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Developers levied to pay for infrastructure

Councils who back plans for new homes will be able to raise hundreds of millions of pounds by a levy on new developments, to spend on local infrastructure like roads, schools, parks and health centres.

The Community Infrastructure Levy (CIL), will help fund massive new investment to sustain new homes, Yvette Cooper said in one of her final announcements as housing minister.

Ms Cooper, who left her housing post today to become chief secretary to the Treasury, added: “I want this new community levy to give councils and communities the extra support they need to do their bit to improve their area for families and for the future.”

The CIL is part of the Planning Bill which has just begun its passage through the committee stage. It is anticipated that local councils will be able to take advantage of these powers from spring 2009.

The levy will give councils the power to set charges to pay for infrastructure when a new development takes place, which is expected to unlock hundreds of millions of pounds more for local infrastructure and services.

Under the current system, only 14 per cent of all residential planning permissions make any contribution to the cost of supporting infrastructure and these generally cover the largest schemes. But even minor developments generate a need for infrastructure and services in an area.

The Government wants all developments to pay a share and those who benefit financially when planning permission is given contribute back to the local community by funding local infrastructure.

The new powers will allow councils to set a CIL for their area following an assessment of local infrastructure needs and consultation with their local community. Different types and sizes of development would pay different amounts depending on local needs to help ensure that the new infrastructure needed to maintain sustainable growth is provided.

The option for councils to raise a CIL on developments come on top of the £14 billion already being invested across Government to provide infrastructure to support housing growth.

The CIL will work in conjunction with other incentives for communities supporting new homes, including the £500 million Housing and Planning Delivery Grant and the £1.7 billion housing infrastructure investment from the department.

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