Clause 94

Localism Bill – in a Public Bill Committee at 2:15 pm on 17th February 2011.

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Photo of Jack Dromey Jack Dromey Shadow Minister (Housing) 2:15 pm, 17th February 2011

I beg to move amendment 134, in clause 94, page 64, line 16, at end insert—

Photo of Hugh Bayley Hugh Bayley NATO Parliamentary Assembly UK Delegation

With this it will be convenient to discuss the following:

Amendment 135, in clause 94, page 64, line 19, at end insert

Amendment 136, in clause 94, page 66, line 25, at end insert—

Photo of Jack Dromey Jack Dromey Shadow Minister (Housing)

Let me get straight to the heart of the issue by saying that the amendment would ensure that the community infrastructure levy was set at a level that would not prejudice the delivery of affordable housing. Before we come to the substance of the amendment, however, I would like to welcome the fact that we are able to move it. Before the election, the Conservative party’s “Open Source Planning” document described the previous Government’s approach as “unnecessarily complicated”. In the same document, the party that now leads the coalition Government said it would “scrap CIL”. I therefore warmly welcome a broken promise on the part of the Conservative party in favour of a coalition of support across the House that it would be sensible to maintain the CIL. However, I must say to Liberal Democrat Members that, had it been the junior party in the coalition breaking that promise, I fear it might have been against a background of photos of Members signing a pledge saying “Scrap the community infrastructure levy”.

Our amendments on the CIL would ensure that, crucially, it would be set at a level that would not reduce the likelihood of affordable housing being delivered in accordance with the local plan. It is vital that when a combination of CIL and affordable housing requirements makes development unviable, there is a clear mechanism that allows CIL to be waived, in whole or in part, so that levels of affordable housing do not automatically fall as a consequence. These amendments would ensure that affordable housing was taken into account when setting the CIL and require CIL regulations that make provision for an exceptions process to be specified in the charging schedule.

In “Open Source Planning”—once again—the Conservative party set out a commitment to ensure that affordable housing was exempted from their then proposed replacement, the local tariff, which is now mercifully in the dustbin of history. The document said this would

“act as a powerful economic incentive for developers to include affordable housing as part of their proposed development.”

Now that the Government have decided to stick to the CIL, do they think that there is a need to ensure that the levy does not restrict the building of affordable homes? We would welcome a clear statement by Ministers on that position.

Photo of Greg Clark Greg Clark Minister of State (Department for Communities and Local Government) (Decentralisation and Cities) (also in the Department for Business, Innovation and Skills)

Given that the hon. Gentleman has mentioned “Open Source Planning” several times, I hope that he has paid my hon. Friend the Member for Henley royalties for his use of that influential and seminal document.

I take the remarks made by the hon. Member for Birmingham, Erdington in the spirit in which they are intended. We reflected on the CIL, as bequeathed by the  previous Government. It is not without its flaws—it is complex. Even the name of it is hardly a clear demonstration to communities as to what they can expect as a contribution to development, and the fact that it is not more widely known is part of the problem that we face.

This goes back to a remark that the right hon. Member for Greenwich and Woolwich made a few days ago: taking a year zero approach to these matters is probably not the most helpful approach. We would not have started from CIL as the legislation has been drafted, but it is a mechanism that gets money into communities to assist with the infrastructure needs that come with development. It is part of the package of measures that I mentioned earlier that allows people to share in the benefits of development and to have some recognition that the effects of development will be addressed. That is the reason why we are continuing with the CIL.

Photo of Henry Smith Henry Smith Conservative, Crawley

Will my right hon. Friend reassure us that when developers are paying under section 106 agreements, they will not face effectively double taxation by paying the CIL as well?

Photo of Greg Clark Greg Clark Minister of State (Department for Communities and Local Government) (Decentralisation and Cities) (also in the Department for Business, Innovation and Skills)

I can give my hon. Friend exactly that reassurance. This is designed to replace the even more opaque system of section 106 agreements and put it in place a clear tariff basis so that any developer contemplating development is clear in advance about what contribution they will need to make to the wider infrastructural needs of the area. That is absolutely right. One replaces another, so section 106 agreements are reserved for very site-specific issues, as opposed to the more general contribution it currently makes.

Photo of Nick Raynsford Nick Raynsford Labour, Greenwich and Woolwich

I shall pass over the fact that the right hon. Gentleman prefers the formulation of CIL developed by the previous Government to section 106, which he described as even more opaque but was, of course, developed by the previous Conservative Government. Is it the Government’s intention that section 106 should be used not only for site-specific provisions, but for the provision of affordable housing? I understand that the Government have stated their commitment to section 106 being available for affordable housing in addition to CIL payments.

Photo of Greg Clark Greg Clark Minister of State (Department for Communities and Local Government) (Decentralisation and Cities) (also in the Department for Business, Innovation and Skills)

I will come on to address that precise point later because it is important.

Let me address the amendments before us. It is important that there is no point having the payment if it jeopardises the provision of affordable housing, which we are all in favour of. Section 211 of the Planning Act 2008 requires the charging authority—I dare say that that was in the minds of our predecessors—to have regard to the economic viability of development in setting the charge, including a consideration of affordable housing, so that needs to be taken into account now. That is further reinforced by the requirement for local planning authorities to have regard to the Secretary of State’s guidance, which says that the CIL schedule of charging must take development costs into account and should consider the effect on affordable housing. We reiterate our commitment to that principle. It is also worth emphasising that social housing—affordable housing—is exempt from payment of the levy, so our commitment is further reflected in that way. The measures and reforms that we have in  mind for CIL far from undermine the viability of affordable housing. It is important that that does not happen, especially at this time, so our approach will continue.

The right hon. Member for Greenwich and Woolwich asked about the use of section 106 payments to pay for affordable housing. I have received representations suggesting that the provision of affordable housing might be a proper use of CIL. It would provide a greater opportunity for revenue to flow into affordable housing if it were regarded as part of the infrastructure of a community, which, in many respects, it is. It is clearly part of the essential make-up of an area that has an infrastructural effect. I want to reflect on those representations and consider whether clarifying the definition in such a way would be make things clearer and provide not only protection, but an increased opportunity for affordable housing. I hope that the right hon. Gentleman will be satisfied, but will also welcome my contemplating and considering those representations.

Photo of Nick Raynsford Nick Raynsford Labour, Greenwich and Woolwich 2:30 pm, 17th February 2011

I am grateful to the right hon. Gentleman for that. He raises an interesting proposition, but he will understand that clarity is essential. Until now, the assumption has been that CIL would be calculated in a way that reflected infrastructure needs, excluding support for affordable housing. If that is to change, it will clearly have an impact on the viability of developments and on how local authorities choose to set the figure for CIL for their areas. When does he expect to be in a position to give greater clarity on the Government’s conclusions? I do not object to the principle of provision for affordable housing being within CIL, but there must be clarity on how the process will operate.

Photo of Greg Clark Greg Clark Minister of State (Department for Communities and Local Government) (Decentralisation and Cities) (also in the Department for Business, Innovation and Skills)

That is not the case at the moment, and it will not be until any change has been contemplated. The people producing charging schedules can perfectly reasonably not regard affordable housing. I do not make any indication that we will adopt the policy, but when clauses are published, representations are received. In the spirit of the debate that we had on other clauses, I think that this is an interesting proposal. We will consider it and reflect on it. At any rate, the protection, and the questions of the viability of affordable housing and of the legitimacy of testing the rates set against the effect on affordable housing, will remain. The protection is undoubted, and I hope that that addresses the question that I dare say is behind the amendments.

Photo of Jack Dromey Jack Dromey Shadow Minister (Housing)

There is a degree of confusion as to exactly what the Government are saying. I sense that the Minister wants to engage and be constructive, and he agrees that we have identified issues of legitimate concern. Given that, will he be prepared, as on other matters, to consider this further in dialogue and, if appropriate, to table amendments on Report?

Photo of Greg Clark Greg Clark Minister of State (Department for Communities and Local Government) (Decentralisation and Cities) (also in the Department for Business, Innovation and Skills)

I am happy to make that commitment. Particular concerns have been expressed, and while we think that the powers are very strong now, I am happy to undertake personally to involve the hon. Gentleman in discussions and to come back to the House on Report.

Photo of Jack Dromey Jack Dromey Shadow Minister (Housing)

In those circumstances, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 94 ordered to stand part of the Bill.