Contribution
My Lords, I support Amendment 170 in the name of my noble friend Lord Gascoigne. As I indicated in the previous group, I sat on the CIL review 10 years ago with Liz Peace, whom some noble Lords may know from the restoration and renewal programme, as well as Andrew Whitaker from the Home Builders Federation, which is probably where my noble friend gets his figure of £8 billion from.
When I was a council leader, we had three councils that came together in the Greater Norwich area, and we were early adopters on CIL. We were only the 12th area to do it, and we pooled our CIL, blind to the administrative boundaries between us, to try to make a step change in the amount of infrastructure delivered. Sadly, following the CIL review in 2017, few other areas joined the bandwagon, and now many areas are not in scope—they have Section 106. But in principle the community infrastructure levy has much to commend it, as it is quick, simple, clear and a lot more straightforward than Section 106. However, there are some problems, one of them being sufficiency.
What we discovered on the CIL review was that the amount of money generated by the CIL was probably some 15% of the total infrastructure requirement, aggravated in many cases by a large number of exemptions—self-built homes, offices converted under permitted development to residence, and so forth. There was a further aggravating factor, in that local authorities are not permitted to borrow against future CIL receipts as they are against Section 106. That made it significantly harder to get the big, chunky infrastructure done.
As a group of local authorities, we created the Section 123 list, where we listed all the things we expected CIL to fund—and there were sections on green infrastructure, social infrastructure, education, highways and community facilities, including libraries. More than 400 lines populated that Section 123 list, which was published annually as a big report, so that everybody could see what we planned to spend the money on. Of course, I support completely the principle of Amendment 170, but it does not go far enough. It is not enough just to say, “Well, this much money is being raised on this job, and that is it”. You have to balance it—not just with the money coming in but with what you plan to spend out on, and the cash flow. It is a simple truth that after you raise the money, and it is only 15%, the next work and the hardest work is leveraging that 15% in with other sources of money, possibly joint ventures and so forth.
CIL is about financing infrastructure, not just funding it. Financing is putting that deal together, whereas funding is just writing the cheque. It is really important that we help the public to understand and see that essential difficulty. Time does not permit describing all the ways in which we have tried to do that, but this amendment does not go far enough. We need to ensure the money coming in and the Section 123 list of the infrastructure going out, as well as the financing. The most important thing that this amendment falls short on is that it does not set the cash flowing—where do you see the money going in 2026, 2027, 2028 and so forth, in a 10-year rolling period? Unless you do that, just by publishing the amount of money that you have raised, there is pressure to get the money out of the door on less important projects with lower impact, which is where we found a difficulty.
By having a more thoughtful, five or 10-year rolling programme, which contains the income, expenditure and cashflow, you would also give clarity to the development community. If you wish, and if it is sensible to do so, you could make a substitution—take an investment in kind, if you will—instead of making an upfront cash payment. That can be very useful. If a new school, for example, is on the Section 123 list, and the developer is interested in it, the new school can help him sell his houses in a large development, but if the money is not quite there yet, being open, honest and transparent, in this more complete way, makes it clear how schools can be financed in kind by the developer, and sometimes you can leverage more in that case.
I support the principle, although I do not believe it goes far enough; we need a five or 10-year programme. In my area, we publish a comprehensive annual report, which includes all the lines—the income and the outcome. However, while posting the balance is useful, it does not tell the whole story. That is what we need to do to get the infrastructure built but also the public onside.