Industry bodies ask Michael Gove to scrap Infrastructure Levy

Thirty industry bodies including housebuilders, housing associations, local councils, charities and planners have called on the government to scrap its proposed Infrastructure Levy on the grounds that it will result in fewer affordable homes being built in England.

The National Housing Federation, the Home Builders Federation, the Construction Industry Council, the Royal Town Planning Institute, Build UK and Shelter were among the signatories of an open letter to the housing secretary Michael Gove.

The letter urges Mr Gove not to proceed with the government’s proposed reforms, warning that it will result in fewer affordable homes being built, less infrastructure for development, and would threaten housing development in many areas across England.

It calls on Mr Gove to reform the current developer contributions system instead. 

Under the proposed new Infrastructure Levy, which would replace Section 106 affordable housing contributions and the Community Infrastructure Levy (CIL), councils will have a “right to require” that a proportion of the cash contribution of a scheme is given “in kind” as an effective subsidy in lieu of on-site affordable housing. 

The current system of Section 106 and CIL currently raises around £7bn per year. 

The letter warns the reforms could raise less money for affordable and social rent homes, and that there would be less of a legal obligation for this tenure of housing to be included by developers. 

Last year, Section 106 was responsible for delivering 47% of all affordable homes built. 

“We cannot support reforms that are likely to leave communities with fewer new social and affordable homes, mixed and balanced developments and less of the infrastructure they need,” the letter reads.

“Many of the difficulties that we’ve experienced using existing Section 106 and (CIL) mechanisms look likely to continue after the new system has been adopted. 

“It remains unclear how [the Infrastructure Levy] will sufficiently uphold the economic viability of projects, protect the delivery of affordable homes and homes for social rent and return enough money to fund the infrastructure growing communities need.”

It states that the reforms will make it harder, not easier, for local leaders and communities to secure the benefits of new development, warning that “it would create prolonged uncertainty across the planning system.”

The signatories suggest that while the model may work on greenfield sites it would make many brownfield sites unviable, perpetuating regional inequalities, creating another barrier to delivery and deepening our already acute housing crisis. 

>> See also: Government delays introduction of Infrastructure Levy by a decade

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Roger Gough, housing and planning spokesperson for the County Councils Network, said: “The proposed Infrastructure Levy could end up being the worst of both worlds: resulting in less funding being made available for vital infrastructure, less affordable homes being delivered than before and impacting on the viability of development.

“At a time when it is crucial that we ensure that there is enough infrastructure to ease local pressures and create sustainable communities as well as building as many homes as possible, the upheaval of introducing a new system will create even more uncertainty to a system which is already not firing on all cylinders and instead the government should seek to strengthen the present S106 and CIL mechanisms.”

Last week the National Housing Federation and the Chartered Institute of Housing expressed “concern” over the impact of the proposed levy on the delivery of affordable housing. 

A Department for Levelling Up, Housing and Communities spokesperson told Housing Today: “We know communities want housing developments to include key infrastructure such as GP surgeries, schools and transport links.  

“That is why we have consulted on the new Infrastructure Levy which will ensure we are delivering affordable housing alongside vital infrastructure. We are carefully considering the responses to this consultation and will respond in due course. Any changes will be gradually rolled out to make sure we get it right.”