THE concern about being fitter to deliver economic growth and jobs has focused in part on ensuring that our planning service in the region is ‘open for business’ and can deliver more quickly.
New proposals are due this month from the Government in the National Policy Planning Framework and there are proposed changes in the system, such as the community infrastructure levy (CIL), that will have an impact both on viability of development and the manner in which the planning process performs.
Guidance is emerging on the way in which the CIL is to operate.
At present the levy is being trialled elsewhere in the country, but when it is implemented across the country the North-east region may find that this new ‘tax’ will have a severe constraint on new development.
Introduced by the Labour government in April 2010, CIL may be imposed by local councils to fund the cost of infrastructure in the area from which new development benefits.
Taxing ‘development gain’ for the social good started in 1909 and has been ‘on and off’ since with the 1947 Planning Act (where the development charge was repealed in 1952), the Land Commission Act 1967 (repealed 1970), Community Land Act 1975 (repealed 1985) and Development Land Tax Act 1976 (repealed also in 1985).
Currently we have through the Planning Acts the ability for councils to obtain contributions for infrastructure through S106 agreements and consents subject to conditions for infrastructure costs.
Infrastructure means transport, flood defences, education and medical facilities, sport, recreation and open spaces and affordable housing.
A council needs to estimate the total cost of infrastructure required to support the development of its area, taking into account the expected sources of funds and assess the potential effects of the imposition of CIL on the economic viability of development across the area.
Sources of funding are very limited at present and more is falling on the direct resources of the region.
For example, the proposed enterprise zone under debate at present allows the North Eastern Local Enterprise Partnership through its local authorities to borrow on the future business rate growth created by the occupation of commercial property and use the capital generated to invest in infrastructure to create economic growth and jobs.
There is a complex mix that needs some careful thought and decision-making to benefit the economic wellbeing of the region.
Whilst this is on-going, the practicality of getting development delivered could suffer.
Change in law and procedure will create a period of uncertainty, which will result in delay and expense.
How the negotiations are managed between the local planning authority and the developer will arrest or delay planning applications.
Getting it right first time and delivering on time is a priority if we are to achieve economic growth.
The Royal Institution of Chartered Surveyors will shortly be seeking views on the emerging guidance in the use and application of the CIL, for those interested I shall be happy to keep in touch with them when the guidance is published.
The impact of CIL on the financial viability of development requires a knowledgeable approach of valuation and development appraisal linked with practical examples of contributions.
Kevan Carrick is a partner at JK Property Consultants LLP and the policy spokesman for RICS North East