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Our infrastructure experts summarise the key issues and share their thoughts on potential developments.

Infrastructure planning and developer contributions are two of the many vital issues awaiting guidance from the Coalition Government.  The last Government’s regulations for the Community Infrastructure Levy (CIL) came into force in April 2010.  This was just as the Conservatives published their (then) long-awaited Planning Green Paper proposing to abolish CIL and replace it with a single unified local tariff (SULT).  Since the Coalition Government was formed in May 2010, the indications are that a CIL-type regime will remain, perhaps re-badged as SULT. 

The end of the road for CIL?

The final regulations for CIL came into effect on 6 April.  This followed a long and controversial process to reform planning obligations and the delivery of infrastructure through CIL.  Despite some key changes to alleviate concerns from the development industry, such as the allowance of exceptions, issues of practicality and implementation remain unanswered.  The Regs remain in force and already are having their effect on the way obligations are negotiated.
 
We understand that the Coalition Government intends to retain a CIL-type regime.  This is likely to mean that they will take forward the plans that the Conservatives proposed in their pre-election Green Paper ‘Open Source Planning’.  This included:

• a single unified local tariff (SULT) - each local planning authority will set its own rates.  This rate will apply to both residential and non residential developments, and will vary depending on the size of development
• a proportion of tariff revenue handed to the community in which the development takes place
• planning obligations will continue for site-specific adaptation and remediation
• encouragement of county councils and unitary authorities to take the lead in preparing infrastructure plans
• open source formatting to support infrastructure project management between service providers is likely to become mandatory

• a tariff-based approach to infrastructure funding is necessary
• the tariff rate needs to be variable to reflect differences in development
• the use of other obligations should be limited to site-specific issues
• affordable housing should be exempt from a tariff
• service providers and local authorities need to work closer together in preparing infrastructure plans

However, the key difference could be how the two systems would operate.  The Labour government tried to produce a prescriptive tariff based system to reforming planning obligations and infrastructure delivery through CIL, but hit issues of practicality (such as payments in kind) and implementation (such as the need for exceptions), leaving major questions over whether it will work.  To date, there has been a notable lack of test cases.  There are also uncertainties over the ability of authorities to secure required levels of contribution in the interim period before they can adopt a CIL charge, particularly given the increasing scrutiny being given to contributions by planning inspectors.  Conversely, the Coalition Government’s planning ethos to hand decision-making powers back to the local level is likely to mean local authorities would have more flexibility with a SULT, which would also require much less examination.  This could lead to more straightforward tariff systems in line with existing arrangements, such as in Milton Keynes and Kent Thameside, being rolled out across the country.

Keep calm and carry on?

In reality, there is still potentially a long way to go for either CIL or SULT.  In the meantime, the need to plan and deliver infrastructure continues, particularly for authorities still wishing to have their Core Strategies examined, and notwithstanding the additional uncertainty created by the revocation of RSSs.  The Planning Inspectorate (PINS) produced a much needed second ‘Learning from Experience’ document in September 2009, which recommended local authorities should:

• identify critical dependencies between infrastructure provision and key policies
• prioritise to avoid the “wish list” approach
• consider “what if” questions where there is uncertainty (such as in market conditions over the plan period)

This document is still highly relevant.  The fundamentals for effective infrastructure planning remain and still need to be addressed.  In terms of using developer contributions to help fund infrastructure, whether we end up with CIL, SULT or something different (such as Tax Increment Funding), local authorities will need to consider their particular requirements, which include:

• the extent to which infrastructure needs are cross boundary
• whether pooled contributions, in conjunction with mainstream funding, will be sufficient to fund necessary infrastructure
• differences in viability in an area - not just between uses and locations, but also the types of sites in terms of issues such as abnormal costs and existing use values

The planning system will also need to adapt to the growing challenges presented by effective infrastructure planning and funding, in particular the viability of development. For example, PINS is already requiring viability evidence where developer contributions will be used to fund key infrastructure requirements.

Our recent study into how training in this area should be improved, undertaken for a commissioning body of private and public sector stakeholders led by the British Property Federation (BPF), is to be followed up by guidance from the RICS on how to test financial viability in planning.  In addition, we are currently leading courses on viability in planning on behalf of the Planning Advisory Service.  These highly popular courses are aimed at local authority planners and increasingly recognise the need for planners to get to grips with the principles of development.

Help is on its way.

Chris Bowden, Andrew Clarke and Shilpa Rasaiah

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