Town and Country Planning (Fees for Applications, Deemed Applications, Requests and Site Visits) (England) (Amendment) Regulations 2014

Baroness Stowell of Beeston Excerpts

Monday 10th February 2014 Grand Committee

Moved by

[Baroness Stowell of Beeston]

That the Grand Committee do consider the Town and Country Planning (Fees for Applications, Deemed Applications, Requests and Site Visits) (England) (Amendment) Regulations 2014.

Relevant documents: 17th Report from the Joint Committee on Statutory Instruments, 28th Report from the Secondary Legislation Scrutiny Committee.

[The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Stowell of Beeston) (Con)]

My Lords, the regulations amend the Town and Country Planning (Fees for Applications, Deemed Applications, Requests and Site Visits) (England) Regulations 2012. The draft regulations have been approved in the other place and, if approved by this House after consideration by the Grand Committee, would come into effect at the end of February. The regulations clarify how local planning authorities should calculate the level of fees payable for proposals for oil and gas extraction.

The coalition Government believe that shale gas has the potential to provide the UK with greater energy security, growth and jobs. We are creating a framework that will accelerate shale gas in a responsible, safe and sustainable way. We have a robust regulatory regime in place, which is grounded in an effective, locally led planning system. That is why local authorities—county councils and unitary authorities in this case—have the responsibility for determining planning applications. They take decisions in accordance with local plans and the National Planning Policy Framework. I want to be clear that this amendment is intended to clarify only one particular point of law.

Departmental guidance going back to 1992 makes clear the Government’s long-standing intention that, for oil and gas applications, fees should be calculated on the basis of the area of the surface works. This is also a practice that has been employed by authorities for many years. Planning authorities have regarded the application boundary of a site by reference to the surface area and charged a fee accordingly. However, the fee regulations themselves refer to the,

“land to which the application relates”—

in other words, the extent of development, including underground works.

Until relatively recently, the tension between the regulations and the guidance has not been an issue in practice. Traditionally, onshore oil and gas development has involved vertical drilling. It is only with the advent of horizontal drilling, including the prospect of hydraulic fracturing of shale, that we have become aware of questions on this issue from the sector and local authorities in recent months. As paragraph 7.3 of the Explanatory Memorandum points out, there are instances in which this alternative interpretation has been adopted. The simple purpose of the regulations is to clarify the law beyond doubt. Therefore, Regulation 2 provides that a fee is not payable for any part of an oil and gas development that takes place underground if there is no oil and gas development on the surface directly above the operations.

We also recognise the confusion and uncertainty over how to interpret the term,

“land to which the application relates”,

when providing information on oil and gas applications, especially on how to show this on a map. Our national planning policy guidance, which will be published in due course, will address this. Applicants will be expected to indicate the horizontal extent of drilling, although this will not affect what they are charged. It is important to understand the likely extent of the proposed development. For example, planning authorities need to know to publicise the applications in relation to the larger area. It is also essential that the planning permission indicates where the underground development is allowed to take place. This is necessary to ensure effective monitoring and enforcement of planning conditions.

We are also taking this opportunity to increase the fees for applications for oil and gas development. As part of our consultation last year, the UK onshore oil and gas industry, which represents the majority of onshore operators, offered to increase the level of fees by 10%. It did so because it recognised that applications for oil and gas extraction, especially shale gas, may be subject to increased public scrutiny. Therefore Regulation 3 provides for application fees to rise by an above-average increase of 10% for all oil and gas applications. Let me be clear, however, that this is not a 10% increase across all categories of development. It affects only applications for oil and gas.

I should now like to address the concerns expressed by the Secondary Legislation Scrutiny Committee. It expressed concern at the lack of time for effective scrutiny of these regulations, as well as the others that were introduced last month. There has been an exchange of correspondence between my department and the committee, and that has been published by the committee. As noble Lords will see from that document, it relates to both today’s regulations and another set of regulations, which are not before us today.

We fully recognise the importance of providing Parliament with sufficient time to scrutinise statutory instruments. We were working to issue the supporting material—the impact assessment and the summary of consultation responses—alongside the statutory instrument before Christmas. However, there was a longer delay than we anticipated in doing so. I am sorry that the scrutiny committee was inconvenienced in this way. It was never our intention to impact on Parliament's consideration of these instruments. However, I am grateful that it was still able to consider the statutory instruments last month.

The scrutiny committee also expressed concern that the department had not systematically evaluated the financial impact on the public sector of the new arrangements. This is even though we acknowledge that applications might be subject to increased public scrutiny, and so the costs to planning authorities of handling them might increase.

The level of fees is not set by examining the cost of processing each type of development in isolation. The fee is based on the average cost of determination across all local authorities in England. These regulations will affect an average of 32 applications per year. That is 32 out of more than 450,000 received by planning authorities in England each year. It is wholly disproportionate to carry out a detailed financial analysis in such circumstances.

We set out our assessment of the changes to these regulations in the impact assessment for the other statutory instrument. Fees are outside the scope of the Government's “one in, two out” procedure for better regulation. However, that does not mean that we do not take seriously the impact on planning authorities that have to handle such applications. We have concluded that there will be a small positive impact. This is based on the Government's intention for how fees should be calculated, as well as the past practice employed by many planning authorities. We must also not forget that planning fees for oil and gas development are already higher than the average fee.

The scrutiny committee also asked why the Government are keen to progress with these changes when there is such a degree of opposition, and after what it perceived as a relatively short period of consultation. I can assure noble Lords that we carefully considered the nature and impact of these proposals when considering the length of time for consultation on the draft regulations. Our consultation period was in line with the revised Cabinet Office consultation principles, which we support and follow. We also carefully considered the responses before pressing ahead with our proposals. Of course, these proposals do not just cover shale, they also cover other oil and gas extraction.

While some local planning authorities might not welcome this proposal, since it could deprive them of an opportunity to raise more income through the planning system, the point is that the statutory planning functions are not just financed through the fees which are set; they are also subsidised by government grant and local raised revenue.

It is important for me to stress that these regulations simply clarify the Government’s long-standing intentions by seeking to clarify the level of fees for onshore oil and gas operators. They will provide clarity for investors, local authorities and local communities alike, and the modest fee increase we have set will help planning authorities to meet the costs of these applications. We have responded to the committee, and our response and the committee’s letter to my right honourable friend the Secretary of State have been published and are available. I commend these regulations to the Grand Committee. I beg to move.

[Lord Bichard (CB)]

My Lords, I welcome the opportunity to make a contribution to this debate as a member of the Secondary Legislation Scrutiny Committee. As noble Lords have already heard, the committee has had considerable reservations about the way in which these regulations have been processed. During my public service career I have generally taken the view that when things go wrong it is the result of incompetence rather than malign conspiracy, but I have to say that the way in which this has been handled may cause me to revisit my position.

Let us revisit the facts from a slightly different perspective from the one we have already heard. The original consultation took place in September and October and allowed just six weeks for responses. The Government’s own new consultation principles, which were published in July 2012 and have not been without controversy, provide:

“For a new and contentious policy”—

such as a new policy on nuclear energy—

“12 weeks or more may still be appropriate”.

As the chairman of the Secondary Legislation Scrutiny Committee pointed out, streamlining procedures in relation to fracking might very well be seen as a new and contentious policy. Given that the Government allowed only six weeks for this consultation, it is hard to imagine what policy considerations might lead them to allow 12 weeks or longer for other consultations.

Let us carry on with the story. The regulations were laid on 20 December last year; that is, during the parliamentary Recess and a day or two before most of us were involved in other festivities. They were brought into force on 13 January this year, just one week after the end of the Recess. As the chairman of the committee, the noble Lord, Lord Goodlad, pointed out in a letter to the Minister, Mr Nick Boles, clearly this gave,

“scant opportunity for Parliament to scrutinise the instrument before it took effect”,

which, given that this is a controversial issue, was especially “regrettable”. The fact that it applies to only a small number of planning applications each year does not change the fact that this is a controversial issue.

To make things worse, as the Minister herself has said, the department failed to publish a detailed analysis of the consultation responses or any impact assessment when the instruments were ultimately laid. Therefore, such scrutiny as Parliament was able to provide was not informed by this important material. The committee pressed for this but it was not provided until 24 January, a full month after the instruments were laid. It showed that only seven of the responses were in favour of the Government’s proposed changes and 155 were against. I am not making points about the content of the regulations—others may want to—but it is right that Parliament should know the outcome of the consultation when the instruments were laid.

When these concerns were put to the Minister, Mr Boles, by the chairman of the committee, the response was close to dismissive. The department does, it seems, support and adhere to the revised Cabinet Office guidelines but, on the advice of its own deregulation unit, felt that the six weeks allowed in this case was proportionate. As for laying the instruments just before Christmas and without the necessary supporting material, we were to be reassured that there was no intent to impact on Parliament’s consideration of them.

I think that the way in which this has been managed is regrettable. It has shown scant respect for Parliament and scant respect for effective consultation, which is an important cornerstone of our democratic system. I hope that the Minister, in addition to the assurances that she has already given us, will be able to offer some greater reassurance than did Mr Boles that this sort of thing will not be allowed to happen again. There may not be many people here to hear this debate today, but these issues go to the heart of our constitutional process.

--- Later in debate ---

[Lord McKenzie of Luton (Lab)]

My Lords, I thank the Minister for introducing these regulations. As we have heard, they are concerned with planning arrangements for onshore operations for the winning and working of oil or natural gas, including exploration drilling. Onshore oil and gas activities are of course not new to the UK, but the more recent development of hydraulic fracturing or fracking is contentious and, as the noble Baroness, Lady Parminter, said, certainly topical.

The Government sought to address the regulatory regime for onshore oil and gas in the publication of planning practice guidance in 2013. At that time, they indicated that proposals would be brought forward to address issues relating to the application process and the level of fees payable to local planning authorities.

The first of these was the subject of a negative instrument that was slipped through Parliament over the Christmas period, giving, as we have heard, scant opportunity for debate; the second is the one that is before us today. So far as process is concerned, the department has been justifiably criticised by the Secondary Legislation Scrutiny Committee for laying these instruments without proper impact assessments and a proper analysis of the related consultation exercise, which itself attracted criticism for being over just a six-week period. The noble Lord, Lord Bichard, thoroughly expressed the concerns of that committee. Indeed, we share those concerns. Why does the department continue to get these matters so horribly wrong, showing scant respect for Parliament, as the noble Lord said? This is probably not the occasion to enter into a full-scale debate about future energy policy and energy security, but we are clear that gas has a role to play in the future balanced energy mix, along with renewables, nuclear and carbon capture and storage. Within that, there is a prospect for shale gas, but with a precautionary approach that needs to address legitimate environmental concerns.

The instrument before us today, which came into effect in January, represents easements for the extraction industry, although perhaps modest ones. These appear to go against the grain of the September 2013 consultation exercise, although the Government’s response does not provide us with details, numbers or percentages of those supporting or opposing the three broad propositions that were canvassed, including the third one, which is the standard application form. Please can these be provided to us?

Specifically, this instrument addresses how planning fees are calculated when there are drilling activities both above and below ground. This is pertinent because activity below the surface will take place horizontally as well as vertically, thereby spreading out much wider than the surface area. It is asserted that the basis of fees for oil and gas applications has long been intended to be related to the area of the surface works only, and that what is before us is a clarification to achieve that objective. That clarification comes with a general 10% fee uplift for all oil and gas applications, which was apparently offered by the offshore industry. Perhaps the Minister could clarify the basis of that calculation and how it relates to the costs that local planning authorities are likely to incur in dealing with applications. Was 10% the industry’s first offer, and what was the range of the negotiations that might have ensued?

The Minister in another place suggested that statutory planning functions are financed from a combination of fees, government grant and locally raised revenue. Indeed, the Minister reiterated that this afternoon. Perhaps she can advise us as to what grants are involved and the future trajectory of grant levels. The Minister in the other place told the Seventh Delegated Legislation Committee:

“Statutory planning functions are not only financed through the fees set, but subsidised by Government grant and locally raised revenue. Our approach to setting fees in England is that they are set nationally and grouped into broad categories such as housing, business and commercial, and onshore oil and gas, approximating to the amount of work involved. The fee is based on the average cost of determination across all local authorities in England. The principle underlying the planning fee regime is that would-be applicants should meet the majority of the costs incurred by planning authorities in determining planning applications”.—[Official Report, Commons, Seventh Delegated Legislation Committee, 5/2/14; cols. 3-4.]

Given the relatively small number of mineral planning authorities it is estimated might be involved in fracking applications, what work has been done to evaluate whether the average for oil and gas applications is appropriate?

The Explanatory Note sets out the government view that planning authorities should concentrate mainly—not exclusively—on the surface impacts of onshore oil and gas development and rely more on the regulatory regimes to manage sub-surface issues. Can the Minister give us some information on the necessary involvement of planning authorities in the non-surface impacts and on how this differs between applications involving hydraulic fracturing and those involving other onshore oil and gas applications, whether concerning exploration, appraisal or production?

Thus far the Government have not been convincing on how they have brought forward these proposals or how they have arrived at the new fee levels. Of course, there are much bigger issues around energy policy, hydraulic fracturing and how communities should be involved and share in the benefits of other developments, but consideration of these matters is not helped when relatively small issues such as this are not dealt with effectively and openly.

[Baroness Stowell of Beeston]

My Lords, I am grateful to all noble Lords who have contributed to the debate. As the noble Lord, Lord McKenzie, acknowledged, these regulations are not about energy policy or the planning process more widely. However, important issues have been raised by noble Lords which I shall seek to clarify and respond to. The noble Lord, Lord Bichard, echoed some of the concerns expressed by the Secondary Legislation Scrutiny Committee. I very much regret—my colleagues in the department share my view—that that committee felt moved to comment on the process that we followed in bringing forward these regulations. As I said in my opening remarks, we recognise the importance of providing Parliament with sufficient time and evidence to scrutinise the documentation and the responses to the consultation. In laying the material before Christmas, we did not expect the significant delay that then transpired between that happening and the consultation responses being provided. I assure noble Lords that there is no conspiracy here but I very much take on board the criticism and will reflect on it for the future.

The noble Lord’s remarks on the length of the consultation exercise and the consideration of responses to it were echoed by my noble friend Lady Parminter and the noble Lord, Lord McKenzie of Luton. It is important for me to stress again that these regulations are very narrow in their purpose. They clarify the existing law and ensure that the Government’s long-standing intention is clear. The other regulations, which are not before us today but were referred to in the scrutiny committee’s report, are important as far as a change around notification is concerned. Those regulations focus very narrowly on notification prior to an application being made by a relevant organisation and certainly do not affect the ongoing process of consultation, which is very important to the process that will be followed if exploration is continued. Therefore, we thought it right to follow the principles set out in the Cabinet Office code, and we felt that six weeks was an appropriate and proportionate amount of time for the consultation period.

As regards analysing the responses, we considered them very carefully but, not surprisingly, because shale gas is a contentious matter, many of those who responded to the consultation, and certainly those who opposed these regulations, used it—this is perfectly understandable and I am certainly not criticising anyone for doing this—to express their opposition in principle to shale. Once the responses were carefully analysed, the number of those who opposed the regulations were opposed less to what was being proposed in the regulations than to the principle of shale itself. They were therefore addressing a different matter in their responses. We have published the consultation responses, albeit belatedly. The noble Lord, Lord McKenzie, asked for further detail on this, and our analysis of the consultation is already available in the public domain.

--- Later in debate ---

[Lord McKenzie of Luton]

My Lords, perhaps I may deal with this point before it slips my memory. As I understand it, the fees relate to the averages of different categories, of which oil and gas is one category. My question was whether the average in respect of oil and gas is fairly representative when you have an oil and gas operation that involves fracking; that is, whether the nature of that operation means that the average for that subset of what is happening across England is fair and reasonable.

[Baroness Stowell of Beeston]

I am sure that my colleagues will confirm if I am wrong, but I would say that it is. This is about being clear that the fee is for the planning application and that that application, even if it is for shale or other forms of oil and gas, should apply in the same way. The relevant area is the surface area, so the process of determining the fee is the same; the fee is for the planning process rather than for carrying out the work that will take place. However, I gather that it is difficult to assess the averages of such applications, given the small number of applications so far.

The noble Lord, Lord McKenzie, asked about the 10% offer from the oil industry in terms of an increase in fees. This proposal came from the industry in response to the consultation exercise. It was not something on which the Government entered into negotiation with the industry. The noble Lord also asked about the role of planning authorities in surface and non-surface input and applications. The planning practice guidance published in July provides clarity on the role of the planning system and other regulatory regimes. The planning role is largely focused on surface impact, while the sub-surface matters are largely assessed by the Environment Agency, the Health and Safety Executive and DECC.

[Lord McKenzie of Luton]

I promise not to interrupt again. The Explanatory Note makes reference to surface impact being mainly involved, but opens up the possibility that it is not exclusively surface impact. I am trying to understand, having looked at the guidance, what specifically might be involved in other aspects of the process.

[Baroness Stowell of Beeston]

Does the noble Lord mean in terms of the planning application fee?

[Lord McKenzie of Luton]

In terms of what is involved in dealing with a planning application.

[Baroness Stowell of Beeston]

I will see if something further comes for me on that while I am on my feet, but I may have to follow it up in writing to the noble Lord.

The noble Lord also asked—this may also answer the point he has just raised—whether the planning fees should cover wider issues than processing an application. The planning legislation is clear that fees may be payable to the planning authority for considering an application; their use for any other purpose would not be possible. Other regulations already exist to ensure that the operator is liable for any damage or pollution that operations may cause. The operator is also responsible for safe abandonment of the wells and for restoring the well site to its previous state, or a suitable condition for reuse. If that is where the noble Lord was coming from, my point is that if there were other costs involved, they are already covered by other regulations. As I do not seem to be receiving any signal that I will be able to answer the noble Lord’s question while I am on my feet, I hope that he will accept my offer of following that up in writing.

In conclusion, I stress again that I hear loudly and clearly the concerns that have been expressed by the scrutiny committee, which have been echoed by the noble Lord, Lord Bichard, and others today. However, I emphasise again that these regulations clarify a point of law so that the Government’s long-standing policy intention is clear. They are nothing more substantial than that in terms of the contentious but important issue of shale exploration. On that basis, I hope that noble Lords will feel that I have answered all their points.

Motion agreed.