House of Lords
Arctic Report Card
(11 years, 10 months ago)
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Lord Giddens
To ask Her Majesty’s Government what is their assessment of the 2012 Arctic Report Card of the National Oceanic and Atmospheric Administration of the United States showing record-low sea ice extent in the Arctic Ocean during the past year.
The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Baroness Verma)
My Lords, the Government have noted the contents of the NOAA report with concern. The observed reductions of Arctic sea ice extent and thickness and the consequent regional environmental and societal impacts re-emphasise the urgent need for strong international action to tackle climate change. The UK has a leading role in the international negotiations and is working through the European Union, the G8 and the UN Framework Convention on Climate Change to reach further global agreement to reduce emissions. Domestically, we are also taking action through the Green Deal and through the Energy Bill.
Lord Giddens
I thank the Minister for that Answer. The self-same report says, in heavy scientific jargon, that the extreme melting of the Arctic is a kick up the pants to the world. In terms of doing more to combat climate change, I take it that the Minister will agree with that assessment. Are the Government prepared to work bilaterally with the Americans on the possible implications for changing weather patterns in the north Atlantic, since such changes look quite likely? These changes will have radical implications for our own weather and are perhaps already beginning. Are the Government working, or planning to work, with the Americans on these issues?
Baroness Verma
My Lords, the noble Lord raises a very important issue—we must be mindful of the different weather patterns that we are witnessing currently. We work through the UNFCCC process, and at the recent conference of the parties in Doha all countries restated their commitment to negotiate a global deal by 2015 on a single comprehensive and legally binding climate agreement to come into effect from 2020. The noble Lord also mentioned our relationship with the US. He is aware that the United Kingdom has bilateral relationships with many countries, particularly in the north Atlantic. Our relationship with the United States is crucial and we will be having ongoing discussions with it and with other partner countries.
Lord Trimble
My Lords, in the context of the United States, would the Minister consider that the US has greatly reduced its carbon emissions in the past year by reducing its dependence on coal plants through the development of shale gas?
Baroness Verma
Yes, my Lords; the noble Lord is right that the United States has reduced its carbon emissions and increased its production of shale gas. However, this country takes the view that we need to ensure that our energy supplies are a mix of renewables and traditional fossil-fuel based. Therefore, although we are looking at shale gas, it will be part of a mix of energy rather than our having a dependency on it.
Lord May of Oxford
My Lords, is the Minister aware that the cost of the actions that we should be energetically taking against climate change—the need for which is underlined by the faster than previously expected melting of Arctic ice—is significantly smaller than the discounted present value of the much more difficult actions that we will be faced with in future if we do not act? I declare an interest as a member of the Committee on Climate Change.
Baroness Verma
The noble Lord is of course right that we need to take action. I am pleased to say that this Government are taking action and working very hard with all partner countries to ensure that this global issue is tackled with a global response.
The Minister of State, Ministry of Justice (Lord McNally)
My Lords, there is time for both sides. Perhaps we can hear first from the noble Viscount, Lord Hanworth.
Viscount Hanworth
My Lords, an example of extreme folly is the manner in which we are allowing petroleum companies to pursue the exploration of oil and gas in the Arctic as the reduction of ice cover renders this more practical. Can the Minister tell us what steps, if any, the Government are taking to restrain such activities?
Baroness Verma
My Lords, the fact of the matter is that we will need supplies of oil for the near future. Although we work very hard with our partner countries to ensure that everything is done in an environmentally safe way and with consideration to the environment and locations, we cannot dictate to the Arctic states or to the Arctic Council how they progress with their drilling. However, we know that they take the issue very seriously and are very environmentally effective when it comes to the security and safety of how they drill.
Baroness Parminter
What global greenhouse-gas emissions stabilisation levels do the Government believe will be necessary to protect Arctic summer sea ice for the remainder of this century? In asking this question I also congratulate the Government on the launch today of the Green Deal, which will help reduce greenhouse gas emissions from British homes.
Baroness Verma
My Lords, I thank my noble friend for mentioning the Green Deal, which will of course help very much in how we respond individually to a very serious issue. Greenhouse gases are the key cause of climate warming. We have invested heavily in research to ensure that, working with Defra, we have many ways of responding to the climate change which is happening around us and to ensure that other countries are working with us in that response.
Lord Harris of Haringey
In the past 60 years more than half of the ice in the Arctic has disappeared. That opens up the prospect of the north-west passage—which we all remember from our history books in childhood—becoming a reality. This has enormous strategic implications not only in the movement of goods but in extra exploration for both oil and other minerals. How do the Government see the United Kingdom’s strategic interests, and are they pursuing those through their associate membership of the Arctic Council?
Baroness Verma
My Lords, the noble Lord is right to raise that issue. Although we are not a member of the Arctic Council or an Arctic state, we have been invited in as observers and we are able to have a very constructive dialogue with those Arctic states and with other observer states as well.
Baroness Worthington
My Lords, the Arctic is experiencing rapid change due to the impact of man-made global warming. In recognition of the unique and fragile nature of this region, Greenpeace is calling for the establishment of a global Arctic sanctuary. The Environmental Audit Committee also recommended that a sanctuary be established in its report, Protecting the Arctic. Can the Minister please inform the House what actions the Government are taking to secure a marine protected area in the Arctic and what assessment they have made of the risks, both economic and environmental, of allowing oil extraction in the area?
Baroness Verma
My Lords, as I think I have said in answer to a number of the questions put to me today, we have to work very closely with the Arctic states and the Arctic Council. However, I recognise the noble Baroness’s point about the depletion of marine life. If she will allow me, I will make sure that she receives a much fuller answer, given that this is quite a serious issue that needs to be tackled.
Energy: Oil Price Projections
Lord Sheldon
To ask Her Majesty’s Government what is their projection of the likely future of oil prices.
The Parliamentary Under-Secretary of State, Department of Energy and Climate Change (Baroness Verma)
My Lords, my department has generated a set of projections for oil prices to 2030. A supply and demand model is used to estimate growth rates, which are then applied to 2012 prices, calculated using year-to-date and future prices. These are then sense-checked against external forecasts. A range is captured by three scenarios: low, central and high. In DECC’s central scenario, oil prices are projected to rise, reaching $124 per barrel in 2020 and $135 per barrel in 2030.
Lord Sheldon
I thank the Minister. Despite the cold winter, we may have a future of warm weather, which could reduce demand in Europe. Although there has been an expectation in 2013, the latest prediction anticipates a slowdown in the global economy if warm weather can actually reduce demand. There can be a reasonable summer.
Baroness Verma
My Lords, while we encourage reduced use of oil in our country, the difficulty arises in emerging economies that have found greater demand for it, so it is about finding a balance between our own liberalised markets and the demand seen elsewhere. There has also been some slight uncertainty during the recent difficulties being faced in north Africa and the Middle East.
The Earl of Courtown
My Lords, will the Minister tell the House how the Government intend to mitigate these increased oil prices, particularly with reference to using future renewable forms of energy?
Baroness Verma
My noble friend will be aware that this Government are keen to ensure that we have a good range of energy mixes, thereby reducing our usage of oil. However, we have a realistic view that, for the foreseeable future, we will still need extra supplies of oil and therefore we cannot mitigate our usage completely. We will of course try to make sure that, through our policies and the Energy Bill, all other energy resources have an equal footing to compete on.
Lord Desai
My Lords, have the Government taken into account the effect of shale gas in the US, which is likely to influence oil prices downwards, if anything?
Baroness Verma
My Lords, while I agree that prices in the US have come down, worldwide there is still great demand, given the emerging economies. For the foreseeable future, globally there will be a great need for oil and, by and large, prices will be seen to go up.
Lord Teverson
My Lords, the Government have been very successful in bringing electricity consumers together to use their collective muscle to switch to better tariffs. Will the Minister undertake that her department will look at similar collective switching for heating oil, as these prices will go up even more? In rural areas in particular we do not have gas supplies and dual fuel is not available to us, so we have very high tariffs. Would she promote that switching for heating oil?
Baroness Verma
My Lords, my noble friend raises an important point. We are determined to make it easier for people to club together to get a better deal on their collective energy purchasing. Switching is a new way for consumers to group together and use their market power to negotiate lower energy bills. Through the Cheaper Energy Together competition, we awarded £5 million of support for the most innovative local authorities. Of those, six schemes were provided to support oil buying groups.
Lord Hughes of Woodside
My Lords, just as it seemed as though the price of petrol and diesel was stabilising, we hear predictions of increases of four to five pence a litre. What are the Government going to do about that, because, given the forecast that they have produced, there is no excuse for them saying that they have been caught on the hop?
Baroness Verma
My Lords, these reports appeared widely in the media over the weekend. I accept from the noble Lord that they are worrying, particularly in times of hardship for most consumers. Perhaps we should look—I was going to say at how we make it easier for consumers not to be ripped off at the petrol pump, but I shall not—at how we can encourage retailers to pass down a drop in price if it comes through the crude oil route. However, the Office of Fair Trading is looking at retail pricing and at how reductions in price are passed down. We hope to be able to respond once we have viewed the report.
Lord Hamilton of Epsom
My Lords, about 12 months ago, Shell produced a forecast for oil prices which was between $70 and $90 a barrel. That has not proved right and prices now are between $115 and $120. If Shell cannot get its forecast right, are the Government likely to?
Baroness Verma
My Lords, I thank my noble friend for that very helpful question. Of course, we do not always dictate the global scenarios that often change in front of us. While we try to make our predictions as accurate as we possibly can, scenarios will be played out on the international scene over which we have no control. Therefore, our scenarios are based on price structures that take into account the low, the central and the high. The price forecasts that we have come to were made on that basis.
Baroness Worthington
My Lords, whichever way you make projections, it looks likely that oil prices will remain high. The only way of keeping transport affordable in the long term is to maximise vehicle efficiency and to develop alternatives as quickly as possible. UK motorists have benefited greatly from the introduction of Europe-wide vehicle efficiency standards. What steps are the Government taking to ensure that tougher, Europe-wide standards are set to the benefit of the UK motorist?
Baroness Verma
My Lords, as always, we are working with our European partners and manufacturers in this country. I say again that it is one of those issues on which we have to make sure that the rest of the world is working with us. We work hard at all conferences and in all fora to ensure that the UK motorist gets a good deal, not just at the petrol pump but on the vehicles that they purchase.
NHS Mandate: Health Inequalities
(11 years, 10 months ago)
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Baroness Williams of Crosby
To ask Her Majesty’s Government what steps they are taking to reduce inequalities in health provision in line with the objectives of the NHS Mandate.
Baroness Northover
My Lords, legal duties in relation to reducing health inequalities will apply to the Secretary of State and NHS commissioners. Local authorities must have regard to reducing inequalities when commissioning public health services. The NHS and public health outcomes frameworks will be used to monitor progress. We are working across government to address inequalities through tackling the wider causes of ill health.
Baroness Williams of Crosby
I thank my noble friend for her reply. In November, the BBC pointed out that the gap between the least served and best served people was widening in this country. Cancer Research UK pointed out in a recent survey that the likelihood of an unskilled worker dying of cancer was twice as great as that of a professional worker in the same region. In light of these figures, the Liberal Democrats proposed, and the Government accepted, a specific duty on the Secretary of State to have regard to inequalities in health. Despite that, the outcomes framework has among its five domains no reference to health inequalities and, despite the very strong support expressed by the public in the mandate consultation, there was no specific reference to inequalities in health in any of the recent DfH documents. Can I therefore ask the Minister directly whether she will agree that, when the review of the outcomes is made next year, a greater attempt will be made to have a specific section dealing with health inequalities and, one hopes, measuring real progress in this most difficult of areas?
Baroness Northover
My noble friend is right to focus on health inequalities that remain. The last Administration and previous Administrations have sought to address them, as have we. In the Health and Social Care Act 2012, for the first time there were specific legal duties to reduce health inequalities. I am slightly puzzled by what my noble friend says about outcomes, because if she looks at the public health outcomes framework and the NHS Outcomes Framework —in particular the public health ones—the two overarching outcomes are increased health life expectancy, and reduced difference in life expectancy and healthy life expectancy between communities. That is the measure against which we will judge what is done in public health.
Lord Tomlinson
Will the Minister accept that the proposals to close the excellent and much-admired accident and emergency hospital in Lewisham, and to downgrade its maternity services, have been made not because there is anything wrong with the hospital but because a government-appointed administrator has said that that should be done in order to help the neighbouring National Health Service trust, which has run up £130 million-worth of debt? Will she accept that closing and downgrading good facilities is an act of almost criminal stupidity, which leads to nothing but increased health inequalities when the Government’s objective is to reduce them?
Baroness Northover
The noble Lord might have heard his noble friend Lord Darzi comment on the difficulty of reorganising services so that they are as efficient and effective as possible. I would ask him to have a look at that.
Baroness Northover
My answer is that, as I have said, the Act puts reducing health inequalities at the centre; that is a responsibility at every level, and those things will be monitored in certain ways. As the noble Lord, who is winking at his colleague and perhaps not looking at me right now, might remember, the Secretary of State is answerable to Parliament and will be answerable for all these areas. If the noble Lord is right, and actions that are taken do not reduce inequalities, there will be an opportunity to hold the Government to account.
Baroness Hollins
My Lords, the first priority in the mandate is about preventing people from dying prematurely. The Minister spoke about inequalities between communities, but I am concerned about two of the improvement areas mentioned in this priority, which are about reducing premature mortality in people with serious mental illness and people with learning disabilities. Will the Minister tell the House about the clinical leadership being put in place to ensure that these two areas are addressed energetically in order to reduce health inequalities within communities?
Baroness Northover
The noble Baroness is right to highlight this area. I point out that the NHS Commissioning Board has recently advertised nine posts which focus on health inequalities. I am sure that that kind of focus will help. The noble Baroness is right in that there are certain groups within communities that are particularly vulnerable. She will probably also be pleased to hear about the Inclusion Health programme, which focuses on particular groups which have particularly poor health outcomes, and which is chaired by Professor Steve Field, of whom she will be well aware.
The Lord Bishop of Wakefield
My Lords, given that one aspect of the Government’s strategy to improve patient outcomes and reduce health inequalities is to encourage a shift from hospital-based to community-based care, will the Minister say what steps are being taken to address the shortage of district nurses, whose numbers have fallen by more than a third in the past decade?
Baroness Northover
I will write to the right reverend Prelate with numbers, as I have seen them but I do not have them in my brief here. I point out that because health will be far more focused in the local area, it is extremely important for the health and well-being boards, for example, to look at how health is delivered in their area. If there are problems because of a lack of staff, they will need to address that.
Baroness Farrington of Ribbleton
My Lords, would the noble Baroness care to correct a mistaken idea that she may have put to the House? I listened very carefully to my noble friend Lord Darzi, who said that his general comments about centres of excellence in no way related to the Lewisham situation, on which he was not commenting. Could she correct that, please?
Baroness Northover
The noble Lord commented on the difficulty of reorganising, which is what I have just highlighted, and it was in relation to the controversy over what is happening in south London. He explicitly said, it is true, that he could not comment on that case but it is extremely important in these cases that a strategic overview is taken of where provision is best set. The Department of Health is obviously well aware of what is said about the strength of accident and emergency at Lewisham Hospital. No doubt if that is a proved case, it will be necessary to bear it in mind.
Healthcare: Support Workers
(11 years, 10 months ago)
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Lord Willis of Knaresborough
To ask Her Majesty’s Government what plans they have to train and register health care support workers.
Baroness Northover
My Lords, my right honourable friend the Prime Minister has announced a £13 million innovation fund, which will provide opportunities for healthcare assistants to progress to nursing roles, and a review of induction training for care staff by the Care Quality Commission. In addition, new training and conduct standards for care staff will be published shortly. We are considering what further action is required in the light of the findings of the public inquiry into Mid Staffordshire NHS Foundation Trust.
Lord Willis of Knaresborough
I thank my noble friend for that very helpful reply. However, does she accept that at the moment there are literally tens of thousands of elderly, frail patients, often with comorbidities, being looked after in domiciliary or care homes by an army of well meaning healthcare support workers who receive virtually no training and who are unregistered, unregulated and often unsupervised? Will my noble friend do three things in the forthcoming legislation: will she ask the NMC, first, to set standards for all healthcare support workers; secondly, to make that training mandatory; and, thirdly, to set out a timetable by which if employers do not use trained staff, it will in fact be an illegal act?
Baroness Northover
My noble friend makes some very cogent points; of course, he has recently reviewed this whole area in the Willis report. As I mentioned just now, we are imminently to receive the report on the Mid Staffs situation, which continued over a long period. My understanding is that it will be published on 6 February. The Government will be responding to what its recommendations might be, but I have already mentioned that Skills for Health and Skills for Care are developing standards for the training and conduct of support workers. They should report on that very shortly. The CQC has also been commissioned to review induction training, so we are acutely aware of this and are working on it at the moment.
Lord Wigley
My Lords, in view of the fact that Skills for Health has a UK remit, whereas I believe that Skills for Care has an England-only remit, can the noble Baroness tell the House what consultation there has been with the Governments in Wales and Scotland to ensure, on the one hand, that lessons are learned from each other and, on the other hand, that the training needs are co-ordinated to the benefit of everyone?
Baroness Northover
We are in constant contact with the devolved Administrations; I have information from both Wales and Scotland. It is indeed extremely important that we learn from each other, as the noble Lord has flagged up.
Baroness Wall of New Barnet
My Lords, I, too, congratulate the Government on the steps that they have taken so far, although they have taken a long time to do them. In addition to the area that the noble Lord, Lord Willis, talked about, there are still issues inside hospitals of patients not understanding that healthcare assistants are qualified to do the work that they are doing, while the healthcare assistants desperately want them to understand that. The Government’s failure to push this forward quickly is damaging that relationship. It also makes patients feel unsafe when they really have no need to.
Baroness Northover
In many parts of the health service, there is excellent care. I have certainly seen that first-hand. We have to make sure, as the noble Baroness does within her trust, that all care is consistent, safe, effective and compassionate. I take seriously the point that she makes.
Lord Elystan-Morgan
My Lords, does the Minister accept that, with regard to out-patients, a common path is often beaten to their door by NHS workers on the one hand and social service workers on the other? Very often, there is a total lack of co-ordination between them, with each group acting as if they came from independent—and sometimes even jealous—empires. In the circumstances, does she not agree that there is a strong case for support workers to be jointly employed, jointly trained and jointly answerable in respect of these matters?
Baroness Northover
This is an issue which the noble Baroness, Lady Emerton, has flagged up and I think she made a very cogent case. Health workers and social care workers move between the two sectors. We are trying to make sure—as previous administrations have sought to do—that the two systems are better integrated, because a patient is one person. They may cross between the two sectors, but they should have the same standards of care, whichever part of the system they are in.
Baroness Brinton
My Lords, given that there is a visible difference between homes where all the staff are trained and those where it is a bit patchy—to be favourable about it—can the Minister confirm whether the Government will be looking for compulsory training, which seems absolutely key to success in protecting both patients and staff?
Baroness Northover
I can assure my noble friend that all options will be considered when we receive the Mid Staffs report.
Baroness Masham of Ilton
My Lords, is the Minister aware that, without registration of these care workers, they can go anywhere and work anywhere, when they are dangerous and not suitable for work because they cannot be tracked?
Baroness Northover
As the noble Baroness knows, employers have a responsibility to make sure that those whom they employ are suitable and do not have the kind of record that she has indicated. We also know that regulation per se does not necessarily mean that good care is given; therefore, a proportionate and intelligent response is needed if we are to ensure that the care given is of the consistency, safety and quality that we all wish to see.
National Health Service (Amended Duties and Powers) Bill [HL]
Growth and Infrastructure Bill
Lord McKenzie of Luton
Lord McKenzie of Luton
My Lords, I should make it clear that this is a probing amendment. The Explanatory Notes to the Bill state that although Section 60(2) of the Town and Country Planning Act 1990 enables development orders for physical development to be granted unconditionally or subject to approval of the local planning authority, there is no equivalent conditionality which can be imposed where the development is a change of use. New subsection (2A) rectifies this and states that an order for development consisting of a change in the use of land,
“may require the approval of the local planning authority, or of the Secretary of State”.
The inclusion of the Secretary of State in those potentially needing to approve does not appear to apply where physical development is involved. May I therefore ask the Minister why this additional potential power has been given to the Secretary of State and why there is a disparity between those two situations?
Lord Ahmad of Wimbledon
My Lords, I should like to explain why the Government believe that it is both necessary and appropriate to include the Secretary of State within the powers set out in Clause 4. As the Committee is aware, we are keen to free up the planning system from unnecessary constraints to ensure that local planning authorities can focus on the most important planning matters in their respective areas. We want to ensure that economic growth is not suffocated by unnecessary constraints on development that is change of use. We have already announced our intention to allow for the change of use of offices to residential accommodation, measures to make better use of existing buildings, and to make it easier to change use to a new state-funded school. I shall come on to that in a moment. These will be secured through the granting of a permitted development right.
As the Committee is aware, the permitted development right regime is a well understood tool for granting national planning permissions for small-scale development. Indeed, Section 60(2) of the Town and Country Planning Act 1990 already provides for the Secretary of State to make a development order containing permitted development rights which require the approval of the local planning authority with respect to certain matters. This allows potential impacts from the development to be managed effectively.
Similarly, Clause 4(1) will allow the Secretary of State to provide that local authorities can ensure that, where permitted development is granted for a change of use, the impacts from that development can be managed sensitively. For example, this could include ensuring that adequate measures are in place to manage the impact of any additional traffic generation or noise created by the change of use.
We are clear that there is also merit in providing that the power within Clause 4(1) applies to the Secretary of State. By doing so, we are providing that the Secretary of State can further prescribe the scope of a permitted development night for change of use within the boundaries of the existing use classes. This could ensure that only those particular uses where additional freedoms would be beneficial, where there are sufficient safeguards and indeed where they would not impact adversely would be permitted. Therefore it would be possible that the effect of a development order could be limited to buildings or categories of building approved by the Secretary of State or other Secretaries of State.
Let me be clear that the Secretary of State’s power in Clause 4 can be used only within the context of a particular permitted development right set out in the development order made by the Secretary of State under powers in Section 60 of the Town and Country Planning Act 1990. Permitted development rights very often have conditions and limitations attached. Clause 4 will enable those conditions to include the approval of matters relating to the change of use by the local planning authority, the Secretary of State or indeed both.
The matters to be approved will be clearly set out in the actual development order. We intend that the power will be used to bring forward our proposed permitted development right to support the creation of new state-funded schools. This will in this instance take account of a decision by the Secretary of State for Education to have considered and committed to the funding of a school. In doing so, we are ensuring that the planning system supports our priority to ensure that every child has an opportunity to benefit from a good state-funded education, something that I am sure the whole Committee wholeheartedly supports. Indeed, in response to the noble Lord, Lord McKenzie, I am sure that he is aware of a place not too far from his area of Luton—Bedford. I can think of no better words than those of the chairman of Bedford Free School, who said that,
“these new rules would have helped us move into the building quickly and easily, so we could concentrate on a new school that the community and local parents wanted, with an excellent head, in one of the most deprived parts of our town”.
Indeed, that was a very good example of where the actual development of the school was delayed but, had these rules been in place, that would not have been the case. It therefore remains the Government’s view that the creation and development of state-funded schools is strongly in the national interest and that planning decision-makers can and should support the objective in a manner consistent with their statutory obligations.
Clause 4 is a sensible measure and will ensure that development can take place quickly while also managing potential adverse impacts locally. As the noble Lord, Lord McKenzie, said, this is a probing amendment. I hope that, with the reassurances that I have given, he will be willing to withdraw his amendment.
Lord Beecham
My Lords, the Minister has taken the opportunity to mention in your Lordships’ House a decision recently announced by the Secretary of State. The latest ukase from the tsar of Eland House goes even further in eroding the position of local authorities. The proposal that he has just announced would allow the Secretary of State to grant permitted development status—as I understand it, for a year—during which a planning application would be processed. That seems to be an extraordinary pre-emptive procedure. I cannot think of a precedent for something of that kind. It would be bad enough if it were a final decision. It is ludicrous to pretend that it is a temporary decision because it is almost inconceivable that the Secretary of State, having granted that permitted development, would not end up approving an application even if it had been turned down by the local authority and the matter went to appeal.
It is another example of the Government interfering and intervening in local decision-making, and in this case in a quite unprecedented way. I invite the Minister to indicate the basis on which this change is happening. I know in my own city a sort of school has been established in what are effectively domestic premises. I do not know how big the school is intended to be, but it is certainly not complying with a number of regulations, including of course the planning regulations. While I would not expect there to be many examples of wholly unsatisfactory buildings being used in this way, there clearly is a risk that schools will be encouraged by the order from the Secretary of State to proceed willy-nilly with their proposals, potentially excluding the local authority entirely. If that is what is envisaged in this context, in how many other areas will the Government seek to assume these powers, and with what effect on the local planning system?
Lord Greaves
My Lords, I saw this only a few minutes ago when I was alerted to it by an e-mail from the Bill team. I congratulate them on doing that, since, along with the Minister’s comments, it gives us the opportunity to debate this under a rather different and less dramatic amendment from that of the noble Lord on the Labour Front Bench.
Having now read the Statement while the discussion was taking place, the proposal that is being put forward seems quite extraordinary. Anything that is announced as a new state-funded school and has the support of the Secretary of State for Education goes ahead outside the normal planning system. That is, I understand, exactly what is being proposed at least for the first year. Presumably it will apply to all of them and not just to those which are said to have had problems opening on time because of delays in the planning system. Once again, we find that if there is a problem with planning—which is presumably caused by something real and is not invented by the planning authority—it is the planning system that is to blame. As the Prime Minister said quite recently, the planners should be removed from the scene. Those were not his exact words, but he said that they should be swept away—that they should get out of the way and let growth commence.
If that is what parts of the Government want, they should be fairly clear and overt about it and we can have debates about it. However, what is happening is that bits are being chipped away here and there. The noble Lord, Lord Beecham, said that it is eroding the power of local authorities. I would say it severely undermines the whole reason for and purpose of the planning system. If it is to be undermined for somebody who wants to run a small business that does not really affect anybody else, and that person wishes to run that business in very unsatisfactory circumstances—in a condition of squalor—I suppose that is their business. However, we are talking here about schools, children in schools and the people who live in the neighbourhood around schools. Even if it is a small free school, it will inevitably have some impact on the people who live around it.
I read that these changes will be subject to a prior approval process to mitigate any adverse transport and noise impacts. I am not quite sure how that will work. Presumably, if there are adverse noise impacts, they will come under environmental health legislation anyway, but I am not sure how the prior approval process will mitigate any adverse transport impacts and what that means. Perhaps the Minister can explain exactly how that will work.
For everything else that might result from a change of use to a school, not necessarily with changes of any sort to the building, presumably you just close down whatever it was previously and move in. It could have been offices, hotels, residential institutions, secure residential institutions—perhaps they are appropriate for some schools, but I will not comment further on that—or used for assembly and leisure. These uses can be converted overnight to a school without so much as a by-your-leave other than prior approval to mitigate any transport and noise impacts. Surely this is fundamentally wrong. It is stated that in a small number of cases free schools have had to delay their opening because there were planning problems; that may be the case. If there were problems, whatever they were, that suggests that that opening should have been delayed and those problems should have been sorted out, just as with any other change of use that would take place.
The Minister’s Statement, headed “Planning and Schools”, says that the Government believe,
“that the creation and development of state-funded schools is strongly in the national interest”—
—we all agree with that; it is a question of how you create and develop them—
“and that planning decision makers can and should support that objective, in a manner consistent with their statutory obligations”.
I think that is referring to the planning decision-makers, but this proposal would abolish their statutory obligations, at least for 12 months. As the noble Lord, Lord Beecham, said, a free school supported by the Secretary of State for Education which opens without planning permission in the first year has to spend that year getting planning permission. If that planning permission is turned down because the premises are obviously unsuitable to be turned into a school, for whatever reasons, the idea that that will go to appeal and the inspectorate will uphold the decision of the local planning authority is not likely. The inspectorate will get its firm instructions. It is quite clear that the Secretary of State for Education and the Secretary of State for Communities and Local Government are in cahoots over this. The planning system is being pushed to one side.
Yet the Statement goes on to say:
“Experience to date has demonstrated that with the assistance of the Education Funding Agency new state-funded schools, and free schools in particular, have been successful in identifying sites that have gone on to secure planning permission”.—[Official Report, Commons, 25/1/13; col. 25WS.]
Presumably we can discuss this further on Report, but since we are discussing it now, it seems that at the very least the Minister needs to be clear and tell us how many instances there have been, out of all the free schools which have been set up, of them having their opening delayed because of planning problems? Where is the evidence that this is happening? What is the scale of the evidence, and what were the circumstances in each of those cases? I suspect that there are not very many of them.
This is a shambles. It is a Secretary of State for Education and a Secretary of State for Communities and Local Government, as I said, in cahoots, driving a coach and horses through the normal planning system. The problem is that if government policy always trumps good planning, where will it end? It will not end with free schools, it will end with anything that any Secretary of State thinks is a good idea and pushes through, regardless of the effects on the people using the premises and on the local community.
Lord Bates
Could I clarify one point in what the noble Lord is saying? He seems to suggest that this is something that the Secretary of State is imposing on a local community, whereas the whole point of free schools is that the demand for them comes from within the community; local parents of local pupils will have indicated their desire to see a school established. Contrary to the notion that this is top-down, this is therefore surely something that supports local people in their local community getting access to the education that they want for their children.
Lord Greaves
My Lords, I do not think that in this Committee we want to go too deeply into free schools and whether what the noble Lord just said is true or whether other factors are involved and to what extent. Free schools exist and, whether some of us like them or not, they are part of the system now. I am not in any way arguing about that in this Committee because I do not think that it is our business. What seems to be happening, however, is that in certain circumstances, when a proposal for a free school comes forward, whatever the instigation or motivation for it, the Secretary of State is saying that the normal planning system will not apply for at least the first 12 months. That is the problem.
I believe that the two Secretaries of State are clearly in cahoots over this, although people might want to use a slightly less emotive term than “in cahoots”. They are, perhaps, working together across departments, which some of us sometimes complain they do not always do. Nevertheless, they are clearly doing this and saying that in those circumstances the planning system will be set aside. That is obviously what is being said. If I want to set up a free school and Mr Pickles thinks that my free school is a good idea, I will not have to get planning permission before it opens. In the circumstances of a school, with children being educated and with the potential effect of a school on the local community, pushing aside the whole of the normal planning system seems to me to be outrageous.
Lord McKenzie of Luton
My Lords, I am grateful to the noble Lord, Lord Greaves, for his support for this amendment and to my noble friend Lord Beecham. When I drafted this amendment it was with a much more innocent approach than has appeared from this debate. It was simply looking at the wording and the disparity between change of use and physical development. However, given the debate that has just ensued, I am very glad that I drafted it. We have yet another example of something that runs through this Bill—an anecdotal approach to a perceived problem in the planning system, with the answer being to circumvent that planning system to deal with it. The issue is not the existence of free schools but their location, and why the normal planning process is not to be applied to that. Although this was a gentle, probing amendment, which I thought we might pass over swiftly with a clear explanation from the Minister, we have opened up something here that we will return to on Report, as well as having some wider debates about permitted development on amendments that come later in the Bill, as we try to remove some of the centralist approach that applies to those amendments and make sure that the local voice is heard.
Lord Ahmad of Wimbledon
Perhaps I can reassure the House. A number of issues have been raised and—as the noble Lord, Lord McKenzie of Luton, suggested—we have noted them, which I believe I made quite clear in the Statement. I do not want to delay the House too long but a number of points were made and I think it is appropriate for people to reflect on the responses prior to the next stage of the Bill.
The noble Lord, Lord Beecham, referred to the one-year temporary right and how that is doing away with the planning process; that is not the case at all. This is very much geared towards ensuring that a school opens on time, and no planning application for a free school has been refused to date. In response to the points raised by the noble Lord, Lord Greaves, this is not about with doing away with the planning process; it is about making the issue in relation to free schools easier. Bureaucracy exists in the planning process. This is not about wiping away planning permission but ensuring that a local community’s demands are met, as my noble friend Lord Bates pointed out. We are seeking to ensure, through the Bill, that we highlight those barriers that prevent such free schools coming into being at the required time.
Lord Greaves
My Lords, I thought about that and then thought that the present Secretary of State will not give permission if it is a local authority school. He will say, “No, you’ve got to do it properly and get planning permission”.
I am grateful that the Minister emphasised that the period will be only one year, and I think that we understood that. However, he also said that, to the best of his knowledge, no free school has so far been refused planning permission—those were his words—and, therefore, at least half the answer to the question on how many have been delayed is “none”, at least at one end of the spectrum of being refused. It would be helpful if, when he writes, he can tell us how many free schools—and where they are—it is claimed have been delayed because of what he calls bureaucracy in the planning system. We can then look at them and make our own assessment of whether this extremely draconian measure is in any way justified.
Baroness Donaghy
My Lords, when the Minister writes, will he also explain whether there are any circumstances in which, during this protective period, one of these schools could be established but not be in the right place or have the right safety environment for the children there? Can he absolutely guarantee that a school that is established without proper planning permission will uphold all the usual standards?
Lord Ahmad of Wimbledon
My Lords, again, this debate widens. I made the point earlier that these are not draconian measures. This is not about two Secretaries of State making policy on the hoof. This is about two Secretaries of State relevant to this issue working together to ensure that we get a policy that works for the local community. The measure applies to any new state-funded school.
As to the question raised by the noble Baroness, I have already alluded to the fact that any new application for any school is subject to the same criteria. Therefore, if the scenario that she indicated has arisen—historically, if it has happened previously and people have had to look at where to locate schools—I am sure that remedial action has been taken. The proposals do not contravene health and safety or issues of security and the safety of children because they are ultimately priorities for any Government of whatever colour or coalition. The measure does not compromise them at all.
I assure any noble Lord who is thinking in that way that while one can never plan for all probabilities, this does not do away with the planning process in terms of the health and safety of children—just to be clear, nor does the issue of free schools negate the role of local planning authorities. They will continue to play a key part in decisions on the location of schools. Let it be absolutely clear that a new school is only established where a community need is highlighted: our new policy allows people to set up a school in response to local needs.
Lord Greaves
The Minister is goading me into one final contribution—I apologise to him. Again, I will avoid the issue of free schools themselves, which I do not think is relevant to this debate. They exist and they can be built, but it is a question of the role of the planning system in relation to them.
I am lost for words when the Minister says that this clause will not negate the role of the local authority in deciding the location of these free schools. It clearly will, because they will be set up in a location without the need to get permission from the planning authority. When he writes to us, can the Minister set out what the role of the planning authority will be in relation to a free school? The “prior approvals” process applies to two particular things. Can he tell us exactly how that will operate and, in particular, what the timescale will be; will it be the same as a normal planning application, or will it be a very informal thing? Will he also tell us what will happen if there are strong reasons for opposing the location of a free school after it has been set up and is in operation? Presumably, it will be spending money, perhaps on the building. What will happen if that is turned down subsequently by the local planning authority?
Lord Ahmad of Wimbledon
As I have already indicated to my noble friend, we will write and cover those matters.
Lord McKenzie of Luton
My Lords, I fear that the Minister has raised more questions than he has answered in this debate. We should be clear that, as amended, the provision concerns “change in the use”—requiring the approval of the Secretary of State—and is not limited to free schools or schools. It could indeed be anything at the whim of the Secretary of State. I have absolutely no doubt that, on the basis of the exchanges that have taken place today, we must return to this and constrain this provision in a very meaningful way. In the mean time, I beg leave to withdraw.
Lord Greaves
Lord Greaves
My Lords, in moving Amendment 52, I shall speak also to Amendments 53, 54 and 55, and clause stand part. I am grateful for the support of my noble friend Lord Tope and that of the noble Lord, Lord McKenzie of Luton, on the first three amendments.
The amendment allows the Committee to discuss the proposals in the Bill to set limits on the powers of a local planning authority to require information from applicants for planning permission. My first two questions are general. First, what is the evidence that this is a significant problem? There seem to be a lot of assertions behind some of the changes in the Bill that this and that are getting in the way of development and growth. There have certainly been complaints—I have heard them from time to time in my own area—from applicants who say that they are being asked for too much information, and that this is slowing things down. So there is anecdotal evidence from applicants that they do not like the amount of information for which they are being asked. However, there is no significant evidence—certainly I have not seen any substantial evidence—that this is a significant problem in many places. We have to ask the Government for more than just assertions and anecdotes about how much of a problem this is. That is my first question: what is the evidence that this clause is needed?
My second question is about whether in this Committee we are wasting our time discussing this. I suspect that we might be. My question is: if this wording is put in the Bill, what difference will it make? Will it make any difference to the amount of information that planning authorities in general ask of applicants in different circumstances? There is already wording in legislation that is very similar to the wording here, including in secondary legislation and in guidance. I suspect that this perceived problem is a chimera, and that in practice this will not make any difference.
The amendments in this group probe one or two things. The Bill states that requests for information must be “reasonable”. Over the years, I—along with quite a few other noble Lords—have put down amendments to different Bills demanding that things should be “reasonable”, in an attempt to get the Government of the day to explain what they mean by their proposals. I remember being told by the noble Lord, Lord Whitty, who is with us today, when I tabled amendments to past Bills, that putting wording about being “reasonable” in a Bill is not necessary—it is redundant and otiose. It should not be in legislation because there is an underlying principle to all legislation that people have to act reasonably. They have to make reasonable decisions on the basis of reasonable evidence. That goes across the whole of the law. Therefore, putting the requirement into a Bill is not something that one should do. Yet here the Government want to put it into a Bill.
What difference would it make? Amendment 55 attempts to define “reasonable”. If the Government want to put in “reasonable”, perhaps they should attempt to define it. In relation to the information that is required, my proposed new subsection states:
“The meaning of ‘reasonable’ in subsection (4A) shall include any information … required as a consequence of any enactment”—
I assume that I will be told that that is not necessary because obviously it would be reasonable—
“and … required as a result of the request of any government departments, government agency or statutory consultee including any other principal local authority that is consulted on the application”.
If this is going to be in legislation, it is very important, if an application is turned down and goes to appeal and the appellant asks for costs on the basis that the local planning authority was guilty of unreasonable behaviour, that the local planning authority should not be penalised in any way as a result of—in effect—having acted on behalf of another body. It may be the district council, it may be the county council or the Highways Agency that wants more information and more work done on highways implications, on a transport plan or whatever. The Environment Agency may want more information about environmental issues such as biodiversity or drainage. On the basis of the information and the decisions made, the inspectorate may decide on appeal that it was wrong and that the information was not a material consideration, should not have been asked for and was not relevant to the application. The local authority should not be penalised on the basis that the Environment Agency or the Highways Agency or another local authority or other statutory consultee has asked for this information. Once the local planning authority gets that advice from the Environment Agency it must follow it up. If it does not it will be dragged through the media for being irresponsible.
Viscount Hanworth
My Lords, I would like to reaffirm some of the points we have just listened to. The provisions of Clause 5, which seek to limit the power of local planning authorities to require information in association with planning applications, seem to be not only unnecessary but pernicious. I am at a loss to understand their provenance. As has been suggested, the key word that reveals the drift of the thinking is “reasonable”. The Bill enjoins planning authorities to limit their demands for information to those that are reasonable. The implication is an aspersion that, hitherto, there has been a significant number of unreasonable demands for information. Where is the evidence that would support such an aspersion? I am sure there is no such evidence.
Rather than relating to the practice of planning, the clause seems to relate to a prejudice against the planning process. As such, it seems to accord with the general tenor of this Bill, which has little or no grounding in facts or in evidence. Perhaps the worst aspect of this clause, as has been suggested, is that it gives no indication of how judgments would be made of what is reasonable and what is not reasonable. The consequence of this is that it invites planning applicants to withhold information on the spurious grounds that it is unreasonable to request it. A licence to behave in this way would surely wreck the planning system. One can fairly ask the Minister whether that is indeed the intention of the Bill.
Lord Cameron of Dillington
My Lords, I am totally supportive of this clause, but I am vague about how it will work as it is without any form of back-up information. It may be my ignorance of the planning system because I come to it from, as it were, the other side of the desk as an applicant rather than a local authority or planning officer. I am particularly concerned about small developments in rural areas, and here I ought to declare an interest for the purposes of this Committee as a farmer and landowner.
In many rural areas, which are of course underfunded as the result of an unfair and imbalanced central government funding system, planning departments have inadequate resources, staff and expertise. I believe that some local planning authorities are reluctant to engage in pre-application advice; indeed, they cannot afford to do so. I am concerned about the first encounter with the local planning authority for small applicants when they submit an application. It is likely that they will find themselves having to pay, say, 30% to 50% of the costs of a project—we must bear it in mind that these are small projects worth £50,000 or even less—in order to conform with the demands made by the local planning authority in terms of reports and consents. The project, of course, is also greatly delayed because they have to get all the answers needed to complete these reports. It seems to me that the belt-and-braces, tick-box approach applied by local planning authorities is not necessarily in order to cover themselves in case of a comeback on the result of an application, but all too often because they lack the expertise within the department to know what is relevant. That is why they take a belt-and-braces approach. The fact that, due to the costs, a small project is killed before it even gets off the ground is often the cause of a secret sigh of relief in an overworked and underfunded local planning authority. In these circumstances, you have to ask yourself where our much-needed development will come from.
In my experience when talking to councillors—I have never actually been a councillor—I have found that few of the reports that are asked for are read by the members of the planning committee. One might say that that is fair because they are reported by the planning officers who know all about them, but even that is not necessarily always strictly accurate. I have known reports to be asked for by planning officers which are already in the file; in other words, the officers have not read the file. I have some questions. How is an underfunded rural local planning authority without knowledge and expertise to apply this clause? How will an overworked planning officer apply it to the multitude of different sorts of application that he has to deal with in a rural area? Is this clause all there is? Should there not be more guidance, which is what I would really like to see?
As I say, it may be perfectly clear to those who have worked for a local planning authority and are used to being on the other side of the desk, but it seems that we need a bit more detailed guidance. However, I repeat that I am totally supportive of this clause.
Baroness Young of Old Scone
My Lords, perhaps I can help the noble Lord, Lord Cameron of Dillington. Lots of guidance on this issue is already available. I believe that Clause 5 is unnecessary in what, if I may say so, is a pretty unnecessary Bill, so I support the amendments, particularly Amendment 55 and, indeed, the proposal that the clause should not stand part of the Bill.
As I say, quite a lot of guidance is already provided in the NPPF to local authorities on information requirements, and we need to allow some time for that to bed in before taking any unnecessary legislative steps to control local authorities in the information that they may seek. As the noble Lord, Lord Greaves, said, it is possible to see what the evidence is that local authorities are being overly prescriptive and requiring information that is otiose, irrelevant or unreasonable. I have had experience across the planning system, mostly from the point of view of organisations requiring information from applicants through local authorities, and I would say that it is the lack of information, or delayed or poor quality information, which creates uncertainty and causes delays that result in poor quality decisions and make it virtually impossible for other interested parties to have a full and fair view of the impact of an application. That is particularly true for some of the environmental requirements that local authorities seek from planning applications.
With regard to “reasonableness”, I am sure the Minister will say that reasonableness is reasonable, but that the wording removes from the local authority the ability to be the final arbiter, to be in the driving seat and to be able to reduce the level of uncertainty that can cause these adverse consequences for decision making. It would be much wiser to allow the guidance that has been issued so recently time to work through in order to see whether local planning authorities are making overly onerous information requirements. If they are, the guidance should be tightened because this issue is much more appropriate for guidance than for primary legislation.
It is interesting that the Royal Town Planning Institute is against Clause 5. Even the Law Society, while supporting Clause 5, quite rightly notes that careful guidance will be needed to avoid this provision becoming a new judicial-review weapon for third parties to stall developments. As an old hand at judicial review as a weapon to stall developments, I would not like to think that we were creating more opportunities to do that.
Lord Beecham
The noble Baroness, the noble Lord, Lord Greaves, and my noble friend Lord Hanworth have done a pretty effective demolition job on this proposal, without the benefit of planning permission.
Another issue arises from the impact assessment. That impact assessment purports to make another part of the case for the Government’s proposals, which relates to costs. On page 29 of the impact assessment, there is an analysis of the:
“Estimated savings for applicants under a central scenario assuming 10% reduction in costs”.
For the 347,800 annual applications, that comes down to something like £54.8 million, on the basis of a 10% reduction in costs. That is the net present value. The costs are £54.8 million and because of some mysterious rounding of the figures, the savings purport to come out to £6.5 million. It might be thought that that is not an inordinately vast sum of money in the scale of things, but it is perhaps worth saving if one could get it.
However, within that, it is significant that for major developments for dwellings, the annual savings would be £1.4 million, so it is hardly a material factor in holding up house building in the country. For a major development—not dwellings—the annual saving is even less, £0.9 million.
Where does the 10% figure come from? Why is 10% applied across the piece? Are the Government really suggesting that information required for a householder development, for which the savings per application are deemed to be all of £69 each, somehow will be of the same percentage order as those for a major development? That strikes me as highly unlikely. This seems to be a bogus figure plucked out of thin air to provide some sort of financial justification for this measure. In addition, the impact statement goes on to say that the Government intend:
“to introduce complementary changes to secondary legislation, which will have the effect of re-introducing a right of appeal where a council has failed to validate an application”—
presumably inter alia but not necessarily exclusively on the ground of lack of information—
“and the statutory time limits for determining a planning application has passed. This will address the impact of recent court decisions that have challenged the Planning Inspectorate’s ability to consider such appeals”.
If this is a significant issue—the Government appear to think that it is—why is there no amendment to the Bill? Why is it being done in the form of secondary legislation, which, of course, cannot be amended if it comes before your Lordships’ House? From time to time, the Government take opportunities to add things to Bills, sometimes in considerable numbers. Why is this matter not being added to this Bill but being left to secondary legislation?
Lord McKenzie of Luton
My Lords, we have signed up to most of the amendments tabled by the noble Lord, Lord Greaves, but did not sign up to his definition of “reasonable”, simply because one of his other amendments sought to delete that term from the Bill, which we thought was a better solution. Along with the noble Lord, we consider that the clause is superfluous, or unnecessary or pernicious, to use the terms of my noble friend Lord Hanworth. Again, we see a measure which is based on assertion and anecdote rather than on hard evidence.
The Government launched a consultation document entitled Streamlining information requirements for planning applications on 3 July last year, which they closed on 11 September. When are we going to get the Government’s response to that consultation? Will it be before or after Report? Interestingly, the consultation states:
“There is no immediate vehicle for further reforms to primary planning legislation”.
That was back in July and it somewhat reinforces our contention that this Bill has been cobbled together in pretty short order. The consultation focuses on three areas: outlying planning permissions; local informational requirements; and agricultural land declarations. In respect of local information, which, effectively, is dealt with in this clause, the document cites that, although the primary powers of local authorities in this respect are broad, they are constrained, in particular by the publication of local information equivalents and the evidence and particulars regarding what is required and by national policy requirements that state that,
“local planning authorities should only request supporting information that is relevant, necessary and material to the application”.
This is what the procedure order requires, as does the related guidance. The consultation document muses that recent changes, including the NPPF, referred to by the noble Baroness, Lady Young, and the demise of regional spatial strategies, will mean that the information requirements of local authorities are likely to be out of date and should be updated every two years. However, it is clear from this document that, if it is necessary to change the current requirements—for example, with a regular updating of information lists—there are already powers to do this.
This also raises the question of why the policy position set down in the NPPF is not sufficient and why it is considered that primary legislation—available, it seems, after all—is needed. There is already a requirement to be reasonable, so what does Clause 5 add other than confusion? I agree with the noble Lord, Lord Cameron, that some planning authorities struggle and are under-resourced. However, surely the answer is to make sure not only that they have clear guidance but are supported in their endeavours. It seems to me that this clause does not help them or move them on one jot.
Specifically, from whose perspective does reasonableness have to be judged? Is that not the role of the local planning authority that has to consider the application? At the end of the day, I fear that this clause is, like too many in this Bill, all about adding another bit of pressure on local planning authorities so that they are encouraged to ask for less, to decide more quickly and to avoid risking appeals, so undermining the quality of decision-making. If the noble Lord is minded at a point in time during our deliberations to seek to have this clause deleted from the Bill, we will support him.
The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Hanham)
Clause 5 amends Section 62 of the Town and Country Planning Act 1990, just in case that had escaped noble Lords. The clause sets out limits to the general power, under Section 62(3) of the Act, of local authorities to request information in support of planning applications.
There has been some debate today about why the clause is necessary. The department published the consultation paper on 21 January—indeed noble Lords’ attention has been drawn to it—and I hope that provides some reassurance on this point. With regard to the other consultation paper that was concluded in September, the Government’s response was provided on 12 December, so a response has been made. The consultation paper demonstrates how the provisions in the Bill form a critically important part of a wider package of deregulatory measures brought forward with the purpose of simplifying the planning system. As well as ensuring a better alignment between the National Planning Policy Framework and the primary legislation that governs information requests by local authorities, the consultation emphasises the need to place limits on the broad power that currently exists in Section 62(3) of the Town and Country Planning Act. This is to address the impact of recent court decisions and ensure that applicants can access the planning appeals system where there is a dispute with the local authority regarding what information is necessary to validate a planning application.
The noble Baroness, Lady Young, asked about the interrelationship between the National Planning Policy Framework and this clause. While the NPPF sets out a clear expectation on local authorities through policy, it is alone insufficient to overcome the interpretation given by the courts to the current legislative framework. The clause also safeguards the position of a local authority in requesting information, where a justification exists on the basis that the matter will be a material consideration when it comes to determine the application in question. Overall, I believe this change will bring a more balanced state of affairs whereby applicants and local authorities will work together to establish the amount of information necessary to get a particular planning application validated. Alongside our wider package, the clause will deliver a better and more proportionate approach to information requests and reduce the scope for disputes that can lead to delays at the validation stage.
Amendments 52, 53 and 54 would all considerably weaken the purpose of the clause and the achievement of the objectives I have just set out. Amendment 53 would amend the objective test in Clause 5 of whether a matter will be a material consideration in the determination of the application to become a more subjective test where the primary role is with the local authority to determine whether this is the case. That would undermine our attempt to address the broad powers of local authorities that have been the source of criticism by the courts. Similarly, Amendment 52 would essentially return us to the position that currently exists and has been found problematic: a subjective test decided by the local authority. A local authority would merely have to have regard to the nature and scale of the development when making an information request.
The purpose of requiring such information requests to be reasonable is to ensure that a local authority can justify whatever information it is seeking and can respond, if pressed, as to why it considers applicants should have to go to the often considerable expense of providing it. Presumably, that is something which we all agree is sensible and appropriate. Amendment 54 would continue in a similar vein, by weakening the requirement for local authorities to justify information requests on the basis that it is reasonable to think that they will be material considerations in the determination of the application to a looser requirement that they would be likely to be. Although I can understand the intention behind the amendment, we need to ensure that local authorities are clear, consistent and certain in why they think that information is going to be relevant to the determination of the application in question. Changing the test to “likely” will weaken the effect of this important principle.
Amendment 55 seeks to respond to the criticism that there is no statutory definition of what is “reasonable” by suggesting one. The definition attempts to set out circumstances which could definitively be considered “reasonable”. These would include information requests made by a government department, government agency or statutory consultee. As I have already said, the purpose of including “reasonable” in the tests is to require a local authority to justify why it considers information is necessary for the application to be validated. The likely requirements of a statutory consultee would clearly be a relevant justification as long as they are warranted by the circumstances of an application.
However, a tick-box attitude to the local list—there are indeed local lists of what information would be required—without consideration of the relevance of any particular item for a particular application will not do. Attempting to draw up in primary legislation a definitive list of what is and is not reasonable is not likely to be helpful and could create confusion. The tests that apply are already clearly set out in the NPPF and the clause as it currently stands clearly emphasises this.
What we really want is for local authorities and applicants to think these matters through together and, where differences emerge at validation stage, to have a sensible discussion about what is reasonable in the individual circumstances of the case. The concern that has prompted this change is that the law as currently drafted allows local authorities to refuse to validate planning applications indefinitely and simply to impose information requirements unilaterally on applicants.
In summary, I fully understand and respect the need for us to safeguard the ability of local authorities to request information from the applicant where it is essential to the determination of a planning application. Clause 5 and the associated proposed changes to secondary legislation achieve this. No harm will be created by the requirement for such requests to be justified and, if necessary, enabling matters to proceed to appeal for a decision. Indeed, we consider that Clause 5 will encourage both applicants and local authorities to work more closely together to ensure that the likely impacts of development are fully appraised in the documentation submitted with the planning application in question.
Lord Deben
I assure my noble friend that many of us are very much in favour of this clause as it responds to a real need and an articulated concern. The Government have sometimes seemed to have felt that the planning system is a much more powerful deterrent to growth than many of us feel, but this change will be welcomed by those who feel that local authorities often have a standard list of things, whether it is applicable or not. I hope that my noble friend will be able to spread this approach to others, because many institutions, authorities and businesses constantly ask for a lot of information which is totally unnecessary but do it because they always have done. I hope she understands that there is great support for her position on this issue, although some of us are more unhappy about other parts of the Bill.
Baroness Hanham
My Lords, I am grateful to my noble friend for that contribution. I am not sure that I can commit other departments and other parts of government to doing anything, but I am glad of his support for what we are trying to do here. It is important that we get this right. I have been asked for the evidence on which the change is based. Not only have concerns been expressed on the part of the development industry about delays experienced at validation stage and the costs involved but this has been a long-standing issue and was a key theme in the Killian Pretty review, to which I am almost certain the noble Lord referred at Second Reading—somebody did anyway. That review, commissioned in 2008, was of the planning application process. Most recently, the department consulted on proposals to amend secondary legislation to streamline information requirements. It was clear from responses from the applicant community that they wanted us to go further and look at the primary legislative framework, which is what we have done.
The noble Lord, Lord Beecham, referred to the impact assessment. The savings predicted in the impact assessment are based on a reduction in costs generated by a shift in behaviour as a result of the clause and changes to secondary legislation. Both the clause itself and related changes to secondary legislation are necessary to introduce the ability for applicants to access the appeals system. If I am pressed—which I see the noble Lord is about to do—I will be happy to write to him on the detailed points made.
Lord Greaves
My Lords, I am grateful to the Minister for that very detailed discussion of the amendments and the clause. I am grateful to all noble Lords who have supported the amendments and to the noble Lord, Lord Cameron of Dillington, for raising a slightly different issue, which he himself suggested would not necessarily be solved by this clause. Some planning authorities are finding it difficult to maintain an adequate standard of service at the moment. There is no doubt about that. I am not sure that that is only rural councils. In the past few days I have been told of a council that has only a handful of development control staff. Most small councils are in the same position. The council has reduced the establishment and encouraged people to take redundancy and so on. A high proportion of its few existing staff have got jobs in other places, which means that that authority is now down to one development control officer. That is clearly a fairly parlous position to be in. I am not quite clear how this clause will assist that local authority.
Having listened to the debate, I am coming to the view that, even if I were in any way tempted to seek to divide the Committee on clause stand part today, which I am not, I would be less likely to do so because it is less necessary. The more I think about the clause, and what it does, and listen to the experience of noble Lords around the Committee, the more I think it will not make very much difference at all. It might cause one or two authorities, which take a fairly slapdash approach to this and send a list without thinking about what is on it, to think a bit more sharply. However, in most cases it will not make very much difference. The more I think about it, the more I come to the view that I cannot tell the difference between it being reasonable to think it will and to think it is likely to be. Nevertheless, it was a useful discussion.
I am not sure whether we have an infestation of animals here now. No, my noble friend has dropped a sweet on the floor.
Baroness Young of Old Scone
While the noble Lords opposite are rummaging under the Benches, I wonder whether the noble Lord, Lord Greaves, might like to comment on the worry of the Law Society that I raised. He seems to be weakening in his resolve about this clause being unnecessary. I would like him to ponder on the fact that the Law Society is worried a bit about it becoming new judicial review territory which, as we know, is a great source of delay in planning applications.
Lord Greaves
I do take that seriously. If I am weakening, it is as to whether this clause will have any significant effect in practice and therefore whether it is worth while making the effort to remove it. There is lots of legislation which has no real effect in practice; we just accept that it goes through, I am afraid. However, with regard to judicial review, the ordinary applicants, about whom the noble Lord, Lord Cameron of Dillington, spoke, who might be having a modest expansion to their farm, business or whatever, are not going to go to judicial review. If there is a problem about too much information being required, I suspect it will concern those people. The noble Lord, Lord Cameron, is probably right that it is that sort of level of applicant. I do not think the householder applicant who wants an extension will be asked for lots of environmental information, and so on.
The big applications will have to provide the information anyway. If you are building a sizeable new housing estate, you are not going to get away without providing information on all the things that will be on the council’s list because they will include things such as drainage, the impact on the local roads and access into the site. They will want traffic counts and all the rest of it. You are not going to get away without that, whatever this legislation says. I suspect that they are providing all the information anyway and will continue to have to do so, while on the question of judicial review—for the people who would have the resources to go to judicial review—that is not going to happen in practice.
Having said that, I said at the beginning that one of my questions was whether discussing this clause at all is a waste of all our time. I suspect that it is but, nevertheless, I am grateful to everybody who has debated and to the Minister. These are important issues. I beg leave to withdraw the amendment.
Railways: High Speed Rail
(11 years, 10 months ago)
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Earl Attlee
My Lords, with the leave of the House I will now repeat a Statement made by my right honourable friend the Secretary of State for Transport in another place.
“With permission, Mr Speaker, I would like to make a Statement about our railways. Investing in transport infrastructure is not a choice. To create jobs and to rebalance our economy we need better roads, better airports and better trains. High Speed 2 is a central part of that investment: an engine for growth throughout our country. That is why, today, I am announcing our initial preferred route north from Birmingham and on to Leeds and Manchester. These new services will reach eight out of 10 of our largest cities: places such as Birmingham, Liverpool and Manchester, as well as Leeds, Sheffield, Newcastle, Glasgow and Edinburgh.
In all, 18 cities—and many more towns, too—will be served by HS2 services. HS2 will be completely integrated with the existing rail network, it will bring people and businesses together, it will create an estimated 100,000 jobs and it has the backing of businesses and cities across Britain. We will introduce legislation for the first phase in this Parliament and legislate for the second in the next one. Construction is set to begin in 2017. The first trains will run in 2026 and the second phase will open fully by 2033.
I would like to make three further points. The first is about the need for the line. HS2 will be the first main line to be built north of London for almost 120 years. Some say we do not need another, but the truth is that we are already good at squeezing the most out of our Victorian railway network and, yes, we will get even more out of it in the coming years with massive investment. We are electrifying 800 miles of track and building Crossrail and the northern hub upgrade. These will help to keep us going for the next decade or two, but what then?
Rail passenger numbers have doubled over the past 15 years and demand will keep growing. The west coast main line is filling up. There is not enough space for all the commuters, freight trains and intercity trains that need to use it. That is why I am publishing, after very careful consideration, my initial preferences for phase two of HS2. The case for going ahead rests on the capacity it will provide and on the new connections it will create. It is not just about faster trains to London, but also about changing the way our great cities work with each other. There will be easy links on journeys that are difficult today. It will give muscle to the economies of cities beyond London, producing an estimated £2 in economic benefit for every £1 that is spent.
I frequently hear calls from colleagues in this House for better services to their local stations. They are right to ask for them; High Speed 2 is part of the solution. By creating free space on existing routes, it will allow better services to places such as Milton Keynes and more trains for commuters in areas such as Staffordshire, Leeds and Manchester. I am determined to make sure the benefits of HS2 run much wider than the places directly served by the new line.
Let me turn to my second point: the detail of the route I am announcing today. This follows the Government’s announcement last year about phase one between London and Birmingham. On the western leg from Birmingham to Manchester, I propose two new high-speed stations. The first is in the heart of Manchester, right alongside the existing station at Manchester Piccadilly, allowing easy connections to places such as Salford, Stockport and Bolton and a journey time to London of just one hour and eight minutes, down from more than two hours today. The second station will be at Manchester Airport, giving direct access to the wider Cheshire area. HS2 also will serve Crewe via a dedicated link and high-speed trains will continue on the existing railway to Liverpool, Warrington and Runcorn. They will also benefit from greatly reduced journey times. Further north, near Wigan, HS2 will connect with the west coast main line. High-speed trains can then continue at regular speeds to places such as Preston, Carlisle, Glasgow and Edinburgh. I am working with our counterparts in Scotland on their aspirations for high-speed rail and I have already set out a long-term ambition to get journeys to Scotland below three hours.
Turning to the eastern leg, we will construct three new stations to bring people and businesses in the East Midlands and Yorkshire closer to Birmingham, the north-east and London. The East Midlands station will be located between Nottingham and Derby at Toton. Links will be upgraded to provide fast access to both. The second station will be at Sheffield Meadowhall. It already has good connections and these can be improved further, allowing it to serve all of Sheffield and South Yorkshire. The third station will be located in the centre of Leeds, alongside the South Bank area. As with the western leg, there will be a connection from HS2 on to the existing rail network. A connection to the east coast main line, just nine miles from York, will allow the north-east to benefit, too—London to York in just one hour and 23 minutes, and Newcastle in just two hours and 18.
Lastly, a decision on how best to serve Heathrow will be taken after the outcome of the Airports Commission has been considered by the Government. From day one, though, HS2 will provide far faster journeys than now via a major new interchange at Old Oak Common, linking to the Great Western main line, Crossrail and the Heathrow Express.
The third point that I want to make today is about design and help for those most affected. I know that this is an issue that many honourable Members want the Government to take extremely seriously, and we are. I know that although the line will benefit the country as a whole, it will also create great anxiety among those close to the proposed route, so we will consult properly, design carefully and compensate fairly.
Let me stress that today I am announcing an initial preferred route. This is the start of the process, not the end. We are ready to listen, ready to improve. I want this line to create jobs and prosperity, not harm them, so, where businesses may be affected, we will work with them to find a solution. We will now begin a period of informal consultation on phase two. This will inform the official public consultation, originally planned for 2014 but which I can announce will be brought forward to this year. The aim is to reach a firm decision on the route of phase two in 2014.
I understand how proposals such as these can affect property markets. So compensation will be as generous as on the first phase, and more generous than when we built the motorways. Today I am launching a public consultation on the exceptional hardship scheme for those who must sell but cannot because of HS2. Under this scheme we will pay the full price, valued as if there were no HS2. This will be followed by the next stage of our property compensation scheme, once the final route is confirmed.
There are not many issues on which all the political parties in this House agree; it often feels like there are none at all. This, however, is one because, regardless of the nature of the Government when the first trains run in 13 years’ time, what matters are the jobs, the rebalancing of the economy and our country’s future prosperity. I commend this Statement to the House”.
That concludes the Statement.
Lord Davies of Oldham
My Lords, I thank the Minister for repeating the Statement made earlier in the Commons. I welcome the Statement, of course. The Minister made the presumption that there was agreement between the major parties on this project and indeed there is. He will know that I endorse the main strategy that is proposed in the paper, and I welcome the fact that this announcement is being made today.
Inevitably, however, there are differences between us, and I will seek to identify some of them for the good of the Government in the time in which they have to make judgments on this important project. I emphasise to the House that in the long run this project will bring strength to the British economy and relieve the pressure on rail lines, particularly the west coast main line, which the Minister rightly identified as running at very close to capacity, but it has nothing at all to do with the rhetoric that he brought into the Statement about jobs and improving our economy at the present time. The idea that the proposals contained in the Statement, which, after all, refer to a project that will not be completed for over a decade from now, will bring an enormous stimulus to the economy and create jobs at present is quite erroneous. I rather regret that the noble Earl has rightly emphasised that we welcome this. Of course we will do our best in opposition and in government to see the fulfilment of the project.
There are inflections in this speech which seem to be addressed to our contemporary economic troubles. This project is too far away to actually deliver a great deal of improvement prior to the next general election or even several years after that. However we welcome the project for the reasons put forward by the noble Earl, not least in terms of the pressure upon existing rail provision in the United Kingdom. He makes the important point that no railway line has been created north of London for more than 120 years.
The Government are still not committing themselves to aspects which we would have thought would give a real sense of urgency to this timetable. Why does this Statement make no attempt to bring the legislation necessary for phase 2 into the timetable for phase 1? Surely one Bill—which might necessitate a carryover facility—dealing with the whole project is bound to be a better prospect than the Government going through all their travails over London to Birmingham, and then starting all over again with a fresh Bill for the lines north of Birmingham.
We also regret that the Statement makes no real approach towards another area of future transport on which we have sought to establish consensus, namely the future of aviation in the south-east. Why do the Government not address their mind to the possibility of a direct link to Heathrow? Surely that would improve connections as far as airports are concerned? It would certainly help with short-haul flights bringing people into Heathrow if they could then travel speedily by train. That would reduce the pressure on Heathrow for short-range flights and the slots which they occupy, giving the airport, with its present colossal problem, a chance to breathe. As the public know very well, every time we have two or three inches of snow, as we have had recently, there is a crisis at Heathrow because it is right up against the margins of capacity with no flexibility for dealing with such a situation. I regret that there is no suggestion of looking at a link to Heathrow.
Where northern cities beyond Birmingham are concerned, we welcome the fact that Manchester and Leeds are to be served. It should be recognised that we need to look at the rail infrastructure for link-up with other major cities apart from those two. High-speed trains will of course bring immediate and direct benefits to those, but we also need assurances from the Government that issues will be addressed so that those cities which are not directly on the line—only two are—will benefit significantly.
We are concerned about another dimension of the high-speed rail proposals. The lines from the north will connect with High Speed 1, the link to the continent. The intensity of interest in this possibility goes back decades. Since High Speed 1 has been in place, served by the magnificent station at St Pancras, there has also been great interest. However, what will happen to these trains from the north? When they get to London, they are meant to clank around the back part of the rail service which Transport for London regards as critical to all its services around London. That line, of course, has speed limitations, to put it at its mildest. The Government are still looking at a situation in which those from the north will have a slow perambulation around London if they are bent upon getting to the continent.
Nevertheless, there is a great deal in this Statement that we welcome. We welcome the fact that it is being made; at least that is an indication that the penny has dropped for the Government, and that there is some urgency about these matters. However we still feel that the Statement could have been much more clearly expressed in terms of urgency for getting this line constructed, to both Birmingham and the cities of the north.
Earl Attlee
My Lords, I am grateful for the positive endorsement from the noble Lord, Lord Davies. He thought that he had identified some differences between us; I do not think that he has succeeded. First, he said that he did not believe that this announcement has any current effect on the economy, and the effect would be all in the future, after the completion of the Crossrail project. However, HS2 Ltd has spent £188 million on this project over either the past financial year or the past 12 months; I am not sure which.
The noble Lord suggested that we should have one hybrid Bill. Noble Lords must understand that the hybrid Bill for phase 1 alone will create extensive and detailed powers. The work required to prepare the Bill is proportionate to the length of the line. It is much better to get phase 1 under way and, once it is, to seek approval for phase 2. There are several very large infrastructure projects under way, but they need to be consecutive, not concurrent. Therefore, Thameslink is nearing completion, Crossrail is starting, and we will then work on phase 1 of HS2 and, finally, start on phase 2. There is an interesting question of whether the phase 1 hybrid Bill should refer to phase 2.
The noble Lord talked about connecting services between HS2 and other cities. Of course, he is quite right. We are clear that the HS2 project must not interfere with and divert resources away from the rest of the railway network. Noble Lords will know that we are doing an awful lot of work elsewhere.
Finally, the noble Lord, Lord Davies, talked about the spur to Heathrow. The Government believe that the HS2 network should link to Heathrow, and our preferred route is for this to be built as part of phase 2. However, since January’s announcement, the Government have also established an independent commission chaired by Sir Howard Davies to recommend options for maintaining status as an international aviation hub. We have therefore taken the decision to pause work on the spur to Heathrow until after 2015. The proposals for the spur and station are not planned to be part of the phase 2 consultation in 2013. However, there will still be an opportunity to consult separately at a later time and include the spur in legislation for phase 2 if that fits in with the recommendations of the commission.
Lord Bradshaw
My Lords, first, we thoroughly support the recommendations. They are about capacity. However, you cannot talk about capacity and ignore the freight dimension, and the freight dimension has been totally ignored by the opponents of HS1.
Secondly, I want to talk about railway fares. We must be careful that we are not building what will be described in the media as a “rich man’s toy”. Is the Minister aware of recently published research which says that British railway fares are in fact lower than those in France, Germany and elsewhere on the near continent? Only fares at the highest peak here are more expensive than in Europe. Will the Minister contact the Rail Regulator and ATOC to see if we can stop these very large increases, often in commuter fares, which are so far above RPI plus one? Fares at RPI plus nine are not uncommon. The next time fares are revised we should attend to the fares basket, on which the fares are calculated, so that people are hit less. Commuters in places such as Manchester and Leeds have seen very little improvement to their services. They have rotten rolling stock that should have been got rid of years ago, and yet they are being called on to shoulder the burden of the investment when it will be a long time before they see any benefits.
Lastly, and briefly, outside the railway industry is where the benefits lie. If you look at Crossrail you will see already that the land and property values are rising very fast, but the railway gets no benefit in terms of the attribution of these in any economic forum.
Earl Attlee
My Lords, first, my noble friend touched on the needs of freight. He is absolutely right, because one problem that we face if we do nothing is running out of capacity on the west coast main line for both passengers and freight. So it is a major driver that we absolutely have to do this project to provide sufficient capacity for freight, because there simply are not the train paths for people to put on the services that they would like to run.
I am looking forward to answering an Oral Question on Thursday regarding railway fares, and my noble friend has been asking me numerous Written Questions about how the fares basket is calculated. One question that it is important to answer is: will it be more expensive to travel by HS2? The issue of fares will be considered in more detail as the project develops. However, our assumptions on the viability of HS2 and the expected fares income do not factor in or depend on a premium for high-speed services.
Lord Soley
Will the Minister assure me that, as in all other European countries, the Government recognise that our future hub airport, wherever it is located, must be linked to a high-speed railway line? Do the Government understand that?
Earl Attlee
My Lords, the most cautious approach for me would be to rely on the Airports Commission, but I am sure that it will take that very much into consideration. In the noble Lord’s submission to the Airports Commission, no doubt he will have mentioned that very point.
Baroness Chalker of Wallasey
My Lords, I thank the Minister for repeating the Statement. Will he pay particular attention to the cross-Pennine route between Yorkshire, Lancashire and northern Cheshire? We will get the real benefits for the north only if, in addition to HS2, we improve the links between the east and the west of our country in the north.
Earl Attlee
My Lords, my noble friend is right in general terms. HS2 is predominantly a north-south route and will link eight out of 10 cities, but to get the full benefit we need a complete network. We are doing everything we can to bring to fruition schemes that have a good business case.
Lord Stoddart of Swindon
My Lords, first, do I assume correctly that the £34 billion cost is estimated in terms of today’s money? If so, what is the cost likely to be by the time the scheme is finished in 2033? Secondly, how can the Government be so certain that the construction of HS2 will result in a better balance between the north and the south? Is it not possible that more people than ever would be attracted from the Midlands and the north to London and the south?
Earl Attlee
My Lords, I cannot answer the noble Lord’s first question because I do not know what inflation is going to do. As to his second question regarding whether HS2 will benefit only London: no, HS2 will play an important role in rebalancing our economy, thereby enabling British cities to work together as an economic powerhouse. I have already said that eight of the 10 top cities will be linked together. London will have Crossrail; it is now the turn of Manchester, Leeds, Liverpool, Sheffield and the east Midlands, with further benefits to Scotland and a whole host of cities in the north. We are not simply building a railway—a way to get between two points more quickly—we are connecting people and markets, and providing a platform for development and regeneration around station sites.
Lord Faulkner of Worcester
My Lords, I offer my wholehearted support for the Statement and the Government’s strategy on High Speed 2. It is 50 years this year since the Beeching report and 30 years since the Serpell report, which noble Lords may have forgotten had as one of its options a national network of just 1,400 miles. The transformation in the popularity of rail travel and the recognition of the role that rail can play in our transportation has been little short of astonishing. The fact that we can talk credibly about new high-speed railways to the north of England and Scotland demonstrates the fact that demand for conventional rail travel is almost at bursting point, as the Minister said.
Perhaps I may ask the Minister one question and make a further point. Today is very much an endorsement of the approach of my noble friend Lord Adonis, who introduced the very first White Paper on High Speed 2 and set this whole process underway. It would be right for the House to pay tribute to him and his foresight in paving the way for the announcement that the Government have been able to make today.
With reference to what the Minister said about high-speed trains running north on conventional railways, particularly on the west coast main line, can he give an assurance that signalling and other infrastructure on the west coast main line will be sufficiently upgraded to allow these trains to run—obviously not at 300 kilometres an hour but certainly closer to a line speed of perhaps 140 or 150 miles an hour? That will require improvements to the signalling. In that way, it might be possible to achieve the target of reaching Scotland within three hours, which I agree is a very desirable aim.
Earl Attlee
My Lords, I am grateful for the support of the noble Lord, Lord Faulkner of Worcester. I have no difficulty at all in paying tribute to the work of the noble Lord, Lord Adonis. This project is going to cover the life of certainly several Parliaments and maybe even several Governments.
The noble Lord talked about speed on the conventional system. One of the problems if we do not do HS2 is that we will have to do upgrade projects on the west coast main line that might look attractive in terms of a business case but, actually, one will eventually run out of capacity on that line, having spent billions of pounds on those projects. The noble Lord is right. I am not sure of the technical points on how we will reduce the journey times from Scotland to London to three hours, but I will happily write to him on that.
Lord Shipley
My Lords, I welcome the announcement very strongly. I have two questions for the Minister. The first relates to the date on which the second phase of the high-speed track north of Manchester and Leeds will join the east and west coast main lines near York and at Wigan respectively. Will the Minister assure the House that this will be done at the very same time as the link to Manchester and Leeds is opened? Otherwise, there might be a flight of investment capital from developers who wonder whether points north of Manchester and Leeds will actually be brought within the high-speed framework. The solution to that problem is for a guarantee to be given that it will be done in 2033, when Manchester and Leeds open. Secondly, I simply ask for confirmation that there will be no reduction in the plans for upgrading the east coast main line in the next 20 years, pending completion of the second phase of HS2.
Earl Attlee
My Lords, my noble friend asked me some important questions about opening events occurring at the same time. Unfortunately, I cannot give the assurance that the noble Lord wants; the date is too far away. However, I will take the point on board. My noble friend also asked me about the upgrading of the east coast main line. It is important to keep that line working properly, but of course we are talking about something quite a long way ahead. I therefore cannot give my noble friend any specific assurances, other than the key one that the HS2 project will not divert resources from the conventional railway system.
Lord Grocott
Like other speakers, I warmly welcome the Minister’s Statement. After all, in this country we built the very first railways and exported the technology to build railways across the world, although sadly in recent decades we have fallen behind. This is a very positive—and for me, exciting—development. I have two points to make from our history. The Minister might find the first reassuring; the second is a question.
The first, reassuring point was made by a railway historian working at the Ironbridge Gorge Museum in my former constituency. He helpfully reminded me that many cartoons and sketches of the 1830s and 1840s speak of cattle not producing milk, hunting and agricultural land destroyed, and the picturesque nature of the English countryside lost forever. I am sure that this is familiar to the House. We all understand the objections that will inevitably come from people along the line and I welcome the assurances that the Minister has given about full consultation. However, in a relatively short period of time, these railways became a treasured part of the landscape.
Secondly, I put the following less reassuring point to the Minister. This is an exciting prospect of about 300 miles of railway—I have not added it all up. The Victorians managed to construct thousands of miles of railway. They did it with picks and shovels, and they managed to do it pretty quickly. Is 2033 the earliest date we can talk about? I have always wanted to live until I am 93, and this would give me an added incentive, but surely it should be possible with JCBs and whatever else modern technology offers to slightly improve on that timescale?
Earl Attlee
My Lords, it is an exciting project. However, we need to be doing it for the right reasons, and I believe—as I think most noble Lords do—that we are. I am sure all noble Lords will agree that it is important that we have an effective and fair system of planning for these large infrastructure projects. However, as the noble Lord will know from his experience as a former government Chief Whip, the process for getting a hybrid Bill through Parliament is quite protracted; it is not an easy thing to do. However, we will do it.
Lord Deben
My Lords, will my noble friend listen carefully to the point that has just been made about speed? I, too, hope to travel on that first train. I would like it to come earlier because that makes it more certain that I will be in a position to do so. Secondly, will he congratulate his right honourable friend in the other House on producing a Statement that was as non-party political as possible, because we need consensus? It did not refer to the fact that since privatisation the use of the railway has increased enormously, and that all the fears that people had have been entirely reversed. It was right to leave that out of the Statement.
Thirdly, does my noble friend not agree that the grandchildren of the people who objected to the railways being built in the first place became those who were most determined to defend them after they had been built? We have to be very firm with those people who, for understandable reasons, do not understand that this country has been held back by its failure over many years to invest in infrastructure. Recent years have seen great change, with the growing of Crossrail and the rest of it. We are a very much more advanced country as a result. Frankly, nimbyism must not be allowed to stand in the way of Britain growing. Will my noble friend be tough about this? It will be easier to be tough if we do this more quickly. The longer we push it out, the more it will be possible for these people to gain support.
Earl Attlee
My Lords, first, of course I always listen very carefully to what noble Lords say. I am grateful that my noble friend thought that it was a non-party political Statement. However, it did say that passenger activity had doubled. In the past, when I had to repeat a Statement that had rather more political content, the noble Lord, Lord Davies of Oldham, did not resist the opportunity to give me a good and well deserved teasing.
We have failed to invest in infrastructure in the past. However, over recent years we have rather turned the tide and recognised the benefits of railways. I will be as tough as I can, but in my current position my capacity is limited.
Lord Ryder of Wensum
My Lords, in my experience, when I hear a Statement delivered by a Secretary of State in the other place claiming that the leaders of all the main parties are agreed on a major matter, it invariably turns out to be wrong. In this case, I am reluctant to spoil the celebration. However, in his first point, the Secretary of State in the other place made no financial and economic case at all for the scheme. While I do not expect to be around in 22 years when the scheme is meant to be finished, I am willing to bet that it will never be completed, because the expenditure that is now stated for the cost of the scheme will be inflated year on year, and ultimately a Government, either on this side of the House or the other, will put a stop to it. I am afraid that that has always been the case with the type of vast public expenditure that the Secretary of State effectively announced today without making any case in its defence.
Earl Attlee
My Lords, HS2 has a good business case. If local areas seize the opportunity it presents, we can expect the benefits to be even greater. We are continuing to work with stakeholders to realise these benefits. The latest available estimates suggest that HS2 will return around £2-worth of benefits for every £1 spent. HS2 has the potential to generate transport-user benefits with a net present value of up to £48 billion, and revenues with a net present value of up to £33 billion. The construction costs of HS2 are broadly similar to the sort of money we are spending on Crossrail, so the incidence of expenditure on the project will be affordable.
Lord Steel of Aikwood
My Lords, there was one slightly opaque sentence in the Statement, which otherwise I welcomed. It referred to consultations with the Scottish Government. Might I persuade the Minister to enlarge a little on that? The last thing we want is a good, high-speed service as far as the north of England and then second-rate ones thereafter.
Earl Attlee
My Lords, I can assure my noble friend that there are ongoing discussions on that particular issue between my right honourable friend the Secretary of State and the Scottish Government. The southern portion of the HS2 system has the better business case and therefore it makes sense to start that first, safe in the knowledge that Scotland will still benefit from the reduced journey times to London.
Lord Greaves
My Lords, this is a visionary and exciting day, but is it not ironic that most of the existing railway network in this country outside London was built in about 20 years in the Victorian period, whereas it is going to take 20 years to build one and a half new lines now? Is it not time that people started to look at a long-term vision of high-speed rail in this country, extending from the north-east of Scotland to the south-west of England as well as routes to London?
Earl Attlee
My Lords, the first point is that our democracy is a little bit more developed than when we started the railway system in the United Kingdom; it was easier to secure parliamentary approval in those days. I recognise that HS2 does not do anything for the West Country in itself, however noble Lords will know that the Great Western is a very fine line.
Growth and Infrastructure Bill
(11 years, 10 months ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
“Time when development began
In section 56 of the Town and Country Planning Act 1990 (time when development began) after subsection (4)(e) insert—“(f) such works as may be described in a condition attached to the relevant planning permission having been agreed between the local planning authority and the applicant for that planning permission.””
Lord Best
My Lords, I declare my interests as president of the Local Government Association, whose officers have, as always, done brilliant work in preparing amendments for the Bill, and as chair of the Hanover Housing Association, which is a relevant interest for the amendments that now follow and relate to affordable housing. These amendments begin with Amendment 55ZA, in my name and that of the noble Lord, Lord Tope, and continue with those in the next six groupings. All of them address concerns about the provisions in Clause 6, which allow developers to appeal to the Secretary of State—that means to the Planning Inspectorate—for a reduction in the level of affordable housing, which the developer previously agreed to provide. This new right for house developers would be activated if the local authority does not accede to a developer’s demands for such a reduction in affordable housing provision.
As we launch into debates on this new right for developers, I think it is necessary for me to spell out why I believe this clause needs serious modification. If I do this now, the Committee will be spared my making these points under each of the six amendments in my name in the following groupings.
First, developers have freely entered into legal agreements with local authorities pledging that they will allocate a specified proportion of the new homes that they build—perhaps 25% or 35%—to be let or sold on a shared-ownership basis to those who cannot afford the full market price. The developer has signed a deal which he believed would deliver a good profit. In normal circumstances, the agreement, under Section 106 of the Town and Country Planning Act 1990, would have to be honoured if property prices turned out to be lower than the developer had predicted. Equally, the local authority could not amend the agreement if prices went up by more than expected and the developer made a larger profit. For central government, using the Planning Inspectorate to overrule the agreement between the two parties in order to improve the profits for the housebuilder would represent a retrospective intervention to change a legal agreement freely entered into by two competent parties. I do not think it has ever been suggested that Machiavellian local authorities have hoodwinked innocent developers unfairly into signing Section 106 agreements. No, the developers thought they had a good deal and the retrospective tearing up of a private contract by central Government diktat would seem to set a sinister precedent.
Secondly, there is the question of fairness. To say the least, this clause is galling for those would-be buyers of a site who were outbid by a developer who, it now transpires, paid over the odds. The reason housebuilders are now seeking to renegotiate the agreements they signed is that they speculated on property prices rising inexorably, but now find that their profit margins will be less than they hoped. In outbidding others, including the many housing associations which have been prevented from buying land by the exorbitant prices these developers paid, they have taken a gamble which has not paid off. If their rash behaviour means that with hindsight they should have paid less for the land, is it fair on other more prudent housebuilders and housing associations for the Government to bail them out? Is it fair that Clause 6 should reward speculative developers by letting them off their obligations to ensure that they can make a handsome profit from the development?
Thirdly, I can see the argument that it is important to save a developer, even if he has acted foolishly, from going out of business because we need to maintain the capacity of the housebuilding industry through these difficult economic times. However, while property prices have fallen in real terms in some areas, particularly in Northern Ireland although it is not covered by this measure, prices have seldom dropped dramatically, and in parts of the London and the south-east, they have even continued to rise. Far from going to the wall, a number of major housebuilders have recently reported substantial annual profits and their share prices have risen significantly. That does not suggest a need to make concessions to prevent bankruptcies in the sector.
Finally, and most importantly, we should scrutinise Clause 6 with great care because it is likely to lead to a reduction in the amount of affordable housing at a time when there are desperate shortages, fewer and fewer households can afford to buy, and market rents are absorbing disproportionate percentages of average incomes. Local authorities are already making concessions in order to be helpful to developers, and if they have got to the point of saying, “This far but no further”, they have good reasons so to do. Section 106 agreements have been hugely important in securing a high proportion of all the affordable housing built over the past decade. These agreements have meant that the bulk of social, subsidised housing has no longer been built in separate, segregated estates exclusively for the poorest and on the cheapest sites. Rather, it has been integrated into mixed-income communities of tenants, shared owners and owners. Backtracking on the gains for local communities that have been achieved by planners through this route is really bad news.
Moreover, inclusion of this element in a development was a key component in the planning consent being granted in the first place. A block of flats in east London with little or no affordable housing may be sold virtually in its entirety to overseas investors and occupiers and will make little contribution to supporting Londoners who need somewhere to live. In rural areas it is likely that local opposition to development was considerably moderated because housebuilders signed up to some affordable housing on the site so that local people who had been priced out of the housing market could stay in the locality. I know that the rural case has been addressed in relation to the special case of exception sites in the government amendment we will consider with the Minister shortly, but I am making the more general case about all developments in more rural communities: take out the affordable housing ingredient and a significant reason for both local authority and community approval for housebuilding will be removed.
These are the reasons why Clause 6 needs to be amended, and the first amendment for consideration seeks to address the key argument against my list of criticisms. This is the counter-argument that despite the disadvantages I have set out, unless the developers in question are let off all or part of their affordable housing obligation, they will simply sit on their hands, do nothing and leave sites undeveloped. How much better, runs this counter argument, for development to get started, and for at least some affordable housing to be built, rather than for the land to lie idle.
The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Hanham)
Before the noble Lord sits down, I would draw the attention of the House to the fact that although he was making a very wide-ranging speech on Clause 6, his amendment is after Clause 5 and relates to one very specific matter. He has also coupled this with Amendment 55F, which appears in the ninth group today, way down the agenda, and which is not grouped with the first amendment. I wondered whether, before going any further, we might agree to speak to the amendment which is being moved and only that one for the moment. The noble Lord has tabled a whole parcel of other amendments to which he will want to speak to some extent, and we will get very confused if we do not go through the amendments in order.
Lord Tope
My Lords, I have added my name to this amendment in the name of the noble Lord, Lord Best, and will do my best to comply with the request. However, I thought it was very helpful, as it was intended to be, for the noble Lord, Lord Best, to set out fully and comprehensively the context in which we approach this. The Minister is of course right about where this amendment applies but one has to see it in the wider context and the noble Lord, Lord Best, did that very well.
The noble Lord has explained this amendment very fully. We are all too familiar with sites all over the country where planning consent has been given, somebody has come along a few months later and perhaps dug a couple of holes, and that is a “material operation” which satisfies the condition that the development shall have started. However, particularly in the current climate, nothing then happens for years and years. I have such sites in my boroughs. I look around the Chamber and see people nodding—we are all familiar with that position.
This amendment, or something very like it with the same purpose, would do great service in strengthening the intentions here—I nearly said the intentions of Clause 6, which is not quite right—to get development moving and to start getting the building. We are not really trying to start development here, we are trying to complete it. Starting by digging a few holes in the ground achieves nothing—what we want to see is the housing being built. Unless we have a clause or amendment similar to this one which requires developers and local planning authorities to decide in advance what is a “material operation” and what properly determines what starts a development, which would mean a lot more than just a tiny bit of infrastructure or my proverbial two holes in the ground—which is not just proverbial, I know places where it is quite literally that—then it is not going to be effective. The noble Lord, Lord Best, mentioned that planning consents already exist for 400,000 homes that have not been started. No doubt on many of those sites there are those two holes in the ground, but there is no sign of any homes materialising. If we had this obligation as part of the requirements that will follow in Clause 6, that would serve, to a significant extent, to ensure not just the starts but the much needed completions.
Lord Deben
My Lords, I hope the Minister listens to the specific concern to make this “in between” clause actually work. However, I hope she will not discuss this issue without facing up to one entirely unspoken problem, which both sides of the House have always had a very clear plot to avoid ever discussing. I find it unacceptable that we should run our supported housing on the basis that we tax people who need a house to pay for other people who need a house. This is entirely a fiscal arrangement that the Treasury has entered into because it does not want us, as a community, to pay the costs of people who need housing and cannot afford it.
So what we do is say that those who are least able to pay more than they have to for their accommodation shall be taxed to pay for others. This is a total scandal. I find this bit and the clause that will follow extremely difficult to support—not because I object to the clause, but because, once again, it hides the plot between Labour, Conservatives and Liberal Democrats never to admit the reality of Section 106. I very often agree with the noble Lord, Lord Best, and I respect him enormously, but to talk about Section 106 agreements being freely entered into is, frankly, nonsense. They are not freely entered into; they are a necessary requirement of getting any kind of development at all.
Lord Burnett
My noble friend Lord Deben makes a powerful case. Does he agree that it is sometimes forgotten by people looking at it from the local authority side that if developers or builders make a profit they pay corporation tax, income tax, capital gains tax or whatever the tax is? In addition, they have Section 106 burdens, and likely to be coming down the track—some have adopted it—is the community infrastructure levy. It will paralyse the industry again if we carry on loading it with these burdens.
Lord Deben
I repeat what I said in the earlier part of this debate. I declare an interest in the sense that I try to help people do sustainable development. That is what has led me to this deep concern. We talk as though the money that developers pay has no effect on the cost of the housing of the people who pay for it. Successive Governments of both parties have consistently spoken about this total myth. The truth is that prices of homes in this country are greater for first-time buyers than they would be if we did not tax them. It is undoubtedly for a good reason, but they are taxed and other people are not.
We have an intergenerational problem. Because of the way that all this works, people who do have houses have a value which is significant. Of course, many of us in that position mitigate it, because the bank of mum and dad has to make it possible for the next generation to have a home. Many people are not in that position. I want this Government to face up to the fiction, which we have all accepted—I admit to it as a former Minister—that somehow the mechanism we have is reasonable and fair. It is unreasonable and unfair. At this moment, when the pressures on young people are so considerable, we must come away from the idea that it is reasonable to accept the basic concept of the noble Lord, Lord Best, that somehow new houses sold on the market should carry that tax and then increase it because—as my noble friend has pointed out—of the other infrastructure taxes that will take place. Nobody else seems prepared to do it, so it is time for this House to say to the Government and Opposition, “This will not go on”. It is not reasonable that we should not, as a society, bear the cost of affordable housing, but shovel it off—because then it is not on the national accounts—to those who are least able to afford it, thus widening the gap between the haves and the have-nots.
Lord Lea of Crondall
I am grateful to the noble Lord for giving way. I used to dabble in this myself some years ago and I know how unenthusiastic the Treasury generally is about hypothecation. In so far as the proposition in this case is that that Treasury likes hypothecation, I suppose that the question could be posed—and it would be very interesting to know the answer: who are these other people in the rest of society who should be paying this if they are not in category A or category B under this supposed hypothecation?
Lord Deben
I am not sure that I entirely follow the noble Lord’s point, but it is true that the Treasury is keen on hypothecation when it suits it and against it when it does not, and this is one of those occasions. The trouble is that hypothecation ought to be between the payment of the bill and the advantages from the bill, but in this case it is not that, and many of those who have to pay the cost of Section 106 agreements are only just above the level of benefiting from them. It is because this is a fundamental flaw in the whole system that I come to be extremely disappointed in the Growth and Infrastructure Bill. As I have said previously, it is a pretentious title for a series of very small alterations, some of which are not terribly helpful.
However, there is a big alteration that we ought to make if we really want people to have housing, which is to say seriously that the cost should not be a tax on a small number and those who are most vulnerable; the cost should be a tax that we all bear for a proper social end. In case the Opposition say that I am moving in their direction, I say that they are as guilty as anyone else. They have imposed taxes in this area that are just as large and always excuse it as a tax on the developer. The developer does not pay taxes; he charges the cost to the people who buy his houses. That is the nature of the market; there is no way of avoiding it. I am very happy to support the drive of the amendment, which suggests that, if we are going to do this, we may as well make sure that we get bang for our buck by tightening it and toughening it. But, my goodness, what a disappointment it is that yet another Bill comes before this House masquerading behind this fraudulent concept that supported housing should not be supported by the nation as a whole but should be a price borne largely on the shoulders of first-time buyers. It is not right, it should not be and we ought to find a different way of dealing with it.
Lord Davies of Stamford
My Lords, the noble Lord, Lord Deben, has taken a broad interpretation of the scope of the amendment. I am glad that he has and the Committee should welcome an opportunity briefly to debate Section 106, because it is an enormously important factor in housing development in this country and the House is unlikely to have another, foreseeable opportunity, either during the passage of this Bill or otherwise, to discuss it.
The noble Lord, Lord Deben, argues, and I think that I can follow his argument fairly clearly, that since there is clearly a cost for developers in entering a Section 106 agreement, whether it is to build affordable housing or to meet some other condition that may be imposed by that agreement, that cost must be reflected in the price of the houses that they sell and therefore be borne by those who buy those houses, who happen to be a limited part of the population. I am sure that that is the noble Lord’s argument—I am sure that he will interrupt me if I have got it wrong. He leaves out an important factor in the equation, which is that if there were no Section 106 agreements fewer houses would be built. Affordable houses are built and receive planning consent only because of Section 106 agreements. If more houses are built, there is a greater supply in relation to a given demand, and that will be factor in the equation bringing down the average price of housing, although not necessarily by the same amount as the other factor in the equation brings it up. The noble Lord should take that point into account if he is to try to design a model for how the housing market works.
The noble Lord, Lord Best, set out his amendment with great lucidity and very persuasively—he of course knows a great deal about this subject. I thoroughly agreed both with his analysis of the situation and with his rather ingenious compromise solution, which we may well want to adopt at this particular moment, having got as far as we have. I deeply regret for two reasons that the Government have decided retrospectively to waive Section 106 agreements. First, it will deprive a lot of people of affordable housing. That is a very bad day’s work. It is just the opposite of what we need in the present situation and an extraordinary reflection of the Government’s priorities. The noble Lord, Lord Deben, was concerned also about people who can afford to buy a house which is not designated an affordable house. He might dispense a little bit of his sympathy for those who could not dream of buying a house which was not deliberately built to be an affordable house and was in other words at the bottom end of the market and a good deal cheaper than average houses in this country.
The second reason why I regret what the Government have done is that it seems to falsify to whole system of planning in this country. As I have just explained, many Section 106 agreements result in land being designated for development which otherwise would be not be so designated. The local planning authority, normally the local council, has quite rightly to make a choice, an arbitrage, between considerations, on the one side, as to whether giving planning consent for, let us say, development on green belt areas or areas outside the existing curtilage of towns and villages represents the loss of an environmental amenity, but, against that negative public interest, as to whether there is a positive interest which outweighs that, which in present circumstances is the need for affordable housing. Therefore, the planning authority in the discharge of its responsibilities has quite reasonably weighed those different aspects of local communities’ interest and come out in that particular direction. Now, of course, if the Section 106 obligations are retrospectively withdrawn yet the development goes ahead, it becomes no longer a balance but entirely a one-sided gift to the developer and the community loses both ways. On the one side, it loses through the loss of the land, the loss of the environmental benefit, the loss of the amenity benefit and the visual impact of the development, whatever that may be; on the other, it loses the benefits of affordable housing or the other benefits of the Section 106 agreement which has been entered into. That is a doubly bad deal for the local community.
I dealt with a lot of Section 106 agreements when I was in the other House and on one occasion took the initiative in brokering a major Section 106 agreement between a landlord, a developer, a district council—South Kesteven District Council—and Lincolnshire County Council as the highways authority in order to finance the southern bypass of Grantham. There was no way in the world that the southern bypass was going to get into the then Government’s road programme—it would not have the met COBA thresholds—but it could and was financed in that way. It took a long time and a lot of negotiation, but it was well worth doing. However, it would have been most extraordinary if, retrospectively, we had said to the developer and the landowner, “Well, that’s alright. You can have the planning consent, but you do not need to build a bypass any more”. That is effectively the sort of deal which this Government are now offering developers.
I have to say that not many people are doing very well out of this Government in this country. People on benefit are obviously suffering; the public sector has suffered greatly; the private sector has suffered enormously; and our Armed Forces are suffering. Everybody is suffering except, as far as I can see, two categories of people: those who are lucky enough to be earning more than £150,000 a year, whose tax rate has been reduced from 50% to 45%, and now real-estate developers and speculative builders. I have nothing against real-estate developers and speculative builders—far from it—but it is an extraordinary set of priorities which are reflected in what the Government are doing.
As the Committee knows, I was for a number of years in the Tory party myself—far too many years, I have say; I am very sorry and repent of that particular sin—but, nevertheless, I know a little about how it works. I must say that if you went to Conservative associations up and down the country and did an analysis by sector of the business activities in which donors to local Tory associations are involved, you may well find that that particular section of the market comes out very high. I do not wish to establish a causal link between the two things; I have no evidence to enable me to do that. However, I simply state these two separate facts as an interesting coincidence.
I have considerable distaste for what the Government currently propose, but we need a way out of this situation that makes some sense and makes sure that these developments take place and affordable housing is built. In that spirit, I very much endorse the amendment of the noble Lord, Lord Best.
Lord Alton of Liverpool
My Lords, I will be brief. I should like to support my noble friend Lord Best. I declare an interest as a vice-president of the Local Government Association.
My noble friend set out a good case for the amendment and I hope that even if the noble Baroness, Lady Hanham, is unable to accept it today she will at least take on the general thrust of his arguments, not just for this amendment but also for those that he said are in later groupings. I believe that he was trying to help the Committee by discussing some of those at this time in order to save time later on.
I was also taken by the remarks of the noble Lord, Lord Tope, who said that it is really everyone’s desire to see the spades in the ground and housing being built. I was struck by a report in the Times today about how over the next four years many people in poorer categories will see their homes defaulted on because of their inability to pay interest-only mortgages. Therefore, this already difficult situation, with homeless people in this country and people unable to get on the home ownership ladder, as the noble Lord, Lord Deben, said a few moments ago, means that we have to do all that we can to try to find space for affordable housing. We must ensure that those who are in homes at the moment will not have to renege on their mortgages and become part of an issue that then has to be faced by local authorities because they are under other obligations to find them temporary accommodation.
I think back to my own time as chairman of a housing committee in Liverpool 30 years ago when we had vast amounts of derelict land and no money at all to build large amounts of new municipal housing even if we had wanted to. We came up with an innovative scheme at the time which met some of the points that the noble Lord, Lord Deben, addressed in his remarks. By retaining the ownership of the site—the land—in the hands of the local authority, we were able to pioneer the building of low-cost homes for sale in inner-city Liverpool—the first that had been built there in virtually a hundred years. Perhaps more importantly, we gave first priority for those homes to people who were already in existing council properties. This meant that, at the same time as encouraging people into home ownership, we freed up their accommodation—at no cost to the public purse—for people on the housing waiting list. Perhaps, therefore, we should look at something along those lines for first-time buyers and for existing council tenants, who would be able to free up their properties and therefore not only stimulate the building of new affordable housing but also create rented accommodation for people currently on waiting lists.
The other point I would like to make to the Minister concerns the issue of integration. I agree with what my noble friend said about how, particularly in rural areas, it has been very good to have a mixture of social housing alongside quite expensive housing. This has enabled people to stay in communities from which they would otherwise be driven. I think that many noble Lords from all sides of your Lordships’ House will have seen how, in rural areas especially, people have been driven away because they simply cannot afford the cost of homes, which are often taken up as second homes by people who live in cities or urban areas. Our first priority should be to allow those people to stay in, and contribute to, their own communities. Similarly, in urban areas, having a mixture of rented and owner-occupied property ensures that we do not create the municipal Bantustans that stretch facelessly and often aimlessly from the railway lines to the cemetery, and which in the past have caused so many of the social problems that we have to deal with today.
Lord Burnett
My Lords, I remind the Committee that we have been through, and probably are still in, the most incredibly severe recession. It is an appalling recession and many building companies have gone broke. They have gone into liquidation. Unfortunately they and other companies have signed up to planning agreements which, because such almost impossible burdens are attached to them, sterilise the sites, development, and the ability to build on them. This clause, the thrust of which I very much support, recognises that fact, and some local authorities, to their credit, recognise it because they are already renegotiating these planning burdens. Local authorities recognise that they want some affordable housing rather than none. The quid pro quo argument made by the noble Lord, Lord Best, is well worthy of consideration as long as there are reasonable time limits.
Another thing that has not been mentioned sufficiently is that, even if you renegotiate a planning permission, that takes a great deal of money, time and effort. Let us get some planning done and let us get some houses built. We are building only about 100,000 homes a year. We need at least 200,000 a year. The noble Lord, Lord Deben, is absolutely right. Let us try to remove some of these burdens and get builders building again. There has been a fundamental change of economic circumstances. That is what the clause is trying to deal with and that is why I support it.
Lord Beecham
My Lords, the noble Lord, Lord Deben, made what Ministers are apt to call some interesting points, which usually presages a disinclination to approve them. However, he did make some interesting points, not least the thought that perhaps the Treasury should revisit the issue of how significant housing projects and more generally the construction industry, to take up the remarks of the noble Lord, Lord Burnett, might be supported. However, the argument of the noble Lord, Lord Deben, was too limited in some ways.
The assumption throughout the noble Lord’s speech was that we are talking exclusively about housing, but Section 106 agreements are not, of course, confined only to housing matters. Secondly, he assumed that affordable housing schemes are for owner occupation. Of course that is true of a greater proportion, but they are not necessarily confined to owner occupation. There is also a need—which is one of the reasons for these agreements in any event, as the noble Lord, Lord Alton, implied—for a mix of tenure which would potentially ensure that there is a social mix within the development. In addition, the noble Lord, Lord Deben, implied that we are talking only about first-time buyers. I do not know what the evidence is for that assertion. When new estates are built, wherever that is, there are certainly a number of first-time buyers, but equally there are people who are, as it were, trading up and who are not necessarily first-time buyers. The position is not quite as stark as he suggested.
It follows that we need to be very clear about what the policy objectives are. First, as everyone in this Committee and in the House generally would confirm, we need to build more houses. Secondly, they should be accessible, through one form of tenure or another, to a wide range of people, not least in order to meet the desirable aim of having the kind of social mix that would help avoid a divided society. There are different ways of doing this. Clearly, Section 106 agreements can facilitate matters, and we will debate that issue in greater detail later. However, I recall in the 1970s, when there was a collapse in the property market, that my local authority stepped in to buy up unsold new private housing developments. That may have happened in other places as well but I cannot say whether it did. They were taken into the municipal stock. Subsequently, of course, under right-to-buy, they virtually all left local authority ownership. However, this might be a way of freeing up the industry; if not properties that are currently built and standing empty, then at least local authorities or social housing organisations taking a share of a development, thereby providing initial purchases and helping to ensure that kind of social mix.
Lord Greaves
The noble Lord reminds me of what Pendle Council did when I was chairman of the housing committee, back in those days when we were all young. As the noble Lord may recall, it was possible because it was a central government initiative that provided the funding, by some means or other, whereby the councils could do that.
Lord Beecham
Precisely. I do not know whether the noble Lord, Lord Deben, would agree but that might be one of the lines of inquiry that the Treasury could pursue and the Government could adopt. The position is not quite as stark as the noble Lord was suggesting and I certainly support the amendment of the noble Lord, Lord Best.
Lord McKenzie of Luton
My Lords, let me say at the start that I support the amendment of the noble Lord, Lord Best. I was tempted to follow the Minister’s suggestion that we do not range more widely over this issue but I was sorely tempted by my noble friend Lord Davies, among others, to get into benefits policy, which I am very happy to talk about for a long time. I share my noble friend’s concerns.
Before I get into the detail of the amendment, I say to the noble Lord, Lord Deben, that the component that seems to be missing from the analysis is the value that accrues to landowners on development from the community granting planning permission and agreeing that they want their community to be in a certain way, as a mixed community. An alternative might be to have special taxes that you get from looking at the uplift in value from planning permission—I will come back on that point—and you might then have your national scheme. For as long as that does not exist, you surely need to recognise that by agreeing to grant planning permission the local community is giving value to the landowner and developer, and to those who are going to occupy the houses that are built on that land.
Lord Deben
There are two very quick things that the noble Lord has to take into account. One is: who pays that? I am merely saying that in our present circumstances, when people find it very hard to buy, first-time buyers and the rest of them are paying for that cost. Secondly, we have a little difficulty here because to have the view that planning permission is a privilege seems to be wholly against any concept of the right to property, which says you can do exactly what you like on it, if the community then decides that you are going to have that restricted. The noble Lord is entering a very much deeper philosophical discussion there. However, the crucial issue is: who pays it? If the person who pays is the one at the bottom end of the scale, as it very often is, we ought to ask whether it should be paid rather more generally. That is all.
Lord McKenzie of Luton
It seems to me that the value comes from the granting of planning permission in respect of the land. If you are going to argue that that has to be shared by the community as a whole, not just the local community, surely you need mechanisms to get that value raised and to redistribute it. You could not do it on the basis of the current tax system.
This takes me back to a point that I was going to make on the amendment. I recall that when I first went on Luton Council, in the mid-1970s, we had something called the Community Land Act, as I recall it, and the development land tax. It was then very much the name of the game for developers to go and dig a trench to demonstrate that they had started their development before those provisions kicked in. Normally, there was a photograph taken with somebody holding up a copy of the Times, or whatever, to validate that this was when they had actually dug the trench.
Lord Burnett
I wonder whether the noble Lord recalls that I referred to the development land tax at Second Reading. It was a good example of the fact that where you have prohibitively high rates of taxation—I think the rate of development land tax was about 80%—it actually sterilised development so that building just did not take place. That was the downturn to which I think the noble Lord, Lord Beecham, was referring.
Lord McKenzie of Luton
We did very well out of it in Luton, I am bound to say, but I should stress that it is not Labour Party policy to reintroduce this tax. We should get that clearly on the record.
So far as the amendment is concerned, I agree with the provision to make sure that there are mechanisms to clearly identify when there is a commencement of development. What I was not sure about, having looked at Section 56 of the Town and Country Planning Act 1990, is whether that overrides all the other things listed there as the commencement of development. For example, that section says that,
“‘material operation’ means … the digging of a trench which is to contain the foundations, or part of the foundations”.
I think that the noble Lord, Lord Best, referred to that but I am not sure whether his amendment overrides it. It would technically seem to need to do that to get the solution that the noble Lord is seeking—a solution with which I agree.
There are a range of broader points but I will forgo the opportunity now for my clause stand part debate and come back there as we go through the amendments in due course.
Baroness Hanham
My Lords, we are back in the situation we were in last time. I am not sure whether I am answering a Second Reading speech that went totally away from the amendment, a clause stand part or just something that everybody has made up around this amendment. While it has not been made up, I think an opportunity has been taken to have a very wide-ranging debate on the back of the amendment moved by the noble Lord, Lord Best. He will understand that I was trying to confine this debate to his amendment, although I realise now that that was absolutely hopeless and was never going to happen.
If I may start on the philosophical aspect of our whole discussion, I will pin it immediately to my thinking that everybody recognises that we desperately need to build. We need to build housing in this country for several reasons. The first, and most important, is that we have an awful lot of people without homes. As my honourable friend at the other end, Nick Boles, has pointed out, if we are not to have people in their 40s still living with their parents and still unable to buy property in the near future, we have to start building. Secondly, we are not going to jerk the economy back into life if we do not jerk the construction industry back into life. Those are two fundamental reasons why we need to make sure that the growth of housing takes place.
There are many elements to housing: housing for sale; housing that goes to right-to-buy; housing for shared ownership; affordable housing; and housing for rent. A great number of projects are all buried within Section 106. Perhaps I could remind noble Lords that Section 106 is responsible for a very great proportion of the affordable housing being built at the moment. The noble Lord, Lord Davies, said that we were getting rid of that. We are not. In this clause we are not waiving the requirement to build affordable housing. What is being said here, and what we are recognising, is that negotiations which took place some time ago when there was probably a very high market may now not be viable because of the affordable housing element, which may be a very large part of the Section 106 requirement.
We are saying to all local authorities: do what many local authorities are already doing; that is, to look at that obligation to see whether it can be reduced to make the whole project viable. If it does not become viable, developers are not going to develop—and if they do not develop, we can all wring our hands and talk about housing forever but it will not be built. If a small reduction in affordable housing brings that back into viability, it seems an exceptionally good reason to have those discussions taking place.
Lord Alton of Liverpool
My Lords, perhaps the Minister could comment briefly on the proposal that local authorities should be able to retain the land itself in order to reduce the cost of houses that are built, in order in turn to bring them within the pocket range of either first-time buyers or existing council tenants. Even if she is unable to give a response today, will she at least agree to write to me about it?
Baroness Hanham
My Lords, I would be very happy to write to the noble Lord, but my feeling is that, if the local authority owns the land and thereby gives it without cost to the developer, by definition everything ought to be lower cost and it ought to be able to have some more control over it. I think this justifies a further look and I will come back to the noble Lord.
Lord Best
My Lords, I am deeply grateful to all noble Lords who have joined in this debate. By covering a lot of the ground on this now, we have saved time later. I will respond briefly to some of the key points made. With regard to the powerful speech by the noble Lord, Lord Deben, I have been discussing these things with Housing Ministers and Planning Ministers for longer than I care to remember; it was the noble Lord, Lord Waldegrave—then William Waldegrave, the Planning Minister—who first introduced the idea of planning gain paying for new housing development. I remember those conversations. It started in Docklands, where there was a need for local people to see something for themselves when lots of new housing was being built that was much more expensive than they could afford; from that came this way of paying for affordable housing for a range of people.
Perhaps it would be better if one simply taxed more deeply the landowners, the house builders and the occupiers, and put the money in a pot to pay for affordable housing, but it would not then be produced in the way that the noble Lord, Lord Alton, was commending—on sites that are now a mix of owner-occupiers and people who are renting or in shared ownership, which are socially very valuable. In a way, the way in which planning gain operates is a tax, and there are really only three people who can pay it. As the noble Lord, Lord Deben, suggests, the purchaser—who may be a first-time buyer—will actually be charged what the market can bear and the market is determined by the 85% of properties that change hands in the second-hand market rather than those that are built new. The developer can charge only what the market will bear, and the purchaser will look at other properties as well. The purchaser is unlikely to see their price increase for that reason.
The house builder themselves cannot operate at a loss—they would just not be in business at all—so they cannot absorb all the cost of this tax themselves. It is, I think, the third party, the landowner, where the tax finally lands, because there is a very wide variation in the value of land for agricultural or other purposes and land for development, and that is where the tax really has been drawn over the years. That system has worked pretty well.
The noble Lord, Lord Davies, makes the point that this could be a double bad deal for local communities unless we get some changes. The noble Lord, Lord Burnett, noted that local authorities already renegotiated a lot of deals, and he approves of the idea of a quid pro quo now if we are to tamper with the Section 106 agreements.
Lord Best
I accept that with some gratitude. The noble Lord, Lord Alton, talked about the social mix on decent sites, which is an important part of Section 106. The noble Lords, Lord Beecham and Lord McKenzie, were supportive, for which I am grateful. The noble Lord, Lord McKenzie, wondered whether this way of approaching the issue would actually not work and one might require a different change to the Town and Country Planning Act. The point of this amendment is that it would enable a Section 106 voluntary agreement —yes, I agree, with some pressure—to be made between two parties, and that could specify the definition of what starting on site and getting going would mean. That would not require legislation; you can put anything into a Section 106 agreement. However, the inspectorate, in reducing the amount of affordable housing, would make that conditional upon agreement being reached about what it means to start on site. I think that it could work.
Clearly the Minister is not minded at this time to go for an amendment of this sort. She very properly applauds the way that Section 106 works and accounts for a lot of affordable housing today. Like her, I approve greatly of the work of Nick Boles, the Planning Minister, in energetically trying to ensure that we build more homes, not just to ease housing shortages but to help the wider economy. She brings some reassurance that the community infrastructure levy provisions might produce ways in which developers were obligated to get on with the job. I am not sure whether that is going to be enough and I reserve my position, but at this point I beg leave to withdraw the amendment.
“(1A) This section only applies in relation to English planning obligations agreed prior to Royal Assent.”
Lord Best
Apologies, my Lords, it is me again. The amendments that follow set out further proposals to moderate the likely adverse consequences of Clause 6. Amendment 55A in my name and those of the noble Lords, Lord Tope and Lord McKenzie, make it clear that Clause 6 relates only to planning obligations agreed in the past, which would usually mean agreed prior to the economic downturn when the foolhardy believed that house prices could go on going up for ever. The amendment, somewhat indulgently, would mean that cases of Section 106 agreement signed right up until the enactment of this legislation could still be subject to appeal and a reduction in the affordable housing component previously agreed by the developer.
I sincerely hope that the Planning Inspectorate would show little sympathy for the developer who has only recently entered into an agreement and almost immediately wishes to renege on it on the grounds that the project is no longer viable. The amendment would fix a clear end date to ensure that appeals, as is obviously the Government’s intention, relate not to the future but to the problems created by the economic downturn of 2008 and the years immediately thereafter. I beg to move.
Lord McKenzie of Luton
My Lords, we have a couple of amendments in this group, but perhaps I might make a few upfront comments now following our early discussions. Our concern about this clause generally is that it will lead to a reduction in the supply of affordable housing. Specifically on that point, I do not think that we have seen the equalities impact assessment for this clause; if we have, doubtless the Minister will let us know, but it would be very helpful if we saw that before we got much further into our deliberations.
The Government’s rationale for this clause is that there are sites where planning permission exists but where development has not started because the affordable housing obligation makes the development not economically viable. This obviously begs the question of how you define and calibrate viability and the extent to which it is the affordable housing obligation that is the cause of the project having stalled. We have received some data about estimates of the number of sites stalled and the housing that might be held up by this, but no real evidence of the extent—if at all—to which this is caused by affordable housing obligations, and our amendments seek to probe this. Can the Minister provide any further information? Will she provide us with a full report with a list of the sites involved and the numbers of affordable housing involved—that is, those sites where it is the affordable housing that is making them unviable?
We think that the clause is unnecessary because local authorities already have the power to renegotiate all aspects of Section 106 and they are using that power, as the Minister has previously accepted. Moreover, the Government have consulted on existing powers and the prospect of reducing the time—I think that it is currently five years—after which an appeal to amend the obligation can be made to the Secretary of State. What is happening with the Government’s response on that consultation?
This clause undermines and potentially discredits the local plan, a process that will have undergone public scrutiny and will have set affordable housing policies. In essence, judgments that have been made about meeting a locality’s housing need may be set aside for the economics of the here and now—set aside, indeed, for generations.
The Government have made play about providing additional funding—£300 million, I think—to support affordable housing. How is that to be applied? Could it not be used in whole or in part to move forward those sites that the Government claim are stored? Is that not a better way forward?
Amendment 55A in the name of the noble Lord, Lord Best, is one that we can support and to which, as the Committee have heard, we have added our name. It restricts the application of the clause to obligations that were entered into prior to Royal Assent. This would act as some restraint on developers overbidding for land and shutting out more responsible bidders that would adhere to local policies, with the prospect of being able to scale back commitments in future.
There is a wider point which we might pursue on Report if this clause remains. As I have said, the Government have been pursuing what they call a separate proposal to allow renegotiation of wider Section 106 planning obligations but only those agreed prior to April 2010. So far as I am aware, we have not seen the response to that. The consultation says:
“We consider that 6 April 2010 is an appropriate cut–off date for this change. New statutory tests were introduced for most planning obligations on 6 April 2010 which ensure that obligations agreed after that date must only cover what is necessary to make the development acceptable, must be directly related to the development and reasonable in scale and kind. It is also clear that a high proportion of stalled developments are dated prior to April 2010 when market conditions were different”.
It is surely the case that this logic applies to affordable homes obligations as to any other Section 106 obligations, so the Government should have no difficulty in accepting the cut-off proposed by the noble Lord, Lord Best, which is apparently less restrictive than the Government’s own thinking.
Amendments 55AA and 55CC provide that an application to modify an affordable housing obligation cannot be made within a certain time of its being entered into. The amendment sets this at two years from the beginning of the grant of planning permission or as may otherwise be prescribed. The purpose of the amendment is obvious. Clause 6 should not run when the Section 106 agreement is reasonably fresh. Consideration of economic viability is not without cost, time and expense and there should be encouragement on applicants and local planning authorities to get it right first time. Knowing that the affordable housing obligation cannot be unpicked for a period of time will at least help to concentrate the mind. It will also strengthen the role of the local planning authority in clearly establishing that its deliberations cannot be immediately brushed aside.
We have added our names to the sunset clause; it has not formally been moved but I will add my comments as I am on my feet. Our preference is for this clause to be removed in its entirety. Failing that, limited by the type of amendments that we have just discussed, time limit in the application of the clause would serve as a backstop to other amendments, giving it a limited life of three years. The rationale for a limited life for this clause was—I think—going to be set out by the noble Lord who was due to move it and follows the analysis in particular of the National Housing Federation. Over the next three years the NPPF should have bedded down and its focus on taking account of the viability of affordable housing should be well established. We are told that the clause is necessary in the first place because of the economic downturn. I presume—despite current GDP figures—that the Government would not argue that this will continue indefinitely. In any event, commitments made in better economic times are washing through the system.
The Government clearly see the clause as having some time limit as Clause 6(4) enables the Secretary of State to repeal by order Section 106BA and 106BB. Perhaps the Minister can say what the Government had in mind for the application of these provisions. What criteria will the Secretary of State have in mind when looking to activate this power and to repeal the clause?
Lord Tope
My Lords, I do not think that I can actually move the sunset clause. Amendment 55CD is in a group, so it would be a little premature. I will most certainly speak to it. I was offering the noble Lord, Lord McKenzie, the courtesy of allowing him to speak to the amendments in his name which are earlier in the group.
Amendment 55A is also in my name, and I am very pleased to support it. As both the noble Lords, Lord Best and Lord McKenzie, have spoken to it I do not think there is anything I need to add at this stage other than to listen with interest to the Minister’s reply. The noble Lord, Lord McKenzie, has inevitably done some of my job in speaking to Amendment 55CD and I welcome and endorse what he had to say on that. It is indeed a sunset clause. It would mean that this section will no longer have effect three years after the Bill is enacted. That is because it should no longer be necessary three years after the Bill is enacted.
The NPPF was adopted nearly a year ago and it stressed the importance of ensuring economic and financial viability in all affordable housing schemes. The NPPF should be doing that job and should continue to do that job. Local planning authorities in their negotiations of Section 106 agreements should be taking that very much into account with developers; Section 106 agreements from henceforth, as long as they last, should meet this requirement. Who knows when the current economic difficulties will come to an end? I hope that that will happen one day—they have certainly been in place for rather longer than a year or more.
It is our view that this clause, which has not found universal favour in your Lordships’ House, really should not be necessary after three years. By that time all the existing Section 106 agreements will have either been implemented or expired. Planning consents extant at that time will have been granted under the regime of the National Planning Policy Framework; therefore this clause should cease to be needed and cease to have any effect. That is the reason for the sunset clause which I now speak to, but do not move.
Lord Beecham
My Lords, in September last year Housing Voice, which calls itself the Affordable Homes Alliance, published the report of an independent inquiry into what it termed—rightly, we would all agree—the affordable homes crisis. The inquiry was chaired by my noble friend Lord Whitty and part of its analysis was to stress:
“The social rented sector is becoming increasingly residualised”.
It pointed out that not enough local authority and housing association homes at social rents were being built to meet need. At that point the waiting lists in England stood at 1.8 million and there were concerns about the Government’s policy as to whether current social housing programmes were adequate. In particular, reference was made to the operation of the affordable rent model under which homes are let at up to 80% of market rates and the introduction of shorter-term, less secure tenancies. That again raises the question of what we are talking about in terms of affordable homes. What is the definition of affordability? In particular, what do we mean by affordable homes for rent?
I notice that the Secretary of State dominates the front page of the Daily Telegraph today with his denunciations of councils—some of them Conservative —for having the temerity to raise council tax to the extent permitted by the Government without having a referendum. The same Secretary of State had no hesitation at all in increasing council house rents by 5.1% which is two and a half times the maximum that a council could raise its council tax.
Leaving that aside, it would be interesting to get the perspective of the Government and that of the Minister on what the Government actually mean by affordable homes in terms of price and the income that might sustain that; rents and the income that might sustain them; and in particular the proportions within projects that should be devoted to the different types of affordable housing. The scheme in the ward that I represent in Newcastle—I hope that it is going to appear on the ground as opposed to being a rather subterranean task being discharged by the contractors—will see 25% of houses being allegedly affordable at the moment. Of that only a small proportion—10% or less of the total—will be for rent. In the economy of my city and several other places that strikes me as a rather low figure. Ironically the development will start with the affordable homes rather than the others because at the moment the market is unlikely to sustain those which even the developers would not regard as being within that category. A little enlightenment would be helpful.
Lord Greaves
The noble Lord makes some good points. I will put a slightly different scenario to him and ask what he thinks. In an area where development is difficult to get under way because it is not a growing or economically buoyant area—I am obviously talking about my own area—clearance took place under the old housing market renewal scheme, so there are small brownfield sites. The council will provide those brownfield sites for free to the main local social housing landlord, the RSL which deals with the former council stock. The intention was to build mixed developments of affordable housing on there, some of which would be for sale and some for rent. However, when you take into account free land, the cost of developing the site and the rents which can be charged in a low-rent area over the next 30 years, as against the costs of developing and management during that period or the price that would have to be charged for affordable housing for sale, the figures just do not add up. Those sites remain undeveloped because they are not affordable to the RSL under the existing rules and regulations. Does the noble Lord have a solution?
Lord Beecham
If I did, it would not necessarily be one that has as yet been reached by my colleagues at the other end of the building. I cannot be writing Labour’s housing policy, much as I would like to.
We need to go back and consider the point which I thought that the noble Lord, Lord Deben, was implying: the Treasury and the Government have to look at the extent to which public investment is required to meet the housing crisis that we are facing, if only because that will have wider impacts upon the economy as a whole. It is as good and necessary a time for that kind of investment to take place, given low rates of interest in borrowing and the need on the construction and housing sides. I think an element of public subsidy would be desirable, but I emphasise that I am not authorised to make any such pronouncements.
Lord Greaves
Of course, they were originally going to stack up because the relatively small gap funding required there was going to come through the housing market renewal scheme. Unfortunately, the coalition’s abolition of that scheme now makes it impossible.
Lord Beecham
There is, of course, also £300 million in the Government’s programme for affordable housing. I have today tabled a Question for Written Answer, which might be anticipated by the Minister, as to where that is going.
Baroness Hanham
My Lords, I apologise. I was not sure whether the exchange across the House had been totally completed.
Baroness Hanham
My Lords, within this group of amendments we cover some of the ground we have already covered, so I will try only to fly over the top of that. These are important amendments and I want to do them justice.
Clause 6, as we have discussed, has a clear and specific purpose: to get houses built. It will deliver private and affordable homes where those homes are currently stalled. As I said at Second Reading, stalled sites represent no local growth, no community benefit and no new housing. Across the country, we have 1,400 stalled sites, with the capacity for 75,000 homes, including affordable housing. The noble Lord, Lord McKenzie, asked me whether we could say how much affordable housing was caught up in this. Local authorities hold that information; it is not necessarily passed back to central government. I therefore cannot give him a definitive response to that, except to say that we know that a good percentage of that 75,000 is affordable housing.
We know that many councils are voluntarily renegotiating to bring sites forward; we have discussed how this can be voluntary. We are in favour of this good practice. We are supporting this approach through a mediation service, bringing together local authorities and developers to help unlock sites, so that they can come together, discuss it and see how they can move on. But where authorities and developers are unable to come to agreement, developers should have a right to challenge. Current legislation prevents the developer appealing formally for five years. This is too long when we need homes.
There may need to be a fundamental review of obligations for those agreed at the peak of the market. We intend to make regulations in the coming weeks to allow earlier renegotiation of all planning obligations agreed prior to April 2010. That was a point made by the noble Lord, Lord Beecham: voluntarily, before 2010, you could do that but the regulations will make that part of legislation. These negotiations can take time and be costly and complex, so we are also ensuring that there is a rapid, focused mechanism for a review of the affordable housing element only, where the viability of the scheme is at stake, with a right of appeal to the Planning Inspectorate.
Affordable housing often comprises the largest single contribution on residential schemes, which is why we have focused there. Research in 2007-08 found that about 50% of all planning obligations are for affordable housing. There should also be capacity to vary the affordable housing provision in most cases. The noble Lord, Lord Beecham, asked what we meant by “affordable housing”. That can be found on page 50 of the National Planning Policy Framework. I will give a snapshot and then the noble Lord can look it up for himself. Affordable housing is:
“Social rented, affordable rented and intermediate housing, provided to eligible households whose needs are not met by the market … Homes that do not meet the above definition of affordable housing, such as ‘low cost market’ housing, may not be considered as affordable housing for planning purposes”.
Those are the three major elements.
It is important to understand that we are not proposing that developers can somehow avoid their obligations, which was suggested by the noble Lord, Lord Davies, earlier. We are simply allowing a review to be made to ensure a viable and deliverable scheme as agreed. Furthermore, we are not proposing that developers can ensure blanket removal of affordable housing requirements for their schemes. We are requiring an evidence-based approach that will adjust the affordable housing requirement by only the amount necessary to bring the scheme into viability. This would not be wholesale removal except in the most extreme cases.
Evidence will be key to this process. Developers will have to submit revised evidence to the local authority to justify why their current planning obligation is not viable. The local authority will be free to respond to this proposal and be able to collect its own evidence if it wishes. Concerns are often expressed about the quality of viability evidence. However, robust evidence must be the best basis on which to make a judgment on the viability.
To assist as much as we can in ensuring consistency in how developers and councils approach this new process, we intend to issue guidance to support this clause. The guidance will not advocate a single methodology for viability assessment, but it will work with industry practice. It will be clear on what developers need to do to support their application for review. We will discuss the guidance with professional bodies and it will be published in due course, but I hope that we will be able to have a discussion about it before Report. The guidance will also be clear on the flexibilities open to local authorities to encourage developers to start on site and to get development going.
Overall, this measure presents a real opportunity to stimulate local housing growth by ensuring that consents are viable and realistic. The provision will not affect those affordable housing contributions that are planned on viable sites; in other words, where the costing stacks up, the developers cannot come back and suggest that they contribute less affordable housing. However, the measure provides for adjusting unattainable levels of affordable housing on unviable sites. Those values may have been estimated during a high point in the market, and we are clearly not there at the moment.
I turn now to the amendments in this group. Amendments 55A and 55CD would limit the life of the clause to those planning obligations in place at the time of Royal Assent or three years after Royal Assent—this is the sunset clause. I understand the arguments being made that the intent of the clause is to address obligations made in different economic circumstances. It is about giving developers the opportunity to review affordable housing requirements and bring forward stalled sites. The difficulty that I have with the amendment, which allows applications in relation to existing obligations only, is that it assumes that we are now in a period of stability in the market and that any obligation made currently should not be challenged on the grounds of viability because we know that all is well in the property market. If we knew all the factors that were to be involved and their impact on a developer’s viability—namely, construction costs, sales values and borrowing costs—and if those were certain and fixed for the foreseeable future, we could focus on the past only. However, evidence from public sources, such as the Office for Budget Responsibility, indicates that we are not actually there yet. Evidence indicates varying performance up and down the country. House price growth remains subdued across most of the country. The recently announced 2.5% house price increases in England were driven by a 5% rise in London and a 3% increase in the south-east. Elsewhere across the country there is still a wide variation in house price growth.
There remains uncertainty in the housing market. The Government continue to provide strong support for housing growth—for example, the NewBuy and FirstBuy schemes—and we are making progress. Net additions are up 11%. Nevertheless, the wider market remains uncertain. While transactions are up year on year, they are down around 47% compared to pre-recession levels. So we do not yet have the certainty that we would like on the housing market and associated viability. The clause already includes, as noble Lords have said, a provision to allow the Secretary of State to switch off the provision by order. This has been drafted in a way that allows for a judgment to be made at the appropriate time, based on the state and stability of the housing market.
However, I am clear from the debate that we have had today that greater certainty on this would be desirable. I am also very conscious of the report published last week by the Delegated Powers and Regulatory Reform Committee of this House. We are giving the report and its recommendations very careful consideration, especially in relation to the suggestion that a sunset date should be considered. Therefore I think it would be more helpful if we return to this matter on Report, and I hope that I can have some further discussions with noble Lords before we get there.
Lord McKenzie of Luton
I am grateful to the Minister for her detailed replies. Perhaps I may follow up on one or two points. I asked whether an equality impact assessment of this clause had been produced and, if so, whether we could see a copy of it before Report. I did not quite follow the rationale about the £300 million of additional funding for affordable housing. The Minister said that it was for new housing. If we are talking here about less housing than there otherwise would have been, it seems to me that that itself is not a logical reason not to be able to apply it to supplement Section 106 agreements, which are assumed to make a particular site incapable of being economically viable.
The Minister helpfully talked about guidance for issues around viability. I was not quite sure—perhaps I missed it—whether she said that we are likely to see a copy of that guidance before we get to Report.
I revert to the issue of the extent to which sites are stalled by affordable housing obligations. Is the noble Baroness at least able to publish a list of the 1,400 sites where the 75,000 houses are to be built, and say whether it is those plans that are causing the sites to be unviable? Local authorities may have that information but is there no central collection of it that can be shared with us? That would be particularly helpful.
Finally, perhaps I may come back on the cut-off point. As I understand it—and as I think the noble Baroness confirmed—the broader consultation on Section 106 agreements and the current five-year rule will have as its starting point agreements that were entered into prior to April 2010, on the basis that agreements entered into after that point would have recognised the current state of the market. If that logic runs for that scenario, why does it not apply equally to consideration of affordable housing? I am a bit unsure as to how those two different processes will interrelate.
Baroness Hanham
My Lords, I can deal with the final point first. As I have said a number of times, the clause is specifically about affordable housing. It is perfectly up to local authorities, even at the moment, voluntarily to renegotiate any aspect of Section 106 applications made before 2010. Regulations are coming out soon to make sure that that can be done anyway.
This clause relates only to affordable housing and the expectation is that this will be a pretty swift operation. Negotiating other aspects of Section 106 agreements may take quite a long time because there may be a lot of elements. However, affordable housing ought to be dealt with swiftly by the local authority or the Planning Inspectorate. We want decisions on this that generate affordable housing. That is why the issues have been separated; there is a single focus here. However, that does not discount other aspects of Section 106 being looked at voluntarily. Ultimately, there will be a statutory requirement.
Lord McKenzie of Luton
I understand why the Government are saying that the issues should be separated; whether I accept that logic is another matter. However, in relation to having one cut-off point of April 2010 because agreements entered into after that would have recognised the current market conditions, why does that issue not run for both scenarios—whether it relates to affordable housing or other components of Section 106 agreements? Why is it 2010 for one but an unlimited starting point for affordable housing?
Baroness Hanham
My Lords, I think that the answer is simply because affordable housing is such a significant element of this particular argument. I may have to write to the noble Lord about this pinch point and come back to him.
As regards the £300 million, I said that we will not make a blanket commitment to fill the gap regarding the aspiration of affordable housing, which is what we have been talking about—the idea of granting affordable housing requirements in the event of a Section 106 agreement being renegotiated. I have not ruled that out entirely but I have, more or less, said that I do not think that we could have such a provision. However, the matter is still being looked at.
Lord Greaves
On the question of the two types of Section 106 agreements, if renegotiation of non-housing Section 106 agreements can be done in regulations, why does it need to be in primary legislation in relation to housing?
Baroness Hanham
That is because we are concentrating here only on affordable housing. Putting this in primary legislation means that the provisions come into effect immediately after Royal Assent and we do not have to spend time working out regulations. These provisions are in primary legislation because this is an important aspect of getting sites unlocked.
Lord Best
My Lords, this has been an important debate. My amendment and some of the others in the group are about there being a cut-off point for the provisions in Clause 6. We know that the Government’s target is, as it should be, agreements made before the peak of the market back in April 2010. I take the point that economic uncertainty—the possibility of things getting worse—prevails; however, one would hope that developers will not enter into agreements from now on without recognising the dangers that they can get into.
My housing association is trying to acquire sites even as we speak, and we keep being outbid by people who we think are paying ridiculous prices for the land. They are entering into Section 106 agreements with their local authorities. It would not be fair on those who are playing the game properly if, later, those who go out and pay far more than they should for a site come back and say, “Sorry, the scheme is not viable with this Section 106. Can we have it reduced?”. That is not a fair way to operate and I think that the Government accept that. I take comfort from the fact that on Report we will hear more about this matter. Therefore, at this stage, I am delighted to withdraw the amendment.
Lord McKenzie of Luton
Lord McKenzie of Luton
My Lords, I shall speak also to our other amendments in this group—Amendments 55AF, 55BB and 55BD.
Amendment 55AB would delete one of the options available to a person seeking easement of an affordable housing obligation—the complete removal of the obligation. To allow that would lead to less of a mix in our communities and less land available for affordable housing. We will come on in other amendments to adherence to the local plan, but I remind noble Lords of the NPPF requirement for local planning authorities to,
“use their evidence base to ensure their Local Plan meets the full, objectively assessed needs for market and affordable housing in the housing market area”.
The prospect of removing the entirety of an affordable housing obligation is not just a short-term issue. The consequences last for years, perhaps a century or more—the chance denied for the creation of inclusive and mixed communities.
Amendment 55AF is the link to Amendment 55BB and is concerned with circumstances where the value of land on which planning consent has been granted with an affordable housing requirement has increased. If the requirement has not been met and the obligation not fulfilled within two years, the amendment would enable the local authority to initiate modifications to the obligation. The implication was that there could be an upward revision of the affordable housing requirement. This is consistent with Amendment 55B of the noble Lord, Lord Best, which would delete provisions that prevent modifications to affordable housing obligations that are more onerous. Such a provision would clearly encourage developers to make speedy progress on their affordable housing obligations and discourage them from sitting on their sites, waiting for land values to increase. This is an issue of basic fairness. If affordable housing is to take the hit when land values fall, why should the reverse not apply? We recognise the need for due process in this approach—perhaps a right to appeal to the Secretary of State—but this amendment seeks just to establish the principle.
Amendment 55BD addresses the timeliness of an implemented and modified affordable housing obligation that has been determined by the local planning authority —that is, an obligation that has not involved an appeal to the Secretary of State under new Section 106BB of the Town and Country Planning Act 1996. It requires the revised obligation to be met within two years; otherwise the original obligation will stand. This approach is consistent with that provided for in modifications determined by the Secretary of State, except that there is a three-year period in that case, which we will seek later to amend to two years. I beg to move.
Lord Best
My Lords, Amendment 55B in this group, which is in my name and those of the noble Lords, Lord Tope and Lord McKenzie, would enable the planning inspector to rule, after looking at the situation, that the level of affordable housing should be increased, rather than only being able to decide that the affordable housing component must be reduced. Without this amendment, the housebuilders have a one-way bet. They cannot lose by going to appeal, and they might win. This is a recipe for developers to simply “have a go”. The amendment would ensure that there are appeals only where a robust and well evidenced case can be made for a reduction, so it should deter frivolous and unsupported applications.
Baroness Hanham
The noble Lord, Lord Best, has spoken to Amendment 55B, which seeks to allow the modified obligation on first applications to be more onerous than the original obligation. If a developer undertook a voluntary renegotiation, he would neither expect nor agree to more onerous terms. He would expect to come out with something better than he went in with. He would revert to the original, agreed obligation if the negotiation was unsuccessful. Under this application process, we want to replicate these circumstances for the first application. It provides an important incentive for developers to come forward and review their schemes. We need housebuilders to bring sites forward and I hope that this provision will ensure that they do this.
The clause also provides an important distinction between the first and subsequent applications to encourage the developer to proceed quickly. Under the first application, the affordable housing requirement must be reconsidered if it is found to be causing the scheme to be unviable. The local planning authority must modify or remove it so as to make the development viable, and the outcome must not be more onerous than the original obligation.
In relation to a second or subsequent application relating to the same planning obligation, the authority has more flexibility in amending the affordable housing requirement. Where it is justified on the basis of economic viability, the affordable housing requirement could be made more onerous than in the original obligation. The only restriction is that the amended obligation must not make the development economically unviable.
The distinction between first and second applications provides a real incentive for developers to reach a new agreement on their affordable housing requirements on the first application and to get on with building. It discourages repeat applications unless the developer is very clear that viability evidence supports their case. It also provides an important incentive for them to come forward and review their schemes. The purpose of these provisions is to ensure that development goes ahead and is not delayed because of unviable affordable housing requirements.
This amendment prevents a developer requesting the local authority to remove the affordable housing requirement, even if viability evidence justified this. It is not our intention that developers should remove all affordable housing requirements. We want affordable housing to be justified on the grounds of viability. In the clear majority of cases, we expect that evidence will demonstrate that some—probably most—affordable housing is viable
However, there will be some cases where evidence demonstrates that no affordable housing at all can be supported by the development. The developer must have the option to apply for this and the local authority must have the option to agree to this. Stalling development with unviable affordable housing requirements serves no purpose. Stalled development brings no local benefit to anybody. I hope that I can reassure the noble Lord that this clause does not encourage applications to remove all affordable housing but looks to ensure that viable applications are agreed to enable development to proceed.
Amendments 55BB and 55BD propose a review of affordable housing after two years where land value has increased. These amendments aim to put in place primary legislation incentives to ensure that developers build their schemes. They look to allow local authorities some control where obligations have not been delivered within two years. The drafting of Clause 6 does not prevent local authorities agreeing a mechanism with developers to increase obligations should markets improve. I am aware that this is the practice in many local authorities where obligations are “staircased” according to market conditions.
We will be clear in guidance on the options open to local authorities, and I urge that this be allowed to be negotiated locally, according to local circumstances. I do not agree that a fixed period for review in primary legislation would be helpful. I hope that the noble Lord will now think that the clauses are helpful.
Lord McKenzie of Luton
My Lords, I thank the Minister for her response. I would like to read the record on the issue between first and second applications, but I think that I have understood the point being made. I will take this opportunity to ask again for a response with respect to the equality impact assessment, which runs through all these groups. It cropped up earlier, and I do not think that we have had a response.
I accept that there is always an opportunity to negotiate an improvement in affordable housing numbers. However, it is the extent to which, under the provisions, the local authority has a right to drive that, just as the local authority has an obligation under these provisions when lack of economic viability suggests that these affordable housing numbers are too great. If that is the analysis, the local authority clearly must do something to modify that in a downward direction. However, where land values have increased, why on earth does it not have the right to reciprocal arrangements and to obtain increased affordable housing? I accept that one can always make these arrangements through negotiations and agreement. However, we are looking for something more positive to balance the other side of the coin. Otherwise, in the words of the noble Lord, Lord Best, this is a one-way bet for developers. Having said all that, does the Minister have any more news on the impact assessment?
Baroness Hanham
I enjoy Committee; there is always this bobbing up and down. It seems inconceivable that developers would want to renegotiate affordable housing at the first chance, on the basis that it might end up going up. They must produce a viability assessment to prove that it has gone down. If the assessment does not prove that, they go back to the original number. If they then rethink and decide to have another go with the second application, at that stage, if the local authority assesses that things have improved a lot it can require an increase in the amount of affordable housing. From a developer’s point of view, it is therefore a bit of a gamble to come back a second time. We suspect that it is better to stick to the original commitment and to get on with it. Regarding the equality impact assessment, I apologise. It will be available on Report, and I will see that the noble Lord gets a copy as soon as possible.
“(2A) An authority can only make a determination in accordance with subsection (3)(a) if it is satisfied, having regard to the development plan, that modifications to planning obligations other than the affordable housing requirements affecting the development or a reduction in the level of the community infrastructure levy payable would not be more appropriate.”
Lord Tope
My Lords, Amendment 55AC is in my name and that of my noble friend Lord Shipley. The intention of the amendment is to ensure consideration of all planning obligation costs, including possibly the cost of the community infrastructure levy.
The concentration of this clause solely on affordable housing has understandably caused a good deal of concern—which I am certain was not the intention—that in some way the Government are downgrading the importance of affordable housing and their commitment to providing it. I know that that is not the case. Nevertheless, that impression is inevitably given when a piece of legislation refers to only one aspect of a Section 106 agreement. The provision of affordable housing is often a very important part of a Section 106 agreement, but it is rarely the only part. There are many other aspects of such an agreement, such as contribution to transport and transport infrastructure, or to education in the local area, and the community infrastructure levy itself. Therefore, if consideration is to be given to the viability of a Section 106 agreement, surely it should take into account all those matters, not just one of them.
The purpose of this amendment is to ensure that all aspects contributing to the viability or otherwise of a Section 106 agreement are considered. Other aspects of it may be varied, not necessarily and certainly not only the provision of affordable housing. That seems to be a fair and equitable way of recognising that economic conditions have changed since the Section 106 agreement was agreed, and of finding the best and most equitable way of varying it, without necessarily focusing solely or even at all on affordable housing. I beg to move.
Lord McKenzie of Luton
My Lords, our Amendments 55AD, 55AE and 55CA are in this group. Amendment 55AD touches on the basis on which a local authority views economic viability. It requires the local authority to proceed to determination of the modified requirements if it assesses that the affordable housing requirement is the sole reason that the development is not economically viable. We will come on to discuss viability and how it is to be determined, but the reality under such a determination is likely to be that a number of factors influence economic viability. One problem with this clause is that it can lead to adjustment only of the affordable housing obligation, as we have discussed. This is unfair.
The Minister in the other place sought to differentiate affordable housing obligations from other Section 106 items on the basis that they were somehow discretionary and not in the same category as road improvements or school enhancements, the need for which might flow directly from the development. This gives scant regard to the validity of the local plan, and to the benefits of building sustainable mixed communities, by suggesting that somehow they are far less important than housing or having sufficient road capacity. Obviously, not having the benefit of proposed new Sections 106BA and 106BB does not mean that there are no other remedies for the developer. A negotiated arrangement with the local planning authority would be one, conducted without the Secretary of State’s powers looming large over the process.
Amendment 55AE requires that if a local planning authority determines to modify an affordable housing obligation, the modification must not materially conflict with the strategic policies of the development plan, and it must be the case that any other form of development that would accord with the development plan would not be economically viable. This is to emphasise the point that planning is not only about economic viability but should be anchored in the democratically derived local plan, with the intricate balances that this sometimes entails.
Amendment 55CA excludes from the definition of affordable housing that can be modified under the clause situations where an obligation would include land to be reserved and transferred to the local planning authority or RSL. The purpose of the amendment is to keep available land for affordable housing in the future. We support Amendment 55AC, moved by the noble Lord, Lord Tope, and Amendment 55BA, which would not preclude a modification being more onerous if there was a compensating, less onerous modification.
Lord Greaves
My Lords, the noble Lord, Lord McKenzie, briefly spoke to my Amendment 55BA, which states that,
“a modification under this subsection may have an effect that the obligation is more onerous in one aspect in return for being less onerous in another or others without becoming more onerous overall”.
It is part and parcel of the feeling throughout the amendments in this group that there ought to be more flexibility in the system, and that if there are Section 106 agreements in relation to a development, they should be looked at as a whole, on the lines drawn by my noble friend Lord Tope, rather than simply in relation to obligations for affordable housing.
Earlier, my noble friend the Minister said that the question of non-housing Section 106 agreements would be dealt with by regulation, and that housing was in the Bill because it was quicker to get it into effect; regulations covering non-housing Section 106 agreements would take longer. That does not answer the question of why the Government have not done both together. Common sense suggests that they could either both be in the Bill or both be covered by regulation, whichever is most convenient. I do not understand the lack of logic in doing them separately.
Perhaps the Minister will tell me—I am not clear on this—whether the regulations for non-housing Section 106 agreements will be seen in the same light as those in the Bill. In other words, will developers be given a right to appeal against a local authority that refuses, or does not want, to relieve them of the obligation? Will the same sort of regime apply under the non-housing regulations, or will they simply state that there is an opportunity to ask the authority to look again at development plans, which of course exists at the moment? It would be interesting to know what the Government are intending.
Common sense suggests that in some circumstances it might be better to look at non-housing obligations. For example, if there is a requirement to produce a park or a play area on the edge of a development or as part of the development, for some reason that may become impractical, or it could be thought in the light of viability studies that it is not absolutely essential, but that it is a less undesirable penalty to incur than having no or less affordable housing. There might be a situation in which a Section 106 agreement required a contribution to a local bus service. The way that local bus services are going at the moment, with some county councils cutting subsidies, by the time the estate is built, the bus service might not exist. It might be that that would be an appropriate let-off for the developer. Flexibility is a good idea.
It seemed to me that some noble Lords speaking in this debate were referring to a different world from that in which some of us are trying to make the best of things. In the case of new housing developments—greenfield housing developments in my part of the world—when planning applications come in, the local authority in general does not ask for affordable housing as part of the development, because an affordable housing requirement would very quickly make that development unviable. That is a fact of life. Local authorities in my part of the world—we will debate an amendment on this later—are finding it very difficult to set up a CIL regime, because imposing CIL on developments would make them unviable. Therefore, none of this applies if development is required or is thought to be reasonable.
Coming back to the point I raised earlier in an exchange with the noble Lord, Lord Beecham, what is a local authority supposed to do when it owns a brownfield site where housing or industry has been recently cleared and the site flattened and made reasonable, when development on that site for housing for sale or rent is simply not viable in present conditions, even if the local authority has put the land into the equation for free? It is simply not viable to develop given the current equation between local development costs and local house prices. The intention was that there would be a degree of gap funding to cover this; it was assured through the housing market renewal scheme, which has now been stopped. There is no gap funding.
What do the Government expect us to do in those circumstances when development of a perfectly good vacant site—for example, on the edge of a small town with wonderful views across Pendle Hill—is nevertheless not economically viable, so development cannot and will not take place? Somebody somewhere has to provide some gap funding to allow that development to take place if an area such as that is going to contribute to the Government’s aims of more housing. That is a slight variation on this amendment but it is a point that needs to be made and I will keep making it time and again because it is a question that nobody seems to be facing up to at the moment.
Baroness Hanham
My Lords, I shall start by trying to answer the points made by the noble Lord, Lord Greaves, because from what he says he will come back to them again. As I understand it, these sites are unviable but are not included within a Section 106 agreement; they are outside that.
Lord Greaves
The sites are not viable on a commercial basis. It is not proposed to be affordable housing, it is proposed to be commercial housing sold at the market price in the local housing market. It is not possible to build houses in those locations that will sell for a price that will pay for the development. An organisation can build for virtually no profit but it is still not viable.
Baroness Hanham
For the moment I am going to say to the noble Lord that it is not quite relevant to this amendment but I would like to consider it further and perhaps come back to him at a later stage.
Clause 6 introduces a fast-track application and appeal process to ensure that quick decisions can be made on stalled sites. These amendments would undermine this simplicity and add complexity, for very little benefit. Amendments 55AC and 55AE seek to bring into the application process consideration of the development plan and strategic policies contained in it. The development plan will already have been taken into account when the decision to grant planning permission was first made and the development plan will presumably be the same at this stage as it was then. I am aware that local planning policies may include policies for the delivery of affordable housing to meet local needs. It is usual practice to apply these policies in the context of individual site viability. The effect of this clause is to help deliver those policies by bringing forward viable development. It does not require a revisiting of the local plan.
Amendment 55AE seeks also to require an assessment of whether an alternative form of development would be economically viable. This would tie the process into lengthy consideration of alternative schemes. The effect of this amendment would be to establish a complex and lengthy process and clearly act as a deterrent to developers. Similarly, Amendment 55AC seeks to prevent a determination to reduce affordable housing requirements if modifications to other planning obligations would be more appropriate. There is nothing to stop the local authority agreeing to vary any obligation on a voluntary basis, as has been said a number of times this evening. The authority could negotiate with the developer to alter the Section 106 agreement outside the process of this legislation if that would be beneficial to both parties. The purpose of Clause 6 is to provide a quick, targeted review process based on viability related to affordable housing only. The imminent regulation change, which provides for a full review of Section 106 agreements in pre-April 2010 obligations, will enable these older agreements to be reviewed across the piece.
I do not think it helpful to bring community infrastructure levy payments into this consideration. The community infrastructure levy has been introduced to provide a non-negotiable levy that is up front and predictable, and set at the local level in accordance with local viability. Local authorities do not have a general discretion to waive or reduce community infrastructure levy payments. The regulations make provision for exceptional circumstances relief but this is subject to strict criteria.
Amendment 55AD seeks to require that the authority must assess the affordable housing requirement to be the sole reason for the site being economically unviable before it modifies the requirement. This amendment is not necessary. The current drafting requires that if the affordable housing requirement means that the site is unviable, the council must vary the obligation. The applicant will have to present evidence to the authority to demonstrate this. The local authority will have regard to this evidence and have the opportunity to prepare its own evidence to justify any decision.
Affordable housing often comprises the largest single contribution on residential schemes, which is why we have focused there. Research from 2007 and 2008 found that about 50% of all planning obligations are for affordable housing. The local authority and the developer are free to renegotiate any aspect of a Section 106 agreement on a voluntary basis at any time. If an obligation which is not affordable housing is causing the site to be unviable, both parties are free to negotiate around that item.
Amendment 55CA would allow land transferred at nil cost to be excluded from the assessment of viability. I understand the importance that land transfers of this type play in creating mixed communities. This is particularly important in high-value areas. I can understand the temptation to think that we should exclude land transfers from the assessment of economic viability. However, the value of this land can be a significant cost to house builders. It is right that the value of this obligation is considered as part of the overall economic viability of the scheme. If the value of that land transfer is causing the site to be unviable, it should be adjusted; this does not necessarily mean removed completely but adjusted to suit economic conditions. Only where it is no longer viable to transfer the land at nil cost will an adjustment be made. Our policy for mixed communities will be upheld and delivered in a realistic and viable way by these clauses. With these assurances, I hope that the noble Lord will withdraw his amendment.
Lord Tope
I am grateful to the Minister for her reply. I am still struggling to fully understand why it is focused solely on affordable housing. Of course, local authorities and developers can agree voluntarily to vary any of the other planning obligations. They can agree voluntarily to vary the affordable housing obligation. We know that such negotiations are going on all over the country and we hope, believe and expect that the vast majority will be varied and agreement reached voluntarily without having to use this appeal mechanism.
However, I take it from what the Minister has said that what gets appealed to PINS—the Planning Inspectorate—can be only the affordable aspect of it and not any of the other planning obligations. For instance, would it be possible for the Planning Inspectorate to agree or determine that some other aspect of the planning obligation could be varied or reduced in order to make the scheme viable, but to retain all or the greater part of the affordable housing obligation? It is that element that is troubling us and to which I suspect we may return at a later stage, but in the absence of any further illumination on the point—
Lord McKenzie of Luton
I wish to raise a number of points and to refer to the matter that the noble Lord has raised. I thought that the current rule outside these new provisions for affordable housing is that if a Section 106 agreement is not implemented within five years, there is a right of appeal to the Secretary of State. I am not sure whether the same criteria would have to apply to the Secretary of State in making a determination of that appeal, but I thought that it was that process which has been the subject of the parallel consultation. For example, it had a cut-off point of April 2010. That may be wrong and no doubt the Minister or her officials in the Box will tell me if that is the case. However, I thought that that was the issue.
I want to come back on the issue of the local plan and development policies. No one is suggesting that we need to revisit the local plan, but simply to ensure that any change to the affordable housing requirement as a result of these provisions is still consistent with the plan. That does not mean revisiting it.
Perhaps I may also come back on the issue of whether affordable housing is the sole reason for a development not being economically viable. Are we saying that if two reasons of broadly the same magnitude make a development not viable, nevertheless it is right and just that it is the affordable housing that is changed as a result? That does not seem to be particularly logical or fair. If the affordable housing component is the sole reason why a development is not viable, one can see how the logic flows for what the clause provides. However, when it is not the sole reason, why is it that only the affordable housing has to take the hit?
Baroness Hanham
My Lords, I have tried to say several times during the course of our debate that this clause relates only to affordable housing. It relates to the developer saying that what is holding things up and why he is not developing is that the affordable housing aspect, for whatever reason, is making it unviable. Any other aspect of Section 106 can be negotiated with the local authority. A developer does not have to do it. It is absolutely only the affordable housing element.
Lord McKenzie of Luton
Perhaps I may press the point. I understand that the clause is focused only on affordable housing and changes and modifications to it, but if the reality is that the assessment of viability shows that affordable housing and other things are making the project not viable, you will nevertheless look to the affordable housing component as that which has to take the hit and bear the adjustment. I accept that everything else can be negotiated under the current provisions, but if it is not solely the affordable housing component, why is it that, to the exclusion of everything else in this clause, the affordable housing component is focused on to bear the consequences of the modification?
Baroness Hanham
It is because that is what this clause is all about. It concerns situations where it is believed that affordable housing is causing the block. Every other aspect of Section 106 can be negotiated voluntarily. Under Section 106 in its totality consideration can be given to other aspects, but it is only where affordable housing is the only aspect that is said to be causing the lack of viability that this clause will impinge.
Lord McKenzie of Luton
I think that that was a gem for which I am grateful to the Minister. I think she said that if the affordable housing component is the sole reason for it not being viable, that is when the clause operates. I think that that is a different position from that which I thought we debated earlier. Perhaps we should read the record because no doubt we shall come back to the issue on Report.
Baroness Hanham
My Lords, unless I have been deluding myself, I thought that that was what I had been saying the whole way through our debate this evening. We will check Hansard and make it clear that that is the situation. I will write to the noble Lord if I have said anything recently which does not bear out what I said before.
Lord McKenzie of Luton
I am most grateful to the Minister and, in the circumstances, I beg leave to withdraw the amendment.
Lord Tope
My Lords, I think that it will be me who begs leave to withdraw this time, and I was about to do that when the noble Lord intervened some minutes ago. It has been an interesting debate. I cannot help feeling that we have gone around in circles a little, but that is not unknown. I am equally certain that we will return to this issue at a later stage. In the mean time, I beg leave to withdraw the amendment.
Baroness Stowell of Beeston
My Lords, before I move that the House be resumed, perhaps I may give some guidance to those involved in the next debate. Two noble Lords have scratched from the speakers list so we will go from the noble Viscount, Lord Montgomery of Alamein, straight to the noble Lord, Lord Davies of Oldham. With the reduction in the number of speakers, it is my pleasure to offer a little extra time for noble Lords to speak. With the exception of the noble Lord, Lord Palmer, and my noble friend the Minister, who will continue to have 10 minutes and 12 minutes respectively, all other speeches are now limited to four minutes. I shall be handing over shortly to my noble friend Lord Attlee and I know that he will assist the House by making sure that all noble Lords stick to four minutes. I beg to move that the House do now resume and, in doing so, I suggest that the Committee stage begin again not before 8.37 pm.
Air Passenger Duty
(11 years, 10 months ago)
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Lord Palmer
To ask Her Majesty’s Government what plans they have for the future of Air Passenger Duty.
Lord Palmer
My Lords, I am grateful for the opportunity to raise an issue that I know vexes many in this House and puts significant burdens both on British business and ordinary families. I must declare my interests. I open my home in Berwickshire to the public and I am a residual beneficiary of a banana plantation on St Lucia.
Air passenger duty has become an increasingly contentious issue over recent years and it is worth reflecting on the reasons. When it was first introduced back in 1994, the maximum that any passenger paid in air passenger taxes on departing a UK airport was just £10, and for those flying short haul it was half that. But, as is often the way with these things, once a tax has been established it is almost impossible for the Treasury not to resist the temptation to find ways to increase it—and what a truly astounding increase we have seen. From that modest beginning, the tax is now generating almost £3 billion each year for the Treasury and costing passengers who pay the highest rate more than £180 in tax alone for a single journey.
Some of the most dramatic increases have been introduced in the past decade. In 2006, a family of four flying to Florida paid £80 in APD—still a significant additional cost on a summer vacation but nothing compared with the £260 they now pay to fly to North America. That is an increase of 225% in just six years. Following the Chancellor’s Autumn Statement, we now have confirmation that APD is set to rise again in April. I offer this example because it illustrates just how rapid the increases have been and explains why there is a growing concern about its impact not just on families, but perhaps more importantly, on the UK’s business community. Indeed, there is a growing body of evidence that points to the damage the tax is having on jobs, growth and in various regions of the economy with various estimates, for example, that more than 90,000 additional jobs could be created were it to be scrapped.
It is tempting to say that the tax should be significantly scaled down. After all, we levy the highest APD anywhere in the world. We are one of only six EU countries to levy APD, the others having recognised the damage such a tax inflicts on economic growth.
As an island nation we depend on inbound air travel to carry three-quarters of overseas tourists into the United Kingdom. Yet, the World Economic Forum’s tourism competitiveness report ranked the UK 134th out of 138 countries for air ticket taxes and airport charges.
I could go on, but today I am merely asking not for the abolition of APD, not for a reduction of APD; not even for it to be frozen. I am simply asking Her Majesty’s Government to review the tax: a proper macroeconomic impact assessment into APD across the whole of the UK economy. That is all. No spending commitment implied, just good old-fashioned evidence-based policy-making.
The reason for this is quite simple: there is a growing body of evidence that points to the profoundly damaging impact of APD on our economy. Among the most compelling research that I have seen includes data from the British Chambers of Commerce which estimates that were APD to be increased by 5% in real terms every year—admittedly less than this year’s rise—there could be a loss to the economy of £3 billion by 2020. They add that this effect could reach £100 billion by 2030.
The World Travel and Tourism Council has estimated that removing APD altogether would result in an additional 91,000 British jobs being created and £4.2 billion being added to the economy in just 12 months.
Just as compelling is the documented damage that we know the tax is already having on airports and airlines across the UK. To give just one example: the BCC in a recent report states that, following the doubling of APD in 2007 and its subsequent rises, Liverpool’s John Lennon Airport has lost six domestic, five European and two long-haul services.
I strongly believe that Her Majesty's Government must take this grave situation into account. It is no wonder that this tax—which started out so modestly—is now one of the most hated indirect taxes that the Government levy, along with capital gains tax and inheritance tax. Indeed, part of the reason I wanted to raise this issue tonight is precisely because of the growing public anger at the tax, with which colleagues in the other place will be much more familiar
Last summer, an incredible 200,000 people wrote to their local MP asking for the Treasury to review the tax—as I am asking now. In addition to this, 100 MPs have publicly stated their support for a comprehensive Treasury review. The APPG on Aviation has also called for a review. Even senior members of the party, such as one of its former leaders, have joined the growing chorus of voices who back this. In other words, this is not the preserve of a few low-tax puritans—it has gained genuine cross-party support.
As expected, this proposal has been supported and championed from the tourism and aviation industry. Indeed, A Fair Tax on Flying, whose research and tireless campaigning have helped bring this issue to the attention of policymakers and the media alike, deserves to be praised for its work. This tide of support is irresistible—or so one would think. The Government have been—I know that the noble Lord, Lord Newby, likes his cricket—playing a rather repetitive game of forward defensive on this, if I am being kind, or stonewalling, if I am being a little more honest.
In almost all their responses to the request for a review—both to constituents and to MPs—the Treasury has, I am afraid, claimed that an impact assessment has already been carried out. Its response to the honourable Member for Crawley on 19 October is typical. He asked what research the Treasury has conducted to assess the impact of APD on the economy. He was told by the honourable Member for Bromsgrove, a Treasury Minister:
“Given that we recently completed a comprehensive consultation on the subject, we have no plans for further review”.—[Official Report, Commons, 19/10/12; col. 536W.]
There are plenty of other similar responses to very similar inquiries, yet there has never been such a consultation. It is a great phantom that has been created by the Treasury—a wonderful piece of misdirection of which the illusionist Derren Brown would be proud.
The fact is that the oft-cited 2011 consultation was to look at the merits of changing the banding of APD—a completely separate issue—and did absolutely nothing to review the macroeconomic impact of the tax. Indeed, even when they had this opportunity, the Government failed to address the gross unfairness of the banding structure. It is quite ridiculous that APD to the Caribbean—which is 6,000 miles from London—should be considerably more expensive than APD levied on passengers travelling to Hawaii, which is 10,000 miles from the United Kingdom.
I implore the Minister not to play the forward defensive on this. Perhaps he might consider playing to the stands and pavilion and giving the 200,000 constituents what they have asked for: a comprehensive review of APD.
On a more positive note, I am in fact supportive of one of the Government's increases in APD to finally, at long last, levy the tax on private jets—an omission that was an affront to reason and fairness, and was long overdue. It has taken 19 years since the introduction of APD for this change to be adopted. Can the Minister assure us today we will not have to wait another 19 years before the Government undertake a review of APD?
All the evidence suggests that our economy and the UK’s international competitiveness are being strangled by APD. If we want to send the message that the UK is open for business then I can think of no more damaging or perverse policies than year-on-year rises in this tax, making it prohibitively expensive for inbound tourists and overseas business travellers to come to Britain to spend their money and to do business —precisely the things we surely need to help grow our economy.
I urge the Minister to make representations to the Chancellor ahead of this year’s Budget. Surely a wise Government would accept that sometimes having money in the Treasury’s coffers instead of circulating around the economy has a damaging overall impact. A really comprehensive review would at least provide us with that evidence.
I hope that the noble Lord can offer us more today than his Treasury colleagues in the other place have been able to do thus far, and I look forward to his response.
Lord Howell of Guildford
My Lords, I warmly commend the noble Lord, Lord Palmer, for promoting this debate, because there can be very little doubt at all that the UK air passenger duty at its present rate and in its present form is a damaging tax measure. It is also a tax of fantastic complexity, with pages of detail from HMRC as to which flights are liable, who is a chargeable passenger, how long between connections and so on. Heaven knows how much it truly costs to administer.
The very high levels are the real problem. Six European countries, as the noble Lord, Lord Palmer, has reminded us, levy a form of APD, but the UK level is double that of the next highest, which is Germany, and very probably the highest in the world. We have probably reached the stage where the damage to our national economy well exceeds the gains to the revenue.
The present banding discriminates directly against our Caribbean island friends, to many of whom we owe a special responsibility over and above our general duty as a richer nation to maintain our traditional concern for smaller states and their welfare. It creates a plethora of mad anomalies. First, it drives long-distance passengers from the UK to start from Paris or Amsterdam rather than London. Secondly, when I visited Glasgow last year, to view its dazzling and well on-time preparations for the Commonwealth Games in 2014, I was told that many of the tens of thousands of visitors from all over the world will fly into and out of Belfast and then hop across to Glasgow rather than flying to and from Glasgow direct. The reason is that Northern Ireland is exempt from the APD. Lucky Northern Ireland, but poor old Glasgow, considering that it has made such superb efforts to be the ideal host to the Games, which I hope it will be once visitors get there.
This is Treasury obfuscation and short-termism at its worst. Some claim that the APD is all about curbing aviation carbon emissions. We all know, and the latest BP energy projections confirm, that it will be China and India’s performance with their vast increases in coal burning which will determine whether we achieve the CO2 targets we want to see. I doubt whether APD will make a smidgeon of difference in combating global warming or climate volatility.
The only interest I have to declare in this matter is that I am chair of the Council of Commonwealth Societies and therefore very much aware of the vital need for this country to keep friends around the world, large and small. I have no hesitation in saying, after serving for two and a half years as Commonwealth Minister, that APD in its current inflated form is working against our friends, against our foreign policy goals and against the national interest. The alleged revenue loss from minor adjustments to make it less unfair will be far exceeded by the gains to the UK economy as a whole. It was meant to be a modest tax; it is now a massive tax. The damage caused by APD has increased, is increasing and ought to be curtailed.
Lord Monks
My Lords, I rise to add my voice to the concerns that have already been expressed by other noble Lords in this debate. In doing so, I declare an interest as president of the British Airline Pilots Association. There can be very little doubt that the APD is an important revenue raiser for the Chancellor and substituting it would be an extremely difficult task. However, the rapid increases that have taken place in recent years make the UK stick out like a sore thumb, in the European airspace in particular, but rather more widely even than that. At present levels, it is unfair and regressive. It is one-tenth of the French level, and the Dutch have abolished this kind of duty at Schiphol, which is perhaps the major competitor to Heathrow. As other noble Lords have said, to fly to Australia via Amsterdam, which is a very viable option for much of provincial Britain, could mean a saving of about £85 in tourist class and more in the premium classes.
Given the other pressures that British aviation is under—particularly the shortage of capacity at Heathrow, as confirmed again by the recent snow, which demonstrates that the airport is always operating at the margin—we are adding further, self-inflicted damage to ourselves with this tax and we risk losing ground against major competitors. Airlines are being disadvantaged, and workers and employees of those airlines are also at risk. I understand that the Flybe redundancies that were announced just last week are being put down to the level of this duty and its effect on the business, which has one or two more marginal routes than perhaps some of the bigger airlines. I also understand that AirAsia recently abandoned the Kuala Lumpur to Gatwick route, citing the level of air passenger duty, as well it might. With those figures, it is difficult to be sceptical.
Civil aviation is a big British success story and we need big British success stories in the UK. Hobbling the industry in the way that this tax does is very unfortunate, and I strongly support the calls that are being made by noble Lords for a review of the tax. I do not think it has a major environmental impact, for reasons already expressed, and the anomalies make it a very difficult tax to defend, except as a valuable source of revenue. Justice demands that this tax is reviewed and that we find other sources of revenue, perhaps from all those whom the Prime Minister accused of aggressive tax avoidance, last week in Davos.
Lord Foulkes of Cumnock
My Lords, along with other noble Lords, including the admirable noble Lord, Lord Palmer, I have had representations on the general issue, calling APD a tax on exports, on business, on inbound tourism and on families, and pointing out that it is the highest air passenger tax in the world. However, I want to concentrate on, and say just a few words about, a particular anomaly and to suggest a solution to the Minister.
First, I declare a non-pecuniary interest as president of the Caribbean Council, which is not as exotic as the banana plantation of the noble Lord, Lord Palmer. The Caribbean Council meets regularly with Caribbean high commissioners, and we recently met many of the Tourism Ministers from the Caribbean when they were in London. The unfairness of the APD in general, and the Caribbean anomaly in particular, is top of the agenda of all those meetings. The four bands, A to D, which have been described by the noble Lord, Lord Palmer, are measured by the distance to the capital of the country concerned, so because California is nearer to Washington, the capital of the US, it is cheaper in APD terms than the Caribbean, which is in the dearer band C. Travel to the Caribbean is disproportionately costly, yet the Caribbean is the most tourist-dependent region in the world; in Antigua and Barbuda, for example, 74% of their GNP comes from tourism. The high APD has resulted in British tourists choosing not to visit the Caribbean. Between 2008 and 2011, there was more than a 10% decrease in UK-Caribbean air traffic, in spite of a general increase of 1% in air traffic generally.
One of the groups most affected is the Caribbean diaspora. Agencies have suggested, for example, that the visiting friends and relatives, or VFR, market has been particularly hard hit. That is worrying. The Government have in fact admitted that the banding is arbitrary. The Chancellor—I am sure the noble Lord, Lord Howell, will use all the influence he can in relation to this—said in his 2011 Budget that he was,
“consulting today on how to improve the existing and rather arbitrary bands that appear to believe that the Caribbean is further away than California”.—[Official Report, Commons, 23/3/11; col. 963.]
However, by November 2011, the willingness to tackle the anomaly had petered out.
To help the Minister—noble Lords know that I am always keen to help the Government when I can—the Caribbean Council proposal is to reband the Caribbean from band C into band B by designating Bermuda as the capital of the Caribbean, for APD purposes only. There is no reason why that cannot be done; it can be done technically and it has been suggested to the Government. The cost to the Government would be just over £18 million out of a total projected revenue of £3 billion. The benefit to the Caribbean and the resulting benefit to the United Kingdom Government would be enormous. In conclusion, I ask the Minister whether he will say in his reply or give us a pledge—I am not expecting an answer today—that he will take this away, look at it sympathetically, discuss it with the Chancellor, remind him of his pledge in the Budget in 2011 and come back to the House with, I hope, a positive response.
Lord Lee of Trafford
My Lords, first, I congratulate the noble Lord, Lord Palmer, on securing this debate. I want to focus my brief remarks on the deleterious effect that APD has on UK tourism. I declare an interest as the chairman of the Association of Leading Visitor Attractions. Tourism is our fifth-largest industry and arguably the number one industry in more parliamentary constituencies than any other single industry. In an Oral Question on 12 November last year, I pointed out that,
“a potential visitor from China must fill in a 30-page visa application form … and find £650 for a family of four in visa fees and air passenger duty. Is it therefore surprising that mainland Europe gets four times as many visitors from China as we do?”.—[Official Report, 12/11/12; col. 1273.]
Thankfully, there has been some improvement on the visa application front, but no give on the APD front.
What is the point of the Government putting an additional £22 million into the GREAT campaign, announced by the Chancellor of the Exchequer in his Autumn Statement, if this is countered by a further rise in APD on long flights and in premium cabins? Since 2007, APD increases have vastly outpaced inflation over the same period, which was 17%. Non-economy visitors in band C from China or India—potentially wealthy spenders—have seen APD increase by no less than 305%. From Australia, it is even worse, with an increase of 360%. In overall terms, the UK levies the highest level of APD of any country in the world. Why is that? Britain’s aviation tax is now so high that the Treasury will collect more than twice as much in passenger taxes in 2012—£2.5 billion—than the total of all other European countries combined, which is £1.2 billion.
Other countries have realised the error of deterring passengers. Belgium, Denmark, the Netherlands and Ireland have all introduced APD charges lower than those now being applied in the UK and subsequently reduced or abandoned them, due to the adverse impact on their inbound tourism. In 2011, the Irish Government acknowledged the negative impact of APD on their economy and removed it to stimulate tourism revenue. Happily, our Government woke up the following year, removing APD from flights from Belfast when it was realised that it made those flights uncompetitive, compared with flights from Dublin.
Of course, we all appreciate that tax revenues must be generated, but why clobber tourism, a great world growth industry? Tourism and hospitality have the near-unique distinction of offering rising job opportunities across the range, from the skilled to the unskilled. It is surely madness to stunt their growth by excessive APD. The Manchester Airports Group tells us that in 2010 AirAsia X dropped plans for a Manchester-Kuala Lumpur service in favour of one from Paris Orly, purely because of the high APD. As the noble Lord, Lord Palmer, said in his opening speech, is it not high time that the Treasury instigated a full economic impact assessment of APD, which has not been done for 19 years?
Lord Fowler
My Lords, I congratulate the noble Lord, Lord Palmer, on promoting this debate and on his excellent speech. I make one point, on the impact that air passenger duty has on jobs. All parties are agreed that it is a national priority to bring more people into employment, but we seem to be set on a policy with APD that destroys jobs, not creates them. I declare an interest as a non-executive director of ABTA, but also a past interest as Secretary of State for Employment. When I did that job, tourism was in the brief. My noble friend Lord Lee, who has just spoken, was my excellent Tourism Minister. The reason that tourism was in the Department of Employment was that it had one of the greatest potentials for creating jobs—and still does, particularly for young people.
Inbound tourism creates jobs, but so too, and this is often forgotten, does outbound tourism—the travel companies in the high street, the big internet companies and the aviation industry that is the transport carrier. We would be mad to turn our back on this source of employment. Yet that is precisely what we are doing. By piling more cost on the traveller, we deter people from coming to this country and at the same time price out many people who want to take a holiday abroad. We also hit the aviation industry and business itself. We seem to forget that we are in a competitive international market. There is an increasing demand for travel, which will come from countries such as China, Brazil and India, but it would be all too easy to price ourselves out of the market and lose jobs as a result.
Britain currently has the highest air taxation of all European Union and G20 countries. Britain’s aviation tax is now so high that the Treasury will collect more than twice as much in passenger taxes in 2012 than the total of all other European countries combined. What is interesting is that in 2009 the Netherlands followed Belgium by abandoning its equivalent to APD because, although it raised the equivalent of £266 million in one year, the Dutch calculated that the loss to the wider economy from the tax was more than £950 million. So I entirely agree with all those in this debate who have argued for an independent economic assessment of APD. My view is also that this needs to be done quickly, before more damage is done and more jobs are lost.
Lord Morris of Handsworth
My Lords, on behalf of the humble and proud people of the Caribbean region, I thank the noble Lord, Lord Palmer, for securing this important debate. As someone born in Jamaica, I have more than a passing interest in this debate, which I declare. I will therefore address my remarks not to the APD tax in general, but to its specific impact on the Caribbean region. However, let me make it clear from the outset that the Governments and people of the Caribbean region do not seek favours from the Government. All they seek is fairness. As we have heard, APD was introduced in 1994. It was argued then that the duty would make a contribution to the overall cost of carbon emissions. It was a green tax. So let me say why the current banding system is unfair and offer a few words about its impact on the economies of the Caribbean.
As we have heard, the tax was originally introduced as a flat-rate charge for flights, but in 2009 it was changed to a four-band system, calculated on the distance between the capital city of the country of departure and the capital city of the country of destination. Let me remind the House of the anomalies of the banding system, which have already been given in this debate. Caribbean capitals, which are just over 4,000 miles from London, are in band C. The capital of the USA and London are less than 4,000 miles apart; consequently, every city in the United States is in band B. That includes Los Angeles, which is more than 5,300 miles from London and 1,300 miles further than any Caribbean-location flight—hardly a green tax.
The outcome of the rebanding means that the APD cost for a family of four flying to the Caribbean is £324. As we have already heard, for an equivalent family flying to the US it is £260. This unfairness will get worse when the inflationary increases announced in the 2012 Budget are introduced. They will not be applied evenly, which emphasises that the APD structure has no logic and discriminates against long-haul flights, particularly to the Caribbean region. The Governments of the Caribbean do not seek to challenge the right of the UK Government to impose this tax. What they seek is an equitable structure, a level playing field and a fair application of the tax.
It cannot be fair that the banding system discriminates against the Caribbean, the most tourism-dependent region in the world. It is not fair that the APD banding system favours the United States, which is a competitor destination. It cannot be fair that the UK takes no account of the impact that the tax has on the Caribbean economies which are still in transition towards being service-based economies. It is not fair, as suggested, that the APD will now be increased annually by the rate of inflation. Let us be clear: this is not a tax without victims. Data from the CAA make it clear that there was a 10.7% decrease in passenger traffic between the UK and countries in the Caribbean region. This is having a devastating effect on local economies, but it is not just having an effect abroad; it is having an effect here, at home, particularly among people in the aviation industry.
No wonder, British Airways has reduced its flights to the Caribbean due to APD and has switched its holiday focus from the Caribbean to the United States. The impact of APD can be felt by small travel operators up and down the high streets in London, Birmingham, Manchester and many of our cities in the UK. Above all, the APD is now becoming a barrier to inward investment in the Caribbean. No one intended that.
When the policies of one country knowingly damage the economy of another, it becomes a question not just of economics but of morality. That is why the review being asked for in this debate is largely supported in the Caribbean and elsewhere. Lest we forget, the Caribbean countries are not seeking favours; they seek only fairness.
Baroness Gibson of Market Rasen
I thank the noble Lord, Lord Palmer, for instigating this important and timely debate. I declare my interests: I am a member of both the Air League Council and the Air Cadet Council, both of which obviously have an interest in this issue.
Air passenger duty affects every passenger travelling by air from a UK airport. It is a tax that we cannot avoid; it is imposed on us. As we have heard, it is a tax which causes considerable damage to the UK economy and which needs an urgent and thorough review.
I opposed the changes to APD introduced by the Labour Government and I oppose APD under this Government, who seem to be facing in two directions at the same time. There is little point in the Prime Minister saying that he wants more business investment in this country on the one hand and raising APD higher to make it more difficult for business on the other.
As the noble Lord, Lord Palmer, said, when APD was introduced in 1994, each travelling person paid £5 for a short-haul flight and £10 for travelling elsewhere. Passengers can now pay up to £184 on some long-haul flights. What an absolute nonsense.
I am not economist, but even I can see that, at a time when we should be doing all we can to encourage more foreign investment and increasing our efforts to encourage tourists to spend more in the UK, this tax is a barrier to both business and tourism. APD is the highest aviation tax in the European Union and among the G20 countries, thereby placing the UK at a direct disadvantage to its business competitors. Why can the Government not see this? Belgium, the Netherlands, Australia and Germany have all scrapped, or are in the process of scrapping, their own air travel levy. Why not the UK?
All that I have said so far has implications for employment in the aviation industry. A Fair Tax on Flying, a campaign group which consists of 40 leading travel organisations, including airlines, airports and trade associations, estimates that the aviation industry supports 963,000 UK jobs. Of those, 352,000 are directly supported by the sector, 344,000 are supported indirectly through the sector’s supply chain and 266,000 are supported by the spending of employees in the sector and its supply chain. The loss of such things as conference business, lost routes from our airports—both short-haul and long-haul—and loss of potential tourism because of APD mean the loss of employment for UK workers.
I support the call for an urgent review of the impact of APD on the UK economy. I support those in the other place and prominent organisations such as A Fair Tax on Flying in asking for a Treasury-led review. Organisations belonging to the campaign know what they are talking about, and I beg the Government to listen to them and to individuals who have written on these matters. How many more people will have to write before notice is taken? The Treasury has never sought fully to understand the impact of APD on economic growth, which speaks volumes. It is time for this anomaly to be rectified.
Viscount Montgomery of Alamein
My Lords, it is a great pleasure to follow the noble Baroness, Lady Gibson, and I agree entirely with what she said. I thank my noble friend Lord Palmer for introducing this subject very fully and for making such a very cogent speech on it. I am afraid that I am going to join the chorus of opposition to this tax that has been revealed so far in this debate.
As has been pointed out by the noble Lords, Lord Morris and Lord Foulkes, most Caribbean islands live off tourism and earn foreign exchange by so doing. In fact, for some, it is their only foreign exchange earner. As things stand at the moment, it is cheaper to fly to Paris, Frankfurt or Amsterdam and change planes, thus avoiding the high tax in the UK. That has the effect of increasing emissions, which is contrary to EU directives on this subject, and causing further distress all round.
I suggest not only that this is an inefficient tax but that the best way to proceed would be to abolish it altogether, because, as has been said, it does not produce a great deal of revenue and causes a lot of irritation and hard work for the airlines. I therefore propose that the tax be abolished altogether.
Lord Davies of Oldham
My Lords, I congratulate the noble Lord, Lord Palmer, on securing this debate and on introducing it in a speech which covered all points at issue. Each subsequent contribution highlighted some of those points with dramatic and significant effect. I thought that I would have a little sympathy for the Minister if most speeches were critical of the position which presently obtains. I am afraid that I have to inform him that every speech has been in that category. When one is on the Front Bench, one always thinks that one may be in a little trouble if one glances over one’s shoulder and sees not a soul behind. It is even worse if, as on this occasion, two privy counsellors and members of former Conservative Cabinets join in the criticism.
The Minister has a case to answer and that case has been very effectively deployed. The other place has of course been greatly exercised over this matter in recent months, having responded to a 100,000-signature petition by holding a debate. Again, scarcely a contribution was made there which supported the APD in its present form. It was also pointed out—the Minister would not expect me to ignore this fact—that the coalition agreement and the manifestos of the two contributing parties indicated that they intended to reform radically this tax.
The Minister has to realise that he has a major task ahead. I will make the most obvious point, which is that there clearly needs to be a review of a tax in circumstances where such a ridiculous anomaly as the Caribbean anomaly obtains. Several noble Lords emphasised that point with great force. My noble friend Lord Foulkes fitted into the category of not bringing on this occasion problems for Conservative Ministers but solutions for them with regard to the Caribbean position. We should not underestimate the degree of concern that obtains on that point in all parts of the House. The noble Lord, Lord Morris, who is so familiar with the background of the Caribbean, emphasised how much this anomaly represented.
I hope that when the Minister replies to the debate he does not simply reiterate that matters will be considered. Let us have a review. The case has been established that this tax is not working now in the way in which it was first intended, and it has also become increasingly onerous over the past two years. I therefore urge the Minister to take on board the representations that have been made from all sides of the House that a proper review is necessary and urgent.
Lord Newby
My Lords, I join all other noble Lords in thanking the noble Lord, Lord Palmer, for securing this debate. I should perhaps declare a former interest as a former adviser to the Caribbean Banana Exporters Association. In addition, until I took this job, I was a regular traveller to the Caribbean in connection with the Sport for Life international educational programme, so I was a regular payer of APD to the Caribbean.
I will begin by acknowledging the important contribution that the aviation and tourism industries make to the economy. The United Kingdom’s aviation sector connects millions of consumers and businesses with international markets. The five airports that serve London offer at least weekly direct services to more than 360 destinations worldwide. That is more than Paris, Frankfurt or Amsterdam. Overall, the United Kingdom has the third-largest aviation network in the world, after the United States of America and China.
Tourism is our fifth-biggest industry and our third-highest export earner, worth around £116 billion to the economy, or roughly 9% of GDP. Despite the tough economic conditions, the UK’s tourism sector is growing at around 3% per year. As the noble Lord, Lord Lee, pointed out, we are seeking to promote tourism as part of the GREAT campaign—one of the most ambitious and far-reaching marketing campaigns ever undertaken by the UK. We have also, as he mentioned, made changes to the rules for Chinese visitors to make it easier for them to obtain visas for travelling to the UK.
Turning to APD itself, I would like to reiterate some of the history, which I know a number of noble Lords have already done to a certain extent. APD was introduced in 1994 as a pure revenue-raising tax. It was introduced in recognition of the fact that air travel was otherwise undertaxed compared to other sectors of the economy. Air travel is zero-rated for VAT, and the fuel used in air travel and in nearly all domestic flights is entirely free of tax. The initial rates of the duty were £5 for flights to destinations within the European Economic Area, and £10 for flights to other destinations.
In 2008, the previous Government announced a restructuring of APD, increasing the number of bands from two to four. The reason given was that this would improve the environmental signal given by the tax. As a result of that restructuring, the highest rate was increased to £170. These changes were enacted in the final Finance Act before the 2010 election.
In the period since the election, the Government have limited increases in air passenger duty to inflation only. During this time, rates have increased by only £1 for the majority of passengers. Budget 2012 set out rates from April 2013, which will also rise only by inflation. The real burden of the duty will therefore remain unchanged for at least a further year. Therefore, the fears of the BCC are, frankly, greatly exaggerated.
I will respond to the point made by the noble Lord, Lord Monks, that this is a regressive tax. This is not a regressive tax. In terms of its impact on deciles of income-earners, households in the highest decile pay more passenger duty as a proportion of their income than those in the bottom income decile. As the noble Lord, Lord Palmer, pointed out, to improve the fairness of the tax overall the Budget 2012 also confirmed the extension of air passenger duty to business jets from April this year.
Concern has been raised by virtually all speakers—I suspect it was every speaker—about the impact of APD on the competitiveness of the United Kingdom. There have been widespread calls for a cut in the level of the tax or for its abolition. The noble Lord, Lord Palmer, was kind enough to mention my interest in cricket. My boyhood cricketing hero was Geoffrey Boycott. I hope that the noble Lord will not be too disappointed if I proceed more in the manner of Boycott playing an innings on a troublesome Headingley wicket than Brian Lara at the Antigua Recreation Ground.
The Government’s view is that there can be a sustainable platform for economic growth only if we are willing to tackle our overspending. Demands for cuts in air passenger duty must therefore be balanced against the Government’s general revenue requirement and the need for a fair contribution from the sector towards reducing the deficit. Air passenger duty is forecast to raise about £2.9 billion in 2013-14. This revenue is essential if we are to maintain progress toward our goal of deficit reduction. If APD were reduced or abolished, other taxes would have to be increased or public expenditure cut by an equivalent amount.
The noble Lord, Lord Palmer, and many other noble Lords have asked the Treasury to undertake a study into the macroeconomic impact of air passenger duty. The Treasury keeps all taxes under review and considers them in the round. This is not the only tax that many people would like to see abolished. In fact, it is almost impossible to find a tax whose abolition would not be cheered to the rafters, so the fact that people would like this tax abolished is not in itself a good reason to abolish it. I am afraid that I must reiterate the context in which we are working. Our central goal as a Government remains tackling the fiscal deficit. This requires the aviation sector to make a fair contribution, which is what we believe APD does.
Lord Morris of Handsworth
The Caribbean Governments are not asking for the APD tax to be abolished. What they are asking for is equity of application.
Lord Newby
My Lords, the noble Lord, Lord Morris, anticipates me. I was just coming to the Caribbean but a number of noble Lords have called for the tax to be abolished tout court. There have been strong arguments—
Lord Howell of Guildford
We must have accuracy in this debate. I am aware of one calling for abolition; sensibly, none of the rest of us is calling for abolition. For the Minister to pin his arguments on the abolition plea alone really is to distort the debate and not to do justice to this House.
Lord Newby
My Lords, I was simply stating that I thought that several noble Lords—at least one—have called for abolition.
Lord Newby
Okay, one noble Lord has called for abolition. I am sorry if I exaggerated the opposition but it certainly felt as though a number of noble Lords were calling for the abolition of the tax.
On the Caribbean, there have been strong arguments presented tonight and over the years about the effect of APD there. I am aware of the strength of the arguments because in a former existence I made them myself. In response to these arguments, changes to the structure of APD were considered as part of the 2011 consultation. For a number of reasons, it proved much more difficult to do it than appeared at first sight. One of the main challenges is that if you adopt the pure principle of a distance-based tax, it would be seen— bizarrely, in my view—as a proxy to taxing fuel. That would be illegal under the Chicago Convention on international aviation, so the Government looked at a rather simpler restructuring. However, they found that the only way they could have done it that would have dealt with the disparity of treatment between the US and the Caribbean would have required an increase in the duty for about 90 per cent of passengers, including those flying to Europe and the USA. The Government felt that, in the current economic climate, it would not be fair to ask the majority to pay more to help fund a cut for the minority.
Lord Foulkes of Cumnock
I think the Minister has been listening carefully to the debate. He will recall that I gave him a suggestion; my understanding is that it was not considered in the review. It came up very recently from a meeting between the Caribbean Council and Ministers from the Caribbean. I asked the Minister for a very simple pledge to take this new suggestion back now and discuss it with the Chancellor: Bermuda should be designated the capital of the Caribbean for this purpose only. Surely that is the least he can do for the people of the Caribbean, on behalf of whom my noble friend Lord Morris spoke so eloquently.
Lord Newby
The noble Lord, Lord Morris, anticipated me two minutes ago and the noble Lord, Lord Foulkes, has anticipated me just now. I was about to say that I had not heard the Caribbean Council’s suggestion of designating Bermuda the capital of the Caribbean. My experience of the Caribbean does not fill me with hope that, when push comes to shove, there would be much agreement to designate anywhere as its capital. I am not sure whether you can designate somewhere as a capital for one purpose but not a capital for every other purpose. However, it is a new suggestion; I will certainly take it back and we will see whether it deals with the problem. My initial thought, not having heard the suggestion before, is that it is probably not quite as simple as that.
The Government recognise the mutual benefit of tourism and trade between the United Kingdom and the Caribbean. We welcome the work of the UK-Caribbean Forum to establish a new and improved strategic partnership to promote prosperity, growth and development within both regions. No doubt this topic can be discussed in that forum.
The noble Lord, Lord Howell, and other noble Lords referred to the devolution of air passenger duty to Northern Ireland. The Finance Act 2012 devolved to the Northern Ireland Assembly the power to set rates on direct long-haul flights leaving from Northern Ireland. The rate on short-haul flights will remain the same as that for the rest of the United Kingdom. In devolving direct long-haul rates to Northern Ireland, the Government responded to the wishes of the Northern Ireland Executive. We also recognised that Northern Ireland is in a unique position within the United Kingdom in that it shares a land border with another EU member state that has a lower rate of aviation tax. Further devolution of air passenger duty to Scotland or Wales is a subject that requires careful continued evaluation before we can be confident of its effects across the UK as a whole.
I return to my initial comment that I thank the noble Lord, Lord Palmer, for securing the debate. The Government want to ensure that aviation and tourism continue to grow to promote economic growth and support jobs across the country more generally. However, we also believe that aviation must bear its fair share of the fiscal burden so that we remain on course to address the record deficit. Air passenger duty makes an essential contribution to the public finances and to this Government’s plans to create a stable platform for growth.
Growth and Infrastructure Bill
Lord McKenzie of Luton
(8A) Regulations under subsection (8) shall be in the form of a statutory instrument and shall not be made unless a draft of them has been laid before and approved by both Houses of Parliament.”
Lord McKenzie of Luton
My Lords, Amendment 55BC is concerned with criteria for evaluating viability. Given our earlier discussions, I do not see any great merit here and now in delving into the RICS draft guidance note on financial viability and where that might lead us. The particular purpose of this amendment is to see that there is some parliamentary process which sets out the framework for the criteria rather than just guidance—I think guidance is the preferred choice of the Liberal Democrat amendments.
I will leave it there tonight but it would be extremely important to have a chance before we get to Report to at least see some outlying guidance or direction of travel from the Government so that we do not have to revisit this in detail on Report. I still hang on to my point about how to divide viability among the various components and what that means. That is an issue that we will come back to, but on that basis I beg to move.
Lord Burnett
I gather that there has been a consultation paper and consultations have closed. I understand that there might be a government response. Can my noble friend let me know when that response is likely to be published? I am led to believe that it might be next month. Can my noble friend help me on that?
Lord Greaves
My Lords, I have Amendment 55CB in this group, which has the same effect as that of the noble Lord, Lord McKenzie, so I will not repeat what he said.
Viability is increasingly important, and not just in relation to Section 106 and the removal of obligations to make things viable. It is inherent in planning applications and local plans, in which pieces of land should be developed before others and in whether it is any longer possible, in old industrial towns such as in the area in which I live, to prioritise brownfield, formerly developed and regeneration sites over and above greenfield sites. That is fundamental. The definitions which the Government, Planning Inspectorate and local authorities will use for viability on particular sites will also be fundamental. I look forward to future discussion on this.
Lord Beecham
My Lords, can the Minister enlighten us on the robustness of the attribution to affordable housing allocations in terms of the 75,000 houses affected by this lack of viability? The information was given in a Written Statement last September by Mark Prisk MP, the relevant Minister. It did not distinguish between general viability issues and those that might have been occasioned by the inclusion within the affordable housing provisions, which have not been acted on.
Mention has been made of the £300 million the Government are making available to compensate for losses under Section 106. Has any of that been used to reduce this number of 75,000 and, if so, upon what basis? Can the Minister enlighten us on that—if not tonight, then subsequently? Viability can of course be called into question. There is a variety of problems, as the noble Lord, Lord Greaves, has just mentioned. They might particularly relate to buying at the top of the market and finding that land and other values have fallen since. That makes the problem of viability clear, but there could be other factors as well. If we are moving towards a position where guidance is to be given on viability after the consultation that has already been referred to, it would be sensible to distinguish between the different factors that contribute to the viability problems that are perceived to occur.
The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Hanham)
My Lords, I thank the noble Lord, Lord McKenzie, for his brevity in moving the amendment. He was so brief that I thought I might be able to leap up and be as brief in response; I have been thwarted on that.
There are two or three questions with which I want to deal quickly. First, on the availability guidance, I cannot promise to have the guidance available but I think I will be in a position to talk to noble Lords in a general way before Report, which they might find helpful. So I am arranging to set up meetings to discuss one or two technical aspects of the Bill before we get to Report. That will be for all Peers, so I hope that that will be useful.
With regard to the question raised by the noble Lord, Lord Burnett, the consultation was on the pre-2010 regulations rather than Clause 6 of the Bill. The Government’s response to the consultation will be made available to noble Lords shortly. I cannot say when “shortly” is, but I hope that we will have it before us.
I have a long reply here for the noble Lord, Lord Beecham, but I suggest that I write to him. With that, I hope that the noble Lord will be willing to withdraw his amendment.
Lord McKenzie of Luton
My Lords, I thank the Minister for her brief reply, matching the length of the moving of the amendments. The noble Lord, Lord Greaves, raised an important point about this being a wider issue than just Section 106. I look forward to seeing what the guidance includes. If it is not formally ready, I hope to have the opportunity for some detailed discussion before we get to Report. I am grateful to the Minister for that.
From what the Minister has just said, I understand that the parallel consultation on Section 106 has been completed but the Government’s response has not yet been issued, and that should be with us shortly. If that is the case, I hope that that will be with us before Report. I look forward to sharing with my noble friend Lord Beecham the response on the points that he raised. Perhaps the Minister can just confirm that issue about the availability of the pre-April 2010 consultation. Subject to that, I beg leave to withdraw the amendment.
Baroness Hanham
My Lords, I think I indicated that I hope to be able to share at least some of the ideas behind the response. I do not know whether I will be able to share the whole response, but I have offered the discussions and it will be much clearer by the time we get to them.
Baroness Hanham
“(11A) This section and section 106BB do not apply in relation to an English planning obligation if planning permission for the development was granted wholly or partly on the basis of a policy for the provision of housing on rural exception sites.”
Baroness Hanham
My Lords, this amendment serves to exempt planning obligations attached to planning permissions on rural exception sites from the provisions of this clause. Some time was spent on the issue of rural exception sites during consideration of this clause in the other place. We have considered very carefully the arguments and evidence put before us then and since, and I hope that the resulting amendment will be welcomed by this House.
Rural exception sites are unique in that they are not allocated sites. They come forward when a landowner is willing to provide land to enable housing for local people to be built. They are sites, often in sensitive locations, where housing would not normally be permitted. Rural exception sites do not operate in a competitive land market. Landowners provide land at generally low value, with no expectation of market values or high levels of return. Planning obligations are used to secure the housing for local people. Clause 6 would introduce a risk of unsettling the practice of rural exception housing by introducing the possibility of a challenge to the planning obligation. I am concerned that this could prevent sites coming forward in the future. I hope that noble Lords will welcome the exemption that we are providing and I beg to move.
Lord Cameron of Dillington
My Lords, perhaps I could ask a question about this amendment. It seems to me that one of the underlying concepts behind Clause 6 is that some affordable housing is better than none. In my opinion, that concept applies in spades, as it were, in rural areas and villages. In the current economic circumstances I worry about the ability to build rural affordable housing on exception sites. Of course, in large-scale developments, the affordable housing element is calculated at nil return to the developer and the landowner, but it is hoped that the remaining houses will provide the landowner and developer with a reasonable profit. In addition, non-affordable and affordable houses will be provided to house buyers. Therefore, the scheme goes ahead, operates and both sorts of houses are provided.
However, none of that applies in a village scheme of, say, six affordable houses. Often, everything is staked against you. It requires public funding—some of the £300 million, I hope—or charitable or semi-charitable funding to make it happen, as well as, usually, a generous landowner who often gives up what he or she sees as potential future “hope value” land to make these projects happen. However, it is not unknown for housing departments, housing providers—RSLs or whatever—planning departments and landowners to do a deal whereby planning permission is given for full-market houses on the exception site or nearby land to ensure the release of the land for affordable housing. Funding or part-funding may even be provided for these small schemes.
Therefore, while I understand that the Government’s desire is to reinforce the sanctity of exception sites, can the Minister clarify that it is not intended to discourage or prevent such deals being done? Rural affordable housing is something that we feel deeply about where I come from.
Baroness Hanham
My Lords, I think I can reassure the noble Lord that that is precisely what we are looking for. We recognise that there are philanthropic landowners who will give land; we know that there are housing associations and RSLs that will work for a specific scheme, and that is precisely what we want to ensure continues to happen.
It is important that small-scale developments in villages can be carried out. That is what the clause does. It ensures that nothing stands in the way of rural exception sites being developed, and the Section 106 agreement that will be negotiated to enable that to happen should make sure that the housing is for local people. That will be the only area where Section 106 would have relevance on this matter. It will be a straightforward process of land being released and a developer being available for affordable housing, social housing or, indeed, private housing. There will be no constraints on that taking place.
Lord McKenzie of Luton
My Lords, I place on record our thanks to the Minister for fulfilling a commitment made in the other place.
“( ) This period should be consistent with that prescribed to authorities under subsection (9) of section 106BA of the Town and Country Planning Act 1990.”
Lord Best
My Lords, I shall speak also to Amendments 55E, 55EA and 55F. Amendment 55D, standing in my name and that of the noble Lord, Lord Shipley, would require the Secretary of State—that is, the Planning Inspectorate—to adhere to the same timetable as that imposed on local authorities when the inspectors consider appeals under Clause 6. This means responding within 28 days or within a period specified by the Secretary of State. Given that much of the Bill is about speeding up the planning process, I guess that the amendment will find favour with the Government.
Amendment 55E in my name and those of the noble Lords, Lord Shipley and Lord Tope, would ensure that the Planning Inspectorate gives material weight to the original decision made by the local authority and looks at all the evidence on which it was based. There will be local considerations and local issues with which the inspectorate may not be familiar; this amendment will ensure that these are taken on board. Going through the evidence collected by the local authority also prevents duplication of effort by the inspectorate.
Amendment 55EA would guard against the developer obtaining an unjustified windfall gain where estimates of future sale prices, on which the inspectorate has judged the viability of the scheme and decided to sanction a reduction in the affordable housing requirement, prove too pessimistic. The amendment would mean a clawback, or so-called overage payment, to the local authority of a portion of the sales proceeds above the predicted levels. It seems only fair that if developers are to benefit from Clause 6 where prices have fallen, that they share their extra profits if, in fact, prices are better than feared. We have already aired Amendment 55F very fully in combination with Amendment 55ZA, and it goes to the heart of the matter. It would ensure that society gets at least something—a swift start on site—in return for the loss of precious affordable housing. I beg to move.
Lord Cameron of Dillington
My Lords, I will speak to two of these amendments. First, I cannot support Amendment 55EA. It has a mild whiff of retrospective taxation which I do not approve of. More importantly, it fails to understand the motivation of an entrepreneur, and his or her assessment of risk. If a particular project is marginal, then the developer does their own assessment of the upside and downside risk. They will proceed only if they personally believe that the upside returns are sufficient to justify the downside risks. If the upside is threatened, as seems to be the case in this amendment, and only the downside risk remains, I do not believe that they will proceed. In that case, one nullifies the whole purpose of this clause.
Furthermore, it occurs to me that if the local authority wants to share in the upside benefits, it should equally share in the downside risks. I cannot believe that the local authority would be happy to pay the developer if the housing price should drop below the estimated figure. In other words, it seems only fair that if it is going to share in the upside, it might also share in the risk. This applies if it wishes to see the development take place as soon as possible; of course, I would personally prefer that it did neither.
Lord Burnett
The noble Lord, Lord Cameron, is making a series of very good points. Does he also believe that were the local authority to share in the upside gain, it might cloud its objectivity?
Lord Cameron of Dillington
It would. Local authorities are not the right bodies to involve in entrepreneurial activity. I share the noble Lord’s opinion.
I move on to Amendment 55F. At the risk of being boringly obvious, this surely underlines the whole purpose of the clause and it is amazing that it has been omitted. We are urgently trying to promote infrastructure development and to prevent any further delays at a time when we might be entering a triple-dip recession. Housing development, as we are all aware, is very good for kick-starting our economy. It employs a local workforce, and to a large extent uses UK raw materials, while clearly performing a social good. In fact, the House Builders Federation claims that every £1 spent on housing puts £3 back into the economy, and that increasing housebuilding by 130,000 units per year, which is the Government’s projected level, could create 195,000 direct jobs and 400,000 in the supply chain. We want housebuilders to get on with it. I therefore cannot see the point of renegotiating affordable housing demands if there is not going to be a quid pro quo whereby the house developer has to get on with the development and build now. Otherwise, they are going to renegotiate and wait for the market to recover.
Lord McKenzie of Luton
My Lords, we have Amendment 55EB in this group. Before I speak briefly to that, I will say that I am happy to support all the other amendments in the group. I heard what the noble Lord, Lord Cameron, said about Amendment 55EA, but it refers to a developer paying a contribution proportionate to the increase in value; it does not mean that there is no upside for the developer.
Amendment 55EB seeks to amend the relevant period from three years to two. This is another point I will pursue. The relevant period in these circumstances is the period within which, if the Secretary of State route is taken, the planning obligation has to be completed. However, if the development is only partly started, I do not think that that applies. Proposed new subsection (12) states that the modifications are,
“the modifications necessary to ensure that, if the development has been commenced before the end of the relevant period”—
in other words, within three years—
“the requirement or requirements apply only in relation to the part of the development that is not commenced before the end of that period, and … such other modifications as the Secretary of State considers necessary or expedient to ensure the effectiveness of the requirement or requirements at the end of that period”.
Does that not mean that if you start a development, you have to complete it within three years, but if you start part of it, you neither have to complete the bit you have started or the other portion, otherwise you will revert to the original Section 106 requirement?
Perhaps I am misreading the provisions. I certainly understand that the intent is that a development must be completed within three years. We say three years is too long; we would like to set the time limit at two years. The issue is how proposed new subsection (12) will work when there is only partial commencement of a project. For me it is less clear. Perhaps the noble Baroness will write to me on that if she cannot deal with it this evening.
Baroness Hanham
My Lords, I thank noble Lords who tabled the amendments in this group. They seek to introduce some constraints to the appeals process. Before I turn to each issue, I will reiterate some of the main principles of our thinking. The appeal is meant to be impartial and evidence-based. It will be a targeted review of viability, and it will be dealt with quickly. It will result in a viable, affordable housing requirement that will be valid for three years—I will come back to that—at which point the original requirement will be reinstated. In other words, if a project has not been started within three years, the appellant will lose all the benefits they gained from the appeal.
Amendment 55D covers the 28-day period for a planning appeal decision. Currently a default 28-day determination period applies to authorities determining the applications made under new Section 106BA. The appeals are made to the authorities, which already have a huge amount of information relating to the original application. It should be noted that the 28-day period can be extended if that is agreed in writing between both parties—the authority and the applicant. The procedures for planning appeals are set out in secondary legislation. We will consult on a streamlined process for new Section 106BB appeals. That consultation has not gone out. Again, I will be happy to discuss it when we have our meeting.
Placing the same default 28-day period to determine appeals is not practical. The Planning Inspectorate does not have the knowledge that the local authority had when it first dealt with the application. The local authority has already negotiated the existing planning obligations and should be very familiar with the evidence on which the agreement is based. Also, the Planning Inspectorate’s procedures do not replicate those of a local authority. The inspectorate will need to consider what form of appeal may be required, whether it be written representations, a hearing or public inquiry. I am sure the noble Lord will understand that it is not possible to undertake a full inquiry, however speedily done, within 28 days. That is pushing it too hard. However, I hope I can offer reassurance that we fully intend this to be a quick process. We shall be placing challenging time limits on the Planning Inspectorate to turn around decisions on these appeals as quickly as possible.
Amendment 55E, introduced by the noble Lord, Lord Best, requires the Planning Inspectorate to give “material weight” to the decision and evidence of the local authority when considering an appeal; that is, the local authority’s case must be considered at the same time. As a point of principle, planning inspectors must be seen to make their own decisions impartially. In this case, they must take an impartial assessment of all the evidence submitted; they cannot just look favourably on some. It would therefore be wrong to provide an advantage to the evidence of one party—the local authority—by requiring in law that it is given particular weight. What if the quality of the evidence submitted by the local authority was very poor?
An inspector is not required in any appeal casework to give material or indeed any other defined weight to particular evidence. Rather, it is for the inspector to decide what weight should be given to any evidence, which could include the local planning authority’s decisions, according to the cases put, and then to justify that assessment. I hope the noble Lord agrees that we should not be trying to prejudice the Planning Inspectorate’s decisions but should let it take an impartial view.
Amendment 55F would require the development to commence within six months of an appeal decision. Amendment 55EB would make it valid for two years, rather than three, and Amendment 55EA seeks to ensure that the appeal decision should include a requirement that the local authority receives a contribution if market values rise. The noble Lord, Lord Burnett, has added his weight against this.
I believe that the clause already provides incentives for the developer to get on and build. Where the Planning Inspectorate issues an appeal decision in these cases, the revised affordable housing requirement is only valid for three years. Any part of the development which has not been commenced in that time will be subject to the original affordable housing requirement. One way or another, the original affordable housing requirement has to be dealt with within that timescale. We must give developers a reasonable amount of time to get on site. Following an appeal decision, the developer may need more time to begin development for legitimate reasons, such as compliance with pre-commencement conditions or securing vacant possession of the property. For more complex schemes, a limited time period to get on site would mean that the whole reassessment of viability could be wasted. We must balance our desire to get stalled sites moving with a realistic understanding of the development process. I am particularly concerned that we do not inadvertently constrain complex projects, such as regeneration schemes, by limiting the revised agreement inappropriately.
I would like to respond to the amendment requiring the Planning Inspectorate to include a provision for market uplift. On a question of principle, Section 106 is intended to be a mechanism by which development is made acceptable in planning terms. The amendment appears to introduce a wider purpose for Section 106, related to profit rather than mitigating the impact of development. I would be extremely concerned that this could set a precedent for the use of Section 106.
The intent of this amendment is to give local authorities some return if markets improve. This provides an incentive for developers to start building. However, the legislation does not prevent local authorities making their own judgments as to whether there should be some incentive within the revised agreement to start development, such as an improved affordable housing provision, if market conditions rise. The only constraint on the local authority is that the outcome should not be more onerous than the original obligation. In the event of an appeal, local authority proposals for such flexibilities could be submitted to the Planning Inspectorate as evidence. We will be clear in guidance that such evidence is appropriate. Again, I see this as a matter for local discretion, depending on site circumstances. We will be ensuring that guidance on this matter is included in our statutory viability guidance which, as I have said, we hope will be available before Report.
I hope that noble Lords will be reassured by those comments. The noble Lord, Lord McKenzie, asked whether, if a development is partly commenced at the end of the three years, the original obligation applies to that part of the development which is not commenced. So if the developer has built only part of the development and there is an obligation to develop affordable housing, and they have had a reduction, that lasts for only three years. If the developer has not got that part in hand, he will have to go back to the original amount agreed before the negotiation.
Lord McKenzie of Luton
Perhaps I may pursue that point. I understand generally the points around the three years, but if it is partly commenced and partly not commenced, in relation to the part that is commenced there is no requirement to complete that part within the three years in order to retain the benefit of the modified Section 106 agreement. That was the point I was pursuing. I understand clearly that if you do the whole lot, you have to do it within three years.
Perhaps it is the convoluted language used in proposed subsection (12), and we may pick it up subsequently, but that is what is not clear to me, particularly in view of what the noble Baroness has just said.
Baroness Hanham
I may need to write to the noble Lord on this. The whole development has got to start within three years. The noble Lord is looking as bewildered as I feel.
Lord McKenzie of Luton
I will not dwell on this because we have other things to discuss. As I understand it, the relevant period is three years—we would like to see a period of two years, but it is to be three years—in which the developer has to complete under the provisions of proposed subsection (11). I am trying to tie that up with what the noble Baroness has just said about starting to commence the development when it is only partly commenced. That is what is confusing me.
Baroness Hanham
My Lords, I do not want to cause any more confusion because it is too late for that. However, I may be able to respond. It is always a relief to know that I am right. The completion is not legally defined. It does not have to be finished within three years, but it must start within three years. I hope that that clarifies the position.
Lord McKenzie of Luton
I understand what the noble Baroness has said, but perhaps we will return to the issue.
Lord Best
My Lords, I am grateful for the support of the noble Lord, Lord Cameron, for the absolutely crucial Amendment 55F, and indeed for the support of the noble Lord, Lord McKenzie, for all these amendments. It might be worth spending a minute or so on Amendment 55EA which talks about the prediction by the inspector that prices are going to be lower than expected when properties come to be sold being proved wrong, and whether the local authority would benefit from that. Let me run through this briefly. I hope that the noble Lord, Lord Cameron, will be clearer about the position and see that this is not such a foolish suggestion.
The developers say to the inspectorate that when they agreed to the Section 106 agreement, they expected prices to be X thousands of pounds at the time of sale. They now tell the inspector that a lower figure is expected from the sales. The inspector agrees and says, “Okay, we will let you off and allow you to break the contract you have already signed with the local authority. You will be let off the obligation to provide as much affordable housing”. But what happens later is that prices rise and it turns out not to be such a bad deal after all. If, instead of saying, “Good luck to the developers. They paid over the odds for the site. It was foolish at the time, but everything has come right. They have not had to build any affordable housing, they have made their profits, and that is the end of the story”, one says, “If the prediction is wrong and prices rise so that the developers make a handsome profit, over a certain pre-agreed level, there should be a share back to the community in lieu of the affordable housing that has been sacrificed”.
The Minister makes the very fair point that dealing with this in cash may be unwise and it may be that one should return to the agreement for more affordable housing. One should get back some of the affordable housing. I would certainly favour that over the hard cash and that would fit in with other requirements here. That would be a good way of doing it. It would give an opportunity for that deal to be negotiated at the time that the inspector provides their judgment, saying, “Less affordable housing, but, if I am wrong in my predictions and prices rise, then we will have some more affordable housing later”. It must not be any better than the original deal, however. That would be a fair way of handling the unforeseeable circumstances of when properties are actually sold in the future as opposed to guessing.
Lord Cameron of Dillington
The noble Lord hoped he would make it clearer to me, but I had understood all that. The point is that, if the house is sold at a lower price than the new agreed price, is the local authority going to give either cash or some form of payment back to the developer, because it has agreed the sale at a price that is still too high?
Local authorities under these circumstances are getting involved in trying to prevent local developers assessing the risk and proceeding with the development as soon as possible. I still think it is very bad for them to get involved in entrepreneurial activity of this nature.
“106BC Modification or discharge of affordable housing requirements: Greater London
(1) Where an application is made under section 106BA for the modification or discharge of an affordable housing requirement in respect of a development falling within section 62B(2), the appropriate authority shall notify the Mayor of London.
(2) Where the Mayor is notified of an application under subsection (1), the Mayor may decide to make any determination in relation to the application that would otherwise be made by the appropriate authority under section 106BA.
(3) The Mayor must consult the relevant local planning authority before exercising any function under this section.”
Lord Tope
My Lords, Amendment 56 stands in my name and that of the noble Lord, Lord Jenkin of Roding. I am pleased to see that the noble Lord has been able to join us.
We return to the situation in London, which seems surprisingly to have been completely overlooked throughout the Bill. We have a Greater London Authority and a Mayor of London and, once again, in view of sensitivities on both sides of the House, I have to point out that we refer to the office and not to past or present office-holders. We have a Mayor of London and we will continue to have a Mayor of London, to whom Parliament has given responsibility for strategic planning in London. Yet the Bill seems to take no account of that at all. In this case, the amendment would ensure that the mayor is notified of any application to modify or discharge affordable housing requirements in London and that, if he deems it necessary, he can call in such applications.
I move the amendment because I recognise that affordable housing, particularly in London, is of crucial importance to the role of strategic planning. It is largely central to it and a very high priority for past, present and, I hope, future mayors. I make the same case as I did the other day in Committee on another amendment. The Mayor of London has been given that responsibility by Parliament. He has been elected by the people of London. He is publicly accountable, first of all to the London Assembly, which is elected by the people of London, and also accountable—in a fairly high profile way, which will always be the case whoever the officeholder is—to the people of London. That must be more appropriate, better and certainly more in tune with localism than giving the responsibility to an unelected, unaccountable body, which is unversed, as yet, in this work, elsewhere in the country.
The added advantage, again, is that the GLA’s planning department knows the planning departments of all the London boroughs and the local housing situation in all the London boroughs. On the whole, most of the time, there is a very good relationship, so it will be making its judgments and decisions with knowledge and will be able to hear, and take proper account of, all arguments put forward both in the local context and in the strategic planning context for the whole capital. That seems to be entirely appropriate for an elected mayor with a strategic planning role. There is really no need at all to involve the Planning Inspectorate, which is based elsewhere and does not have either the knowledge or the accountability to carry out that role.
I move this amendment in the hope that the Government will belatedly start giving some consideration to the role that they and their predecessor Government have created in London: a mayor with responsibility for strategic planning. It is very hard to understand an argument that says that the mayor responsible for strategic planning should have no role in this process. I believe that must be an oversight and I am pleased to offer the Government the opportunity to correct it. I beg to move.
Lord Jenkin of Roding
My Lords, I am very pleased to be here to support my noble friend Lord Tope. It is about six hours since I was moving amendments in Grand Committee about copyright so it is pleasurable to come back to a rather more familiar scene. I do not think that I can add very much to what my noble friend has said. He has put the case extremely well. The centre of the case is that the mayor is there and has these powers accorded to him by Parliament. It seems very strange that he should have no function in relation to this important matter. Affordable housing in London is enormously important, as I think my noble friend on the Front Bench will acknowledge. From his own knowledge, he will be well aware of the need to find proper housing for people who cannot afford to go out into the market. The mayor has this overall responsibility. Why should he not be entitled to have this role rather than it going to the inspectorate in Bristol? I very much support the amendment.
Lord McKenzie of Luton
My Lords, I am not unsympathetic to the thrust of the amendment that has been moved by the noble Lord, Lord Tope, and supported by the noble Lord, Lord Jenkin. However, it does not seem to be quite right to say that the Bill makes no reference to the Mayor of London, because new Section 106BB(18) states:
“In the application of Schedule 6 to an appeal under this section in a case where the authority mentioned in subsection(1) is the Mayor of London, references in that Schedule to the local planning authority are references to the Mayor of London”.
I was not quite sure whether the noble Lord was proposing that the Mayor of London’s role in this should be as the local planning authority—in which case the question is what happens if the Mayor of London does not support the applicant’s appeal—or whether the Mayor of London sits in substitution for the Secretary of State. When the noble Lord replies, it would be helpful if he could clarify and unpick that issue.
Lord Ahmad of Wimbledon
My Lords, I must admit that, as I heard my noble friend Lord Jenkin making his contribution, I looked over my shoulder, because earlier this afternoon I did just that and noticed he was not in his usual place. We of course welcome him and, indeed, his contribution to the Committee.
My noble friend Lord Tope proposes amendments that seek to allow the Mayor of London to determine applications made under new Section 106BA, where the development, as he rightly pointed out, is of strategic importance. He also made the important point about affordable housing and its particular importance in London, which I fully support, as do the Government. The Government are supportive, in particular, of a proactive approach to stalled sites being taken forward by the Mayor of London. The clause is clear that any application for review of affordable housing requirements under Section 106 that the mayor himself negotiated and signed is made directly to the mayor.
In other cases there is also a need to balance carefully the need for a rapid, focused mechanism for reviewing affordable housing obligations, where the viability of the scheme is at stake. We must also weigh up whether an additional notification and the argument being made at consultation stage with the mayor would cause unnecessary delay.
I have listened to the arguments that, in the majority of cases, the borough is best placed to respond to any applications made under this clause. Where the borough that negotiated the agreement was party to the original viability evidence and must legally enforce the agreement, I am sure that all noble Lords would agree that the borough would seem best placed to deal with an application for review. That said, the Government do listen and I have listened carefully to my noble friend Lord Tope. There are cases where the mayor has a formal role in determining the planning permission to which the existing Section 106 agreement relates. I can certainly see that there is an argument that, in certain specific cases, the mayor should have an ongoing role. This is something that my noble friend Lady Hanham and I have discussed with the Minister. On that basis, we would like to come back to this issue on Report. With those reassurances, I hope that my noble friend is willing to withdraw his amendment.
Lord Tope
My Lords, I welcome those reassurances very warmly. I am grateful. Let me clarify for the noble Lord, Lord McKenzie, though he probably understood. I am not sure how to phrase this, but I was proposing that the Mayor of London should in London have the role otherwise ascribed to the Secretary of State. I must be careful how I phrase that, because I am not sure that either would wish to be likened to each other. I was not suggesting for one moment that the mayor should take the role of the local planning authority. I agree with the Minister that in most cases I would hope that the issue would be resolved with the local planning authority in an amicable and fair way.
The mayor would be notified, which is not very difficult these days. There are not that many projects under review in London. I would hope that in many cases he would not feel the need to call it in, but that if he did there would certainly be a good reason to do so. After 12 and a bit years in London, I have more confidence that not only would a better decision come from City Hall than from PINS in Bristol, but that it would be a quicker decision than if it were referred to the Planning Inspectorate, which is likely to have a considerably increased workload. All round, it is a better solution and I am pleased and reassured to hear that the Government are giving positive consideration to it. On that basis, I beg leave to withdraw the amendment.
Lord McKenzie of Luton
Can the noble Lord help me out on this point? Where Clause 6 refers to 106BB appeals, it states in new subsection (18) that:
“In the application of Schedule 6 to an appeal under this section in a case where the authority mentioned in subsection (1) is the Mayor of London, references in that Schedule to the local planning authority are references to the Mayor of London”.
If there are circumstances where, for a Mayor of London or a local planning authority, you have to read “Mayor of London”, then the Mayor of London duly cannot then act instead of the Secretary of State. Maybe this is not the occasion to unpick that particular provision, but I would like some clarification on it and I imagine the noble Lord would as well.
Lord Jenkin of Roding
The Mayoral Development Corporation that is set up under the Localism Act might well be the sort of place where the mayor would have the primary role.
“Indebtedness
(1) The Localism Act 2011 is amended as follows.
(2) Section 171 (limits on indebtedness) is repealed.
(3) In Part 7 of the Localism Act 2011 insert—
“Definition of indebtedness
(1) A local authority shall determine and keep under review the amount of housing debt held by that authority.
(2) A determination under this section must have regard to the duty to determine an affordable borrowing limit under section 3 of the Local Government Act 2003 (duty to determine affordable borrowing limit).
(3) A determination under this section must have regard to any guidance issued or approved by the Secretary of State.
(4) A local housing authority may not hold debt in contravention of a determination under this section.
(5) In this section “housing debt”, in relation to a local housing authority, means debt—
(a) which is held by the authority in connection with the exercises of its functions relating to houses and other property within its housing revenue account, and(b) interest and other charges in respect of which are required to be carried to the debit of that account.””
Lord Tope
My Lords, I rise to speak to this amendment standing in my name and that of my noble friend Lord Shipley, who is engaged at a Holocaust memorial function in Speaker’s House.
This is arguably the amendment that might make the most difference to achieving growth in the housing market, because it seeks to remove the housing borrowing cap. The measure that has been called for by a large number of bodies—most recently, the National Federation of ALMOs, the Chartered Institute of Housing, the Local Government Association, the Association of Retained Council Housing and London Councils. All of them say that removal of the housing borrowing cap to enable local authorities to start more building would make a huge and almost immediate difference to the provision of housing, particularly in the capital but also throughout the country.
I hope that there is some movement on this; I have heard some encouraging noises elsewhere. I recall asking the Minister, the noble Baroness, Lady Hanham, about it in Questions a week or two ago and she replied that it was a matter for the Treasury. Unfortunately, I was not allowed a supplementary. Of course it is a matter for the Treasury; some would say that that is the whole problem. But it is still the responsibility of the Minister’s department and all of us who support this Government —and of those who do not support them—to take the measures that would enable housebuilding to get under way. This is certainly not the only measure but it is a single measure that would make an enormous difference. If authorities were still governed by all the prudential rules in the same way as normal, they would still have to act responsibly, but if they were able to borrow against their housing stock, it would make a significant difference. It would get housebuilding moving on a greater scale. I hope that discussions within government are moving in the right direction and that, if not tonight then before the end of this Bill, we will hear that the housing borrowing cap is being lifted. I beg to move.
Lord Jenkin of Roding
My Lords, I strongly urge the amendment on my noble friend the Minister. My noble friend Lord Tope said that a great many organisations were in favour of the change. I have to say that none is more in favour than London Councils—I should perhaps have again declared my interest as a joint president. It has said firmly that, of all the measures, this could be one which really helps the housing situation in London—which, as noble Lords know well, is pretty desperate at the moment.
The cap exists on top of the normal constraints on local government borrowing. It is an additional barrier to development which seems absurd in the present circumstances, given that everybody is quite rightly saying to the Government that growth and getting things moving should be absolutely top of the agenda. It seems absurd that there should be duplication of the protection against irresponsible borrowing by local authorities. It seems not to have any sensible purpose now. The usual controls operate perfectly satisfactorily. I simply do not understand the case for retaining the cap.
I have perhaps not had my ear quite as close to the ground as my noble friend Lord Tope, but I cannot believe that the Chancellor and his colleagues in the Treasury have not been made aware of this and do not recognise that, if they really want to move housing forward in London and the rest of the country, the cap should be removed. I hope that my noble friend will be able to respond positively.
Lord Best
My Lords, I support the noble Lords, Lord Tope and Lord Jenkin, and pledge the Local Government Association’s support. Is its support stronger than that of London Councils? It is equal to that from London Councils.
I talked at Second Reading about the growing national housing deficit. I was trying to get into common parlance the idea that, every year, we are building up a bigger and bigger deficit. We are adding another 100,000 homes a year to the deficit that we already have because we are building at least 100,000 less than we should. We must do something dramatic to try to turn the deficit into a positive.
Local authorities are sitting on assets against which they could borrow. A lot of housing associations have run out of space to borrow any more, and they have used up the opportunity to borrow against the properties that they own. Many local authorities have plenty of headroom to borrow more against that security. This is prudential borrowing that will be repaid out of rents. It is not frightening to overseas investors and bankers to see another £7.4 billion, which is the amount estimated by the report Let’s Get Building, produced by John Perry from the Chartered Institute of Housing. Over a period of five years, £7.4 billion is not enough to frighten the horses but it would produce 12,000 homes a year—60,000 homes in all. That is about 5% of what we need each year, but it is about 10% more than we currently provide. That is one relatively dramatic way in which, without any subsidy, we could get at least a few thousand more homes built every year.
I chaired a commission for the LGA and the Department for Communities and Local Government called Easing Housing Shortages: The Role of Local Authorities, which sent me around to see what local authorities had been doing. Were they up to it? Did they have any sites on which they could develop? They were using what was called local authority new-build funding, and I saw how councils can demolish those garages on the end of the site and put in 14 bungalows, perhaps, for elderly people, who can then move out of underoccupied council housing into those bungalows, thereby releasing 14 family houses on the council estate. It is creative action; the land is already there; the garages do not get used any more; it is a place where people congregate for nefarious purposes—everyone is delighted to see the development. Local authorities could get on with schemes of this kind up and down the land. I support this amendment.
Lord McKenzie of Luton
My Lords, this proposed new clause is the same as that which my colleagues moved in Committee in another place by way of a probing amendment. It has been very powerfully moved by the now traditional triumvirate of the noble Lords, Lord Tope, Lord Jenkin and Lord Best—a powerful group indeed. In the Commons, I am bound to say, it did not elicit much information, and drew a rather aggressive diatribe from the Minister—something to do with Labour and borrowing. Thank goodness we have a Minister at this end with whom we can have a measured and sensible discussion. We have an innate sympathy with this amendment, and would like to use the opportunity to press the Minister on some particular issues.
First, perhaps we can ask something that has been touched upon by the noble Lords, Lord Tope and Lord Jenkin; and if reported hints from senior Treasury officials at the time of the Autumn Statement that the Government were considering at least relaxing the cap are true and under active consideration, it may save us some time. I hope that they are, but perhaps the Minister can tell us whether they are.
I will also make it very clear that we accept that in the interests of macroeconomic management the Government are entitled to have powers to limit the amount of money borrowed by local authorities. In fact, the Labour Government legislated to that effect in 2003, and that power extends to setting limits on individual councils, and different limits for different kinds of borrowing.
When we were debating these provisions in what is now the Localism Act, I tried to get an answer as to why Section 171 was needed as well as Section 4 of the 2003 Act. I do not believe we ever got a satisfactory reply, so perhaps I can use the opportunity to ask again, in the hope that the Minister can now clarify the position. That is my second question.
We have had the benefit of several briefings on this matter from the LGA, the National Federation of ALMOs, CIH and others, and in particular, as has been referred to, we have had the Let’s Get Building report, which was commissioned by the National Federation of ALMOs. The case for more housing is overwhelming, and the need for more affordable housing is desperate. We can debate until the cows come home which Government have delivered what, but it is surely common ground that we need to build more, and that this is becoming increasingly urgent.
Therefore, this is not just about providing decent homes for people. The boost to the economy is surely well understood, as is the strong multiplier effect on GDP of construction and the boost to employment. Given the grim GDP figures delivered last Friday, this could not be more urgent. The need to boost construction and build more social housing is clear. The Let’s Get Building report also lays out why councils, together with ALMOs, are particularly well placed to play a role, especially in using their land assets, and to link it in with their apprenticeship and work experience scheme. Do the Government accept that analysis from the report? It would seem that at least part of the coalition does.
As the report points out, the revenue costs and savings of an expanded council new-build programme are complex and depend on such factors as whether a grant from the HCA would be needed, the extent to which council tenants would require housing benefit—or universal credit in future—and the prior housing status of new tenants. To the extent that additional council housing reduces demand for supporting people in the private rented sector or temporary accommodation, there is a potential saving for the Government. Additional build also provides an opportunity to get a better balance in the local stock offering. As the noble Lord, Lord Best, said, it is a reasonable way of dealing with underoccupation.
Of course, the crunch issue is borrowing. It is accepted that, under current rules, additional borrowing by councils will form part of public sector debt, notwithstanding that it will be effectively financed out of rental income. There may be arguments about recasting the treatment of that debt, but they are probably not for us today. As we have heard, the Let’s Get Building report proposes that additional borrowing of some £7 billion over five years would facilitate the provision of 60,000 additional homes, although the amendment does not call for this. It calls for the housing cap to be removed. Even if the Government were not minded to support the amendment, would they at least be minded to raise the level of the cap? Have they given recent consideration to this? The Minister will doubtless tell us that there is existing headroom of some £2.8 billion, but this is not evenly distributed.
It is worth putting these borrowing numbers into context. According to the December OBR report, the forecast for debt at the end of this March is £1.2 trillion. Moreover, the forecast increased by £27 billion between March and December last year. Given the upside that it could bring to GDP growth, £7 billion over five years would not seem of itself to be critical to our chances of hanging on to our AAA rating—whatever they may be—or to the Government’s chances of meeting their fiscal rules. That £7 billion over five years is within the margin of standard statistical error for public borrowing figures. As for removing the cap entirely, the evidence from CIPFA is that the introduction of prudential borrowing for councils in 2004 has been a complete success and that borrowing levels have remained modest and prudent. Total local government borrowing is in the order of some £81 billion.
The reform of council house finance from April 2012 has boosted councils’ ability to manage their housing finance more positively. They all have 30-year business plans, while average council housing debt is reported as being just over £17,000 per property. I ask the Minister: why not trust local councils on the basis of their track record to date? These are some serious questions for the Government to answer.
Lord Ahmad of Wimbledon
My Lords, first, various questions have been raised about comments from the Treasury, when those comments may not have been heard. I am sure noble Lords will appreciate that it is not for me to comment on such rumours. What I can outline is the Government’s position on where we stand, particularly with regard to these amendments and the issue of housing debts with regard to local authorities.
It is notable that we have been talking about affordable housing; there is also an issue about affordable debt. That is the question which we cannot forget in our deliberations. I therefore regret to say that while I agreed with my noble friends on their previous amendment, on this occasion the Government cannot accept this amendment because it would put at risk the first and key priority of the Government, which is to reduce the national deficit.
Lord Greaves
The Minister referred to the 170,000 units of social housing which he said were being delivered. Is he absolutely confident that they are going to be delivered and, if so, can he provide us with a list or details of where they are going to be?
Lord Ahmad of Wimbledon
I did say that this would be a figure up to 2015, so we can certainly provide details of the ones that have already been delivered. We will make sure that we write to him about that.
Lord Tope
My Lords, I would indeed have been very pleasantly surprised if the Minister had stood up and accepted my amendment; I did not expect that, but I must admit to being a little disappointed with the reply. Perhaps I should make clear that I do not have a direct line to the Chancellor: my references were really only to what we can all see, read and hear in the public media. There are calls not least from the Mayor of London—who seems to have found favour again—to increase investment, and that would inevitably mean some borrowing. The borrowing we are talking about is very much prudential borrowing, in all meanings of that word. Without question, this issue is going to continue. I hope we will see some movement, but it will not continue further tonight. I beg leave to withdraw the amendment.
Lord Greaves
“Planning obligations: limitations on use
Paragraphs 122 and 123 of the Community Infrastructure Levy Regulations 2010 (planning obligations) shall cease to have effect.”
Lord Greaves
My Lords, Amendment 57A introduces a new clause. Its purpose is to probe further into the future of planning obligations, and particularly the future of Section 106 agreements and their relationship to the community infrastructure levy, otherwise known as CIL. I am aware that I am continuing with what I said when the CIL regulations came out in 2010 and probably going even further back to the Planning Act 2008.
This is a probing amendment about incredibly obscure and esoteric things. I apologise to members of the Committee for introducing them at this time of night but I think they are important. I have attempted to understand the position but I cannot. That may be due to a lack of information, a lack of understanding or even a lack of intelligence on my part. If I cannot understand, I hope that the Minister can explain what is going to happen so that at least we can assess whether it will be satisfactory.
The future of Section 106 comes from paragraphs 122 and 123 of the CIL regulations 2010. They come from concerns that in some areas the substantial transfer of planning obligations to CIL from Section 106 will not be satisfactory, not least because CIL itself will not yield very much, if anything at all. It is perhaps a minor pending disaster in those parts of the country which are not very prosperous, where property and land values are not very high, and CIL levies may not be possible at all.
Paragraph 122 of the regulations puts a limitation on Section 106 planning obligations which in future must be,
“(a) necessary to make the development acceptable in planning terms;
“(b) directly related to the development; and
(c) fairly and reasonably related in scale and kind to the development”.
This has already happened and it means that Section 106 is more restrictive than it used to be. Paragraph 123 brings in further limitations and sub-paragraph (2) states that Section 106 obligations,
“may not constitute a reason for granting planning permission … to the extent that the obligation provides for the funding or provision of relevant infrastructure”.
I am paraphrasing to some extent but reading from parts of the regulations. Sub-paragraph (3) says that it,
“may not constitute a reason for granting planning permission to the extent that …
(b) five or more separate planning obligations … within the area of the charging authority; and
“(ii) which provide for the funding or provision of that project, or type of infrastructure, have been entered into before the date that obligation A was entered into”.
In other words, within a planning authority there will be a limit of five within each category of types of projects of Section 106 agreements. This rather oddly applies no matter what size the planning authority may be. The definition of infrastructure is related to the authority’s list of types of infrastructure that may be funded by CIL. The intention is that these new restrictions under paragraph 123 will be introduced in April 2014.
I have various questions for the Minister which I will put on record. I am quite happy for replies to these in writing because they are fairly technical, although they may just show my lack of understanding. After April 2014, how will the five-project limit work? Is it the same for large authorities and small ones? What type of project will be allowed for Section 106 obligations after April 2014 and how will they vary from what they are now? Do these restrictions cover all Section 106 agreements and do we assume that the council concerned has agreed to and has examined a CIL scheme? What is the position if a CIL scheme has not been agreed to, as in certain financial environments in less prosperous areas it may simply be impracticable? My advice is that in areas such as east Lancashire, it is not likely to be possible within the next four years.
How will viability, which we have discussed in the Committee today, affect all this? Does all this have any relationship at all to the Section 106 affordable housing agreements, and that whole agenda we have been talking about? What is the definition of infrastructure? Are there other Section 106 possibilities connected to an application that are neither housing nor infrastructure? When we discussed this earlier, the Minister said that not all authorities have yet got CIL schemes in place. It would be interesting to know what proportion of authorities already have CIL schemes in place, where they are, and, therefore, which authorities do not have them.
All this seems very complicated, and that may be because I do not understand it. It may all be crystal clear when the Minister explains it, but if I do not understand it then maybe one or two other people in the country do not, even those involved in the planning system. We need to get this sorted out. If the system that we have, and the changes which are going to take place, are simply not going to work or be satisfactory, then the Government need to look at it again. I beg to move.
Lord McKenzie of Luton
My Lords, not for the first time, we are indebted to the noble Lord, Lord Greaves, for a list of incisive and important questions. I simply ask that the Minister will copy the reply which I hope he will commit to give to the noble Lord, Lord Greaves, to others so that we can have it in good time for subsequent sittings.
Lord Ahmad of Wimbledon
My Lords, I am grateful to my noble friend Lord Greaves. He does himself an injustice in describing himself as not understanding issues to do with local authorities and planning. I certainly always learn a great deal from his contributions, as I have again today.
My noble friend’s amendment would remove the statutory tests for the use of planning obligations, the effect of which would be to return to a much broader use of Section 106. These statutory tests were introduced by the previous Government. Their purpose was to scale back the use of Section 106 so that it must be necessary, proportionate and directly related to the development in question. In these times of market uncertainty, it seems absolutely right that Section 106 is used to mitigate the impact of developments and no more.
The second purpose was to ensure that Section 106 could operate alongside the community infrastructure levy in a fair way. I remind the House that the community infrastructure levy was brought in to provide a transparent, non-negotiable and fair charge, addressing many of the concerns around the operation of Section 106. At this late hour, I will write on the specific question my noble friend raised about how many local authorities are already within this. Of course, as the noble Lord, Lord McKenzie, has asked, I will ensure that I copy that letter to all who have taken part in this debate.
The levy continues to be the Government’s preferred mechanism for collecting contributions to infrastructure. The scale-back of Section 106 sits alongside the roll out of the levy and prevents developers being charged twice for the same item of infrastructure. The effect of this new clause would undermine this, causing a dual system, which would serve to confuse; I am sure that that was not my noble friend’s intention. We therefore do not support the inclusion of this new clause which would undermine the progress that we are making with the community infrastructure levy. I hope that my noble friend is willing to withdraw his amendment.
Lord Greaves
My Lords, I made it absolutely clear that this is a probing amendment. It is simply a means of putting these questions on the table. The questions will clearly be set out in Hansard and I hope that the Minister’s welcome offer to write on some of these matters will tackle each of these questions in turn and provide some answers fairly quickly.
I will bring the amendment back on Report if I am not satisfied. This is an important question. There are parts of the country that CIL is really designed for. Where there are developments which are clearly profitable, even in the present financial circumstances, then CIL will work. In parts of the country, even on the best sites that may be available through the planning system, the imposition of CIL will make the developments unprofitable and unviable. That is the problem. If you do away with Section 106 on the one hand but you cannot impose CIL on the other, there is nothing left. That is the stark problem that is facing probably more parts of the country now than was the case when CIL was introduced five years ago. I am happy to withdraw the amendment now but I would be very grateful indeed to hear from the Minister. No doubt I will spend some happy hours trying to understand his letter and perhaps have some further discussions.
Lord Greaves
Lord Greaves
My Lords, the proposed amendment is to subsection (2) of Clause 7, which is about the,
“Secretary of State’s consent required for certain disposals for consideration less than the best that can reasonably be obtained”.
Subsection (2) is an amendment to Section 233 of the Town and Country Planning Act 1990. The new provision states:
“The Secretary of State may give consent under subsection (3) … in relation to any particular disposal or disposals, or in relation to a particular class of disposals”.
The next paragraph states,
“in relation to local authorities generally, or local authorities of a particular class, or to any particular local authority or authorities”.
The purpose of the amendment is simply to probe the Government’s intentions in relation to the particular class of disposals and in relation to broad categories of local authorities or, indeed, all local authorities. If the Government are putting this in legislation, they must have some idea of the kind of consents that will be given in a much broader way perhaps than exists at the moment. This could be extremely helpful to local authorities and very welcome.
I should say that I put down the final amendment to take out subsection (3) because I could not understand it. I looked at it and I looked at the legislation, and I still could not understand it. I thought that perhaps the Government can explain to me what it means. I beg to move.
Lord Ahmad of Wimbledon
My Lords, my noble friend Lord Greaves has spoken to his amendments. I want to outline the Government’s position because we will be resisting them. However, he said that they are probing amendments. I also take on board his final point. I will refer to his comments when I get to Amendment 57D.
Before I respond specifically to the amendments in detail, it might help the Committee if I set out briefly what Clause 7 is intended to do. Local authorities have wide powers to acquire, appropriate and dispose of land. The main constraint on disposals of land is that if an authority wishes to dispose of land at less than the best consideration reasonably obtainable, it must obtain the consent of the Secretary of State. In order to avoid having to give decisions on minor disposals, the Secretary of State has the power to give general consents for specified classes of disposal for housing land and other land not held for planning purposes. However, there is no power under Section 233 of the Town and Country Planning Act 1990 to give a general consent for the disposal of land held for planning purposes at less than best consideration. So local authorities must apply to the Secretary of State each time such consent is required.
Before I continue, I remind the Committee that this clause had the support of all parties in the other place. The shadow Secretary of State for Communities and Local Government stated at Second Reading in the other place that the clause was sensible—I am sure that he did not say that about other clauses—and he supported the removal of the anomaly on disposal of land for less than best consideration.
Amendment 57B will stop the power of having a general disposal consent by preventing consent being given for a particular class of disposals. Perhaps I may illustrate this by reference to the general disposal consent under the Local Government Act 1972 for all land not held for housing or planning purposes. The class of disposal in that consent is all those disposals where the difference in value between the open market value and the selling price is less than £2 million, subject to certain conditions.
Amendment 57C will also wreck the point of having a consent by preventing it applying to local authorities generally or those of a particular class. I do not want to anticipate how a new general consent might be worded but I might speculate that the Government would want to give consent under this new provision to all local planning authorities, or all authorities to which Section 233 of the 1990 Act applies. Amendment 57C would prevent this.
My noble friend Lord Greaves referred to the deletion by Amendment 57D of subsection (3), which he said he did not quite understand. Here is my attempt to explain it and I hope he is clearer at the end. Subsection (3) adds a new subsection (9) to Section 233 to directly apply the protection set out in Section 128(2) of the 1972 Act. I am sure that that is clear but I will nevertheless continue to explain. The protection set out in Section 29 of the Town and Country Planning Act 1959 will no longer apply. This will mean that disposals of planning land and “other” land under the 1972 Act will be subject to the same procedures. The amendment would therefore remove a convenient provision for local authority users who are accustomed to using the Local Government Act.
I accept that that last point may require some re-reading of Hansard and some technical points may arise, but we will, if we can, between this stage and Report make any other clarifications that are sought. I hope that my noble friend will withdraw his amendment.
Lord Greaves
My Lords, noble Lords will understand why, in working my way through all those references, Acts and regulations, it felt like a game of snakes and ladders and I was not getting anywhere. However, I am grateful to my noble friend for those explanations, which I shall read carefully. It will form some good bedtime reading if I have difficulty getting to sleep one evening. Clause 7 is clearly highly desirable and I am pleased to beg leave to withdraw the amendment.