The Community Infrastructure Levy (CIL) has been in place for over a decade, designed to ensure that new development contributes towards the infrastructure needed to support it.
Traditionally, it has been most associated with residential and retail schemes, with many Local Planning Authorities (LPAs) considering industrial development less viable to charge.
That may be about to change, as James Williams, Planning Associate in the Public Sector Property team at Vail Williams, explores.
What is CIL?
CIL is a charge that local authorities in England and Wales can set on new development to help fund schools, roads, public transport, healthcare facilities, and other infrastructure.
Unlike Section 106 agreements, which are negotiated on a site-by-site basis, CIL provides a more transparent and consistent mechanism to secure contributions from developers.
Rates are set by individual LPAs, informed by viability studies and subject to public consultation and examination. Crucially, CIL is only levied where the market can sustain it.
Why is Stevenage reviewing CIL?
Stevenage Borough Council in Hertfordshire has recently submitted a draft CIL charging schedule to the Secretary of State for examination (15 August).
If adopted, it will replace the 2020 schedule which was based on a 2017 viability study that concluded there was “no scope” to introduce CIL on industrial development.
Fast-forward to 2024, and the market has shifted dramatically.
The pandemic accelerated growth in the industrial and logistics sectors, driven by e-commerce and demand for warehouse and distribution space. This has pushed up land values and altered viability assessments.
As a result, Stevenage is proposing to introduce a £40 per square metre levy on industrial development – a notable first step for an LPA in recognising the changed dynamics of the sector.
Whilst many LPAs are not revisiting their CIL schedules – particularly with ongoing devolution discussions raising questions about consistency across neighbouring authorities – Stevenage’s move highlights a trend worth monitoring, as Luke Storey, Agency Associate at Vail Williams, explains:
“Historically, industrial and logistics schemes haven’t been subject to Community Infrastructure Levy (CIL), but we’re now seeing local authorities such as Stevenage begin to apply it. The question is whether this is a one-off, or the start of a wider trend in the market. While larger schemes with stronger margins may be able to absorb the cost, in more secondary locations even a small change in profitability could affect viability, potentially stifling new development.”
If adopted, it could set a precedent for other councils under pressure to capture value from the booming industrial sector, which could have unintended consequences.
There will be challenges, particularly around:
- Consistency across boundaries: where neighbouring LPAs adopt different rates
- Market sensitivity: ensuring new charges do not stifle development appetite
- Viability testing: keeping pace with fast-moving shifts in land values.
