Levelling-up and Regeneration Bill Debate
Full Debate: Read Full DebateBaroness Scott of Bybrook
Main Page: Baroness Scott of Bybrook (Conservative - Life peer)Department Debates - View all Baroness Scott of Bybrook's debates with the Ministry of Housing, Communities and Local Government
(1 year, 3 months ago)
Lords ChamberMy Lords, I hoped we were hearing the voice of future generations up in the Gallery when the noble Baroness, Lady Pinnock, was speaking. Perhaps they were reminding us to think about affordable housing. The noble Lord, Lord Lansley, said that affordable housing was at the heart of some of this debate, and that is certainly the view of our Benches.
The noble Baroness, Lady Pinnock, set out the issues relating to the infrastructure levy that are causing such great concern across the sector. As she mentioned, this has resulted in an unprecedented step in my time in local government, with over 30 key organisations writing jointly to the Secretary of State to set out their concerns. They are united in saying that the introduction of the infrastructure levy could
“make it harder, not easier, for local leaders and communities to secure the benefits of new development”.
They point to the developer contributions that are being generated by the community infrastructure levy and Section 106 systems, which generated £7 billion in 2018-19 to support housing, infrastructure and services. I share their concerns that this new levy has the potential to reduce this amount.
I take the point made by the noble Lord, Lord Lansley, about the discussions that we have already had in Committee, but these views have been expressed by powerful bodies in our sector. His points about the design of the system are well made, but that should have been considered before the Bill came to the House. Points from the noble Lord, Lord Young, about trying to operate this discussion on a key part of the Bill in a vacuum are also well made.
The main concern of the organisations that wrote to the Secretary of State is the potential for this reform to
“leave communities with fewer new social and affordable homes, mixed and balanced developments and less of the infrastructure they need”.
They fear that the “upheaval” of introducing a new system would build delays and uncertainty into the planning system at a time when there is an urgent need to deliver affordable housing quickly, and that CIL and Section 106 would
“not be improved by these reforms”
and would need to be managed alongside the new levy. They welcome the principle of allowing authorities to borrow against developer contributions, but point out that the financial risk of doing so, when the final assessed amounts are “uncertain”, would probably be too great for local government finance officers.
In addition to the risks flagged by these key representatives of the sector, it is not yet clear what impact the infrastructure levy will have on permitted development. At present, developers engaging in permitted development make little, if any, contribution to infra- structure, in particular to affordable housing. This anomaly also needs to be resolved in any new infrastructure levy system.
I am grateful to many of the organisations that signed that letter which have also been kind enough to send us briefing material, and to the office of the Mayor of London, which has provided us with very strong evidence about the potential detrimental impact this would have on building more affordable housing in London. Its figures suggest that, had the levy been in place over the last five years, it would have resulted in between 4,500 and 10,000 fewer affordable homes, and could have made up to 30,000 homes of all tenures unviable.
We completely understand the need to ensure that developments provide the infrastructure to support them, but this proposed new levy adds layers of complexity, because it is being grafted on to an already complex system. The money that developers will have to pay to support transport, schools, health centres, open and play space, and, critically, affordable housing will be calculated once a project is complete instead of at the planning stage, as it is currently. This has resulted in concerns that the funding will be delayed or, potentially, lost altogether. The charging system will be complex and labour-intensive, putting further pressures on the local authority planning departments that we know are already at breaking point.
The reply to the organisations that wrote to the Secretary of State from the Minister responsible, Rachel Maclean, said that she would be looking at the issues they raised in detail and would be organising a round table very shortly. I believe that round table may have taken place in very recent days. However, as the sector has been raising these concerns since the infrastructure levy was first mooted, it is a shame the round table did not take place many months ago.
We accept that the Government have made some concessions on the infrastructure levy clauses, but they do not meet the basic challenge of explaining to the sector just how this new proposal will deliver more resources more effectively than the current system. For that reason, if the noble Baroness, Lady Pinnock, wishes to test the opinion of the House on her amendment, she will have our support. We understand that Amendment 90 is consequential to Amendment 68.
Turning to other amendments in this group, we hope the Government recognise the importance of the infrastructure levy supporting the delivery of the levelling- up missions. Our concern all through the passage of the Bill has been what mechanisms there are to link the missions to planning, funding and the infrastructure levy. My Amendment 69 to Schedule 12 is intended to address this, as well as ensuring that there is a commitment to the infrastructure levy being shared between tiers of local government in non-unitary areas.
My Amendment 70A wound enshrine in the Bill that the application of the infrastructure levy is optional. I am very grateful, as others have said, to the Minister for the many discussions we have had in relation to the Bill, in particular this part of it. I believe, and hope she will confirm, that it is the Government’s intention that infrastructure levies should be optional, and that government Amendment 82 enshrines this in the Bill.
Amendment 71, in the name of the noble Lords, Lord Best and Lord Young, and my Amendment 71A have similar intentions of ensuring that the level of affordable housing funded by developers in the local authority area will meet the needs of that area as set out in the local development plan. I referred to the critical links that need to be built between planning and the infrastructure levy earlier on. When it comes to affordable housing, this is absolutely essential. We recognise the very significant concessions the Government have made on affordable housing, so, rather than pushing Amendment 71A to a vote, perhaps we can have further discussions before the planning and housing sections of the Bill to build that link between the provision of affordable housing through the infrastructure levy and the local plan.
The noble Lord, Lord Stunell, gave clear evidence of the principle behind the current definition of affordable housing. We agree that the current definition is wholly deficient, as much of the housing included in it is absolutely not affordable to many of those in desperate need of housing. We feel that the Government should take an inclusive approach to developing a new definition by working with the sector and housing charities to reach an agreed, appropriate definition of affordable housing. We would support the proposal in the amendment from the noble Lord, Lord Stunell, that a link with the median income in the relevant local planning area would be a good starting point for this definition.
As mentioned by the noble Lord, Lord Best, we are very grateful to the Minister for tightening up the wording she introduces in Amendments 72, 73 and 75 to ensure that developers must now “seek to ensure” the affordable housing funding level is maintained. We are also grateful for her clarification in Amendment 74 that funding of affordable housing is to be provided in the charging authority’s area and, in Amendment 79, that charging authorities can require on-site provision of affordable housing through the infrastructure levy. We believe this change will encourage the development of mixed housing and hopefully mixed tenure communities, which have proved over time to be far more sustainable and successful.
We are also pleased to see government Amendment 80, which requires a report to be laid before Parliament on the impact that the infrastructure levy is having on the provision of affordable housing. It perhaps does not go as far as our Amendment 81, which would have made provision for a new levy to be introduced where IL was shown not to be successful, but we recognise that the Minister has listened to our concerns and we hope that placing a report before Parliament on the success, or otherwise, of IL will encourage further thinking if it is shown not to be delivering.
We have some concerns, which we have shared with the Minister, in relation to Amendment 76 on the thorny issue of viability. Our concern is that this clause, which allows the infrastructure levy to be disapplied where the charging authority considers the application of the levy, including its provision for affordable housing, would make the development unviable. The process of negotiation on infrastructure contributions between local planning authorities and developers can be very long and complex, especially when major developments are involved. We would not want to see any further pressure being put on local authorities in that negotiation process by having this clause dangled in front of them as an incentive for developers to proceed. It has been hard enough in the existing system to resist the weight of financial and legal expertise that the developers have put into these discussions, as mentioned by the noble Lords, Lord Best and Lord Young. We do not want to give them another weapon in their armoury—we do not think that is necessary.
I am grateful to the noble Lord, Lord Young, for setting out the potentially devastating impact the viability get-out clause can have on affordable housing. The noble Earl, Lord Lytton, referred to the inclusion of contingencies in that viability calculation. When you start to pick apart that contingency—I have done it—it is very interesting to see what sits underneath it, which is often some very wild assumptions in my experience. I am sure that that is not always the case, but it can be.
The noble Lord, Lord Lansley, is right to flag up in his Amendment 77 the question of the relationship between Section 106 contributions, which have been most effective in securing affordable housing through planning contributions, and the infrastructure levy. Lastly, we welcome the amendments in the name of the noble Lord, Lord Lansley, which would require a response to the technical consultation on the infrastructure levy before it comes into force.
In summary, we feel that an opportunity has been missed by introducing IL to be grafted on to an already complex system instead of using this Bill for a new, simplified and comprehensive approach to the provision of infrastructure developed with and for the sector, and with an implementation plan to smooth the transition so that it would not disrupt local authorities from the urgent work of solving the housing crisis. However, I once again thank the Minister for the amount of her time she has given to meet noble Lords on this subject and for the amendments that have subsequently come forward. It is the best of this House that the expertise we have here is used to improve legislation, and I am sure today’s debates are a good example of that.
My Lords, Amendments 68 and 90, tabled by the noble Baroness, Lady Pinnock, seek to remove the provisions in the Bill which provide the imposition of the new infrastructure levy in England. I regret that these amendments have been proposed, but I recognise the need for serious and open debate on this subject.
We covered the shortcomings of the existing system of developer contributions at length in Committee. There is a clear case for reform. Since 2010, average new-build house prices have risen by more than £250,000, and land prices have also risen substantially. This increase in value must be captured within the levy system, allowing for more local benefit, but we recognise the need to get these significant reforms right. That is why I can commit to the House today that the Government will undertake a further consultation on fundamental design choices before developing infrastructure levy regulations. Through further consultation and engagement, and the test-and-learn approach, which we discussed in detail in Committee, we will seek to ensure that the levy achieves its aims and that it is implemented carefully. I hope the noble Baroness, Lady Pinnock, will feel able to withdraw Amendment 68 and will not press Amendment 90.
My noble friend Lord Lansley has tabled Amendments 311 and 312, which seek to prevent the introduction of the infrastructure levy until the Government have published proposals for its implementation. I know that my noble friend has formally responded to the recently concluded technical consultation, which we are carefully reviewing. I can confirm that we will not commence the levy provisions in Part 4 until we have responded to that further round of consultation. The regulations themselves will be consulted on in future as well. I hope my noble friend Lord Lansley is therefore content not to press his Amendments 311 and 312. I assure him that he is correct: there is scope in the Bill for us to vary the approach set out in the technical consultation, and I reiterate that, if we do that, we will be consulting further.
I apologise for interrupting my noble friend but, among the powers that have been taken, is she anticipating that the design choices yet to be made will include whether local authorities may set their charging schedule by reference to gross development value or, in certain circumstances, may choose to use floorspace charging, as they do under CIL at present?
My noble friend is absolutely right: these will come out as we go through the consultation and further design stages.
Government Amendment 93 is consequential on legislation which is already on the statute book; namely, the Judicial Review and Courts Act 2022. It brings the enforcement provisions relating to the community infrastructure levy in line with the enforcement provisions relating to the new levy, which in turn reflect the provisions in the 2022 Act, creating a consistent, coherent cross-government policy on sentencing law.
We believe that we have a strong case for proceeding with the new infrastructure levy and have built in safeguards to ensure that development can progress with vital mitigations in place. We recognise that introducing the infrastructure levy is a significant change to the existing system. That is why we propose to introduce the levy via a test and learn approach. If the levy is found to have negative impacts in the context of one particular local authority, the Secretary of State will have the flexibility to disapply the levy in that authority for a specified time period.
In any system of developer contributions there are trade-offs between seeking simplicity and at the same time enabling individual site circumstances to be catered for. These are tricky balances to strike, and if our initial policy design leans too far in one direction or another, it may impact on the pace at which development can come forward. It is likely that revisions will be required of the initial levy regulations, as occurred with the community infrastructure levy, as the system beds in. While we do not expect these to be substantial, it will give local authorities confidence that the system will be flexible and able to be adjusted to experience on the ground. We do not expect the power to disapply the levy to be used often—if at all. However, it is a sensible, inbuilt precautionary power to cater for all circumstances.
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.
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.
My Lords, I thank the Minister for her response. I have to say that I still have concerns about non-regression. If it works for the Environment Act, I do not understand why it would not work here. Having said that, I beg leave to withdraw my amendment.
140: Clause 157, page 182, line 7, after “means” insert “the legislation listed in Schedule (Existing environmental assessment legislation)”
Member’s explanatory statement
This amendment introduces the Schedule inserted after Schedule 12 in the Minister’s name which lists the existing environmental assessment legislation for the purposes of the definition.
141: Clause 157, page 182, line 8, leave out from beginning to the end of line 3 on page 183
Member's explanatory statement
This amendment leaves out the list of existing environmental assessment legislation because the detail of that definition is being moved into the Schedule inserted after Schedule 12 in the Minister’s name.
142: Clause 157, page 183, line 3, at end insert—
“(1A) “Relevant existing environmental assessment legislation” means—
(a) in relation to EOR regulations made by the Secretary of State acting alone or jointly with one or more devolved authorities, the legislation listed in Schedule (Existing environmental assessment legislation);
(b) in relation to EOR regulations made by the Scottish Ministers acting alone, the legislation listed in Part 2 of that Schedule;
(c) in relation to EOR regulations made by the Welsh Ministers acting alone, the legislation listed in Part 3 of that Schedule;
(d) in relation to EOR regulations made by a Northern Ireland department acting alone, the legislation listed in Part 4 of that Schedule.”
Member's explanatory statement
This amendment inserts a new definition of “relevant existing environmental assessment legislation”.
143: Clause 157, page 183, line 4, at end insert—
““appropriate authority” means—
(a) the Secretary of State,
(b) a devolved authority, or
(c) the Secretary of State acting jointly with one or more devolved authorities;”
Member's explanatory statement
This amendment provides the definition for Part 6 of “an appropriate authority” as the Secretary of State, a devolved authority or the Secretary of State acting jointly with one or more devolved authorities.
144: Clause 157, page 183, line 7, at end insert—
““devolved authority” means—
(a) the Scottish Ministers,
(b) the Welsh Ministers, or
(c) a Northern Ireland department;””
Member's explanatory statement
This amendment provides the definition of a “devolved authority” for Part 6.
145: Clause 157, page 183, line 27, at end insert—
““relevant existing environmental assessment legislation” has the meaning given by subsection (1A);”
Member’s explanatory statement
This amendment is consequential on the amendment inserting a new definition of “relevant existing environmental assessment legislation” into Clause 157 in the Minister’s name.