Developers welcome change to infrastructure tax

Housebuilders and developers have welcomed a government climb-down over plans for a levy to be charged on development sites.

The government has proposed a series of amendments to the tax – known as the community infrastructure levy (CIL) – to ensure the safe passage of the planning bill through the House of Lords.

The CIL is a means of using the profit developers generate to pay for the infrastructure needed to support their schemes. It was originally to be levied against the increase in land value after planning permission is granted.

The amendments, due to be voted on by peers after Building went to press on Wednesday, call for the level of the charge to be determined in relation to the economic viability of a scheme, meaning tax would be charged only if the scheme was profitable.

Developers had criticised the original proposals as impossible to enforce and too similar to the previously proposed planning gain supplement (PGS), which was scrapped in 2007 after massive industry opposition.

But the changes have been welcomed by a consortium of developers and housebuilders, led by the British Property Federation (BPF).

We’re really unhappy there’s so little detail on the amendments

Jacqui Lait MP

The BPF said it would work with the government to resolve further issues about how the CIL might work.

Nevertheless, Liz Peace, chief executive of the BPF, warned the government that in the current climate the chances of the CIL achieving “any significant contribution to infrastructure is virtually nil”.

The move from the government prompted the Conservatives to withdraw amendments that had threatened to defeat the bill and declare that they would not vote against the changes.

Jacqui Lait, the Tory planning spokeswoman, welcomed the government “concession”, but added: “We’re really unhappy there’s so little detail on it.”