To report the Executive’s response and action plan in respect of the report of the Task and Finish Group on Community Infrastructure Levy.

This item reported the Executive’s response to the second phase report of the Task and Finish Group on Community Infrastructure Levy (CIL); minute 17 of the 16 July 2013 Committee refers.

The Assistant Director updated the Committee on the government’s proposed reforms to CIL arising from practice experience in pathfinder authorities and a consultation that had been undertaken in April and May 2013.  The government response was published at the end of October 2013 as ‘Community Infrastructure Levy: Consultation on further Regulatory Reforms’.  It was expected that, subject to Parliamentary process, the new regulations would come into effect by the end of January 2014.  The main proposals included:

1.       In view of the changes required, local authorities would be given an extra year to continue the current policy of pooling Section 106 obligations into broader schemes (until April 2015); this was supported by 89% of respondents.

2.       Authorities would be required to strike an appropriate balance between the desirability of fund infrastructure from the levy and the potential effects of the levy on the economic viability of development across the area; supported by 86%.

3.       Authorities would be allowed to set differential rates by reference to both the intended use and the scale of development, e.g. retail development; supported by 86%.

4.       The government would require the Regulation 123 list, setting out the types of infrastructure that may be funded by CIL, to be available during the rate setting process, including at the examination; supported by 83%.

5.       Authorities would be given the flexibility to extend social housing relief to include affordable rent and discounted housing market homes; supported by 75%.

6.       As discussed at Task and Finish Group meetings, relief for self-build homes for individuals was proposed.  This was only supported by 39% of respondents but the government was intending to proceed with this, subject to a rigorous two-stage vetting process.

The Assistant Director commented that, with some of the uncertainties cleared up, this would set the scene for the next phase of work on CIL.  The Council was about to re-engage its retained consultants, to include input from the reinstated Task and Finish Group, to identify precisely the basis for their work and to capture the accepted recommendations from the group’s second phase report.  It was anticipated that the next phases of consultation would commence in the new calendar year.

The Assistant Director responded to a number of questions from the Chairman, Vice-Chairman (also Chairman of the Task and Finish Group), and other Members.   The principal points included:

a.       The ‘Community Infrastructure Levy (Amendment) Regulations 2013’ required the charging authority to pass 15 per cent of the relevant CIL receipts to the parish council for that area.  For development within an area that had a neighbourhood plan in place the authority must pass 25 per cent to the parish council for that area. 

b.       It was confirmed that the legislation permitted setting a zero CIL rate in some zones, e.g. Leominster greenfield urban extension.

c.       It was the intention of the authority to have the Local Development Framework (LDF) and CIL tested by an independent Planning Inspector at the same time and, subject to the availability, this might be held in spring or summer 2014.  It was noted that CIL was now lagging behind the LDF and officers would be focussing attention on this work.

d.       It was reported that the Council had received a large number of responses to the consultation on its Preliminary Draft Charging Schedule (that ran from March to April 2013) but these had yet to be published.  It was acknowledged that the authority needed to update respondents on the next phase and on the changes in approach to reflect the latest government guidance.

e.       The Assistant Director confirmed that the delay in starting the third phase of work would not inhibit the Task and Finish Group from contributing in a positive way, as it had done in the earlier phases.

f.       Attention was drawn to the Executive response to recommendation 5a and b, ‘Consideration will be given to phasing the infrastructure projects in the IDP (Infrastructure Delivery Plan) with the development trajectory in the Core Strategy.  The phasing will also however, be potentially influenced by the development of the Core Strategy evidence base in relation to traffic modelling and the Nutrient Management Plan.’  The Assistant Director reported that significant elements of the Nutrient Management Plan had been completed but had not yet been signed off.  He also reported that the traffic modelling was likely to be available later this calendar year.  It was noted that the final round of consultation was likely to be delayed until the information was available to all parties, with consultation responses ultimately forwarded to the Planning Inspector.

g.       In response to a question about the IDP and the Economic Viability Assessment (EVA), it was reported that the authority would need to marry up how processes were worked through.  It was likely that detailed technical work on CIL related elements would be completed and available as part of the consultation process in early 2014.  It was noted that there was a difference between having CIL and LDF tested at the same time and when they were submitted.  A judgement would need to be made once the new timetables and the capacity of the Council’s consultants was understood.

h.       It was noted that a decision had been taken to decouple the CIL process from the Core Strategy process, partly for reasons of capacity, and it was questioned whether the EVA would be available for the final consultation on the Core Strategy.  The Assistant Director reported that the viability of the LDF was one of the outstanding issues which would need to be in place before the plan could be submitted.  He added that there was a subtle difference between the viability of the plan and the work that underpinned CIL.

i.        The authority was working to resolve the outstanding technical issues and have all the relevant information in place that would be expected by the Inspector.  It was commented that the Planning Inspectorate was increasingly acting as an advisory service in order to address issues prior to submission and examination.  It was noted that the work was being informed by the experience of other authorities, however there were specific circumstances for Herefordshire e.g. traffic modelling and water quality.  It was also noted that the authority was constantly reviewing its ability to deliver the housing numbers, with significant progress made in terms of areas outside Hereford and the Market Towns in consultation with Members.

j.        It was noted that there was an interrelationship between the LDF and the FYHLS; in the event that the Secretary of State supported the submission of the plan, this would provide the ability to grant permission for some of the larger strategic housing sites which would help to meet and, and in some cases go beyond, the FYHLS.

k.       The Assistant Director said that the Council had chosen to undertake CIL but only time would tell whether CIL would have an impact on development coming forward.  As referred to in point 2. above, it was re-iterated that authorities would need to strike an appropriate balance.  He added that preliminary work by the Planning Obligations Manager showed that there would be relatively limited difference between CIL and the application of current policy using Section 106 Agreements.

l.        Further to point a. above, it was confirmed that the amended regulations specified a cap on CIL receipts passed to parish councils.  However, it was understood that the cap was relatively generous and should not have a significant impact on the types of schemes coming forward in Hereford and the Market Towns.  It was commented that, if necessary, the Council’s consultants could model this as part of the next phase.

m.     Local councils could use CIL receipts for the provision, improvement, replacement, operation or maintenance of infrastructure or for anything else that was concerned with addressing the demands that development places on an area.  However, no detailed schedule had been issued, so a degree of judgement would be needed.

n.       It was reported that the amended regulations would also enable greater flexibility regarding the phasing of CIL payments on larger schemes.

RESOLVED:  The Executive response and contents of the action plan be noted.