Industry warns over ‘complexity’ as Gove pushes ahead with infrastructure levy

Greater clarity is needed on the “complex” infrastructure levy planning specialists have said, ahead of the first debate of the Levelling Up and Regeneration Bill, which contains the reforms, this afternoon.

The bill, announced in the Queen’s Speech last month, includes a raft of planning reforms and is due to go through its second reading in the Commons today, where it will be debated by MPs.

Planners told Housing Today ahead of the debate that the Levy could lead to a “hotch potch” of policies across the country, and hinder development in less well-off parts of England.

The second reading comes as Government sources have indicated Boris Johnson is planning to focus on housing in the coming weeks, following his narrow win in a vote of no confidence on Monday, by 211 votes to 148. It is understood the prime minister is keen to push ahead with the plan to extend the right to buy to housing association tenants. 

A Social Housing Regulation Bill, which could mean failing social housing landlords facing unlimited fines and Ofsted-style inspections, is also being introduced in parliament today. 

It will give the social housing regulator stronger powers to issue the fines and enter properties with only 48 hours of notice. 

Charlie Collins, planning director at Savills, said the proposed Infrastructure Levy (CIL), which is designed to largely replace the current CIL and Section 106 systems, could lead to a ‘hotch potch’ of planning policy across the country. Collins said this morning the draft levelling up bill gave little information on policy, and added that many councils were putting their local plans on hold until more details were released. More details are expected in the consultations on the national development policy and national policy framework later this year.

While the government has said the new levy is designed to avoid the complexity of existing Section 106 negotiations, it has admitted the Section 106 agreements will be retained for other purposes, and will still be used to determine planning contributions for “largest” sites. The legal drafting of the new Levy is largely based on existing CIL regulations.

“A lot of clarity is required,” Collins said, adding: “A lot of secondary legislation will be required to make it work”.  He pointed out it was unclear when the Community Infrastructure Levy (CIL) will be abolished in favour of the levy, and in some places developers could be paying the two levies, such as in London.

Collins also said the debates should discuss setting the new levy at the “right level”, and that it has to be “regionally specific”. The question of “who will be taking the money and who will be using it” should also be raised, with the local authority effectively acting as “banker” with the new IL. With individual local authorities leading on charging the levies locally it could lead to a “hotchpotch” of strategies, Collins suggested, and they would need more “expertise and resources” to be able to comply with the new duties required of them.

A spokesperson for the House Builders Federation said: “Speeding up the process of agreeing developer contributions is a welcome ambition, but through the current system home builders already provide more than £7bn per year in local infrastructure along with more than half of all new affordable homes. Adding another, levy alongside section 106 nationally and CIL in London and Wales runs the risk of creating a more complex framework at a time when house builders are also struggling under the weight of a fast growing tax and regulatory burden.”

Marie Chadwick, policy leader at the National Housing Federation, said: “We await with interest further information on the infrastructure levy and the bill after today’s debate. In our discussions with government, we’ve pushed for clarity on how delivery of social and affordable homes will be protected, and what this will mean for sites that are 100% affordable housing. We look forward to hearing more detail on this today.”

The town planners umbrella-body the RTPI said that the levy “could prove too complex and hinder less well-off parts of the country”. 

A spokesperson for the Lib Dems told Housing Today: “The Infrastructure levy is useless on its own and is unlikely to result in new homes, particularly social homes being built. We need wholesale reform of house building including reforming the Land Compensation Act 1961.” 

Following the introduction of the Social Housing Regulation Bill, the LGA said: “As well as improving existing homes, the social housing supply is not sufficient to meeting the current housing demand, which is why we want to see long-term plans to give councils powers to build 100,000 high-quality, climate-friendly social homes a year, including reform of the right to buy scheme, which has made it difficult for councils to build replacement homes at the rate at which they are sold.”