Clause 6 — Modification or discharge of affordable housing requirements

Growth and Infrastructure Bill (Programme) (No. 2) – in the House of Commons at 6:02 pm on 17th December 2012.

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Photo of Nick Raynsford Nick Raynsford Labour, Greenwich and Woolwich 6:02 pm, 17th December 2012

I beg to move amendment 3, page 6, line 4, after ‘(1)’, insert ‘Subject to subsection (1A),’.

Photo of Nigel Evans Nigel Evans Deputy Speaker (First Deputy Chairman of Ways and Means)

With this it will be convenient to discuss the following:

Amendment 4, line 5, at end insert—

‘(1A) This section does not apply to any planning obligation relating to development—

(a) in a National Park,

(b) in an area designated as an area of outstanding natural beauty,

(c) in an area designated as a rural area pursuant to section 157 of the Housing Act 1985, or

(d) for which planning permission was granted by a neighbourhood development order.’.

Amendment 45, line 18, leave out ‘means’ and insert ‘is assessed by the local authority to be the foremost reason.’.

Amendment 44, line 24, at end insert—

‘(3A) The Secretary of State shall make an order by Statutory Instrument setting out the criteria by which viability is to be assessed.

(3B) An order shall not be made under subsection (3A) unless he has consulted those persons or organisations he considers to be appropriate and a draft of the Order has been laid before, and approved by resolution of, both Houses of Parliament.’.

Amendment 46, line 40, at end insert ‘or,

(e) request that the requirement is to be met in part, or in full, by central government funding allocated for the delivery of affordable homes.’.

Amendment 47, page 7, line 8, at end insert—

‘(7A) Where the local authority has reasonable grounds to believe that the value of the land, on which planning consent with a planning obligation that contains an affordable housing requirement is placed, has risen and the original obligation has not been reasonably met at the end of one year they may—

(a) determine that the requirement is to have effect subject to modifications,

(b) determine that the requirement is to be replaced with a different affordable housing requirement, or

(c) determine that the requirement will be subject to review within a given time period.’.

Amendment 48, line 31, after ‘market’, insert

‘but not including requirements for land on the site to be reserved and transferred at nil cost to a local planning authority or registered provider of social housing.’.

Photo of Nick Raynsford Nick Raynsford Labour, Greenwich and Woolwich

I draw attention at the outset to my interests as declared in the register.

It is widely agreed, I think, that clause 6 is unsatisfactory. It is clearly based on conjecture and prejudice, rather than evidence. It was put together in a hurry, without adequate thought about its likely consequences, and there is a wide view that it is likely to have damaging impacts, not least on the provision of affordable housing. Ideally, the clause should be withdrawn. However, if the Government persist in promoting it, it is at the very least essential that it be amended to prevent some seriously damaging impacts on well-established mechanisms for the delivery of affordable housing. The purpose of amendments 3 and 4, which have been tabled in my name, is to prevent the destruction of a mechanism that has been in place for 25 years or more and that has secured a great deal of affordable housing, particularly in rural areas.

The other amendments in this group have been tabled in the names of my right hon. Friend Hilary Benn and my hon. Friends the Members for City of Durham (Roberta Blackman-Woods) and for Edinburgh South (Ian Murray) on the Opposition Front Bench. They seek further amendments to the clause in order to offset some of its unfortunate consequences. I will not speak to those amendments; I will simply speak to amendments 3 and 4.

The issues were debated in Committee and were raised as a consequence of the evidence presented to us by Dr Nigel Stone of the English National Park Authorities Association. What was clear during the evidence sessions was the overwhelming weight of expert opinion against clause 6. Planning experts from the Royal Town Planning Institute, the Town and Country Planning Association and the Planning Officers Society joined representatives from local government, politicians and officers in condemning the clause as inappropriate and damaging. In his telling evidence, Dr Stone said that, as currently drafted, the clause could fatally damage the policy of rural exceptions, which has worked, as I have said, for more than 20 years and allowed the provision of affordable housing in a substantial number of areas where commercial housing development would not usually be acceptable.

The policy is called the exceptions policy because, exceptionally, it allows affordable housing—which may be social housing for rent, but could equally be low-cost home ownership—on the clear understanding that that housing will, in perpetuity, be kept available for the needs for which it was produced and that it will never be converted into market housing. The reason for that is obvious to everyone who cares about national parks, areas of outstanding natural beauty and rural areas where the beauty of the landscape would be seriously compromised by indiscriminate, speculative development. Such areas need people to work to help the local economy and desperately want to keep existing rural communities alive with opportunities for long-term residents to continue to live in the villages in which they were born and brought up.

Photo of John Redwood John Redwood Conservative, Wokingham

Does the right hon. Gentleman not understand that the Minister’s intention is very simple and sensible? He does not want a commercial development of homes to be prevented by an affordable housing target that is not realistic for that development. Surely it is better to have some housing than none.

Photo of Nick Raynsford Nick Raynsford Labour, Greenwich and Woolwich

If the right hon. Gentleman will bear with me, he will realise that, actually, the consequence of what the Minister is trying to do would be to destroy a policy that dates back to the days of the Conservative Government of the 1980s—I believe that the right hon. Gentleman was strongly supportive of them—who allowed it to come into being in order to ensure that it was possible to create affordable housing to meet needs in areas where there would usually be outright opposition to market housing. The reason for that outright opposition is that such developments would seriously compromise the character of an area. The rural areas in question do not want a mass of indiscriminate private sector development, but they do recognise the need for some homes for people who need to live and work in those communities. That was the basis of the policy, which was a product of his party’s Government. It was supported by my party, has remained in operation for more than 20 years and has secured a good supply of affordable housing to meet special needs. I would have thought that he would have welcomed it.

Photo of John Redwood John Redwood Conservative, Wokingham

That was then and now is now. Then, we had working banks, a growing economy and people were able to invest and carry the costs. That is not true today, thanks to what the right hon. Gentleman’s party did in government.

Photo of Nick Raynsford Nick Raynsford Labour, Greenwich and Woolwich

I am sorry to have to remind the right hon. Gentleman that it is his Government who have been in office for the past two and half years, over which time the economy, at the very best, has been grinding along on the bottom as the result of his party’s mismanagement of it. I do not, however, intend to go down that route. I want to return to a policy that has received widespread support from Members of all parties, including some of his hon. Friends, who have specifically welcomed my amendment. I hope that after he has listened more to my argument, he will recognise that there is logic to the amendment.

The exceptions policy has evolved to meet special needs without opening the floodgates to more indiscriminate development, which would have otherwise happened because the areas concerned are often highly attractive and desirable areas where there would be considerable financial return from building commercial housing.

Hastoe Housing Association is probably the specialist body in this field and its chief executive, Sue Chalkley, joined me and a number of other experts to talk to the Minister about the issue. I am extremely grateful to him for making time available to hear our case and hope he was persuaded by it. Hastoe describes its role as

“a rural specialist housing association” that has

“developed affordable homes for local people in more than 200 villages across the south of England. Most of these schemes are on Rural Exception Sites.”

Its briefing goes on to explain how the process works:

“The Parish Council approaches us for assistance because they have identified that local people need affordable housing. We arrange a housing needs survey to evidence the need. We then walk around the village, with the Parish Council and planners, to identify site options.

The sites are very often just outside the village envelope and are usually, but not always, farm land. They are ‘exception sites’”,

as defined by the national planning policy framework. The briefing continues:

“We agree the preferred site with the Parish Council and planners and discussions are held with the landowner about purchase.”

The following is the crucial part:

“The price for an ‘exception’ site is an enhanced agricultural value, averaging £8,000 per plot.

Tenures can be affordable rent or shared ownership. Shared owners cannot buy more than 80% of the equity, so the homes remain affordable for future, generally local, purchasers.

The NPPF allows a small number of market sale homes on exception sites to help the financial viability of schemes where grant subsidy is limited.

The S106 agreement provides landowners and communities with confidence about the future use of the land; that it will always be prioritised for local people and always retained as affordable housing.

The delivery of new homes on exception sites requires willing landowners and willing communities. There are often only one or two landowners in rural communities and, without their co-operation, no homes will be built. We need their co-operation.”

Sue Chalkley stresses that the process gives confidence to all parties that such homes will for ever be kept available for the need for which they were developed, and will not simply become market housing by the back door. The section 106 agreement is crucial to that process. Without it, landowners are inevitably reluctant to provide land, because they can see the risk that sites that they sell substantially below open market value—I have quoted the figure of £8,000 for enhanced agricultural value—might produce a windfall gain to some future occupier who is fortunate enough to find that the property is saleable on the open market. That is the first problem.

The second problem is that communities that have agreed to an element of affordable housing on the basis that it is for people in need would be horrified if the policy could be subverted and the properties could become available as open market homes, rather than be used for the specific needs for which they were approved. Landowners and communities would have a crisis of confidence in the policy if clause 6 was passed unamended.

In Committee, I gave the Minister one example of how the policy could be subverted, but I have now highlighted a number of other ways. The first example that I quoted was an individual working in forestry in a national park being helped by a national park authority to get permission for an individual, self-built home for his needs. If that individual received consent for an exceptions home, but it subsequently became unviable because the builders’ prices had gone up or because he could not get a loan from the bank because of the mortgage difficulties that Mr Redwood mentioned, he could say that it was no longer viable to proceed with the development as agreed. Under the provisions of clause 6, he would be entitled to ask the planning authority—in this case it would be the national park authority—to reconsider the section 106 agreement because it was no longer viable to proceed with building the home.

The legislation gives no let out. It does not allow the planning authority to consider the wider social impacts or the needs of the community. It simply requires it to look at financial viability. If the argument is a sound one—and in the scenario that I have quoted it is—the planning authority will ultimately have to say that the person has a strong case. However, it might decide to refuse the request because if it agreed, it would subvert the exceptions policy and destroy the confidence of local people in it, meaning that landowners would no longer provide land for such developments and local communities would no longer agree to them.

Then, of course, the next ghastly consequence of the clause bites, because at that point the decision is referred to the Planning Inspectorate, which has a remit to consider only viability. It does not have a remit to consider whether a development is desirable, whether it would subvert the exceptions policy, or whether it would result in inappropriate development in a national park or area of outstanding natural beauty. It is required to look only at viability. If it does so on the terms that I have described, it will inevitably find that the section 106 agreement has to be amended or set aside because it prevents viability.

At the moment when the first of those decisions is taken, the rural exceptions policy is dead, because shockwaves will go around the country rapidly and word will get around that this policy that has worked for 25 years; that has helped to secure housing in loads of areas for people in need; that has kept communities together; and that has given employment opportunities to people who need to work on a relatively low wage in such areas is no longer viable because people can no longer be confident that a section 106 agreement will bite and will remain in force. That is the terrible consequence of the Bill.

Amendment 4 is very modest. The Minister knows that its purpose is very limited. It is restricted to excepting four circumstances from the general impact of clause 6. It would exclude developments in national parks, in areas of outstanding natural beauty and in rural areas where the exceptions policy applies, as defined by section 157 of the Housing Act 1985. As a result of my discussion with the Minister, I have added a fourth circumstance: developments approved subject to neighbourhood development orders. In the course of our conversation, it became clear that some communities that are considering neighbourhood plans may well give consent to a development on the basis that it is affordable and would not want that to be subverted by the viability test in clause 6.

My amendments are tightly defined and would safeguard a policy that has been hugely successful and that is subscribed to by parties across the House. If they are accepted, there will be a huge sigh of relief in many rural communities that are rightly concerned that the Bill will subvert something that is of value to them and to people in housing need. I hope that the Minister is persuaded by the evidence that he heard from the people I brought to see him and by the logic of the amendments, and will feel free to support them tonight.

Photo of John Redwood John Redwood Conservative, Wokingham 6:15 pm, 17th December 2012

The Government are right to be concerned about the poor volume of house building that they inherited and that has continued for the past two and a bit years. It is right that they need to facilitate more development of more or less any kind. It will, by definition, be affordable because people will now build houses only if they can see a purchaser or tenant with reasonable security.

I have difficulty with the amendments proposed by Mr Raynsford. He and I would probably agree that we need more affordable housing of all kinds in this country. The biggest shortage is probably in affordable housing for sale. A large number of people would like to own their own home. It is one of the tragedies of the current situation that people in their 20s and quite a lot of people in their 30s are no longer able to obtain a large enough mortgage to afford the prices of homes in many parts of the country. We therefore have a new generation of people who do not have the access to home ownership that previous generations have enjoyed and taken advantage of.

That has come about because of a mighty land and property price bubble, generated primarily by the mortgage excesses of the previous decade and, to a lesser extent, by the capitalisation of the subsidies that the Government tipped into the housing sector to try to keep pace with the inflationary bubble that the banking and monetary policy was creating. We are using public money to chase a bubble, which makes it very difficult to get affordable housing to people. The public money then does not go around as far as it should, because land and property prices are so high.

How are we going to break into that conundrum? The Government are trying many things. They are trying to get a freer flow of mortgage money and cash to people at cheap prices, so that they can afford more. They are also working on the supply side to try to puncture the land bubble at a sensible rate, so that all homes become more affordable.

The danger with concentrating on so-called affordable homes for rent in the public sector is that, as the right hon. Member for Greenwich and Woolwich says, there is a big lottery element to it. If one was born in the right village or has lived in the right village for long enough, one might qualify for such property, but if one has moved around too much or has lived in a different village, there is no such opportunity. The lottery element is one problem with what the right hon. Gentleman is suggesting.

The right hon. Gentleman said that affordable homes would always be available, but of course they will not, because they will mainly be lived in by the people who first get them. Those people might decide to live in them for 20, 30, 40 or 50 years, so they will not be available to anybody else because they will be providing family accommodation to those people. We might say that that is fine, because that is the purpose of such homes, but they cannot both fulfil the intended role for the family who are lucky enough to get them and be available to a family that does not have them.

That leads to a distributional problem, because if somebody who takes on a heavily subsidised affordable rented house becomes very successful, we rightly do not tell them that they have to leave. That means that someone quite rich and successful can be living in a heavily subsidised house, which does not seem fair. It is better to move to a system of subsidising people rather than properties, by giving them income support and the means to achieve what they need—a house to buy, a flat to rent or whatever. It is subsidising property that has got us into all these awful arguments, and it is sending the wrong signals and drying up the market in all sorts of ways. There are not enough affordable properties, and an awful lot of developers are being put off.

I hope that the Minister will build on the ideas that are currently in circulation to allow some development to take place, and that he will not allow previous plans from better financial times to prevent that development. I hope he will consider the two important points that I have made—that it is surely better to subsidise people in need than particular homes, which can lead to the maldistribution of results both geographically and by individual; and that it is surely better to work on the land market, because it must be our ultimate aim to have a land market at prices that people can afford. Thanks to the mortgage and subsidy boom of the previous decade we are a long way from that, with the result that many of our constituents cannot access the housing that they need and would like.

Photo of Roberta Blackman-Woods Roberta Blackman-Woods Shadow Minister (Communities and Local Government)

I wish to speak to amendments 45 to 48. Clause 6 greatly exercised us in Committee because of the threat that it presents to the future supply of affordable housing delivered through the application of section 106 agreements. No evidence has been provided in Committee or elsewhere of the necessity of the clause or of why section 106 agreements, as they relate to affordable housing, should be singled out for such treatment. Ministers and other Government Members seemed blasé about what the clause could mean for the development of housing, and particularly about the need to create communities that are both balanced and mixed.

I want to make it clear from the outset that we dislike clause 6 very much indeed, and that in tabling our amendments we have sought to curtail its worst excesses. The Minister was not able to provide an evidence base for it, a point noted by many witnesses, such as the National Housing Federation, which stated that

“no evidence has been provided to suggest that Section 106 generally, and its affordable housing component specifically, are routinely stalling developments.”

The Minister has not explained why the clause is necessary given that local authorities are already renegotiating section 106 agreements. The Local Government Association has emphasised that point, and as I have already pointed out to the Minister, the LGA is currently—I stress that word to my hon. Friends—under the control of the Conservative party. It stated that it believed the whole of clause 6 to be

“unnecessary because councils are already responding to changed economic circumstances by renegotiating Section 106…agreements voluntarily.”

Case studies exist from a range of councils, including Cheshire West and Chester, Exeter and Haringey. Given the relatively short time available I will not go into them in much detail, but it is worth pointing out that Cheshire West and Chester council has already renegotiated the section 106 agreement for Winnington urban village, and that Exeter city council has done the same for a series of new developments. There are a lot of examples of that across the country, and I am happy to pass the information on to the Minister if necessary.

Photo of Simon Hughes Simon Hughes Deputy Leader, Liberal Democrats

Does the hon. Lady accept that there is a problem with the current system? My local authority is run by the Labour party and has done a deal with the biggest developer on the estate near the Elephant and Castle, reducing the agreed planning percentage of affordable housing from 35% to 25%. When I asked, on behalf of those I represent, to see the paperwork justifying the viability of that, the council and the developer said no.

Photo of Roberta Blackman-Woods Roberta Blackman-Woods Shadow Minister (Communities and Local Government)

The right hon. Gentleman makes an interesting point, and I hope that he will persuade Ministers to accept our amendment 44, on how viability is measured. It would require more precise guidance to be given to local authorities of whatever political shade so that they know how they should assess viability. Voluntary agreements, which usually mean negotiating section 106 requirements downwards, are occurring across the country, so we and local councils need a better understanding of what is meant by viability in that context.

We know from the evidence provided by the LGA that on average councils are willing to accept a level of affordable housing about a third lower than the amount set in their local plan. We also know that all but 2% of councils have said that they would be willing to renegotiate section 106 agreements. There is therefore a big question about the need to include clause 6 at all.

It may help the House to understand the full nature of what is wrong with the clause if I briefly go through each amendment and its purpose. Amendment 45 would require a local authority to establish first of all that it is the application of a section 106 housing agreement that is making a development unviable. As we pointed out in Committee, such an amendment would place a sensible requirement on local authorities to establish that it is the section 106 agreement for affordable housing that means that a development cannot go ahead as planned. It would also allow other types of obligation, such as highways contributions, to be put forward to the local authority for renegotiation as part of current section 106 arrangements. Developers can already ask a local authority for a renegotiation of section 106 agreements, so we simply cannot understand why the Government would not want to accept such a basic, common-sense amendment.

The LGA has continued to press on that point, stating that it does not understand why the clause addresses only affordable housing when section 106 agreements also fund other forms of infrastructure. It has asked why social housing is deemed dispensable, especially since the current lack of funding has had a particular impact on the delivery of affordable housing, which is greatly needed.

After the May 2010 election, the Government cut the budget for new affordable homes by 60%. Labour invested £8.4 billion in the three years between 2008 and 2011, whereas the current Government will invest just over half of that amount in the four years between 2011 and 2015. At the same time, funding for existing affordable homes has fallen. As a consequence, shockingly, 37% of affordable homes do not meet the decent homes standard. I say to Ministers in passing that when we discussed the matter in Committee, no mention was made of the huge amount of money that went into upholding that standard under the previous Government. Of course, that kept a number of affordable houses in occupation.

We know that private rents are soaring. They hit a record high over the summer and are even higher at the moment. The number of homelessness acceptances is increasing, and over the past year rough sleeping has risen by about 23%. Affordable housing is therefore more necessary than ever, which is why the clause is so dangerous.

The Minister should note that the Local Government Association supports amendment 44. It asks the Minister to set out in regulations the criteria by which viability is to be assessed, and to consult relevant organisations before doing so—the issue raised by Simon Hughes. The LGA states that the clause encourages have-a-go behaviour for developers, because it offers no reason for them not to try to seek a reduction in their affordable housing obligations from the Planning Inspectorate. The LGA has said that the clause could delay house building and economic recovery as developers wait for the new regime to be put in place, while placing additional resources centrally with the inspectorate, rather than properly resourcing local planning authorities.

Amendment 44 proposes that the Secretary of State sets out in regulations, on which there has been consultation, the criteria for assessing economic viability. The determination of economic viability and the ability of developers to use non-viability as a means of renegotiating section 106 agreements for affordable housing is central to the clause, yet at no stage has the Secretary of State thought it necessary or reasonable to set out clearly to the members of the Committee, the House, relevant organisations and agencies or developers how viability is to be determined. That is simply not acceptable; greater transparency is necessary. Indeed, on this amendment the National Organisation of Residents Associations asked the Minister what I think is a fair question: who decides what is an appropriate profit margin and how will it be assessed? The association made the relevant point that it could be a moving feast.

In Committee, the Minister said:

“Of course it is important that local authorities understand how viability will be measured and what criteria will be used. The guidance will be published in due course.”––[Official Report, Growth and Infrastructure Public Bill Committee, 27 November 2012; c. 295.]

More guidance! I thought the Government said that they were seeking to reduce guidance, yet we find, again and again during consideration of the Bill, that not only do we have consultation papers coming out of our ears, but we will have a lot more guidance to deal with too. We need to know when the guidance will be published and whether the Minister is discussing the matter with the Royal Institution of Chartered Surveyors, which, I understand, has already produced some draft guidance.

Amendment 46 would require the Government to use the £300 million they say they have allocated for affordable housing—I am concerned it may have been allocated a number of times already—to be used to pay developers to make sites viable. Labour Members are desperately concerned that the removal of affordable housing from development sites will lead to a lack of balance and a lack of mix in our communities. That is why we think it is better for the Government’s money to be used for mixed schemes, which are already planned and deliverable, rather than to stop them and put the money somewhere else. We feel strongly about this and at the appropriate time will press the amendment to a Division.

What the Minister said in Committee is interesting, because he seemed to acknowledge my point about the need to develop balanced communities:

“One reason why we all want to retain the rather clumsy 106 system is that there does not seem to be another way of achieving mixed communities whereby new developments of private housing also include affordable housing. We are genuinely trying to make this work.”––[Official Report, Growth and Infrastructure Public Bill Committee, 27 November 2012; c. 289.]

It therefore seems strange that, having acknowledged the problem in Committee, the Government have come forward with no proposals to address it on Report. The Town and Country Planning Association highlighted the issue, drawing attention to the fact that

“The effect of the reforms to Section 106 agreements will be to reduce the quantum of land for affordable housing and risks increased social polarisation on particular sites.”

How will the Minister ensure that mixed sites will continue if a developer asks for the section l06 agreements on affordable housing to be removed?

Amendment 47 was also the subject of some discussion in Committee, not least because the structure of clause 6 allows only for a situation in which land values are falling. The amendment addresses the situation where development has been stalled for more than one year and land value has risen. It allows for the local authority to determine a new requirement, modify a requirement, or agree to review it after a given period.

The Government do not seem to have contemplated a situation in which land values are rising. As the Bill is supposed to contain measures that support growth, that is extremely worrying. Clearly, the Government have no more faith in the ability of the Bill to deliver growth than we do. The amendment would allow for the renegotiation of section 106 agreements for housing to be made where land values have increased and development on a renegotiated agreement downwards has not been delivered within one year. The Minister considered the one-year period to be too short. Perhaps he will be able to tell the House today what sort of time frame he would consider.

Amendment 48 is extremely important. If a developer sought to persuade the Secretary of State that a development was not viable because of the application of a 106 agreement for affordable housing and that it should therefore be removed, the amendment would ensure that the land remains protected for use by social landlords, or by the local authority if possible. That would protect the development of mixed communities and ensure that social landlords are not denied building opportunities through of the absence of land—a point made to the Minister by a number of housing associations. The Minister said that for social housing landlords

“land is often the thing they find hardest to come by, particularly land in a larger development, which is necessary to create a mixed community.”––[Official Report, Growth and Infrastructure Public Bill Committee, 27 November 2012; c. 306.]

He also said that more guidance will be published. I finish on this point and ask him again: when will this new guidance be published?

Several hon. Members:

rose—

Photo of Dawn Primarolo Dawn Primarolo Deputy Speaker (Second Deputy Chairman of Ways and Means)

Order. Just before I call the next speaker, I want to remind the House that the knife falls at 7 o’clock. The Minister has not spoken yet and it will be necessary to hear him speak.

Photo of Simon Hughes Simon Hughes Deputy Leader, Liberal Democrats

I will be brief. I want to make a couple of comments on clause 6 and affordable housing, and to follow on from the comments made by Roberta Blackman-Woods on her amendments.

I have concerns about the protection of affordable housing, both as it is traditionally defined—social rents, council rents or target rents—and as it may be defined now or in the future, which is at a higher percentage of market rents. I have raised this personally with the Minister—he has been very helpful—and the Under-Secretary of State for Communities and Local Government, my right hon. Friend Mr Foster. I would be grateful if the Minister addresses three questions.

First, how can I be assured that my constituents, local councillors and I, as the MP, will be able to see any deal that is done between our local council and the developer, and be able to ensure that the argument about viability is justified? To be blunt, I do not often believe developers when they say, “The figures don’t stack up.” I have reasons for not believing them. On the south bank, for example, developers got out of an obligation with the local authority on the basis that the figures did not stack up, but, when the properties were sold, the sale price was much higher than the likely sale price they put down. Clearly, then, their profit was greater and they could have afforded to build many more affordable homes. How can my hon. Friend the Minister assure me that we can know publicly what is economically viable?

Secondly, how can we guarantee input into the discussions about the guidance, about which the Minister has spoken and written to me, to ensure that it is effective? Bills are often outline structures implemented by secondary legislation and guidance, so I would like reassurance about the effectiveness of guidance in ensuring viability—accurately defined—and transparency and a common way of assessing it that applies all over England. It is no good having a viability argument in Southwark that is different from one in the north-east; we need a common formula that developers and councils have to follow.

My final question relates to a point made, perfectly properly, by the hon. Lady. How can we provide for the deliverability of affordable housing to go up and down? If the market drops, I could understand developers saying, “We can’t deliver,” although they would need to explain their case publicly. But if, as with the case on the south bank, the market goes up and the money to be made by the developer is greater, the community, represented by the local authority, needs to be able to say, “We want some money back. We want an additional affordable housing component.”

I hope that the Minister will put on the record some of what he has written and spoken to me about and what I have discussed with the Under-Secretary, my right hon. Friend the Member for Bath. I also hope he can reassure us that in the remaining work on the Bill—before it becomes law and in subsequent secondary legislation and guidance—the House can have an input into what is drafted and confidence that we will not lose affordable housing because developers that can afford to deliver on that simply say that they cannot.

Photo of Clive Betts Clive Betts Chair, Housing, Communities and Local Government Committee

I want to raise a number of points on which I hope the Minister can provide the reassurance that, in previous debates in the Chamber and before the Communities and Local Government Committee, he has not provided.

First, where is the evidence of a problem? The Homes and Communities Agency wrote to me to say that it had had no difficulties with section 106 agreements holding up any of its schemes. The volume house builders, to which I presume the Minister talks—I have been at meetings with them—say that the problem is not the section 106 agreements or the planning system, but getting customers who have access to finance and the confidence to spend it walking through their doors wanting to buy their homes.

The part of the industry most in difficulty comprises the small builders; the volume house builders and larger companies have simply reduced how much they are building. The small builders build on small sites which, by their very nature, do not have section 106 agreements attached to them, yet it is those schemes that have largely stopped across the country, again because of a lack of customers and the fact that banks, by and large, have withdrawn finance from that section of the industry. In that area, there has been almost no growth at all; in fact, the industry is now at a standstill. Once again, that is not due to section 106 agreements.

Photo of John Redwood John Redwood Conservative, Wokingham

The hon. Gentleman is right that the main problem is the lack of effective demand because of the banking and mortgage collapse, but does he not see that, because of that, there is little or no profit in these prospective developments and that that is why they cannot afford the 106 agreement-type levels common before the bust?

Photo of Clive Betts Clive Betts Chair, Housing, Communities and Local Government Committee 6:45 pm, 17th December 2012

I put to the right hon. Gentleman a point that has already been made very effectively: why, then, are the Government targeting only the social and affordable housing element of section 106 agreements? What about the rest of the obligations on developers? Do they not cause a problem too? In an earlier debate—I do not know whether the right hon. Gentleman was present—when challenged by his colleagues behind him about the need to ensure proper infrastructure, the Minister talked about the need for the community infrastructure levy to provide the resources to ensure that that infrastructure was provided. If developers have a problem with viability, why is he championing the community infrastructure levy and 106 agreements that are currently providing infrastructure for non-housing elements while targeting the housing element of 106 agreements? Why is that necessary? Again, we have had no answer from him.

On the housing element, I want to return to a point that we discussed in the Select Committee the other day and which my hon. Friend Roberta Blackman-Woods just made very strongly. I refer to the crucial issue of mixed housing developments. I would have thought that there would be cross-Chamber support for the idea of mixed housing developments. We do not want people in owner-occupied houses in one place and a smaller number of rented homes completely segregated on a different site. We need mixed schemes where everyone, irrespective of their tenure, can live together side by side. I thought that was the Government’s policy.

We had an interesting discussion about that in the Select Committee. We asked the Minister why, if £300 million was to be made available to provide additional rented homes in order to compensate for the ones lost under section 106 agreements, those properties could not be built on the same sites as the schemes in question in order to increase their viability. As I understand it, that is precisely what my hon. Friend’s amendment 46 would do, so will the Minister respond favourably to it? It would simply put into the Bill the idea that he seemed to welcome in the Select Committee the other day. I look forward to his response.

I turn to amendment 44, which was also tabled by my hon. Friend. Simon Hughes made the point about viability and whether we can trust developers when they say that a scheme is not viable. By what criteria will they and the Secretary of State be judged if a scheme is changed and fewer affordable houses are built? The Minister must accept that 106 agreements are not often backroom deals made in isolation between council officials and developers; they are often out there and scrutinised not merely by councillors, but by the public affected by them.

Communities want to know what will be built in their areas and whether rented homes will be available for people who cannot afford to buy. They will be very suspicious if, without such criteria in the Bill, the Secretary of State seems to be doing a deal behind the scenes—whether or not it is called the Planning Inspectorate—which results in the withdrawal of the affordable homes that they thought were being built, and to which they and their families would have access, and different amounts of affordable housing, if any, being agreed for the site. That is why it is important that the Minister states upfront the criteria that will be used to change the affordable housing component that communities will assume will be negotiated for their areas.

Finally, the lack of rigorous time scales in the proposals is worrying. My hon. Friend the Member for City of Durham mentioned the possibility of revisiting the issue after one year and reinstating higher levels of affordable housing for any scheme. That is a really important point, because the worry that some people have about the proposal is that developers will simply say that schemes are not viable; renegotiate them so that less affordable housing has to be provided; and sit on the land and wait till times become more propitious—when they can sell the houses for more, sell more houses and provide fewer for rent. In the meantime nothing will happen. In other words, instead of a stimulus to growth, the proposals could defer development and increase the profitability of the schemes so that fewer affordable or rented houses are produced. The Minister needs to address that worry and include some proper time periods, as my hon. Friend the Member for City of Durham has suggested.

Photo of Nicholas Boles Nicholas Boles The Parliamentary Under-Secretary of State for Communities and Local Government

Everybody is keen for me to explain things and reassure them, but they have not given me a great amount of time in which to do so. I hope you will understand, Madam Deputy Speaker, if I canter through my remarks pretty quickly.

I am a simple soul and do not have a lot of truck with ideology. I want to build more houses now, and I want the absolute certainty that they will go up, rather than a vague, tenuous hope of even more houses at a possible future date. Our discussions in Committee and this evening have persuaded me even more of the merit of this clause, and I am redoubled in my enthusiasm.

Photo of Nicholas Boles Nicholas Boles The Parliamentary Under-Secretary of State for Communities and Local Government

I am sorry, but I will not give way because many hon. Members have asked me for explanations and assurances. I am entirely convinced of the merit of this clause, but in Committee I heard good arguments from Members across the House about ways in which the legislation might be applied that would not produce more houses soon, or could threaten that possibility. I will address two of those arguments, which I hope will offer some reassurance to many hon. Members.

My right hon. Friend Andrew Stunell and Mr Raynsford raised the issue of rural exception sites. I understand that the likelihood of more land being brought forward in the future to supply affordable housing in key rural exception sites might diminish if the clause were to be applied to those genuinely exceptional schemes. I am grateful to the right hon. Member for Greenwich and Woolwich for organising a meeting with the housing association and the national park authority, and to my right hon. Friend the Member for Hazel Grove for attending it. I have been persuaded by the principle of their argument, but the precise way that the right hon. Gentleman’s amendment takes account of the issue is not necessarily right and I hope I can persuade him not to press the amendment to a vote. I am currently looking at proposals that will be brought forward in the other place to achieve a carve-out for rural exception sites from this provision.

I have also been persuaded by some of the arguments about developers achieving a more favourable affordable housing agreement and then sitting on it. That is why, unprompted, the Government have clarified that any affordable housing agreement renegotiated by the Planning Inspectorate will survive for three years but return to its previous level at the end of that period. If the developer has not built out on the basis of the new, lower, affordable housing agreement, the agreement will return to the previous higher level and they will have to continue to build it out at that level.

Photo of Simon Hughes Simon Hughes Deputy Leader, Liberal Democrats

Will the Planning Inspectorate system ensure that anybody can see the figures as well as the facts?

Photo of Nicholas Boles Nicholas Boles The Parliamentary Under-Secretary of State for Communities and Local Government

I was coming to that. Currently, I am glad to say, the Planning Inspectorate is required to consider in its decision only evidence that is published or available publicly. It is not allowed to take into account anything that it is given on an entirely confidential basis. We intend to apply that principle to its decisions on viability under this clause, and through guidance we will urge local authorities as strongly as possible to adopt the same policy. Currently there is not quite the same expectation, but being a proper localist I am not in the business of compelling local authorities to do such things. However, I reassure my right hon. Friend that we will be nudging them hard.

The further financial support announced at the same time as measures in the Bill—£300 million of subsidy and a further £10 billion of guarantees—was also raised. As I explained in Committee—it is important to repeat it in the House—the subsidy is awarded to particular providers of affordable housing, not particular schemes, and Members across the House will want provision of that subsidy and its allocation to different providers to be based on value for money. We all want more, rather than fewer, houses for the amount of money available. We cannot allocate money to solve the problem of a particular site, because that would not meet the value-for-money test, as some sites will represent worse value for money than others. It is, therefore, right to retain the discretion to give the subsidy where value for money is greatest, but there is nothing to prevent providers who have sites that are affected by such renegotiation from coming forward with proposals for that subsidy and guarantee. If they can make the case that a site represents a good place to invest the Government’s money, there is every chance they will secure some of that subsidy.

What we are trying to achieve is simple. Many local authorities, of all political stripes, have understood that some agreements were based on market values that no longer pertain, or on market conditions that are no longer in place, and are therefore impossible for any developer to build out. Those authorities—and I congratulate them on it—have voluntarily renegotiated the affordable housing elements of their section 106 agreements, and sometimes other elements, to unlock activity and house building now. The Government would like to see every local authority do that willingly, off its own bat, without the application of this clause, and transparently so that the local population can see why it has taken those decisions.

A common thread running through this Bill is that we want many of its measures never to be needed because local authorities have acted first. That is true of clause 1 and equally true of this clause. We want local authorities to take responsibility, and instead of fetishising an agreement that sets out a vague target for affordable homes that might be built, we want them to do whatever it takes, pragmatically and practically, to ensure that homes are built. I have accepted many suggestions from hon. Members on all sides of the House, and I have learned a great deal from those more experienced than me about such things as rural exception sites and the way viability is assessed.

I hope I have persuaded hon. Members that the Government are genuinely trying to make the legislation work to produce more houses now, while retaining the important principle of mixed communities, emphasised by Members across the House. We want mixed communities to remain a key theme; we do not want gated communities. That is why the new section 106 affordable housing agreements will return to their previous level after three years if they have not been built out fully. The Government hope and would prefer local authorities, rather than the Planning Inspectorate, to renegotiate affordable housing agreements. The amendment is a last resort to prevent a very few pig-headed local authorities from doing what is in the interests of their own people and ensuring that more houses get built quickly, rather than waiting for some never-never land where that unrealistic agreement is finally translated into bricks, mortar and roofs over people’s heads.

This debate, and those in Committee and on Second Reading, have shown that the Government—two parties with very different philosophies—believe in practical measures to get things done and make people’s lives better. All too often the Labour party prefers postures, statements and wild aspirations with absolutely no explanation about how it will deliver them. On that basis, I hope that the right hon. Member for Greenwich and Woolwich will withdraw his well-intentioned and sensible amendment with a view to an alternative being brought forward in the other place. I urge the House to resist the amendments tabled by the hon. Member for City of Durham and her hon. Friends.

Photo of Nick Raynsford Nick Raynsford Labour, Greenwich and Woolwich

I am slightly disappointed that the Minister cannot accept the wording of my amendments. I took some care with the wording in Committee—indeed, one of my amendments was treated as poetic, which was a rather attractive description. On this occasion, despite the affront to my amour propre and the fact that the Minister has not accepted the wording, I accept his good intentions and the fact that he has agreed for the Government to introduce amendments in another place. I therefore beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendment proposed: 46, page 6, line 40, at end insert

‘or,

(e) request that the requirement is to be met in part, or in full, by central government funding allocated for the delivery of affordable homes.’.—(Roberta Blackman-Woods.)

The House divided:

Ayes 220, Noes 271.

Division number 122 Growth and Infrastructure Bill (Programme) (No. 2) — Clause 6 — Modification or discharge of affordable housing requirements

Aye: 220 MPs

No: 273 MPs

Ayes: A-Z by last name

Tellers

Nos: A-Z by last name

Tellers

Question accordingly negatived.