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Posted By:
Frieda Wignall
Cities Team Researcher
A Community Infrastructure Levy (CIL) is a planning charge, enforced by councils on some new housing or home expansions, that raises money for infrastructure development – funding improvements such as new schools, public transport and parks.
South Gloucestershire Council is using its CIL to fund the authority’s Climate Emergency infrastructure budget. The decision to use the CIL for climate funding was approved in February 2020 and will amount to £1.5m a year until at least 2024. This amount will be split equally across three focus areas: green schools, green transport, and green communities. Money raised will be topped up from the UK government’s New Homes Bonus.
CIL funding has already impacted all three of South Gloucestershire’s focus areas.
Green schools
CIL funds have been match-funded against the Public Sector Decarbonisation Scheme to modify school buildings. Money has also been brought in from lighting specialist Calex to install LED lightbulbs.
Green transport
The council has used funds to encourage the use of electric vehicles.
Green communities
Funding has supported nature and biodiversity enhancement. Projects include:
South Gloucestershire Council also owns a super-fast fiber network called ‘umbrella’ which runs between business parks in the region. The network was originally established in partnership with the West of England Local Enterprise Partnership and Toshiba-BRILL (the not-for-profit arm of Toshiba). Now, the council, Toshiba and the University of West England are collaborating on an experimental design project for an indoor air quality monitoring system in care homes, part-funded by CIL.
The council is developing a set of sensors that will tap into the umbrella network to allow real-time monitoring of temperature, CO2 and particulates. These sensors will enable the council to assess indoor air quality in each care home room. By identifying the potential need for improved ventilation, cooling, heating, insulation or shading, the council hopes this system will help care homes adapt their buildings to be resilient to the impacts of climate change – for instance, periods of extreme heat. The council is ensuring that the most vulnerable are protected.
CIL is a simple way of setting aside money for climate action. The mechanism is already available to all councils – South Gloucestershire simply decided to use it for green purposes. The levy is also a relatively fair and equitable way to raise funds, because it takes a small contribution from every developer, spreading the cost more widely. Though the amount raised fluctuates, a community infrastructure levy provides a defined source of funding for the climate agenda.
CIL also provides greater freedom and flexibility for spending than money raised through more tightly constrained Section 106 agreements (an alternative way to raise money from development which needs to be more closely linked to the development). Although CIL does have restrictions – regulations require authorities to set out the specific areas spending will be in – this can be useful when organising and targeting spend within the broader climate emergency budget.
South Gloucestershire is a wealthy region compared with the rest of the UK, and the council is reasonably financially stable. The number of homes in the region has been growing fast, which means levy income is above the figures anticipated in the council’s medium-term financial plan. The levy surplus was a convenient and feasible option for financing the climate emergency infrastructure budget compared to other, stretched council funding sources. Though the amount raised will differ for each, all planning authorities can charge and use CIL receipts to fund infrastructure related to climate action plans.
The council recognises the need to act for the long-term health, economic and social benefits to the area as well as to the council’s own finances. South Gloucestershire declared a climate emergency in 2019 and pledged to become carbon neutral by 2030. The council’s approach acknowledges the need to prepare for the local impacts of a changing climate. The region already faces significant flood risk and other climate impacts. So, the council is motivated to take urgent action.
Using the levy to fund the climate agenda has required cooperation between the council’s four-person climate emergency team and its finance team. The climate emergency team’s revenue costs are financed through historic New Homes Bonus receipts.
Understanding how CIL defines revenue and capital spending
South Gloucestershire council found that there was a potential conflict between the approaches embedded in the CIL regulations and those normally used by their finance team. For example, local government finance often treats green spending on projects like tree-planting as a revenue cost, not a capital cost. This is because capital spending has to show the long-term financial uplift in the value of the asset – in this case the trees – but non-monetary enhancements such as social values are more difficult to account for. CIL regulations, however, do allow for funds to be spent on green infrastructure as a revenue cost.
Resolving the differing definitions of revenue and capital spending between the levy regulations and local government finance system is a challenge that other authorities will encounter. Having a detailed knowledge of the levy regulations to refer to as evidence is crucial to overcoming any misunderstandings.
Recognising the co-benefits
Raising awareness amongst finance officers on the co-benefits of climate and nature work could also help overcome resistance to using this funding for green infrastructure. Changing officers’ perceptions can convince them that taking action on the climate emergency can also deliver on other core council objectives, as opposed to seeing it as a wholly separate enterprise, easing cooperation between different council teams.
Councils may be underestimating potential income from CIL
The income from CIL is variable, but due to pressure from the UK government to speed up the delivery of new housing, most councils are likely to be under-forecasting their levy receipts. Across the country there is a general underestimating of the rapid rate of new development and its impact on CIL income. Subject to other infrastructure pressures not escalating in similar proportions, councils that are under-forecasting – especially those where significant recent developments have taken place – can seize this opportunity to fund climate emergency responses without negatively affecting their medium-term financial plan.
An opportunity to link with parish and town councils
Parish and town councils also receive 15% or 25% of CIL income from their areas if they have adopted a neighbourhood development plan. In those local authority areas where a large proportion of the levy is channelled through parishes and towns there is an opening for dialogue. Parishes and town councils are landholders and property owners in their own right and tend to be very close to local communities. These bodies can be effective allies, working closely with councils to achieve shared climate emergency goals.
To find out more, contact Barry Wyatt – barry.wyatt@southglos.gov.uk or Lucy Rees, Senior Environmental Policy & Climate Change Officer – lucy.rees@southglos.gov.uk. UK government guidance on the Community Infrastructure Levy regulations can be found here.
This case study was produced by Ashden and Friends of the Earth. It was originally published in March 2022 and was last updated in August 2023.
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