Festive funding rows: CIL, planning fees & local authority funding
We are now officially in December, which means that festive-ness is now socially acceptable*. As such, I thought we should get properly into the Christmas spirit with a good old row about money... in fact, as a special treat, we are going to be talking about two of them.
Coun - CIL Wars: Two Tier Authority Areas and CIL Funding
Planning Resource has recently reported on a long-running row between Gloucestershire County Council and the district and borough councils in the area over infrastructure funding - which cumulated in a fairly scathing report being published by the County Council for a scrutiny committee meeting held on 22 November. The full report can be found here. The crux of issue is summarised in paragraph 6.4:
"6.4. The severe impacts associated with the implementation of CIL in 5 of the 6 District Councils has been, and continues to be, a source of great concern to GCC. There is evidence to suggest that tens of millions of pounds of developer contributions are no longer being secured by GC every year, with the greatest impact being on primary and secondary education provision. This will result in capacity issues at schools over the next 5 years onwards, once the demand for services from these new developments is required. At a time of ongoing financial uncertainty, such a significant ‘loss’ of income / funding is of great concern and is glowing red on GCC’s corporate risk register."
The wording of the report is somewhat bad-tempered, and I recommend reading the Planning Resource article in full, for the District Councils' responses to it.
It is worth noting, however, that regardless of the discourse, this dispute is not, in fact, the fault of any of the councils reportedly involved. In many ways, it is an inevitable consequence of the design of the Community Infrastructure Levy Regulations themselves. It is something that has been baked into the regime from the start.
One of the biggest problems with CIL is that it breaks the direct link between the delivery of a particular development and the delivery of infrastructure. Instead, opting to prioritise raising revenue over ensuring actual delivery.
As a general rule, outside of London, there can only be one CIL Charging Authority in an area. In two-tier authority areas, the CIL charging authority is nearly always the Local Planning Authority, who not only set the appropriate level of CIL for their area but are also responsible for collecting and distributing the funds.
Whilst there are provisions in the legislation preventing CIL funds being spent on anything other than infrastructure, there are no mechanisms for ensuring that:
- Any of the revenue raised through CIL is actually transferred to county councils; or
- that any of the revenue raised through CIL is actually spent at all.
In the absence of any statutory mechanisms mandating how CIL is to be distributed, it is left to each district or borough council to put their own mechanisms in place. This often requires county councils to navigate a patchwork of different allocation requirements to access funds which, under the old 'section 106' regime would have simply been paid to them directly.
An example of this 'patchwork' approach can be seen in the table below, which is taken from Kent County Council's most recent Infrastructure Funding Statement:
Table 9 – District CIL regimes and access to CIL funding
|Process for accessing CIL funds
|Adopted Apr 2020
|Bidding process under development
|Adopted Apr 2014
|Representation within Leader’s Advisory Group and projects within Dartford’s Infrastructure Delivery Plan
|Folkestone and Hythe
|Adopted Jul 2016
|Set proportion of funds passed to KCC annually to spend on CIL infrastructure priorities
|Adopted Oct 2017
|Application to annual bidding process
|Adopted Feb 2014
|Application to CIL Spending Board
|Tonbridge and Malling
The result of this "patchwork" approach to distribution, and the difficulties associated with navigating it, has resulted, in some parts of the country, to less money actually making its way to the types of infrastructure projects for which county councils tend to be responsible. This definitely appears to have been the case in Gloucestershire, where the County Council has reported:
"4.13. Overall, it is very difficult to directly compare S106 and CIL as the application of the two funding systems differs due to the different trigger points and calculation methodologies applied by each of the five LPAs in question. What is clear, however, is that the introduction of CIL has had a significantly negative impact on the scale of development contributions agreed and received by GCC. It remains the case that GCC has not received a penny of CIL from CBC, CDC, GCiC nor TBC since its implementation. This is an increasingly serious issue which needs to be acted upon by the LPAs in question as a matter of urgency. It is therefore encouraging that the JSP authorities have already started to actively review this situation and the associated governance arrangements." (my emphasis)
This has led some county councils to express a distinct preference for the securing contributions through s.106 Agreements instead. Indeed, to quote Gloucestershire again...
"4.14. Under CIL GCC has significantly less influence in relation to the essential link between proposed development sites and the required mitigation measures. However, under S106 arrangements the link between the development site and the mitigation measure is clearly understood, including the financial requirements needed for mitigating the impact of the new development on existing services. It has worked very successfully in Gloucestershire over many decades."
Gloucestershire County Council is not alone in this.
Kent County Council has started to request s.106 contributions for county provided infrastructure even from developments in the CIL charging parts of the county. Indeed, I have recently seen a committee report for a development in Sevenoaks which contained the following paragraphs:
"This proposal is CIL liable. CIL contributions are intended to fund infrastructure to help support development. KCC Economic Development have raised requests for funding for services that the County Council provide via s106 funding arrangements. They have specifically requested the following monies:
- Primary Education expansion - £64988
- New Secondary Education provision - £72464
- Acquisition of Secondary School Land - £61500.32
- Special Educational Needs and Disabilities - £8462.48
- Community Learning - £1132.98
- Youth Service - £4519.50
- Library Bookstock - £3826.05
- Social Care - £10,134.72
- Waste - £12,673.23 255
The total contributions requested would amount to approximately £239.4k.
This development would generate approximately £1.1m in CIL receipts. This level of CIL receipt is more than enough to cover KCC infrastructure requests. As Infrastructure providers, KCC would be able to bid for funds in line with the Council’s existing CIL spending procedures. As Sevenoaks District Council is a CIL charging authority, it would not be reasonable to secure other financial contributions for infrastructure in this instance."
I understand that the reason for this relates to the greater certainty that s.106 Agreements provide county councils of both the timing of the receipts and that they will actually be forthcoming.
As pressure on local authority budgets continues to grow, these types of disputes are likely to become more and more common. Which is unfortunate, given that the potential for them was both foreseeable and, indeed, baked into the legislation from the start.
Perhaps it is time to return to a more direct mechanism for linking the provision of infrastructure funding to actual delivery? Maybe, there is a case for asking Santa to revisit the LURB proposals for a new Infrastructure Levy and just bring back s.106 Agreements, instead.
Planning Application Fees
Our second money related story of the day also comes from Planning Resource. In an article published today, they report that DLUHC are actively considering ways to get more resources into local authority planning departments, including:
- the possibility of ring-fencing planning department budgets; and
- increasing planning application fees.
The first of these proposals is still at an early stage, but it would come as a welcome relief to planners in those councils who use planning revenue to subsidise other departments.
The second of the proposals could be done at any time. The Fees Order is secondary legislation, and it does not require much in the way of parliamentary time to amend it.
Given that a large number of the practical problems with the planning system at present are resource related, I am sure that anything that can be done to ease the pressures on local planning authorities in this respect will be gratefully received.
Let's just hope that the matter of local authority resourcing doesn't get left until the ongoing issues with LURB have been resolved. As that could be a very long wait indeed...
* Our Christmas tree is going up at the weekend. Can't wait!
The report said that it "remains the case that GCC has not received a penny of CIL from [Cheltenham Borough Council, Cotswold District Council, Gloucester City Council, or Tewkesbury Borough Council] since its implementation. This is an increasingly serious issue which needs to be acted upon by the LPAs in question as a matter of urgency."
The document also said that the introduction and implementation of CIL "and the significant impact this has had on GCC securing site-specific development obligations through section 106 (S106) legal agreements" is a "significant area of major disagreement between (most of) the district councils and GCC".”