Alongside and sometimes included in the various amendments to the CIL policy that have been issued over the period 2010 to 2014 there has also been specific
guidance on how to implement the CIL policy, in particular the setting of the charging rate, with several versions of the guidance as discussed in more detail in chapter 5.
The CIL process consists of five stages, but the main feature of the CIL policy implementation is the process of setting, consulting upon and approving the
proposed charging rates for the LPA area and this is the key focus of this research.
The CIL process consists of five stages as follows:
1) Public Consultation on the preliminary draft charging schedule
2) Public Consultation on the draft charging schedule (for a minimum of 4 weeks) 3) Charging Schedule examination
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4) Examiners report published (which is no longer binding on the LPA)
5) Approval of charging schedule by a resolution of the Council and introduction of the CIL (DCLG, 2010b).
In 2010 guidance was issued to assist Local Planning Authorities (LPAs) in the
preparation of the draft charging schedules, the most important aspect of which is the setting of the appropriate rate of levy. The charging authority in setting the CIL rate
“must aim to strike what appears to the charging authority to be an appropriate balance between the desirability of funding infrastructure from CIL and the potential effects (taken as a whole) of the imposition of CIL on the economic viability of development across its area” (DCLG, 2010b, p. 4).
The charging authority is also required to “use appropriate available evidence to inform the draft charging schedule”, this is not to focus on the implications for
individual development sites but rather for the area as a whole, recognising perhaps that some potential development sites may be put at risk. There is no specific model or methodology required to be used in assessing the economic viability but evidence will need to be provided to the independent examiner as part of the approval process (DCLG, 2010b).
The guidance also provides for a differential rate to be applied for different uses and in different locations across the LPAs area but the more complex the charging schedule the more difficult it could be in complying with “state aid” conditions of EU legislation. The differential rates need to be fully justified and supported with available evidence, although it is also recognised that available data will not be comprehensive (DCLG, 2010b). In addition to the “economic viability assessment”, there is also a requirement that the LPA has an up to date Development Plan, there is provision for joint examination of a draft charging schedule alongside the proposed core strategy if one has not already been approved (DCLG, 2010b). CIL has been described as a plan-led policy (Jones and Paul, 2009). In addition there is a
requirement to draw up an infrastructure plan which underpins the Development Plan and sets out the infrastructure that is to be funded by CIL and which cannot overlap with infrastructure to be funded from s106 agreements (DCLG, 2010b).
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The key points relate to the preparation of the three main documents, the
infrastructure delivery plan, the economic viability report (or viability assessment) and the (preliminary) draft charging schedule. The assumptions made in these
documents, the assessment of the balance, the risks that attach to the decisions made based on these documents and how these are communicated to stakeholders are all important elements within the CIL process and will be investigated as part of this study.
The link to the Development Plan was also strengthened by the National Planning Policy Framework (NPPF) released in 2012 para 175 which stated:
“Where practical, Community Infrastructure Levy charges should be worked up and tested alongside the Local Plan. The Community Infrastructure Levy should support and incentivise new development, particularly by placing control over a meaningful proportion of the funds raised with the
neighbourhoods where development takes place” (DCLG, 2012b para 175)
Also the issue of the viability of the Development Plan is to be tested under para 173 as set out below:
“Pursuing sustainable development requires careful attention to viability and costs in plan-making and decision-taking. Plans should be deliverable.
Therefore, the sites and the scale of development identified in the plan should not be subject to such a scale of obligations and policy burdens that their ability to be developed viably is threatened. To ensure viability, the costs of any requirements likely to be applied to development, such as requirements for affordable housing, standards, infrastructure contributions or other
requirements should, when taking account of the normal cost of development and mitigation, provide competitive returns to a willing land owner and willing developer to enable the development to be deliverable” (DCLG, 2012b para 173).
Together these two paragraphs emphasise the importance of viability in planning in current policy and guidance and how the CIL is becoming part of that new approach.
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This is further reflected in the stricter test in the 2014 guidance (DCLG, 2014a) which states
“They will need to draw on the infrastructure planning evidence that underpins the development strategy for their area. Charging authorities should use that evidence to strike an appropriate balance between the desirability of funding infrastructure from the levy and the potential impact upon the economic viability of development across their area” (DCLG, 2014a, p. 12).
The removal of the words “what appears to the charging authority to be” also
removes the discretion of the LPA in determining the balance appropriate to its area and policy objectives. The guidance goes on to state
“What is meant by an appropriate balance?
The levy is expected to have a positive economic effect on development
across a local plan area. When deciding the levy rates, an appropriate balance must be struck between additional investment to support development and the potential effect on the viability of developments.
This balance is at the centre of the charge-setting process. In meeting the regulatory requirements (see Regulation 14(1)), charging authorities should be able to show and explain how their proposed levy rate (or rates) will contribute towards the implementation of their relevant plan and support development across their area. .
As set out in the National Planning Policy Framework in England (paragraphs 173 – 177), the sites and the scale of development identified in the plan should not be subject to such a scale of obligations and policy burdens that their ability to be developed viably is threatened.” (DCLG, 2014a, p. 12) The emphasis in the 2014 guidance is more towards deliverability and supporting development and not threatening viability of development by the scale of “policy burdens” in line with the 2012 National Planning Policy Framework and further supplemented by the 2014 National Planning Policy Guidance (DCLG, 2012b) which are on-line. The changes from 2010 to 2014 reflect a growing importance being placed upon delivery of development in a period of difficult market and economic
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conditions, linked with this emphasis on delivery is the importance placed on viability assessments to support the delivery of the Development Plan, but also in setting the rates for CIL. The Viability Assessment is at the heart of the CIL process in its influence on the establishing the balance and the settings of the CIL rates. The guidance available to LPAs in carrying out the Viability Assessment is now considered.