Pictured above: Gary Cardin

The Department for Communities and Local Government have released a long awaited statement regarding its proposals for reform of the Community Infrastructure Levy (CIL). As widely anticipated, this is not the complete dismissal as suggested in the pre election Planning White Paper but a reworking of the current legislation.

The statement notes that the Levy approach has been accepted by the coalition "as the best framework to fund new infrastructure to unlock land for growth" and is noted as being fairer, faster and more transparent than the existing planning obligations process.

The proposed changes to the regulations and their impact are briefly summarised as follows:

• A "meaningful proportion" of levy revenue will be allocated back to the neighbourhood in which it is raised. A definition of "meaningful" is not clarified but will no doubt be debated in time. Additionally there is no guidance as to who will control the locally returned monies or how decisions will be made on its expenditure; 

• Limit on inspectors influence over Levy charges. Examiners will only ensure that charging authorities are not setting unreasonable rates. Whereas, currently their recommendations are binding this will no longer be the case and authorities could choose to disregard any direction given as long as the issue of a "reasonable charge" can be proven; 

• More flexible charging arrangements.  This is a key change in that authorities will be able to decide the timetable of payments over the currently restrictive timetable. This may have a positive effect on the viability of development and levy payments if these can be phased over a longer period. Additional changes are proposed to the limits for payments in kind; 

• Approach to planning obligations to remain the same as before with limits over site specific only matters and a phasing out of current tariff systems by 2014; and 

• Draft regulations are proposed for release in the New Year, which should result in the amended regulations being brought into effect from 6 April 2011.

Gary Cardin, head of Drivers Jonas Deloitte's Birmingham office, comments: 

"In an uncertain planning environment, with regards to CIL at least, this is definitely a positive step forward from the state of unknown in which authorities find themselves post election.  Additionally these changes will not have any detrimental effect upon those already progressing CIL, meaning that existing work will not need to be undone.  

"However, this focus on locally retained funds will result in uncertainty regarding the proportion of Levy that will stay within the neighbourhood and how this reinvestment process will be managed and by whom. With the on-going constraints on the availability of capital and need for significant infrastructure, will this latest decision have the effect of widening the funding gap for critical projects which may not be considered to be of local interest?  Although it is possible for the neighbourhood communities to put their share into "larger projects funded by the Council" it is not clear how the decision process as to where to spend the cash will be made.

"However, on a positive note the CIL approach of a charge for all should ensure that the maximum possible capital is recouped from development to help towards the provision of new infrastructure, as long of course that the charge is set at a viable level. It has been widely reported that the S106 approach was resulting in only 6% of development paying towards infrastructure - effectively disregarding the cumulative effects multiple small sites have on local infrastructure.  CIL can't be expected to pay for the total infrastructure bill however, and a variety of other funding sources will also need to be utilised in conjunction with the Levy to deliver growth.

"For charging authorities looking to the future there is much to do to ensure that they are able to recoup capital for infrastructure post 2014 when the current systems such as tariff charges to offset the effect on infrastructure will cease to exist. Development of the Core Spatial Strategy (if not already adopted), the Infrastructure Delivery Plan and resultant charging schedule will take time and resource to complete. This long awaited decision confirms that action needs to be taken sooner rather than later to ensure that authorities are able to charge development for their infrastructure requirements."

For more information about Driver Jonas Deloitte, please visit their website here: www.djdeloitte.co.uk