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Sir Jeremy Hunt (Godalming and Ash) (Con)
I beg to move,
That this House has considered the impact of the Community Infrastructure Levy on private homeowners.
Thank you, Mr Turner, for presiding over this debate on an issue that is having profound life-changing consequences for ordinary families across the country. I also thank the Minister for his interest in the issue. Politics can be very tribal, but I have already met him twice to discuss it, both times with Councillor Jane Austin from my constituency—once in July last year and once in December last year, alongside my hon. Friend the Member for Farnham and Bordon (Gregory Stafford). I know he wants to solve the issue.
The community infrastructure levy, or CIL, was introduced for the best of reasons: to ensure that commercial developers contribute towards the cost of the infrastructure needed as a result of their developments. It was never intended as an extra tax on people doing home extensions, and certainly never as a retrospective tax that people are landed with unexpectedly after the event. Most councils understand that, but one or two have ruthlessly exploited loopholes that allow them to punish homeowners, including Lib Dem-run Waverley in my constituency, which charges over £550 per square metre, one of the highest in the country.
But it is not just there. This morning, I heard about a case in Sevenoaks, where the district council pursued a stay-at-home mother relentlessly, in a case championed by my right hon. Friend the Member for Sevenoaks (Laura Trott). For many families the consequences have been devastating. Some have been forced to sell or remortgage their homes, and the financial burden, alongside the stress and uncertainty, has been immense. Some have fought their councils for years, hitting brick walls at every turn. I am aware of 15 families in Waverley alone who faced unexpected charges, ranging from £26,000 to £235,000.
There are now more than 100 known other cases across the country. Here are some examples: Steve Dally and his wife Caroline have been forced to remortgage their home to pay a £70,000 CIL charge on a home extension in Godalming. As they explained to me and local councillor Jane Austin, they are not developers; they simply extended their home. They hit a brick wall when they challenged Waverley and had to risk additional penalties and compounded interest in the process.
Another Godalming couple were hit with a £70,000 bill because they were living in rented accommodation while their home was being renovated. In Milford in my constituency, a homeowner was forced to pay a £120,000 CIL bill when forced to submit a retrospective planning application because two walls of his existing home fell down. For failing to give notice of the walls falling down he was charged £2,500 in penalties because he had failed to submit a commencement notice, something he had never heard of.
Enton resident Helen Grant reluctantly settled a £56,000 CIL charge on the family home, only to be sent a bill for a further £3,000 in interest charges when the council reviewed her case, which had already been closed. It is not just Waverley; I pay tribute to the CIL Injustice Group, which operates across the whole country. Many of its members are watching from the Gallery today, including people from Wokingham, Tonbridge and Devon.
Jim Shannon (Strangford) (DUP)
I thank the right hon. Member for bringing this issue forward. I remind him of the cautionary tale from Northern Ireland. We operate without a CIL-style levy. Instead, we rely on bespoke section 76 agreements, which avoid the tax-like rigidity of CIL. That has left us in Northern Ireland with a multibillion-pound funding gap for infrastructure—specifically, for our waste water systems—which is now halting thousands of developments across 25 cities and towns in our 11 council areas. Does he agree that we must ensure that this measure is not just a sales tax on development value but a ringfenced guarantee for the specific pipes and roads that make those homes habitable? The cautionary tale from Northern Ireland is an example of where this has gone wrong.
Sir Jeremy Hunt
I thank the hon. Member; he always makes very thoughtful contributions. He makes two very important points. The first is that we do need developers to contribute towards infrastructure costs. The risk of the appalling injustice that I am drawing attention to today is that we lose social consent for very important contributions that enable much-needed infrastructure to be built. Secondly, he is absolutely right to say that not having CIL at all would be very bad. In my area in particular, there is constant concern about the lack of infrastructure to keep pace with new housing developments.
I want to return to the CIL Injustice Group, because their accounts are extremely concerning. Some are nervous about dealing with their council because of the bad way they are treated. Others spend thousands of pounds on legal fees, often unsuccessfully. Part of the issue is that CIL is an extraordinarily complex process. Forms must be filled in in the correct order and are subject to strict timetables. Even professionals struggle. It is very unforgiving if someone gets it wrong. They have to pay within 90 days, under threat of seizure of assets and imprisonment, and if they do not comply, they get slammed with thousands of pounds in late charges and interest on top of that. There is effectively no right of appeal, and most importantly, there is no ability to correct errors. Ordinary homeowners inevitably do make errors, but there is no latitude in the system to allow them to correct those errors.
Richard Foord (Honiton and Sidmouth) (LD)
Does the right hon. Member share my view that when the community infrastructure levy was introduced, it was not designed to penalise people who were adding extensions to their homes or seeking to self-build? Rather, it was designed as a levy on large-scale infrastructure that would help through reinvestment into the community.
Sir Jeremy Hunt
The hon. Member is absolutely right, and he is foreshadowing what I will propose as one of the solutions to this issue: that homeowners should be excluded from the potential ambit of CIL altogether, because that was not its intention. It is a loophole that is being exploited, and I hope to explain why some councils have been so keen to exploit that loophole. We need to remove the root cause if we are going to deal with this issue.
Kit Malthouse (North West Hampshire) (Con)
My right hon. Friend is laying out a compelling illustration of the injustices to individuals that this highly complex charge is causing. As he moves on to his solution, will he also reflect on the macroeconomic impact of this complexity and deterrence? I was Housing Minister for a year. Sadly, in those 12 months, I did not get round to sorting out this mess, but it was obvious to me that the small builder sector, which used to produce over 50% of the homes in this country, had been decimated by the crash and never returned. This disincentive to the kind of work that would encourage a really strong small builder sector, which could then contribute more to our economy, is both a brake on growth and a brake on the wider housing aspirations that both Governments have had over the last few years.
Sir Jeremy Hunt
I absolutely agree with my right hon. Friend, who has much more experience of the housing sector than I do. He will know that countries like France—not very far away—that have been much more successful than us in building more houses also have a flourishing small builder sector. In this country, because of the enormous costs involved in the planning process and often the land, it is much harder for small builders to get involved. Of course, one of the other advantages of small builders is that they are more likely to get consent from local communities, because they are often from those local communities. I agree with my right hon. Friend entirely: that is one of the unintended consequences of the problems we have with the community infrastructure levy regime.
CIL was drafted with very strong teeth to ensure that developers actually pay up, but for ordinary members of the public trying to do an extension, these Orwellian processes can be utterly terrifying. Some councils—not my own Waverley borough council, alas—recognise the inflexibility of the regulations and have taken a soft-touch approach to prevent homeowners from being captured. To its credit, West Berkshire, which as it happens is also a Lib Dem council, implemented a discretionary review and refunded £400,000 to affected householders. Others have not. I recognise that the difference in councils’ approaches makes the Minister’s job more difficult.
So how should we fix the issue? First, we need to reform the highly complex CIL legislation to distinguish between commercial developers and householders. The problem with a system that is based entirely on the floor area of a project is that even a small increase in the size of a project—just a couple of extra metres on a patio—can suddenly mean that an ordinary homeowner is required to get planning permission, perhaps retrospectively, and can become liable, and they may not know it at the time. Homeowners should be outright excluded from the reach of the community infrastructure levy.
Secondly, even in the absence of legislation, we need clear guidance from the Government to local councils so that no homeowners anywhere are charged for the community infrastructure levy. Thirdly, we need an effective mechanism for redress and the ability to correct genuine mistakes after a liability notice has been issued. Sadly, zero rating CIL liability does not work because a charge remains on the land, which may render the property unsaleable, so the Government need to find a way not just to avoid injustice but to secure justice for the hundreds of families who have been wronged to date by the problems in the system.
Finally, we need to recognise that the root cause of the problem is that councils such as mine have been collecting the community infrastructure levy not just to build infrastructure but so that they can use the interest from unspent CIL as revenue. An estimated £9 billion is sitting in council accounts from unspent contributions by developers, of which an estimated £2.2 billion is unspent CIL. That means that some councils are effectively funding their core services from the human misery of their council tax payers. At a minimum, rules should specify that interest from unspent CIL should go back into the CIL account to avoid a perverse incentive for councils to do the wrong thing.
British democracy rests on the principle of consent and fairness, both of which demand justice for those caught unfairly by the CIL system, which was never designed to capture them. All those people deserve clarity, and this should be prevented from happening again. I know the Minister and many other hon. Members here today want just that, and I look forward to hearing the Government plans.
Several hon. Members rose—
Karl Turner (in the Chair)
Order. I remind Members that they should bob if they wish to be called in the debate.
Gregory Stafford (Farnham and Bordon) (Con)
It is a pleasure to serve under your chairmanship, Mr Turner. I congratulate my right hon. Friend the Member for Godalming and Ash (Sir Jeremy Hunt) on securing this debate. I have applied for a similar debate twice, but clearly I do not have the touch of a former Chancellor in the Westminster Hall lottery.
This is a very serious issue. The community infrastructure levy is meant to be simple: developers contribute and that money is used to fund the infrastructure that communities need. That is the principle, and that is the promise, but in parts of my constituency that promise is being broken. The regulations are clear that CIL is intended to support growth through infrastructure, yet we see millions of pounds collected and sitting idle, with little evidence of delivery. The rules exist but the action does not follow.
In Waverley where, as we have heard, CIL rates are among the highest in the country, substantial sums are being collected and left unspent—£30 million when we last checked at the beginning of the year. That alone undermines public trust, but the reality is worse than that. The money does not simply sit there; it accrues interest—£125,000 a month in Waverley’s case. That interest is not ringfenced for infrastructure; it is absorbed into the general council spending. It is equivalent to 10% of council tax in Waverley’s case. Residents are told that the money is for community facilities when in reality it is sitting in accounts, quietly supporting day-to-day council spending.
At the same time, inflation is eating away at the value of the original CIL pot, so when the council does eventually spend it, it delivers less than it should. Communities lose twice: the infrastructure does not arrive and the money set aside to fund it is steadily diminished.
Worse still, the system is being misapplied. Of course, it is right that developers should contribute, but individual homeowners making changes to their own properties were never intended targets of the regime. Pursuing them aggressively, as Waverley borough council does, is not just heavy-handed; it is plain wrong. Let us call it what it is: a cash grab.
CIL may be a national framework, but it is administered locally. The contrast within my constituency could not be starker. In East Hampshire, charging rates outside the regeneration zone in Whitehill and Bordon range from £95.94 to £265.68 per square metre. Even with a manual exemption system, the council actively supports residents, contacting them repeatedly by letter, email and phone to make them aware of exemptions, guiding them through the process and clearly warning them of the consequences of failing to submit the correct forms. That is what good administration looks like.
Let us compare that approach with that taken by the Liberal Democrat-run Waverley borough council. There, the CIL rates charged to affected homeowners are among the highest in the country. In Farnham, they stand at £547.17 per square metre, rising to just under £570 per square metre in Haslemere and the surrounding villages.
With those high rates comes a very different approach. I have been contacted by a number of constituents who together face CIL liabilities of nearly £1 million. They are not developers; they are ordinary residents who feel blindsided, misled and, in some cases, harassed. They are being charged for exemptions they were never supposed to pay. That is not administration. That is extraction.
The response from the Liberal Democrat leadership, supported for too long by the Farnham residents group, has been one of inertia and, frankly, contempt. Instead of being helped to navigate a complex system, residents have been left in the dark and presented with life-changing bills. This is not fairness; it is the politics of envy in action, and my constituents are paying the price.
Let me give some examples. One constituent who lives on the Surrey-Hampshire border has an East Hampshire postcode but her property falls within Waverley. She was hit with a £48,000 charge, which has now risen with interest to £60,000. In Haslemere, another constituent received a £94,000 charge because an agent failed to submit the correct forms. He was forced to put his home on the market, with the only alternative to divert the majority of his pension to pay the bill.
In Lower Bourne, a couple were issued with a £54,000 charge two days before Christmas in 2024. That led to delays and additional restart costs of between £15,000 and £20,000. Also in the Bourne, a resident faces a charge of £150,000. In Moor Park, another faces a charge of close to £100,000, triggered by a mid-project planning amendment.
Even minor administrative issues are treated with zero flexibility. A Farnham resident now faces a £25,000 charge, along with £5,000 in legal costs, following a change-of-use application for a granny annexe. These are not speculative, rapacious developers; they are people improving their homes, supporting their families and planning for their futures. The human cost is real and growing.
As has been pointed out, last year my right hon. Friend the Member for Godalming and Ash and I met the Minister to discuss these issues. At the time, he appeared sympathetic, so I ask him today: what progress has been made? At that meeting, we urged the Minister to issue clear guidance to local authorities to prevent further harm while the regulations were reviewed. Unfortunately, that idea was not taken forward. I understand the concern about overreach, but what we are seeing now is not restraint; it is injustice.
I support my right hon. Friend’s proposed solutions. With that in mind, I ask the Minister three fairly straightforward questions. First, what progress has been made on reforming the CIL regulations? Secondly, will he issue clear guidance to ensure that councils do not exploit the rules to the detriment of ordinary homeowners? Thirdly, will those who have been wrongly charged be refunded? Under the current system, once development has commenced, there is effectively no right to appeal. It is a rigid and unforgiving mechanism. Most councils choose not to wield it in this way, but Waverley borough council has.
The spirit of the law is being ignored, and the balance has been lost. My constituents are being treated not as residents to be supported, but as revenue to be extracted. This is not what the levy was designed to do. It was meant to build stronger communities, not penalise them. The law may permit what is happening, but it was never intended to enable it. It is time we put that right.
Gideon Amos (Taunton and Wellington) (LD)
It is a pleasure to serve with you in the Chair, Mr Turner. I congratulate the right hon. Member for Godalming and Ash (Sir Jeremy Hunt) on bringing this important and overdue consideration of CIL to Westminster Hall.
We have heard some powerful contributions, and it is clear that there is a widespread and serious problem. Families are facing bills of £40,000 to £70,000—in some cases over £200,000—for what often amounts to a missing form. That is an awful and unacceptable situation, and it can be life-ruining for those involved. The lack of appeal, the mounting interest and the threat of people losing their homes are all real injustices. The system is broken and needs to be changed.
The Liberal Democrats agree with much of the substance of what has been said, but I must be direct with the right hon. Gentleman: Waverley borough council’s CIL charging schedule, which sets all the rules for the charging of CIL, all the forms and all the processes were put in place by the Conservative council administration a few years ago. The Liberal Democrat authority is doing its best to manage the system that was put in place by its predecessors. His party had ample time in government to fix the issue and, as we have heard, did not do so.
On the question of the discretion available to councils, the position is fairly clear. In December 2025, the High Court handed down a judgment in Luck v. Bracknell Forest borough council, and was unequivocal that once a valid CIL charge has fallen due, councils cannot lawfully cancel it. Councils find themselves with no alternative. Depending on what lies behind the original mistake or inaccurate charge, councils simply cannot wipe away the charge, as the Court has determined.
John Milne (Horsham) (LD)
The CIL rules manage to be too inflexible and too vague at the same time. My constituent Ruth has had to pay a £38,000 CIL charge because unfortunately her husband did not submit the correct forms, as a result of what turned out to be Alzheimer’s. As my hon. Friend said, any potential refund would be technically against the law, and the Government say they cannot intervene in the case because the correct rules have been followed. Does my hon. Friend agree that, while waiting for further legislation, the Minister needs as a matter of urgency to issue new national CIL guidelines and give councils clarity, consistency and the ability to correct injustices where appropriate?
Gideon Amos
My hon. Friend is absolutely right. He makes the excellent suggestion that not only should we have guidance, but the regulations themselves need to be changed, in many of the ways that other hon. Members have already mentioned.
Richard Foord
Does my hon. Friend recall that our hon. Friend the Member for Newbury (Mr Dillon) tabled a new clause on CIL guidance for the debate on the English Devolution and Community Empowerment Bill, but unfortunately the Government did not accept it? Does my hon. Friend agree that we ought to look at other legislative opportunities to correct the wrongs?
Gideon Amos
My hon. Friend is absolutely right that the Government should do that. There have been opportunities to do something about this; there are opportunities to change the law. He seems to have read the later part of my speech, and is quite right to mention our hon. Friend the Member for Newbury (Mr Dillon), who not only made that point in respect of that Bill but brought it to the attention of the Select Committee last year. Liberal Democrats in Parliament have been trying to get resolution and a change in the rules.
In Waverley, the council has gone further than the law requires. It has set up a discretionary review process, opening a few weeks from now in June, for householders who believe they have been wrongly charged. That is the right thing to do, acting within the limits of what the law allows it to do. But the council can only act up to and within the bounds of the law, which is rigid.
Gregory Stafford
Before the hon. Member moves on, I should correct what he said: CIL was introduced in Waverley in 2019, and the Liberal Democrats took over the council one month later. The idea that the Conservatives brought it in is utter nonsense. The Liberal Democrats have now had seven years to try to fix it, and they have not. I ask the hon. Member to use his influence on his fellow Liberal Democrats to encourage them to operate a system far more like those in other parts of the country that we heard about from my right hon. Friend the Member for Godalming and Ash (Sir Jeremy Hunt), which operate with more flexibility.
Gideon Amos
The amount of flexibility that can be exercised depends on the nature of the error in the process that is being discussed, so not every council can operate the same redress in the same situation. The hon. Gentleman confirms that it was a Conservative administration that drew up the CIL charging schedule, the forms and all the processes that underlie and guide—in fact, not just guide but narrowly dictate—how the council exercises control over CIL. Where the hon. Gentleman is right is that the rules need to change. The best way to change them would be to change the regulations in this place.
That brings me to the Minister and the Government. The Minister has said, including when my hon. Friend the Member for Newbury raised the issue, that CIL was never intended to be applied in this way, and I believe he is right. He has named the Liberal Democrat authority in West Berkshire as a good example of exercising discretion where the law allows that to be done, but naming good examples is not enough, and we need to do more.
We need three things from the Government on this issue, and we need them in this Parliament. We need a statutory definition of what constitutes a minor administrative error, so that homeowners are not penalised by tens of thousands of pounds for a missed form. We need a statutory right of appeal against CIL charges, with clear limits for resolution, and a clear lawful basis on which councils can waive or refund charges in cases of genuine homeowner error. Currently, that option can be exercised only in certain cases, depending on the nature of the error involved. I am grateful that the Minister has indicated in previous discussions that the Government will act, but we need to see action.
While on the subject of CIL, we should be honest about the wider problem. All the Members who have spoken—I think they have all been hon. Gentlemen—were right that it is necessary to fund infrastructure, so the rationale behind CIL is worth while. As the hon. Member for Farnham and Bordon (Gregory Stafford) pointed out, the CIL funds do need to be spent on delivering infrastructure.
The levy is a flat rate per square metre and bears no relation to the level of the uplift in land value before and after planning permission is granted. I confess that back in the 2000s when the measure was being put forward, I was part of a lively debate with bodies such as the British Property Federation, arguing that the levy should relate to the level of land value uplift. In some parts of the country, where we have clear viability challenges, there is very little land value uplift. The same level is charged as on a site with a massive land level uplift, where there is no viability problem. The state is missing out on land value uplift in places and the CIL is affecting viability in other places. We would suggest that the Government move towards a levy that relates to the land value increase that the landowner is gaining. That is necessary to fund schools, surgeries, GPs, roads, and all the rest of it.
The Minister is reportedly looking at the levy again; I urge him to be ambitious and make the changes we are arguing for. Patching the exemption rules is necessary, but it is not sufficient. The injustice that constituents are facing is real—we agree on that—but the schedule put in place by previous parties is what has guided Waverley’s actions. The council is doing what it lawfully can to address the issue, but the Government need to do the rest.
Gareth Bacon (Orpington) (Con)
It is a pleasure to serve under your chairmanship, Mr Turner, and to take part in this debate about the impact of the community infrastructure levy on private homeowners. I thank my right hon. Friend the Member for Godalming and Ash (Sir Jeremy Hunt) for securing the debate; he has campaigned on this topic diligently and relentlessly alongside his neighbour, my hon. Friend the Member for Farnham and Bordon (Gregory Stafford). I am sure those in the Chamber will agree that both of them have made powerful and persuasive speeches this morning.
The community infrastructure levy—more commonly abbreviated to CIL—is clearly not being enforced reliably, consistently or appropriately enough. What should be, and was introduced as, a sensible alternative or addition to section 106 payments has become, for many homeowners, a financial burden far beyond their wildest nightmares. CIL was specifically designed to be a levy on developers in mitigation of the impact of new developments to ensure that they contribute to local infrastructure. It was designed with safeguards, such as the fact that the levy can apply only in areas where a local authority has consulted on and approved a charging schedule that sets out the levy rates, and published that on its website.
The rates were to be decided by the local authority to ensure an added democratic oversight to the whole process. Moreover, and perhaps most importantly, CIL was established with sensible exemptions—at least on paper. Primarily, it was meant to be the case that only new developments that create net additional floor space of 100 square metres or more, or create a new dwelling, are potentially liable for the levy. That should have meant that most residential annexes and extensions, house or flats built by self-builders, local authority or housing association-provided affordable housing and charity developments are exempt.
Most importantly in the context of this morning’s debate, if a householder development is over 100 square metres, an exemption can still be secured if it is applied for, but that is not a straightforward process. As my right hon. Friend the Member for Godalming and Ash said in his opening speech, it is a rather onerous and complicated process of submitting myriad forms against tight deadlines before any building work can start.
Many people are caught out, having filled out the forms incorrectly or late. In many cases, homeowners were not even aware of the existence of CIL until it was too late. Even in the case of an entirely innocent mistake where council determines an application to be retrospective, the householder will become liable for CIL. The CIL Regulations 2010, which were created under the Planning Act 2008, fail to adequately safeguard those exemptions and have therefore not properly protected homeowners from exorbitant bills from local authorities failing to properly discharge the collection of the levy.
It is important to note that this is not happening everywhere. Around 200 councils operate CIL. As has been acknowledged in earlier speeches, some take a pragmatic, common sense and humane approach to its application. Others, however, demonstrably do not, and have followed the legislation to the letter without any regard for its overriding intention. That prompts the question: if some councils can adopt the regulations more flexibly, why cannot others?
The Sunday Times has reported cases involving large sums of money being charged to residents in Surrey, Sevenoaks, London, Shropshire, Horsham, Bracknell Forest, Basingstoke, Chester and East Sussex. The Government have not issued any official guidance to local planning authorities on the enforcement decisions on CIL charges that have previously been levied on householder developers. We have heard powerful and devastating examples from my hon. and right hon. Friends here today: the details of the homeowners often improving their greatest and proudest assets—their homes—and finding themselves with a bill for life-changing amounts of money that they were never told they were at risk of incurring.
That is a deeply troubling scenario to play out in our local areas, and it is made worse when we consider that in some cases the residents in question found themselves not only facing financial ruin but doing so with no right of appeal against the charge. This has led to people handing over their life savings or even their pensions, funding their debt through huge amounts borrowed from friends, family or sometimes unscrupulous lenders, remortgaging their homes or, in some of the most shocking cases, selling their homes to pay off the local authority, and finding themselves with nowhere to live and nowhere to go.
Let me be clear: the Opposition are not saying the original intention was wrong, nor are we saying that this situation has come about by deliberate design, because it is important that local infrastructure is not only protected from the strain of increasing housing stock, but, vitally, upgraded to match new levels of demand. However, in too many cases, CIL is simply not working that way.
Even beyond the heinous examples shared today, residents who are exempt from CIL but live in an area where it is being levied are not seeing its benefits. According to research carried out by the Home Builders Federation, that is because local authorities in England and Wales are currently sitting on an accumulative total of around £2 billion in unspent CIL money. These deposits are earning the local authorities in question millions of pounds of interest, which they are using to support their revenue budgets.
The closest alternative, section 106 of the Town and Country Planning Act 1990, is not much better. It allows local authorities to secure investment in central infrastructure arising from development, similar to but not exactly the same as CIL. Based on another piece of research from the HBF, across England more than £1.5 billion of section 106 contributions are made each year towards funding, facilities and services.
However, according to the Urban Mobility Partnership, £5.3 billion of those annual contributions remain unspent in the accounts of local authorities in England and Wales. Even when they are spent, the HBF has shown that last summer local authorities reported a 20% rise in section 106 negotiation timelines, with 35% of all section 106 agreements taking more than 12 months to finalise and more than a third of councils having an average timeframe of more than 500 days.
It is clear that our systems for supporting infrastructure in our local communities are failing private homeowners on two counts: first, and most shockingly, they are landing frighteningly large Bills on the doorsteps of unsuspecting homeowners who are seeking only to improve the homes that they have worked hard to buy, sustain and improve; and secondly, the benefits of the payments are not being felt by the local community.
The Minister is a decent man, and I know he shares my concerns about this issue. He has said before that he
“recognises that procedural requirements relating to exemptions for housebuilder applications under the 2010 CIL regulations have had financial consequences for some homeowners.”
He further stated that
“a series of households across the country have been very badly hit by this. It is very clear to us that the CIL regulations in question are not intended to operate in this way. We are giving very serious consideration to amending them to ensure that no one else is affected in this manner.”
I do not doubt his sincerity.
The Government must address those points and do so quickly. Perhaps the Minister could commit today to finding much needed time in the next parliamentary session to solve this crisis, back homeowners and undo this regulatory mess. Would he be prepared to put a timeframe on that today? It is vital that more is done to help homeowners facing these bills and to ensure that funds find their way into the beneficial causes in our local communities, and for the Government to ensure that these outcomes are realised quickly.
The Minister for Housing and Planning (Matthew Pennycook)
It is a pleasure to serve with you in the Chair, Mr Turner. I warmly congratulate the right hon. Member for Godalming and Ash (Sir Jeremy Hunt) on securing this important debate, and I commend him on his thoughtful opening remarks and the determination with which he sought redress for about 50 families in his own constituency and families affected across the rest of the country.
I thank the hon. Member for Farnham and Bordon (Gregory Stafford) for his well-argued contribution and the shadow Minister, the hon. Member for Orpington (Gareth Bacon), for his remarks. I am also grateful to the CIL Injustice Group for helping to ensure this issue gets the national recognition it deserves and bringing the cases in question to our attention.
At the outset, as the shadow Minister just mentioned, I want to stress that the Government appreciate fully that noncompliance with procedural requirements relating to exemptions for household applications under the Community Infrastructure Levy Regulations 2010 have had financial consequences for some owners. In a number of cases, those financial consequences have been extremely severe.
The Government recognise and take extremely seriously the concerns that have been raised about CIL liabilities applying to householder and self-build developments. We have been giving very serious consideration to the issue over many months. I have welcomed the engagement I have had with the right hon. Member for Godalming and Ash and the hon. Member for Farnham and Bordon. I am pleased to have the opportunity to set out the Government’s proposed intentions in relation to it. As the right hon. Member for Godalming and Ash was able to secure a 90-minute debate, I have the time I need to address all his points.
Hon. Members will appreciate that it would not be appropriate for me to comment on specific cases, nor on the approach taken by individual local planning authorities to those cases and the particular facts and circumstances that applied. I appreciate that that is somewhat frustrating, but I am afraid that it is the Government’s position. It remains the case that local planning authorities are ultimately responsible and accountable for their own decisions on charging and enforcement of CIL. The Government none the less expect, as I have reiterated on numerous occasions, charging authorities to consider each case very carefully and in accordance with their legal obligations.
Hon. Members will forgive me if I provide a brief overview of the CIL system, but I think it is important in the context of the debate. The CIL legislative framework was introduced through the Planning Act 2008 and subsequent regulations were made under those powers in 2010. It is a local charge that local planning authorities can levy on new development in their area to help fund the infrastructure needed to support development of their area.
CIL receipts can be used to fund a wide range of infrastructure across the charging authority’s area. That includes transport schemes, education and health and social care facilities, blue light infrastructure, flood defences, green spaces and other leisure facilities. More than half of local planning authorities in England charge CIL, and the Government are committed to strengthening further and improving the system. It supports development by funding the provision, improvement, replacement, operation or maintenance of infrastructure, which brings significant benefits for local communities.
Turning to the legislative context, CIL is intended to be a clear and transparent system providing certainty to developers about what kinds of development are liable to pay the rates that will apply and when payment is due. Before charging CIL, a local planning authority must consult on a draft charging schedule, which sets out the authority’s proposed local set levy rates. In answer to the point made by the Liberal Democrat spokesperson, the hon. Member for Taunton and Wellington (Gideon Amos), we expect that to take into account issues such as viability. The charging schedule must then undergo independent examination in public. It must be formally adopted by the local authority and published on its website.
In addition to the procedures that must be followed before an authority can charge CIL, the legislation sets out what steps must be taken to collect CIL payments. After the grant of planning permission, the CIL charging authority, more often than not the local planning authority, must issue a CIL liability notice as soon as practical, which sets out the CIL liability for the proposed development. A developer must normally pay the CIL liability within 60 days of commencement of development or within the terms of the charging authority’s published instalments policy.
Charging authorities set their own levy rates, which undergo public consultation and independent examination. The levy rates are set out in charging schedules, which are published on the relevant authority’s website. Authorities can specify some types of development as being subject to a zero levy rate. Further to that, development of less than 100 square metres will not be liable for CIL unless the development consists of one or more dwelling. Other types of development can also be subject to a specified exemption or relief from CIL. That includes social housing and charitable development.
The CIL regulations were amended in 2014 under the coalition Government to introduce express exemptions for individuals who build their own homes, undertake extensions of more than 100 square metres to their existing homes, or construct a residential annexe within the grounds of their homes. To secure those exemptions, the regulations made in 2014 require that applicants must apply to the relevant CIL charging authority and receive confirmation that the exemption has been granted before development commences. That is to ensure that both the householder and the local authority are clear about any CIL liability or exemption granted before commencement of the build. That is necessary because, once commencement of development occurs, the levy becomes payable in accordance with the levy payment requirements.
The CIL regulations were designed to provide transparency, certainty and consistency for local planning authorities and developers. The procedural requirements are intended to secure those aims. As is typical for levy or tax regimes, they require that any exemption from payment is claimed through a formal application in good time. This approach helps to provide clarity on the CIL liability prior to the commencement of development, and guards against abuse by those who might seek to game the system or by those who are not genuine applicants—in this case, self-builders and residential developers.
Turning to the matter at hand, however, the Government have become increasingly aware that, in some cases, that balance has not always been achieved in practice. Therefore, it is right that we pause, reflect and consider whether regulatory changes are needed.
To obtain an exemption, a householder must first assume liability for CIL. The next stage is to formally apply to the CIL-charging authority for an exemption. Both processes require the submission of forms prescribed by the Secretary of State that are available on the planning portal. The developer must wait to be notified by the CIL-charging authority of its decision on the exemption claim before development can commence.
The Ministry of Housing, Communities and Local Government publishes comprehensive guidance on CIL, which is available on the gov.uk website. This guidance also refers to the relevant forms that must be completed. Apart from those who are building residential extensions, developers are required to serve a commencement notice to the charging authority; again, this must occur prior to commencement of development. This is for good reason—to ensure that the charging authority is aware of when the building is to commence, because that triggers the payment of the levy.
As hon. Members have highlighted, failure to complete the necessary processes before works commence on a site has resulted in some homeowners and self-builders losing their eligibility for an exemption. In such cases, the full CIL charge has been imposed. Sometimes, it has been payable immediately, with late payment interest and surcharges also applied, as was mentioned earlier.
The Government appreciate that compliance with the process requirements of CIL can appear complex, particularly for developers who might not otherwise be involved in planning and development on a regular basis, or who do not have professional builders or advisers involved in the process. A householder developer might not be aware of their CIL liability until after planning permission stage, when a levy liability notice is issued by the authority. They might not fully appreciate the consequences that arise from commencing their development between permission being granted and commencement taking place.
Furthermore, the nature of the regulations means that developments that receive retrospective planning permission under section 73A of the Town and Country Planning Act 1990 cannot benefit from an exemption because, in planning terms, this is the grant of a new planning permission. A section 73A permission is treated as having commenced when that permission is granted. As a result, any exemption previously obtained does not carry over and it is not possible to comply with the procedural requirement of applying for an exemption before commencement.
I want to make it clear that local planning authorities are operating within a prescribed statutory framework. Many authorities administer CIL exemptions carefully and conscientiously, often supporting householders through what can seem to be a complex process. That said, we have identified an important opportunity to provide greater clarity and flexibility for applicants and charging authorities.
Let me set out the next steps. Having considered the concerns that have been raised with me—primarily by the right hon. Member for Godalming and Ash, but also by others, including the hon. Member for Farnham and Bordon, and my hon. Friend the Member for Dagenham and Rainham (Margaret Mullane)—I am pleased to confirm today that the Government intend to consult on proposals to amend the CIL regulations, in order to improve the process for obtaining householder development and self-build exemptions in the future.
Through the forthcoming consultation, the Government will put forward proposals aimed at improving outcomes for householders and self-builders, while safeguarding the integrity of the CIL system and ensuring that local planning authorities can properly administer, scrutinise and enforce that system. We want to ensure that in the future, the system minimises the opportunity for procedural errors and that, when errors are made, it does not impose disproportionate penalties. We also want to prevent homeowners and self-builders from incurring significant and unexpected CIL charges, which, as we have heard today, can have significant consequences for individuals and their families.
We are also mindful of the need to ensure that any revised process continues to help local planning authorities to properly administer CIL in an effective way and to ensure that CIL liabilities are discharged appropriately. After all, as has rightly been noted today, CIL remains a vital system to support the development of an area by funding essential local infrastructure.
I appreciate that hon. Members will want to engage carefully with the detail of these proposals once they are published. The Government aim to publish a consultation on the proposals as soon as possible. Although I am loath to give a specific date, as Ministers always are, I anticipate being able to do so before the summer recess.
Before I conclude, I will briefly address what I know is probably the biggest concern that exists, which is the issue of retrospectivity. I recognise that many hon. Members who have spoken today will be concerned not only about what we do in future to amend the regulations, but about how proposals will help constituents who have already incurred a CIL charge as a result of non-compliance with procedural requirements for securing an exemption, arising from the way the regulations were framed in 2014. I am afraid I have to repeat what I said earlier: I cannot comment on individual cases and facts that are not known to me, nor on the approach taken by specific charging authorities, but I want to reassure hon. Members here today that we take such concerns very seriously. They are actively informing our work to reform the system going forward.
The regulations in question have been in force for more than a decade and there will inevitably be a significant amount of variation between cases. There are limits on what the CIL legislative framework can do in such a context, but I remain committed to addressing those concerns in a revised system going forward, and I am more than happy, as I have been striving to do over recent months, to keep hon. Members with an interest in this issue and whose constituents are affected, fully updated. It is certainly not the case that when it comes to those already affected we intend to do nothing.
I look forward to updating the House in due course in respect of the proposed steps I have set out today and in respect of the consultation and when hon. Members will have a chance to fully engage. I look forward to receiving feedback on the forthcoming proposals and debating the amending regulations before they are made. I thank hon. Members again for speaking up for their constituents and their interest in this extremely important issue.
Karl Turner (in the Chair)
I call Sir Jeremy to wind up—you may take your time.
Sir Jeremy Hunt
That is quite an unusual thing to be told by the Chair, Mr Turner. I thank you for chairing this important debate and I thank all hon. Members present for some excellent contributions. I particularly want to thank my neighbour and hon. Friend the Member for Farnham and Bordon (Gregory Stafford) for his tenacious campaigning on this issue on behalf of my former constituents in Farnham and Haslemere. He made an excellent contribution. I also want to thank the shadow Minister, my hon. Friend the Member for Orpington (Gareth Bacon), who typically gave a very thoughtful and clear exposition of the issues we face. I also thank hon. Members from other parties who have spoken and intervened.
Before I come on to the Minister’s comments, I want to comment on what was said by the hon. Member for Taunton and Wellington (Gideon Amos), because it was directly about my own local authority. He was right to say that a council cannot lawfully cancel a charge after it has become liable, but that does beg the question why there have been countless injustices in some councils, but not in others, and that is because there has been an element of choice in the way local authorities have decided to go about things.
To make the point that I am not being party political here, Lib Dem West Berkshire has chosen to be reasonable, do the right thing and make sure there is justice for people unfairly caught in the CIL trap, but Lib Dem Waverley has not. It has been in power for seven years and Waverley residents, a number of whom are watching this debate, have suffered badly.
Gideon Amos
The right hon. Gentleman is absolutely right that residents need redress. I will simply place on the record again that the nature of the errors or mistakes in charging can be different from one authority to another, which was very much the case with West Berkshire, where the nature of the charges being made wrongly was a different procedural error and therefore a different remedy could be applied. I hope that, in the spirit of being non-tribal with which he began this debate, he will accept that that is actually a fact.
Sir Jeremy Hunt
I absolutely accept that. Again, in that spirit of being non-tribal, the hon. Gentleman will know the number of times that his party and other parties have talked about the 14 years in which we had opportunities to fix things that we did not fix, so he will appreciate that the Liberal Democrats in Waverley have had seven years to fix the issue and have failed to do so. That is why so many people from Waverley are looking at this debate carefully. But he is correct to say that all councils have to operate within the law.
I want to move on to the Minister’s comments. First, I thank him for the interest that he has shown right from the start. I want to put on the record that the number of people affected is relatively small in the grander scheme of things, and it would have been easy for the Minister to decide there were other priorities. It is about 100 families—maybe a bit more, maybe a bit less—so the Minister could easily have decided to focus on other areas, but he has not. He has spent an enormous amount of time trying to address this. That is the right and proper thing for a Minister in a democracy to do; if there is an injustice that even affects one person, it is incredibly important that Ministers take note, and he has really done that.
The Minister also clarified the problems with the 2014 exemptions introduced by the coalition Government, which were designed to ensure that householders were not caught up in these regulations, but did so through such a bureaucratic and cumbersome process that many inadvertently have been. The issue of particular complexity relates to householders’ immediate liability from the moment that building starts, which seems entirely reasonable for a professional developer, but entirely unreasonable for a homeowner who may not be aware of that element of the law.
It is extremely welcome that the Government are going to consult on the CIL regulations. As a former Government Minister, I feel a tremendous amount of frustration and pain at the need for endless consultations. They can be of value, but they also slow things down. I recognise that the Minister wants to do this fast—I did groan when he said, “as soon as possible,” but then when he said, “before the summer break,” I took some encouragement. I think this is something that is moving forward.
In the options that the Minister consults on—he cannot respond to this, but it is something to take away—could we find a way of removing homeowners from CIL liability altogether? That way we move away from a system that is purely based on the square meterage of a development, to one based on the type of person doing the development. Could we change the regulations so that homeowners can at least always apply for an exemption retrospectively if an error has been made? Not being able to do so offends natural justice, and was an unintended consequence of the complexity of the original regulations.
I am grateful to the Minister for confronting head-on the fact that for many people, this is about getting justice for something that has happened, not ensuring that injustice does not continue to happen. He has been very open with me about the legal complexities involved, and I know from my time as Health Secretary how difficult it is to reopen retrospective cases. The Minister’s Department has enormous influence over local authorities, however, not least through setting their grants, so if the Department chose, it could find a way to put councils under pressure, where there are outstanding CIL cases and injustice, so that those cases get solved.
I recognise that what I ask is not easy, but it is absolutely the case that local councils are extremely dependent on the Minister’s Department for large chunks of their financing. I ask him to consider what levers he has at his disposal to make this happen, while at the same time thanking him for his ongoing interest and determination to address the issue. The final thing I will say is that I know someone in the Public Gallery got up at 4 am to attend this debate. I thank that person and all the CIL Injustice Group for their tenacious campaigning to try to right a truly awful wrong.
Karl Turner (in the Chair)
Thank you, Sir Jeremy. The debate has also been very instructive to me.
Question put and agreed to.
Resolved,
That this House has considered the impact of the Community Infrastructure Levy on private homeowners.