The Community Infrastructure Levy (CIL) has an important role to play in helping local communities benefit from new development. Introduced almost 20 years ago, the levy enables local authorities in England to raise funds from developers to help pay for infrastructure such as schools, transport improvements, healthcare facilities and community assets.

However, with an estimated £2.2 billion of CIL funds currently unspent by councils, questions are increasingly being raised about whether the system is working as effectively as it could.

The Government should consider giving local authorities greater flexibility over how a proportion of these funds can be used – particularly where skills shortages are restricting development and economic growth.

A significant pot of funding is sitting unused

Analysis by the Home Builders Federation estimates that councils are collectively holding around £2.2 billion in unspent CIL funds. The average authority operating CIL is estimated to hold £13.9 million, although some councils have accumulated significantly larger balances.

Mark Cunningham, Partner, said:

Analysis by the Home Builders Federation (HBF) estimates that councils are holding an estimated £2.2 billion of unspent Community Infrastructure Levy (CIL) funds. The Government should consider giving local authorities greater flexibility to use a proportion of these funds where skills shortages are holding back development and economic growth

The accumulation of funds comes at a time when development activity has slowed in many parts of the country. This raises a wider policy question: if funding is available but not being deployed, could a more flexible approach help address some of the practical barriers preventing development?

The skills shortage is becoming a growth constraint

Infrastructure investment is often viewed primarily in terms of physical assets – roads, schools, healthcare facilities and transport networks. But the ability to deliver these projects ultimately depends on having enough skilled people.

Today one of the biggest barriers to growth today is a lack of skilled people. Construction, engineering, and infrastructure projects all face difficulties recruiting and retaining skilled workers. In many parts of the country, growth is constrained not by a shortage of projects, but by a shortage of the workforce needed to deliver them.

This suggests that the debate around CIL should extend beyond how much money is raised and where it is spent. It should also consider whether developer contributions can help create the workforce needed to deliver the growth those developments are intended to generate.

Could CIL support skills as well as infrastructure?

A proportion of these funds should be used more directly to support growth by incentivising apprenticeships linked to major developments, supporting construction skills programmes and creating training pathways into sectors facing severe labour shortages. This would create a clearer link between development and economic opportunity for local communities.

For businesses, this could help create a more sustainable pipeline of talent while supporting the delivery of new projects. For individuals and local communities, it could provide routes into employment and skills development.

A broader rethink of developer contributions?

The Government faces a difficult balancing act. Developer contributions need to ensure that new development is supported by appropriate infrastructure, while excessive costs can potentially affect the viability of projects and the pace of development.

Greater flexibility over existing CIL balances would not, in itself, resolve the UK’s housing, infrastructure or skills challenges. However, it could provide local authorities with another tool to respond to the specific barriers facing their areas.

Mark concluded:

If development generates jobs and drives growth, it should be considered reasonable that developer contributions help create a workforce to deliver and sustain that growth

The wider opportunity is therefore to create a stronger connection between development, infrastructure, skills and local economic outcomes.

What should you consider/do next?

For businesses and developers:

• Consider how local skills shortages could affect the cost, timing and deliverability of planned developments
• Engage with local authorities on skills, employment and infrastructure priorities linked to major projects
• Assess whether apprenticeship and training initiatives could form part of wider development and community strategies

For local authorities:

• Review accumulated CIL balances and whether existing funding is being deployed effectively
• Consider where skills shortages are directly limiting development and economic activity
• Explore how training and employment initiatives could complement traditional infrastructure investment, while maintaining CIL’s core purpose

Would you like to know more?

If you have any questions about the above, please get it touch with your usual Blick Rothenberg contact or Mark using the form below.