Julian Francis of the Association for Consultancy and Engineering says the Community Infrastructure Levy is raising nowhere near enough to support house building.
Julian Francis
At last, after months of waiting, we finally have the much-anticipated government White Paper on fixing the housing market in England. Upon closer inspection of this document you could be forgiven for being a little underwhelmed by its recommendations. We are, after all, facing a significant housing crisis that has the potential to not only stall the UK economy, but to create a political crisis.
To put this crisis in context, it now takes a first-time buyer couple 24 years to save up enough money for a deposit without assistance from their family. This fact has led to a collapse of home ownership for people 35 years or below to a record low of just 37%.
The reason for this is well known and understood by all. Since 1998, the ratio of average house prices to average earnings has more than doubled because we are not building anywhere near enough new homes to meet demand.
To add insult to injury, the average London home now earns almost £10 an hour more than the average London worker living in it. How much more perverse a situation can you get than when property earns more than people?
The government proposes to meet this crisis by tackling the serious and growing gap between the number of planning permissions granted and the number of new homes completed. The White Paper states that too few councils have plans to meet the unprecedented housing demand with 40% of local planning authorities lacking an adequate plan for building new homes to meet the projected growth in household numbers.
New centralised standards will be set for local councils to project their future housing needs, with the expectation that the plans will be reviewed every five years. Building more homes, close to city centres and transport hubs, is the only way to halt the decline in affordability, argues Sajid Javid.
“The independent report – A New Approach to Developer Contributions – presents some shocking figures. The report suggests that CIL is not raising as much money as was envisaged by the government when it was first introduced. Nor is it raising as much as local authorities were anticipating.”
All of this, however, fails to deal with a significant and underappreciated issue that is one of the primary causes for the housing crisis in this country – the funding of community infrastructure projects.
As Sajid Javid presented the Housing White Paper to the floor of the House of Commons on Tuesday afternoon, a suite of documents linked to it were released by the Department for Communities and Local Government. One of which was an independent study on the mechanics of the Community Infrastructure Levy (CIL).
The independent report titled A New Approach to Developer Contributions presents some shocking figures. The report suggests that CIL is not raising as much money as was envisaged by the government when it was first introduced. Nor is it raising as much as local authorities were anticipating.
Figures cited by local authorities suggest that CIL is only yielding between 5% and 20% of the funding required for new local infrastructure leaving the balance to be found by local authorities who are already addressing their own financial challenges. This is a financial black hole at the very heart of our planning system.
The report concludes that CIL has not provided the universal and “fair for all’ approach for delivering local infrastructure.
This is not news for ACE which has been arguing for years that the forgotten child of the infrastructure debate has been local community funding for both the social and economic infrastructure that people rely on for their day-to-day activities.
Rather than bringing the promised increase in prosperity, for too long people have seen new development in their area exacerbate the problems they face, from congestion or lack of school places to the inability to get a doctor’s appointment. This is down largely to the fruits of development not being fully shared with the people who face the brunt of the disruptions.
To combat this, ACE has called for specific local infrastructure instruments to allow local authorities to fund the infrastructure their communities need. It is the model that operated in London for both the Olympics and Crossrail and we see no reason why this cannot be done across the country.
I was, therefore, very happy to read that that the report recommends the introduction of a Strategic Infrastructure Tariff (SIT) for Combined Authorities, Local Infrastructure Tariffs (LIT) for local authorities as well as reformed CIL, and Section 106 agreements.
This is something that ACE welcomes but the formula of which LITs are set is yet to be determined by DCLG although it has been suggested that it will be calculated using a national formula based on local market value set at a £ per sq metre rate.
These reforms more than anything else will do more to fix the housing crisis in this country by significantly reducing one of the primary blocks on new development – community resistance. If adopted we may at last achieve the true promise of development to improve the lives of the whole community.
Julian Francis is director of policy and external affairs at the Association for Consultancy and Engineering (ACE)
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