The Community Infrastructure Levy (CIL) is not raising as much money as anticipated and needs significant reform, a Government-commissioned report has found.
The report found 'evidence that CIL is not raising sufficient revenue to contribute effectively to the funding of the infrastructure needed to support development’ and that infrastructure funded by CIL is not being delivered in a timely manner.
It argues that councils’ inability to borrow against future income can delay development.
The report, A New Approach to Developer Contributions, by an independent team of experts was published alongside the Housing White Paper.
The CIL Review Team, which submittedthe report last October, recommends a ‘twin track system…that captures the best of both worlds’.
The low-level tariff would be called the Local Infrastructure Tariff (LIT) and ‘should be applied to all development, almost without exception,’ the report says.
Larger developments that could be characterised as ‘large’ or ‘strategic’ and require direct mitigation or very specific major infrastructure would also be subject to obligations under the Section 106 system.
Financial contributions under this system would continue to be collected by the relevant local authority and, where appropriate, passed to the body that provides the relevant infrastructure.
In addition, CIL transfers construction risk from developers used to delivering large projects to local authorities – often smaller districts – ‘which lack the technical and professional skills or financial capacity to deliver’.
CIL also created tension between district and county councils, who do not necessarily have the same spending priorities.
The Housing White Paper said the Government would examine the options for reforming the system of developer contributions and make an announcement at the Autumn Budget.