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Community Infrastructure Levy details announced

So-called Roof Tax is tax on floors

Community Infrastructure Levy (CIL) is the official term for the so-called Roof Tax which will replace Section 106 agreements as a means of capturing some of the land value released from planning permissions.

One of the last inept acts of a wretched and dying government, the proposal has been put together following the collapse of the Planning Gain Supplement. The legislation is set out in a newly issued Statutory Instrument which you can download here.

In short, the charge is meant to contribute towards the cost of new infrastructure that is needed as the result of the development for which planning permission is given. The amount payable is proportional to the increase in gross internal floor area resulting from the development.

Thus the built-in incentive is not to develop at all or to construct cramped and mean houses, flats and offices with the smallest rooms the builders can get away with. What a wonderful idea!

What the tax is actually doing is taking a little bite out of land value at the time of development, which is precisely the wrong time to do it, with a perverse incentive to build small. At most, it can only pay for capital infrastructure projects at a local level. The CIL collected on a development 30 miles from London cannot possibly contribute usefully towards the cost of motorways and the upgrading of commuter train services, as will be needed if it is one of many such schemes that collectively will result in more traffic. Nor, if this infrastructure is upgraded, does the CIL collect any of the resulting enhancement in land values.

CIL is an improvement on Section 106 agreements, with their uncertainties and other problems, but land value should not be collected in this way. Infrastructure can not be paid for out of the increase in the selling price of land resulting from planning consent. Land value should be collected through a charge on the whole of its annual rental value (land value taxation, LVT), which means that if planning consent is given, then its rental value goes up and the land value charge goes up correspondingly, with no further ado apart from a fresh valuation. Likewise, infrastructure developments lead to changes in land values and LVT automatically picks up part or all of those in perpetuity.


The legislation is extremely complicated and the Statutory Instrument runs to 72 pages. It looks as if there is plenty there for lawyers to argue endlessly over, and probably, an abundance of loopholes. For the record, the The London Rating (Site Values) Bill 1939, in comparison runs to 34 pages. We recently had this checked by one of our own tame lawyers, who expressed the view that apart from the references to local rather than national taxation, it is would, broadly speaking suffice. So much for LVT being “complicated and hard to understand”. But since the British government has set its face firmly against LVT, it is willing to impose legislation that is orders of magnitude more complex, to achieve less, and the public will continue to have this kind of legislative mess inflicted on it.

The Campaign did not comment at the consultation stage of this particular proposal but we have responded to almost every consultation since 1997. The consistent pattern is that the comments are noted, often with approval, and then ignored, fobbed off, or excused away. We have concluded that consultations are a sham since they do not affect outcomes. On the other hand we helped to provide fuel for the opposition from other outside interests, which eventually sank the Planning Gain Supplement. Though responding to consultations is not a waste of time, it is unrealistic to expect positive outcomes in the short term.

Unintended consequences

The CIL will have all sorts of unintended and undesirable consequences. It will slow economic recovery by discouraging development. It will not raise adequate amounts to pay for infrastructure. It will encourage the building of cramped properties, at a time when space standards in Britain are already the smallest in Europe. When there is no coherent view of land economics and the operation of the land market, there can be no rational legislation for the taxation of land. It would be pleasant to be able to contemplate the prospect of better from a prospective incoming government but sadly that is a forlorn hope.