Local leaders urge the government to axe infrastructure levy reforms

In a letter that was written to Michael Gove, local leaders have warned proposals for a new levy for developer contributions should be shelved.

In March 2023 the government outlined plans to introduce a new infrastructure levy in a bid to bring about more affordable housing. However, 30 organisations have joined together and submitted a letter to Levelling Up Secretary, Michael Gove, last week claiming the plan could damage local planning and stifle investment.

Overall 30 organisations, including the Construction Leadership Council, Build UK, the Construction Industry Council, the Royal Town Planning Institute, and the Local Government Association took part in contributing to the letter.

The document warns that the levy could ‘make it harder, not easier, for local leaders and communities to secure the benefits of new development’ – resulting in local authorities and housing providers delivering fewer homes for affordable and social rent, which during these difficulties times, are in high demand.

Although, the government have argued the opposite, claiming the new levy will help to provide more affordable properties. However, the signatories claim that it is unclear how the proposed levy’s rates and thresholds will protect the delivery of affordable homes, warning that ‘we cannot support reforms that are likely to leave communities with fewer social and affordable homes, mixed and balanced developments and less of the infrastructure they need.’

In addition to providing fewer affordable properties, the document proposed to Mr Gove also highlights the lack of thinking the government have done around how homes will be financed. By introducing the new levy, the government intends to replace the current developer contributions system, which includes Section 106 (S106) and the Community Infrastructure Levy (CIL). Payments under S106 finance affordable housing and on-site infrastructure and CIL fund large-scale infrastructure projects. The current system raises around £7bn per year.

Following this, the letters states that the reforms could raise less money for affordable and social rent homes, while there would be less of a legal obligation for this tenure of housing to be included by developers. Last year, s106 was responsible for delivering 47% of all affordable homes built in England.

As a result, the letter is now calling for a ministerial roundtable meeting to explore options for reforming the current system instead of introducing a brand new one.

‘This radical overhaul of the developer contribution system therefore presents significant operational and economic challenges that will make it difficult for existing communities to realise the benefits of new developments in their area,’ the letter said. ‘Every signatory of this letter remains committed to supporting you and officials in your department to get the best outcome for local communities.’

The letter read: ‘We have come together today to ask that you work with us to fully reconsider how S106 and the CIL could be improved and more widely implemented.’

Image: Jack Taylor – Getty Images