Government consults on changes to developer contribution rules

Out-Law News | 11 Jan 2019 | 3:54 pm | 1 min. read

The government is consulting on changes to developer contributions focussed on the operation of the Community Infrastructure Levy (CIL), which allows local planning authorities to raise funds from new development to help fund local infrastructure.

Developer contributions can be sought or required where additional public infrastructure such as new roads, schools and play areas is needed to support development such as the building of new homes. Developers contributed around £5 billion through case by case 'section 106' agreements with local authorities in 2016-17, according to government figures.

CIL has raised £940 million for those local authorities which have introduced it since 2010 but in its response (16-page / 273KB PDF) to a Housing, Communities and Local Government Select Committee report, issued last Autumn just before the consultation started, the government acknowledged that "there is scope for central and local government to claim a greater proportion of land value increases through reforms to existing taxes and charges."

Among other reforms, the consultation confirms the government's intention to lift the 'pooling' restriction on developer contributions. This development will give local authorities more flexibility to pool contributions in order to fund large-scale projects which benefit multiple communities.

Authorities will also be given more flexibility to spend the money received by way of developer contributions on a wider range of local priorities. They will also be subject to a new requirement to publish 'infrastructure funding statements', giving local communities more transparency over what has been collected and how it has been spent. The consultation includes draft regulations bringing in these changes, which are expected to be laid before parliament later this year.

The aim of the consultation is to make the rules surrounding developer contributions in England simpler, more transparent and easier to understand. Housing minister Kit Malthouse said that the changes would help to address the "lengthy and complex" process of negotiating developer contributions. However, as the recent response noted, "For decades, governments have sought to capture increases in land value, but with limited success".

"CIL itself was heralded as being 'faster, fairer and more certain' when it was introduced, but has not delivered what was expected and the rules have been found to be too complex and procedurally burdensome to operate effectively," said strategic planning adviser Sue Chadwick of Pinsent Masons, the law firm behind Out-Law.com.

"Any changes to CIL to make it simpler for developers and local authorities to apply and administer will be welcomed," said planning law expert Clare Mirfin of Pinsent Masons. "It will be interesting to see whether these changes deliver the intended positive benefit – being the realisation of a proportionately greater level of funding for infrastructure as a result of the grant of planning permission in a more straightforward way - or if the search for the holy grail of successful land value capture continues."