Localism Bill

Lord Berkeley Excerpts

Thursday 14th July 2011 Lords Chamber

[Lord Jenkin of Roding]

In moving this amendment, I wish to discuss the other two with which it is grouped. I tabled these amendments before we had the debate last Tuesday in which we discussed the application of the community infrastructure levy. Anxieties had already been aroused with regard to the original purpose of the levy being altered. My noble friend Lord Attlee spelt out that purpose very correctly. It is meant to support infrastructure development and be paid by the developer of a facility such as housing or industry. My noble friend Lord Greaves had moved an amendment which would widen the permitted use of the levy receipts beyond infrastructure matters that support the development of the area. My noble friend Lord Attlee said:

“We want to reflect on whether continuing to limit spending solely to providing infrastructure restricts local authorities’ ability to support and enable development of the area”.—[Official Report, 12/7/11; col. 707.]

He went on to say:

“We want to reflect on the amendments proposed by my noble friends Lord Greaves and Lord Tope to allow the spending of the levy on matters other than infrastructure”.—[Official Report, 12/7/11; cols. 709.]

These words have aroused considerable anxiety. I have a copy of a letter written yesterday by the Institution of Civil Engineers to the Secretary of State. The letter was copied to my right honourable friend Greg Clark and my noble friend Lord Attlee. The institution’s chairman wrote:

“I am writing to highlight concerns regarding the Government’s undertaking to reflect on allowing the use of the Community Infrastructure Levy on matters other than infrastructure. The Levy was specifically conceived and justified to provide for new and upgraded infrastructure—a point reinforced by the Government many times”.

Indeed, they did so most recently last Tuesday through my noble friend Lord Attlee.

The purpose of these three amendments is to try to get clarification on three specific issues. First, Amendment 148ZZBBBA seeks to ensure that the application of CIL is confined to the provision and maintenance of an infrastructure project which is in an approved charging schedule, on the ground that that fulfils the original purpose of the introduction of the CIL. The institution believes—I accept the case that was made on Tuesday and is in the Bill—that this should include what is called in the Bill “ongoing expenditure”, which I understand to mean the maintenance of an approved infrastructure project financed by CIL. I hope that my noble friend can give me a very clear undertaking that there is no question of this levy being used simply to fill a revenue hole in a local authority’s budget. It has to be confined to the provision and maintenance of an infrastructure project.

My second point has been touched on but I would like to be given a much needed assurance. There are plenty of examples of where developers have agreed to make a contribution under Section 106 of the Town and Country Planning Act 1990. If a developer has made such an agreement—sometimes it can last for a number of years—he should not be charged the CIL in addition. I hope that my noble friend can give me a clear undertaking on that. It was briefly discussed, and if we had not risen when we did on Tuesday, I would have intervened, because I was expecting to move the amendment on Tuesday night. I said, “Let’s wait until I am speaking”.

My third point concerns the suggestion of compensating communities by allowing CIL receipts to be passed to other persons. I do not quarrel with that—although I know that some object—but it must be spent on infrastructure projects. It must not be allowed to be a financial recompense paid to a community because it has development in its area. I hope that my noble friend can give me a clear assurance on that.

My final point is that the area must not be too tightly defined. There is anxiety that that may be the effect of the Bill. For instance, if the money has to be spent in the area, how will that fund a bypass which may be necessary as a result of the development, or flood defences, which may have to happen well outside the area but are clearly for its benefit?

I have asked a number of questions, and I do not think that I need to go on longer. Those are seen as serious issues by those concerned with re-establishing our infrastructure in this country. I took part in the original debate on the CIL when the 2008 Bill was going through the House. Indeed, I tried to ensure that both Houses would be able to approve the delegated legislation under it. I carried that in this House, but it was turned down by the then Leader of the House in another place. I have a considerable interest in making sure that we get this right. I beg to move.

[Lord Berkeley]

My Lords, I am very pleased to support the noble Lord, Lord Jenkin of Roding, on this group of amendments. He has articulated very well the problems which the CIL could cause developers. It is particularly important for bigger projects, which might be taken through a hybrid Bill process, through the IPC or the Transport and Works Act, where the decisions are effectively made by Ministers. Ministers will approve—or not—a deal which ends up as a Section 106 agreement. The worry is that, completely separately, the local authority might want to put a CIL charge on the project. One must think of the effect on business confidence when considering ports, airports, logistics centres, railways, roads, power stations or anything else of that size, and of the figures involved.

The people who run Gatwick Airport have told us that they are committed under a Section 106 agreement to contribute about £1 million annually to public transport via a levy on their car park revenues. If they had also been required to pay a CIL to the local authority—probably retrospectively, because it may well have happened after the Section 106 agreement was signed—they would not know what liability they would be stung for, frankly. To give two bigger examples, Hutchison Ports had a Section 106 agreement to extend the ports at both Felixstowe and Bathside Bay. It was committed under the agreement to spend about £100 million on upgrading the railway line to Leeds. We can question why it should be Leeds, but that is what was agreed. I think that the London Gateway port project, downstream on the Thames, had to contribute a similar amount for road improvements between there and the M25. If, having signed up to all that, they are suddenly stung for a CIL, it will put off developers from going ahead with these projects. It is after all the Government’s wish to develop new projects—I return again to the Secretary of State for Transport’s plan to build a high-speed railway line to Birmingham and beyond. You can imagine that people in villages along the route who do not like the plan, having had their referendum to vote against it, will then try to sting the promoters, whoever they may be, for a CIL. It could get quite interesting. It will put off business and I hope that when the Minister responds he can strengthen the assurance that was given in another place that a CIL will not be levied on projects for which a Section 106 agreement has been entered into and agreed.

--- Later in debate ---

[Earl Attlee]

My Lords, Amendment 148ZZBBBA, moved by my noble friend Lord Jenkin of Roding, seeks to limit spending on the ongoing costs of providing infrastructure to those items that were originally funded by the levy. New developments may create additional demands on existing infrastructure as well as demands for new infrastructure. The amendment would prevent local authorities from using levy receipts to address the intensification of demand on existing infrastructure, despite the fact that this could be exactly what is needed to support a new development.

My noble friend’s Amendment 148ZZC seeks an exemption from the levy for any development that makes a contribution to existing infrastructure through Section 106 planning obligations. This is not appropriate as the two instruments are concerned with different aspects of development. Through the levy, most new development would contribute towards the cost of meeting the cumulative demands that development of an area places on infrastructure. Conversely, planning obligations are concerned only with the site-specific matters necessary to make a particular development acceptable in planning terms.

Local infrastructure may or may not be part of the planning obligation. Where it is any part of a planning obligation, it must satisfy the statutory tests that ensure that they are necessary to make the development acceptable, are directly related to the development and are fairly related in scale and kind. We do not believe that it is appropriate to exempt development that is subject to a planning obligation from making a contribution to the more general infrastructure demands that it places on the area. In addition, the existing legislation already prevents developers being charged twice for the same item of infrastructure through both instruments. That answers the concern of the noble Lord, Lord Berkeley. I will check to make sure that it also answers the concern of the noble Lord, Lord McKenzie. I am not absolutely certain that it does, but I will check, and I am sure we will return to this at a later stage.

[Lord Berkeley]

The port down the Thames—London Gateway—committed probably £100 million to upgrade the junctions on the roads and the motorway leading to the M25 to cope with additional traffic reported to be coming from its development. I understood the Minister to say that that is exactly what the CIL might be required to do. I see that as double taxation.

[Earl Attlee]

My Lords, I think that I will come to a point later in my speech that should deal with the noble Lord’s concerns.

My noble friend Lord Jenkin also proposes Amendment 148ZZD, the effect of which would be that where regulations require the charging authority to pass funds to another body, it would retain ultimate control over how those resources are used by confining spending to matters it determines appropriate.

--- Later in debate ---

I have seen today the letter that my noble friend Lord Jenkin referred to. We are considering it carefully. I have no doubt that my noble friend will return to this matter on Report. By that time we will have considered the letter and these matters further, and of course I look forward to further debate. In the mean time, I hope that my noble friend is willing to withdraw his amendments.

[Lord Berkeley]

The noble Lord, Lord Greaves, suggested that Section 106 might be being phased out. Is that correct?

[Earl Attlee]

No.