Infrastructure levy for Scotland: discussion paper

1 Introduction

Development and the creation of better places requires interaction between the private sector and the public sector. The planning system guides where development should take place, whether that is residential or commercial. The majority of development is financed and carried out by the private sector, but the public sector needs to facilitate or respond to growth and development by ensuring necessary infrastructure is provided and maintained. This includes transport, education, healthcare facilities, open space etc. Developments are likely to be more attractive to purchasers or tenants where they have good transport links and public facilities nearby. The provision of high quality, accessible infrastructure is also central to local living and the establishment of 20 minute neighbourhoods, as set out in policy 15 of NPF4.

The fact that new development typically creates demand for new or upgraded public infrastructure raises questions of how this is to be paid for – and, in particular, the extent to which landowners / developers should contribute. Through the identification of sites in development plans, the granting of planning permission, and investment in infrastructure, the actions of the public sector can increase land value. The concept of an infrastructure levy is that an element of that land value uplift should be used more directly to contribute to the costs of providing the infrastructure which supports development.

Over the years, a number of mechanisms have been used for this purpose – not just in Scotland but across the whole UK. At present, planning obligations under section 75 of the Town and Country Planning (Scotland) Act 1997 (“the 1997 Act”) are the principal planning mechanism used in Scotland to secure contributions to, or provision of, infrastructure. Planning obligations are an established and well-understood part of the planning landscape; they have a number of important strengths but also some acknowledged limitations. The overarching aim of the ILS is to create an additional, fair and effective mechanism for securing contributions to infrastructure on a wider scale.

The ILS is intended to complement rather than replace section 75 planning obligations, and other mechanisms for securing developer contributions, which will continue to be used to secure site-specific mitigation, on-site infrastructure and affordable housing. It is intended to supplement rather than replace existing national and local government funding; in most cases it will be one element in a mix of funding for any particular project.

We recognise that land values and the conditions for development vary widely across Scotland. The Scottish Government will work in partnership with COSLA and local government to ensure the regulations provide sufficient flexibility for local authorities to implement the ILS (or not) in a way that supports appropriate development to benefit their communities