Growth and Infrastructure Bill

Lord Burnett Excerpts

Tuesday 8th January 2013 Lords Chamber

[Lord Burnett]

My Lords, I draw the attention of noble Lords and others to my entries in the Register of Lords’ Interests. We are all only too well aware of the crisis precipitated by years of failure to build sufficient houses to meet the huge and growing demand. Housing starts slumped again in 2007 at the start of the recession. Noble Lords are well aware that household growth in England increases by approximately 240,000 per year, whereas fewer than 100,000 houses are being built. These problems date back many decades and there is now a massive accumulation of demand that has led to terrible stress for individuals and families. There is an estimated shortage of 2 million homes.

The first major problem to be overcome is finance. I am delighted that the Government are taking steps to ensure that there are competitive and reasonable sources of finance for house purchase, especially for first-time buyers. I hope that this year mortgages will be easier to obtain with competitive rates and not such stringent deposit requirements, especially—again—for first-time buyers and young families. The main headline on the front page of yesterday’s Financial Times was,

“‘Massive Softening’ of Basel bank rules”.

It was reported that,

“global liquidity standards would be less onerous than expected and not be fully enforced until 2019, four years later than expected”.

This is encouraging. I also welcome the Government’s proposed new funding for affordable homes.

If the financial problems are beginning to be resolved, this leaves the difficulties that successive Governments have faced in dealing with the planning system. There are signs from the front line that local planning authorities are responding more optimistically and more positively to the dreadful shortage of housing. Local councillors are elected on a local, not a national mandate. It is very difficult for local planning authorities and councillors to respond to what are not only local but also national pressures. This is true especially in areas where the demand is particularly great, including London, the south-east, East Anglia and what I call the near and far south-west. The National Planning Policy Framework is assisting, and there has been some further impetus with the relaxation of planning rules for change of use from commercial to residential.

In rural areas, planning policy should also, in appropriate circumstances, allow for conversion of redundant agricultural and other buildings—I am talking about more modern buildings and what could be called rural brownfield sites—to residential use. Rural areas need houses, especially affordable ones. At present, an individual has to be wealthy to buy a house in much of rural England. I remind the House that wages for many in the rural areas of England are very low. Nevertheless, although there are signs of a more speedy and realistic response from planners, as my noble friend said when she opened this debate, there is still much to be done. We have a plan-led system. That is understood by professionals in the field. It should work well. Local plans should be produced expeditiously and time limits for consultation should be adhered to.

One matter that must be given more attention is housing need. It appears that with the demise of the regional spatial strategy each local authority will face the task of assessing housing need for its individual area. There must be a clear, intelligible and compelling basis for assessing that need. The underlying basis and calculation should and must be made publicly available, and should accord with publicly available national guidelines. In sensitive areas, there is always pressure on local councils and planning authorities to reduce the need figures. The measure of need must be robust and ensure that local authorities do not buckle under pressure and reduce the housing need for their areas. The robust measure of need, combined with a five-year supply and other rules, should ensure that we start to meet the massive pent-up demand for housing that, as I said, has built up over decades.

If planning authorities are to assess the need for housing in their areas, they must carry out that assessment openly, robustly and—as I have said before—within national guidelines. If a planning inspector at the core strategy consideration stage is not satisfied with the level of housing, he or she should not find the local plans sound. I hope that my noble friend will let me have some assurances on this matter when she winds up at the end of the debate. A sound local plan produced swiftly, with objective, robust housing need numbers and a formula that can be tested by potential applicants, is essential.

In the past the Secretary of State in the other place referred to “muscular localism”. I take it that that means, among other things, that local planning authorities should not be able to deny need and, if they do not have a five-year supply and cannot point to other more suitable sites, applications should in the main be granted. I am aware of analysis made by the Centre for Economics and Business Research that suggests that housebuilding, which sank to 95,000 units in 2010, could be boosted to 300,000 units annually by 2015. This would add some 201,000 extra permanent jobs in construction, and contribute £75 billion to GDP, or 5 percentage points to growth. Furthermore, it is estimated that this would reduce rents by nearly 11%. Housing would then become more affordable and the financial pressures on the working-age population would be substantially reduced.

I welcome the measures in the Bill to deal with existing planning consents that are now uneconomic. Some local authorities are already more realistic. I would hope that local authorities are being made aware that landowners already pay either capital gains tax or income tax on the proceeds of the sale of land for development. Furthermore, for many proprietors of small and medium-sized owner-managed businesses in this country, the sale of their premises, with or without planning permission for development, will be the basis of their pension. The self-employed do not have the benefit of, for example, generous public sector pensions or the pensions that are available to those who work for large corporations. I hope that the Minister will make the foregoing clear to planning authorities when they consider Section 106 agreements and the burdens to be imposed on developments. Further, I hope she will exhort local planning authorities to have a simple, straightforward measure of viability for development that is easily understood and implemented. For example, a small site of fewer than 15 houses should not, in these difficult economic times, have to bear substantial planning burdens.

There is not sufficient time to deal in detail with the community infrastructure levy, which could be yet a third-tier tax on house construction. I believe some local authorities have already introduced a community infrastructure levy and I know that the Government have set up a committee to review that levy. I remind the House of a previous episode in the chequered history of the taxation of development in this country. In approximately 1976, the then Government introduced the development land tax. At the cost of millions, a new tax office was set up in Middlesbrough, forms were produced and, if my memory serves me right, the rate of that development land tax was about 80%. That led to the absurd situation that, with capital gains tax or income tax for traders, the rate of tax was sometimes in excess of 100%. This led to a complete drying up of the supply of land. Attempts like this serve only to make housing more and more scarce and enrich further those lucky enough to be able to afford to own a house.

I welcome the Government’s proposals in relation to town and village greens. I hope my noble friend will give consideration also to the inclusion in the legislation of a clear right of appeal or challenge to a registration of a town or village green under the 2006 Act. The right of appeal should be designed to catch future and some past registrations. The registration authority—invariably the local authority—often appoints an expert to advise the registration authority, which is both judge and jury in the matter. It is contrary to the rules of natural justice to deny an appeal. I hope that the Government will consider introducing a mechanism for reviewing town and village greens registered under the Commons Act 2006 and over land already allocated for development or subject to an existing planning application. There is rightly a democratic process for formulating a local development plan, and if land has been allocated for development for a particular purpose, that process should not be overturned and changed by means of a town and village green application lodged at a late stage.

Finally on this matter, the Bill provides that an application should be stayed when land is allocated for development or when a valid planning application has been made in relation to the land. The stay would cease if the land were removed from allocation or if an existing planning application were withdrawn or refused. I hope my noble friend will give consideration to the stay becoming effective once the consultation draft of the local development plan is first published. This would effectively make the process subject to the more democratic processes that apply to emerging local plans.

Planning is a complex subject, and good intentions can often thwart and deny the possibility for many to find a reasonable house to buy or rent at a reasonable price. We need to balance the protection of the countryside with the legitimate need for housing of millions of our fellow citizens.