Draft Community Infrastructure Levy (Amendment) Regulations 2018
(Limited Text - Ministerial Extracts only)
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The Minister for Housing (Dominic Raab)
I beg to move,
That the Committee has considered the draft Community Infrastructure Levy (Amendment) Regulations 2018.
It is a pleasure to serve under your chairmanship, Ms McDonagh. The draft regulations were laid before the House on Wednesday 13 December 2017. If approved, they will help to ensure that contributions to the community infrastructure levy are calculated in line with the original policy intent.
The Community Infrastructure Levy Regulations 2010, which came into force in April 2010, enable local planning authorities and the Mayor of London to raise a levy on new development in their areas. The CIL can be used to fund a wide range of infrastructure to support the development of the area where it is collected. Local authorities raised at least £240 million through the CIL in 2016-17 to help fund local infrastructure, and the Mayor of London’s CIL raised £381 million towards Crossrail by 2016-17. As I said, that money can be used to fund a wide range of infrastructure that is needed as a result of development, including safer roads schemes, flood defences, preservation of green spaces and even leisure centres.
The draft regulations will strengthen the Government’s original intention regarding the relationship between the obligation to pay CIL and amendments to planning permissions. As hon. Members will know from their constituencies, amendments to developments are often made using what is known as a section 73 permission under the Town and Country Planning Act 1990. Those permissions are used to make minor but material adjustments to large-scale, long-term developments. For example, a developer might seek permission to build a different type of flat from the one that was originally permitted, perhaps because of shifts in demand, in the needs of the community or, indeed, in viability.
The draft regulations make clear that any new CIL should be charged only on the change to the development made through the section 73 permission, not on the whole project. In addition, indexation should be applied only to that particular change, not to the entire development. To be clear, the draft regulations relate only to developments that were permitted prior to the CIL coming into force, and they apply only when such developments are amended after the CIL was introduced. That means that a developer will not be double-charged on work that was permitted before the levy was introduced in the area. However, they will be liable to pay the levy on any changes to their planning permission that have the effect of increasing the development’s impact on infrastructure.
We think that is the right balance. Without this amendment, developers could end up facing CIL charges that are not just double but multiples of—possibly six times—what the Government intended. If approved, the draft regulations will strengthen the Government’s policy intent and ensure that the CIL works fairly and does not hold back vital developments. They have been widely welcomed by organisations including Wandsworth Borough Council and Peabody housing association, and by affected planning consultants and developers.
The draft regulations will provide additional clarity to ensure that the 2010 regulations operate as originally intended. If approved, they will ensure that the CIL continues to help fund vital infrastructure in local communities without impeding development. I commend the draft regulations to the Committee.
Dominic Raab
We have had some very insightful and thoughtful contributions. I thank the shadow Minister for her kind words and look forward to working with her in the future on CIL and on many other housing matters.
My first point in relation to her comments is that CIL should be charged only on changes to development and the indexation. That is the only way these regulations will bite. They will not affect the rate, which I think is the technical point that she raised.
Dr Blackman-Woods
I do not think my point was about the overall rate of CIL; it was about the rate of indexation. I thought the purpose of the SI was to ensure that the same rate of indexation is used, rather than to change the overall CIL.
Dominic Raab
I thank the hon. Lady for that clarification. I think we are agreed on that point. There has been no change to the rate. The indexation applies to the specific change; it does not apply to pre-CIL matters or applications.
The lack of clarity relates to an application originally brought by Peabody, a registered provider of affordable housing, and a judicial review involving Wandsworth Borough Council. I make that point because we are trying to ensure that the original intention of the 2010 regulations is enforced. Those regulations almost invariably have been properly applied by local authorities, in accordance with the original intention, and accepted by developers. That case is a fairly isolated incident of the wrong interpretation being applied. None the less, for the sake of developers, local authorities and communities, we want to ensure that there is proper legal certainty.
My hon. Friend the Member for Bosworth raised the issue of CIL’s application to the whole country rather than just to London. I hope that I made this point in my opening remarks, but I am happy to reaffirm it: in the wider country, £240 million was raised through CIL last year. CIL is certainly not just a metropolitan or London-centric issue; it applies to the whole country. We are trying to ensure that, where there is much-needed homebuilding, infrastructure is provided, too. CIL is an important contribution to that, certainly not just in London.
My hon. Friend also asked about section 106. That is, in effect, the negotiated contribution that a developer makes, bearing in mind the infrastructure that is required and the viability of the development. The distinction is that that is agreed, whereas CIL is, in effect, levied, but both are critical. We want to ensure that we provide the homes we need in the places we need them, with the necessary infrastructure and funding.
The hon. Member for Bassetlaw, in his usual tub-thumping way, criticised the legislation. He made some perfectly reasonable points. I gently point out to him that the primary legislation for CIL was passed under the last Labour Government, but in the spirit of co-operation, if he has any further ideas or thoughts about the legislation or its application to his constituency, he should feel free to write to me.
John Mann
CIL’s introduction, and the regulations that came with it, came in 2012. It was raised first with the Chancellor at the Treasury Sub-Committee, and then in the House by me and the Minister’s colleague—I cannot remember where he is from, but his first name is Richard and his surname is rashers of pork that are eaten on a morning. He is a very good man, and he and I campaigned to get the CIL down to something rational. I want to know about my constituent who is putting in his own money to do up a derelict property and is getting taxed for the privilege. That does not seem to be the intended consequence, but it is the fact of the matter. That is not good news for someone who is trying to invest.
Dominic Raab
I thank the hon. Gentleman. I am not familiar with all the facts of the case. If he would like to write to me, I am happy to address them. I was simply making the point about the primary legislation. There ought to be cross-party support for an important mechanism to provide targeted investment where homes are needed.
The hon. Member for Harrow East—
Dominic Raab
I apologise—the hon. Member for Harrow West raised a local case. There are two points. Of course, I sympathise with the kind of situation he described in his constituency. We are absolutely not going soft on developers, although, frankly, I am not really sure I buy into that whole hard-soft idea. We want a smooth, streamlined approach with maximum legal certainty so that we can provide the homes we need, and with respect for local democracy in our local communities, while ensuring that we get the targeted investment to support the infrastructure that goes with housing. That is how we carry constituencies with us, whether it is his, mine or any other across the country, as we go through that vital national mission of building the homes we need.
Dr Blackman-Woods
I am grateful to the Minister for giving way. He is being very generous. I and all of us on the Opposition Benches accept that this is all about legal certainty, but will the Minister also accept that the outcome is likely to be a reduction in the amount of CIL levied?
Dominic Raab
I thank the hon. Lady. I tried to address that earlier. Almost all the cases where the regulations were applied were in accordance and consistent with the original intentions of the regulations. What we are really responding to is that one isolated case. I suspect that if there is any impact on revenue, it will be negligible. That also has to be countervailed against the risk of having uncertain regulations, with all the litigations that would ensue if we did not straighten this out.
As the hon. Member for City of Durham said, the draft regulations are necessary to provide clarity and certainty. They will help to ensure that developers have the certainty required to continue to deliver the homes we need, and that local councils can continue to collect the funding for the vital infrastructure to support them. That is not about going soft on developers; it is about ensuring that we have a constructive relationship that builds the homes that this country needs.
Most development impacts on or benefits from infrastructure. It is right and fair that those who benefit from the uplift in values created by a new development should share some of that gain with the local community. I suspect that that is something we believe on a cross-party basis in this House, and I also believe that it is right for development permitted before CIL came into force to be treated fairly. I commend the draft regulations to the Committee.
Question put and agreed to.