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Local authorities should be given greater freedom to spend Community Infrastructure Levy funds on skills and training where labour shortages are holding back development, according to the audit, tax and business advisory firm Blick Rothenberg.
The firm points to analysis by the Home Builders Federation (HBF), which estimates that councils are holding around £2.2bn of unspent levy receipts, with the average authority operating the levy thought to hold £13.9m and some holding considerably more.
Mark Cunningham, a partner at Blick Rothenberg, said: “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.”
He added: “CIL has played an important role in funding infrastructure across the country and should continue to do so, but investing in people is ultimately key to delivering infrastructure. Despite a slowdown in development activity in recent years, these balances continue to rise.”
The Community Infrastructure Levy is a charge that local authorities in England and Wales can levy on new development to help pay for the infrastructure needed to support growth. Councils can use it to fund schools, transport improvements, healthcare facilities and community assets.
The HBF figures come from a Freedom of Information survey of 243 local authorities in England and Wales, published in March, which put total unspent developer contributions at £9bn once Section 106 money is included.
Cunningham said a share of the levy 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,” he said.
He said the levy was introduced almost twenty years ago, when the challenges facing the economy were different. “As balances continue to accumulate, the challenges facing the economy have changed,” he said. “Today one of the biggest barriers to growth 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.”
The argument echoes long-running complaints from employers that money raised to fund training too often goes unused, with billions sitting idle in apprenticeship levy accounts in earlier years.
Cunningham added: “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.”
