Community Infrastructure Levy ("CIL") - A Work in Progress

Thursday 6th October 2011

Despite the fact that the CIL came into effect on 6 April 2010, only two councils have introduced it. The rules were amended in April of this year and further changes are proposed in the Localism Bill.

What is CIL?
CIL is a voluntary system designed to give local authorities additional funding to carry out local infrastructure projects. The levy is charged per square metre of the development and  Councils will have the flexibility to use the money in accordance with their own priorities. It is hoped that developers will have much more certainty about how much money they will be expected to contribute to infrastructure projects.

Setting CIL
Local authorities prepare a preliminary draft of the charging schedule and consult adjoining local authorities, county, parishes, the RDA, local residents and businesses.  The draft, relevant evidence and the representations procedure must be placed on deposit at offices, published on its website, sent to consultation bodies and advertised in press. The draft will then be subject to public examination. An independent examiner may make recommendations, and the CIL may only be set if any recommendations have been incorporated.

Paying CIL
A local authority must issue a demand notice to the developer for payment, but councils are able to set their own flexible payment deadlines. It is possible for the CIL to be paid in kind by way of a gift of land. If developers fail to pay, or if persons fail to otherwise carry out responsibilities under CIL, the local authorities may impose "surcharges" or even serve Stop Notices.

Planning Obligations
With the introduction of CIL planning obligations are being scaled back. New statutory tests on planning obligations for permissions given after 6 April 2010 have been introduced. Obligations must be necessary to make the development acceptable, directly related to the development and fairly and reasonably related in scale and kind to the development.

After 2014, or the adoption of CIL (whichever is sooner), local authorities will no longer be able to pool more than 5 planning obligations to a single project which could be funded by CIL. This in effect makes s106 tariffs which fund such projects inoperable. The appropriate mechanism for pooled contributions will be the CIL.

Proposed Changes under the Localism Bill
At the time of writing the Localism Bill is under scrutiny in the House of Lords and proposes a number of changes to the way the money can be used. It is proposed that money raised can be spent on maintaining infrastructure, as well as building new infrastructure. Furthermore, councils will be provided with greater freedom in setting the rate that developers should pay in different areas.  The Government also wants to reserve the power to require that some of the money raised from the levy go directly to the neighbourhoods where development takes place.

The Government recently found that 60% of local authorities were yet to commence on the initial stages of CIL. Many are still coming to terms with the implications of the current and proposed amendments for the scheme. The Community Infrastructure Levy is still very much a work in progress.

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