New Powers for Councils to Raise Millions More to Support New Homes

Councils who back plans for new homes will be able to raise hundreds of millions of pounds to spend on vital infrastructure like roads, schools, parks and health centres.

Housing Minister Yvette Cooper is setting out how the new Community Infrastructure Levy (CIL), will help fund massive new investment to sustain new homes, as part of the Government's drive to support quality neighbourhoods.

Ministers believe it is essential that new developments have parks, play areas and proper facilities and that more is done to ease transport pressures when new homes are built. They are also keen to ensure that small developments which can have a cumulative impact on areas make a contribution to local infrastructure and facilities.

Independent evidence from Kate Barker and the National Housing and Planning Advice Unit shows that there is a long-term need for more housing to meet rising demand. But it is crucial that the infrastructure is in place to create prosperous and sustainable communities.

The Levy will give councils the power to set charges to pay for infrastructure when a new development takes place, which is expected to unlock hundreds of millions of pounds more for local infrastructure and services.

Under the current system, only 14 per cent of all residential planning permissions make any contribution to the cost of supporting infrastructure, and these generally cover the largest schemes. However, even minor developments generate a need for infrastructure and services in an area.

Ministers think it is right that all developments pay their fair share and those who benefit financially when planning permission is given should contribute back to the local community by funding local infrastructure. That's why the new Community Infrastructure Levy (CIL) has been included in the Planning Bill.

The new powers will allow councils to set a CIL for their area following an assessment of local infrastructure needs and consultation with their local community. Different types and sizes of development would pay different amounts depending on local needs to help ensure that the new infrastructure needed to maintain sustainable growth is provided.

The option for councils to raise a CIL on developments come on top of the £14 billion already being invested across Government to provide infrastructure to support housing growth.

The CIL will work in conjunction with other incentives for communities supporting new homes, including the £500m Housing and Planning Delivery Grant (HPDG) and the £1.7 billion housing infrastructure investment from the department.

Housing & Planning Minister, Yvette Cooper said: 'Families across the country need more affordable homes. We want to give more support to communities and councils who are doing their bit to deliver the extra homes we need with money for vital infrastructure.

'It isn't enough to build more homes. They need to be in high quality neighbourhoods with proper infrastructure and local facilities too.

'I want this new community levy to give councils and communities the extra support they need to do their bit to improve their area for families and for the future.'

The document published on 24th January sets out further details of how the CIL will be raised.

Key steps include
* authorities producing a list of infrastructure needed to support development in the area;

* authorities producing a draft charging schedule for consultation of the rates the levy might be set for the area. This means local people will have a real say in what their local community needs and ensure the right infrastructure is delivered;

* Councils to set out final charging schedule for the levy. Land owners and developers will know from the outset how much they will have to pay and what infrastructure the CIL is paying for;

* Householder developments by homeowners, such as extensions, would be exempt from the levy;

* Planning obligations ('section 106 agreements') will continue to operate alongside CIL and will deliver at least site-specific infrastructure and affordable housing funding, complementing the new levy which will serve the wider community.

The Government is creating these new powers in the Planning Bill which has just begun its passage through the committee stage. It is anticipated that local councils will be able to take advantage of these powers from spring 2009.