Is CIL Just Government-sponsored Bribery?

Following on from our post introducing CIL, we wanted to pose the question of whether CIL is really just government-sponsored bribery?

On the larger schemes, CIL contributions can add up to quite substantial sums. But it’s not just the commercial property developers that pay, it’s any development over 100sqm. That means if you are working on your own home and exceed that size, you will be making a contribution to the public purse. It’s interesting therefore to look at where all the money goes.

Who pays? And who pockets the CIL funding?

The landowner is typically liable for the payment of the CIL, although this liability may, through agreement, be transferred to the developer or self-builder.

The payment of the CIL goes to the charging authority for the area. It’s usually paid once work has commenced on site. Instalments for high-end payments may be granted, but for smaller schemes, expect to pay in one go.

Some developments are exempt from the CIL charge, such as social housing or where the properties concerned are owned by and intended for charitable purposes.

Where does the CIL revenue go?

Mayoral CIL is collectable across all London-based CIL charging authorities and is earmarked for Cross rail, with the objective of raising £300 million towards the overall cost of this initiative. City Hall views this as a sound investment in London’s future. Cross rail’s new transport links will not only support development by improving accessibility to and within London, but will also create jobs and the demand for local commerce, thus supporting the growth of London’s economy.

The charging authorities’ CIL revenues must be shared with local communities, Parish and Town Councils, where the development has taken place. For all developments where CIL liability notices were issued after the introduction of CIL Neighbourhood Funding Regulations in April 2013, Parish and Town Councils should benefit through the receipt of up to 25% of the CIL revenue for any one development.

In the interests of transparency, charging authorities are encouraged to issue a Regulation 123 list, showing exactly how they intend to use their CIL funding.

The City of London’s list, approved last May, includes publicly accessible open space, education facilities and flood defences i.e. infrastructural improvements. Other infrastructure that may benefit from the CIL could be emergency services facilities, transportation and public healthcare facilities. One parish council in England has used some of their CIL funding for cemetery improvement.

Don’t our taxes cover local infrastructure needs?

Unfortunately, through the austerity measures introduced by the Government following the economic crisis, local authorities have seen their budgets drastically reduced. Either our communities go without or we need to find new ways of funding a community’s social necessities.

So, is the CIL bribery or community investment?

With property in London at a premium, and showing little sign of abating in price or value, CIL seems a straightforward way to ensure that our population as a whole benefits from property development.

Certain developments are large and predicted to remain luxury, or ‘buy-to-leave’ investments for the super-rich, as we see in Nine Elms. In such cases it seems fair to pass a proportion of the potential profit on to the surrounding area and its people. With that in mind, CIL is not so much bribery as community investment. New developments can only benefit from well-equipped communities.

The best part of the CIL is its strict compliance procedure when setting tariffs, which must be evidence-based and independently approved. Perhaps the Government should concentrate on regulating the alternative developer contributions in the same way.

Transparency, such as we see with the CIL, ensures that monies fed to the local area via these financial considerations will be seen as a positive move forward and an investment in the future. That’s what we should all strive for, developers and local authorities alike: a see-through system with predictable and measured outcomes. In further developing London, we need to prove to our communities that we value them. No one wants to see property development outstripping the availability of facilities for those who need it most.

And so to answer our original questions, is CIL just government sponsored bribery?

You could answer yes, but our feeling is, if applied universally and in fair proportion, CIL makes a positive contribution to our local communities.

For more information on how the CIL works in your area, we suggest a visit to your local authority website. There you will find links to national Government websites along with what’s being planned through CIL for your community.