What is the Community Infrastructure Levy (CIL)?

The community infrastructure levy is a new local levy that authorities can choose to introduce  to help fund infrastructure in their area.

When did CIL start?

The CIL regulations came into force on 6 April 2010.

What you need to know about CIL

For those of you that require a detailed knowledge of CIL and are intending to set a CIL in your area you will need to read the relevant section of the 2008 Act (Part 11, paragraphs 205-225), the regulations and the guidance provided by CLG.

The community infrastructure levy: an overview  - on the Communities and Local Government (CLG) website

This overview includes a short explanation of the CIL regulations and explains what CIL will be used for and how it will work.

Community infrastructure levy guidance: charge setting and charging schedule procedures - on the CLG website

This document provides specific guidance on setting a CIL and creating a charging schedule.

Planning Act 2008 - on the OPSI website

The Community Infrastructure Levy 2010 Regulations - on the OPSI website

Community Infrastructure Levy (CIL): a brief introduction

This note is for those who only need a general understanding of CIL and will not have to implement the regulations. It should give you a general grasp of what it involved.

• What is CIL for?
• Calculating CIL
• Exemptions
• Collection, enforcement and monitoring
• Using s106 Obligations
• Advice for planners: what you should be doing
• Support 
• Further Resources

What is CIL for?

CIL will help pay for the infrastructure required to serve new development. This includes development that does not require planning permission. CIL should not be used to remedy pre-existing deficiencies unless the new development makes the deficiency more severe.

CIL can be charged by local authorities in England and Wales – but they do not have to.

Councils must spend income from the levy on infrastructure but they can decide what infrastructure to spend it on and it can be different to that for which it was originally set. Authorities should set out on their Web site what they will use CIL for.

Calculating CIL

CIL will be charged per square metre net additional increase of floorspace on most buildings that people normally use. It is not just for housing.

The levy should be based on evidence of the infrastructure needed.  This should be balanced against viability. In reality, it is likely that viability will set the level. It is helpful to remember that CIL is not intended to be the main source of finance for infrastructure.

CIL is considered to be more transparent and straight forward than using s106 obligations to fund infrastructure, especially large infrastructure projects.

CIL payments will be indexed.

In setting a charging schedule there is a consultation requirement and the schedule will be independently examined. The examiners recommendations are binding.

Differential rates of CIL can be set based on uses and/or area.

CIL can be paid in kind

Exemptions

There is CIL exemption for social housing and development used for charitable purposes (there can also be discretionary relief for charitable investments).

The CIL Regs allow authorities to offer CIL relief in exceptional circumstances where the specific scheme cannot afford to pay it - but there are conditions.

Affordable housing is not included in CIL. This should be provided through s106.

Collection, enforcement and monitoring

Collecting authorities are in most cases the charging authorities.

Charging authorities include:

• Districts
• Unitaries
• Metropolitan councils
• London Boroughs
• London Mayor
• National park authorities and the Broads

Note that this does not include county councils. However, the county councils will collect on developments for which it gives consent.  In London the boroughs will collect CIL for the Mayor. The Homes and Communities Agency (HCA), development corporations and enterprise zones can also collect if the relevant charging authority agrees.

There is a significant bureaucracy relating to collecting and enforcing. Payments over £10,000 can be collected in instalments. Up to 5% of the total CIL can be used to administer CIL. The collecting authority may keep up to 4%.

There are extensive enforcement powers related to CIL including stop notices. Ultimate liability for CIL rests with (and can default to) the landowner but anyone can come forward and assume liability.

Authorities will be required to monitor and report annually on CIL collection and spending.

Using s106 Obligations

S106 can still legitimately be used for site specific mitigation measures.

S106 can still be used to for pooled contributions for infrastructure that can be collected by CIL up to April 2014 (or until a CIL has been adopted).

S106 can be pooled for up to 5 developments where infrastructure is not locally intended to be funded by CIL.

It is unlawful for a planning obligation to be taken into account when determining a planning application for a development, or any part of a development, that is capable of being charged CIL if the obligation does not meet all of the following tests:

1. necessary to make the development acceptable in planning terms;
2. directly related to the development; and
3. fairly and reasonably related in scale and kind to the development.

Developments which are capable of being charged CIL includes most buildings that people normally use. Such development is considered capable of being charged CIL for the purpose of these tests whether there is a local CIL in operation or not. For developments that are not capable of being charged CIL, the policy and policy tests in Circular 5/05 continue to apply.

Changes to planning obligations

Planning obligations consultation - on the CLG website

The consultation on a new policy document for planning obligations is now underway. The deadline for responses is 17 June 2010. A new policy document is required in light of the introduction of the Community Infrastructure Levy (CIL) and reforms to planning obligations brought about by the Final CIL Regulations 2010 that came into force on 6 April 2010. In its final form, this policy document is intended to replace the Government's current policy contained in Circular 5/05: Planning Obligations, and form an annex to the new Development Management Planning Policy Statement.  

In the meantime, the policy in Circular 5/05 continues to apply.

Advice for planners: what you should be doing

Infrastructure delivery plans

Look at your infrastructure planning and consider what evidence you have to assist you in creating a charging schedule and whether that will stand up to independent examination. 

Make sure that processes for infrastructure planning and developing the CIL charging schedule are fully integrated, involving the full range of partners including the local strategic partnership and with clear governance arrangements. The output should be a rolling delivery programme which will provide the basis for the CIL schedule and for review and monitoring of infrastructure delivery.

Viability

Gather viability evidence for your area and those proposed developments contained in your strategy. Consider whether or not there are significant differences between the value that can be achieved by developments in your area, and the values of different uses (differential values).

Re-use existing work

If you are working on policies for tariffs or standard charges through S106 look at the potential for conversion to a CIL charging schedule. Think about how to use the evidence that you have, and what further valuation evidence and sensitivity testing you may require.

Governance

Consider what governance, administrative and monitoring structures that you will need to have in place to charge, collect and monitor CIL. Discuss these with colleagues in finance (collection and audit) and legal (standing orders and land charges). There will need to be very clear and transparent corporate processes for administering the funds. This should include collaborating with partners to allocate and prioritise spending.

The infrastructure planning process and the resultant delivery programme underpinning the CIL charging schedule will form the basis for allocating CIL spending in a clear and transparent manner.

Brief others

Infrastructure planning is fundamental to the delivery of the vision for the area, as expressed in the sustainable community strategy and core strategy.
An effective infrastructure plan should be owned by the authority corporately and by the local strategic partnership. It should not be seen just as a planning document or activity. If this is not the case in your authority work at getting this message across. An effective infrastructure plan can be used corporately for the Community Infrastructure Levy, Local Investment Plans, Total Capital and asset management plans.

Robust infrastructure planning needs involvement and commitment from a wide range of agencies and providers. They will need convincing that it is in their interests to sustain their enthusiasm. Think carefully about how they should be approached and who should be involved and how you can build lasting relationships.

Make sure senior colleagues and members including the Chief Executive and the Finance Director are briefed on the CIL Regulations. The potential income stream will be attractive but make sure they understand:

• the procedural issues (up to date  plans, infrastructure plan, charging schedule, public examination) 
• timescale implications 
• CIL is for top up funding and does not replace mainstream sources.

Support  

PAS support for infrastructure planning

Further Resources

The Community Infrastructure Levy - on the Communities and Local Government website

London Thames Gateway Social Infrastructure Framework  - on the Healthy Urban Development Unit (HUDU) website. This was developed to establish an overall methodology through which social infrastructure needs and the delivery of new facilities could be considered.  Includes a Toolkit to Guide Decision Making at the Local Level.

NHS London Healthy Urban Development Unit Model - on the HUDU website. This model enables a full appreciation of health service requirements resulting from a new residential or mixed use development.

The Advisory Team for Large Applications (ATLAS) 

ATLAS has been created to guide stakeholders through the town planning process in relation to large, complex or strategic development projects. 

The ATLAS paper on social infrastructure provides information to assist in planning for new social infrastructure as part of large scale development projects

The ATLAS paper on financial appraisal and project viability explores the role of financial appraisal and project viability in the planning process and provides a general introduction to:

• financial appraisal process
• key components of project costs and values
• potential sources of comparable evidence.

Cambridgeshire Horizons

Cambridgeshire Horizons is the not-for-profit organisation charged with driving forward sustainable growth in Cambridgeshire. Its aims include co-ordinating development and infrastructure implementation and securing funding commitments for infrastructure.

Milton Keynes

A long-term vision for Milton Keynes was developed through the MK 2031 project. The strategy for growth, completed in June 2006, looked far enough ahead to provide a platform for major economic and cultural development and also took into account the qualitative and quantitative changes required in education, health and social care alongside major physical infrastructure.

MK 2031 project
Milton Keynes strategy for growth