Comment: The mayor’s new CIL system must not repeat past mistakes, writes Will Bushby, senior policy officer (Planning & Construction), BPF
This week, we responded to the mayor’s consultation on the sequel to the Mayoral CIL (MCIL2).
While I’m optimistic that it’s a catalyst for new infrastructure and economic growth in the capital, the mayor’s new system must not repeat past mistakes.
The Community Infrastructure Levy (CIL) was conceived in 2010 to help local authorities deliver the infrastructure needed to support the new development in their area.
Generally, taxes or levies aren’t popular but this one should have worked. And while the principles around spreading the burden of infrastructure delivery across the industry were supported, the detail and implementation (and in some cases the level of the rates set) have resulted in many suggesting that CIL has failed to stack up.
The initial London Mayoral CIL (MCIL), however, became the exception to this sinking ship.
MCIL first came into effect in April 2012 to help close the £600m gap required to pay for Crossrail, now known as the Elizabeth Line.
Both the mayor’s office and developer community suggest it has been a success – but why has MCIL been a hit when the original CIL is still cited as one of the biggest bugbears in the planning system?
The answer will underpin MCIL2’s success, and we hope our response will help the mayor and his team to avoid the pitfalls of the original CIL.
The key differences between MCIL and CIL as a tool used by local authorities are clear, the level of the rate set and transparency.
The relatively low level of MCIL is critical.
One thing often forgotten regarding planning obligations is that they are not charged in isolation.
Most developments have several obligations they must fulfil which impact on a project’s viability and consequently whether the scheme can get off the ground.
Its transparency is also key. Developers knew the money they paid to MCIL went directly into a single, big piece of kit that would not only support their own developments but also help the London transport network from buckling under considerable population growth.
This is vital if we wish to ensure London remains an attractive place to live, work and play.
In contrast, the CIL regime is clear as mud, and there is no way of knowing where the money is being spent.
The CIL Review, published earlier this year, summarises the problem nicely: “The way CIL works is not liked by many developers, who seem to have discovered a nostalgic fondness for the Section 106 process”.
These are the very same developers who campaigned for a simpler, clearer, more certain system and hoped CIL would be the answer – and who now hark back to the old days of S106 in which money either had to be spent or could be clawed back.
CIL monies are collected across the country and, in some circumstances, we struggle to see evidence of the resulting funds being deployed effectively.
If CIL is going to work in the future, we would strongly recommend that the UK government learns the lessons from the original MCIL.
The mayor and his team should now examine these differences closely to ensure MCIL2 is as positive a force for London regeneration as MCIL1.
MCIL2 proposes a significant uplift in the rates chargeable to offices, retail and hotels in the City of London and the Isle of Dogs.
We are sure the mayor doesn’t want to inadvertently slow down investment in these areas, given their already tight viability and high land prices.
In addition, MCIL2 needs to be aligned to the London Plan.
The London Plan is fundamental in setting a pathway for London to grow and thrive, and with the new Levy needing to raise £4.5bn, compared to its predecessor’s £600m, it is vital that the London Plan is pro-growth and helps to boost the development that is required to meet the target.
And then the million-dollar question: will Crossrail 2 get the green light?
MCIL2, following the steps of its predecessor, is set to help fund the new rail link. However, if these plans are shelved, the MCIL payments are likely to be directed into smaller infrastructure projects.
This takes us back to navigate something akin to the murkier past of the original CIL.
We have every confidence that the second MCIL has the potential to be just as big a success as the first if the mayor works with the property industry to make it work.
We all have a vested interest in making London an even better city to live in, let’s just hope the sequel turns out to be a hit.
