Development incentives – but at what cost?

In light of what is starting to appear to be a wholehearted failure to persuade local communities to meet requisite housing targets, Nick Boles last week proposed self-proclaimed "bungs" to local communities.

Boles' announcement follows the government's consultation in October 2011 to require CIL charging authorities to allocate a 'meaningful proportion' of CIL to the areas where development occurs. Boles has proposed that, for areas where a neighbourhood plan is in place, 25% of CIL revenue be given to the local community.  Neighbourhoods without a neighbourhood plan would still receive a 15% share of CIL revenue but this would be capped at £100 per council tax dwelling.  

It is a clever approach aimed at both incentivising new housing developments and encouraging communities to adopt neighbourhood plans. It might even be viewed as a win-win scenario: the government gets to see new homes being built and local communities get a bit of extra cash to re-roof their local community centre or town hall.  But in the end, there is a limited pot of gold and this is just robbing Peter to pay Paul.  

Clearly there is no 'incentive' unless the local planning authority (the charging authority) for the area in which the development is proposed has an adopted CIL charging schedule.  Local planning authorities are entitled but not obliged to charge CIL. While the number of local authorities with charging schedules in place is still relatively low, this is steadily increasing as the ability for local authorities to seek section 106 planning obligations will be severely constrained after 2014. The money raised from CIL is meant to be calculated and spent on infrastructure needed to support the future development aspirations of local authority areas, having considered the economic viability of proposed development following the imposition of CIL. Infrastructure includes things such as schools, highways, open spaces, flood defences etc.  In an ideal world, the level of CIL adopted will be the maximum amount possible without thwarting development.

If 25% (or even 15%) of CIL is to be allocated to local communities, this will be at the expense of local authorities having sufficient revenue to fund the infrastructure upon which CIL was originally based.  The government's view seems to be that this is the cost local authorities and the wider society as a whole must pay to get new homes built.