The Government has outlined proposals to allow Local Authorities to introduce a “Community Infrastructure Levy” (“CIL”) to obtain ‘fair and reasonable’ contributions from developers for the improvement of local infrastructure. The reasoning behind this is to deliver development in a more sustainable way and to obtain contributions for almost all developments whereas currently many small to medium sized developments do not contribute anything at all.

Some see CIL as a substitute for the proposed Planning Gain Supplement (PGS) (see our article of 18 May 2006), however this is not the case as Gordon Brown backed the proposals in the 2007 Budget and announced that 70% of the revenue raised from PGS would go to local authorities. PGS is now likely to be introduced in 2009.

The crucial differences between CIL and the previously proposed Planning Gain Supplement are:

1. Each Local Authority may choose whether or not to apply CIL;
2. CIL will be a standard charge applied to all developments over a set threshold, whilst Planning Gain Supplement is a tax on the value added to the land by planning permission; and
3. CIL will be payable in addition to any obligations under s.106 Agreements, which will continue to remain in force.
   

It will be possible for contributors to assess whether the CIL contribution they have made is fair and reasonable as Local Authorities will have to be more transparent and will have to advise each contributor as to the purpose for which their contribution will be applied.

Where a CIL contribution is not made, or is late, the Local Authority may impose monetary penalties or even suspend or cancel the planning permission until the CIL is paid. It has also been suggested that a criminal offence for non-payment be created, but this is still being discussed. These penalties would be subject to the right of appeal