A new levy will ensure developers help provide vital public services, the government has said.

The Community Infrastructure Levy (CIL) will allow local authorities to raise funds from developers alongside building projects.

Money raised will be used to build new infrastructure, such as schools, hospitals, roads as well as transport schemes and leisure centres.

Regulations published by the government will allow councils to raise an additional £700m a year, where councils choose to use the new power.

Housing and planning minister John Healey said the new system would ensure developers paid a fair share towards vital local services.

It would also give developers certainty over the contributions they have to make to support local communities when they plan projects.

The government was helping house-builders on the road to recovery by kick-starting work on construction sites, said Mr Healey.

But he added: “It's not enough to build more homes.

“We need high quality neighbourhoods where local families can live and benefit from first class schools, roads, parks and leisure centres.”

The final regulations include:

• allowing up to 100 per cent CIL relief in exceptional circumstances for developments that would otherwise not proceed
• allowing payments of CIL to be made in-kind in the form of land provided that land is transferred with the intention of providing infrastructure
• doubling the standard payment period to 60 days to ease cash flow for developers; and allowing payment by instalments in many cases
• introducing the potential for local authorities to borrow against future CIL receipts to allow infrastructure provision to be unlocked earlier in development, subject to the overall fiscal position of the country
• providing additional reliefs for developing charities in line with the Government's commitment to the voluntary and community sector
• providing 100% exemption from CIL for most types of affordable housing
• enabling authorities to draw the administrative costs of CIL from CIL receipts, subject to a 5% cap to maximise revenue for infrastructure.

The levy would be an improvement to the existing system, Mr Healey said.

It would put an end to site-by-site deals, which could be lengthy and uncertain, he added.

“Many councils don't get the contribution to new infrastructure their area needs at present.”

The levy would bring improved transparencies for communities who would know what infrastructure was needed and how it would be funded.

The new system heralded the end for unpredictable charges attached to planning permissions, Mr Healey said.

From 6 April, Section 106 agreements would only be permitted if they are directly related to the new developments.

By 2014, the agreements would be scaled back further to ensure they operate effectively alongside the levy.

Councils would be able to ensure new building projects paid a fair share towards easing pressure on services brought about by new development.

This would ensure those who benefited financially from planning gave something back to the local community by funding infrastructure.