Developers are demanding the government limit the scope of a proposed planning tax or risk jeopardising new development.

Home Builders Federation (HBF) and British Property Federation (BPF) representatives have told the government they want a list of what the community infrastructure levy (CIL) can be used to pay for included in the Planning Reform Bill.

John Stewart, director of economic affairs for the HBF, said the list was vital to prevent councils from expecting more from developers over time, and to stop developers from being asked to pay for the same infrastructure through the CIL and the section 106 system.

He said: “Without clarification, every council would have a different wishlist. The tendency for creep could start to render developments unviable.”

The CIL would take the form of local tariffs, along the lines of the Milton Keynes roof tax, to pay for the infrastructure needed to support development. The proposals are contained in the Planning Reform Bill and replace proposals for the national development tax known as the planning gain supplement.

Michael Chambers, director of regeneration for the BPF, said there were “intensive” discussions with government on the issue. Transport and education infrastructure are both areas the CIL would be expected to contribute to, but other areas, such as healthcare or prisons, would be more controversial.

Sources suggest officials in the communities department do not object to the idea in principle, but are concerned about whether a working list could actually be agreed in time to add to the bill.

Chambers said: “There are some fairly obvious things that would be included, but it quickly becomes very complex. There needs to be a lot more discussion about where the parameters lie.”

The government has set up consultation groups to work through the CIL. These include the HBF, BPF, lobby group London First and the Major Developers Group.

Planning the planning tax

Nov 2003 Proposals for “optional planning charge” put in Planning and Compulsory Purchase Bill. Voted out by House of Lords.
Mar 2004 Kate Barker raises prospect of planning gain supplement (PGS) to tax increase in land values gained upon receipt of planning permission
Dec 2005 Then-chancellor Gordon Brown backs the PGS
July 2007 Prime minister Brown says he is willing to drop PGS if developers come up with workable alternative
Oct 2007 Chancellor Alistair Darling scraps the PGS
Nov 2007 Planning Reform Bill published with details of community infrastructure levy