Planning and Infrastructure Bill

Baroness Scott of Bybrook Excerpts

Report stage
Wednesday 22nd October 2025 Lords Chamber

[Earl Russell (LD)]

My Lords, I rise briefly to respond to the amendment in the name of the noble Baroness, Lady Coffey. It was moved in Committee by the noble Lord, Lord Gascoigne. It aims to remove the size and complexity tests currently required for awarding a water infrastructure project licence. While this is a technical amendment, it would have significant implications.

Under existing regulations, a water infrastructure project licence is awarded only if the project is considered large or complex enough to potentially threaten the incumbent water undertaker’s ability to deliver services. The test involves assessing factors like projected costs, risk profile, delivery complexity and the water company’s competencies, among others, to determine whether specifying the project to an extended provider would result in better value for money and service stability. The amendment’s goal is clear: it is to remove this test.

I have listened to what the noble Baroness said. It is argued that the amendment would allow smaller or less complex projects potentially to be outsourced or treated as specified infrastructure projects, SIPs, and offer better economic efficiency. While we recognise that this could lead to broader applications of the project licences and potentially facilitate more third-party infrastructure projects in the water sector—we share this ambition to accelerate infrastructure delivery—we are cautious on this amendment, and I follow the line that we took in Committee. The current regulatory framework, which includes a size and complexity threshold, exists as a crucial safeguard. Ofwat’s regulations are intended, and the test ensures it, for ambitious projects, if managed by an incumbent company, not to threaten the water company’s fundamental services obligations to its customers.

Given the widely acknowledged fragility of the water sector more generally and the broken infrastructure that has led to substantial water wastage, we must think carefully before rushing to add to this. Instead of risking unintended consequences through a quick legislative fix, we prefer a more robust path that could be considered by the Government co-funding models, for example, similar to those used in the nuclear sector, if crucial projects exceed what companies can realistically deliver.

It is also essential to take note of the Government’s concerns raised in Committee regarding the amendment. They confirmed that they actively resisted this amendment, certainly in Committee. They have already made a commitment to review the specified infrastructure projects, SIPR, framework. Our understanding is that Defra intends to amend it to help major water companies to proceed more quickly and deliver better value for bill payers. The Government stated their concerns that removing the size complexity threshold now would pre-empt that planned review process. They emphasised the importance of ensuring that any changes are properly informed by engagement with regulators and industry to create a regime that remains targeted and proportionate to the sector’s diversity needs. The Minister assured the Committee that this essential review, which follows the publication of the Cunliffe review on water industry modernisation, will be completed in this calendar year.

For those reasons, while we welcome the spirit of Amendment 58A, we believe that the responsible course of action is to allow the Government to complete their committed to and planned regulatory review, so we are unable to support this amendment.

[Baroness Scott of Bybrook (Con)]

My Lords, I support Amendment 58A, tabled in the name of my noble friend Lady Coffey. As we have heard, under the current framework, only projects deemed sufficiently large or complex can be considered for a separate infrastructure licence. This threshold may have made sense at the time that the regulations were introduced, but it now risks being a barrier to innovation and investment in the sector, which is already under increased strain. By removing this test, the amendment would allow projects to be assessed on their value for money alone—a clearer, more practical standard. It would not lower the bar for scrutiny but rather broaden the scope for alternative delivery models, where they can be demonstrated to give clear public benefit.

Given the ongoing challenges around water security, pollution and climate resilience, we should be enabling a wider range of solutions and not limiting them to outdated regulatory constraints. This is a modest and targeted amendment that would give Ofwat and the relevant authorities greater flexibility to support efficient investment in our water infrastructure. We agree with its intent, we support it, and we hope that the Government will think again.

[Baroness Taylor of Stevenage (Lab)]

My Lords, I welcome this amendment from the noble Baroness, Lady Coffey, which seeks to ensure that the specified infrastructure project regulations are amended to enable a broader use and to ensure that we get value for money for customers.

Two procurement models for delivering infrastructure exist at the moment: SIPR and direct procurement for customers—DPC. I acknowledge that we have to do all we can to make sure that customers get the good value for money that we are all seeking. That is why, in the Government’s response to the independent water review undertaken by Sir Jon Cunliffe, we will address our proposals for changes across both those procurement models, in the White Paper that will be published shortly. For that reason, I hope the noble Baroness will withdraw her amendment.

--- Later in debate ---

[Lord Lansley (Con)]

My Lords, Amendment 61 in this group is in my name. I will talk to that in a moment, but first I want to say one or two things about the helpful amendment from the noble Baroness, Lady Thornhill. I think it points in the right direction, but we need to understand where we would end up if we were to go in that direction.

Some noble Lords will have participated in the debate that we had toward the latter stages of the last Parliament about the new regulations relating to planning fees. One thing that came through quite forcibly from that was that householders—for example, making applications in relation to their own houses—were paying significantly less than the cost of dealing with their application. I completely take the point made by the noble Baroness, Lady Thornhill, that there is, and has been subsequently in the Government’s changes to the planning charges, some balancing of that, and that householders are paying more.

If I understand correctly, it is the noble Baroness’s intention that the fees charged should be proportionate to the number of households or the scale of a development—although that is not actually what her amendment says. The amendment simply says that it should be proportionate; it does not say proportionate to what. Basing it on the size of a development could mean basing it in a positive correlation or a negative correlation. I am afraid that when you write legislation, you have to write specifically what you want. Otherwise, the noble Lord, Lord Banner, and his colleagues will take it apart. We do not want that; we want to be very clear about what we are setting out to achieve.

I am sure it is not the noble Baroness’s intention to press the amendment, but it raises an important issue. When Ministers bring forward regulations to set out how the planning fees should be set and the criteria by which they should be set, it is at that point that I hope they will take full account of what the noble Baroness said and the purposes she was describing.

My amendment is derived from our debate in Committee. I did not have an amendment then, but we had an exchange about Clause 49, which relates to the surcharge that can be charged for the purpose of meeting the costs of statutory consultees and other bodies that support the planning process. When we reach Clause 49, we see that new Section 303ZZB(6) states that the level of the surcharge must be set so as to

“secure that, taking one financial year with another, the income from the surcharge does not exceed the relevant costs of the listed persons”.

I noticed, in listening to the debate, that new Section 303ZZB(8) says that:

“Regulations …may set the surcharge at a level that exceeds the costs of listed persons”.


We therefore have the curious situation where, in the same section, it says that it should not exceed the costs and also that regulations have the specific power to exceed the costs. I have not had a conversation with the Minister, but I have been thinking about this quite carefully. The purpose of tabling this amendment is to ask whether my understanding is correct. If it is, I think it would be very helpful for that to be said explicitly.

New subsection (8), which says that the surcharge could exceed the costs of the listed persons, relates to a specific application, so the charge does not have to be set so as not to exceed the costs of the work done in relation to any individual application. New subsection (6) tells us that, in effect, it is not just taking one year with another or looking at the costs, but looking at costs across all of these activities and applications, and that, overall, the listed persons should not receive more by way of income from the surcharge than meets their costs. I hope that the explanation of the Bill is precisely that: subsection (8) should only be referenced in relation to an individual application and could not be used to set surcharges so as to provide greater income to statutory consultees or others than the costs they incur dealing with planning applications.

[Baroness Scott of Bybrook (Con)]

My Lords, Amendment 59 tabled by the noble Baroness, Lady Thornhill, would require that any fee or charge set out in regulations be proportionate to the nature and size of the development to which it applies. Proportionate fees are of course vital to ensure fairness between applicants and avoid placing undue burdens on smaller developments. However, we cannot support this amendment as further prescription in the legislation risks reducing flexibility for local authorities and the Secretary of State to respond to changing circumstances. We agree with the principle of proportionality, but we do not think this is the right way. I hope that the Minister will look at our Amendment 103 later today.

Amendment 60 tabled by my noble friend Lady McIntosh would allow the cost of enforcement measures, such as checking whether specified flood mitigation or resilience measures have been properly installed, to be included in the fees. While I entirely agree with the intention to ensure that local planning authorities can recover their costs, we cannot support this amendment. We are concerned that this might blur the line between the cost of enforcement and the wider issues of fees, which are separate statutory functions, although this is an issue we should continue to look at into the future.

Finally, Amendment 61 tabled by my noble friend Lord Lansley seeks to reduce what may be included in fees for planning provisions made under subsections (5A) and (5B). I recognise my noble friend’s concerns about the overreach in fee structures and I hope the Government can take the time today to set out the reasons and intentions behind these subsections.