Variable Tariff
The variable tariff is an innovative local idea to raise funding for new developments. The idea is based on existing mechanisms for standard charges on new development such as the Milton Keynes tariff, whereby each new housing development given planning permission would pay a pre-set contribution to new infrastructure.
In March 2008, Cambridgeshire Horizons, on behalf of the local authorities in Cambridgeshire, commissioned work to explore the potential to implement a variable tariff or 'roof tax' to be paid by development in the Cambridge sub-region. The amount each development would pay per house would vary across Cambridgeshire, as house prices and land values differ between areas of the county.
A variable tariff would increase investment in infrastructure, such as new roads and community centres, as currently not all new housing contributes to meet the infrastructure need that it creates.
The Cambridgeshire Horizons Board approved progression of the work to the implementation stage at their June 2008 meeting. However this work has since been overtaken by national government proposals for the Community Infrastructure Levy (CIL). This levy does exactly the same thing as a variable tariff, but uses a new legal framework rather than the existing legal mechanism (known as Section 106). The variable tariff work is still useful to the partnership because it anticipated the levy, which would offer a national solution to the problem of funding new infrastructure.
The Community Infrastructure Levy offers a more legally robust method of collecting contributions than a variable tariff based in existing planning legislation, and the decision was therefore taken to proceed with CIL. Enabling legislation for CIL was included in the 2008 Planning Act. Final regulations setting out in detail how it operates were issued on 10th February 2010, and CIL powers came into effect on 6th April 2010. More information on the Community Infrastructure Levy can be found on the Department for Communities and Local Government website.
Cambridgeshire Horizons are co-ordinating preparation work for CIL. In order to collect the levy, Local Planning Authorities will need to prepare detailed infrastructure plans and a charging schedule, which will set out the levels of tariff to be charged and what the money will be spent on. Like the variable tariff, CIL will be charged at different rates in different areas of the county, according to differing house prices and land values.
Cambridgeshire Horizons have led the preparation of an Integrated Development Programme (IDP). The IDP sets out the strategic infrastructure, of greater than local significance, needed to support housing and economic growth. Some of this infrastructure could be funded by the Community Infrastructure Levy.
Read the latest paper on the Community Infrastructure Levy, which was produced to update the Cambridgeshire Horizons Board in July 2010