That this House has considered the impact of the Community Infrastructure Levy on private homeowners.
Thank you, Mr Turner, for presiding over this debate on an issue that is having profound life-changing consequences for ordinary families across the country. I also thank the Minister for his interest in the issue. Politics can be very tribal, but I have already met him twice to discuss it, both times with Councillor Jane Austin from my constituency—once in July last year and once in December last year, alongside my hon. Friend the Member for Farnham and Bordon (Gregory Stafford). I know he wants to solve the issue.
The community infrastructure levy, or CIL, was introduced for the best of reasons: to ensure that commercial developers contribute towards the cost of the infrastructure needed as a result of their developments. It was never intended as an extra tax on people doing home extensions, and certainly never as a retrospective tax that people are landed with unexpectedly after the event. Most councils understand that, but one or two have ruthlessly exploited loopholes that allow them to punish homeowners, including Lib Dem-run Waverley in my constituency, which charges over £550 per square metre, one of the highest in the country.
But it is not just there. This morning, I heard about a case in Sevenoaks, where the district council pursued a stay-at-home mother relentlessly, in a case championed by my right hon. Friend the Member for Sevenoaks (Laura Trott). For many families the consequences have been devastating. Some have been forced to sell or remortgage their homes, and the financial burden, alongside the stress and uncertainty, has been immense. Some have fought their councils for years, hitting brick walls at every turn. I am aware of 15 families in Waverley alone who faced unexpected charges, ranging from £26,000 to £235,000.
There are now more than 100 known other cases across the country. Here are some examples: Steve Dally and his wife Caroline have been forced to remortgage their home to pay a £70,000 CIL charge on a home extension in Godalming. As they explained to me and local councillor Jane Austin, they are not developers; they simply extended their home. They hit a brick wall when they challenged Waverley and had to risk additional penalties and compounded interest in the process.
Another Godalming couple were hit with a £70,000 bill because they were living in rented accommodation while their home was being renovated. In Milford in my constituency, a homeowner was forced to pay a £120,000 CIL bill when forced to submit a retrospective planning application because two walls of his existing home fell down. For failing to give notice of the walls falling down he was charged £2,500 in penalties because he had failed to submit a commencement notice, something he had never heard of.
Enton resident Helen Grant reluctantly settled a £56,000 CIL charge on the family home, only to be sent a bill for a further £3,000 in interest charges when the council reviewed her case, which had already been closed. It is not just Waverley; I pay tribute to the CIL Injustice Group, which operates across the whole country. Many of its members are watching from the Gallery today, including people from Wokingham, Tonbridge and Devon.
I thank the right hon. Member for bringing this issue forward. I remind him of the cautionary tale from Northern Ireland. We operate without a CIL-style levy. Instead, we rely on bespoke section 76 agreements, which avoid the tax-like rigidity of CIL. That has left us in Northern Ireland with a multibillion-pound funding gap for infrastructure—specifically, for our waste water systems—which is now halting thousands of developments across 25 cities and towns in our 11 council areas. Does he agree that we must ensure that this measure is not just a sales tax on development value but a ringfenced guarantee for the specific pipes and roads that make those homes habitable? The cautionary tale from Northern Ireland is an example of where this has gone wrong.
I thank the hon. Member; he always makes very thoughtful contributions. He makes two very important points. The first is that we do need developers to contribute towards infrastructure costs. The risk of the appalling injustice that I am drawing attention to today is that we lose social consent for very important contributions that enable much-needed infrastructure to be built. Secondly, he is absolutely right to say that not having CIL at all would be very bad. In my area in particular, there is constant concern about the lack of infrastructure to keep pace with new housing developments.
I want to return to the CIL Injustice Group, because their accounts are extremely concerning. Some are nervous about dealing with their council because of the bad way they are treated. Others spend thousands of pounds on legal fees, often unsuccessfully. Part of the issue is that CIL is an extraordinarily complex process. Forms must be filled in in the correct order and are subject to strict timetables. Even professionals struggle. It is very unforgiving if someone gets it wrong. They have to pay within 90 days, under threat of seizure of assets and imprisonment, and if they do not comply, they get slammed with thousands of pounds in late charges and interest on top of that. There is effectively no right of appeal, and most importantly, there is no ability to correct errors. Ordinary homeowners inevitably do make errors, but there is no latitude in the system to allow them to correct those errors.
Does the right hon. Member share my view that when the community infrastructure levy was introduced, it was not designed to penalise people who were adding extensions to their homes or seeking to self-build? Rather, it was designed as a levy on large-scale infrastructure that would help through reinvestment into the community.
The hon. Member is absolutely right, and he is foreshadowing what I will propose as one of the solutions to this issue: that homeowners should be excluded from the potential ambit of CIL altogether, because that was not its intention. It is a loophole that is being exploited, and I hope to explain why some councils have been so keen to exploit that loophole. We need to remove the root cause if we are going to deal with this issue.
My right hon. Friend is laying out a compelling illustration of the injustices to individuals that this highly complex charge is causing. As he moves on to his solution, will he also reflect on the macroeconomic impact of this complexity and deterrence? I was Housing Minister for a year. Sadly, in those 12 months, I did not get round to sorting out this mess, but it was obvious to me that the small builder sector, which used to produce over 50% of the homes in this country, had been decimated by the crash and never returned. This disincentive to the kind of work that would encourage a really strong small builder sector, which could then contribute more to our economy, is both a brake on growth and a brake on the wider housing aspirations that both Governments have had over the last few years.
I absolutely agree with my right hon. Friend, who has much more experience of the housing sector than I do. He will know that countries like France—not very far away—that have been much more successful than us in building more houses also have a flourishing small builder sector. In this country, because of the enormous costs involved in the planning process and often the land, it is much harder for small builders to get involved. Of course, one of the other advantages of small builders is that they are more likely to get consent from local communities, because they are often from those local communities. I agree with my right hon. Friend entirely: that is one of the unintended consequences of the problems we have with the community infrastructure levy regime.
CIL was drafted with very strong teeth to ensure that developers actually pay up, but for ordinary members of the public trying to do an extension, these Orwellian processes can be utterly terrifying. Some councils—not my own Waverley borough council, alas—recognise the inflexibility of the regulations and have taken a soft-touch approach to prevent homeowners from being captured. To its credit, West Berkshire, which as it happens is also a Lib Dem council, implemented a discretionary review and refunded £400,000 to affected householders. Others have not. I recognise that the difference in councils’ approaches makes the Minister’s job more difficult.
So how should we fix the issue? First, we need to reform the highly complex CIL legislation to distinguish between commercial developers and householders. The problem with a system that is based entirely on the floor area of a project is that even a small increase in the size of a project—just a couple of extra metres on a patio—can suddenly mean that an ordinary homeowner is required to get planning permission, perhaps retrospectively, and can become liable, and they may not know it at the time. Homeowners should be outright excluded from the reach of the community infrastructure levy.
It is a pleasure to serve under your chairmanship, Mr Turner. I congratulate my right hon. Friend the Member for Godalming and Ash (Sir Jeremy Hunt) on securing this debate. I have applied for a similar debate twice, but clearly I do not have the touch of a former Chancellor in the Westminster Hall lottery.
This is a very serious issue. The community infrastructure levy is meant to be simple: developers contribute and that money is used to fund the infrastructure that communities need. That is the principle, and that is the promise, but in parts of my constituency that promise is being broken. The regulations are clear that CIL is intended to support growth through infrastructure, yet we see millions of pounds collected and sitting idle, with little evidence of delivery. The rules exist but the action does not follow.
In Waverley where, as we have heard, CIL rates are among the highest in the country, substantial sums are being collected and left unspent—£30 million when we last checked at the beginning of the year. That alone undermines public trust, but the reality is worse than that. The money does not simply sit there; it accrues interest—£125,000 a month in Waverley’s case. That interest is not ringfenced for infrastructure; it is absorbed into the general council spending. It is equivalent to 10% of council tax in Waverley’s case. Residents are told that the money is for community facilities when in reality it is sitting in accounts, quietly supporting day-to-day council spending.
At the same time, inflation is eating away at the value of the original CIL pot, so when the council does eventually spend it, it delivers less than it should. Communities lose twice: the infrastructure does not arrive and the money set aside to fund it is steadily diminished.
Worse still, the system is being misapplied. Of course, it is right that developers should contribute, but individual homeowners making changes to their own properties were never intended targets of the regime. Pursuing them aggressively, as Waverley borough council does, is not just heavy-handed; it is plain wrong. Let us call it what it is: a cash grab.
It is a pleasure to serve with you in the Chair, Mr Turner. I congratulate the right hon. Member for Godalming and Ash (Sir Jeremy Hunt) on bringing this important and overdue consideration of CIL to Westminster Hall.
We have heard some powerful contributions, and it is clear that there is a widespread and serious problem. Families are facing bills of £40,000 to £70,000—in some cases over £200,000—for what often amounts to a missing form. That is an awful and unacceptable situation, and it can be life-ruining for those involved. The lack of appeal, the mounting interest and the threat of people losing their homes are all real injustices. The system is broken and needs to be changed.
The Liberal Democrats agree with much of the substance of what has been said, but I must be direct with the right hon. Gentleman: Waverley borough council’s CIL charging schedule, which sets all the rules for the charging of CIL, all the forms and all the processes were put in place by the Conservative council administration a few years ago. The Liberal Democrat authority is doing its best to manage the system that was put in place by its predecessors. His party had ample time in government to fix the issue and, as we have heard, did not do so.
On the question of the discretion available to councils, the position is fairly clear. In December 2025, the High Court handed down a judgment in Luck v. Bracknell Forest borough council, and was unequivocal that once a valid CIL charge has fallen due, councils cannot lawfully cancel it. Councils find themselves with no alternative. Depending on what lies behind the original mistake or inaccurate charge, councils simply cannot wipe away the charge, as the Court has determined.
The CIL rules manage to be too inflexible and too vague at the same time. My constituent Ruth has had to pay a £38,000 CIL charge because unfortunately her husband did not submit the correct forms, as a result of what turned out to be Alzheimer’s. As my hon. Friend said, any potential refund would be technically against the law, and the Government say they cannot intervene in the case because the correct rules have been followed. Does my hon. Friend agree that, while waiting for further legislation, the Minister needs as a matter of urgency to issue new national CIL guidelines and give councils clarity, consistency and the ability to correct injustices where appropriate?
My hon. Friend is absolutely right. He makes the excellent suggestion that not only should we have guidance, but the regulations themselves need to be changed, in many of the ways that other hon. Members have already mentioned.
Does my hon. Friend recall that our hon. Friend the Member for Newbury (Mr Dillon) tabled a new clause on CIL guidance for the debate on the English Devolution and Community Empowerment Bill, but unfortunately the Government did not accept it? Does my hon. Friend agree that we ought to look at other legislative opportunities to correct the wrongs?
My hon. Friend is absolutely right that the Government should do that. There have been opportunities to do something about this; there are opportunities to change the law. He seems to have read the later part of my speech, and is quite right to mention our hon. Friend the Member for Newbury (Mr Dillon), who not only made that point in respect of that Bill but brought it to the attention of the Select Committee last year. Liberal Democrats in Parliament have been trying to get resolution and a change in the rules.
In Waverley, the council has gone further than the law requires. It has set up a discretionary review process, opening a few weeks from now in June, for householders who believe they have been wrongly charged. That is the right thing to do, acting within the limits of what the law allows it to do. But the council can only act up to and within the bounds of the law, which is rigid.
Before the hon. Member moves on, I should correct what he said: CIL was introduced in Waverley in 2019, and the Liberal Democrats took over the council one month later. The idea that the Conservatives brought it in is utter nonsense. The Liberal Democrats have now had seven years to try to fix it, and they have not. I ask the hon. Member to use his influence on his fellow Liberal Democrats to encourage them to operate a system far more like those in other parts of the country that we heard about from my right hon. Friend the Member for Godalming and Ash (Sir Jeremy Hunt), which operate with more flexibility.
The amount of flexibility that can be exercised depends on the nature of the error in the process that is being discussed, so not every council can operate the same redress in the same situation. The hon. Gentleman confirms that it was a Conservative administration that drew up the CIL charging schedule, the forms and all the processes that underlie and guide—in fact, not just guide but narrowly dictate—how the council exercises control over CIL. Where the hon. Gentleman is right is that the rules need to change. The best way to change them would be to change the regulations in this place.
That brings me to the Minister and the Government. The Minister has said, including when my hon. Friend the Member for Newbury raised the issue, that CIL was never intended to be applied in this way, and I believe he is right. He has named the Liberal Democrat authority in West Berkshire as a good example of exercising discretion where the law allows that to be done, but naming good examples is not enough, and we need to do more.
We need three things from the Government on this issue, and we need them in this Parliament. We need a statutory definition of what constitutes a minor administrative error, so that homeowners are not penalised by tens of thousands of pounds for a missed form. We need a statutory right of appeal against CIL charges, with clear limits for resolution, and a clear lawful basis on which councils can waive or refund charges in cases of genuine homeowner error. Currently, that option can be exercised only in certain cases, depending on the nature of the error involved. I am grateful that the Minister has indicated in previous discussions that the Government will act, but we need to see action.
While on the subject of CIL, we should be honest about the wider problem. All the Members who have spoken—I think they have all been hon. Gentlemen—were right that it is necessary to fund infrastructure, so the rationale behind CIL is worth while. As the hon. Member for Farnham and Bordon (Gregory Stafford) pointed out, the CIL funds do need to be spent on delivering infrastructure.
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Secondly, even in the absence of legislation, we need clear guidance from the Government to local councils so that no homeowners anywhere are charged for the community infrastructure levy. Thirdly, we need an effective mechanism for redress and the ability to correct genuine mistakes after a liability notice has been issued. Sadly, zero rating CIL liability does not work because a charge remains on the land, which may render the property unsaleable, so the Government need to find a way not just to avoid injustice but to secure justice for the hundreds of families who have been wronged to date by the problems in the system.
Finally, we need to recognise that the root cause of the problem is that councils such as mine have been collecting the community infrastructure levy not just to build infrastructure but so that they can use the interest from unspent CIL as revenue. An estimated £9 billion is sitting in council accounts from unspent contributions by developers, of which an estimated £2.2 billion is unspent CIL. That means that some councils are effectively funding their core services from the human misery of their council tax payers. At a minimum, rules should specify that interest from unspent CIL should go back into the CIL account to avoid a perverse incentive for councils to do the wrong thing.
British democracy rests on the principle of consent and fairness, both of which demand justice for those caught unfairly by the CIL system, which was never designed to capture them. All those people deserve clarity, and this should be prevented from happening again. I know the Minister and many other hon. Members here today want just that, and I look forward to hearing the Government plans.
CIL may be a national framework, but it is administered locally. The contrast within my constituency could not be starker. In East Hampshire, charging rates outside the regeneration zone in Whitehill and Bordon range from £95.94 to £265.68 per square metre. Even with a manual exemption system, the council actively supports residents, contacting them repeatedly by letter, email and phone to make them aware of exemptions, guiding them through the process and clearly warning them of the consequences of failing to submit the correct forms. That is what good administration looks like.
Let us compare that approach with that taken by the Liberal Democrat-run Waverley borough council. There, the CIL rates charged to affected homeowners are among the highest in the country. In Farnham, they stand at £547.17 per square metre, rising to just under £570 per square metre in Haslemere and the surrounding villages.
With those high rates comes a very different approach. I have been contacted by a number of constituents who together face CIL liabilities of nearly £1 million. They are not developers; they are ordinary residents who feel blindsided, misled and, in some cases, harassed. They are being charged for exemptions they were never supposed to pay. That is not administration. That is extraction.
The response from the Liberal Democrat leadership, supported for too long by the Farnham residents group, has been one of inertia and, frankly, contempt. Instead of being helped to navigate a complex system, residents have been left in the dark and presented with life-changing bills. This is not fairness; it is the politics of envy in action, and my constituents are paying the price.
Let me give some examples. One constituent who lives on the Surrey-Hampshire border has an East Hampshire postcode but her property falls within Waverley. She was hit with a £48,000 charge, which has now risen with interest to £60,000. In Haslemere, another constituent received a £94,000 charge because an agent failed to submit the correct forms. He was forced to put his home on the market, with the only alternative to divert the majority of his pension to pay the bill.
In Lower Bourne, a couple were issued with a £54,000 charge two days before Christmas in 2024. That led to delays and additional restart costs of between £15,000 and £20,000. Also in the Bourne, a resident faces a charge of £150,000. In Moor Park, another faces a charge of close to £100,000, triggered by a mid-project planning amendment.
Even minor administrative issues are treated with zero flexibility. A Farnham resident now faces a £25,000 charge, along with £5,000 in legal costs, following a change-of-use application for a granny annexe. These are not speculative, rapacious developers; they are people improving their homes, supporting their families and planning for their futures. The human cost is real and growing.
As has been pointed out, last year my right hon. Friend the Member for Godalming and Ash and I met the Minister to discuss these issues. At the time, he appeared sympathetic, so I ask him today: what progress has been made? At that meeting, we urged the Minister to issue clear guidance to local authorities to prevent further harm while the regulations were reviewed. Unfortunately, that idea was not taken forward. I understand the concern about overreach, but what we are seeing now is not restraint; it is injustice.
I support my right hon. Friend’s proposed solutions. With that in mind, I ask the Minister three fairly straightforward questions. First, what progress has been made on reforming the CIL regulations? Secondly, will he issue clear guidance to ensure that councils do not exploit the rules to the detriment of ordinary homeowners? Thirdly, will those who have been wrongly charged be refunded? Under the current system, once development has commenced, there is effectively no right to appeal. It is a rigid and unforgiving mechanism. Most councils choose not to wield it in this way, but Waverley borough council has.
The spirit of the law is being ignored, and the balance has been lost. My constituents are being treated not as residents to be supported, but as revenue to be extracted. This is not what the levy was designed to do. It was meant to build stronger communities, not penalise them. The law may permit what is happening, but it was never intended to enable it. It is time we put that right.
The levy is a flat rate per square metre and bears no relation to the level of the uplift in land value before and after planning permission is granted. I confess that back in the 2000s when the measure was being put forward, I was part of a lively debate with bodies such as the British Property Federation, arguing that the levy should relate to the level of land value uplift. In some parts of the country, where we have clear viability challenges, there is very little land value uplift. The same level is charged as on a site with a massive land level uplift, where there is no viability problem. The state is missing out on land value uplift in places and the CIL is affecting viability in other places. We would suggest that the Government move towards a levy that relates to the land value increase that the landowner is gaining. That is necessary to fund schools, surgeries, GPs, roads, and all the rest of it.
The Minister is reportedly looking at the levy again; I urge him to be ambitious and make the changes we are arguing for. Patching the exemption rules is necessary, but it is not sufficient. The injustice that constituents are facing is real—we agree on that—but the schedule put in place by previous parties is what has guided Waverley’s actions. The council is doing what it lawfully can to address the issue, but the Government need to do the rest.