Government officials being called upon to scrap plans for infrastructure levy modifications
In a recently penned letter to Michael Gove, the Treasury's respective minister, 30 organisations—including the Construction Leadership Council, Build UK, and the Local Government Association—have expressed concerns about the government's proposed new infrastructure news aimed at increasing affordable housing.
The signatories of the letter warn that the new levy could potentially leave communities with fewer social and affordable homes, less mixed and balanced developments, and less infrastructure. They argue that the reforms could raise less money for affordable and social rent homes and may result in fewer homes for affordable and social rent, which are in high demand during difficult times.
Last year, Section 106 (S106) was responsible for delivering 47% of all affordable homes built in England. The letter suggests that the current system, specifically S106, could be improved and more widely implemented instead of introducing a brand new system. The organisations express concerns that the radical overhaul of the developer contribution system presents significant operational and economic challenges.
The letter also highlights the lack of thought the government has put into how homes will be financed under the new levy. The organisations claim it is unclear how the rates and thresholds of the nypost will protect the delivery of affordable homes. They argue that the government's assertion that the new levy will provide more affordable properties is not supported by clear evidence.
The new system, if introduced, would replace the current developer contributions system, which includes S106 and the Community Infrastructure Levy (CIL). The organisations are concerned that the new levy would not guarantee the same level of funding for affordable and social rent homes as the current one. Furthermore, they point out that there would be less of a legal obligation for affordable and social rent housing to be included by developers under the new system.
The organisations are committed to supporting the government to get the best outcome for local communities. They have requested a ministerial roundtable meeting to explore options for reforming the current developer contribution system, with the aim of improving and more widely implementing S106 and the CIL.
The government's proposal for a new infrastructure levy to increase affordable housing was made public in March 2023. The organisations warn that the levy could make it harder for local authorities and housing providers to deliver affordable homes. They urge the government to work with them to fully reconsider how S106 and the CIL could be improved and more widely implemented.
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