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Clause 5 is concerned with section 106 agreements. Every member of the Committee will know that the clause has attracted widespread criticism, not least from the witnesses who gave evidence to our Committee. There were three broad grounds for objecting to the clause.
The first is the obvious concern that it would further reduce the supply of affordable housing, which is already woefully inadequate. We heard from a significant number of people with different perspectives, including the Royal Institution of Chartered Surveyors, whose written evidence made it clear that it was concerned; the National Housing Federation; and local authorities, all of whom feared that the outcome would be to reduce further the already inadequate supply of affordable housing.
Secondly, we heard evidence that the Government’s analysis when bringing forward the clause was fatally flawed. The Government saw the affordable housing component as the only factor likely to lead to the stalling of development schemes, or at least their analysis identified the affordable housing component in section 106 agreements as the only part that would be subject to renegotiation as part of the process, whereas we have heard evidence from very many other sources, including in particular the Local Government Association—it ought to know—and the planning community, that a very wide range of factors could result in a scheme being stalled because it was seen to be unviable, and that it was quite wrong to single out affordable housing as the only area subject to renegotiation or change on appeal, as is provided in clause 5.
Anyone on the Government Benches who is defending the clause would do well to remind themselves of the evidence of the Local Government Association—both what its representatives have said to us and also its written evidence. It is a most damning indictment of a Government who claim to be supporting a localist agenda. They really have not got their ducks in a row, if I can put it in that rather crude way. They have managed to alienate almost the entire local government community, including their own supporters in local government, who believe that this is an inappropriate and ill-advised Bill, particularly this clause.
The third objection to clause 5 is that it will have some perverse, and hopefully unintended, consequences, some of which were identified during the evidence sessions. I hope that Ministers will recognise that and be prepared to accept amendments that are intended to avoid some of those perverse consequences. This group of amendments is in exactly that line. The amendments deal not with the overall thrust of the clause—we will debate that later—but with the potential impact on the exception sites policy in rural areas. This is a narrow and specific series of amendments designed to deal with a narrow and specific, but damaging, potential consequence of the clause.
Perhaps I should start by describing what the exception sites policy is. It is defined, helpfully, in the national planning policy framework:
“Rural exception sites: Small sites used for affordable housing in perpetuity where sites would not normally be used for housing. Rural exception sites seek to address the needs of the local community by accommodating households who are either current residents or have an existing family or employment connection. Small numbers of market homes may be allowed at the local authority’s discretion, for example where essential to enable the delivery of affordable units without grant funding.”
There, we begin to get to the nub of the policy. It has been in existence for over 20 years, it has had bipartisan or cross-party support—I know of no political party that has objected to it or found it inappropriate—and it has facilitated the supply of substantial numbers of homes meeting real needs in rural areas, by making exceptions to allow the development of housing where it would otherwise not be permitted.
If I describe how the policy works, that will hopefully make it easy to understand. In particular rural areas there is a presumption against housing, for a variety of reasons—because we are dealing with a national park, an area of outstanding natural beauty or an area where the countryside would be compromised by the commercial development of large numbers of market homes. However, in such areas there may well be a need for a small number of homes to meet the needs of the local community. There may be a need for homes for the sons and daughters of existing residents, for example, to keep a village community alive, or for individuals who need to work in that area because their job, although not well paid, is essential to the economy and community of the area. The exceptions policy emerged as a counter-intuitive but sensible approach to providing for those needs by saying that although there would normally be a presumption against housing development in an area, development would be allowed in exceptional circumstances because it would meet a pressing social, and in some cases economic, need.
We heard from Dr Nigel Stone of the English National Park Authorities Association. In his evidence on the importance of that policy he said, “The majority of us”—his members, the national park authorities—
“have a planning policy based on a rural exceptions approach to planning. For a housing application to be approved, it would have to meet affordable local needs criteria and be occupied by somebody who meets those criteria.”
He went on to express his worry about clause 5. He said:
“Our concern is that because they are exception sites, the potential developer and occupier is able to purchase that land at a relatively low price, because it has little hope value.”
The current scheme works on that basis, but if that hope value were suddenly to become larger because the exception depending on the section 106 agreement were to be modified, it would open up the possibility of other development and entirely undercut the basis of the policy. Dr Stone emphasised how the policy depends on all parties agreeing. He said:
“It works both ways: it enables a landowner selling a piece of land to feel reassured that it will meet a local need, and it enables a purchaser to purchase at a relatively low cost. That is critical to the viability of building on the site. It is by retaining the full section 106—that occupancy—that potentially makes it available in the future for other people who meet the local needs criteria, so that you build up a stock of affordable homes.”––[Official Report, Growth and Infrastructure Public Bill Committee, 20 November 2012; c. 147, Q336.]