Clause 5 - Modification or discharge of affordable housing requirements

Part of Growth and Infrastructure Bill – in a Public Bill Committee at 4:30 pm on 27 November 2012.

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Photo of Roberta Blackman-Woods Roberta Blackman-Woods Shadow Minister (Communities and Local Government) 4:30, 27 November 2012

That is very helpful, Mr Howarth. Thank you.

I want to refer again to the NPPF and ask the Minister why the clause is necessary at all. Paragraph 205 of the NPPF states:

“Where obligations are being sought or revised, local planning authorities should take account of changes in market conditions over time and, wherever appropriate, be sufficiently flexible to prevent planning development being stalled.”

It seems clear that the provisions of the entire clause are dealt with already by the NPPF. That comes back to the point that we were making this morning to the Minister to which we did not receive a satisfactory answer. Why are the Government now saying in contrast to what they said while we were discussing the NPPF that, in order for the framework to take effect, specific legislation must be brought forward? I again ask the Minister to be really clear about that issue.

My general comments about the clause are on matters that we have not particularly looked at in detail. No evidence whatever has been provided to suggest that section 106 generally and its affordable housing component specifically are responsible for the stalling of development in the United Kingdom. So many organisations have objected to the clause that it is an arrogant Minister indeed who would refuse to listen to them. From the evidence presented to the committee, the only people in favour seem to be the Home Builders Federation, and even they had some qualifications. I am not clear about the extent to which they have been covered, because I have been absent, but I am sure that the Committee did a splendid job in looking at them.

It is interesting that the impact assessment cites only two pieces of evidence, and they are worth considering briefly. I emphasise that because what is proposed in the  Bill is radical, despite the Minister’s protestations that it is only tinkering at the edges, that only a couple of authorities will be caught by it, and so on. The change is quite radical for planning policy, and 106 applications.

The first point is how 106 agreements are being framed, and we touched on that earlier. The language is about costs and obligations. There is nothing in the impact assessment to show why section 106 agreements are there at all, and factoring in what will be lost to local communities and others by the fact that they may not be implemented. That is why we need to tread with care.

Instead, the Government are continuing with the Bill without any evidence to support it and, as we have heard, it could drastically reduce the number of housing units in the country overall. The impact assessment states categorically that 1,400 housing schemes of above 10 units have stalled, totalling up to 75,000 units, and according to the Glenigan data that seems to be the case.

One might have thought that evidence would be presented to show that stalling of sites is due to section 106, but no. There is no such evidence, and when I met Glenigan last week, it pointed out that in fact it had been told that a number of sites had stalled because of viability issues, but it is not clear what the viability relates to, and more work needs to be done on that. The impact assessment is careful, and says:

“Whilst there will be a number of factors why these sites are stalled, the value of 106 agreements, agreed in more favourable market conditions, may now be affecting … viability”.

The Government are not even certain enough of their case to say that viability will be affected. That is followed by an analysis of sites in weak market areas that have stalled, but again there is no evidence that 106 agreements, particularly relating to affordable housing, are the main problem. Common sense tells us that the wider economic downturn is most likely to affect the viability of sites, and some of the people who gave evidence to the Committee suggested that. In any case, the Government should not be introducing such a drastic measure without setting out clearly how viability is to be measured, and I hope the Minister has taken that point from our earlier discussions.

Another reason for removing the clause is the huge shortage of affordable housing in this country. The National Housing Federation notes that 1.8 million families are on housing waiting lists. We know from the Office for National Statistics that we need something like 4.5 million houses in the next 25 years just to cater for the housing need that has been identified now. That does not include future housing need that might arise but has not been assessed. Despite that, recent figures from the national housing statistics show that the number of additional affordable houses in 2011-12 was down by 4% compared with 2010-11. Provision of social rented homes was also down by 3% in 2011-12 compared with 2010-11.Additionally, those homes provided by intermediate housing schemes were also down by 10% compared with the 2010-11 figures, and the number of affordable homes completed through planning obligation section 106 without grant rose by 18%, to 4,130. Of those 4,130 homes, 2,360 were for social rent, 40% were for affordable rent and 1,720 were for intermediate rent.

Figures from Shelter also suggest that, given the projected rise in the number of new households, current levels of building are simply not sufficient. I hope that the point that the Minister has taken from the figures  that I have just read out is that, although housing need is increasing, the number of affordable housing units is reducing, but section 106 agreements deliver about half of all the social housing for rent in this country. So getting rid of those agreements, even if it is only on a number of sites, is moving our delivery of affordable housing in precisely the wrong direction.

The planning Minister is also reported to have conceded that the Government are not building enough housing, saying that he wants to get back to building about 250,000 or 290,000 homes per year. I am not sure which figure he has exactly settled on, but I for one will give him his due; if he has accepted that we need these large numbers of houses to be built, I look forward to hearing from him about how that is going to happen. What we do know is that new build starts are down by 30% since the Government took office and, with housing becoming a scarcer commodity, one can only imagine what will happen to affordability. When it is a scarce resource, market conditions will mean that housing increases in price, and this is already happening in some areas. Therefore, affordability becomes more difficult for certain sections of the population.

It simply beggars belief, does it not, that given the pent-up demand for affordable housing, this clause is being introduced. I know that the Minister will say that the Government have set aside £300 million for affordable housing, but there are a number of problems with this. The first is the new definition of “affordable housing”. I understand that it was debated in my absence, but I want to question the Minister on the new definition of “affordable housing”, because the current definition is 80% of market rent so I am not sure where “affordable housing” can go except to 80-plus as a percentage of market rent, and that is just not affordable for many people.

Secondly, there is no indication as to whether any of the £300 million is to be spent on social rented housing. Thirdly, what is the time frame? That is very important, because we know from the figures that I gave earlier that section 106 agreements deliver a substantial number of homes for social rent, and it really is not clear where the affordable housing will be delivered from if a lot of developments go forward without affordable housing as part of the development. Nor is it clear how quickly the £300 million will be distributed to local authorities, or others, and what they will use it for. So it simply does not make sense in the midst of such a housing shortage, particularly a shortage of affordable housing, to introduce any measure—even one that the Minister might say is at the edges—that does not add to the affordable housing stock.

Is not the real reason for this absolutely dreadful clause the outcome of successful lobbying by a number of developers who simply do not want to pay for their obligations under section 106 agreements, particularly for on-site social housing? The outcome will mean less mixed communities, and affordable and social housing being banished to the most undesirable low-value sites. Such a step backwards, when we know that communities of this nature are much less likely to be sustainable in a number of ways, has got to be questioned.

In its written evidence to the Committee, the Town and Country Planning Association stated that the changes to section 106 agreements

“will reduce the...amount of land...available for affordable housing and most importantly it may lead to the kind of socially polarised communities which the planning system has striven to avoid.”

The Campaign to Protect Rural England also raised the issue of land availability. It asked—quite rightly—how, without section 106 agreements, land would available for affordable housing. The Minister needs to tell us how the £300 million that has been set aside for affordable housing will ensure that land is brought forward. In all that the Government have said about that sum of money, I have not heard any reference being made to ensuring that land will be available.

The Highbury Group wisely says that the Government should seek

“to maximise the supply of affordable housing in all parts of the country likely to be affected by the impact of the cap on housing benefits in April next year”.

So we are not talking about only a few areas here and there. There is now going to be a huge need for affordable housing just to cope with another measure in the Government’s programme, which is likely to mean that people will have to move out of the housing that they currently occupy. The Highbury Group also points out that ATLAS best practice guidance encourages local authorities to put in

“formal mechanisms for review” every three years, when conditions apply. There is already best practice out there, so I am not sure why the clause is necessary.

Barratt points out that the resulting renegotiation of section 106 agreements that the clause would entail could mean that sites currently under consideration would be further stalled. As several organisations have made clear, there is simply no need for the clause, because there is already a formal procedure in section 106A of the Town and Country Planning Act 1990, which allows developers to apply, once five years have passed, for the modification or discharge of planning obligations. Secondly, as we have often noted, local authorities are already renegotiating section 106 agreements. They are doing that on a voluntary basis and with the needs of their local communities in mind. In the spirit of localism, they should be left to get on with that and the task of developing much-needed sustainable mixed communities. The Minister should remove the clause from the Bill.