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Is levy too complex to work? DARRON BARKER, head of national commercial property consultancy Lambert Smith Hampton's Newcastle office, considers the Government's latest reforms to the Community Infrastructure Levy.

Byline: DARRON BARKER

THE Community Infrastructure Levy (CIL) is a new levy designed to enable local authorities to raise funds from developers undertaking large-scale projects in their area to pay for supporting infrastructure works.

It applies to all planning permissions in areas with an adopted CIL (including some permitted development) for new builds of 100sq m or more of gross internal floor space or one or more dwellings, even if below that threshold. Following a consultation by the Department for Communities and Local Government (DCLG) on CIL reforms in April 2013, new regulations were laid before Parliament in December 2013.

The main thrust of the reforms to CIL is a 12-month extension to the adoption deadline.

Although welcomed, it is rumoured that around 55% of councils will still miss the new deadline of April 2015 because of already overstretched resources and the mere fact that they will still be able to apply Section 106 planning obligations to specific developments.

So why the need for change? CIL was conceived by the previous government in very different economic circumstances from those that exist today. The theory was that Section 106 would become a minor element, however the main concern is that CIL will become one of three taxes that exist in parallel to affordable housing and Section 106 contributions. The economic downturn experienced in the North East region has given local authorities little encouragement to do away with Section 106 agreements and affordable housing. It is becoming increasingly apparent that CIL is viewed as an extremely complex tax that is proving very difficult to unravel and implement, particularly in the North of England, where development viability is a real issue.

The inappropriateness of CIL in a depressed marketplace is contributing to the failure to deliver development, which has been rendered even less viable than it was before.

There is a school of thought that says councils may see CIL charge rates as away of supplementing their income in order to counteract the squeeze on their budgets. Developers may well encounter situations where they are paying both under CIL and Section 106 agreements, which is actually prohibited under the regulations. The retail sector is concerned that some local authorities may be proposing a two-tier levy in the form of a higher charge for out-oftown retailers, which is being viewed as away of seeking to rebalance development towards the high street.

The reforms are intended to come into effect early this year. It will be interesting to see if the reforms do in fact unlock swathes of new development before the next election.

So far, CIL is creating more confusion and inefficiency than the Section 106 process.

The retail sector is concerned that some local authorities may be proposing a two-tier levy

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Title Annotation:Features
Publication:The Journal (Newcastle, England)
Date:Oct 4, 2014
Words:458
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