Levelling-up and Regeneration Bill

Baroness Pinnock Excerpts

Report stage
Tuesday 18th July 2023 Lords Chamber

Moved by

[Baroness Pinnock]

[Baroness Pinnock (LD)]

My Lords, before I start, I repeat my relevant interests as a councillor and as a vice-president of the Local Government Association.

This group of amendments concerns the Government’s proposal to introduce the infrastructure levy as a replacement for the existing community infrastructure levy—CIL—and Section 106. My Amendment 68 seeks to leave out Clause 129, which establishes the infrastructure levy, and Amendment 90 would delete the relevant Schedule 12.

My reasons for this dramatic action are these. The infrastructure levy as currently proposed is contrary to the purpose of the Bill, which is to enable the levelling up of areas that are defined in the White Paper. The IL fails to contribute to that levelling-up mission because the amount that it will be possible to set as an infrastructure levy rate will be dependent on land values. Land values are much lower in the very areas that are the focus in the White Paper of levelling up. Using the existing community infrastructure levy as an example, land is zoned according to land values. At the independent examination of CIL in Kirklees, where I am a councillor, the planning inspector reduced the CIL charge to nil pounds—nothing—per square metre for a zone which includes the allocated site for 2,000 houses. This is not levelling up.

One of the criticisms of the infrastructure levy is that it will not be site specific. That means that communities that have large housing developments will not necessarily benefit from improved facilities, such as open green space, play areas, and funding to support school places as well as affordable housing on site. Any infrastructure levy can be spent anywhere in the council district.

Another of the major criticisms is that the charge will be paid by the developer only towards the end of the construction period, which may be a number of years. Meanwhile, it is expected that local authorities will have to borrow to build the new facilities needed in the expectation of funding at a sometimes much later stage.

It has also been argued that developers avoid funding infrastructure because of claims about the financial viability of a development. My noble friend Lord Stunell’s Amendment 94 aims to shine a strong light of transparency on viability. I agree with him.

The main contention during the debate on the infrastructure levy was on the provision of so-called affordable housing. There are amendments in the name of the noble Lord, Lord Best, and of the noble Baroness, Lady Taylor of Stevenage, that have the worthy aim of linking the income from the infrastructure levy to the building of houses for affordable sale or rent. We support those aims, but one of the downsides of this approach is that the infrastructure levy is designed to fund affordable housing and local facilities. There is a risk that, in some areas, it would all be spent on housing, which is positive but to the detriment of important local facilities.

Such is the level of concern about the infrastructure levy proposals that representations have been made by more than 30 organisations, including the County Councils Network, the Royal Town Planning Institute, Shelter, the Local Government Association and the National Housing Federation. The concerns expressed are about complexity, upheaval and uncertainty.

Finally, the Government have stated that the infra- structure levy will be in a test and learn state. This creates further uncertainty. Further, because the infrastructure levy is to be phased in, developers will be dealing with different charging regimes in different parts of the country for many years to come. That clearly adds to uncertainty and complexity for developers. Perhaps the Government have lost confidence in the scheme as proposed.

The difficulty with the infrastructure levy is that this is not the right time to change developer charging systems, nor will it provide sufficient funding at the appropriate time to fund affordable housing and local facilities for developments. It is time for a total rethink. I will listen very carefully and closely to the Minister’s response. If I am not entirely satisfied with the response she provides, I will be minded to test the opinion of the House. I beg to move.

[Lord Stunell (LD)]

My Lords, I rise to speak to Amendments 70 and 94 in my name in this group. I want to add my strong support to Amendment 68, moved by my noble friend Lady Pinnock, which aims to get rid of the IL altogether. She has spoken very powerfully to that point, saying not least that it is contrary to the central purpose of the levelling up White Paper and to the whole substance of the mission statements, which are set out—or rather, the skeletons of which have been laid—at the front end of the Bill.

The complexities and the unintended consequences of the infrastructure levy were explored in depth in Committee. The Government are now reduced to saying that it will be piloted first on a “test and learn” basis, and that it may be introduced piecemeal over the next decade rather than as a big bang, which I suppose is the beginning of some sort of reality check. The Government’s own amendments, which are in this group and which we shall hear about shortly, are an attempt to water it down a bit further. As my noble friend said, the Government seem to have rather lost confidence in the infrastructure levy providing the solutions that they originally imagined.

Well, we are a little bit ahead of the Government. We have completely lost confidence in the infrastructure levy as a vehicle for positive change on the delivery of affordable homes or indeed decent infrastructure associated with new development. The infrastructure levy is beyond repair. This duck is dead. I certainly hope that, if my noble friend Lady Pinnock does not get the assurances that she is looking for and a vote is called, noble Lords will go into the Content Lobby with her.

I wait to hear what the noble Baroness, Lady Taylor of Stevenage, has to say about Amendment 69 and what the noble Lord, Lord Best, has to say about Amendment 71. I would say that what they are offering is palliative care rather than resuscitation of the levy. Either or both of those amendments would be definite improvements on anything the Government have tabled, so I will wait to see what is said about that.

The noble Lord, Lord Lansley, has tabled Amendment 311, which is an admirable setting out of preconditions—preconditions which are so obvious and sensible that I fear the Government will reject them out of hand. Instead of seeing this for what it is—an attempt to introduce sound legislative principles into the Government’s Bill management, which I would have thought they would welcome—I suspect they will just see it as some kind of amendment to kick the whole project into the long grass. But in default of anything else, will the Minister please give the noble Lord, Lord Lansley, some help with getting those preconditions written into this model?

I turn to my Amendment 70. This returns to the vexed issue of what is affordable when we talk about affordable homes. Affordability is used in legislation at present based on the idea that, provided that there is a discount on the going market rate, a home in the private sector is thereby affordable. It is currently a standard discount, which takes no account at all of incomes in the locality, nor does it pay any attention to price differentials between similar homes. For instance, similar homes in an outer London borough such as Sutton, where I was born, are a factor of two more expensive than those in the metropolitan borough of Stockport, where I live. So for “affordability” to mean the same in the two boroughs, incomes in Sutton would need to be double those in Stockport to match the ratio of incomes to the discounted sale prices in the two boroughs.

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[Baroness Pinnock (LD)]

My Lords, I thank all noble Lords for their contributions and challenges to what I have said during this important debate. I particularly thank the Minister for being so generous with her time prior to Report in order to discuss these issues and to respond so constructively to the elements raised in Committee about affordable housing concerns, as well as for having spoken so persuasively—although maybe not quite persuasively enough—in response to this debate, giving as always a full reply to all the issues that were raised.

I come back to the fact that this is not about reforming a planning system; it is a levelling-up Bill, part of which will have to look at how we build more social and affordable housing, and communities that are healthy, safe and ready for the future. However, I come back to the fact that was raised by the Minister: these regulations could be disapplied by some local authorities if the development was deemed economically unviable to raise the funding. Those are the very same places which this Bill and the Government’s own White Paper wanted us to focus on, to raise up those communities so they can enjoy the same level of prosperity as other parts of the country. I repeat that the CIL level in a large part of the authority which I represent was set by the planning inspector at zero. That is the problem with the infrastructure levy. The example that the Minister gave of Pendle demonstrates that some authorities will not be able to build enough affordable housing under this system.

The organisations that wrote to the Secretary of State retain many of the concerns about the infrastructure levy. The system remains complex and very uncertain, for developers and for local authorities. It will be expensive to operate, and difficult to set the levy at the right level. I accept there is a need for reform of the existing CIL and Section 106, but this is not it. This is adding on something, as we have heard, so that we will have three different systems running side by side. People and developers will be confused, and local authorities will not be sure how much money they will be able to raise.

I hear the strength of feeling the Minister expressed in her response to the debate. Nevertheless, given all those worries that I have—fundamental concerns— I beg leave to test the opinion of the House.

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[Lord Lansley (Con)]

My Lords, I want to speak to Amendments 96 and 98, to which my noble friend Lord Young has just spoken so eloquently and compellingly. I share with him a sense of gratitude to our noble friends for the time they have given and for the way in which they have addressed a range of concerns. However, I have to confess that not least my noble friend’s detailed examination of community land auctions in theory caused me to inquire of several people how it might work in practice, although we have not seen that in reality. Those are a few hours of my life I shall never see again, but the conclusion I reached at the end of that was that it will not happen. That is probably the main reason why my noble friend may choose not to press this amendment to a Division to remove this provision from the Bill: it will sit in the Bill, it will become part of the Act and it will never see the light of day beyond that point.

Why? First, because as we have just debated, Part 4 provides for what is, in effect, a mandatory system for all local authorities for deriving developer contributions. Unless that is an utter failure, I cannot see why local authorities would want to go down the path of community land auctions, as opposed to having a much fairer and more equitable system of levy. Secondly, let us look at how it actually works. My noble friend is saying that the regulations will tell us in due course under what circumstances a local authority can enter a scheme. Clause 133(2) says:

“The local plan may only allocate land in the authority’s area for development … if the land is subject to a CLA option or a CLA option has already been exercised in relation to it”.


So, in preparing a local plan—this is before the planning process is completed, so following a call for sites—the local planning authority must seek options from all the sites put forward before they are chosen to be allocated or not to be allocated.

Let us have a look at that. I declare my interest again as chair of Cambridgeshire Development Forum. In 2019, in preparation for a local plan, the Greater Cambridge Shared Planning service issued a call for sites. It received 675 applications. In 2020, it allocated 19 sites. We therefore have, I think, in this joint plan area, 656 sites that have to go through the process of agreeing a community land auction option and disclosing the price—actually, as the lawyers rightly tell me, not only disclosing the price, which many landowners and developers will resist, but agreeing a legally watertight potential option before the point at which the allocation is made. These options will cease to have effect only when the plan is adopted or approved. In this instance, that is expected to be in the middle of 2025, just ahead of the Bill’s cut-off date. That means that, under these circumstances, the community land auction options would subsist for nearly six years, during which 656 sites will be held in abeyance and nothing can effectively be done with them. The price on those 656 sites, at which they are willing to sell, would have been disclosed, while the actual value will continue to change.

I do not see any evidence that local planning authorities have any desire to go down this path and engage in this process. Of course, it is optional, as my noble friend will no doubt remind us—local planning authorities do not have to do it. The conclusion I have reached is that they will not do it. Therefore, in reality, my noble friend did the Government a service by suggesting that it be taken out and the Bill be lightened. As it happens, I suspect Ministers will not do that, but I think they must be realistic and understand that this is proceeding with very little chance of success.

[Baroness Pinnock (LD)]

My Lords, I thank the noble Lords, Lord Young and Lord Lansley, for throwing some much-needed light on the practicalities of community land auctions. During the debate in Committee, a number of us expressed scepticism about the value of having this in the Bill and how it will work. Nevertheless, it is a pilot scheme; there are plenty of reservations in the Bill itself that may make it more difficult for the blue-sky thinking of the think tanks, this having been brought forward at a late stage of the Bill.

There are some voices in the housing sector that support the proposal of community land auctions. Their argument is that this is the best way of extracting a fair portion of the enhanced land value that allocation for development ensures. That is what they say. Others argue, as did the noble Lords, that it will have the perverse effect of buying planning permissions—I think that was the phrase the noble Lord, Lord Young, used in Committee. For me, time will tell. The noble Lords have said they will not push this amendment, so time will tell whether the scheme is attractive to councils and whether it will then deliver what its proponents claim.

[Baroness Hayman of Ullock (Lab)]

My Lords, I will be very brief. I listened with great interest to what the noble Lord, Lord Young of Cookham, said. The issue is that, on paper, this looks quite sensible, but when we start to dig into it and look at it, that peters away. That is one of the problems.

There is an assumption that the option value will be significantly less than the market value for housing development, which we have mentioned. That is not necessarily going to work out in practice; it is a flawed idea when you look at how it works practically. The circumstances for which the theoretical arrangement is designed are really a collection of small, completely substitutable land parcels with a number of different owners. I do not know that that necessarily bears much resemblance, in reality, to the characteristics of land management and the market across the country. That is one of our concerns. Further, the idea that auctions are going to drive down land prices in the absence of any element of compulsion is, we think, pretty unlikely, to say the least. There is an example of that with Transport for London’s disappointing experience with the development rights auction model, which failed to deliver.

Thirdly, if the arrangements prove to be workable in practice, it will almost certainly be an attractive proposition only in areas where there is significant housing demand and high land values; so I do not necessarily see it as something that will be practical to roll out around the country.

On those key points, I think it has been a discussion worth having.

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For me, “overall” means “on the one hand, on the other hand”; it means trade-offs. We all know that trade-offs notoriously diminish levels of protection and often promise jam tomorrow that never materialises, so I am deeply suspicious of anything that looks at overall levels of environmental protection when we are in fact assessing a mechanism that will look at specific cases over time. I believe that Amendment 106 in the name of the noble Baroness, Lady Hayman, would provide a much more robust assurance and non-regression test by taking “overall” out of the equation, so I hope that the House will support the noble Baroness’s amendments.

[Baroness Pinnock (LD)]

My Lords, this is an important set of amendments from the noble Baroness, Lady Hayman of Ullock. They seek assurances from the Government that the replacement for the existing environmental tests for development—environmental outcomes reports—will be as robust as the ones they will replace.

The noble Baroness, Lady Hayman of Ullock, made a powerful case for a non-regression clause with her Amendment 106. Recently, there has been a lot of debate about this and pressure from those who want to point the finger of responsibility at the planning system for failing to produce the right number and quality of homes that are desperately needed in this country. When they do so, they point out the additional responsibilities of developers to adhere to environmental responsibilities and regulations, which are causing the difficulties they express. Of course, it is never as easy as that.

It seems to me that, after many years, as the noble Baroness, Lady Young, said, we have a much better balance now between development and protection of the environment in which developments are set. There are responsibilities that developers have to take up in order to make sure that they construct and do not destroy; to make sure that they create communities that sit well in their environment; and to make sure that nature and the environment are looked after for existing and future generations. So the noble Baroness, Lady Hayman, has made important points here; I hope that the Minister will be able to respond positively to them, because they are important. I guess that they will be raised again later on in our debates on Report.

[Baroness Scott of Bybrook (Con)]

My Lords, Amendments 100 and 101 in the name of the noble Baroness, Lady Hayman of Ullock, would require that all regulations made under Part 6 specify environmental outcomes, whether or not they actually relate to the outcomes themselves. This would place a significant burden on subsequent regulations and would require outcomes across every process element, even where not relevant—for example, on regulations related to enforcement, exemptions and guidance.

We recognise that framing will be critical and recently carried out a consultation on how we can translate the Government’s ambitions into deliverable outcomes, which is surely the key consideration here. The Government have also legislated to ensure additional consultations on future outcomes, as well as adopting the affirmative procedure in Parliament on the associated regulations.

Regarding Amendment 101, the Government have been careful to ensure that the new system is capable of capturing all the current elements of the environmental assessment process. This allows the Secretary of State to consider health matters such as air pollution when setting outcomes. Impacts on human health are covered by “protection of people” in Clause 143(2)(b). When developing secondary legislation, we will consult with stakeholders to ensure that health-related commitments are sufficiently captured.

On Amendment 106, the drafting of Clause 147 mirrors the EU-UK Trade and Cooperation Agreement to ensure that, when bringing forward reforms, we live up to our commitment to non-regression. As well as departing from the existing drafting, Amendment 106 would create a rigid approach to non-regression. Removing “overall” from levels of environmental protection would remove the ability to look at the effect of reforms as a whole. When read alongside the commitment to international obligations and expansive duties to consult, we feel that the non-regression clause strikes the right balance to ensure EORs can be an effective tool in managing the environment.

Let me respond to all the noble Baronesses who have spoken by making it clear that, in creating a new system of environmental assessment, it is essential that the standards are kept high. The Government are committed to improving what exists and ensuring that we can deliver on the challenges we face in the 21st century. Focusing on environmental outcomes will allow the Government to set ambitions for plans and developments that build on the Environment Act and other environmental commitments. The legislation is clear that the Government cannot use these powers to reduce the level of environmental protection, and it includes a clause setting out this commitment to non-regression.

On Amendment 107, I have no reservation in saying that the UN sustainable development goals are crucial ambitions. The UK is committed to achieving them by 2030, as affirmed in the international development strategy and integrated review. The expansive nature of these goals is such that it is not possible for the planning and consenting frameworks within which EORs operate to support them all. To require the EOR regime to do so would significantly expand the scope of the assessment beyond the existing legal frameworks of the environmental impact assessments and strategic environmental assessments.

This amendment would exacerbate the biggest issue with the current process, which is a mandatory list of topics that are required to be considered for all assessments, whether relevant or not. Listing matters to be considered in this way has resulted in overly long, complex and inaccessible documents, full of unnecessary material in case an omission invites legal challenge. It would thwart our efforts to make the process more effective, meaningful and manageable.

Environmental assessment was established as a tool to ensure that the environmental impacts of a development were not overlooked in favour of the social and economic priorities that drive development activity. A requirement to support the delivery of all goals would divert attention away from the EOR’s core purpose of providing an additional level of scrutiny of the effects of the development activity on the environment.

I hope this provides the reassurances necessary for the noble Baroness, Lady Hayman of Ullock, to withdraw her Amendment 100 and for the other amendments not to be moved when they are reached.

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[The Earl of Caithness (Con)]

One of the problems that I raised during our debate on 18 May in Committee was the problem of surface water run-off from farms and roads, which was causing problems for our rivers. I am extremely grateful to and would like to thank my noble friend the Minister for the letter that he sent me on 23 June, in which he commented a bit more on the points that I raised. The interesting thing about that letter was his comment on the surface run-off from roads. He said that Defra was

“working with the Department for Transport to reduce the impact of the strategic road network and roads managed by local highways authorities on water bodies”.

It just shows what an important cross-government issue this is.

The difficulty that my noble friend has is that he has to work at one remove from the local authorities. The reason I stress the local authorities is that the next day, on 19 May, I was on the River Piddle, a lovely chalk stream, and at 3.30 pm the river was gin clear—it was what a chalk stream should be. We had quite a good thunderstorm and within an hour that river was chocolate brown; it was full of silt and run-off, and the roads were under water. There was run-off from the farmland adjacent to the river—the whole aquatic environment of the river was affected by that thunder- storm; it was a short-term disaster for the river, created by human behaviour. Something similar happened to us humans when we had the smog in the early 1950s. We tackled that problem; it was a manmade problem and we tackled it with the Clean Air Act. It is equally important that we now tackle the problems facing our rivers. It will take a major effort by the Government and across government to do that.

All our rivers are important, but why are the chalk streams just that bit more important? It is worth reiterating that 85% of the world’s chalk streams are in England; they are our equivalent of the rainforests. We have a special responsibility to those rivers, and if we do not give a lead to the rest of the world on such an important issue, we will not be doing nature justice.

There are three key indicators of the ecological health of rivers: water quality, water quantity and the physical habitat. The key to getting all of those right is management. The Government will need every single tool in the toolbox and every policy to be able to take the necessary action to fight off the vested challenges from all quarters that they will need to do to establish chalk streams to the standard that we expect and fulfil the one big wish, so rightly mentioned by my noble friend Lord Trenchard.

The Bill is about regenerative action and levelling up, and it is intended to give places a sense of identity. As my noble friend Lord Trenchard said, many of the rivers flow through towns as well as the countryside. The restoration of the rivers could bring huge opportunities and benefits to those towns and to the countryside for both nature and humans. If we do not take this opportunity, we will be letting nature and ourselves down.

[Baroness Pinnock (LD)]

My Lords, my noble friend Lady Bakewell of Hardington Mandeville is unfortunately unable to attend today, as she is not well. I will say a few words on her behalf.

First, I endorse entirely what has already been said about the environmental importance of chalk streams. I think it was David Attenborough who described them as one of the rarest habitats on earth. If David Attenborough says that, we must listen and listen carefully.

Secondly, I want to say something about pollution and about water extraction. The Environment Agency has responsibility for giving permission to water companies for the level of extraction, be it from rivers or aquifers. Indeed, there are aquifers in Yorkshire—not in my part, but in the East Riding—which Yorkshire Water extracts from. What I do know is that aquifers take a long time to refill after periods of extraction. I look to the Minister to respond on water extraction from aquifers. The amount of water taken from aquifers obviously then impacts on the flow in chalk streams, which is essential for their protection.

What I want to say about pollution from sewage overflow discharge is this. About 150 years ago there was a Conservative Prime Minister in this country who had a policy of sewage. That is exactly what this country needs now. A Conservative Government run this country, so perhaps they can adopt Disraeli’s policy of sewage. It would be a bit late, but it would not be before time if they did.

[The Minister of State, Department for Environment, Food and Rural Affairs (Lord Benyon) (Con)]

I am very grateful to the noble Baroness and others who have spoken. The noble Baroness should read our Plan for Water, which does exactly what she said. I refer noble Lords to my entry in the register.

I turn to Amendment 102, in the name of my noble friend Lord Trenchard. I defer to no one in the verbal arms race that usually takes place in these debates about who can be the greatest supporter of chalk streams. I am passionate about them, and I want to see our chalk streams, which are one of the most valuable ecosystems in these islands, restored to pristine health. I note the passion from across the House on the need to protect these habitats further.

The Government recognise that chalk streams in England are internationally important and unique, and in many cases in poor health. We are committed to restoring England’s chalk streams. We have recently reaffirmed this commitment in our Plan for Water, which I just referred to, which recognises chalk streams as having special natural heritage.