Last month the National Housing Federation held a one-day conference on the newly-emerging world of land-use planning. It was very useful to hear from one of the authors of the draft National Planning Policy Framework about the careful thought that had gone into its preparation – it gave one confidence.
It was unsurprising to see the shared bafflement of many in the audience about how the new-look planning regime, with its desire to empower people at Neighbourhood level, is going to deliver on the stated aims of increasing housing supply. That rather reduced one’s confidence.
But this blog is prompted by the final session of the day which addressed the Community Infrastructure Levy (CIL). As many readers will know, CIL is the latest version of the tool first suggested in 2003 as a way of generating a lump-sum contribution by a planning applicant towards the cost of the providing “public assets” that are needed for a residential development and community to be successful. Not only does it cover roads and drainage, but also classrooms for the local school, parks large and small, health and leisure facilities etc. CIL is charged to help create sustainable communities.
There are many advantages in a levy such as CIL – most notably that the applicant (such as a housebuilder) knows in advance how much they are going to have to pay. This places negotiations with the landowner on a much more secure footing and smooths the entire process of bringing land forward for development. Over the last 10 years negotiations with landowners have been extremely difficult because of the uncertainty over the cost of planning obligations that may have to be provided. Housebuilders can check local plan policies, but they have been in a state of flux since the Planning & Compulsory Purchase Act 2004. Furthermore, everybody knows that planners don’t achieve their policy requirements, but it can be difficult to predict in advance what they’ll settle for. All of which adds up to a long and bloody negotiation between housebuilder, the landowner and the planning authority either before or after the planning application goes in. S106 Agreements have worked, but they have been very time-consuming, messy and – in the case of affordable housing – disappointingly ineffective.
So there is much to be said for providing certainty through tools such as CIL. But affordable housing is specifically excluded from CIL. Does this matter? Is it significant? Yes, as affordable housing is usually by far and away the most costly element on the planners’ shopping list. So CIL brings greater certainty to the negotiation process, but only for a small part of the problem.
But it gets worse. A scheme can only pay for “infrastructure” up to the point that it becomes financially unviable. Where the public goodies that are needed cost a lot more than the planning gain that is available (which will apply to every local planning authority in the land), choices have to be made. Roads and drainage, contribution to educational facilities, or affordable housing?
Having CIL deal with nearly everything apart from affordable housing, and then relying on a S106 Agreement to help house the homeless creates a problem. In short, CIL comes first. So if there is any debate about how much a scheme can contribute towards “public goodies”, it happens after the contribution to roads, drains, schools, leisure centres etc has been accounted for. In other words, it will be affordable housing that takes the hit, simply because of the timing.
So, CIL combined with S106s could be the worst of all worlds for those of us interested in increasing the supply of affordable housing.
Is there a solution? Government appears to have set its face against bringing affordable housing within the ambit of CIL. So, how about CIL(AH)? A locally-set levy for affordable housing, following the same methodology as for CIL (which is essentially the same as for setting and affordable housing planning policy under the PPS3/NPPF). It would have the benefit of providing greater certainty to landowners, housebuilders and planning officers, whilst avoiding the problem of affordable housing suffering simply through timing.
What do you think?