Committee (2nd Day) (Continued)

Growth and Infrastructure Bill – in the House of Lords at 8:33 pm on 28th January 2013.

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Relevant documents: 11th Report from the Delegated Powers Committee, 10th Report from the Constitution Committee.

Amendment 55BC

Moved by Lord McKenzie of Luton

55BC: Clause 6, page 7, line 10, leave out "guidance issued by the Secretary of State." and insert "regulations, subject to consultation, setting out the criteria upon which viability, for the purposes of this section, is to be assessed.

(8A) Regulations under subsection (8) shall be in the form of a statutory instrument and shall not be made unless a draft of them has been laid before and approved by both Houses of Parliament."

Photo of Lord McKenzie of Luton Lord McKenzie of Luton Shadow Spokesperson (Work and Pensions), Shadow Spokesperson (Communities and Local Government) 8:37 pm, 28th January 2013

My Lords, Amendment 55BC is concerned with criteria for evaluating viability. Given our earlier discussions, I do not see any great merit here and now in delving into the RICS draft guidance note on financial viability and where that might lead us. The particular purpose of this amendment is to see that there is some parliamentary process which sets out the framework for the criteria rather than just guidance-I think guidance is the preferred choice of the Liberal Democrat amendments.

I will leave it there tonight but it would be extremely important to have a chance before we get to Report to at least see some outlying guidance or direction of travel from the Government so that we do not have to revisit this in detail on Report. I still hang on to my point about how to divide viability among the various components and what that means. That is an issue that we will come back to, but on that basis I beg to move.

Photo of Lord Burnett Lord Burnett Liberal Democrat

I gather that there has been a consultation paper and consultations have closed. I understand that there might be a government response. Can my noble friend let me know when that response is likely to be published? I am led to believe that it might be next month. Can my noble friend help me on that?

Photo of Lord Greaves Lord Greaves Liberal Democrat

My Lords, I have Amendment 55CB in this group, which has the same effect as that of the noble Lord, Lord McKenzie, so I will not repeat what he said.

Viability is increasingly important, and not just in relation to Section 106 and the removal of obligations to make things viable. It is inherent in planning applications and local plans, in which pieces of land should be developed before others and in whether it is any longer possible, in old industrial towns such as in the area in which I live, to prioritise brownfield, formerly developed and regeneration sites over and above greenfield sites. That is fundamental. The definitions which the Government, Planning Inspectorate and local authorities will use for viability on particular sites will also be fundamental. I look forward to future discussion on this.

Photo of Lord Beecham Lord Beecham Shadow Spokesperson (Communities and Local Government), Shadow Spokesperson (Justice)

My Lords, can the Minister enlighten us on the robustness of the attribution to affordable housing allocations in terms of the 75,000 houses affected by this lack of viability? The information was given in a Written Statement last September by Mark Prisk MP, the relevant Minister. It did not distinguish between general viability issues and those that might have been occasioned by the inclusion within the affordable housing provisions, which have not been acted on.

Mention has been made of the £300 million the Government are making available to compensate for losses under Section 106. Has any of that been used to reduce this number of 75,000 and, if so, upon what basis? Can the Minister enlighten us on that-if not tonight, then subsequently? Viability can of course be called into question. There is a variety of problems, as the noble Lord, Lord Greaves, has just mentioned. They might particularly relate to buying at the top of the market and finding that land and other values have fallen since. That makes the problem of viability clear, but there could be other factors as well. If we are moving towards a position where guidance is to be given on viability after the consultation that has already been referred to, it would be sensible to distinguish between the different factors that contribute to the viability problems that are perceived to occur.

Photo of Baroness Hanham Baroness Hanham The Parliamentary Under-Secretary of State for Communities and Local Government

My Lords, I thank the noble Lord, Lord McKenzie, for his brevity in moving the amendment. He was so brief that I thought I might be able to leap up and be as brief in response; I have been thwarted on that.

There are two or three questions with which I want to deal quickly. First, on the availability guidance, I cannot promise to have the guidance available but I think I will be in a position to talk to noble Lords in a general way before Report, which they might find helpful. So I am arranging to set up meetings to discuss one or two technical aspects of the Bill before we get to Report. That will be for all Peers, so I hope that that will be useful.

With regard to the question raised by the noble Lord, Lord Burnett, the consultation was on the pre-2010 regulations rather than Clause 6 of the Bill. The Government's response to the consultation will be made available to noble Lords shortly. I cannot say when "shortly" is, but I hope that we will have it before us.

I have a long reply here for the noble Lord, Lord Beecham, but I suggest that I write to him. With that, I hope that the noble Lord will be willing to withdraw his amendment.

Photo of Lord McKenzie of Luton Lord McKenzie of Luton Shadow Spokesperson (Work and Pensions), Shadow Spokesperson (Communities and Local Government) 8:45 pm, 28th January 2013

My Lords, I thank the Minister for her brief reply, matching the length of the moving of the amendments. The noble Lord, Lord Greaves, raised an important point about this being a wider issue than just Section 106. I look forward to seeing what the guidance includes. If it is not formally ready, I hope to have the opportunity for some detailed discussion before we get to Report. I am grateful to the Minister for that.

From what the Minister has just said, I understand that the parallel consultation on Section 106 has been completed but the Government's response has not yet been issued, and that should be with us shortly. If that is the case, I hope that that will be with us before Report. I look forward to sharing with my noble friend Lord Beecham the response on the points that he raised. Perhaps the Minister can just confirm that issue about the availability of the pre-April 2010 consultation. Subject to that, I beg leave to withdraw the amendment.

Photo of Baroness Hanham Baroness Hanham The Parliamentary Under-Secretary of State for Communities and Local Government

My Lords, I think I indicated that I hope to be able to share at least some of the ideas behind the response. I do not know whether I will be able to share the whole response, but I have offered the discussions and it will be much clearer by the time we get to them.

Photo of Lord McKenzie of Luton Lord McKenzie of Luton Shadow Spokesperson (Work and Pensions), Shadow Spokesperson (Communities and Local Government)

I beg leave to withdraw the amendment.

Amendment 55BC withdrawn.

Amendment 55BD not moved.

Amendment 55C

Moved by Baroness Hanham

55C: Clause 6, page 7, line 26, at end insert-

"(11A) This section and section 106BB do not apply in relation to an English planning obligation if planning permission for the development was granted wholly or partly on the basis of a policy for the provision of housing on rural exception sites."

Photo of Baroness Hanham Baroness Hanham The Parliamentary Under-Secretary of State for Communities and Local Government

My Lords, this amendment serves to exempt planning obligations attached to planning permissions on rural exception sites from the provisions of this clause. Some time was spent on the issue of rural exception sites during consideration of this clause in the other place. We have considered very carefully the arguments and evidence put before us then and since, and I hope that the resulting amendment will be welcomed by this House.

Rural exception sites are unique in that they are not allocated sites. They come forward when a landowner is willing to provide land to enable housing for local people to be built. They are sites, often in sensitive locations, where housing would not normally be permitted. Rural exception sites do not operate in a competitive land market. Landowners provide land at generally low value, with no expectation of market values or high levels of return. Planning obligations are used to secure the housing for local people. Clause 6 would introduce a risk of unsettling the practice of rural exception housing by introducing the possibility of a challenge to the planning obligation. I am concerned that this could prevent sites coming forward in the future. I hope that noble Lords will welcome the exemption that we are providing and I beg to move.

Photo of Lord Cameron of Dillington Lord Cameron of Dillington Crossbench

My Lords, perhaps I could ask a question about this amendment. It seems to me that one of the underlying concepts behind Clause 6 is that some affordable housing is better than none. In my opinion, that concept applies in spades, as it were, in rural areas and villages. In the current economic circumstances I worry about the ability to build rural affordable housing on exception sites. Of course, in large-scale developments, the affordable housing element is calculated at nil return to the developer and the landowner, but it is hoped that the remaining houses will provide the landowner and developer with a reasonable profit. In addition, non-affordable and affordable houses will be provided to house buyers. Therefore, the scheme goes ahead, operates and both sorts of houses are provided.

However, none of that applies in a village scheme of, say, six affordable houses. Often, everything is staked against you. It requires public funding-some of the £300 million, I hope-or charitable or semi-charitable funding to make it happen, as well as, usually, a generous landowner who often gives up what he or she sees as potential future "hope value" land to make these projects happen. However, it is not unknown for housing departments, housing providers-RSLs or whatever-planning departments and landowners to do a deal whereby planning permission is given for full-market houses on the exception site or nearby land to ensure the release of the land for affordable housing. Funding or part-funding may even be provided for these small schemes.

Therefore, while I understand that the Government's desire is to reinforce the sanctity of exception sites, can the Minister clarify that it is not intended to discourage or prevent such deals being done? Rural affordable housing is something that we feel deeply about where I come from.

Photo of Baroness Hanham Baroness Hanham The Parliamentary Under-Secretary of State for Communities and Local Government

My Lords, I think I can reassure the noble Lord that that is precisely what we are looking for. We recognise that there are philanthropic landowners who will give land; we know that there are housing associations and RSLs that will work for a specific scheme, and that is precisely what we want to ensure continues to happen.

It is important that small-scale developments in villages can be carried out. That is what the clause does. It ensures that nothing stands in the way of rural exception sites being developed, and the Section 106 agreement that will be negotiated to enable that to happen should make sure that the housing is for local people. That will be the only area where Section 106 would have relevance on this matter. It will be a straightforward process of land being released and a developer being available for affordable housing, social housing or, indeed, private housing. There will be no constraints on that taking place.

Photo of Lord McKenzie of Luton Lord McKenzie of Luton Shadow Spokesperson (Work and Pensions), Shadow Spokesperson (Communities and Local Government)

My Lords, I place on record our thanks to the Minister for fulfilling a commitment made in the other place.

Amendment 55C agreed.

Amendments 55CA to 55CD not moved.

Amendment 55D

Moved by Lord Best

55D: Clause 6, page 8, line 16, at end insert-

"( ) This period should be consistent with that prescribed to authorities under subsection (9) of section 106BA of the Town and Country Planning Act 1990."

Photo of Lord Best Lord Best Crossbench

My Lords, I shall speak also to Amendments 55E, 55EA and 55F. Amendment 55D, standing in my name and that of the noble Lord, Lord Shipley, would require the Secretary of State-that is, the Planning Inspectorate-to adhere to the same timetable as that imposed on local authorities when the inspectors consider appeals under Clause 6. This means responding within 28 days or within a period specified by the Secretary of State. Given that much of the Bill is about speeding up the planning process, I guess that the amendment will find favour with the Government.

Amendment 55E in my name and those of the noble Lords, Lord Shipley and Lord Tope, would ensure that the Planning Inspectorate gives material weight to the original decision made by the local authority and looks at all the evidence on which it was based. There will be local considerations and local issues with which the inspectorate may not be familiar; this amendment will ensure that these are taken on board. Going through the evidence collected by the local authority also prevents duplication of effort by the inspectorate.

Amendment 55EA would guard against the developer obtaining an unjustified windfall gain where estimates of future sale prices, on which the inspectorate has judged the viability of the scheme and decided to sanction a reduction in the affordable housing requirement, prove too pessimistic. The amendment would mean a clawback, or so-called overage payment, to the local authority of a portion of the sales proceeds above the predicted levels. It seems only fair that if developers are to benefit from Clause 6 where prices have fallen, that they share their extra profits if, in fact, prices are better than feared. We have already aired Amendment 55F very fully in combination with Amendment 55ZA, and it goes to the heart of the matter. It would ensure that society gets at least something-a swift start on site-in return for the loss of precious affordable housing. I beg to move.

Photo of Lord Cameron of Dillington Lord Cameron of Dillington Crossbench

My Lords, I will speak to two of these amendments. First, I cannot support Amendment 55EA. It has a mild whiff of retrospective taxation which I do not approve of. More importantly, it fails to understand the motivation of an entrepreneur, and his or her assessment of risk. If a particular project is marginal, then the developer does their own assessment of the upside and downside risk. They will proceed only if they personally believe that the upside returns are sufficient to justify the downside risks. If the upside is threatened, as seems to be the case in this amendment, and only the downside risk remains, I do not believe that they will proceed. In that case, one nullifies the whole purpose of this clause.

Furthermore, it occurs to me that if the local authority wants to share in the upside benefits, it should equally share in the downside risks. I cannot believe that the local authority would be happy to pay the developer if the housing price should drop below the estimated figure. In other words, it seems only fair that if it is going to share in the upside, it might also share in the risk. This applies if it wishes to see the development take place as soon as possible; of course, I would personally prefer that it did neither.

Photo of Lord Burnett Lord Burnett Liberal Democrat

The noble Lord, Lord Cameron, is making a series of very good points. Does he also believe that were the local authority to share in the upside gain, it might cloud its objectivity?

Photo of Lord Cameron of Dillington Lord Cameron of Dillington Crossbench

It would. Local authorities are not the right bodies to involve in entrepreneurial activity. I share the noble Lord's opinion.

I move on to Amendment 55F. At the risk of being boringly obvious, this surely underlines the whole purpose of the clause and it is amazing that it has been omitted. We are urgently trying to promote infrastructure development and to prevent any further delays at a time when we might be entering a triple-dip recession. Housing development, as we are all aware, is very good for kick-starting our economy. It employs a local workforce, and to a large extent uses UK raw materials, while clearly performing a social good. In fact, the House Builders Federation claims that every £1 spent on housing puts £3 back into the economy, and that increasing housebuilding by 130,000 units per year, which is the Government's projected level, could create 195,000 direct jobs and 400,000 in the supply chain. We want housebuilders to get on with it. I therefore cannot see the point of renegotiating affordable housing demands if there is not going to be a quid pro quo whereby the house developer has to get on with the development and build now. Otherwise, they are going to renegotiate and wait for the market to recover.

Photo of Lord McKenzie of Luton Lord McKenzie of Luton Shadow Spokesperson (Work and Pensions), Shadow Spokesperson (Communities and Local Government) 9:00 pm, 28th January 2013

My Lords, we have Amendment 55EB in this group. Before I speak briefly to that, I will say that I am happy to support all the other amendments in the group. I heard what the noble Lord, Lord Cameron, said about Amendment 55EA, but it refers to a developer paying a contribution proportionate to the increase in value; it does not mean that there is no upside for the developer.

Amendment 55EB seeks to amend the relevant period from three years to two. This is another point I will pursue. The relevant period in these circumstances is the period within which, if the Secretary of State route is taken, the planning obligation has to be completed. However, if the development is only partly started, I do not think that that applies. Proposed new subsection (12) states that the modifications are,

"the modifications necessary to ensure that, if the development has been commenced before the end of the relevant period"- in other words, within three years-

"the requirement or requirements apply only in relation to the part of the development that is not commenced before the end of that period, and ... such other modifications as the Secretary of State considers necessary or expedient to ensure the effectiveness of the requirement or requirements at the end of that period".

Does that not mean that if you start a development, you have to complete it within three years, but if you start part of it, you neither have to complete the bit you have started or the other portion, otherwise you will revert to the original 106 requirement?

Perhaps I am misreading the provisions. I certainly understand that the intent is that a development must be completed within three years. We say three years is too long; we would like to set the time limit at two years. The issue is how proposed new subsection (12) will work when there is only partial commencement of a project. For me it is less clear. Perhaps the noble Baroness will write to me on that if she cannot deal with it this evening.

Photo of Baroness Hanham Baroness Hanham The Parliamentary Under-Secretary of State for Communities and Local Government

My Lords, I thank noble Lords who tabled the amendments in this group. They seek to introduce some constraints to the appeals process. Before I turn to each issue, I will reiterate some of the main principles of our thinking. The appeal is meant to be impartial and evidence-based. It will be a targeted review of viability, and it will be dealt with quickly. It will result in a viable, affordable housing requirement that will be valid for three years-I will come back to that-at which point the original requirement will be reinstated. In other words, if a project has not been started within three years, the appellant will lose all the benefits they gained from the appeal.

Amendment 55D covers the 28-day period for a planning appeal decision. Currently a default 28-day determination period applies to authorities determining the applications made under new Section 106BA. The appeals are made to the authorities, which already have a huge amount of information relating to the original application. It should be noted that the 28-day period can be extended if that is agreed in writing between both parties-the authority and the applicant. The procedures for planning appeals are set out in secondary legislation. We will consult on a streamlined process for new Section 106BB appeals. That consultation has not gone out. Again, I will be happy to discuss it when we have our meeting.

Placing the same default 28-day period to determine appeals is not practical. The Planning Inspectorate does not have the knowledge that the local authority had when it first dealt with the application. The local authority has already negotiated the existing planning obligations and should be very familiar with the evidence on which the agreement is based. Also, the Planning Inspectorate's procedures do not replicate those of a local authority. The inspectorate will need to consider what form of appeal may be required, whether it be written representations, a hearing or public inquiry. I am sure the noble Lord will understand that it is not possible to undertake a full inquiry, however speedily done, within 28 days. That is pushing it too hard. However, I hope I can offer reassurance that we fully intend this to be a quick process. We shall be placing challenging time limits on the Planning Inspectorate to turn around decisions on these appeals as quickly as possible.

Amendment 55E, introduced by the noble Lord, Lord Best, requires the Planning Inspectorate to give "material weight" to the decision and evidence of the local authority when considering an appeal; that is, the local authority's case must be considered at the same time. As a point of principle, planning inspectors must be seen to make their own decisions impartially. In this case, they must take an impartial assessment of all the evidence submitted; they cannot just look favourably on one. It would therefore be wrong to provide an advantage to the evidence of one party-the local authority-by requiring in law that it is given particular weight. What if the quality of the evidence submitted by the local authority was very poor?

An inspector is not required in any appeal casework to give material, or indeed any other defined weight, to particular evidence. Rather, it is for the inspector to decide what weight should be given to any evidence, which could include the local planning authority's decisions, according to the cases put, and then to justify that assessment. I hope the noble Lord agrees that we should not be trying to prejudice the Planning Inspectorate's decisions but should let it take an impartial view.

Amendment 55F would require the development to commence within six months of an appeal decision. Amendment 55EB would make it valid for two years, rather than three, and Amendment 55EA seeks to ensure that the appeal decision should include a requirement that the local authority receives a contribution if market values rise. The noble Lord, Lord Burnett, has added his weight against this.

I believe that the clause already provides incentives for the developer to get on and build. Where the Planning Inspectorate issues an appeal decision in these cases, the revised affordable housing requirement is only valid for three years. Any part of the development which has not been commenced in that time will be subject to the original affordable housing requirement. One way or another, the original affordable housing requirement has to be dealt with within that timescale. We must give developers a reasonable amount of time to get on site. Following an appeal decision, the developer may need more time to begin development for legitimate reasons, such as compliance with pre-commencement conditions or securing vacant possession of the property. For more complex schemes, a limited time period to get on site would mean that the whole reassessment of viability could be wasted. We must balance our desire to get stalled sites moving with a realistic understanding of the development process. I am particularly concerned that we do not inadvertently constrain complex projects, such as regeneration schemes, by limiting the revised agreement inappropriately.

I would like to respond to the amendment requiring the Planning Inspectorate to include a provision for market uplift. On a question of principle, Section 106 is intended to be a mechanism by which development is made acceptable in planning terms. The amendment appears to introduce a wider purpose for Section 106, related to profit rather than mitigating the impact of development. I would be extremely concerned that this could set a precedent for the use of Section 106.

The intent of this amendment is to give local authorities some return if markets improve. This provides an incentive for developers to start building. However, the legislation does not prevent local authorities making their own judgments as to whether there should be some incentive within the revised agreement to start development, such as an improved affordable housing provision, if market conditions rise. The only constraint on the local authority is that the outcome should not be more onerous than the original obligation. In the event of an appeal, local authority proposals for such flexibilities could be submitted to the Planning Inspectorate as evidence. We will be clear in guidance that such evidence is appropriate. Again, I see this as a matter for local discretion, depending on site circumstances. We will be ensuring that guidance on this matter is included in our statutory viability guidance which, as I have said, we hope will be available before Report.

I hope that noble Lords will be reassured by those comments. The noble Lord, Lord McKenzie, asked whether, if a development is partly commenced at the end of the three years, the original obligation applies to that part of the development which is not commenced. So if the developer has only built part of the development and there is an obligation to develop affordable housing, and they have had a reduction, that lasts for only three years. If the developer has not got that part in hand, he will have to go back to the original amount agreed before the negotiation.

Photo of Lord McKenzie of Luton Lord McKenzie of Luton Shadow Spokesperson (Work and Pensions), Shadow Spokesperson (Communities and Local Government)

Perhaps I may pursue that point. I understand generally the points around the three years, but if it is partly commenced and partly not commenced, in relation to the part that is commenced there is no requirement to complete that part within the three years in order to retain the benefit of the modified Section 106 agreement. That was the point I was pursuing. I understand clearly that if you do the whole lot, you have to do it within three years.

Perhaps it is the convoluted language used in proposed subsection (12), and we may pick it up subsequently, but that is what is not clear to me, particularly in view of what the noble Baroness has just said.

Photo of Baroness Hanham Baroness Hanham The Parliamentary Under-Secretary of State for Communities and Local Government

I may need to write to the noble Lord on this. The whole development has got to start within three years. The noble Lord is looking as bewildered as I feel.

Photo of Lord McKenzie of Luton Lord McKenzie of Luton Shadow Spokesperson (Work and Pensions), Shadow Spokesperson (Communities and Local Government)

I will not dwell on this because we have other things to discuss. As I understand it, the relevant period is three years-we would like to see a period of two years, but it is to be three years-in which the developer has to complete under the provisions of proposed subsection (11). I am trying to tie that up with what the noble Baroness has just said about starting to commence the development when it is only partly commenced. That is what is confusing me.

Photo of Baroness Hanham Baroness Hanham The Parliamentary Under-Secretary of State for Communities and Local Government

My Lords, I do not want to cause any more confusion because it is too late for that. However, I may be able to respond. It is always a relief to know that I am right. The completion is not legally defined. It does not have to be finished within three years, but it must start within three years. I hope that that clarifies the position.

Photo of Lord McKenzie of Luton Lord McKenzie of Luton Shadow Spokesperson (Work and Pensions), Shadow Spokesperson (Communities and Local Government)

I understand what the noble Baroness has said, but perhaps we will return to the issue.

Photo of Lord Best Lord Best Crossbench

My Lords, I am grateful for the support of the noble Lord, Lord Cameron, for the absolutely crucial Amendment 55F, and indeed for the support of the noble Lord, Lord McKenzie, for all these amendments. It might be worth spending a minute or so on Amendment 55EA which talks about the prediction by the inspector that prices are going to be lower than expected when properties come to be sold being proved wrong, and whether the local authority would benefit from that. Let me run through this briefly. I hope that the noble Lord, Lord Cameron, will be clearer about the position and see that this is not such a foolish suggestion.

The developers say to the inspectorate that when they agreed to the Section 106 agreement, they expected prices to be X thousands of pounds at the time of sale. They now tell the inspector that a lower figure is expected from the sales. The inspector agrees and says, "Okay, we will let you off and allow you to break the contract you have already signed with the local authority. You will be let off the obligation to provide as much affordable housing". But what happens later is that prices rise and it turns out not to be such a bad deal after all. If, instead of saying, "Good luck to the developers. They paid over the odds for the site. It was foolish at the time, but everything has come right. They have not had to build any affordable housing, they have made their profits, and that is the end of the story", one says, "If the prediction is wrong and prices rise so that the developers make a handsome profit, over a certain pre-agreed level, there should be a share back to the community in lieu of the affordable housing that has been sacrificed".

The Minister makes the very fair point that dealing with this in cash may be unwise and it may be that one should return to the agreement for more affordable housing. One should get back some of the affordable housing. I would certainly favour that over the hard cash and that would fit in with other requirements here. That would be a good way of doing it. It would give an opportunity for that deal to be negotiated at the time that the inspector provides their judgment, saying, "Less affordable housing, but, if I am wrong in my predictions and prices rise, then we will have some more affordable housing later". It must not be any better than the original deal, however. That would be a fair way of handling the unforeseeable circumstances of when properties are actually sold in the future as opposed to guessing.

Photo of Lord Cameron of Dillington Lord Cameron of Dillington Crossbench 9:15 pm, 28th January 2013

The noble Lord hoped he would make it clearer to me, but I had understood all that. The point is that, if the house is sold at a lower price than the new agreed price, is the local authority going to give either cash or some form of payment back to the developer, because it has agreed the sale at a price that is still too high?

Local authorities under these circumstances are getting involved in trying to prevent local developers assessing the risk and proceeding with the development as soon as possible. I still think it is very bad for them to get involved in entrepreneurial activity of this nature.

Photo of Lord Best Lord Best Crossbench

I have failed in my mission to convince the noble Lord, Lord Cameron, but there was a good deal of food for thought from the Minister on a number of those points, which I will study with care. In the meantime, I beg to withdraw the amendment.

Amendment 55D withdrawn.

Amendments 55E to 55F not moved.

Amendment 56

Moved by Lord Tope

56: Clause 6, page 9, line 38, at end insert-

"106BC Modification or discharge of affordable housing requirements: Greater London

(1) Where an application is made under section 106BA for the modification or discharge of an affordable housing requirement in respect of a development falling within section 62B(2), the appropriate authority shall notify the Mayor of London.

(2) Where the Mayor is notified of an application under subsection (1), the Mayor may decide to make any determination in relation to the application that would otherwise be made by the appropriate authority under section 106BA.

(3) The Mayor must consult the relevant local planning authority before exercising any function under this section."

Photo of Lord Tope Lord Tope Liberal Democrat

My Lords, Amendment 56 stands in my name and that of the noble Lord, Lord Jenkin of Roding. I am pleased to see that the noble Lord has been able to join us.

We return to the situation in London, which seems surprisingly to have been completely overlooked throughout the Bill. We have a Greater London Authority and a Mayor of London and, once again, in view of sensitivities on both sides of the House, I have to point out that we refer to the office and not to past or present office-holders. We have a Mayor of London and we will continue to have a Mayor of London, to whom Parliament has given responsibility for strategic planning in London. Yet the Bill seems to take no account of that at all. In this case, the amendment would ensure that the mayor is notified of any application to modify or discharge affordable housing requirements in London and that, if he deems it necessary, he can call in such applications.

I move the amendment because I recognise that affordable housing, particularly in London, is of crucial importance to the role of strategic planning. It is largely central to it and a very high priority for past, present and, I hope, future mayors. I make the same case as I did the other day in Committee on another amendment. The Mayor of London has been given that responsibility by Parliament. He has been elected by the people of London. He is publicly accountable, first of all to the London Assembly, which is elected by the people of London, and also accountable-in a fairly high profile way, which will always be the case whoever the officeholder is-to the people of London. That must be more appropriate, better and certainly more in tune with localism than giving the responsibility to an unelected, unaccountable body, which is unversed, as yet, in this work, elsewhere in the country.

The added advantage, again, is that the GLA's planning department knows the planning departments of all the London boroughs and the local housing situation in all the London boroughs. On the whole, most of the time, there is a very good relationship, so it will be making its judgments and decisions with knowledge and will be able to hear, and take proper account of, all arguments put forward both in the local context and in the strategic planning context for the whole capital. That seems to be entirely appropriate for an elected mayor with a strategic planning role. There is really no need at all to involve the Planning Inspectorate, which is based elsewhere and does not have either the knowledge or the accountability to carry out that role.

I move this amendment in the hope that the Government will belatedly start giving some consideration to the role that they and their predecessor Government have created in London: a mayor with responsibility for strategic planning. It is very hard to understand an argument that says that the mayor responsible for strategic planning should have no role in this process. I believe that must be an oversight and I am pleased to offer the Government the opportunity to correct it. I beg to move.

Photo of Lord Jenkin of Roding Lord Jenkin of Roding Conservative

My Lords, I am very pleased to be here to support my noble friend Lord Tope. It is about six hours since I was moving amendments in Grand Committee about copyright so it is pleasurable to come back to a rather more familiar scene. I do not think that I can add very much to what my noble friend has said. He has put the case extremely well. The centre of the case is that the mayor is there and has these powers accorded to him by Parliament. It seems very strange that he should have no function in relation to this important matter. Affordable housing in London is enormously important, as I think my noble friend on the Front Bench will acknowledge. From his own knowledge, he will be well aware of the need to find proper housing for people who cannot afford to go out into the market. The mayor has this overall responsibility. Why should he not be entitled to have this role rather than it going to the inspectorate in Bristol? I very much support the amendment.

Photo of Lord McKenzie of Luton Lord McKenzie of Luton Shadow Spokesperson (Work and Pensions), Shadow Spokesperson (Communities and Local Government)

My Lords, I am not unsympathetic to the thrust of the amendment that has been moved by the noble Lord, Lord Tope, and supported by the noble Lord, Lord Jenkin. However, it does not seem to be quite right to say that the Bill makes no reference to the Mayor of London, because new Section 106BB(18) states:

"In the application of Schedule 6 to an appeal under this section in a case where the authority mentioned in subsection(1) is the Mayor of London, references in that Schedule to the local planning authority are references to the Mayor of London".

I was not quite sure whether the noble Lord was proposing that the Mayor of London's role in this should be as the local planning authority-in which case the question is what happens if the Mayor of London does not support the applicant's appeal-or whether the Mayor of London sits in substitution for the Secretary of State. When the noble Lord replies, it would be helpful if he could clarify and unpick that issue.

Photo of Lord Ahmad of Wimbledon Lord Ahmad of Wimbledon Lord in Waiting (HM Household) (Whip)

My Lords, I must admit that, as I heard my noble friend Lord Jenkin making his contribution, I looked over my shoulder, because earlier this afternoon I did just that and noticed he was not in his usual place. We of course welcome him and, indeed, his contribution to the Committee.

My noble friend Lord Tope proposes amendments that seek to allow the Mayor of London to determine applications made under new Section 106BA, where the development, as he rightly pointed out, is of strategic importance. He also made the important point about affordable housing and its particular importance in London, which I fully support, as do the Government. The Government are supportive, in particular, of a proactive approach to stalled sites being taken forward by the Mayor of London. The clause is clear that any application for review of affordable housing requirements under Section 106 that the mayor himself negotiated and signed is made directly to the mayor.

In other cases there is also a need to balance carefully the need for a rapid, focused mechanism for reviewing affordable housing obligations, where the viability of the scheme is at stake. We must also weigh up whether an additional notification and the argument being made at consultation stage with the mayor would cause unnecessary delay.

I have listened to the arguments that, in the majority of cases, the borough is best placed to respond to any applications made under this clause. Where the borough that negotiated the agreement was party to the original viability evidence and must legally enforce the agreement, I am sure that all noble Lords would agree that the borough would seem best placed to deal with an application for review. That said, the Government do listen and I have listened carefully to my noble friend Lord Tope. There are cases where the mayor has a formal role in determining the planning permission to which the existing Section 106 agreement relates. I can certainly see that there is an argument that, in certain specific cases, the mayor should have an ongoing role. This is something that my noble friend Lady Hanham and I have discussed with the Minister. On that basis, we would like to come back to this issue on Report. With those reassurances, I hope that my noble friend is willing to withdraw his amendment.

Photo of Lord Tope Lord Tope Liberal Democrat

My Lords, I welcome those reassurances very warmly. I am grateful. Let me clarify for the noble Lord, Lord McKenzie, though he probably understood. I am not sure how to phrase this, but I was proposing that the Mayor of London should in London have the role otherwise ascribed to the Secretary of State. I must be careful how I phrase that, because I am not sure that either would wish to be likened to each other. I was not suggesting for one moment that the mayor should take the role of the local planning authority. I agree with the Minister that in most cases I would hope that the issue would be resolved with the local planning authority in an amicable and fair way.

The mayor would be notified, which is not very difficult these days. There are not that many projects under review in London. I would hope that in many cases he would not feel the need to call it in, but that if he did there would certainly be a good reason to do so. After 12 and a bit years in London, I have more confidence that not only would a better decision come from City Hall than from PINS in Bristol, but that it would be a quicker decision than if it were referred to the Planning Inspectorate, which is likely to have a considerably increased workload. All round, it is a better solution and I am pleased and reassured to hear that the Government are giving positive consideration to it. On that basis, I beg leave to withdraw the amendment.

Photo of Lord McKenzie of Luton Lord McKenzie of Luton Shadow Spokesperson (Work and Pensions), Shadow Spokesperson (Communities and Local Government)

Can the noble Lord help me out on this point? Where Clause 6 refers to 106BB appeals, it states in new subsection (18) that:

"In the application of Schedule 6 to an appeal under this section in a case where the authority mentioned in subsection (1) is the Mayor of London, references in that Schedule to the local planning authority are references to the Mayor of London".

If there are circumstances where, for a Mayor of London or a local planning authority, you have to read "Mayor of London", then the Mayor of London duly cannot then act instead of the Secretary of State. Maybe this is not the occasion to unpick that particular provision, but I would like some clarification on it and I imagine the noble Lord would as well.

Photo of Lord Tope Lord Tope Liberal Democrat

I should have been a little quicker begging leave to withdraw. I would indeed welcome clarification. I am sure it will be forthcoming when we hear further what proposals the Government have.

Photo of Lord Jenkin of Roding Lord Jenkin of Roding Conservative

The Mayoral Development Corporation that is set up under the Localism Act might well be the sort of place where the mayor would have the primary role.

Photo of Lord Tope Lord Tope Liberal Democrat

Not for the first time, I am grateful to my noble friend and I quickly beg leave to withdraw the amendment.

Amendment 56 withdrawn.

Clause 6, as amended, agreed.

Amendment 57

Moved by Lord Tope

57: After Clause 6, insert the following new Clause-

"Indebtedness

(1) The Localism Act 2011 is amended as follows.

(2) Section 171 (limits on indebtedness) is repealed.

(3) In Part 7 of the Localism Act 2011 insert-

"Definition of indebtedness

(1) A local authority shall determine and keep under review the amount of housing debt held by that authority.

(2) A determination under this section must have regard to the duty to determine an affordable borrowing limit under section 3 of the Local Government Act 2003 (duty to determine affordable borrowing limit).

(3) A determination under this section must have regard to any guidance issued or approved by the Secretary of State.

(4) A local housing authority may not hold debt in contravention of a determination under this section.

(5) In this section "housing debt", in relation to a local housing authority, means debt-

(a) which is held by the authority in connection with the exercises of its functions relating to houses and other property within its housing revenue account, and

(b) interest and other charges in respect of which are required to be carried to the debit of that account.""

Photo of Lord Tope Lord Tope Liberal Democrat 9:30 pm, 28th January 2013

My Lords, I rise to speak to this amendment standing in my name and that of my noble friend Lord Shipley, who is engaged at a Holocaust memorial function in Speaker's House.

This is arguably the amendment that might make the most difference to achieving growth in the housing market, because it seeks to remove the housing borrowing cap. The measure that has been called for by a large number of bodies-most recently, the National Federation of ALMOs, the Chartered Institute of Housing, the Local Government Association, the Association of Retained Council Housing and London Councils. All of them say that removal of the housing borrowing cap to enable local authorities to start more building would make a huge and almost immediate difference to the provision of housing, particularly in the capital but also throughout the country.

I hope that there is some movement on this; I have heard some encouraging noises elsewhere. I recall asking the Minister, the noble Baroness, Lady Hanham, about it in Questions a week or two ago and she replied that it was a matter for the Treasury. Unfortunately, I was not allowed a supplementary. Of course it is a matter for the Treasury; some would say that that is the whole problem. But it is still the responsibility of the Minister's department and all of us who support this Government -and of those who do not support them-to take the measures that would enable housebuilding to get under way. This is certainly not the only measure but it is a single measure that would make an enormous difference. If authorities were still governed by all the prudential rules in the same way as normal, they would still have to act responsibly, but if they were able to borrow against their housing stock, it would make a significant difference. It would get housebuilding moving on a greater scale. I hope that discussions within government are moving in the right direction and that, if not tonight then before the end of this Bill, we will hear that the housing borrowing cap is being lifted. I beg to move.

Photo of Lord Jenkin of Roding Lord Jenkin of Roding Conservative

My Lords, I strongly urge the amendment on my noble friend the Minister. My noble friend Lord Tope said that a great many organisations were in favour of the change. I have to say that none is more in favour than London Councils-I should perhaps have again declared my interest as a joint president. It has said firmly that, of all the measures, this could be one which really helps the housing situation in London-which, as noble Lords know well, is pretty desperate at the moment.

The cap exists on top of the normal constraints on local government borrowing. It is an additional barrier to development which seems absurd in the present circumstances, given that everybody is quite rightly saying to the Government that growth and getting things moving should be absolutely top of the agenda. It seems absurd that there should be duplication of the protection against irresponsible borrowing by local authorities. It seems not to have any sensible purpose now. The usual controls operate perfectly satisfactorily. I simply do not understand the case for retaining the cap.

I have perhaps not had my ear quite as close to the ground as my noble friend Lord Tope, but I cannot believe that the Chancellor and his colleagues in the Treasury have not been made aware of this and do not recognise that, if they really want to move housing forward in London and the rest of the country, the cap should be removed. I hope that my noble friend will be able to respond positively.

Photo of Lord Best Lord Best Crossbench

My Lords, I support the noble Lords, Lord Tope and Lord Jenkin, and pledge the Local Government Association's support. Is its support stronger than that of London Councils? It is equal to that from London Councils.

I talked at Second Reading about the growing national housing deficit. I was trying to get into common parlance the idea that, every year, we are building up a bigger and bigger deficit. We are adding another 100,000 homes a year to the deficit that we already have because we are building at least 100,000 less than we should. We must do something dramatic to try to turn the deficit into a positive.

Local authorities are sitting on assets against which they could borrow. A lot of housing associations have run out of space to borrow any more, and they have used up the opportunity to borrow against the properties that they own. Many local authorities have plenty of headroom to borrow more against that security. This is prudential borrowing that will be repaid out of rents. It is not frightening to overseas investors and bankers to see another £7.4 billion, which is the amount estimated by the report Let's Get Building, produced by John Perry from the Chartered Institute of Housing. Over a period of five years, £7.4 billion is not enough to frighten the horses but it would produce 12,000 homes a year-60,000 homes in all. That is about 5% of what we need each year, but it is about 10% more than we currently provide. That is one relatively dramatic way in which, without any subsidy, we could get at least a few thousand more homes built every year.

I chaired a commission for the LGA and the Department for Communities and Local Government called Easing Housing Shortages: The Role of Local Authorities, which sent me around to see what local authorities had been doing. Were they up to it? Did they have any sites on which they could develop? They were using what was called local authority new-build funding, and I saw how councils can demolish those garages on the end of the site and put in 14 bungalows, perhaps, for elderly people, who can then move out of underoccupied council housing into those bungalows, thereby releasing 14 family houses on the council estate. It is creative action; the land is already there; the garages do not get used any more; it is a place where people congregate for nefarious purposes-everyone is delighted to see the development. Local authorities could get on with schemes of this kind up and down the land. I support this amendment.

Photo of Lord McKenzie of Luton Lord McKenzie of Luton Shadow Spokesperson (Work and Pensions), Shadow Spokesperson (Communities and Local Government)

My Lords, this proposed new clause is the same as that which my colleagues moved in Committee in another place by way of a probing amendment. It has been very powerfully moved by the now traditional triumvirate of the noble Lords, Lord Tope, Lord Jenkin and Lord Best-a powerful group indeed. In the Commons, I am bound to say, it did not elicit much information, and drew a rather aggressive diatribe from the Minister-something to do with Labour and borrowing. Thank goodness we have a Minister at this end with whom we can have a measured and sensible discussion. We have an innate sympathy with this amendment, and would like to use the opportunity to press the Minister on some particular issues.

First, perhaps we can ask something that has been touched upon by the noble Lords, Lord Tope and Lord Jenkin; and if reported hints from senior Treasury officials at the time of the Autumn Statement that the Government were considering at least relaxing the cap are true and under active consideration, it may save us some time. I hope that they are, but perhaps the Minister can tell us whether they are.

I will also make it very clear that we accept that in the interests of macroeconomic management the Government are entitled to have powers to limit the amount of money borrowed by local authorities. In fact, the Labour Government legislated to that effect in 2003, and that power extends to setting limits on individual councils, and different limits for different kinds of borrowing.

When we were debating these provisions in what is now the Localism Act, I tried to get an answer as to why Section 171 was needed as well as Section 4 of the 2003 Act. I do not believe we ever got a satisfactory reply, so perhaps I can use the opportunity to ask again, in the hope that the Minister can now clarify the position. That is my second question.

We have had the benefit of several briefings on this matter from the LGA, the National Federation of ALMOs, CIH and others, and in particular, as has been referred to, we have had the Let's Get Building report, which was commissioned by the National Federation of ALMOs. The case for more housing is overwhelming, and the need for more affordable housing is desperate. We can debate until the cows come home which Government have delivered what, but it is surely common ground that we need to build more, and that this is becoming increasingly urgent.

Therefore, this is not just about providing decent homes for people. The boost to the economy is surely well understood, as is the strong multiplier effect on GDP of construction and the boost to employment. Given the grim GDP figures delivered last Friday, this could not be more urgent. The need to boost construction and build more social housing is clear. The Let's Get Building report also lays out why councils, together with ALMOs, are particularly well placed to play a role, especially in using their land assets, and to link it in with their apprenticeship and work experience scheme. Do the Government accept that analysis from the report? It would seem that at least part of the coalition does.

As the report points out, the revenue costs and savings of an expanded council new build programme are complex and depend on such factors as whether a grant from the HCA would be needed, the extent to which council tenants would require housing benefit-or universal credit in future-and the prior housing status of new tenants. To the extent that additional council housing reduces demand for supporting people in the private rented sector or temporary accommodation, there is a potential saving for the Government. Additional build also provides an opportunity to get a better balance in the local stock offering. As the noble Lord, Lord Best, said, it is a reasonable way of dealing with underoccupation.

Of course, the crunch issue is borrowing. It is accepted that, under current rules, additional borrowing by councils will form part of public sector debt, notwithstanding that it will be effectively financed out of rental income. There may be arguments about recasting the treatment of that debt, but they are probably not for us today. As we have heard, the Let's Get Building report proposes that additional borrowing of some £7 billion over five years would facilitate the provision of 60,000 additional homes, although the amendment does not call for this. It calls for the housing cap to be removed. Even if the Government were not minded to support the amendment, would they at least be minded to raise the level of the cap? Have they given recent consideration to this? The Minister will doubtless tell us that there is existing headroom of some £2.8 billion, but this is not evenly distributed.

It is worth putting these borrowing numbers into context. According to the December OBR report, the forecast for debt at the end of this March is £1.2 trillion. Moreover, the forecast increased by £27 billion between March and December last year. Given the upside that it could bring to GDP growth, £7 billion over five years would not seem of itself to be critical to our chances of hanging on to our AAA rating-whatever they may be-or to the Government's chances of meeting their fiscal rules. That £7 billion over five years is within the margin of standard statistical error for public borrowing figures. As for removing the cap entirely, the evidence from CIPFA is that the introduction of prudential borrowing for councils in 2004 has been a complete success and that borrowing levels have remained modest and prudent. Total local government borrowing is in the order of some £81 billion.

The reform of council house finance from April 2012 has boosted councils' ability to manage their housing finance more positively. They all have 30-year business plans, while average council housing debt is reported as being just over £17,000 per property. I ask the Minister: why not trust local councils on the basis of their track record to date? These are some serious questions for the Government to answer.

Photo of Lord Ahmad of Wimbledon Lord Ahmad of Wimbledon Lord in Waiting (HM Household) (Whip)

My Lords, first, various questions have been raised about comments from the Treasury, when those comments may not have been heard. I am sure noble Lords will appreciate that it is not for me to comment on such rumours. What I can outline is the Government's position on where we stand, particularly with regard to these amendments and the issue of housing debts with regard to local authorities.

It is notable that we have been talking about affordable housing; there is also an issue about affordable debt. That is the question which we cannot forget in our deliberations. I therefore regret to say that while I agreed with my noble friends on their previous amendment, on this occasion the Government cannot accept this amendment because it would put at risk the first and key priority of the Government, which is to reduce the national deficit.

I remind the Committee that Section 171 of the Localism Act 2011-as was mentioned by the noble Lord, Lord McKenzie-provided powers for the Secretary of State to set a limit on the amount of housing debt each stock-holding local authority can hold. I will come back to his question in a moment, if I may. This was felt necessary because the self-financing settlement, which was successfully concluded in April last year, gave local authority landlords direct control over a very large rental income stream and, therefore, the potential to increase levels of borrowing beyond what we as a country can afford-a rise in borrowing far beyond that which would be accommodated within the prudential code.

Just to be clear: why have Section 171, when borrowing by local authorities is already controlled by the Local Government Act; that is, the prudential code? As the noble Lord, Lord McKenzie, pointed out, the prudential code in the Local Government Act did not take account of the actual rental stream from council housing, and therefore Section 171 and the caps. The code has worked well, but borrowing arising from self-financing must be affordable within national fiscal policies, which the prudential borrowing rules do not address.

Noble Lords and others cite this amendment as a means to increase housebuilding. The Government are completely committed to seeing an increase in housebuilding, but not if it increases public sector debt beyond that which we can afford. In response to the noble Lord, Lord McKenzie, yes, we want to see local authorities active in promoting housebuilding, but through working with housing associations and other developers to release land and maximise private investment. For example, from 2011 to 2015, 170,000 more affordable homes are being delivered with more than £19.5 billion of investment-over 75% of which is being provided by the private sector.

Moreover, if local authorities themselves want to build, I remind noble Lords that the vast majority of council landlords-139 out of 167, more than 80%-collectively have £2.8 billion of borrowing capacity within the settlement, as the noble Lord, Lord McKenzie highlighted, some of which could be used for this purpose.

It is not that we do not favour more housing; we do. Equally, it is a central priority for the Government to ensure that debt is controlled, and this has spiralled out of control. I will not do the noble Lord a discourtesy in any sense, but the important issue is that this is about ensuring fiscal responsibility in all our policies. In proposing that local authorities work with the private sector and housing associations, we believe that this is the correct way forward. As I said at the start of my comments, it is not just about affordable housing; it is also about what level of debt is affordable. On that basis, I hope that, while the noble Lord may not agree with the Government's position, he will see fit to withdraw his amendment.

Photo of Lord Greaves Lord Greaves Liberal Democrat 9:45 pm, 28th January 2013

The Minister referred to the 170,000 units of social housing which he said were being delivered. Is he absolutely confident that they are going to be delivered and, if so, can he provide us with a list or details of where they are going to be?

Photo of Lord Ahmad of Wimbledon Lord Ahmad of Wimbledon Lord in Waiting (HM Household) (Whip)

I did say that this would be a figure up to 2015, so we can certainly provide details of the ones that have already been delivered. We will make sure that we write to him about that.

Photo of Lord Tope Lord Tope Liberal Democrat

My Lords, I would indeed have been very pleasantly surprised if the Minister had stood up and accepted my amendment; I did not expect that, but I must admit to being a little disappointed with the reply. Perhaps I should make clear that I do not have a direct line to the Chancellor: my references were really only to what we can all see, read and hear in the public media. There are calls not least from the Mayor of London-who seems to have found favour again-to increase investment, and that would inevitably mean some borrowing. The borrowing we are talking about is very much prudential borrowing, in all meanings of that word. Without question, this issue is going to continue. I hope we will see some movement, but it will not continue further tonight. I beg leave to withdraw the amendment.

Amendment 57 withdrawn.

Amendment 57A

Moved by Lord Greaves

57A: After Clause 6, insert the following new Clause-

"Planning obligations: limitations on use

Paragraphs 122 and 123 of the Community Infrastructure Levy Regulations 2010 (planning obligations) shall cease to have effect."

Photo of Lord Greaves Lord Greaves Liberal Democrat

My Lords, Amendment 57A introduces a new clause. Its purpose is to probe further into the future of planning obligations, and particularly the future of Section 106 agreements and their relationship to the community infrastructure levy, otherwise known as CIL. I am aware that I am continuing with what I said when the CIL regulations came out in 2010 and probably going even further back to the Planning Act 2008.

This is a probing amendment about incredibly obscure and esoteric things. I apologise to members of the Committee for introducing them at this time of night but I think they are important. I have attempted to understand the position but I cannot. That may be due to a lack of information, a lack of understanding or even a lack of intelligence on my part. If I cannot understand, I hope that the Minister can explain what is going to happen so that at least we can assess whether it will be satisfactory.

The future of Section 106 comes from paragraphs 122 and 123 of the CIL regulations 2010. They come from concerns that in some areas the substantial transfer of planning obligations to CIL from Section 106 will not be satisfactory, not least because CIL itself will not yield very much, if anything at all. It is perhaps a minor pending disaster in those parts of the country which are not very prosperous, where property and land values are not very high, and CIL levies may not be possible at all.

Paragraph 122 of the regulations puts a limitation on Section 106 planning obligations which in future must be,

"(a) necessary to make the development acceptable in planning terms;

"(b) directly related to the development; and

(c) fairly and reasonably related in scale and kind to the development".

This has already happened and it means that Section 106 is more restrictive than it used to be. Paragraph 123 brings in further limitations and sub-paragraph (2) states that Section 106 obligations,

"may not constitute a reason for granting planning permission ... to the extent that the obligation provides for the funding or provision of relevant infrastructure".

I am paraphrasing to some extent but reading from parts of the regulations. Sub-paragraph (3) says that it,

"may not constitute a reason for granting planning permission to the extent that ...

(b) five or more separate planning obligations ... within the area of the charging authority; and

"(ii) which provide for the funding or provision of that project, or type of infrastructure, have been entered into before the date that obligation A was entered into".

In other words, within a planning authority there will be a limit of five within each category of types of projects of Section 106 agreements. This rather oddly applies no matter what size the planning authority may be. The definition of infrastructure is related to the authority's list of types of infrastructure that may be funded by CIL. The intention is that these new restrictions under paragraph 123 will be introduced in April 2014.

I have various questions for the Minister which I will put on record. I am quite happy for replies to these in writing because they are fairly technical, although they may just show my lack of understanding. After April 2014, how will the five-project limit work? Is it the same for large authorities and small ones? What type of project will be allowed for Section 106 obligations after April 2014 and how will they vary from what they are now? Do these restrictions cover all Section 106 agreements and do we assume that the council concerned has agreed to and has examined a CIL scheme? What is the position if a CIL scheme has not been agreed to, as in certain financial environments in less prosperous areas it may simply be impracticable? My advice is that in areas such as east Lancashire, it is not likely to be possible within the next four years.

How will viability, which we have discussed in the Committee today, affect all this? Does all this have any relationship at all to the Section 106 affordable housing agreements, and that whole agenda we have been talking about? What is the definition of infrastructure? Are there other Section 106 possibilities connected to an application that are neither housing nor infrastructure? When we discussed this earlier, the Minister said that not all authorities have yet got CIL schemes in place. It would be interesting to know what proportion of authorities already have CIL schemes in place, where they are, and, therefore, which authorities do not have them.

All this seems very complicated, and that may be because I do not understand it. It may all be crystal clear when the Minister explains it, but if I do not understand it then maybe one or two other people in the country do not, even those involved in the planning system. We need to get this sorted out. If the system that we have, and the changes which are going to take place, are simply not going to work or be satisfactory, then the Government need to look at it again. I beg to move.

Photo of Lord McKenzie of Luton Lord McKenzie of Luton Shadow Spokesperson (Work and Pensions), Shadow Spokesperson (Communities and Local Government)

My Lords, not for the first time, we are indebted to the noble Lord, Lord Greaves, for a list of incisive and important questions. I simply ask that the Minister will copy the reply which I hope he will commit to give to the noble Lord, Lord Greaves, to others so that we can have it in good time for subsequent sittings.

Photo of Lord Ahmad of Wimbledon Lord Ahmad of Wimbledon Lord in Waiting (HM Household) (Whip)

My Lords, I am grateful to my noble friend Lord Greaves. He does himself an injustice in describing himself as not understanding issues to do with local authorities and planning. I certainly always learn a great deal from his contributions, as I have again today.

My noble friend's amendment would remove the statutory tests for the use of planning obligations, the effect of which would be to return to a much broader use of Section 106. These statutory tests were introduced by the previous Government. Their purpose was to scale back the use of Section 106 so that it must be necessary, proportionate and directly related to the development in question. In these times of market uncertainty, it seems absolutely right that Section 106 is used to mitigate the impact of developments and no more.

The second purpose was to ensure that Section 106 could operate alongside the community infrastructure levy in a fair way. I remind the House that the community infrastructure levy was brought in to provide a transparent, non-negotiable and fair charge, addressing many of the concerns around the operation of Section 106. At this late hour, I will write on the specific question my noble friend raised about how many local authorities are already within this. Of course, as the noble Lord, Lord McKenzie, has asked, I will ensure that I copy that letter to all who have taken part in this debate.

The levy continues to be the Government's preferred mechanism for collecting contributions to infrastructure. The scale-back of Section 106 sits alongside the roll out of the levy and prevents developers being charged twice for the same item of infrastructure. The effect of this new clause would undermine this, causing a dual system, which would serve to confuse; I am sure that that was not my noble friend's intention. We therefore do not support the inclusion of this new clause which would undermine the progress that we are making with the community infrastructure levy. I hope that my noble friend is willing to withdraw his amendment.

Photo of Lord Greaves Lord Greaves Liberal Democrat

My Lords, I made it absolutely clear that this is a probing amendment. It is simply a means of putting these questions on the table. The questions will clearly be set out in Hansard and I hope that the Minister's welcome offer to write on some of these matters will tackle each of these questions in turn and provide some answers fairly quickly.

I will bring the amendment back on Report if I am not satisfied. This is an important question. There are parts of the country that CIL is really designed for. Where there are developments which are clearly profitable, even in the present financial circumstances, then CIL will work. In parts of the country, even on the best sites that may be available through the planning system, the imposition of CIL will make the developments unprofitable and unviable. That is the problem. If you do away with Section 106 on the one hand but you cannot impose CIL on the other, there is nothing left. That is the stark problem that is facing probably more parts of the country now than was the case when CIL was introduced five years ago. I am happy to withdraw the amendment now but I would be very grateful indeed to hear from the Minister. No doubt I will spend some happy hours trying to understand his letter and perhaps have some further discussions.

Amendment 57A withdrawn.

Schedule 2 agreed.

Clause 7 : Disposals of land held for planning purposes

Amendment 57B

Moved by Lord Greaves

57B: Clause 7, page 10, line 10, leave out from "disposals," to end of line 11

Photo of Lord Greaves Lord Greaves Liberal Democrat 10:00 pm, 28th January 2013

My Lords, the proposed amendment is to subsection (2) of Clause 7, which is about the,

"Secretary of State's consent required for certain disposals for consideration less than the best that can reasonably be obtained".

Subsection (2) is an amendment to Section 233 of the Town and Country Planning Act 1990. The new provision states:

"The Secretary of State may give consent under subsection (3) ... in relation to any particular disposal or disposals, or in relation to a particular class of disposals".

The next paragraph states,

"in relation to local authorities generally, or local authorities of a particular class, or to any particular local authority or authorities".

The purpose of the amendment is simply to probe the Government's intentions in relation to the particular class of disposals and in relation to broad categories of local authorities or, indeed, all local authorities. If the Government are putting this in legislation, they must have some idea of the kind of consents that will be given in a much broader way perhaps than exists at the moment. This could be extremely helpful to local authorities and very welcome.

I should say that I put down the final amendment to take out subsection (3) because I could not understand it. I looked at it and I looked at the legislation, and I still could not understand it. I thought that perhaps the Government can explain to me what it means. I beg to move.

Photo of Lord Ahmad of Wimbledon Lord Ahmad of Wimbledon Lord in Waiting (HM Household) (Whip)

My Lords, my noble friend Lord Greaves has spoken to his amendments. I want to outline the Government's position because we will be resisting them. However, he said that they are probing amendments. I also take on board his final point. I will refer to his comments when I get to Amendment 57D.

Before I respond specifically to the amendments in detail, it might help the Committee if I set out briefly what Clause 7 is intended to do. Local authorities have wide powers to acquire, appropriate and dispose of land. The main constraint on disposals of land is that if an authority wishes to dispose of land at less than the best consideration reasonably obtainable, it must obtain the consent of the Secretary of State. In order to avoid having to give decisions on minor disposals, the Secretary of State has the power to give general consents for specified classes of disposal for housing land and other land not held for planning purposes. However, there is no power under Section 233 of the Town and Country Planning Act 1990 to give a general consent for the disposal of land held for planning purposes at less than best consideration. So local authorities must apply to the Secretary of State each time such consent is required.

Before I continue, I remind the Committee that this clause had the support of all parties in the other place. The shadow Secretary of State for Communities and Local Government stated at Second Reading in the other place that the clause was sensible-I am sure that he did not say that about other clauses-and he supported the removal of the anomaly on disposal of land for less than best consideration.

Amendment 57B will stop the power of having a general disposal consent by preventing consent being given for a particular class of disposals. Perhaps I may illustrate this by reference to the general disposal consent under the Local Government Act 1972 for all land not held for housing or planning purposes. The class of disposal in that consent is all those disposals where the difference in value between the open market value and the selling price is less than £2 million, subject to certain conditions.

Amendment 57C will also wreck the point of having a consent by preventing it applying to local authorities generally or those of a particular class. I do not want to anticipate how a new general consent might be worded but I might speculate that the Government would want to give consent under this new provision to all local planning authorities, or all authorities to which Section 233 of the 1990 Act applies. Amendment 57C would prevent this.

My noble friend Lord Greaves referred to the deletion by Amendment 57D of subsection (3), which he said he did not quite understand. Here is my attempt to explain it and I hope he is clearer at the end. Subsection (3) adds a new subsection (9) to Section 233 to directly apply the protection set out in Section 128(2) of the 1972 Act. I am sure that that is clear but I will nevertheless continue to explain. The protection set out in Section 29 of the Town and Country Planning Act 1959 will no longer apply. This will mean that disposals of planning land and "other" land under the 1972 Act will be subject to the same procedures. The amendment would therefore remove a convenient provision for local authority users who are accustomed to using the Local Government Act.

I accept that that last point may require some re-reading of Hansard and some technical points may arise, but we will, if we can, between this stage and Report make any other clarifications that are sought. I hope that my noble friend will withdraw his amendment.

Photo of Lord Greaves Lord Greaves Liberal Democrat

My Lords, noble Lords will understand why, in working my way through all those references, Acts and regulations, it felt like a game of snakes and ladders and I was not getting anywhere. However, I am grateful to my noble friend for those explanations, which I shall read carefully. It will form some good bedtime reading if I have difficulty getting to sleep one evening. Clause 7 is clearly highly desirable and I am pleased to beg leave to withdraw the amendment.

Amendment 57B withdrawn.

Amendments 57C and 57D not moved.

Clause 7 agreed.

House resumed.

House adjourned at 10.08 pm.