What is the Infrastructure Levy?

Infrastructure Levy attempts to reform the existing system of the Community Infrastructure Levy (CIL) and S106 obligations in England. Unlike the CIL, the new Levy is a mandatory charge that aims to enable local authorities to generate more profit to support infrastructure funding– schools, affordable housing, transport links, and green spaces.  

‘The Levy will be charged on the value of the property at completion per square metre and applied above a minimum threshold. Levy rates and minimum thresholds will be set and collected locally, and local authorities will be able to set different rates within their area’ – the consultation document stated.  

What is the CIHT stance on Infrastructure Levy? 

CIHT welcomed the publication of Infrastructure Levy by the Department for Levelling Up, Housing and Communities (DLUHC). CIHT supports the Government’s intention to simplify and improve the existing system to improve the infrastructure delivery.  

However, CIHT believes that the implementation of the Levy needs further engagement with local authorities on the viability of available resources, skills, and training required for the system to operate smoothly, given that there is neither skill nor the capacity available in many local authorities at present. 

CIHT is also concerned that any new Levy ensures that the focus is on providing sustainable transport solutions and not reinforcing the provision of road-based solutions where these are inconsistent with the Government’s decarbonization objectives and local authority’s declarations of a climate emergency. 

Potential positive changes

• The new Levy is highly likely to capture smaller developments that previously did not contribute to the infrastructure development. 
• The new system shows potential to improve knowledge and skills exchange for setting levies and infrastructure plans across the country.  
• Infrastructure Levy will enable local authorities to choose how best to spend available resources in case they need additional support for other sectors rather than infrastructure – but it can also be a challenge (see the section below).  
• In theory, the new principle of the ‘right to require’ will enable greater protection of affordable housing delivery as a proportion of Levy liabilities.  

Potential challenges 

• Local authorities are allowed to determine the level of levies without the central government's approval. Thus, it poses a significant risk of fostering competition between local authorities as some might impose low levies to encourage development in their area.  
• As the final Levy received will be based on the Gross Development Value (GDV), there is always a risk that the GDV will go down (e.g., during a recession), reducing the burden on the developer but leaving local authorities worse off at the completion of development: meaning local authorities will be carrying a financial liability in case GDV goes down. 
• As there is the need to have all the funding available before delivery commitments can be made, if an authority does not borrow it means infrastructure cannot be delivered without upfront funding. Given the current financial situation in local authorities, there will be many who are unlikely to want or able to take the risk and cost. 
• There is a potential risk that local authorities – due to a lack of sufficient funding available - may not sufficiently prioritise the infrastructure needs of their communities. Given that the current developer’s contribution system does not supply enough resources for the required affordable housing provision and satisfy transport needs, expanding the list of what can be funded through the Infrastructure Levy adds unnecessary pressure to the system. 

If you are interested in some other challenges of Infrastructure Levy, please read our full response here.  

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Help & Support 

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