MEMORANDUM SUBMITTED BY THE BRITISH PROPERTY FEDERATION AND THE HOME BUILDERS FEDERATION (PB 22)

PLANNING BILL COMMITTEE

 

1 Introduction

1.1 The British Property Federation (BPF) and the Home Builders Federation (HBF) together with a grouping of major developers and London First have worked closely with Government in recent months on the arrangements for the proposed Community Infrastructure Levy (CIL). This memorandum therefore concentrates heavily on Part 10 of the Planning Bill which deals with the CIL.

1.2 However, in an annex 1 we set out our views on a number of other aspects of the Bill in which we have an interest. We would particularly stress our support for the Clauses providing for the introduction of National Policy Statements and the setting up of an Infrastructure Planning Commission (Parts 1-8, Part 9 Chapter 1). We believe that both will provide greater certainty in meeting the Government's objective of providing the necessary infrastructure needed to support the building of the homes that we need for the future and the development required for a vibrant economy. We also support many of the changes to existing planning regimes in Chapter 2 of Part 9 albeit with a number of concerns that we set out.

1.3 Brief information about the BPF and HBF is set out in annex 2.

2 Community Infrastructure Levy (CIL)

Context

2.1 The BPF and HBF argued strongly that the proposals for a planning gain supplement (PGS) were unworkable and would not, therefore, achieve their objectives. We stressed that PGS would remove the important connection between development and the local community, would lead to significant valuation disputes and would hinder the pace of development.

2.2 We argued instead for a different approach on the broad lines of the proposals for the CIL - which we support. We believe that CIL has the major advantage of supporting local authorities by providing a locally based mechanism for helping to fund infrastructure needs. It is not a centralising measure. Moreover, the Local Development Framework process provides the ideal mechanism for establishing local infrastructure needs required to support development and agreeing the level of CIL needed to supplement other funding. We welcome the fact that the CIL Clauses of the Bill are enabling clauses. This will provide the necessary flexibility to implement the levy through regulations and guidance as its full details are developed.

2.3 We do, however, have a number of significant concerns about the guiding principles for the introduction of the CIL which we believe should be considered in finalising the content of the Bill's enabling clauses.

References to Land Value

2.4 We accept the general premise of Clause 163(2) that CIL should contribute towards the costs incurred in providing infrastructure to support the development of an area. We also recognise that, when setting CIL, the charging authority must have regard to issues of viability. If the authority does not do so CIL will inhibit development.

2.5 The Government seemingly tries to address this point by relating CIL to changes in the value of land as a consequence of permission for development (Clauses 163(2), 165(4), 166(4)(b)). We are concerned, however, that this may be seen to establish CIL on an element of the PGS proposals that we found to be unworkable; namely valuation of such changes. The level of CIL, and in particular the level of CIL being incurred by any particular owner, should not be directly related to increases in land value. Rather the direct relationship should be to the cost of the infrastructure required, with the amount being charged then tempered by an examination of what part of that cost should be borne by other sources of funding and by a consideration of local viability issues (not value increases). If CIL is directly related to land value increases then the problems identified with PGS valuations will be introduced and will undermine the efficacy of CIL.

2.6 Our view is, accordingly, that all Clauses that refer to the "value of land" should be removed from the Bill. The focus should instead be on viability. Reference should be made to the need to issue supporting policy guidance that explains how issues of viability should be addressed in setting overall CIL levels.

The Importance Localism and the Local Development Framework (LDF)

2.7 At the outset we emphasised the positive role that CIL can play in promoting greater local responsibility for infrastructure provision. It is therefore essential that CIL is an integral part of the LDF. Indeed, we can only support CIL if the level and apportionment of CIL is subject to transparent public scrutiny and independent oversight. The LDF process is the only suitable mechanism that could accommodate this. The existing process of preparation and independent examination is a good vehicle for determining the level of qualifying infrastructure required in a local area and examining the sufficiency of planned development required to contribute towards the cost of that infrastructure. The resulting CIL policies within the LDF would then have full statutory weight as part of the adopted development plan.

2.8 At present the Clauses make no reference to the local process by which the CIL should be determined. It is therefore recommended that a new provision be inserted in the Bill requiring that the LDF process should cover preparation of CIL policies and levels of charge.

2.9 We would emphasise that there will have to be transitional arrangements as charging authorities move towards embedding CIL proposals within the LDF. The reference in Clause 171 (1) (f) to transitional provisions is, therefore, crucial. The nature of those provisions will need a lot of careful thought and discussion and are, therefore, best dealt with through regulations. In general, we believe that a three year period should be adequate for all local authorities to adopt CIL policies within their local development plan documents.

The Need for CIL to be Additional

2.10 To receive the support of the property and house building industry, it is essential that CIL should be additional to existing sources of funding for infrastructure. The Bill should make this clear, perhaps in Clause 163. This would ensure that there is no scope for using CIL as an excuse to cut other existing sources of infrastructure funding. Furthermore, the Bill should exclude from the scope of CIL all infrastructure which should be centrally funded, such as infrastructure which is procured by a Government department / agency or infrastructure which requires a development consent from the IPC.

The Nature of the Infrastructure to be Funded

2.11 The types of infrastructure to be funded by CIL should be specified in the Bill (Clause 167), rather than through regulations as currently proposed in the Bill. The scope of CIL needs to be clearly specified so that it does not "creep" over time without parliamentary scrutiny as new potentially chargeable infrastructure is defined. Also, if infrastructure is funded by CIL then charging authorities and planning authorities should be barred from seeking or receiving additional contributions from planning applicants in relation to that infrastructure. For example, if the cost of education facilities is included within CIL then no further contributions towards education should be required in connection with any planning or development consent. Having a clear demarcation between what should be within (and outside) the scope of CIL would help create a clear LDF process and would support the proposed approach on additionality.

2.12 The Bill needs to be absolutely clear about the fact that CIL is only meant to cover the capital costs associated with the relevant infrastructure. CIL should not cover any future maintenance costs which should be funded from general taxation, including both council tax and business rates.

The Importance of Off-Setting

2.13 We believe that the ability of a developer to elect to directly provide elements of infrastructure which are otherwise identified through the CIL and to off-set the agreed cost of that provision against CIL payments is critical. If infrastructure is vital to the delivery of development a developer needs to be able to make sure that it is provided. Although Clause 168(4) hints that off-setting may be possible we believe that it should be a mandatory component of any CIL scheme. It is an important component of the arrangements in Milton Keynes.

CIL and Land Costs

2.14 The land costs associated with providing CIL funded infrastructure should be included within the levy. This will ensure that land costs are borne equitably. It will also facilitate offsetting where a developer provides land in lieu of paying CIL.

Charging Authorities

2.15 Clause 164 sets out potential charging authorities. We believe that CIL must be simple if it is to work. Our concern is that Clause 164, as currently drafted, is at risk of confusing the role of those authorities that may play some part in setting the charge with that of the authority whose responsibility it is to levy and collect it. Whilst CIL may be based on the infrastructure needs of different bodies, it is essential that those requirements are distilled into a single requirement which should be set out in the LDF.

2.16 Similarly, CIL payment arrangements should be kept simple with all CIL payments going to one body. That body, which would usually be the local planning authority, should then be responsible for any future on-payment of CIL, perhaps only being required to make payments when the relevant infrastructure is actually commissioned.

Delivery

2.17 We support CIL because, provided that it is introduced sensibly, it will speed up and enhance the local delivery of necessary infrastructure. The Bill is silent, however, on the means by which charging authorities will deliver the necessary infrastructure, or the timetable for doing so. We would emphasise that the timely delivery of infrastructure is just as important as the charging and collection process.

2.18 Our view is that the Bill should be amended to provide that CIL should, effectively, be paid on trust and subject to conditions that:

(a) require the charging authority to use best endeavours[1] to deliver the infrastructure justifying the CIL payment;

(b) require different charging authorities to work with each other;

(c) require charging authorities to work in partnership with infrastructure providers.

 

 

Enforcement of Liability

2.19 One of the benefits of CIL is that it will simplify the planning process and reduce the need for complex agreements under section 106 of the Town and Country Planning Act 1990. Our view is that the obligation to pay CIL should normally be contained in a standard planning condition requiring payment either prior to commencement of development (for small schemes) or in accordance with a programme set out in the condition (for large schemes); or through a simple pro forma Section 106 obligation. This would avoid the necessity for preparing time consuming legal agreements and enable existing planning enforcement powers to be used to ensure that development does not proceed without payment of CIL.

The Need for Residual Discretion

2.20 CIL should apply to almost all development. Clause 171 (c) rightly allows for exceptions to be identified in the CIL regulations and presumably these will relate to categories of development, which can be further clarified in policy guidance. Development for charitable purposes might be one such area.

2.21 However, there will inevitably be exceptional cases where, for example, extraordinary costs mean that a bespoke approach to CIL liability on an individual site needs to be taken. In these exceptional circumstances charging authorities must have a residual discretion to agree an appropriate solution on a case by case basis. This might arise, for instance, on a major development where the scale and timescale of development means that the straightforward application of a levy process might prejudice development. This may also be the case where a brownfield site in need of regeneration requires extensive remedial work, such as decontamination.

2.22 The Clauses need to recognise explicitly that CIL will need to be developed in regulations in a way that permits limited exceptions, to be negotiated through the planning system.

Right of Appeal

2.23 Clause 166 (5) allows for regulations to provide for an appeal against CIL only in relation to the application of methods for calculating CIL.

2.24 Accepting that challenges to the CIL will be an exception to the rule, those who incur the CIL liability must have the right to seek an independent assessment / inquiry into the level of the CIL, specifically in relation to their development, for example, if it is felt that the payment of CIL will render the development unviable. In these circumstances (as in current policy), this lack of viability would need to be demonstrated. However, no new or separate process is necessary for this purpose. It would be a matter for the planning authority, in the final instance, to judge whether the benefits of the development justified the grant of permission with reduced obligations, either to CIL or for example to other obligations incumbent on the developer, such as affordable housing (or both).

2.25 Also, in the event of a refusal of planning permission on grounds that the full CIL policies of the LDF are not observed by a particular application, the current planning appeals process would deal with the appeal, as it does in all matters where planning policies are not observed.

January 2008

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Annex 1

1 National Policy Statements / Infrastructure Planning Commission

1.1 Both commercial and residential developments necessary to regenerate communities and provide much needed homes and employment are held up as a consequence of a planning system which takes many years to deliver major infrastructure. It was estimated some time ago that the average time from conception to completion of major infrastructure projects was some seventeen years. Consequently, we welcome proposals to speed up the decision making process on major infrastructure projects through the provision of clear, unambiguous National Policy Statements and the establishment of the proposed new Infrastructure Planning Commission to process applications for major infrastructure projects.

1.2 We will leave it to others to comment on the details of these proposals and would simply state here that it will be vital to ensure that the National Policy Statements are subject to appropriately extensive but sensibly managed consultation with all interested parties and due parliamentary scrutiny, and that the Commission should be adequately resourced and able to attract suitably experienced and qualified members.

2 Changes to Existing Planning Regimes

2.1 The Bill introduces a range of changes which are intended to expedite the planning process and we support the bulk of them. We do, however, have a number of comments which are set out below.

Local Development Documents

 

2.2 The Bill re-states the existing, but largely misunderstood, position whereby Supplementary Planning Documents (SPD) are not required to be listed in local development schemes.

2.3 Whilst we are strongly in favour of the Government's attempt to speed up the LDF system, we believe that confirming the removal of SPDs from the local development scheme is not the best way to achieve this as a key source of planning information for developers and local communities will be lost. An unintended consequence of this will be a reduced opportunity for interested parties to follow, and comment on, the development of planning policy in a local authority.

2.4 The White Paper stated that local authorities would be required to publicise SPDs they bring forward to the public and relevant stakeholders if they are no longer required to list them in the local development scheme. We consider this to be too vague a proposition and recommend that the Bill should flag up the need for regulations requiring that SPDs be formally published.

 

The power to make non-material changes to planning permission

 

2.5 We have argued over a number of years that developers should be able to make non-material changes to a project covered by an existing planning permission without having to go through the whole planning process again The White Paper appeared to recognise this need and implied that provision would be made to allow applicants to seek non material changes post planning permission. The Bill appears, however, to have turned this around and to have established a provision whereby local planning authorities may make non-material changes to a planning permission (Clause 156). Whilst we accept that this may result in the situation we were seeking, it could equally allow a local planning authority to introduce arbitrary late changes to an agreed application at a cost to the developer. We strongly recommend an amendment to this section of the Bill to ensure that only changes initiated by the original applicant are treated in this way.

Determination of planning appeals procedure

 

2.6 The Bill provides that the Secretary of State (PINS) may determine the type of appeal procedure (i.e. a written representation, a hearing or an inquiry) to which an appellant is entitled if appealing under the 1990 TCPA, the Listed Buildings Act and the Hazardous Substances Act.

2.7 We recognise that this is an attempt to deal with situations where householders and appellants in other comparatively minor cases might insist on a hearing at disproportionate cost when a written application would be much more appropriate. Clearly the imposition of different costs for different types of appeals (see below) will help resolve this issue. If, however, the Government intends to pursue this measure we would wish to seek some form of assurance that larger, more complex cases will not be straitjacketed into an inappropriate form of appeal procedure and that there would be flexibility for handling those difficult cases which do not appear to fit the stated criteria

Fees for planning appeals

 

2.8 The Bill will enable regulations to be published which allow a fee to be charged and paid by the appellant for making an appeal under the 1990 TCPA and the Listed Buildings Act.

2.9 We acknowledge the rationale behind the proposal for charging for appeals but we believe that if such charges are to be introduced there should be some modification to the current process for awarding costs in order to encourage both applicants and local planning authorities to take a more responsible attitude to the determination process. Otherwise, a developer who pursues a successful appeal against a local authority which has taken a wholly unreasonable position on an application will have ended up paying for that local authority's unreasonable behaviour. Such a position is inequitable and untenable.

Annex 2

 

The British Property Federation

1 The British Property Federation (BPF) represents companies owning, managing and investing in property. This includes a broad range of businesses comprising commercial property owners, the financial institutions and pension funds, corporate landlords, local private landlords, as well as all those professions that support the industry.

 

The Home Builders Federation

2 The Home Builders Federation (HBF) is the principle trade association representing the interests of private housebuilders in England and Wales. Their members, who include companies ranging from major national firms, through regional companies to smaller local companies, are responsible for more than 80% of the new homes built every year.

 

 

 

 

 

 

 

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[1] Note : "best endeavours" is used to set the standard of obligation on utilities in the New Roads & Street Works Act 1991 and was accepted by Milton Keynes Partnership in relation to the delivery of strategic infrastructure in the Milton Keynes tariff arrangements.