Infrastructure Levy

The Levelling-up and Regeneration Bill that is making its way through Parliament at the moment is designed to give local leaders and communities the tools they need to reduce inequality and ‘level up’.

It affects many aspects of planning, including the current system of securing developer contributions under the Community Infrastructure Levy (CIL) and section 106 agreements.

Developer contributions enable the collection of funds towards infrastructure and community use, such as schools, public open spaces and GP surgeries.

Under the Levelling-up and Regeneration Bill, the current system will be replaced with a new Infrastructure Levy (IL).

What is the new infrastructure levy?

The IL is intended to operate as a flat-rate levy on development to ensure developers pay a fair share to deliver infrastructure that communities need. It will replace the current CIL regime and will vastly reduce the need to rely on section 106 agreements.

IL is set to apply to all types of development including permitted development. There may be some exemptions and reduced rates, which will be considered in the ongoing technical consultation.

The delivery of infrastructure on the development site in question will be managed through planning conditions or obligations and built by the developer, although there will remain a place for section 106 agreements in some situations. . IL will also be used for wider areas than the development site itself, for example, to build a new school which the development will increase demand for.

How will IL be different to section 106 agreements?

Unlike section 106 agreements which can involve lengthy negotiations between developers and local authorities (LAs), IL will be mandatory and non-negotiable. Charging authorities (usually LAs) will set a minimum threshold for IL and rates, which may be dependent on the type of development and different geographical zones. As an alternative to monetary contributions, affordable housing on the development site could fulfil IL requirements.

Infrastructure delivery plans

To help deliver appropriate infrastructure, LAs will need to create infrastructure delivery strategies showing the infrastructure provision in their area and what will be required to meet the needs of predicted growth, as well as their approach to funding this through IL.

IL will be rolled out on a ‘test and learn’ basis, providing space for alterations to be made to the system. If and when the IL provisions are enacted, more detail will follow in Regulations in due course.

Have your say

The government’s technical consultation on IL is open for comments until 9 June 2023. Comments can be made at https://consult.levellingup.gov.uk/planning/infrastructure-levy-consultation/