Council to urge clarity on plans for tax to boost infrastructure

The Government is consulting over changes to the Community Infrastructure Levy, which would see developers forced to pay an additional tax on all but the smallest schemes.

In October, East Riding Council’s cabinet agreed in principle to introduce the charge, but a report ahead of its meeting next week says the current proposals present difficulties over how some of the funds would be passed on to town or parish councils where the development would take place.

The Government says a “meaningful proportion” of the levy should be passed on.

However, the report says: “The duty to pass a meaningful proportion of CIL funds to town and parish councils would have significant implications for the way in which the council works with town and parishes once a CIL charge is in place.

“There is also the potentially substantial administrative burden in passing down CIL monies, as well as helping to establish infrastructure priorities within each area.”

It continues: “The issue of what a ‘meaningful’ proportion of CIL would denote is an interesting one. Given the diverse range of town and parish councils in our area it is unlikely that a ‘one size fits all’ approach involving either a fixed percentage or amount of CIL money per town/parish would be suitable.”

It said in rural parishes where little chargeable development may take place, a higher percentage of the money may be needed to be classed as meaningful, whereas in some urban town council areas the percentage would be small.

Also, in some areas it may not be viable to apply the levy, meaning the parish will get no contribution at all.

Either way, the ability to charge developers to help meet gaps in infrastructure has been welcomed by the authority after it predicted there would be major shortages to support expected growth in the region by 2026.

The East Riding Infrastructure Study says investment will be needed in areas including flood defences, surface water drainage, schools, open space and playing fields, accommodation for older people and highways.

The study shows that some sections of the region’s roads will be operating at a “stress level” of about 100 per cent by 2026.

The levy, which was created by the Government last year and can be applied by all local authorities in England and Wales, would see a standard charge made per square metre on most new developments.

It cannot be used to remedy existing infrastructure deficiencies - unless they would be aggravated by new development, the consultation said.

The current regulations forbid the use of the levy for building affordable housing, although the Government is considering whether to change this.

The report, by Steve Button, the council’s director of policy, partnerships and improvement, says the council would prefer to stick with the existing arrangements as it fears some developers would choose to pay the levy rather than build the houses.

“Introduction of CIL for affordable housing may lead to developers seeking to pay the levy instead of building on site,” it said.

“This would lead to a situation where value for money could not be achieved, as land to deliver the affordable housing would have to be purchased along with associated planning and further infrastructure costs.

“This would be at odds with the Government’s stated aim of creating mixed and balanced communities.”

An extra 1,000 affordable homes a year are need in the East Riding until 2016, according to a strategic housing assessment.

The cabinet will discuss the proposed response to the consultation on Wednesday.