Properties at a new 1,750-home development from Peabody and Berkeley Homes are on sale for up to £662,500 for a flat as Greenwich council decisions see related income lacking for local residents.
Developers will pay a low rate of £40 per square metre in Community Infrastructure Levy funding to the authority to fund services, with a rate set in 2015.
Unlike the £70 rate adopted in most of Greenwich borough (which is one of the lowest in London) it wasn’t Greenwich council but the Planning Examiner who set that £40 rate in this eastern part of the borough. However, by 2018 Greenwich could have increased it. They committed to a review which never appeared to happen. Most councils that also set a low rate in one part used far higher rates in more expensive areas to offset income. Greenwich Council could have gone for £230 psm in the west of the borough but chose £70 psm.
Both decisions contributed to a loss of millions, with other London boroughs covering Zones 2-4 often tens of millions ahead in revenue for services due to applying a higher rate for developers to pay.
The 2015 Greenwich CIL report which determined totals paid by developers stated “The Council makes a commitment in its supporting information document (CE9) to a review within three years of implementation”.
A review around 2018 would have seen – at the very least – an increase £50 per square metre in the area where 1,750 homes are to be built, as the Mayor of London was in the process of reducing his CIL rate from £35 psm to £25 psm in Greenwich borough offering the ability for the borough element to rise.
Even if we take that baseline of a £10 psm rise, when applied over 1,750 homes that is a sizable sum now lost to borough residents for a whole range of possible services and infrastructure improvements. However, other boroughs that have revised have tended to increase rates by far higher sums even without a reduced Mayoral CIL applying to their areas.
The failure to gain additional CIL income compounds issues with how they allocated the other main source of funding – Section 106.
As covered extensively on this site last year, plans to improve the wider area and links to Plumstead station and local shops by substantial alterations to a three-lane gyratory were scrapped. Not one penny of Section 106 will now be spent on improved pedestrian and cycling links to the nearest station which also serves many bus routes, nor local shops. That ignored two council reports (and one then in draft and now adopted) on encouraging people to walk, use public transport and encourage sustainability.
Requests from residents for answers are being rebuffed. When some councillors have been asked about the issue, they state low rates applied to developers in 2015 were the best they could secure, which is contradicted by the 2015 Planning Examiner’s report.
There’s also silence from the council on why no revision took place in 2018 despite a 2015 commitment to do so.
This has ensured millions of income has been lost, with Greenwich sitting near the foot of income from this key source of funding since 2015.
They now state they will look to revise rates four years after committing to in 2015. It’s a long process that can take 18 months at least, and many more millions could be lost before it happens.
It’s all the more odd in a time of harsh cuts from central government not to secure every penny they could.