Without doubt, one area of the Levelling-Up Bill that raises more questions than answers is the Infrastructure Levy (IL) and the Government’s proposed overhaul of developer contributions and affordable housing.
What is certain is that we have lost the ‘National’ from the originally proposed National Infrastructure Levy set out in the 2020 Planning White Paper. Instead, the newly-proposed IL would be set and collected by Local Authorities.
It was this single, nationally-set levy that the Government previously highlighted as being crucial in accelerating and simplifying the planning process.
With the new requirement for every local authority to assess, examine, set, and keep up to date their own IL charging schedule this isn’t a simplification of the current system. Indeed, in parts, it sounds very familiar to the advent of the Community Infrastructure Levy (CIL) regulations. Furthermore, with it now being 12 years since the publication of these regulations and with many local authorities yet to introduce their own CIL Charging Schedule for concerns related to stifling development viability, it remains to be seen, particularly in lower value areas, whether a mandatory IL will have the positive effect that the Government is intending.
A further part of the challenge is delineating to what extent – fully, partially, or not at all – the new IL would replace the current twin track approach of CIL and Section 106. Larger schemes and those in London and other Mayoral cities may indeed need special treatment, but there is also the question of which mechanism will be used to secure non-financial obligations that currently sit within Section 106 agreements. While the extended use of planning conditions may pick up some of the slack, conditions are unlikely to be appropriate to secure all measures intended to make development acceptable in planning terms.
The definition of “infrastructure” in the Bill covers, amongst other things, roads, schools, healthcare, open spaces and affordable housing – all necessary for new housing to succeed. Flexibility to update these definitions is welcome, although this also means the potential for local authorities to use IL on measures not related to infrastructure. The Planning White Paper went as far as suggesting that it could be used to reduce Council Tax, so there is also the potential that IL could be used to plug gaps in Council budgets, which certainly seems to undermine the purposes of a levy associated with infrastructure.
The definition of development matters too. In the Bill it covers everything from new build development to change of use and it is also clear that IL charges can vary by land use and by micro location. Again, this is not so different to CIL so other than the intended switch from a calculation linked to floorspace generated to a calculation linked to development value, it is questionable how really different IL is and whether or not it will accelerate and simplify the planning process as the Government intends.
Clearly the system needs improvement, and greater clarity, certainty and transparency for everyone as this Bill passes through both Houses will be paramount.
At the moment, though, these are very early stages and – without question – business as usual must be the approach to take.