Levelling-up and Regeneration Bill (Eighteenth sitting)
Tuesday 6th September 2022
(1 year, 7 months ago)
Public Bill CommitteesLevelling-up and Regeneration Act 2023 View all Levelling-up and Regeneration Act 2023 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: Public Bill Committee Amendments as at 6 September 2022 - (6 Sep 2022)
The Committee divided: - Ayes: 5 / Noes: 8 - Question accordingly negatived.
The Chair
You are all very welcome. I am glad that our Galleries are swelling with even more Members; that is excellent. Welcome back after the recess, Committee. I have a few preliminary announcements. Please switch off your electronic devices or at least put them on silent. No food or drink is permitted, except of course for the water on the tables. If you wish to remove your jacket, please feel free to do so, as it is very warm today. Please provide your speaking notes to Hansard colleagues; you know the email address. And we will get right down to business.
Clause 99
Development commencement notices
The Minister for Housing (Mr Marcus Jones)
I beg to move amendment 74, in clause 99, page 116, line 27, leave out from beginning to “for” in line 28 and insert
“planning permission has been granted under section 70 or 73”.
This amendment corrects a cross-reference.
Mr Jones
As ever, it is a pleasure to serve under your chairmanship, Mr Paisley. I hope that colleagues had a good summer and, in many ways, are suitably refreshed and raring to go with our consideration of the Levelling-up and Regeneration Bill in Committee.
These three amendments are aimed at ensuring that proposed new section 93G of the Town and Country Planning Act 1990, which is created by clause 99, works as intended. The amendments propose two changes. First, new section 93G does not refer to the correct section of the 1990 Act as the basis for the grant of planning permission. Therefore, the two technical corrections set out in Government amendments 74 and 75 are considered necessary to make clause 99 legally accurate. Secondly, to ensure that references in new section 93G concerning when new development has begun have the same meaning as those elements set out in existing section 56(2) of the 1990 Act, a consequential amendment is required. This is set out in Government amendment 76.
Overall, the amendments will ensure that clause 99 works as intended, without ambiguity. For those reasons, I hope that members of the Committee support them.
Amendment 74 agreed to.
Amendments made: 75, in clause 99, page 117, line 25, leave out “58(1)(b)” and insert “70”.
This amendment corrects a cross-reference.
Amendment 76, in clause 99, page 117, line 29, at end insert—
“( ) In section 56 (time when development begins), in subsection (3), after ‘92,’ insert ‘93G,’.”—(Mr Marcus Jones.)
This amendment adds a consequential amendment to section 56 of the Town and Country Planning Act 1990 (which determines the time when development begins).
Question proposed, That the clause, as amended, stand part of the Bill.
Matthew Pennycook (Greenwich and Woolwich) (Lab)
It is a pleasure to reconvene after the summer recess under you in the Chair, Mr Paisley.
Clause 99 will insert proposed new section 93G into the Town and Country Planning Act 1990, as the Minister said. The new section will require those carrying out certain development types to serve a commencement notice to the relevant local planning authority before any development takes place. Such development notices will be required to outline the expected start date of construction, the details of the planning permission, the proposed delivery rate for the scheme, and other relevant information. The example in the explanatory notes accompanying the Bill suggests that this provision will most likely apply to large-scale residential schemes as a means, albeit a limited one, of preventing land banking and slow build-out by larger developers.
We welcome this sensible new duty. However, I would be grateful if the Minister provided further clarification as to what kinds of developments are likely to fall within the “prescribed description” bracket in subsection (1)(b) of the proposed new section and therefore be required to submit one of the new commencement notices.
Mr Jones
As I am sure the hon. Gentleman will appreciate, the description of the particular type of development he refers to will be dealt with in regulations and we will bring forward further details in due course. We will do so in consultation with both local authorities and industry.
Question put and agreed to.
Clause 99, as amended, accordingly ordered to stand part of the Bill.
Clause 100
Completion notices
Mrs Emma Lewell-Buck (South Shields) (Lab)
I beg to move amendment 170, in clause 100, page 118, line 31, at end insert—
“(3A) But notwithstanding subsection (3) the completion notice deadline may be less than 12 months after the completion notice was served if the local planning authority are of the opinion that—
(a) development has not taken place on the site for prolonged period,
(b) there is no reasonable prospect of development being completed within a reasonable period, and
(c) it is in the public interest to issue an urgent completion notice.
(3B) A completion notice may include requirements concerning the removal of any buildings or works authorised by the permission, or the discontinuance of any use of land so authorised, at the end of the completion period, and the carrying out of any works required for the reinstatement of land at the end of that period.”
This amendment would enable the issuance of completion notices withdrawing planning permission with a deadline of less than 12 months when certain conditions are met, and enable completion notices to require that building works be removed from a site or a site be reinstated to its previous condition.
Thank you, Sir Ian—Mr Paisley.
Mrs Lewell-Buck
Okay, let’s go with that. Welcome back, everyone. I hope everyone had a lovely summer and all that.
South Shields is a beautiful place, but at the corner of Lawe Road and Ocean Road, leading to our gorgeous coastline, there is a derelict building that has been left to rot, to the extent that only the frontage remains; behind it, there is nothing. The only thing holding it up is unsightly scaffolding. It has become a rubbish dump and a home for rats, and it is causing a hazard to neighbouring properties and the public. The building has been like that for five years. The property was once a guest house. In February 2017, planning permission to convert it into a 43-bedroom hotel was approved. Soon after, the developer decided to stop all work on the site.
Earlier this year, the then Minister for Housing advised that
“The Government are absolutely clear that new developments should be built out as soon as possible, once planning permission is granted. Where sites are stalled or there are delays to delivery, it is for local authorities and developers to work closely together on these issues.”
He added that local authorities have the power to deal with the problem of uncompleted development under sections 94 to 96 of the Town and Country Planning Act 1990, which gives local planning authorities the power to serve a completion notice on the owner or occupier of land, if the local planning authority considers that a development will not be complete within a reasonable time.
However, South Tyneside Council has stated:
“It is a privately owned site and a Planning Consent has been implemented, so the options open to the Council are extremely limited”.
It added that it
“cannot use these formal planning enforcement powers in this instance as the construction work has planning permission and the site is still considered in law to be a live construction site.”
In short, my constituents must put up with this and are at the mercy of a faceless private developer.
That building is just one example. I am sure the Minister will agree that it simply cannot be right that there are no powers that can be used by local authorities or the Government in such situations. It is not acceptable for Ministers simply to state that it is for local authorities and developers to work closely together to solve the issues, when there is no legislation to support them to do so. In fact, the legislation that there is does the exact opposite. My amendment would ensure that the relevant measures were in place to support local authorities and local communities. I do not intend to divide the Committee on the amendment, but I would like the Minister to address my points.
Tim Farron (Westmorland and Lonsdale) (LD)
It is a pleasure to serve under your chairmanship again, Mr Paisley, and a great pleasure to be with the other members of the Committee after the summer break.
I support the amendment in the name of the hon. Member for South Shields. I very much look forward to being in South Shields when, hopefully, I finish the Great North Run on Sunday.
Tim Farron
I gather it is a struggle to get back into the Toon afterwards—I will cadge a lift to the Bigg Market with you.
My concern is—this is why the amendment is important—that when we talk about planning and the powers that communities have, so often Governments, particularly this one, listen to a range of voices, but especially to the interests of developers. Here is an opportunity for the Government to listen to and give power to communities. In my constituency and around the country, there will be many instances like the one referred to by the hon. Member for South Shields, where planning permission has been given, work begins and then it is not completed. The powers available to the local council or local planning authority—let us be honest, we are talking about the powers available to the local community to have any control over all that—are very limited.
If the Government accepted the amendment, it would indicate that they are serious about empowering communities over the things that happen in them. That way, we are not allowing things to happen to communities, but allowing communities to have real sovereignty over what happens within their boundaries.
Matthew Pennycook
Very briefly, I congratulate my hon. Friend the Member for South Shields on this excellent amendment, which we support. She made clear that the problem she has highlighted of private plots lying derelict for extended periods of time with no real prospect of development being completed has a real impact on local communities. Allowing the 12-month completion notice deadline to be circumvented in the circumstances set out in the amendment, with the proportionate requirement set out in proposed new subsection 3B, is sensible and we urge the Government to consider it seriously.
Mr Jones
I listened closely and carefully to what the hon. Member for South Shields said. I am sure she knows that because of the role of Ministers in the planning system, I cannot discuss that particular situation in detail, but I can say that I am aware of such situations, even in my own constituency. I am sure there are similar situations across the country.
Amendment 170 relates to the proposed updated legislative framework for completion notices in clause 100. Those notices are an existing tool available to local planning authorities that can be served on developments that, in the opinion of the local planning authority, will not be completed in a reasonable period. We want to equip local planning authorities with the tools necessary to deal with sites that have experienced long periods of inactivity or slow delivery. That is why, through clause 100, we propose to modernise the procedure for serving completion notices to make them simpler and faster to use, giving more control and certainty to local planning authorities in the process. To achieve that, clause 100 will remove the need for a completion notice to be confirmed by the Secretary of State before it can take effect and allow for a completion notice to be served on unfinished developments sooner, providing the planning permission has been implemented.
Amendment 170 proposes two fundamental changes to clause 100. First, there would be a shorter completion notice deadline below the current 12-month minimum in certain circumstances. Those are where a local planning authority is of the opinion that development has not taken place on a site for a prolonged period; that there is no reasonable prospect that the development would be completed in a reasonable period; and that it is in the public interest to serve a notice.
While I support the intention, I remind the Committee that completion notices, when served by a local planning authority or the Secretary of State, must provide the recipient with an opportunity to complete the development. To put it another way, a completion notice requires a person to use or lose their planning permission. Therefore, that person must be afforded the chance to use the planning permission and complete the development before the granting of that permission is removed. Providing the opportunity to complete is a critical aspect of the procedure governing the use of completion notices and reflects the longstanding position that planning permission is a development right and that revoking that right should be subject to compensation.
Mrs Lewell-Buck
I thank the Minister. How long do developers have to complete if they are served a notice by the local authority?
Mr Jones
In the case we are talking about, the current minimum once a notice is served to use or lose planning consent is 12 months. Clearly, we think that that is proportionate in giving the chance for a development right to be used by the developer. The penalty for failing to complete the authorised development within a specified time period is the removal of planning permission for the unfinished parts of the development. The person served with a completion notice must have a reasonable period in which to finish development and avoid that outcome. As I have said, a period of 12 months is proportionate and gives developers a fair opportunity to deliver on their permission in full.
Mr Jones
I will in one moment. Half-completed developments can be complicated to complete. That minimum 12-month period is also consistent with other elements of the planning system and the approach to compensation. In particular, 12 months is the period given under section 108 of the Town and Country Planning Act 1990, where compensation is payable for the revoking of a planning consent granted under a development order.
Mrs Lewell-Buck
I thank the Minister for giving way again. What does he envisage would happen if somebody kept renewing their planning application? How is the Minister proposing to stop situations such as the one that I outlined in proposing this amendment?
Mr Jones
As I am setting out, there are a number of ways in which we will ensure that development gets built out as quickly as possible. That is important because, clearly, it is the expectation of communities for a planning consent to be followed through once it has been granted. I will continue to explain how that will happen, because the second change sought by the amendment relates to removing finished parts of a development, where a site could not be completed before planning permission was withdrawn, and restoring the land to its previous state.
I recognise the importance of being able to remove unfinished developments, and appreciate that the local planning authority should have the power to provide for that as a last resort. I remind the hon. Member for South Shields that powers are already available to planning authorities to seek the removal of unfinished developments. Section 102 of the Town and Country Planning Act 1990 enables local planning authorities to make a discontinuance order, which can, among other things, require discontinued use of land, alterations, or removal of buildings or works. Therefore, I believe the proposed change is unnecessary due to the powers that are available through existing legislation.
On that basis I hope that my comments have reassured the hon. Member and I hope, as she mentioned at the start of her comments, that she will not seek to divide the Committee.
Mrs Lewell-Buck
I do not seek to divide the Committee at this stage on this matter. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Question proposed, That the clause stand part of the Bill.
The Chair
With this it will be convenient to discuss that schedule 10 be the Tenth schedule to the Bill.
Mr Jones
As part of the measures in the Bill to provide greater transparency around the delivery of new development and to bring about the timely build-out of planning permissions, through clause 100 we will be speeding up, simplifying and modernising the framework for serving completion notices. The power to serve completion notices is available to local planning authorities in sections 94 and 95 of the Town and Country Planning Act 1990. The Secretary of State can serve notices under section 96 of the 1990 Act.
A completion notice may be served on a development that, in the opinion of the local planning authority, will not be completed in a reasonable period. The notice will set a deadline after which the planning permission will become invalid and, if development is not completed by that deadline, planning permission will be removed for any unfinished elements of the development. In effect, a completion notice requires a developer to use it or lose it.
At present, however, completion notices are rarely used, with only 13 notices served since 2011 and just three since 2014. This partly reflects the fact that they are, and should remain, a tool of last resort. However, local planning authorities should not be discouraged from using them where appropriate and where the existing process for serving notices is long, slow and unnecessarily complex. Completion notices, for example, cannot take effect unless until they have been confirmed by the Secretary of State. In practice, this requirement has added an average of three months to the process for the nine notices confirmed since 2011, the longest of which being over six and a half months.
Matthew Pennycook
Clause 100 would amend the provisions in the Town and Country Planning Act 1990 relating to completion notices. It does so by removing two requirements: that the Secretary of State must approve a completion notice and that the notice must be served only after the deadline for commencement of the planning permission has passed. We welcome these sensible revisions to the 1990 Act. I do, however, have two questions for the Minister, but I am more than happy for him to get back to me in writing if needed.
First, given that the changes sought by clause 100 are intended to work in conjunction with the new duty provided for by clause 99 on commencement notices, will the Minister explain why such notices are restricted to certain types of as yet undefined development, while the changes made to completion notice provision will continue to apply to all types of development? Secondly, subsection (2) of proposed new section 93H makes it clear that a local planning authority can serve a completion notice if it is of the opinion that the development will not be completed “within a reasonable period”—a power that in theory would allow the cases my hon. Friend the Member for South Shields just raised to be addressed in a timelier manner. Will the Minister clarify what is meant by “within a reasonable period”? If he cannot, can he tell us who will determine what it will mean in due course and whether there will be any limits whatsoever, given how ambiguous the phrasing is?
Mr Jones
On the first question, I will take up the hon. Member’s offer to write to him. To his second point, that reasonable period of time will be set out in guidance. The local planning authority will be the one to deal with the matter directly, rather than getting the Secretary of State involved. The authority will be able to determine how to deal with a particular situation by taking into account the factors relating to each development involved.
Question put and agreed to.
Clause 100 accordingly ordered to stand part of the Bill.
Schedule 10 agreed to.
Clause 101
Time limits for enforcement
Question proposed, That the clause stand part of the Bill.
Mr Jones
The Government are clear that effective enforcement action is important to maintain public confidence in the planning system. This chapter introduces a number of measures long called for by colleagues in this place to strengthen the enforcement powers of local authorities and to close loopholes. Local planning authorities presently have a wide range of enforcement powers, with strong penalties for non-compliance, to tackle such situations. While we believe that the current enforcement framework generally works well, we acknowledge that we could make improvements in a number of areas. We want to strengthen planning enforcement powers and sanctions, reinforcing the principle that unauthorised development should never be viewed as preferential to proper, up-front planning engagement.
Within the planning enforcement framework, there are statutory time limits for the commencement of enforcement action. It is necessary to have a statutory time limit to provide certainty when the passage of time means that enforcement action is no longer feasible. However, there are currently two time limits for commencing enforcement action, depending on the nature of the breach. For a breach of planning control consisting of building operations or the change of use to a single dwelling, the time limit for commencing enforcement action is four years. For any other breach of planning control, the time limit for commencing enforcement action is 10 years from the date of the breach.
Stakeholders have raised concerns that the four-year timeframe can be too short, and in some cases can result in opportunities to commence planning enforcement action being inadvertently missed. For example, a person may not initially raise concerns with their local planning authority, assuming that a neighbouring development has the correct permissions or will not cause disturbance. Should the development prove disruptive, they may then try to come to an agreement with the person responsible for the development. By the time they raise their concerns with the local planning authority, some time may well have passed. The local planning authority may not initially be aware of that, prioritising other investigations. When an investigation begins, it may then become clear that the time limits for commencing enforcement action have inadvertently passed.
The four-year time limit can cause frustration for communities, whose initial pragmatism may result in unauthorised, harmful development becoming inadvertently immune from enforcement action. The clause will bring the time limit to commence enforcement action in England to 10 years in all cases, either from the date of substantial completion or the date of the breach, depending on the specific nature of the breach. That will provide greater confidence to local planning authorities that they will have the time to take enforcement action, and indicate to the public that planning breaches are taken seriously and should never be viewed as a preferential approach to proper engagement with the planning system. I commend the clauses to the Committee.
Question put and agreed to.
Clause 101 accordingly ordered to stand part of the Bill.
Clause 102 ordered to stand part of the Bill.
Clause 103
Enforcement warning notices
Matthew Pennycook
I beg to move amendment 116, in clause 103, page 122, line 36, at end insert—
“(4) The Secretary of State must provide sufficient additional financial resources to local planning authorities to enable them to implement the provisions in this section.”
This amendment, along with New Clause 36, would require the Secretary of State to provide sufficient additional resources to local planning authorities to enable them to implement the changes required by Chapter 5 of Part 3.
The Chair
With this it will be convenient to discuss new clause 36—Duty to provide sufficient resources to local planning authorities for new burdens: enforcement of planning controls—
“The Secretary of State must provide commensurate additional financial resources to local planning authorities to enable them to implement the provisions in Chapter 5 of Part 3.”
See explanatory statement for Amendment 116.
Matthew Pennycook
Planning enforcement is vital if the integrity of the planning system is to be upheld. For that reason, we broadly welcome the measures set out in chapter 5 of this part of the Bill. Taken together, the amendment and new clause 36 would simply require the Secretary of State to provide sufficient additional resources to local planning authorities to enable them to implement the changes required by the provisions in this chapter.
As we discussed in relation to many previous amendments, we know that as a result primarily of local authority belt tightening in response to funding cuts by central Government, the resources dedicated to planning within local planning authorities have fallen dramatically over recent years. Planning enforcement has not escaped the impact of that general resource reduction. When it comes to the impact on enforcement activity, the figures speak for themselves: the Department’s own data on enforcement action show a marked decline in the issuing of planning contravention and enforcement notices over the past decade. Given that planning enforcement action, as opposed to the investigation of planning breaches, has long been classified as a discretionary service—rather than a statutory duty—our concern is that without sufficient additional resources many local authorities will simply determine to cut back on planning enforcement teams, rather than make full use of the new and enhanced powers provided for by the clauses in this chapter.
The National Association of Planning Enforcement, based on feedback from its members, has detailed how funding pressures are even leading some local authorities to consider removing their planning enforcement services budgets altogether, or reducing the provision to essential services only, with the suggestion that that means electing only to enforce certain breach types or taking enforcement action only on a select number of cases. In evidence recently submitted to the Select Committee on Levelling Up, Housing and Communities, the Royal Town Planning Institute highlighted that budgetary pressures were now so acute for some local authorities that they are prepared to risk the challenge of potential judicial reviews and formal complaints to the ombudsman, rather than spend resources they simply do not have on staffing planning enforcement teams.
We believe that it is right for clear expectations to be set when it comes to local authorities fulfilling their planning enforcement obligations. However, they deserve to be properly resourced to carry out those obligations and given adequate funds to undertake enforcement action, including in relation to biodiversity net gain. To the extent that the provisions in this chapter, including extending the period for taking enforcement action to 10 years in all cases and introducing new enforcement warning notices, clearly constitute additional work pressures on planning enforcement teams, it is only appropriate that local planning authorities receive sufficient additional resources to carry them out.
I hope that rather than merely once again paying lip service—as happened on so many occasions before the summer recess—to the need to ensure that planning authorities are resourced to deliver the reforms in this Bill, the Minister will feel able to demonstrate a commitment on the record to resourcing local planning authorities properly by either accepting our proposals or detailing precisely what additional funding authorities can expect in order to carry out the new functions.
Tim Farron
This is an important amendment. Throughout the passage of the Bill and in the discussions we have had and will continue to have in Committee, I and others have tabled amendments for greater planning powers, so that communities have a greater level of control over what happens within them. Such controls might ensure that homes developed are genuinely affordable for local families or meet the needs of older families, or that we limit the number of second homes and holiday lets.
The problem, however, is that the planning powers that exist are not being enforced around the country. In my community, the district council is a planning authority, and there are two national parks, the Yorkshire Dales and the Lake District. The one thing that they have in common is a desire to do the right thing and an incapacity to do so. In that situation, for a householder or a small business wanting to do something fairly minor, the lack of resource in the planning department means that they are not getting the soft, semi-formal advice at the beginning of a process that stops them potentially falling into a trap later. It becomes a case of jeopardy—they make a proposal that costs a fortune but ends up not being passed—whereas when planning officers have the time, they go out on site with people and give them guidance on what may or may not win approval. That is a perfectly good thing.
On the other hand, we have large developers who take the mickey and end up being allowed to get away scot-free. I am thinking about Church Bank Gardens in Burton in Kendal. Planning permission was given, and then various situations followed included bankruptcy and receivers taking control of the assets, but the people on the estate and in neighbouring estates still endure the roads not yet being made up or utilities provided. All those things are happening because—in one sense, at least—we have a planning authority that is incapable, given its resources, of enforcing its own planning conditions.
Mr Jones
Clause 103 provides local planning authorities in England with a new power to issue enforcement warning notices. The notice invites a retrospective planning application for a development that does not have permission, but that may be acceptable in planning terms, or may be made acceptable by the imposition of planning conditions. It does this by stating the matters that appear to be a breach of planning control and stating that further enforcement may be taken if a planning application is not received within a specified period. This formalises a process that the majority of local planning authorities already carry out informally. Formalising the process brings certainty, such as by setting out the specified period for an application to be submitted, and it constitutes taking enforcement action, ensuring that the time limits for commencing enforcement action cannot inadvertently expire.
However, the use of enforcement warning notices by local planning authorities will be discretionary. It will not create significant additional resourcing burdens for local planning authorities. We recognise many local authorities have capacity and capability challenges. We will publish guidance to assist local planning authorities in using enforcement warning notices. Although we are not changing fees through the Bill, we intend to consult on proposals to increase planning fees to ensure that local planning authorities are properly resourced to improve their services.
Rachael Maskell (York Central) (Lab/Co-op)
The Minister is talking about local planning authorities being properly resourced. In York, we no longer have a chief planner. There are serious deficits in funding in our local authority. As hon. Friends have said, planning is often the first thing to be cut. How will the Minister ensure that they are properly resourced to take on these additional responsibilities?
Mr Jones
I thank the hon. Member for York Central for that important point. I have acknowledged that there are capacity and capability challenges. I have also acknowledged that the Government want to go further by allowing local authorities to bring in more income. We have discussed and put the principle out there of doubling fees for retrospective planning applications, which often put often unnecessary additional pressure on local authorities, if people would have put forward their planning applications in the first instance in the proper and usual way.
On new clause 36, effective enforcement action is important to maintain public confidence and trust in the planning system. The package of enforcement measures in the Bill will strengthen the enforcement powers available to local planning authorities. Generally, the provisions make the existing framework easy to use by enforcement officers and, as such, they will not create significant additional burdens or resource pressures for local planning authorities. The use of new tools, such as enforcement warning notices, is discretionary. We are also working with partners to deliver a capacity and capability strategy to support the implementation of our planning reforms so that local planning authorities have the right skills and capabilities to make creative decisions and drive forward ambitious proposals, and we are committed to new burdens principles.
For those reasons, we cannot accept amendment 116 and new clause 36. I hope the hon. Member for Greenwich and Woolwich is sufficiently reassured to withdraw the amendment.
Matthew Pennycook
I regret to inform the Minister that I am not sufficiently reassured. I note what he said about fees and about the strategy the Department intends to bring forward. Yet, what I hear time and again in responses to amendments that seek to press the Government on local authority resourcing is a seeming unawareness of how acute the problem is. The Minister referred to it in very diplomatic terms as capacity and capability challenges, but it goes way beyond that. Local planning authorities are under acute pressure, which has a direct impact on planning services in those local authorities and, because it is a discretionary service, on the enforcement part of those planning services.
I am concerned to hear the Minister say that he does not think the provisions in this chapter constitute additional work pressures. It seems to me that they do. When looked at in the round, the measures introduced in the Bill certainly constitute additional work pressures on departments. I am not going to press these proposals to a Division, but we will come back time and again to the issue of local authority resourcing, because planning is under acute pressure in terms of capability and skills, and the Government have to provide stronger commitments as to what they will do to address that. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Question proposed, That the clause stand part of the Bill.
Mr Jones
I beg to move amendment 73, Clause 104, page 123, line 19, after “authority” insert “or the Secretary of State”
This amendment extends new section 174(2AA)(b) to cases where the Secretary of State declined to determine an application for planning permission.
Clause 104 closes a loophole that currently allows those who have breached planning control two opportunities to obtain planning permission retrospectively, once by appealing an enforcement notice and once by appealing the refusal or non-determination of a retrospective planning application.
The amendment corrects a drafting error. The new provisions in clause 104 apply to cases where either the local planning authority or the Secretary of State is the decision maker. Subsection (2AA)(b) erroneously refers only to the local planning authority. The amendment corrects that error, bringing applications that are declined to be determined by the Secretary of State within scope of the subsection.
Amendment 73 agreed to.
Question proposed, That the clause, as amended, stand part of the Bill.
Mr Jones
The retrospective planning application process is a necessary part of the planning system. It allows those who have made a genuine mistake to remedy the situation. However, we are aware that it is also used by people who have intentionally undertaken development without permission, who then attempt to delay enforcement action.
Prior to the Localism Act 2011, an appeal could be made both against the refusal of a retrospective application and against enforcement action, on the ground that permission ought to be granted. Through the 2011 reforms, we reduced the circumstances in which an appeal could be made, preventing an appeal on the grounds that permission ought to be granted if an enforcement notice was issued before the end of the statutory determination period. However, the reforms inadvertently created a loophole, which has allowed appellants to continue to appeal twice in certain circumstances, against the refusal or non-determination of a retrospective planning application and against an enforcement notice, on the ground that permission ought to be granted. Both appeals, in effect, assess the planning merits of the case.
The loophole exists because, in some circumstances, a local planning authority might not issue an enforcement notice before the end of the determination period for a related retrospective application. That could be because the local planning authority might have invited the retrospective application in the first place, and does not want to be seen to prejudge the outcome, for example. In such cases, if the development were subsequently found to be unacceptable and retrospective planning permission was refused, an enforcement notice would be issued after the end of the determination period.
There would remain two opportunities to obtain permission retrospectively: first, by appealing the refusal of the retrospective application, and secondly, by appealing the enforcement notice on the ground that permission ought to be granted. A similar situation would occur if the determination of the retrospective application were delayed and the appellant appealed the retrospective application on the ground of non-determination.
Therefore, the clause will extend the period during which an enforcement notice can be issued and during which an appeal on the ground that permission ought to be granted can still be prevented to two years. The applicant will not then be able to appeal an enforcement notice on the ground that permission ought to be granted during that extended period. Instead, they will have only one route to obtain planning permission retrospectively—through a successful appeal of the refusal or the non-determination of the retrospective planning application. Appealing an enforcement notice on other grounds will still be permitted.
The clause will reinforce the message that people should seek planning permission before they start a development. Where they do not do so, they should have only one opportunity to obtain planning permission after the unauthorised development has taken place so that the matter can be rectified as soon as possible. That will speed up enforcement action and prevent resources from being wasted assessing the planning merits of the same case twice. I therefore commend the clause to the Committee.
Matthew Pennycook
I would like to make some further remarks on clauses 105 and 106. Clause 105 will give the Secretary of State a new power that allows them to dismiss an appeal in relation to an enforcement notice or an application for a lawful development certificate in England should it appear to them that the appellant is causing undue delays to the appeals process. This is another point of clarification, but I simply wish to get a sense from the Minister of what causing undue delays as per proposed new section 176(6) of the Town and Country Planning Act 1990 will be taken to mean in practice.
Clause 106 will amend sections 187A and 216 of the 1990 Act in relation to England to increase the maximum fine for failing to comply with either a breach of condition notice or a section 215 notice. We do not oppose those changes, but I would like reassurance from the Minister that the Government have properly considered the possibility that increasing the maximum fine in such a way might have the unintended consequence of discouraging from seeking retrospective permission those who have, for whatever reason, made genuine mistakes on their planning applications.
Mr Marcus Jones
I thank the hon. Gentleman for his questions. On clause 105, let me give him an example of an undue delay. Such a delay could constitute not allowing a planning inspector to access land for a site visit. That is one circumstance in which the process would be frustrated.
On clause 106, I gently say to the hon. Gentleman that, while I understand his concerns, many members of the public, particularly those who have been affected by unauthorised developments, would be keen for us to be tougher on such developments. Therefore, I think this is more about ensuring that we put in place a regime that deters people from embarking on unauthorised development. I therefore believe that increasing the fines that will be payable is the right thing to do.
Question put and agreed to.
Clause 104, as amended, accordingly ordered to stand part of the Bill.
Clauses 105 and 106 ordered to stand part of the Bill.
Clause 107
Power to provide relief from enforcement of planning conditions
Rachael Maskell
I beg to move amendment 137, in clause 107, page 125, line 35, at end insert—
“(1A) But regulations under this section may not provide for relief from a planning condition relating to the development of a type or volume of affordable housing in a development.”
This amendment would exclude planning conditions relating to the delivery of agreed on-site affordable housing in developments from the power to provide relief from the enforcement of planning conditions.
Where affordable and social housing is identified in plans, the obligation to provide that tenure in the planning process must never be overridden. We have a national crisis with regard to the availability of affordable homes for our constituents. I certainly see that in York, where it is skewing the economy and having a severe impact on the way my community works. We have been overrun by so many second homes and holiday lets that it is even impinging on our ability to deliver statutory services in my community.
Far too often, developers start to build out their plans, starting with the high-value housing, only then to return with the plea that the site is no longer viable to provide social or affordable housing. That housing is therefore not built, and the funding is banked but never spent, because the argument is played out time and again on future sites. High-end, high-value housing is therefore taking precedence over the development of affordable housing. We simply cannot allow that to happen at any point in the development process. My brief amendment would recognise that in statute to ensure that there can never be an excuse for not delivering vital affordable housing on the basis of viability.
Tim Farron
This is an important amendment, which by my reading would ensure that communities do not get stitched up as a result of viability assessments. I can think of examples in all three planning jurisdictions in my constituency where a developer has been given planning permission and part of the deal has been the delivery of a portion of affordable housing—often social rented housing. I am thinking in particular of the site at Jack Hill in Allithwaite, near Grange-over-Sands. To put it bluntly, the developer goes on site, turns over the turf, discovers some rocks and says, “Ooh, that’s more than we expected. It’s going to be expensive. We can’t afford to deliver your 20 affordable houses after all.”
The only reason the community, perhaps grudgingly, consented through its representatives to planning permission being given in the first place was the assumption that, of those 50 or 60 houses, perhaps 20 would provide homes for local families and local workers. I remember South Lakeland District Council going to the Secretary of State’s predecessor but two to raise this matter with them, saying, “Come on, this cannot be legitimate. It can’t be right.” The developer agrees, at planning committee, to build these affordable houses and then turns up, discovers something that is not a surprise if someone knows even the rudimentaries of the geology of the lakes and south Cumbria, and decides they are not able to build those houses. I am afraid that the Secretary of State said to our council, “No, we will not stand with you. The developer can do what they want.” As a result, we have got no affordable housing out of that particular project, and many others besides.
We have a massive housing crisis in Cumbria, and a workforce crisis as a consequence. It is heartbreaking and economically debilitating. We have the powers, if they can be enforced, to do something about it. The amendment put before us by the hon. Member for York Central would give us at least some opportunity to force those who have been given planning permission to keep their promises, so that affordable homes are at least in part delivered to the communities that need them.
Mr Jones
I thank the hon. Member for York Central for her amendment. It seeks to ensure that relief from enforcement action under clause 107 cannot be granted with respect to planning conditions relating to affordable housing delivery. The aim of clause 107 is to enable the Secretary of State, by regulations, to limit enforcement action against non-compliance with prescribed planning conditions or limitations for a specified period of relief. Members of the Committee will recall that the covid pandemic demonstrated that the planning system needs to be sufficiently flexible to support businesses to respond to and recover from periods of disruption quickly and confidently.
During recent years we have taken steps, through written ministerial statements, to encourage local planning authorities to take a considered approach to enforcement action against non-compliance with certain planning conditions that have placed unintentional burdens on businesses. That includes conditions that govern the operative uses of development, such as construction working hours, delivery times and opening hours. Clause 107 will place on a statutory footing similar provisions to those that we introduced through policy, and it is intended that the measure will be used in relation to those types of operative use conditions as periods of disruption arise in the future.
The hon. Member’s amendment concerns those conditions that relate to affordable housing specifically. Affordable housing provision is principally secured through a section 106 agreement rather than planning conditions, so the practical benefit of the proposed exemption would be limited and this is not the sort of operative condition that the clause is aimed at. Furthermore, we are proposing to change the way affordable housing for a development is determined, as part of our plans for the new infrastructure levy, which the Committee will debate shortly. Through regulations for the levy, we intend to introduce a new “right to require”, to remove the role of negotiating in determining levels of onsite affordable housing, and we propose to consult on the approach shortly. Therefore, I consider the amendment not to be necessary and I ask the hon. Member for York Central to withdraw it.
Rachael Maskell
I thank the Minister for his response. I will certainly be following the debate on schedule 11 very closely, to ensure that it does fulfil all the commitments that the Minister has alluded to in his speech, but I will withdraw the amendment at this point. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Question proposed, That the clause stand part of the Bill.
Mr Jones
On the basis that I have explained how clause 107 works during our discussion of amendment 137, I do not propose to make any further comments on it. I commend the clause to the Committee.
Question put and agreed to.
Clause 107 accordingly ordered to stand part of the Bill.
Clause 108
Consultation before applying for planning permission
Question proposed, That the clause stand part of the Bill.
Mr Jones
The Government are committed to increasing opportunities for meaningful and early community involvement in planning decisions. Throughout the Bill, we are introducing measures that do just that. Communities should be given a say on developments that affect them, and should have those views taken into account when decisions are made. We are also keen to ensure that issues are dealt with early on, so that decisions are not unduly delayed. That is why we are introducing this minor but important change.
Clause 108 will make permanent the powers in sections 61W to 61Y of the Town and Country Planning Act 1990 that enable the Secretary of State to mandate the types of applications for which applicants will be required to carry out consultations with those in the vicinity of the development, and with any other specified people—for example, statutory bodies—before submitting a planning application to the local planning authority. The powers also require applicants to have regard to any responses received in the pre-application consultation, including views expressed by local communities.
The powers have been used only to require pre-application consultation on onshore wind turbines where two or more turbines are being installed, or where the hub height is over 15 metres. We want to explore additional opportunities to use the powers where pre-application engagement will be most beneficial, and we will engage on that before bringing forward the necessary changes through secondary legislation. Making the powers permanent will allow the Government to further strengthen community engagement with the system. I commend the clause to the Committee.
Question put and agreed to.
Clause 108 accordingly ordered to stand part of the Bill.
Clauses 109 to 112 ordered to stand part of the Bill.
Clause 113
Infrastructure Levy: England
Matthew Pennycook
I beg to move amendment 142, in clause 113, page 131, line 38, leave out “a charge” and insert “an optional charge”.
This amendment would ensure that application of the Infrastructure Levy would be optional rather than mandatory.
The Chair
With this it will be convenient to discuss the following:
Clause stand part.
Amendment 143, in schedule 11, page 283, leave out lines 27 and 28 and insert—
“(1) A charging authority in England may, if it determines that IL would be more effective than the community infrastructure levy for delivering infrastructure in its area and would not prevent it meeting the level of affordable housing need identified in its local development plan, in accordance with IL regulations, charge IL in respect of development in its area.”
This amendment to inserted section 204B, which is connected to Amendment 142, would ensure that application of the Infrastructure Levy would be optional rather than mandatory
Amendment 145, in schedule 11, page 289, line 18, leave out “or require”.
This amendment and Amendment 146, would give charging authorities discretion over the basis on which infrastructure levy rates are calculated.
Amendment 146, in schedule 11, page 289, line 30, leave out “or require”.
See explanatory statement for Amendment 145.
Amendment 147, in schedule 11, page 308, leave out from line 40 to line 13 on page 309 and insert—
“may be given under subsection (4) for authorities that have adopted an IL charging schedule, only if it is necessary for–
(a) delivering the overall purpose of IL mentioned in section 204A(2), or
(b) avoiding charging a specific development more than once for the same infrastructure project through both IL and the following powers—
(i) Part 11 (Community Infrastructure Levy) (including any power conferred by CIL regulations under that Part),
(ii) Section 106 of TCPA 1990 (planning obligations), and
(iii) Section 278 of the Highways Act 1980 (execution of works)
unless this is essential to rendering the development acceptable in planning terms.”
This amendment would avoid restrictions being placed on the use of the community infrastructure levy, section 106 obligations, and section 278 agreements at the Secretary of State’s discretion unless necessary to avoid double charging for the same infrastructure provision.
Clause 115 stand part.
Matthew Pennycook
Part 4 of the Bill concerns the infrastructure levy, which is the Government’s proposed replacement for the present arrangement by which local planning authorities secure developer contributions, comprised of the community infrastructure levy—or CIL—and section 106 planning obligations, albeit with a significant role, as required, for section 278 agreements providing for permanent alterations or improvements to a public highway.
In our view, this new levy is one of the most consequential aspects of the Bill, with potentially far-reaching implications for not only the provision of core infrastructure but the supply of affordable housing. For that reason, I intend to spend a fair amount of time considering it.
Clause 113 introduces schedule 11, which would amend the Planning Act 2008 to provide for the imposition, in England, of the new levy. It is worth noting at the outset that the levy proposed in the Bill is a quite different proposition from the one suggested by the Government in their 2020 “Planning for the Future” White Paper. The latter was premised on a nationally set rate or area-specific rates, and its introduction was to be accompanied by the replacement of the current system of section 106 planning obligations. The amended approach proposed in the Bill, which allows charging authorities to set their own infrastructure levy rate or rates and retains an important role for section 106 on—albeit presently undefined—large sites, is without doubt an improvement on the excessively rigid system put forward in the White Paper.
However, the Opposition still have serious concerns about the possible implications of the revised infrastructure levy outlined by the Government. I deliberately use the word “possible”, because schedule 11 merely provides the basic framework for the levy; as with so much of this legislation, almost all the detailed design is to follow in regulations after some form of consultation.
In general terms, we have two main concerns about the new levy. First, when we consider how it might work as proposed, it is impossible to escape the conclusion that it will result in a system of developer contributions that is at least as complex as the present one; it is likely to be even more complex. In short, we worry that it may prove onerously complicated to operate in practice.
Secondly, there is good reason to suspect that the levy as proposed will fail to secure as much, let alone more, public gain from developers. In short, we worry that it will lead to less infrastructure and less affordable housing in the future, while putting the development of less viable sites at risk entirely.
Rachael Maskell
My hon. Friend is making an excellent speech about our concerns about the infrastructure levy, but one thing he has not touched on yet is the resourcing required to put it in place. We have just had a debate about the resourcing of local authorities, in which it was recognised that planning departments are under considerable strain. That is likely to get worse in the light of the challenges that local authorities face. How will the resourcing be put in place to deliver even the basics by 2030?
Matthew Pennycook
That is a very apt point, and I will address it when I talk about how the levy might work in practice. One of the criticisms of the system that Ministers often cite are the problems relating to viability inherent in it. We know that local planning authorities struggle with that element of the system. This new levy introduces a need to value and incorporate viability into every planning decision covered by the new levy, rather than just those where viability is a consideration, so I think the resourcing pressures will be exacerbated by its introduction.
However, we accept that the Government have no intention of removing part 4 from the Bill, so our focus is firmly on trying to amend it and schedule 11 to mitigate any harmful effects of the levy. This first group of amendments on part 4 seeks to achieve that mitigation simply by reversing the presumption in the Bill that the use of the infrastructure levy will be mandatory for all charging authorities, and by fixing core elements of its design. In short, they all aim to provide for a greater degree of discretion.
Amendment 142 would amend clause 113 to make it clear that IL would be an optional charge. Amendment 143 would have the same effect in relation to schedule 11, while making it clear that the decision to adopt the levy would be premised on a judgment that it would be more effective than CIL for delivering infrastructure and would not prevent affordable housing need from being met. Making IL optional would necessitate allowing charging authorities that choose not to adopt it to continue to make use of the current system, so amendment 147 seeks to ensure that the Bill places no restrictions on the use of the community infrastructure levy, section 106 obligations and section 278 agreements, unless doing so is necessary to avoid double charging for the same infrastructure provision. To give charging authorities that freedom, it is necessary to leave out clause 115 entirely, given that it restricts the use of CIL to Greater London and Wales.
Finally, amendments 145 and 146 are designed to provide an additional safeguard by enabling charging authorities to determine the best way to calculate the amount of IL payable, rather than forcing them to base such a calculation on gross development value—a metric that, as I will come on to explain, we believe is likely to generate a host of serious problems if made the default means of calculating levy charges. We feel strongly that these amendments, by giving charging authorities discretion in these important respects, would help to avoid the obvious risks of imposing the levy universally, given the significant variation in development and land values not only across the country but in individual local authority areas, and would better allow charging authorities to tailor developer contribution arrangements to their local circumstances, so that they can get the best for their area.
I have already alluded to our belief that there are a series of inherent flaws in the levy as proposed. Chief among those are the fact that its proceeds will be expected to cover not only core infrastructure, but all affordable housing, and the fact that charges will be based on a percentage of final gross development value, or GDV. To convey to the Committee precisely why we believe that these features are so problematic, and why we feel so strongly that charging authorities should have discretion on whether to adopt the new levy, as well as on the metric on which it is calculated, let me give a worked example that shows the differences between the existing and proposed systems, based on my understanding of how the new levy is likely to operate.
Let us imagine, for the purposes of this worked example, that under the present developer contributions system, a local planning authority receives an application for a 100-home development, with 1,000 square metres of commercial floor space and an on-site community facility—a simple planning application. We will assume that the LPA has a local plan in place, and that it specifies a requirement of 50% affordable homes by unit; that would be 50 of the 100 homes on this hypothetical site. Let us imagine further that, as so often happens, the applicant uses viability assessments to reduce the affordable housing contribution levels to 40%. If that is approved, under the existing system, the local planning authority will know that in this scenario, despite the reduction on viability grounds, it will secure 40 affordable homes to buy or rent on this site, and with a local CIL rate of, say, £100 per square metre, it has certainty at the point of planning determination that the applicant is required to make a contribution of approximately £520,000 for infrastructure, taking into account social housing relief.
Now let us assume, in contrast, that this Bill receives Royal Assent unamended, and that the same local planning authority receives, some years from now, an identical application, having been forced to adopt the new infrastructure levy. It is an extremely challenging exercise to specify even hypothetical infrastructure levy rates, given the overall lack of detail at present and the numerous assumptions that are required to estimate what sort of rates will be needed to achieve the same level of value capture as at present—a subject I will touch on in more detail when we deal with the amendments relating specifically to rate setting. For the purposes of this scenario, let us specify that the authority’s levy charging schedule has set a minimum cost threshold of say, £3,000 per square metre; an IL rate of 50%—because, whatever the specific range, we know that IL rates will have to be far higher than CIL rates to cover the costs of all required infrastructure and affordable housing; and that the authority in question seeks to apply a ‘right to require’ amount—that is, the proportion of the levy proceeds to be allocated to on-site affordable housing— of 90%.
Under the new system, how many affordable homes would the levy implemented by this charging authority provide on our hypothetical site, and what contribution would the applicant make toward the provision of other local infrastructure? To answer those two relatively simple questions, one would need an assessment of the gross development value of the proposed development, GDV being the metric that the Government wants the new levy to be based on. To assess the development’s GDV, valuations would have to be secured. To accurately assess the value of the mix of flats and houses of different sizes, features and locations across the development, one would need to reference the value of comparable new build properties in the area, assuming those exist. To accurately value the commercial floor space in the proposed development, one would need to undertake an assessment of likely rents, using comparable local properties, again assuming that those exist. Those likely rents would then have to be capitalised using a yield based on an analysis of the sale of comparable commercial buildings in the area, again assuming those exist. The resulting figures would then have to be divided by net saleable and lettable floor space to generate a per square metre value for that commercial floor space. Generic or standardised information could of course be used, but that would run the risk of significantly increasing the margin of error, with consequential impacts for the amount of affordable housing and infrastructure provided on our hypothetical site.
Armed with those assessed values, and given that end value is the metric on which this levy is calculated, in order to estimate the amount of IL generated for affordable housing on the site, the local planning authority would deduct the minimum threshold of £3,000 per square metre, multiply the remaining number by the IL rate of 50%, multiply it again by the 90% “right to require” proportion, multiply that figure by the proposed amount of floor space, and divide the remaining figure by the different values of market homes and affordable homes, which in themselves would require additional valuations.
All of that is to say that the exact proportion of affordable homes that the levy will generate will vary from site to site in any given local planning authority area, even if the authority chooses to set a single rate, rather than multiple rates, as is its right. It will depend on myriad different, and far from simplistic, time-consuming assessments of end value. However, calculating the levels of affordable housing generated by the levy is not the end of the process. The local planning authority will then need to calculate the infrastructure contribution for our site, namely the difference between the total levy amount and the proportion allocated to affordable housing, and the value of the community facility as another piece of on-site infrastructure.
Moreover, every one of these valuations—each critical to arriving at an assessment of the GDV of the development as a whole—will presumably not be set in stone, because the value of the market and affordable homes, the commercial floor space and the community facility on our hypothetical development will change over time, as would any other. That means that the local planning authority will almost certainly have to carry out further valuations at different stages in the development process, with the final liability not being known until years after the application was submitted—and that is setting aside the very real possibility that the new system will, along with problems relating to avoidance, generate frequent disputes over valuations, which could delay and complicate the process further.
Imagine for one moment a senior planning officer or an elected councillor in our imagined local planning authority who is confronting that new system and trying to accurately assess at the planning application stage how much affordable housing will be provided on our hypothetical site, and the amount of infrastructure funding that will be extracted from the developer. I put it to the Committee that doing that would be extremely challenging, if not impossible, for them—let alone for a local resident who has taken a passing interest in the proposed scheme.
As my hon. Friend the Member for York Central said, most local planning authorities simply do not have the expertise and the resource to oversee such a complicated process, and that leaves aside other pertinent questions. What if the final infrastructure levy liability, based as it will be under the Government’s proposals on end-value GDV, turns out to be lower than the value of the on-site affordable housing and infrastructure that has been constructed in the interim? In such circumstances, would the local planning authority have to refund the developer on the basis that an overpayment has been made?
What is more, the difficulty that charging authorities will face in estimating the affordable housing and infrastructure payments generated by the new levy, and by implication they difficulty that they will have in setting rates in the first place, are not the new system’s only weaknesses. The significant uncertainty that will result from the decision to base the levy on a proportion of GDV is likely to cause issues in relation to the price of land and development land sales. It will almost certainly hamper the ability of local planning authorities to properly assess the benefits of proposed development, and whether it will contribute sufficiently to meeting local housing need and infrastructure requirements. Also, the new system will not remove the need for some type of site-specific legal agreement to ensure that the contributions extracted from developers are used to deliver the affordable homes on site, and that all the relevant requirements in terms of tenure type, discount rates and eligibility are ultimately met.
Perhaps most contentiously, the decision to make GDV the metric for the new levy is likely to result in applicants making their IL payments at the end, rather than at the beginning, of the development of a site, because the potential for interim payments or payments on account will be complicated by the fact that the final IL liability will not become clear, due to all the problems inherent in valuing GDV, until near the point of completion. That raises the very real prospect of the new levy creating a system in which the infrastructure required to support development will not be in place when it is needed.
One assumes from several passing comments made by previous Ministers that the Government believe that the answer to this obvious problem is to allow local authorities to borrow against future levy receipts to fund the delivery of infrastructure up front. However, the Minister must surely recognise that all that proposition entails is a transfer of risk and cost from the private to the public sector; it does nothing to address the uncertainty at the heart of the new process. Even with the opportunity to borrow against future levy receipts, it would remain the case that net receipts from post-completion valuation would be hard to predict, and rates on borrowing would reflect that uncertainty, resulting in infrastructure being more expensive to deliver. The idea that local authorities will collectively take up this borrowing option at the scale needed to offset the delay in securing levy contributions is, frankly, for the birds.
It may be that the Government believe that infrastructure on any given site will be paid for by levy contributions extracted from already completed developments, but if that is the case, it will give rise to a situation where there is no guarantee that the infrastructure funding delivered by a new development will be spent in the vicinity of the development. Whatever way one looks at it, the outcome is likely to be fewer overall approvals, more unsustainable development where development does occur, and greater local opposition; either development will not be accompanied by the up-front provision of core infrastructure, or there will be no obvious link between an individual development site and infrastructure provision in the area.
In sum, and with the obvious proviso that the detailed design of IL will be delivered through regulations and so we can only judge the new system based on our current understanding of the Government’s thinking, there is very good reason to suspect that the levy will not be a simpler, more transparent, more certain and more effective system of developer contributions than the one that presently exists. As a result, we feel strongly that the Government should think again about legislating to make its adoption mandatory.
Tim Farron
The hon. Member for Greenwich and Woolwich has just provided almost infinitely more detail than there is in the Bill. My understanding is that the whole point of a Bill Committee is that we get to grips with the detail, and yet the Government are providing us with very little.
This really matters. I will set out a particular case of my community experiencing the real sharp end of the crisis, but every community in the country is experiencing a crisis of housing quality, availability and genuine affordability. This just tickles it, if we are lucky. We have a lack of detail. The idea itself is vague, and what we do know about the infrastructure levy is that it is likely to be complex, and the more complex it is, the more we favour the developer. In a situation where the nervous planning authority errs on the side of caution and, therefore, lack of ambition when seeking planning gain, the more the developer manages to gain advantage for itself. Given that there is no guarantee that any value from the levy will accrue to the community where the development will take place, the likelihood of communities opposing developments will increase, therefore making them less likely to go through.
On top of all of that, as has already been mentioned, a fundamental flaw of using GDV as the measure for what the levy should be in practice is that we are basically putting all the risk on the community and not the developer. That is obvious. It is probably why developers have been relatively silent over this—because they see that it is potentially in their favour. It is also why housing associations and others, including housing charities, have been very concerned—because they worry that is a slow, downward slope towards reduced delivery of affordable housing.
It may well be that, when the detail is forthcoming—and if not now, why not now?—we may be pleasantly surprised and, incrementally, we might find that the infrastructure levy, in detail, after pilots, does add value. However, the concern that many of us have is that this is untested and replacing a scheme which, while imperfect, does deliver some affordable housing.
The problem with section 106 and the infrastructure levy is that it is an entirely incremental, weak and fairly tepid approach to a massive problem. Our way of developing affordable housing is just to get the odd scattering of homes per development, if we are lucky and can find a system that will make a planning gain and gain something of the land value uplift that a developer has from the project. The reality, however, is that communities such as mine—I will speak specifically to the issues in Cumbria—have high house prices, an evaporated, almost non-existent long-term private rented market, and vast numbers of second homes, meaning properties not lived in all year around.
Cumbria is a nice part of the world—absolutely beautiful. Eden and the south lakes is a very beautiful place. If someone builds a five-bedroom house there, it will fly off the shelf within hours. There is no problem with building homes for demand. The Minister and the Government must understand—and I hope the new Prime Minister understands—that what is desperately required when it comes to housing policy is that, for a period at least, we stop building for demand and start building for need. The reality is that, as things stand, the infrastructure levy and section 106 only skim the top of the problem. That demonstrates a complete lack of ambition behind the concept of levelling up. We are not levelling up; we are getting some crumbs from the table. It is just a different way of getting some crumbs from the table, not actually producing any real bread.
Mr Jones
Clause 113 introduces the new infrastructure levy. It is well known that new development creates demand for public services and infrastructure. Local authorities should secure contributions from developers to share in the land value uplift that comes from granting planning permission and use that value to deliver infrastructure and affordable housing for communities.
One of the main criticisms of new developments in local communities, however, is that they are not accompanied by the infrastructure that communities often need. The current system of developer contributions is uncertain and fragmented. Local planning authorities can negotiate section 106 agreements to secure affordable housing and contributions to infrastructure, and can choose to charge the community infrastructure levy to collect money from developers for infrastructure that is not affordable housing.
The protracted negotiation of a section 106 agreement delays the granting of planning permissions. Agreements can be renegotiated as the development progresses—a point that has been raised by several Opposition Members. Both negotiation and renegotiation generate uncertainty for local communities over how much affordable housing will be available and what infrastructure will be delivered by a development. On the other hand, the community infrastructure levy is a non-negotiable charge, and it is optional as to whether local planning authorities charge it. Only half of local planning authorities currently charge the CIL. Of those that do not, more than a third believe that introducing it will increase their ability to capture land value. Common reasons for not implementing CIL include concerns that the extra charge will reduce the amount of affordable housing delivered because, unlike the levy, CIL cannot be used for affordable housing.
Also, CIL and section 106 do not capture all of the increases in value that occur as a result of increases in house prices. Average house prices in England have increased by nearly 22% over the past two years. CIL rates do not increase to capture more of that uplift, as they are based on the value when planning permission was granted. Although some section 106 agreements may capture an element of the uplift, many will not. As a result, local authorities are not capturing as much value for key services as they could.
Clause 113 provides for the introduction of a single charge that will largely replace the existing system of developer contributions. The infrastructure levy is an opportunity to deliver better outcomes for communities and to address shortcomings in the system that incremental change is unlikely to deliver. The levy will aim to capture land value uplift at a higher level than the current developer contribution regime by charging rates based on the final value of developments. I hear what the hon. Member for Greenwich and Woolwich has said about that, and the concerns he has raised. To clarify that point, the gross development value can be captured because we know what the sale price of that property is when it is sold, just as we do when stamp duty land tax is charged.
Matthew Pennycook
How to respond to that? That was a valiant attempt to make the best case possible for what is ultimately a flawed proposition.
The Minister has outlined that the existing system has flaws. I agree with him, as I said earlier, although I do not think they are the flaws that he set out. Some of the issues around viability—I spoke to the reasons earlier—have been addressed, and the Government can take other steps, not least under clause 110, to strengthen the existing system. However, we are considering the framework for a system that, as far as I can tell from looking back at CIL and previous attempts, has never been tried. We are talking about a single, fixed-rate levy mechanism for securing all affordable housing and infrastructure. That has never been tried, and certainly not on the basis of a metric as problematic as GDV.
The Minister says that we know the sale value at the endpoint of a development, but we do not necessarily—it depends on what the development is, and with phased development it becomes even more complicated—and knowing that does not address the inherent uncertainty that GDV creates at the point of the planning application being determined. With the current system, there is no sense of how much affordable housing or infrastructure we are going to get, and we certainly have no guarantees that we are going to get that infrastructure up front, which is a live point of concern across the Committee and across the House.
It is okay to say that perhaps local authorities will have greater certainty, by means of the borrowing power that the Bill will provide for, but what will they do—store up infrastructure levy reserves for a couple of years before they start to bring forward infrastructure developments on sites? Even if they can do that, this system will break the link between individual sites and IL contributions, so in all our constituencies we will get greater local opposition to plans because, even more so than with the current system, our residents will not be able to understand the link between a planning application being brought forward and what public gain they and their community will get out of it.
I do not think that the Minister, as much as he attempted to, has responded to the serious concerns that I have set out about GDV and the new system to the extent that we can be reassured that, in passing this framework this morning, we will be introducing a system that will have better outcomes and that addresses the real complexities in the current system.