Housing and Planning Bill

Lord Taylor of Goss Moor Excerpts

Wednesday 23rd March 2016 Lords Chamber

[Lord Taylor of Goss Moor (LD)]

My Lords, I, too, wish to speak briefly in support of Amendment 102B. As always, I draw attention to my interests, in particular that I am president of the National Association of Local Councils. There is no question but that parish councils are deeply concerned about the removal of the ability to require some affordable homes, when viable, to meet local needs—and we should remember that Section 106 can be contested on viability grounds. The reasons for that have been well expressed, but I shall add a couple of points at least.

First, I strongly believe that it is in the Government’s interest to recognise the particular issues that there will be in smaller rural communities if there is a blanket policy removing affordable home requirements on sites of under 10 units, for the reasons that the noble Lord, Lord Best, spelled out. In many communities that would be a typical site—in fact, in some it would be quite a large site. But even where there are sites of maybe 20 or 30 units that could be brought forward, this policy will encourage them to be brought forward only in small fractions of less than 10, to achieve the higher number of market-value homes and the profitability that will go with that, which alone will slow down the delivery of homes that are much needed in these communities.

Secondly, there is no question but that small villages were the first to come alive to the severity of the housing problems that we have in this country around affordability for people on working wages in those communities. Rural incomes for those who live and work in rural communities average 20% below the national average right across the country. Commuters may bring up the wage levels in some villages, but rural wages are typically low. People are needed to live in those communities, who will work in the shops and do the work of the land and in schools, on those relatively low wages, and they desperately need a home. In the nature of villages, those communities came alive very quickly to the unaffordability issue, because it is much more obvious there.

The response has been for those communities to be very often surprisingly positive about bringing forward appropriate small-scale development, provided that it provides at least some homes with a clear tie to local need and affordability in perpetuity. To remove that would be immediately to remove a lot of that neighbourhood support for the delivery of homes. As somebody who currently chairs a neighbourhood plan, I have to say that the community is very much alive to its own particular needs. I happen to be in a very poor community, where some of those affordability issues are not as great as some of the needing to improve the community in other ways. We happen to be a community in which the affordability pressures are not there, but we know exactly what the community needs. There is a desire for self-build, for example, which we are building into the neighbourhood plan. To remove the ability of communities at local authority and neighbourhood plan level to respond to that on sites that may be brought forward makes no sense to me.

Finally, I think the Government are seeking to help smaller building companies to access land for development. I do not know what the situation is in some parts of the urban environment—I know it less well than the rural one—but I know that in the kind of rural communities and housing schemes right across the country that I visit regularly, through work and in my former role as chairman of the National Housing Federation, the simple fact is that these sites are relatively valuable. A small site for eight or nine units in a well-off village with high house values should be immensely profitable to bring forward, and landowners will get very substantial money if they can bring those forward, compared to the agricultural values that those sites might otherwise be worth. So there is no lack of incentive for the landowner.

The problem is that they are highly desirable for quite large housebuilders as well. There are good profits to be made, there is easy delivery, there is certainty on sales and the numbers are not so large that they could in any sense depress prices, so the sites are highly appetising. If the affordable home requirement is removed, it will be easy for national and regional players to look for the 20% to 25% profit margins that they would come in on with high house prices. The requirement for affordable housing helps depress those prices but, perhaps more importantly, it depresses the ability to get those very high margins. Local small builders will work to builders’ margins, which may be as little as 10%. In my part of mid-Cornwall, Restormel Borough Council pioneered releasing sites for affordable housing in the form of housing where the sale price was related to local earnings levels in perpetuity. Those houses were not built by the big regional and national players, but by local builders who were more than happy because they could make their margin within that price cap and get sites at low cost because the landowner knew that the price would be low, the community knew it would be affordable for the community in perpetuity and the builders were still able to make the margin they needed and knew that the community would support the development going forward.

I do not think the Government will achieve their objectives in rural areas this way. They will lose, not gain, numbers. They will lose, rather than gain, opportunities for smaller builders. They will lose community support for the housing that is desperately needed in those communities precisely by the people who allow them to be living and working communities but who cannot otherwise afford a home on local wages.

[Lord True]

I shall not follow on Clause 143 in particular, although it is an extraordinarily important debate. In a sense it reflects the tension that runs through the Bill. The Government have a clear commitment to provide 1 million homes—starter homes—and to get the country building. On the other hand, in doing that, they want to remove what they perceive, sometimes rightly, sometimes wrongly, as obstacles. That tension runs right through the Bill and underlies this clause because one is naturally suspicious that some of the things that have been said here might have the effect of letting this clause go forward without understanding what precisely it means. The Explanatory Notes say that an example of what the Secretary of State might do would be to place conditions relating to sites of certain size, which is the point just discussed.

I hope the Government will be sensitive about affordable housing. It is extraordinarily difficult to do, not just in rural areas. I do not want to repeat something I said in an earlier debate, but in high land-value areas, it is very difficult to deliver affordable housing. It is really on the margins. Often in those areas, sadly one is dealing with communities that do not really want what they call social housing. The council has to take those people on and look them in the eye. It also has to take on developers and say, “We need to do this”. We need a few tools in our hands to be able to do that. In going forward and, I hope, giving us a lot more information about the regulations, I hope the Government will be sensitive to that side of the argument. I understand all the suspicions that have been expressed, although the Committee has to understand the imperative for the Government to deliver building.

Clause 142, which was raised by the noble Lord, Lord Greaves, who unerringly draws our attention to every clause, is a massive clause with a massive schedule underlying it. It looks well intentioned. The right reverend Prelate said that if it helps resolve disputes, that would be good. I am all for arbitration. If the sense is that two sensible people come together and resolve the matter, of course, we would all want that to happen. But we do not have here soft arbitration, we have hard statute. This hard statute is backed up in Schedule 13 by a very lengthy set of things that will happen when this person, whoever it is, could be called in by the Secretary of State without even waiting for either the applicant or the local authority to call them in. He or she might be called in under new Schedule 9A(1)(4) in Schedule 13 to the Bill, when

“a person of a prescribed description, requests the Secretary of State to make an appointment”,

of a person, and,

“any prescribed requirements as to the consent of the … authority are satisfied”.



Then there is a whole set of Russian dolls—clause after clause providing what this process might do. So this is not soft arbitration; it is almost like creating a new inspectorate—it seems to be separate from the inspectorate at Bristol—to arbitrate in cases of Section 106. It may be the same as the inspectorate at Bristol—I know not. Then a whole lot of things have to happen. It looks a bit like quasi-justice. Quasi-justice is not necessarily always quick and it is certainly not cheap.

The interesting thing about planning—as anyone who deals with it knows—is that planning creates its own precedent. Planners have to take note of what inspectors have said in the past. They have to take note of past decisions as well as the law. These unknown persons are going to be dealing with cases, perhaps at the request of the Secretary of State, according to the Explanatory Notes taking into account,

“any template or model terms published by the Secretary of State”.

We do not know whether they will be in regulations or what they might be. They will then give judgments on the Section 106 negotiations. It even says in the Explanatory Notes that they can,

“consider two or more planning applications at the same time if the same or similar issues arise”.

So we have what is effectively a hard, quasi-statutory system of making assessments. These judgments will lie on the record. It may well become, in my judgment, a bit like the decisions of the inspector, something which the next arbitrator will then take notice of in a similar case—not the same case, as they can consider similar cases. The freedom of negotiation between local authorities and applicants is potentially trenched into by this process.

The clause looks well intentioned, but a little too elaborate. It is a classic way in which Governments go about making law. They say, “Wouldn’t it be a good idea to bring discussions quickly to an end”, because they want to get things done quickly. They think local authorities are always holding them up so they want to force them to go this unknown person to impose a decision. Once that report is issued, the local authority must comply—that is what is written in the regulations.

I would like to think a lot more about this going forward as a statute. It is good practice to consider arbitration, but it is very tough. We have just had a debate about basement development in which we were told it was not necessary to put stuff on the statute book as we have codes of practice and everything can be done in a soft way. Here this arbitration has to be legalistic and hard—it has to be on the statute book. I worry about that.

Section 106 negotiations are tough—they are meant to be. I went to a topping-out ceremony in my borough a few weeks ago with some people from one of the hardest-negotiating developers in the country. We had a good old time and they said, “My goodness your authority was tough in negotiations”. I said, “Yes, and so was your business, but look what we’ve got: 300 new houses, affordable housing, community theatre and a community place in this town, which we got as a result of that negotiation”. If that had gone to the person in Bristol, Peterborough or wherever who might be appointed under this system, I wonder whether any of that would have happened.

I asked my noble friend to reflect on this very elaborate, albeit well-intentioned, system. The Government are absolutely right to call on local authorities to try to cut negotiations short and do them as fast as possible, but we have far too much rigmarole of regulation, law and diddle-daddle in this country already, and this looks like more of that on the way.