Local Authorities (Contracting Out of Community Infrastructure Levy Functions) Order 2011

Baroness Hanham Excerpts

Wednesday 9th November 2011 Grand Committee

Moved By

[Baroness Hanham]

That the Grand Committee do report to the House that it has considered the Local Authorities (Contracting Out of Community Infrastructure Levy Functions) Order 2011.

Relevant documents: 29th Report from the Joint Committee on Statutory Instruments.

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

My Lords, the community infrastructure levy allows local authorities to choose to charge a levy on new development in their area in order to raise funds needed to meet the demands of hosting that development and, in turn, to enable growth. The levy was introduced by the previous Government through the Planning Act 2008. Part 2 of that Act provides for regulations to allow the imposition of the levy. The Community Infrastructure Levy Regulations 2010 made the first use of those powers bringing the levy into effect from 6 April 2010.

The instrument before the Committee today allows local authorities, if they so wish, to contract other parties to deliver most of the activities they carry out under the community infrastructure levy regulations. The draft instrument is entirely consistent with other contracting-out legislation, made under the same powers, for contracting out of functions concerning the administration and enforcement of the business improvement district levy and council tax and non-domestic rates. Both instruments were considered by this Committee.

The objective of the order is to provide levy authorities with the scope to contract out specified functions and thereby give them the means to meet their responsibility to ensure best value. The order is of interest primarily to community infrastructure levy charging and collecting authorities. We consulted the Local Government Association and representatives of other levy authorities which welcomed the approach proposed by the draft order.

Where an authority chooses to contract another body to undertake a function, that body then does so on the authority’s behalf; that is, the contractor acts as an agent of the authority to undertake the function it is contracted to deliver. Article 3 makes this fact clear by requiring that where a contractor, in doing the work that the authority has contracted him to do, enters into an agreement with another person, that agreement has to make it clear that the agreement is between the authority and the person, not the contractor and the person.

It is possible to contract out only functions that an authority can delegate to a committee, sub-committee or officer, not functions that the authority itself must carry out. Where legislation requires a meeting of the authority—or, in the case of the Mayor of London, the mayor—to approve, that function cannot be contracted out. Article 4 of the draft order reflects these restrictions and reiterates that such functions may not be contracted to another party. The effect is that an authority cannot contract out its functions to propose, implement or withdraw a community infrastructure levy charge in its area or delegate its power to ask a court to consider imprisoning a levy debtor.

These safeguards mean that decisions concerning whether to raise a charge, including at what level the charge should be set and whether to continue to do so, are for the authority and it cannot delegate it. The draft instrument has no effect concerning the spending of levy receipts; the community infrastructure levy regulations already provide for authorities to pass funds to any person they choose and, where they do so, the authority remains responsible for ensuring they are applied appropriately. The functions that this order allows to be contracted out include: gathering evidence to support consideration of whether and at what rate to apply a charge; the administration of the charge, including processes for notifying, collecting and enforcing liabilities; and the administration of the resultant funds.

The order provides local authorities with the flexibility to ensure that their responsibilities are delivered in the most effective and efficient manner possible, be that in-house or through another party. It allows for a competitive process to be undertaken, which will provide authorities with the scope to drive down costs and drive up standards. Importantly, the order does not allow for decisions concerning whether and at what rate to charge a levy on development in an area to be delegated or create scope for another body to spend the proceeds.

I am satisfied that the order is compatible with the rights contained in the European Convention on Human Rights. I beg to move.

[Lord Kennedy of Southwark]

My Lords, the order itself is not controversial, so I do not envisage a long debate on it. However, I have a few brief comments to make. As the noble Baroness, Lady Hanham, has advised the Grand Committee, primary powers were taken in the Planning Act 2008 to enable the Government to make regulations allowing local planning authorities to set a levy for their area to be paid by the owners and developers of land in order to contribute to the provision of the infrastructure needed to support development or planning in their area. The process was being determined, but the general election got in the way. Local authorities will have the ability to outsource all or part of their functions related to the levy, except where they are specifically prevented from contracting out that function.

I am aware that there has been a consultation process and that all the responses support this preferred option. I have one question for the noble Baroness which revolves around the review. I see that the review of the levy itself is scheduled for 2015. Is the noble Baroness satisfied that that will be soon enough, and were local authorities consulted on that particular point?

[Baroness Maddock]

My Lords, as a former member of the Merits of Statutory Instruments Committee, at times I take a keen interest in secondary legislation. This is in an area that I was involved in when I was on the Front Bench, so I have taken a particular interest in it. It has already been said that the order is not controversial. The main legislation was the Planning Act 2008, followed by the Community Infrastructure Levy Regulations 2010. I wonder whether it was flagged up, particularly in the main legislation, that later on this is how things would happen. One of the reasons the Merits Committee does such a good job is because legislation in recent times has become more and more complicated, and more of the detail comes out in secondary legislation. My noble friend and I have been involved in local government legislation over the years, and we know how difficult this has been. Again, I wonder whether the way in which this was going to be enacted was flagged up in the primary legislation.

I have one another minor question, which might be a little pernickety—I must account for it by saying that I have served on the Merits Committee. I notice that the consultation period was only six weeks. The statutory consultation period is quite often 12 weeks. I have not looked at it closely enough to know whether this was the correct period, and I understand that the Local Government Association and others were consulted, so there are no issues around it. However, I would like to know whether that was the correct period of consultation.

[Baroness Hanham]

My Lords, I thank the noble Lord and the noble Baroness for their questions. I shall start with my answer to the noble Lord, Lord Kennedy: 2015 is considered reasonable given that the first charges will start in the new year, 2012, and that time is needed to allow the arrangements to bed down before they are reviewed. Effectively, they will have three years in which to do so.

The noble Baroness, Lady Maddock, is probably more familiar with the 2008 legislation than I am since I expect she was there, but like me, she may not remember it. The consultation period of six weeks was set out in the Deregulation and Contracting Out Act 1994, so it fell within the normal parameters, and indeed the Local Government Association was consulted as well. I hope that noble Lords will be content with those replies.

Motion agreed.