Under the proposals, the amount developers will have to pay will be calculated once a project is complete, instead of at the stage when planning permission is given. This is designed to make sure that councils benefit from increases in land value, which can be significant for large developments that take years to complete.
The infrastructure levy, which will replace section 106 contributions for most developments, will prevent developers from negotiating down the amount they contribute to the community when they bring forward new projects, the government says.
Councils will also be given powers to set rates themselves.
Secretary of state for levelling up, housing and communities Michael Gove said: “Central to our levelling up mission is ensuring local communities can take back control. The infrastructure levy will do just that – giving local leaders the tools to bring forward more affordable housing and the transport links, schools and GP surgeries their communities need.”
He added: “It will also speed up delivery and put an end to lengthy negotiations with developers seeking to shirk their responsibility to provide for local people.”
A small number of councils will implement the levy initially, testing how it operates in practice, before being rolled out more widely, to make sure the new approach works.
The consultation runs until 9th June 2023 and can be found here.
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Solicitor Gary Sector, a partner in Addleshaw Goddard's planning & infrastructure consenting team, said: "This announcement is no surprise really. For years the government has been talking about shaking up the levy on developers. It makes sense that Michael Gove was going to be the one to finally do it.
"Since the controversial community infrastructure levy (CIL) was brought in 13 years ago to sit alongside 106 planning obligations, there have been a number of false dawns on further major structural reform in this area.
"Undoubtedly this is a complex system to navigate. The consultation suggests the government is serious about securing a simpler calculation of contributions paid on the completion of a development, replacing current s106 and CIL calculations which are front-loaded to when planning permission is granted.
"Whether the planning system really needs another big-bang moment it debateable at a time when the government is so focused on growth. Changes to the planning system are often unpredictable and there's nothing to say that this change won't slow things down in the short-term.
"The consultation raises a number of pressing questions, not least around how charges secured at the time of completion of developments secure the timely delivery of infrastructure requirements. The government can expect a lot of lively debate from developers and local authorities during the 12-week consultation period.
"Make no mistake, change here is not going to be instant. The government makes clear any significant reforms will be implemented slowly, with a 10 year 'test and learn' period. So in the short term this is perhaps more about creating the illusion of significant reform, whilst on a practical level doing very little in a few local authority areas – at least initially."
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