at an area-specific rate, or set locally?
[Nationally at a single rate / Nationally at an area-specific rate / Locally]
Any new Infrastructure Levy rate should be set locally, as a nationally set rate will not be able to reflect the wide variance in ability to capture different levels of land value uplift on developments across the country.
Viability should also be removed as a material planning consideration, as this is all too often used to reduce contributions from developers and/or reduce build quality.
Q22(c). Should the Infrastructure Levy aim to capture the same amount of value overall, or more value, to support greater investment in infrastructure, affordable housing and local communities?
[Same amount overall / More value / Less value / Not sure. Please provide supporting statement.]
As an absolute minimum, any new Infrastructure Levy should aim to capture at least the same amount of value as the existing system at an individual local authority level, rather than a national figure. However, if the Government is serious about improving the existing land value capture mechanisms, any new model should strive to deliver a significant uplift in the amount of value, compared to the current system, to support greater infrastructure investment.
It is also important to note that existing contributions either through Section 106 or Community Infrastructure Levy rarely reflect the full infrastructure costs to an area, meaning there is a large infrastructure funding gap across the country. For example, London has an infrastructure funding gap of £1.3 trillion; the “Oxford corridor” has an aggregate funding gap of more than £178 million; Cornwall has a residual infrastructure funding gap of more than £659 million; Harrogate has an infrastructure funding gap of at least £98 million.
Consideration also needs to be given to the fact that house prices in some areas will never generate sufficient land value uplift to fund all the infrastructure required, including affordable housing. If we are truly to level up the country, investment will be needed from the Government in infrastructure and land remediation in many parts of the country.
Q22(d). Should we allow local authorities to borrow against the Infrastructure Levy, to support infrastructure delivery in their area?
[Yes / No / Not sure. Please provide supporting statement.]
Yes, in principle we would support this proposal should an Infrastructure Levy be brought forward. One of the longstanding issues with the CIL is that whilst the powers to enable local authorities to borrow against CIL do exist, the current regulations prohibit this. CIL regulation 60 states that borrowing is allowed on zero per cent of CIL receipts, in the absence of a direction from the Secretary of State setting a higher percentage. Such a direction has never been issued. There is one exception that was introduced in 2019, which is that the Mayor of London is able to use CIL in order to repay money borrowed to deliver Crossrail.
We are however concerned that the consultation paper appears to suggest that one of the key mechanisms for funding upfront infrastructure would be by local authority borrowing (para 4.13), which would then be recouped from the Infrastructure Levy received on completion of developments.
One of the challenges of borrowing against the Infrastructure Levy, as with the current CIL, is that it is likely to be a highly cyclical funding stream, so borrowing against it is risky. Therefore, whilst the flexibility of local authorities being able to borrow against future Infrastructure Levy receipts is a positive measure and therefor welcome, there should not be a national expectation that this will be one of the primary routes for upfront funding of infrastructure.
There should also be a mechanism for phased payments of Infrastructure Levy throughout the course of a development, which has multiple advantages for local authorities compared to the payment at the completion of a development, where – in the absence of government funding - local authorities would have to fund themselves any upfront infrastructure required for a site and cover associated cash flow costs and risks. For example, a development might remain uncompleted for many years, may undergo multiple re-submitted planning applications or may simply sit dormant, meaning that the council may be unable to recoup its costs.
Should an Infrastructure Levy be introduced regulations should also clarify that receipts received by a local authority can be passed to another body where this is to reimburse expenditure already incurred by that other body; for example, when they have acted as a forward funder, in cases where a developer is unable to fund the required investment at an early stage of a development.
Q23. Do you agree that the scope of the reformed Infrastructure Levy should capture changes of use through permitted development rights?
[Yes / No / Not sure. Please provide supporting statement.]
Yes. Our view regarding Proposal 20 is that permitted development rights remove the ability of councils and local communities to shape the area they live in and ensure homes are built to a high standards with the necessary infrastructure in place. On that basis, they should be rescinded. Notwithstanding our view, if the Government is minded to continue with permitted development rights allowing change of use, we would in principle support the proposal for any reformed Infrastructure Levy to capture changes of use through permitted development rights. Local authorities should also be able to require on-site affordable housing provision on these types of development, where appropriate. The consultation is not clear whether that would be possible. The exemption of self- and custom-build development should also be removed from any new Infrastructure Levy.
Any reformed Infrastructure Levy should also cover all developments, including minor developments – covering both infrastructure and affordable housing contributions.
Q24(a). Do you agree that we should aim to secure at least the same amount of affordable housing under the Infrastructure Levy, and as much on-site affordable provision, as at present?
[Yes / No / Not sure. Please provide supporting statement.]
Yes – in principle, although the consultation document is light on detail and so it is unclear how Proposal 21 would be achieved in practical terms. There is no detail provided as to: how options for the delivery of affordable housing will actually work; how prices and value will be set; how to deal with land transactions and tax implications; or how changing circumstances and/or market fluctuations would be taken into account. These are all significant, complex issues that will require detailed legislation and could introduce delays in the system.
We are concerned that as the case with CIL now, the Infrastructure Levy will simply not be able to fund all necessary infrastructure, as well as affordable homes requirements currently captured through section 106 and so there will need to be appropriate trade-offs made. The consultation is silent on this point. We are also not clear on what the baseline for the ambition of securing at least the same amount of affordable housing is. To illustrate, there were a number of changes proposed to affordable housing delivery in the Changes to the current planning system consultation, which will reduce the amount of affordable housing. Is the baseline before or after these changes, for example? Similarly, there has been a downturn in housebuilding since COVID-19 hit, which will also have had a knock-on effect on affordable housing delivery. Is the baseline before or after COVID-19?
Although there should be flexibility for local authorities to decide how receipts from the Levy are used, there is a risk that if priority is given to affordable housing delivery, the limited size of the total pot will mean that less funding is available to provide the infrastructure needed as a result of new development. More detail needs to be provided on how the Infrastructure Levy will align with the proposed national Single Housing Infrastructure Fund and other funding streams, to ensure that there is sufficient funding provision for strategic and local infrastructure.
We agree that any Levy should deliver as much on-site affordable housing provision as possible, although it is not clear what powers local authorities would have to mandate this. Delivering a well-integrated variety of homes of different types and tenures is vital in supporting mixed and balanced communities but the consultation document is light on detail on how this can be achieved. Local authorities also need the powers to determine the tenure mix of any affordable housing provision, to ensure it meets local need.
Q24(b). Should affordable housing be secured as in-kind payment towards the Infrastructure Levy, or as a ‘right to purchase’ at discounted rates for local authorities?
[Yes / No / Not sure. Please provide supporting statement.]
There should be flexibilities for local authorities to do either.
Q24(c). If an in-kind delivery approach is taken, should we mitigate against local authority overpayment risk?
[Yes / No / Not sure. Please provide supporting statement.]
We support the principle of mitigating against local authority overpayment risk. However, we do not support the proposal that market volatility could be addressed by allowing a developer to change affordable housing into market housing – thus reducing affordable housing supply, as opposed to for example, the developer reducing their profit margin. It is crucial that local government is involved in the design of any new system for securing developer contributions.
Q24(d). If an in-kind delivery approach is taken, are there additional steps that would need to be taken to support affordable housing quality?
[Yes / No / Not sure. Please provide supporting statement.]
In principle we support the proposal that local authorities could have an option to revert to cash contributions if no affordable homes provider was willing to buy homes due to their poor quality. However, there should be no excuse for any poor-quality homes to be built - they are homes that once built someone will inevitably end up living in. There needs to be a much more robust mechanism to ensure all new homes are built to a recognised level of quality. This could be delivered through a requirement to meet specific housing and design sustainability standards. For example the Mayor of London, has housing design standards for the Homes for Londoners: Affordable Homes Programme 2016-21. This covers environmental standards; space and accessibility standards and security and access standards.
Q25. Should local authorities have fewer restrictions over how they spend the Infrastructure Levy?
[Yes / No / Not sure. Please provide supporting statement.]
Yes - in principle local authorities should have flexibility on how they use any newly introduced Infrastructure Levy to deliver local policy priorities (Proposal 22).
Q25(a). If yes, should an affordable housing ‘ring-fence’ be developed?
[Yes / No / Not sure. Please provide supporting statement.]
No. Please see answer to question 25.
Q26. Do you have any views on the potential impact of the proposals raised in this consultation on people with protected characteristics as defined in section 149 of the Equality Act 2010?
Issues of digital exclusion will need to be addressed to ensure all residents can engage equitably in the planning process and be informed about planning decisions affecting them. Councils need to be given the appropriate resources to ensure that they can support their communities through the transition and adoption of any new process, as well as the ongoing use of digital platforms as part of a more digitalised planning system.
Many communities do not have access to the quality or speed of broadband required to engage in the new Local Plan or Neighbourhood Plan approach as proposed. Some members of the public may either not be able to or not wish to engage digitally, and some aspects of the process may be better undertaken in person. The planning process and timeframes needs to allow the time and resources required to undertake a mix of genuine forms of engagement.