Comment


“Rather than councils taking on an increasing responsibility for commercial and investment decisions directly, while having increased responsibilities for budget allocation... I propose greater collaboration with the private sector.” Mark Edgerley, Associate Director of Boyer (part of Leaders Romans Group)


Te means by which the Government hopes to address the financial issues facing local authorities is a new Infrastructure Levy. It is proposed that the Infrastructure Levy would replace both the Community Infrastructure Levy (CIL) and Section 106 payments, to be calculated on the Gross Development Value (GDV) of a scheme on completion. Te rationale for the new levy is the Government’s stated objective in the


context of levelling up: ‘ensuring local communities can take back control’. Central to this is additional borrowing and budgeting powers: a new ‘Right to Require’ aims to strengthen local government’s powers in the negotiation process and through the Infrastructure Levy it is intended that developers pay more (a ‘fairer share’) which can help fund affordable housing and local infrastructure including transport, healthcare and education. With much of the levy payable on completion rather than throughout development, the change (to be implemented through secondary legislation attached to the Levelling Up and Regeneration Act) would give local authorities additional borrowing powers. However, I question whether these extended powers will ultimately benefit


local authorities, which are already almost universally under-resourced and whose circumstances have, in some cases, been worsened as a result of bad investments and poor commercial decisions. My concern is that enabling local authorities to borrow against future receipts opens up the potential for yet more Section 114s. Furthermore, there is concern in the industry that, unlike CIL and Section


106, the Infrastructure Levy funds may be spent on costs not associated with infrastructure. Terefore there is an increased likelihood that the funding will be used for other requirements, rather than specifically for the new communities that are being created. As we have already seen, this is exacerbated as demands – from social care to meeting net zero – increase. Under Section 106 and CIL, funding may not be used by local authorities to fund in a commercially and speculative manner. While this limits the


opportunity for smart investments, it also reduces risk and ring-fences the funds for community infrastructure and provision of housing and services associated with the new development. Te downside of the ‘flexibility’ brought about by the Infrastructure Levy is


that more mistakes could be made in public expenditure. Financial decision-making by locally elected politicians will invariably


be compromised by the fact that politicians, understandably, are motivated by achieving electoral support within a specific political cycle. Tis tends to be achieved through short-term successes, rather than the longer-term approach that strategic investment requires. Changes in leadership, policy priorities and political agendas will inevitably compromise long term success. Rather than councils taking on an increasing responsibility for commercial


and investment decisions directly, while having increased responsibilities for budget allocation (compromised further by diminishing resources) I propose greater collaboration with the private sector. Tere are many instances in which public and private partnerships have


created successful housing and regeneration bodies, and where the private sector has provided resources – such as to planning teams to help local authorities as a means of addressing nutrient neutrality or working on the busier stages of a local plan. In these arrangements, both parties can play to their strengths and the council is freed up to make decisions that only the council can make – such as budgeting. Like many in the development sector I have reservations about the


Infrastructure Levy. Most importantly, the increased flexibility that it offers local authorities should not be regarded as an advantage. If the Infrastructure Levy were to be implemented I would suggest that the greater flexibility (or responsibility) that it bestows on the public sector should be supported by greater flexibility to pursue public/private working arrangements.


26 | HMMFebruary/March 2024 | www.housingmmonline.co.uk


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