Section 106 and CIL

  • By London Councils

When new developments happen, the developers are usually asked to pay a contribution towards the funding of associated infrastructure Historically this was through 'Section 106' agreements negotiated between local authorities and developers, although the Planning Act  2008 introduced a new way of doing this - the Community Infrastructure Levy, or CIL.

Section 106

S106 contributions remain the primary means for boroughs to ensure that developments pay for infrastructure that supports them. However, only 7% of developments attract a S106 agreement, and agreements are by their nature uncertain in terms of what they can deliver.

S106 contributions are negotiated between boroughs and developers, and can pay for anything from new schools or clinics to roads and affordable housing. 

The Community Infrastructure Levy (CIL)

Introduced by the Planning Act 2008, local authorities are allowed, but not required to introduce a CIL. CIL is different to S106 in that it is levied on a much wider range of developments and according to a published tariff schedule. This spreads the cost of funding infrastructure over more developers and provides certainty as to how much developers will have to pay.

A number of London boroughs are looking at implementing a CIL in the near future. Once a CIL is implemented, a borough will still be able to negotiate for a S106 agreement, but it will be restricted to site-specific measures and to the provision of affordable housing. 

Recent Changes

The Coalition has confirmed that it is retaining CIL, but it is making some minor changes to the regulations about how it can be drawn up and collected.  More significantly, the new government has said that 'a meaningful proportion' of any borough's CIL will in future be passed to local communities to spend as they see fit. London Councils is concerned to ensure that any dilution of the CIL that boroughs receive does not undermine their ability to fund necessary infrastructure.  

Additionally and uniquely in London, the Mayor is levying his own CIL, to fund £300m towards Crossrail.  London Councils is lobbying to ensure that the rate at which the Mayoral CIL is set does not undermine the viability of developments and the ability of boroughs' CILs to raise necessary infrastructure funding. We are working with boroughs and the GLA to ensure that the requirement on boroughs to collect the Mayoral CIL places as small a burden as possible on boroughs. 

The Mayor has consulted on his CIL twice in 2011, and you can see London Councils' responses to these consultations below.