The clear message from the recent CIL Examinations is that there is no one right
We now have the opportunity to consider two very different CIL charging schedule examination reports, that of Newark and Sherwood, which comprises of multiple charge variations by use and area and that of Shropshire which comprises of only three different variations.
While the acceptance of no charges for commercial development may seem controversial, we do not see any particular precedent being set by this conclusion and we explain why in this article.
Here we take a quick look at some key messages coming from these to help others considering developing a CIL charging schedule.
What questions are the Examiners interested in?
Both Examination reports look to respond to two key questions:
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Is the charging schedule justified by appropriate available evidence?
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Does the evidence strike an appropriate balance between helping to fund the new infrastructure required and at the same time not put the overall viability of development of the area at serious risk?
These two simple questions are at the heart of testing the evidence base, however, understanding and interpreting these requires a good understanding of the CIL regulations and of the local context. As the Examiner’s responses to these two very different charging schedules has shown “there is no one right answer”. This response is entirely in keeping with the guidance from DCLG of empowering local charging authorities to come to a reasonable, evidenced and balanced view on their CIL charge locally and keeping a light touch on being prescriptive about how to set the CIL charge.
So what messages can we take from these examination reports?
A critical determinant in the interpretation of the evidence and where the balance rests is the local charging authority’s attitude to developer risk. If the charging authority considers there is strong demand and limited supply, they may opt for a slightly higher CIL (providing there are sufficient buffers in place so as not to put the overall development of the area at risk).
So a good starting point will be to determine the charging authorities ‘attitude to risk’. The more risk averse an authority is, the lower the CIL will be set.
The CIL charge needs to reflect the local development context - This means understanding where and when development is likely to take place and deciding on the complexity of the charge to reflect this.
Both the charging schedules do that and come out with different charges for instance for commercial uses, and this is totally permissible providing it is based on appropriate evidence.
The charge must be founded in documented local economic data, not planning policy. The economic geography will inform the economic development evidence for the charge. Relevant questions include:
- Are there very high levels of development activity in specific sectors? Or the converse?
- Are planning consents actually being implemented and if not why not?
- Why are there high vacancy levels in a particular sector in the area? Could it be there is market saturation or indication of high levels of land supply for that use?
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Is there physical evidence of development activity such as signs of building works and cranes in the area or is construction activity very low at present?
Different charges can be devised for different categories of development – where the evidence supports this. One might be forgiven at first glance of reading the Examiner’s comments on the Newark and Sherwood CIL approach to differential charges adopted for retail to imply the end of differential charging within the retail sector, indeed the Examiner states that the approach is:
‘Contrary to national guidance and unreasonably favours smaller retailers over larger ones’.
However, closer reading of the report shows that there was not clear viability justification for the differential rates. The Examiner’s comments:
“The proposed division in CIL rates between new retail buildings at 500sq.m.appears somewhat arbitrary and lacks a convincing evidential justification in relation to a serious risk of deterring new development.... the evidence is not sufficiently fine grained to justify the choice of this particular division within the retail use class”.
Our view is that if appropriate evidence is provided, there should still be scope to vary the charge.
Interestingly in the case of Newark and Sherwood, the Examiner also engages in a discussion about delivery and implementation of infrastructure. He acknowledges that this is outside the scope of the charging schedule. However, it is not surprising to note that this is the area where most concern from participants was raised and the Examiner for this reasons picks up on this matter.
There are some very useful considerations here for those contemplating producing a CIL charging schedule (though it is clearly understood that these are not required for preparing the CIL charging schedule) as good practice to diffuse the opposition:
- Firstly to think carefully about your infrastructure requirements and whether they are likely to be funded by CIL or S106
- Have a strong and defendable story to tell about what infrastructure is required, why and how it is likely to be provided
- Be aware of the concerns likely to stem from local communities, developers, members and wider stakeholders and be prepared to respond to their objections / concerns.
What is clear from our work nationally on CIL Charging Schedules, is that CIL will not be able to ‘plug the full’ infrastructure funding gap. However, will the examiner be interested in moving the balance towards ‘plugging more of the infrastructure funding gap?’ This remains to be seen, although we doubt this, however. There is a slight hint in the case of Newark and Sherwood report, where the Examiner does point to the potential loss of income of the CIL total would materially increase the identified infrastructure funding gap in relation to supporting the case for charging for some industrial development.
