Introduction of an Infrastructure Charging Mechanism in Scotland: research project

Annex F. Infrastructure Growth Contribution ( IGC) Process and Resources

The following process lanes describe the flow of activities, after IGC has been announced by government following from the necessary legislative changes (see Annex E) and from the setting by Scottish Government of the charging formula or flat rate.

Central Co-ordinated Option

Power to Charge IGC

The Government will appoint an arm’s length agency which will have the power to levy the Infrastructure Growth Contribution ( IGC) on all future development in all areas of Scotland receiving development consent from the specified implementation date.

The agency will call for City Region Deals, combined authorities, or regional partnerships to submit a Plan for Strategic Infrastructure, showing how infrastructure investment will release additional land for growth.

The PSI will show indicative future times scales for the delivery of additional infrastructure and the anticipated funding sources including Government Departments and Agencies, Private Enterprise, and Local Government, showing the additionality of resources provided by the IGC. This plan does not need to specify exact locations or detailed cost estimates, as many infrastructure items may be linked to potential growth beyond that allocated in the LDP.

The agency will assess the plan for reasonableness and deliverability and the lead authority, or authorities, will consider the responses of the agency prior to making the PSI.

The made PSI will entitle the authority(ies) to be allocated resources by the agency from the IGC fund, in accordance with guidance published from time to time by Scottish Government.

Local Co-ordinated Option

Power to charge IGC

The Local Planning Authority ( LPA), possibly in co-ordination with adjoining authorities, makes a Plan for Strategic Infrastructure ( PSI), as part of, or in alignment with made, Local Development Plans ( LDP), showing how infrastructure investment will release additional land for growth.

The PSI will show indicative future times scales for the delivery of additional infrastructure and the anticipated funding sources including Government Departments and Agencies, Private Enterprise, and Local Government, showing the additionality of resources provided by the IGC. This plan does not need to specify exact locations or detailed cost estimates, as many infrastructure items may be linked to potential growth beyond that allocated in the LDP.

The made PSI will entitle the LPA to levy the Infrastructure Growth Contribution ( IGC) on all future development receiving consent from that date.

IGC and the development process

Prior to land acquisition the Developer assesses site potential in accordance with local development plan and supplementary guidance, and estimates gross development value.

Developer estimates the amount of IGC that will be payable on completion values and, amongst other estimates, determines the price that can be paid for the land.

The Developer applies for planning permission.

Local Planning Authority issues the Decision Notice which includes the condition to pay IGC on completion of each dwelling or building, and the formula or flat rate to apply at that time.

Before one month ahead of the expected completion the Developer self-assesses the floor area and market value of the dwelling or building.

Central Co-ordinated Option

The Developer pays to the Revenue Scotland, the IGC amount for the dwelling or building. See payment form.

Revenue Scotland issues a receipt certificate (on-line) with the payment details.

The receipt certificate is passed by the Developer to the prospective purchaser, along with other information such as the Energy Performance Certificate for example in the Home Report. The receipt certificate confirms to purchaser that the obligation to pay IGC has been met at the appropriate value.

Local Co-ordinated Option

The Developer pays to the LPA or their Revenues Department as specified by the LPA, the IGC amount for the dwelling or building. See payment form.

The LPA, or its revenues department, issues a receipt certificate (on-line) with the payment details.

The receipt certificate is posted as a planning notice and reported within the Property Enquiry Certificate, and in the case of residential accommodation forms part of the Home Report. The receipt certificate confirms to the purchaser that the obligation to pay IGC has been met at the appropriate value.

In the case of dispute (by the Developer, Purchaser, their lender, the agency, Revenue Scotland, or the LPA) then the Scottish Assessor determines when the building is completed, i.e. ready for use, the floor area, and/or the market value at completion date, according to the dispute raised.

In the case of delay of more than three months between date of payment and the date the dwelling or building is ready for use, then a further self-assessment of value is made and if and only if values have increased so that more than a further £50 is to be paid, then the full additional amount over the amount already paid is paid and receipted as above. There is no

Central Co-ordinated Option

Annual monitoring and reporting

The arm’s length agency will produce an annual report showing:

• The amounts received in the year
• Balances brought forward
• Funds committed
• Balances carried forward
• Details of the authorities that have been allocated funds and the infrastructure schemes that have been funded, and the additional land that this has enabled for development.

This report will be presented to the crosssector advisory panel, and if adopted by the panel, will be presented to the appropriate Minister and published.

Local Co-ordinated Option

Annual monitoring and reporting

The authority levying a charge, or with unspent funds following a termination of IGC in its area, will produce an annual report showing:

• The amounts received in the year
• Balances brought forward
• Funds committed
• Balances carried forward
• Details of infrastructure schemes that have been funded and the additional land that this has enabled for development.

This report will be published by the authority.

The Payment Form (and receipt certificate)

Will include the following information for each dwelling or building:

• The address of the dwelling or building
• Name and address of the Developer responsible for payment
• The self-assessed market value
• The self-assessed gross internal floor area
• The formula or flat rate per square metre
• Less the above information for any retained floorspace existing at the time of consent
• The amount paid, or zero if below the threshold.

Resource impact (estimate)	Quantum	Set-up costs	Quantum per annum	Arm's length agency	Developer	Revenue Scotland	Scottish Assessors	Local Authority	Total pa
		£m		£m	£m	£m	£m	£m	£m
Central Co-ordinated Option	1	0.50
Plans for strategic infrastructure	10	2.50
Governance and leadership			1	0.15					0.15
Planning administration			17,500					0.44	0.44
Payment processing			17,500		0.61	0.79			1.40
Appeals and revaluation			500	0.05	0.23	0.09	0.38		0.74
Fund management			1	0.56					0.56
Annual reporting			1	0.35					0.35
Total		3.00		1.11	0.84	0.88	0.38	0.44	3.64
Local Co-ordinated Option	32	1.60
Plans for strategic infrastructure	32	3.20
Governance and leadership			32					0.80	0.80
Planning administration			17,500					0.44	0.44
Payment processing			17,500		0.61			1.31	1.93
Appeals and revaluation			650		0.29		0.49	0.23	1.01
Fund management			32					0.59	0.59
Annual reporting			32					1.12	1.12
Total		4.80		-	0.91	-	0.49	4.48	5.88
As % of potential amounts raised	Formula	Flat rate
Potential amount raised £m pa	75	39
Central Co-ordinated Option	5%	9%
Local Co-ordinated Option	8%	15%