When CIL was introduced, its primary objective was to make the planning obligations system “fairer, faster 
and more certain and transparent” (CIL: An Overview, DCLG 2010). Recent figures on housing completions, planning applications and CIL receipts all suggest that this has not been achieved, with the exception of the London Mayoral CIL, which has exceeded expectations.

The key issue is ultimately that the CIL model relies on the delivery of development to raise funds. A “Catch 22” is subsequently created (see Figure 1), as in many cases development cannot commence until the necessary infrastructure is delivered. Similarly, without housing completions Charging Authorities cannot secure CIL receipts.

click on figure 1 below to enlarge

Given the scale of most Local Authorities’ funding gaps, CIL will only ever make up a small percentage of the shortfall. This is a point illustrated by the London Mayoral CIL which, despite its success, is only anticipated to make up 2% of the funds needed to pay for Crossrail.

Local Authorities are therefore reliant on securing alternative funding sources if they intend to pursue “Council-led delivery”, which is difficult for two reasons. Firstly, there is a limited amount of public funding available, making it necessary to prioritise certain projects. Secondly, the CIL Guidance states that Charging Authorities are prohibited from borrowing against future CIL receipts. It is therefore inherently difficult for Charging Authorities to secure funding to deliver infrastructure projects ahead of development.

What does this mean 
for the future of CIL?

Increasingly, Local Authorities are opting to pursue a “developer-led” approach based on a zero CIL rate and site specific Section 106 mitigation. To date, over 30 Local Authorities have published a Charging Schedule that includes 
a zero CIL rate for strategic sites 
or key growth areas, suggesting that Section 106 is the preferred system for large-scale development.

However, the success of the 
London Mayoral CIL would suggest that CIL can be an incredibly powerful tool if it is kept simple, transparent, far-reaching and is used alongside additional sources of funding.

CIL Take-up

Our forecasts show that only 26% of Local Authorities will have a CIL in place by April 2015 when the Section 106 pooling restriction takes effect.

Of the remaining Local Authorities, our research highlights that a further 19% of Local Authorities do not intend to pursue CIL, raising the question of how strategic infrastructure will be funded in these areas.

Taken from
Spotlight: CIL - Is it delivering?