A presentation used to introduce the infrastructure levy in March 2023

1. Infrastructure Levy
Technical Consultation
29 March 2023
Planning Advisory Service Webinar Event

2. Why do we want to reform the existing system?
Section 106 agreements (planning obligations):
 can be uncertain and opaque;
 are subject to negotiation (and can be subject to subsequent renegotiation);
 can lead to substantial delays in the granting of planning permission.
CIL is more transparent and predictable, but it is inflexible in changing market conditions.
• Contributions from developers play an important role in providing the infrastructure needed to support
development.
• Developer contributions worth a total of £7bn were agreed in 2018/19, of which £4.7bn was in the form of
affordable housing contributions.
• Section 106 agreements are negotiated with developers, whereas the Community Infrastructure Levy (CIL) is a
fixed charge levied on the floorspace of a new development.
Policy context

3. The Levelling Up and Regeneration Bill makes provision for a new Infrastructure Levy (IL).
 The IL will aim to capture land value uplift at a higher level than the current system.
 It will be a locally set, mandatory charge, levied on the final value of completed development.
• Primary legislation provides the overarching framework, based on Part 11 provisions of the existing Planning
Act 2008.
• We are seeking responses on elements of the Levy’s design that will be delivered through regulations.
• There will be a further consultation on the draft regulations once they have been developed, utilising
feedback from stakeholders.
• Implementation will be phased through a ‘Test and Learn’ approach
What are we consulting on?

4. Consultation outline
1. Fundamental design choices
2. Levy rates and minimum thresholds
3. Delivering infrastructure
4. Affordable housing
5. Charging and paying the Levy
6. Other areas
7. Introducing the Levy

5. 1. Fundamental design choices
Definition of ‘development’ for the purposes of
the IL.
Integral:
 required for the scheme to function
 delivered by developers outside of the
Levy charge.
Levy funded:
 delivered by local authorities using Levy
receipts (or by borrowing against Levy
proceeds).
Core: Delivery Agreements used to secure integral
infrastructure where needed, and in some other
limited circumstances
Infrastructure in-kind: large and complex sites,
where a negotiated approach is justified. The value
of any contributions towards infrastructure must
equal or exceed what would be secured through the
Levy.
Section 106-only: minority of developments, such
as those do not meet the definition of development.
Scope
Types of infrastructure
Section 106 – routeways

6. Charging schedules (tested through examination)
 Current revenue from developer contributions
 Levels of affordable housing
 Viability of development
 Infrastructure Delivery Strategy
2. Levy rates and minimum thresholds
• LPAs will set a minimum threshold (as £ per m2 of the gross internal area), below which IL will not be charged.
• The Levy will be charged as a percentage of the GDV of the completed development above the minimum
threshold.
• The minimum threshold and Levy rate will be set out in a charging schedule.
LPAs will be able to set different rates and/or
thresholds for different development uses and
land typologies/locations – aiming to capture
more value whilst maintaining viability.
Evidence will be required to demonstrate levy
rates are set with regard to the desirability of
maintaining affordable housing at levels that
equal or exceed the levels provided through
planning obligations during a previous time-
period.

7. 3. Delivering infrastructure
Infrastructure Delivery Strategy (IDS)
• LPAs will set out how they intend to use Levy proceeds
alongside other funding sources
• This will involve engagement with other relevant bodies
 Part One: Baseline infrastructure and anticipated
growth
 Part Two: Approach to funding through the Levy
and other sources
 Part Three: Strategic Levy spending plan
• The IDS will replace the Infrastructure Delivery Plan in
the current system, supporting both the Local Plan and
Levy charging schedules.
• Part three of the IDS will be subject to an independent
examination
Timely delivery of infrastructure
• Specified upfront payments for
certain items of infrastructure?
• LPAs will be able to borrow against
future Levy receipts

8. 4. Delivering affordable housing
Right to Require
Existing system
The Government is committed to IL delivering at least as much – if not more – on-site affordable housing as
developer contributions do now.

9. 5. Charging and paying the Levy
Indicative liability: calculation
• Submitted with planning application
• Based on knowledge of floorspace and assumed values in charging schedules
• Levy liability registered against development site as local land charge
Provisional liability: calculation and payment
• Post-commencement but prior to first occupation of the scheme (or of a phase of the scheme)
• Independent valuation of anticipated GDV per m2 may be required
• Land charge removed once provisional payment is made
Final adjustment payment
• Post-completion or once development is sold
• Adjustments to provisional liability payment to reflect actual market value
• Penalty fees for late payment
1
2
3

10. 6. Other areas
Neighbourhood
Share
• Proportion of funds that are passed on to a town or parish council
• Considering arrangements in non-parished areas
Administrative
share
• The proportion of Levy funds that will support transition to the new
system and ongoing administrative costs
Reduced rates and
exemptions
• The primary legislation retains the charitable relief under CIL.
• Regulations can set out further exemptions and/or reduced rates.
• Residential annexes and self-build housing
• Approach to small sites
• Treatment of publicly funded infrastructure
Enforcement
• Imposition of local land charge
• Stop Notices
• Financial penalties

11. 7. Introducing the Levy
• Test and Learn
 IL will be introduced in a small number of LPAs once regulations are made
 We will monitor, evaluate and improve the operation of IL
 National roll-out will take place over the course of a decade
• Transition
 Sites permitted before the introduction of IL will continue to be subject to their CIL and s106 requirements
 Retention of Mayoral CIL in London
• Equalities
 Understanding the impacts of proposed changes on people with protected characteristics

12. Key information
• The consultation will be open until Friday 09 June.
• Responses encouraged to use Citizen Space.
• Questions should be directed to: InfrastructureLevyConsultation@levellingup.gov.uk