RICS response to the technical consultation on the Infrastructure Levy

The RICS has responded to the Department of Levelling Up Communities and Housing’s (DLUCH) technical consultation on the Infrastructure Levy (IL). Our response to the consultation was informed by the insight and expertise of RICS members from the Planning & Development group, who gave their time, ensuring a plurality of views have been considered.

Overall, we welcome the government’s intention to simplify the development levy system applying to new development. We also recognise that the current proposal moves from an existing measure intended to capture a proportion of the uplift in land value to fund infrastructure and affordable housing, to a measure which is explicitly intended to maximise land value capture subject to maintaining development viability. As such, it seeks to address an area of planning policy unresolved since the introduction of the Town and Country Planning Act 1947 i.e. capturing unearned uplift in land values associated with planning measures.

Nevertheless, the proposed IL represents significant change, which will be implemented over an extended period. We regard this measure which is a form of development land tax with extreme caution, conscious of previous experiences. We are keen to find more equitable and administratively efficient ways of funding necessary infrastructure and affordable housing while maintaining the business case to develop. At the same time, we are concerned about serious unintended consequences the IL proposals may have on land markets and the planning and development process.

Key themes from the IL consultation and our response to them are set out below:

• The long timeframe for implementation of the IL – although beneficial in easing the measures into the system, it also leaves the proposal exposed to short and long-term political risk. Given this timeframe, there is a strong case to reconsider how improving Section 106 (s106) agreements in the short term or as an alternative to the IL can help improve the planning gain process.
• A confusing picture – The potential distortion of land markets with three different land value capture measures in operation namely Community Infrastructure Levy (CIL), s106 and IL (Test and Learn; Transition period)
• Unequal cost and benefit – a mandatory IL will result in an implementation cost and resource burden for low value locations, with many of these areas not having adequate land value uplift to capture. Therefore, it is currently unclear what the current cost/benefit is for these locations.
• A lack of local plans – As highlighted in our response to the National Planning Policy Framework Reform (NPPF) consultation,  many local authorities have suspended work on replacement local plans increasing the number of expired plans unsuited for the piloting and implementation of the IL proposal.
• Skills & capacity – There are concerns as to whether there are the skills and sufficient capacity in the private sector to service both public and private sector clients when it comes to continual viability assessments and rate setting scrutiny through the charging schedule process. This capacity concern extends to local planning authorities, and there are questions around the ability to deliver existing planning services, without implementing new measures, potentially stalling current plan making and investment decisions.
• A localised approach needed – Proposed housing thresholds to determine the IL routeway are too high as set out in the consultation document and should only be prescribed at a local level.

The IL and NPPF consultations highlight the government’s focus on reform of the planning system, and we will continue to work alongside our members to provide expertise to the government as this develops.

We will also continue to work closely with the IL team at DLUHC and have held a series of workshops to address aspects of technical detail of the levy. These workshops will continue following our consultation submission.

For more information or to get involved in RICS’ policy work, contact Senior Public Affairs Officer, Robbie Toomey at rtoomey@rics.org