Levelling-up and Regeneration Bill

Baroness Taylor of Stevenage Excerpts

Wednesday 3rd May 2023 Lords Chamber

Childcare is an essential part of our economic infra- structure. For many parents, it is as crucial to getting to work as roads or trains. I know that this amendment would not solve all these problems, but it would help to ensure that families with children do not see childcare prices forced up or waiting lists becoming even longer as a result of much-needed new and affordable housing. That is why I support this important amendment.

[Baroness Taylor of Stevenage (Lab)]

My Lords, I will speak to the amendments in this group in my noble friend Lady Hayman’s name and in my name, and comment on other amendments submitted. As this is the first group on the infrastructure levy before the Committee, I will make some general comments, which I will try not to repeat in future groups so as not to test Members’ patience.

The introduction of the infrastructure levy has broadly been welcomed by local government and the Local Government Association, as it is non-negotiable and set at a local level. I hope that, eventually, it will rationalise the current system of the CIL and Section 106. However, as my grandmother is from Wiltshire, I feel justified in saying that it is a jiffling picture at the moment.

The proof of its success will be whether the levy delivers more in infrastructure, affordable housing and, key to this group of amendments, some of the social infra- structure that greatly concerns local residents when they hear of new development. Key to this is whether, as the current community infrastructure levy and Section 106 system transitions to this new arrangement, the levy actually delivers at least as much as, if not more than, the current system. What protections does local government have against the temptation for Secretaries of State—I will not name anyone—to top-slice the infrastructure levy?

Forgive my cynicism, but I have the clear memory of the new homes bonus in mind. The new homes bonus was, first, top-sliced from local authority budgets then cut in successive years, so it was really just another mechanism to cut local government budgets. I know that the infrastructure levy is substantially different, in that funding is delivered from the development sector, but will this be too tempting a pot for the Treasury to resist?

The LGA has expressed concerns that significant elements of the levy are not yet clear in the Bill, such as definitions of larger sites, rate-setting and the relationship between different tiers of authorities that will be in receipt of the levy. There also needs to be a clear definition of what infrastructure is in scope and what is not, which is the subject of many amendments in this group. For example, if the system is to move on from Section 106, how will contributions towards issues currently funded by that method be treated, such as skills, apprenticeships and the local workforce—in other words, issues that sit outside the built environment?

Local government has also urged the Government to reconsider the timing of the levy. The new system as proposed may help developers’ cash flow, but local authorities want to ensure that infrastructure is provided early in the development process so that existing local residents can be reassured that there will not be an uncomfortable transition phase while the provision of infrastructure lags behind development and results in a period of pressure on existing resources. I moved around our new town four or five times when I was growing up, as new developments were built, each time to areas with no shops or services and little in the way of public transport. The sequencing of infrastructure is really important.

Like many other voices in local government, I have long been an advocate for removing the permitted development process, which undermines local plan-making and the quality standards of new homes. But if the Government insist on retaining permitted development—it looks as though they will—there must be a way of applying the levy to such change-of-use developments.

Many of the amendments in this group are seeking some clarity from the Government about how the infra- structure levy can be used and how they will demonstrate what is being achieved in this respect. Our Amendment 314, in the name of my noble friend Lady Hayman, raises the key issue of demonstrating how the levy will impact public transport in travel-to-work areas and requests that the Minister must publish within two years of Royal Assent a summary setting out progress. If we are serious about reducing car dependency to aid our net-zero ambitions, clear commitments from this legislation are essential.

Similarly, Amendment 315 probes whether the levy may be used in relation to the contribution required for restoring railways. We have heard a great deal in earlier discussions on the Bill about, for example, the use of restored former rail routes to improve interconnectivity. The levy could provide a very important contribution to this. We hope that when we see the detail of the regulations associated with the levy, it will be empowered to do so.

Amendment 316 again probes the intended scope of the infrastructure levy. When we talk to local people, their concerns about new developments, as well as the impact on the environment, are often about the pressure that these put on services and facilities that meet local and strategic needs and contribute towards a good quality of life, such as health provision, education, community, play, youth services, recreation, sports, faith and emergency services facilities. Too often, they have felt that developers focus just on the profit side of the equation, with little regard for the needs of existing communities or those for whom they are building. Although CIL and Section 106 have made some provision for parts of social infrastructure in the past, they have been too limited in the amount provided and in restrictions on what is provided. As an extreme example, in my borough, a Section 106 agreement could be used only to deliver a bus shelter in an area that had long since lost its only bus service. We would like to see a broad scope for the infrastructure levy, driven locally by local need and with flexibility for it to be used in appropriate ways as communities develop.

It would be wrong not to mention the knotty issue of viability. I draw attention to the Explanatory Notes to the Bill, which say at paragraph 725:

“The purpose of IL is: to ensure that the costs incurred in supporting the development of an area (including by the provision of affordable housing), and achieving any additional purpose specified in IL regulations, are funded at least in part by owners or developers of land, but in a way that does not make development in the area economically unviable”.


One has to ask: unviable to whom? If the infrastructure needed is not to be provided through this route, how is it to be provided? Will it be by the local authorities which are already so strapped for cash they are cutting services, not developing them, or by the Government? My noble friend Lady Hayman’s Amendment 343 seeks to specify a wider scope for the infrastructure levy in the Bill, so that it is clear that developers may be asked to make wider contributions to the infrastructure demands that their development is driving.

Amendment 355, in my name, seeks to limit the circumstances in which the Secretary of State can direct a charging authority to review its charging schedule. We understand why it may be necessary to ensure that charging schedules are kept up to date, but surely these timescales are for local determination, and it should be only in the most extreme circumstances that intervention would be necessary. The community infrastructure levy itself is a relatively new form of charging infrastructure against developments, so it will be important to have a benchmark on what it has achieved in this respect so that it is possible to assess the infrastructure levy against the current arrangements.

I will comment briefly on other amendments in this group. The amendment from the noble Lord, Lord Russell, is to ensure that large-scale developments can be required to provide funding for childcare services and settings. My noble friend Lady Hayman’s Amendment 343 also seeks to broaden the scope of social provision under the infrastructure levy. In her amendment to Schedule 11, paragraph (c) refers specifically to nurseries, so we support this amendment. The plea of the noble Lord, Lord Russell, was powerfully made. Having been a single parent myself, I know that the issue of nurseries and childcare is really vital, but we need to identify what the infrastructure levy can do with capital and revenue funding streams. It is no good building nurseries if there is no funding to run them. The noble Lord, Lord Young, was right to raise the complex issues around funding for childcare. If we are going to resolve some of this through the infrastructure levy, we need to understand how.

There are a number of amendments in the names of the noble Lords, Lord Greenhalgh and Lord Wasserman, and the right reverend Prelate the Bishop of Exeter regarding the implications of the infrastructure levy for our emergency services. We understand the motivation behind these amendments: although emergency services may be asked to comment and make submissions on planning applications, they are, more often than not, unable to be there at the point of decision-making. It is important that the Bill gives clarification on how emergency services are to be treated for the purposes of the infrastructure levy.

Amendment 335, in the name of my noble friend Lady Warwick, the noble Baronesses, Lady Watkins and Lady Thornhill, and the right reverend Prelate the Bishop of Chelmsford, seeks to ensure that infrastructure levy funds cannot be used by local authorities to cover the costs of unspecified items. The wording in Schedule 11, which this amendment would remove, is simply not clear enough. The amendment highlights again how important it is that the Bill is absolutely clear about what can be covered by IL and what cannot.

We are grateful to the noble Lord, Lord Best, for his tireless pursuit of opportunities that the Bill could give to increase the delivery of supported housing, particularly for older people. We believe that this should be a strong consideration in the structure of the infrastructure levy, so we support his amendment. The noble Lord’s Amendments 337 to 339 and 354 all refer to the independent examination of the IL charging schedules by an independent examiner. We look forward to the Minister’s comments on the rationale for this provision in Schedule 11. Is this service to come under the remit of the Planning Inspectorate? If not, who will carry out this role, how, and how will they be appointed?

In respect of Amendment 348 from the noble Baroness, Lady Scott of Needham Market, we are interested to hear the views of the Minister on the treatment of town and parish councils under the new infrastructure levy regime. There are over 10,000 parish, town and community councils in England, ably represented by the National Association of Local Councils. Is it the intention of the Bill that these councils be a specified recipient of the neighbourhood share of the infrastructure levy; for that share to be 25%, or 35% for a parish council with a neighbourhood development plan; and for a parish council to have full flexibility over how those receipts are spent?

NALC believes that the higher CIL amount provides an additional incentive to undertake a neighbourhood development plan and to identify extra investment in infrastructure or anything else concerned with addressing demands of development. Do the Government intend to build on CIL for the new infrastructure levy, with a parish council being the body which will receive the neighbourhood share? They are not named explicitly in the Bill. Will the uplift in neighbourhood share still be available to parish councils which have prepared a neighbourhood plan?

I hope your Lordships will forgive me for a long intervention, but this is a huge group with a lot of different amendments in it. In summary, a great deal of clarification is needed around the introduction of the infrastructure levy. We urge that as much of this clarification as possible is included in the Bill and that there is a thorough period of pilots introduced to test the implementation of the infrastructure levy in practice and whether it can deliver against the opportunities that it should be able to realise.

--- Later in debate ---

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

My Lords, I apologise for the length of time that I am going to take, but it has been a very diverse debate about a number of things and some important issues, so please bear with me.

When new development is built, it creates a demand for public services and local infrastructure. The granting of planning permission also increases the value of land. It is important that local authorities can secure contributions from developers to share in the land value uplift that comes from granting planning permission and use this to deliver local infrastructure and affordable housing for communities.

The current system of developer contributions is uncertain and fragmented. The negotiation of Section 106 agreements frequently results in delays in granting planning permission and these agreements can be renegotiated as the development progresses, as we have heard. Local authorities cannot be expected to negotiate as effectively as big developers. The developers can always build elsewhere, which weakens a local authority’s leverage in negotiations. Developers can devote more financial resources to negotiation, out-gunning local authorities. This can generate uncertainty for local communities over how much affordable housing will be available and what infrastructure will be delivered.

Local authorities can also charge the community infrastructure levy, which is a non-negotiable—but optional —charge. Only half of local planning authorities currently charge the levy. Of those that do not, over one-third believe that introducing it would increase their ability to capture land value. The community infrastructure levy is also unresponsive to change in development value as it is charged at a fixed rate per square metre of new development and does not go up in line with house prices. That is why we are introducing the new infrastructure levy; to largely replace the existing system of developer contributions.

The new levy will aim to capture land value uplift at a higher level than the current developer contributions regime by charging rates based on the final value of developments. This should ensure that a fairer price is initially paid for the land by the developer, and then that the developer pays a fairer contribution to the infrastructure and affordable housing. As it is a non-negotiable charge, it should help to reduce delays associated with Section 106 agreements, while maintaining the viability of developments. It will also end the inequality of arms, where local planning authorities must negotiate for affordable housing with developers. The levy will be charged on the majority of types of development, providing opportunities to secure funding for affordable housing and infrastructure from developments that currently contribute very little. I totally agree with the noble Baroness, Lady Warwick of Undercliffe, that the important issue for developer contributions is housing.

The Government recognise that the new infrastructure levy is a significant change and a major undertaking. For this reason, we are taking a “test and learn” approach to its implementation. This will be vital to monitor and test the design of the levy as it works on the ground. This means that, once levy regulations have been developed following Royal Assent, only a small number of local authorities will adopt the levy initially. This “test and learn” approach will allow the Government to continue to work with local authorities, developers and local stakeholders to achieve a system that is optimally designed. We have published a detailed technical consultation, which closes on 9 June, to inform the design of the new levy regulations. We have approached this consultation in a very open manner with the sector, and we really want to listen to, and take on board, the feedback.

I turn to Amendments 290, 324, 335 and 343, tabled by the noble Lord, Lord Russell, my noble friend Lord Greenhalgh and the noble Baronesses, Lady Warwick and Lady Hayman. The amendments relate to the definition of “infrastructure”. I will highlight first the point that the priority for receipts from the new levy will be the provision of infrastructure: affordable housing, schools, GP surgeries, green spaces and transport. This infrastructure is vital to support the local community and mitigate the impact of any new development.

Although I understand the desire for future levy receipts to be spent on a wider range of other important priorities, I must be clear that this will not be an unlimited pot of money and that any other spending will come at the expense of affordable housing and local infrastructure that is needed to directly mitigate the impact of new development. Although we have the ability to allow for some spending on non-infrastructure priorities through the Bill, we recognise that there are important trade-offs here. Through the consultation, we are testing the extent to which we should require local authorities to prioritise affordable housing and infrastructure before unlocking such flexibilities.

Secondly, I will address childcare, which I think everybody in the Committee agrees is exceptionally important—I know that this is a priority for all of us in the House and the other place. It is also a priority for the Government, and I am happy to say that, since Amendment 290 was tabled, the Chancellor has announced transformative reforms to the funding and delivery of childcare, as part of the Spring Budget. By 2027-28, this Government expect to spend in excess of £8 billion every year on free hours and early education, helping working families with their childcare costs. This represents the single biggest investment in childcare in England ever, and it means that eligible working parents of children from nine months old to their start in primary school will all have 30 hours of free childcare per week. I hope that the noble Lord will agree that the Chancellor’s announcement means that it is no longer necessary to try to bolt together the planning system and funding for childcare through the Bill.

I make it clear to the noble Lord, Lord Russell, that guidance for applications for free schools already includes explicit assumptions that any new free schools will include proposals for nurseries. Therefore, education investment in a possible new development will include a nursery, unless there are very strong reasons why this would be inappropriate. So the Government are dealing with the issue of ongoing support for childcare and, at the same time, there is already in guidance the necessity for more nursery places where houses are built.

I turn to infrastructure spending more broadly. New Section 204N(3) provides a non-exhaustive list of kinds of infrastructure, which assists with broadly understanding what the levy might be spent on. But spending is not restricted to any of the listed items: the levy can be spent on any infrastructure that supports the development of an area. This means funding the provision, improvement, replacement, operation or maintenance of infrastructure, provided that this in accordance with the overall aim of the levy, as set out in new Section 204A. To strengthen infrastructure delivery, new Section 204Q requires local authorities to prepare “infrastructure delivery strategies”, which will set out a strategy for delivering local infrastructure and spending levy proceeds.

[Baroness Taylor of Stevenage (Lab)]

Where do the infrastructure delivery strategies sit in terms of the local plan process? The noble Baroness, Lady Thornhill, referred to this. What role will they play in relation to NDMPs? It is not clear from the legislation exactly how they fit in with the rest of the planning process, and it is important that either the Bill sets that out or we have guidance elsewhere—for example, in the National Planning Policy Framework—that makes it crystal clear where those strategies sit.

[Baroness Scott of Bybrook (Con)]

I understand that, and I will write to the noble Baroness to explain this completely. I know that this is confusing because the NPPF has not been agreed, so I understand where she is coming from and I will make sure that we send her a letter.

Turning to Amendment 324, I agree with my noble friend Lord Greenhalgh that the emergency and rescue services should be among the infrastructure providers that are able to receive levy funds from local planning authorities. For this reason, they are already included in the illustrative list of infrastructure in new Section 204N(3), which makes it explicit that levy funds can be applied towards

“facilities and equipment for emergency and rescue services”.

We do not provide detailed definitions across all kinds of infrastructure, as this is not necessary. The words used must be given their natural and common-sense meaning—so “infrastructure” too must be given its ordinary meaning. I have stated that it can encompass matters not listed in new Section 204N(3).

--- Later in debate ---

[Baroness Scott of Bybrook (Con)]

What we have said is that this will deliver no fewer affordable homes. Of course, the number and type of affordable homes that are built will be a local decision. If local authorities want more homes—I suggest that we need more homes in this country—we should be able to deliver more homes.

[Baroness Taylor of Stevenage (Lab)]

I thank the Minister from our side for the very detailed response she gave to all the contributions that have been made. In response to the question from the noble Lord, Lord Shipley, we have a further group on this, so I am sure we will debate it further in the course of that group. The combination of the lack of clarity around what the new infrastructure levy is going to deliver in affordable housing and the removal of housing targets looks like a terrible contribution. I know the Minister said that this would not mean fewer affordable homes, but the number that have been built in the last few years is woeful. We want that to improve; we want to get more affordable housing out of this. I know we will discuss this again in a subsequent group, but it is really important. I hope we can get some clarification in that group about how this new infrastructure levy system is going to help us deliver the affordable homes that we all know we need.

[Baroness Scott of Bybrook (Con)]

This is about not just the new infrastructure levy but the whole Bill. We know that where local authorities have local plans, they build more houses. The Bill is there to enable and encourage local authorities to have local plans. It is the combination of all these things within the Bill that should deliver more houses.

--- Later in debate ---

My final remark is whether this rather poorly considered proposal—in my opinion—to cap certain land sales is equitable and whether the right solution, if the underlying problem is land value capture, is not best addressed through planning conditions or general taxation. I beg to move.

[Baroness Taylor of Stevenage (Lab)]

My Lords, the noble Lord, Lord Carrington, warned me that we may go head to head on this, and I fear that that might be the case this afternoon. This group of amendments addresses a very important set of conditions about compulsory purchase and the skewing effect of hope value, which we consider is vital to address to help the delivery of genuine regeneration schemes and social and/or truly affordable housing.

Definitions are important here, which is why the first amendment in my name in this group probes how the Secretary of State will work with local authorities to determine an appropriate definition for regeneration. Too often, this has been left in the hands of developers so that existing communities feel, at best, that their views about how they would like the area to be regenerated are ignored and, at worst, that they are being displaced by regeneration schemes, as developers are relentless in their pursuit of uplifting the values of properties for their own benefit.

I understand the amendment in the name of the noble Lord, Lord Carrington, and I am sure that there are cases which result in the kinds of circumstances he has described, but the boot is quite often on the other foot. However, I support his comments about how many important sections of the Bill are subject to consultations running in parallel with the progress of the Bill through Parliament. It does not give us much confidence that listening is going on, and it means that we are trying to incorporate all the pre-legislative processes as we are going through the process of the Bill. So the consultations are running, and we should then have pre-legislative scrutiny—which we have ended up having to do as we go through the Bill—and then legislation. I think that is why we have had such a long set of proceedings on the Bill. There are issues here.

The amendment in the name of the noble Baroness, Lady Bennett, includes a power of acquisition for local authorities, specifically for the purpose of social or affordable housing. I believe that there are powers already under previous Acts of Parliament that allow this, but it is important that those powers are sped up or enhanced in some way. Part of the “Today” programme on Radio 4 this morning was about social housing in Wales. Before the Minister is tempted to come back and say that that is to do with Labour running Wales—which I do understand—this situation, of a gentleman who had been waiting some 20 years for social housing, occurs across the country. One of the responses from Shelter, which also appeared on that programme, was that local authorities need a fast-track route to purchase empty homes for social housing. The power is already there, but it can take for ever. I have been dealing with a case in my own borough where, 22 years later, we have still not managed to purchase a very dilapidated house because of the various circumstances attached to that case. It makes it very difficult. Where it is possible, local authorities should be helped and assisted to do that.

My Amendment 412 aims to ensure that compulsory acquisitions by a local authority do not materially change the housing provision in an area. It is important to clarify that we do not intend this amendment to suggest that the housing has to be re-provided on the same site, although that may be a choice that the local authority wishes to make. If it is not, the housing should be re-provided elsewhere in the local authority area and be specified at the time of planning for the site in question.