Development levy is “last straw” for industry

Tuesday 07 November 2017

Plans to adopt a UK-style tax on new developments have not been sufficiently “Jersey-fied” and could lead to higher house prices if the plug is not pulled soon, a collective of local business leaders has warned.

The proposed Jersey Infrastructure Levy (JIL) – penned by Minister for the Environment Steve Luce – proposes to claim back a percentage of the profit land owners enjoy when planning permission is granted, in order to fund parish infrastructure as well as the ‘Future St Helier’ project to rejuvenate town.

According to Deputy Luce, this should help make Jersey a more varied and vibrant place to live, but members of the Chamber of Commerce, Jersey Construction Council and Jersey Farmers’ Union yesterday rallied against the idea at a Scrutiny hearing yesterday. 

They said that they had previously expressed numerous concerns over the statistics laying the foundations for the plans, but that these had “fallen on deaf ears.” So concerned were the Jersey Construction Council over the alleged inaccuracies that they commissioned a review by Lichfield’s UK Planning Consultancy, which they said highlighted issues with the potential impact and viability of the plans.

Pictured: The Department for the Environment hopes that, if passed, the money raised from the JIL will go towards rejuvenating town.

Ogier’s Claire Smith, a planning law specialist, criticised the lack of clear direction regarding how the collected money would be spent. She likened it to putting cash “in a black hole.” 

She argued that the existing Planning Obligations Agreement system – one in which developers are asked to shell out for “mitigating” features like bus shelters or improved junctions – was serving islanders better than JIL would because it meant that necessary infrastructure would not get missed.

If parishes don’t use the funds on bits of infrastructure deemed necessary by nearby residents, the developers could be left to take the blame, she warned. 

The Panel, which consisted of Chairman Deputy David Johnson and Vice Chair Deputy Tracey Vallois, were told that the industry is already being penalised without the added pressure of the JIL. According to the Jersey Construction Council, the price of construction is already rising, with costs having increased by as much as 12% following the Brexit decision and the weaker pound. They said that Deputy Luce’s proposals had not taken this into account.

“This is the straw that’s breaking the camel’s back,” developer David Whalley commented.

Pictured: The Minister for the Environment's plans, which had already been attacked in an open letter by the Chamber of Commerce, are one tax too far for the already burdened development industry, the Panel heard yesterday.

While the Minister had maintained that the additional cost of JIL would not be absorbed into house prices, this suggestion was met with resounding disagreement. Chamber of Commerce President Eliot Lincoln described the notion as “misguided”, adding that JIL would either lead to “landowners holding onto land, or you’ll see costs being passed all the way down.” 

“Either one of those is going to slow the industry down, so we’re really concerned,” he said. 

Moreover, they feared that it could stifle the progress of much-needed affordable housing projects on the island: “Currently there is a shortage of homes on Jersey and bringing this in will just slow down the process, suffocate the whole process… and increase the affordability problem.”

When questioned over their thoughts about certain affordable homes being exempted from the tax, Mr Whalley pointed out: “Everybody’s ‘affordable’ is different of course.”

Ms Smith said that this “woolly statement” would have to be carefully pinpointed in legislation. “Will it just mean Andium?” she questioned.

This morning we're taking evidence on the Infrastructure Levy. Find out about other public hearings this week here: https://t.co/4fUpQG3PJt

— Jersey Scrutiny (@jerseyscrutiny) November 6, 2017

Ms Smith’s most scathing critique, however, came as she discussed the inspiration behind JIL – the UK’s Community Infrastructure Levy (CIL), which she said had plenty of its own difficulties.

“It’s the most amended piece of legislation since Planning has existed because it is so incredibly technical,” she said, adding that it was the hardest of all areas she practices in – “and I also practice in nuclear law.” She added that it was expensive for councils to deliver and that rates of return were small. “I do not believe this is going to deliver all the good things that the Minister is looking for at all,” she said.

She added that what was already a difficult system in the UK would certainly not fit in Jersey - even if it has been "poked a bit" in a bid to make it work. "You're taking the microcosm and applying a macro system that specifically won't work in Jersey... It has not been sufficiently Jersey-fied."

 The Minister for the Environment is due to be questioned on Thursday over the plans.