As part of its Levelling Up agenda, the government is proposing to improve the planning system through the introduction of an Infrastructure Levy (IL) which will replace the existing system of developer contributions (through section 106 agreements) and the community infrastructure levy (CIL).
IL will be a charge levied by local authorities, locally-set and non-negotiable. It will be a mandatory charge. The aim of the IL is to help location authorities to receive fairer contributions from landowners and developers and to create a swifter, simpler, more transparent system.
The Consultation:
The government is consulting stakeholders on the design of the IL. Responses will inform the preparation and content of the regulations that will set out its operation; these regulations will be consulted on as well. You should respond to the government’s consultation by 9 June 2023.
Key things to note about the proposed new IL and the consultation:
- IL will apply to all types of development, including changes of use through permitted development, unless an exemption applies. The IL will replicate some existing CIL exemptions and the government is seeking views on other appropriate exemptions.
- ‘Integral’ infrastructure will be delivered either through planning conditions or through targeted planning obligations – known as ‘Delivery Agreements’. Other forms of infrastructure will be funded instead by IL. Section 106 agreements do retain a role.
- IL will be charged on the gross development value (GDV) of a completed development. A key concern for the IL is to prevent impacts on deliverability and viability of schemes which the government is concerned could be the case if the IL is charged upfront. A later payment could enable local authorities to capture more value. The government is consulting on whether there may be circumstances where earlier payment would be suitable and appropriate.
- It will be possible to pass IL payments to third parties and to borrow against the future payment of IL. Given the proposed trigger for payment of IL, enabling local authorities to borrow against IL proceeds aims to mitigate concerns raised about local authority cashflows.
- IL rates and thresholds will be set by the LA and can vary based on the type of development and/or charging zones.
- Local authorities will be required to prepare infrastructure delivery strategies. These will need to set out how the authority expects to spend IL proceeds and include information such as what infrastructure would be required to support anticipated growth from the development, funding sources and setting out a spending plan. The Strategy will be subject to examination.
- The new “right to require” will allow LA’s to secure affordable homes as a portion of the IL liabilities. The government is asking for views on the proposed “right to require” and in what circumstances exemptions from the IL for registered provider-led schemes could be appropriate.
- A portion of IL can be retained to help fund local community priorities and administration of IL.
- IL will be listed as a local land charge and stop notices can be used to enforce the charge.
- IL will be introduced over a decade, through a “test and learn” process. Local authorities that are interested in becoming a “test and learn” authority are invited to express their interest.
- Sites permitted before the introduction of IL will continue to be subject to CIL and s.106 agreements and the government is seeking views on its proposed transitional and implementation measures and whether these will be effective.
More information can be found at the following link: https://www.gov.uk/government/consultations/technical-consultation-on-the-infrastructure-levy/technical-consultation-on-the-infrastructure-levy#topic-of-this-consultation
The consultation closes on the 9 June 2023 at 11:45pm. Local authorities, landowners and developers should all respond to the consultation. The proposed changes represent a huge shift in planning policy and will impact all those involved in the process when implemented. Don’t miss out on the opportunity to make your comments and ensure that the system will work for you.
This article is for general awareness only and does not constitute legal or professional advice. The law may have changed since this page was first published. If you would like further advice and assistance in relation to any of the issues raised in this article, please contact us today by telephone or email enquiries@sharpepritchard.co.uk.
