Property industry urges Government to reject proposed changes to Localism Bill

This could see CIL revenues designed for new roads, schools and hospitals instead diverted to plug the hole in the funding of other public services for which it was never intended.

The BPF argues that unless the £6billion predicted to be raised by CIL over the next decade was spent on infrastructure then development would be held back in many parts of the country and economic growth would suffer. In the 2010 Emergency Budget Government said that £200billion of investment in infrastructure would be needed by 2015.

It could also turn communities against development when they see that the new infrastructure needed to mitigate its impact can no longer be afforded. This would be counter to Government’s key aim of giving communities incentives to accept development in their areas.

The BPF spoke out after Government spokesperson Earl Attlee announced in a House of Lords debate on the Localism Bill that ministers would consider "whether widening permitted uses of the levy would make the instrument more effective and better placed effectively to promote, support and enable new development".

He also announced a Government consultation this summer that would allow CIL payments to be spent on affordable housing.

BPF chief executive Liz Peace said: "We are delighted that ministers intend to reflect on the proper working of CIL rather than making decisions in haste.

"However, we would urge them to appreciate that if CIL is diverted away from vital investment in new infrastructure then this will undermine the ability of authorities to deliver development and will compromise economic growth.

"It could also make communities more hostile to development – not less, as Government seems to hope.

"Concerns around new development are usually around the impact on local services and the need for new roads, schools and hospitals. Taking money away from this necessary investment will be seen for what it is – a desperate and crude attempt to divert CIL funds to plug a hole in the funding of public services."

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