New local levy on development may stifle the recovery

YORKSHIRE'S development pipeline could face increased pressure from today when local authorities get the go-ahead to charge developers for additional infrastructure.
By The Newsroom
Published 6th Apr 2010, 13:16 BST
Updated 6th Apr 2010, 13:17 BST

The Government is introducing the Community Infrastructure Levy (CIL), which is part of the Planning Act 2008, in order to raise money from developers to pay for facilities needed as a consequence of new developments, such as schools, hospitals and sewage plants.

Although local authorities have the power to implement the new charging system and use the money from today, the process of preparing the required framework is likely to take at least 12 months.

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Payment would be due when work starts on a scheme with planning permission.

James Podesta, associate director of planning at CB Richard Ellis in Leeds, said: "Essentially, the CIL will be viewed as an additional tax on development. Currently, as developers proceed through the planning process, they may be required to enter into planning obligations which can include contributions to improve the local infrastructure if they relate to the scheme's impact.

"Planning obligation contributions are agreed on a negotiation basis and although they could be scaled back, they will not be replaced by the new CIL charges, meaning that developers could now face additional costs."

Mr Podesta warned councils thinking about bringing in the CIL to factor in the current economic circumstances before continuing.

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He said: "Here in Yorkshire it is clear that a synchronised downturn in the economy is not being followed by a synchronised recovery and any additional charges to be levied on developers are only likely to further stifle development.

"The Government's view is that the CIL will increase fairness by broadening the range of developments asked to contribute, allowing for the cumulative impact of smaller developments to be addressed.

"However, there are numerous schemes that are in danger of becoming unviable if this extra levy is charged."

He added: "In addition, it is important to recognise the potential impact of the impending General Election. Under a Conservative administration, CIL may well be scrapped in favour of a local 'tariff'."

Related topics:YorkshireGovernmentLeeds