Levelling-up and Regeneration Bill

Lord Lansley Excerpts

Committee stage
Thursday 18th May 2023 Lords Chamber

[Lord Carrington (CB)]

Citizens Advice and others have pointed to provision of rural housing being a growing problem and a significant barrier to the rural economy, as the average house price can be up to 10% of average earnings, compared with 7.4% in urban areas, excluding London.

Navigating the planning system has always been a problem in rural areas, and larger building providers have been the most successful. CPRE, the countryside charity, has pointed out that successful housing applications tended to be in a very narrow segment of the market—the upper to middle end, which does not favour renters, first-time buyers and affordable housing.

The Government are prioritising the development of brownfield sites, which is certainly laudable, but 87% of these are in urban areas and often in the south-east. However, the economic impact of small developments and, in particular, affordable housing in rural communities can make a huge difference in supporting businesses and communities in terms of employment and other activities. It would also assist with the growing problem of rural homelessness, as identified by Shelter and other charities.

These amendments make strategic housing and market assessments of affordable housing compulsory, and influencing the rate of the infrastructure levy would be of great benefit to the sensible provision of affordable housing in rural areas.

[Lord Lansley (Con)]

I want briefly to refer to the clause stand part notice tabled by my noble friend Lord Young of Cookham and I for a probing purpose. Clause 126 has the effect of retaining the community infrastructure levy in London and Wales, but I will not talk about Wales. We are leaving Wales out of it for these purposes. The clause retains the community infrastructure levy in London, alongside the introduction of the infrastructure levy. I understand that that is essentially because the mayoral CIL has been used for the provision of Crossrail and is expected to do so for years to come.

However, it has raised in our minds a question to ask my noble friend the Minister about whether the community infrastructure levy, which of course does not provide for affordable housing, can live alongside the infrastructure levy for a number of years. The technical consultation, which is to be concluded on 9 June, does not explain how the respective contributions are to be assessed in a combined fashion because they apply to different parameters of the development. That leads to the assumption that with a 10-year transition we are looking at many places across the country with a combination of community infrastructure levy obligations that have arisen in relation to developments over a number of years and past developments, alongside the introduction of the infrastructure levy. The technical consultation, to my reading, does not help us understand how these two things are going to be meshed together. Of course, many noble Lords tabled their amendments in this group before the technical consultation was published. It answers some of the questions, but not all of them, and I think this is one question that it does not quite answer.

Another question occurred to me while reading the technical consultation in relation to affordable housing. It does not yet provide certainty about whether contributions under the infrastructure levy may be regarded as an improvement on the situation where developers are able to negotiate or renegotiate their liabilities under Section 106. Developers are not engaging in negotiations simply because they can and therefore they do and local authorities do not give way simply because they ask for it. Circumstances change.

I am always burned by the fact of the October 2008 crash. In the space, literally, of weeks, the economic viability of many large-scale development projects changed dramatically. If you look at any system, including this system, and it cannot meet the test of what you would do under those circumstances, I am afraid it does not help. Renegotiation of the contributions is one solution. It might be said that if the market price and the gross development value of a large site crash in the way they did in October 2008, the infrastructure levy crashes as well. The problem then is: how is the affordable housing going to be funded? How is the other infrastructure to be funded?

I do not have answers to all these things, but my noble friend and I will perhaps have an opportunity in the next group to talk a bit more substantively about the infrastructure levy and what we might do about it, but that does not answer the question. If affordable housing presently often suffers by being a residual after other Section 106 obligations have been met, and if under the infrastructure levy it becomes, in effect, a right to require and it is elevated above other requirements, there will be a great deal of difficulty in local communities about the fact that there are many other obligations that the infrastructure levy has to meet that may not be able to be met if the gross development value comes down or if, for example, the affordable housing right to require and the tenures that have to be provided lead to a much higher cumulative discount needing to be paid. We have to have some flexibility built into the system, and the risk at the moment is that that is not presently available in the way that we have understood it in the past. We can strengthen local authorities, and in the next group I hope we can talk about how that might be possible.

[The Parliamentary Under-Secretary of State, Department for Levelling Up, Housing & Communities (Baroness Scott of Bybrook) (Con)]

My Lords, Amendments 313 and 317 propose to make the levy voluntary for local authorities or to introduce it through a pilot system. I acknowledge that the reforms we are proposing will need to be implemented in a sensible manner. There are problems with the existing system, but it is important that we do not introduce new issues. We want to ensure that the new levy delivers at least as much affordable housing as the existing system, and that is why we are currently consulting on the levy and intend to consult again on the draft regulations. We want input from across the private and public sectors, and we will consider the feedback carefully as we proceed. As I mentioned previously, the new levy will be introduced through a process of test and learn and a phased-out programme. I hope that this will provide the noble Baroness, Lady Taylor, the reassurance that further piloting powers are not needed.

In terms of introducing the levy as a voluntary system, we are seeking to create more certainty across the whole system of developer contributions. We recognise that the levy must be introduced carefully to ensure that it will deliver the intended results. That is the purpose of the test and learn. However, if we do not aim for a unified system, we will dilute the potential benefits. I hope this provides the noble Baroness, Lady Hayman, with sufficient reassurances to withdraw Amendment 313.

Amendments 364 and 364A are concerned with how the Government will assess the delivery of affordable homes under the new infrastructure levy. Given the length of time of the proposed rollout, requiring an assessment of the levy 120 days after the Bill is passed, as proposed in Amendment 364, provides an insufficient amount of time meaningfully to assess the impacts of the levy, but I reassure the Committee that during the rollout the Government will work closely with stakeholders to monitor the impacts of the levy. That includes monitoring our commitment to deliver at least as much, if not more, affordable housing.

In addition, the department has commissioned a scoping study to develop an approach to the evaluation of the planning elements of the Levelling-Up and Regeneration Bill, which we expect to report following Royal Assent, and the full evaluation informed by the findings of the scoping study will then be commissioned. I hope this gives reassurance to the noble Baroness, Lady Taylor, and that she will feel able not to move her amendment.

On Amendment 364A, first homes were a 2019 manifesto commitment and are already successfully established in the market through a grant-funded early delivery programme. Outside that programme, the first homes discount is funded by developers as part of their contribution through planning obligations. The Government currently publish information about the delivery of first homes through both the early delivery programme and planning obligations in our annual affordable housing supply statistical release, and I reassure the noble Baroness, Lady Hayman, that we will continue to do so. We will work closely with local authorities throughout the phased test-and-learn implementation programme to monitor the Government’s key objective to maintain affordable housing supply. This will include but will not be limited to first homes. I hope I have provided the noble Baroness with sufficient reassurance not to press that amendment.

--- Later in debate ---

Debate on whether Clause 124 should stand part of the Bill.

[Lord Lansley (Con)]

My Lords, we remain with the question of the infrastructure levy in this part of the Bill. The purpose of debating the question of whether Clause 124 should stand part is to allow for a debate on the principles of the infrastructure levy. Curiously, it seems we will have a debate on the principles after we have discussed some of the detail—but let us not worry too much about that; we will no doubt return to all these subjects on Report anyway.

Although this is the levelling-up Bill, this clause is the not-levelling-up provision in it, since the Government’s technical consultation said that the infrastructure levy could lead to a possible increase in

“geographic inequalities already evident in the current system”.

We therefore cannot treat the infrastructure levy as tackling one of the central issues we face: that, while there is a large amount of development value being created in some parts of the country that can fund infrastructure and affordable housing, whether it does or does not, in other parts of the country it is not available at all.

That is exacerbated by the gross development value as well as the simple fact that, in some parts of the country, there is a relative dearth of brownfield sites—for example, in the east of England, my own area. That means that when development takes place on greenfield sites, the gross development value—netting off the build cost and existing use value—can be large. In many other parts of the country, there are more brownfield sites and, by the time you have calculated a lower gross development value and taken off the build cost and existing use value—both often higher for a brownfield site—you are left with very little of the gross development value available for the infrastructure levy.

There will, I am afraid, be a serious potential conflict between the purposes of the infrastructure levy. The community will look at it and say, “This will provide our schools, healthcare infrastructure, flood defences, open spaces and sport and recreation facilities” and all sorts of other potential benefits, looking at the amendments, as opposed to affordable housing. Under the existing system, two-thirds of developer contributions go to affordable housing. We do not know, but the pressures will, if anything, be higher rather than lower. That may lead to a very serious constraint on the amount of infrastructure levy available for the purposes that the infrastructure delivery strategy sets out.

I do not pretend that there is a completely different and better answer than what the Government are proposing. However, I am a bear of very simple brain; at Second Reading, I referred to the simple proposition that, on one hand, you have Section 106, by means of which developers are required to provide the infrastructure—in my view, they should also provide the affordable housing that is to be integral to the site they are developing or that is consequent directly upon that site—and, separately, there should be an infrastructure levy or community infrastructure levy.

I find it slightly surprising that the Government, having addressed the problems associated with the community infrastructure levy—it is not country-wide and it is based on pounds per metre squared, or a floor-space calculation, rather than on gross development value—did not do what struck me as the sensible thing: to rewrite aspects of the community infrastructure levy while retaining its basic structure, and make it mandatory for local authorities to introduce one. Instead, they are sweeping it all away—but not entirely. All sorts of definitions of the community infrastructure levy will be retained. The CIL will go on for years in relation to all the developments that receive planning permission before the infrastructure levy comes into place, as we just heard.

The infrastructure levy also does not sweep away Section 106 at all. This is supposed to be transparent and streamlined; I am sorry, but I do not find it to be that. There are three routes. There is the core levy routeway but, when you delve into that, there is a delivery agreement within it that is, to all intents and purposes, Section 106 retained. The infrastructure levy is not sweeping away Section 106 or the negotiable aspects. If the Government really want to set—I understand why they would—what is effectively a minimum level of contribution from developers in relation to a development that goes towards integral infrastructure as well as wider infrastructure requirements, why not just do that and directly relate the Section 106 contributions to the total of the infrastructure levy—or the community infrastructure levy under the current system?

We have a series of difficulties. The current system, with gross development value, will have serious potential issues. For example, how will these viability assessments be done, by whom and how many times? The Government themselves are contemplating a viability assessment at the application stage—the indicative one—then another provisional one post commencement but prior to the completion stage, and then a final adjustment. Reading the documentation, the implication is that each of the viability assessments is an incremental change on the previous ones. What we know, and the noble Baroness, Lady Taylor of Stevenage, kindly agreed with me on this, is that the viability assessments can change dramatically. There is nothing in the structure of this that looks yet at what those implications might look like.

--- Later in debate ---

[Baroness Bennett of Manor Castle (GP)]

My Lords, it is a great pleasure to follow the noble Lord, Lord Randall of Uxbridge, and I am sure the entire Committee will join me in saying that we are delighted to have him back with us. I also commend the noble Baroness, Lady Hayman of Ullock, for the huge amount of work that has gone into this. So much is having to be filled in from the Opposition Benches and indeed the Back Benches on the other side, because this is such a skeleton Bill.

We have not only a shortage of birds, mammals and insects, but we are running into a shortage of Henry VIII metaphors. We have Henry VIII on steroids with rockets strapped to his boots—I have run out of additions to that one. The Bill as before us now would put into law an extreme right to Ministers to do whatever they would like. It is interesting to be having this debate in the context of the just-completed Report of the retained EU law Bill, because then your Lordships’ House expressed very clearly a desire to see non-regression in environmental regulations, but we need amendments such as these to the Bill to deliver the will that the House has expressed.

This group also made me think of debate on the economic crime Bill, where we were recently discussing the issue of freeports. There is a great deal of fear and concern in the community that these are places of open slather, where businesses will be allowed to do whatever they like and destroy whatever they like, where all the rules are taken away. As the Bill is written, that is what environmental outcome reports will effectively be doing: taking away EU-derived protections and leaving nothing written down in their place.

I will not run through it in detail, but if any noble Lords have not seen it, I point them to Wildlife and Countryside Link’s excellent report going line by line through a number of the amendments and explaining their importance. I pick out a couple of points. Amendment 372 concerns the climate. As the noble Baroness, Lady Hayman, said, we are in a climate emergency, and how can that be missing from this crucial Bill? We are supposed to be talking about a levelling-up Bill. These changes to environmental protection around the country seems a long way from levelling up, but that is where we are. If we think about the protection of nature and the impact of the lack of nature on public health, people’s well-being and communities, it is of particular interest to communities generally seen to be in need of levelling-up support.

I particularly pick up one element of Clause 141: the fact that it destroys the mitigation hierarchy. The environmental mitigation hierarchy starts with “avoid”: do not trash things in the first place. We are one of the most nature-deprived corners of this battered planet and should be absolutely avoiding environmental damage. At the moment, we are doing the opposite. I think of how often my social media feed and my email queue are full of desperate people saying, “How can we be cutting down this ancient tree to build one house?” or, “How can we be destroying this hedge when, with a bit of initiative and creativity, we could leave the hedge and build some houses as well?” There is so much we are not doing, and the way the Bill is written allows open slather to that.

I just note one point on Amendment 388, which introduces a super-affirmative procedure for regulations. It is an inadequate backstop: it is a backstop, but not nearly good enough. We need to write the essential protections into the Bill. That would mean that the Committee is following the desire that the House expressed at Report on the retained EU law Bill.

[Lord Lansley (Con)]

My Lords, I will speak to three amendments in my name in this group: Amendments 378A, 378B and 386A. They are designed to try to ensure that this part of the Bill works effectively, and I hope will be regarded as helpful by my noble friend on the Front Bench. Not everything I have had to say has always been helpful, but I hope this is—it is all intended to be helpful, of course.

I remind the Committee of my registered interest as chair of the Cambridgeshire Development Forum. In that context, members of the forum from BDB Pitmans helped me with the construction of these amendments. Amendment 378A relates to Clause 142(3), which provides for informing the public and for “adequate public engagement” to take place in relation to the exercise of functions under this part. The effect of this new provision could be to extend public consultation requirements to the exercise of permitted development rights, because of the use of “proposed relative consent”. These are consents.

The present situation does not require such consents to be the subject of such a consultation requirement. In the legislation as it stands, adequate public engagement does not imply no public engagement. This would therefore increase the burdens on utilities, for example, in exercising a consent for a permitted development right in relation to telecommunications, highways, rail, et cetera. Amendment 378A would enable the Secretary of State to disapply the requirement where it would impose a disproportionate burden on development. Alternatively, page 174 mentions

“proposed relevant consent or proposed relevant plan”

in relation to “adequate public engagement”. If “proposed relevant consent” was replaced with “EOR regulations”, it would serve the purpose perfectly well, and save the problem that might otherwise arise.

Amendment 378B relates to Clause 142(1) on non-regression. It is a pleasure to welcome back to his place my noble friend Lord Randall of Uxbridge. We have heard from him about the

“overall level of environmental protection”.

This is defined by reference to the European Union law when this Act is passed. My Amendment 378B would enable the Secretary of State to take into account, in exercising this responsibility to maintain the level of environmental protection, any urgent need for energy resilience. It is worth remembering that Section 20 of the Environment Act 2021 provides for environmental legislation to be introduced with a statement that

“will not have the effect of reducing the level of environmental protection provided for by any existing environmental law”.

There is then in that section a statutory provision enabling the Secretary of State to make

“provision that is different from existing environmental law”

and

“might provide for the same or a greater level of environmental protection”.

Why then is there no equivalent provision in relation here to the making of EOR regulations? The inflexibility of this provision is particularly illustrated by the prospect in the European Union of the introduction of a streamlined environmental assessment process for low-carbon technologies. I have reflected this in the phrase

“urgent need for energy resilience”.

This would enable Ministers to take account of such a process to advance low-carbon technologies and not be tied specifically to a level of environmental protection defined by current environmental law. I encourage my noble friend to consider either my amendment or something similar to the provision in Section 20 of the Environment Act 2021.

Amendment 386A refers to Clause 150, which makes the consequential amendments to this part. It is about the proposed repeal of Section 71 of the Town and Country Planning Act 1990, which is what provides for environmental assessments. As it stands, that section will be repealed two months after this Bill passes into law. Existing environmental impact assessment regulations will then subsist from that moment until such time as the EOR regulations can be made, following the entry into force of those regulations.

But how long is the gap? How long will it be between this Act coming into force and the making of the EOR regulations? It could easily be well over a year and possibly two. For the greater part of that period, no power would remain to amend the environmental impact assessment regulations, pending the environmental outcomes reports regime. The EOR power is not able to amend the EIA regime until that stage.