Levelling-up and Regeneration Bill (Twenty Second sitting)

Dehenna Davison Excerpts

Committee stage
Thursday 13th October 2022 Public Bill Committees

[The Chair]

With this it will be convenient to discuss new clause 53—Independent examination of locally-led urban development corporations—

“(1) A proposing authority must submit a proposal for designation of a locally-led urban development area in England under section 134A of the Local Government, Planning and Land Act 1980 to the Secretary of State for independent examination.

(2) The examination must be carried out by a person appointed by the Secretary of State.

(3) The purpose of the examination is to determine whether the proposal is in general conformity with national planning policy, the local development plan, and any other material considerations.

(4) Any person who makes representations seeking to change a proposal for designation of a locally-led urban development area must, if they so request, be given the opportunity to appear before and be heard by the person carrying out the examination.”

This new clause would ensure that proposals to designate land as an urban development area and to establish a locally-led urban development corporation to oversee it would be subject to independent examination at which the public would have a right to be heard.

Welcome, Minister.

[The Parliamentary Under-Secretary of State for Levelling Up, Housing and Communities (Dehenna Davison)]

Thank you, Mrs Murray. It is a pleasure to serve under your chairmanship, particularly for my first outing as a Minister. I would appreciate your going slightly easy on me on procedural matters—I will do my best.

As we know, the Government are committed to empowering local areas to drive forward growth and renewal without the need to establish a body accountable to central Government. Development corporations are powerful tools that can deliver large-scale development, and they have been successfully used to deliver more than 20 post-war new towns across England, such as Telford and Milton Keynes. They have also been instrumental in regenerating brownfield sites, such as Canary Wharf and the London Olympic site. However, the enabling legislation was designed for a different time and in response to very different circumstances, so there are now multiple types of development corporation, which have varying powers and remits that inhibit their use. Given the scale of the challenge to level up the country, provide the necessary infrastructure and deliver the growth and housing that current and future generations need, we want to ensure that development corporations are accessible right across England.

In October 2019, we consulted on the legislative framework for development corporations to ensure that they have the powers they need to deliver. The results of that consultation showed that there is a gap in the existing models. Outside of mayoral areas, there is no model available for local authorities to regenerate their areas, which is what the clause is intended to address. The clause introduces a new locally led urban development corporation model, which will be overseen by a local authority covering the area, rather than by central Government. It will also allow local authorities, rather than central Government, to put forward proposals to the Secretary of State to designate and create a locally led urban development corporation.

Subsection (4) sets out what authorities will need to do before submitting a proposal to the Secretary of State for designation. That includes what a proposal must contain, who is able to put forward a proposal and who can become an oversight authority. Local authorities will not be able to unilaterally decide to ask the Secretary of State to designate a locally led urban development corporation. Instead, the clause includes a statutory requirement for the proposing authorities to consult local residents, businesses, MPs and other local authorities before making a proposal to the Secretary of State. When the proposal is received by the Secretary of State, they will look carefully at the robustness of the plans, including community involvement and the views expressed, before making a decision. That is why new clause 53 is an unnecessary addition to the consultation requirements and would slow down the designation of development corporation areas.

The purpose of designating an area is to determine the area in which the locally led development corporation will operate and deliver a programme of urban regeneration, and there will be other opportunities for the local community to have their say on the planning proposals for the area through the planning system. Respondents to the consultation noted the considerable amount of up-front resource required to make the case for a locally led development corporation, expressing apprehension about the level of evidence that may be required.

The clause introduces a different test for locally led urban development corporations. Before they are established, the Secretary of State must assess whether it is expedient in the local interest, rather than in the national interest, to designate the development area, which means that local authorities will no longer need to prove that their proposal is in the national interest. A similar provision is introduced for locally led new town development corporations under clause 132. We will provide further guidance to ensure that the evidence required to meet the test is proportionate and provides the certainty that local authorities desire.

We also want to ensure that the proposals are implemented as planned. Subsection (7) requires the Secretary of State to give effect to the proposal, subject to its meeting the statutory test that it is expedient in the local interest. That will include the order providing for the name of the development corporation, the number of board members, who the oversight authority will be, and arrangements for the performance of functions by oversight authorities consisting of more than one local authority. The order must also provide for any other functions that the proposal sets out as planning powers.

Orders designating locally led development corporations will, as for mayoral development corporations, be subject to the negative procedure. That reflects the fact that local democratic scrutiny will have occurred prior to the proposal being permitted to be made. The clause will equalise mayoral and non-mayoral areas with locally led development corporations by standardising the parliamentary process, with democratic oversight at the local level.

We intend to use the powers in the clause as we did the locally led New Towns Act 1981 (Local Authority Oversight) Regulations 2018, which will be subject to the affirmative procedure. That includes setting out which functions will be transferred to the oversight authority. We will consult on regulations in due course to ensure that they are informed by both communities and stakeholders. In the light of that explanation, I ask the hon. Member for Greenwich and Woolwich not to press new clause 53.

[Matthew Pennycook (Greenwich and Woolwich) (Lab)]

It is a pleasure to reconvene under your chairmanship, Mrs Murray. I welcome the two new Ministers to their places. I want to speak to new clause 53, not least because I am not entirely convinced by the reassurances just given by the Minister. As she said, and as the policy paper accompanying the Bill sets out, this part of the Bill makes provision for a new type of locally led urban development corporation accountable to local authorities rather than the Secretary of State. It amends the process for establishing locally led new town development corporations and updates the planning powers available to both centrally and locally led development corporations, bringing them into line with the mayoral development corporation model in terms of enabling them to become local planning authorities for the purposes of local plan making, neighbourhood planning and development management.

In the view of the Opposition, part 6 of the Bill is largely uncontroversial, and we are broadly supportive of the measures contained within it. The development corporation model established by the New Towns Act 1946 was a key part of the post-war planning settlement and, as the Minister referenced, it proved remarkably effective in addressing the housing emergency faced in those years. The 32 new towns built under the post-war UK new towns programme today house over 2.5 million people. Funded by 40-year Government loans, they ultimately not only paid the Treasury back, but returned a surplus. The legacy of urban development corporations is more mixed, but their potential for large-scale regeneration is undeniable and their capacity to successfully deliver major projects, such as the London Olympics, is testament to their utility.

In a real sense, development corporations remain an answer to one of the core weaknesses of the planning system, which is that local planning authorities have the power to develop and set a strategy in a local area, but few powers and little capacity to ensure the necessary development to realise it is delivered. On the other hand, development corporations combine strategic planning capability with powerful delivery mechanisms that help ensure that the development objectives they set are realised. They can, for example, commission private sector companies, or establish their own, to deliver homes and infrastructure, and they can compulsory purchase the land they need to deliver a plan and then control consent to bring forward development. For all those reasons and more, we therefore welcome the fact that the Bill includes provision to amend and enhance the development corporation model. However, we need to ensure that the new types of development corporation provided for by part 6 of the Bill realise their potential and have legitimacy in the eyes of the public—the latter being directly related to the former.

When it comes to their likely efficacy as a means of regenerating areas, the decision to provide for locally led development corporations risks proving a double-edged sword. The advantage is, of course, that a local authority, or authorities, seeking to designate an urban development area and create an urban development corporation, as provided for by clause 131, or to oversee the creation of a new town in an area within their administrative boundaries, as provided for by clause 132, can determine their own priorities rather than having them determined for them by the Department. In that sense, the measures provided for in this part are in keeping with the spirit of the original New Towns Act 1946. The disadvantage is that, in practice, there is likely to be little incentive for a local authority, or authorities, to take the financial and political risk of designating a given area and establishing the necessary development corporation to regenerate it. The recent experience of four north Essex authorities, which attempted unsuccessfully to designate and oversee the development of three garden communities, is a stark illustration of the need for central Government to be far more active in supporting locally led initiatives if they are to succeed.

The success of the post-war UK new towns programme lay, in part, in the fact that each development corporation operated within the context of strong national policy and enjoyed the active and direct support of the Government of the day and their Ministers. It is telling that this part of the Bill places no duty on the Secretary of State to support—financially or otherwise—the locally led development corporations it enables to be established. As things stand, we have no sense of what the Government ultimately wish to achieve by means of the provisions in this part, not least how they believe such locally led development corporations will assist in levelling up, given the likelihood that most will come forward in the south and, I would wager, the south-east of the country. Our new clause 53 is not designed to address the potential challenges involved in ensuring that locally led corporations realise their full potential in that sense, as vehicles for regeneration and levelling up, but I hope the Government will carefully consider the points I have made in that respect.

When it comes to community consultation, I am afraid that I am not satisfied that the proposed measures are sufficient. In terms of the perceived legitimacy of these development corporations, it is essential that they provide for an element of public participation in any proposal to designate and establish such a corporation. At present, the process provided for by clause 131 entails no public inquiry before designation and no right for members of the public to be heard prior to a decision being made.

The same is the case for locally led new town development corporations, as provided for by clause 132. That means the Bill will allow land to be designated as an urban development area, and powerful new bodies to be established to oversee development on such land, without any rights for the local communities affected to have their say and at least test the evidence as part of that process. We believe that is an error, and new clause 53 simply seeks to ensure that proposals to designate land as an urban development area and to establish a locally led urban development corporation would be subject to independent examination, at which the public would have a right to be heard. As you will know, Mrs Murray, that is part of our ongoing efforts throughout the passage of the Bill to overhaul it to ensure that there is an ongoing role for the public in the planning process at these stages, with the obvious benefits that that entails for trust and confidence in the planning system. I look forward to any further thoughts the Minister might have having heard my argument.

[Dehenna Davison]

I thank the shadow Minister for not only expressing his concerns but indicating his broad support for part 6 of the Bill and the enhancements it will make overall to the development corporation model.

The point about trust and confidence in planning and the development corporation system is vital. On the point about consultation, I refer the hon. Member back to the comments I just made: there would be no unilateral ability for local authorities to go straight to the Secretary of State to request that a locally led urban development corporation be set up. There is a statutory requirement for authorities to consult local residents, businesses, MPs and other local authorities before making those representations to the Secretary of State.

On the resources for establishing a development corporation, we recognise that this can be a significant undertaking, but the Government have a range of programmes available to help support local authorities in their growth aspirations. We would encourage local authorities that are interested to approach the Department and see how we can work with them to provide that resource and confidence. On that basis, I once again ask the hon. Member not to press new clause 53, and I commend the clause to the Committee.

Question put and agreed to.

Clause 131 accordingly ordered to stand part of the Bill.

Clause 132

Development corporations for locally-led new towns

Question proposed, That the clause stand part of the Bill.

[The Chair]

With this it will be convenient to discuss new clause 54—Independent examination of locally-led new town development corporations—

“(1) A proposing authority must submit a proposal for designating an area of land as the site of a proposed new town under section 1ZA of the New Towns Act 1981 to the Secretary of State for independent examination.

(2) The examination must be carried out by a person appointed by the Secretary of State.

(3) The purpose of the examination is to determine whether the proposal is in general conformity with national planning policy, the local development plan, and any other material considerations.

(4) Any person who makes representations seeking to change a proposal for designating an area of land as the site of a proposed new town must, if they so request, be given the opportunity to appear before and be heard by the person carrying out the examination.”

This new clause would ensure that proposals to designate land as the site of a proposed new town and to establish a locally-led new town development corporation to oversee it would be subject to independent examination at which the public would have a right to be heard.

[Dehenna Davison]

As I said when discussing clause 131, the Government are committed to ensuring that there is a fit-for-purpose development corporation model for all circumstances. The current designation of a development area and the establishment process for a locally led new town development corporation are overly burdensome. As I have outlined, our consultation on development corporations highlighted the authorities’ concern about the up-front resource required to make the case for a locally led new town development corporation and about uncertainty regarding the process. It was suggested that streamlining the establishment process could go some way to mitigating those concerns.

--- Later in debate ---

[Matthew Pennycook]

I will speak to new clause 54, but I shall be extremely brief. As the Minister will know, the new clause seeks to achieve precisely the same outcome as new clause 53, in relation to locally led urban development corporations, but in relation to the locally led new town development corporations, as provided for by clause 132.

For the record, I reiterate that we are not reassured by the Minister’s comments about public consultation being intrinsic to the proposed measures. If I have understood her correctly in terms of that public consultation, we are talking about the ability for communities to comment after the areas of land in question have been designated and established. I suggest that the process of designating land to be developed in this manner and of establishing a corporation is a matter that local communities will want to have a say on, as is rightly the case, before they get a say on other elements of the process to follow.

We believe it is a mistake to establish a process for creating these corporations in which the public have no input into the designation and no right to be heard at the point that the land in question is delineated and the corporation established. I appreciate that the Minister will give me exactly the same answer she did in response to new clause 53, but I hope that the Government will at least reflect on what it will mean for trust and confidence in the planning system, which we know is extremely low, if local communities are cut out of this stage of the process entirely.

[Dehenna Davison]

Once again, I completely share the hon. Gentleman’s sentiments around trust in the planning system. It is absolutely paramount to the planning system operating and getting that local buy-in—it is really crucial. That is why it is a statutory requirement for a public consultation to be undertaken before the proposal is submitted to the Secretary of State, on the grounds that I outlined in the previous clause. I hope that that provides at least some reassurance that local residents will absolutely be consulted before these processes move forward.

Question put and agreed to.

Clause 132 accordingly ordered to stand part of the Bill.

Clause 133 ordered to stand part of the Bill.

Schedule 12 agreed to.

Clauses 134 to 137 ordered to stand part of the Bill.

Schedule 13 agreed to.

Clause 138

Removal of restrictions on membership of urban development corporations and new town development corporations

[Matthew Pennycook]

I beg to move amendment 183, in clause 138, page 157, line 26, at end insert—

“(4) In the case of a locally-led urban development corporation, the board must include no less than three community members who represent a local qualifying body.

(5) In this section, ‘local qualifying body’ means a parish or town council, or an organisation or body designated as a neighbourhood forum, authorised for the purposes of a neighbourhood development plan or such other bodies that reflect the cultural, social or environmental priorities of the locality to be designated as a locally-led urban development area.”

This amendment would ensure that local communities within the locality to be designated as a locally-led urban development area are represented on the board of a locally-led urban development corporation.

--- Later in debate ---

[Dehenna Davison]

I thank the shadow Minister and the hon. Member for Westmorland and Lonsdale for their contributions, and hope that I can provide a little bit of reassurance.

We feel that, while incredibly well intentioned, the amendments are unnecessary. The appointment of board membership for locally led new town development corporations is already addressed in the New Towns Act 1981 (Local Authority Oversight) Regulations 2018. Those regulations provide that

“the oversight authority must have regard to the desirability of appointing one or more persons resident in or having special knowledge of the locality in which the new town will be situated.”

That could include members from parish councils or local community groups, or organisations that reflect the cultural, social or environmental priorities of the locality.

We intend to replicate that approach for locally led urban development corporations. We intend to set out further details on the composition of board membership in regulations, which will be subject to parliamentary debate. As we did with the New Towns Act 1981 (Local Authority Oversight) Regulations 2018, the Department will consult on draft regulations to ensure that they are appropriate and permit local communities and businesses to have a say.

In appointing independent members, we expect oversight authorities to ensure that the board has the relevant skills and experience needed. That includes those with an understanding of the local area. In accordance with the principles of local authority appointments, the appointments of the chair, deputy chair and independent board members should be through an open, transparent and publicly advertised procedure, which I hope will provide some reassurance to the hon. Member for Westmorland and Lonsdale. I appreciated the examples from his own constituency.

Regarding the suggested minimum of three appointments, it is the Government’s view that it should be up to the oversight authority to determine the appropriate board composition and numbers, based on local circumstances. I hope, therefore, that the hon. Member for Greenwich and Woolwich will agree not to press his amendments.

[Matthew Pennycook]

I thank the Minister for that response and am partly reassured by it. As I hope I made clear, we are trying to drive at what I think is a very limited form of public participation on the boards. I accept what the Minister says, both on what is expected by the Government from oversight authorities in putting the boards together, and the further details, although what “a say” means is yet to be defined. We look forward to seeing in the regulations what those further details entail.

I hope the Minister has taken away our very firm view that there must be an appropriate level of community participation on the membership of the boards so that local communities have trust and confidence in what they are doing. However, I do not intend to press the amendment to a Division at this time. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 138 ordered to stand part of the Bill.

Clause 139 ordered to stand part of the Bill.

Clause 140

Acquisition by local authorities for purposes of regeneration

Question proposed, That the clause stand part of the Bill.

[The Chair]

With this it will be convenient to discuss the following:

Clauses 141 to 144 stand part.

That schedule 14 be the Fourteenth schedule to the Bill.

[Dehenna Davison]

I will now explain clauses 140 to 144 and schedule 14. The Government want to see local authorities empowered to use compulsory purchase to regenerate their areas, so that places and regions can drive improvements in economic growth and pride in place. The levelling-up White Paper made it clear that we want local communities to be empowered to take the lead, and we want to ensure they have the tools they need to succeed. Key to that is ensuring that local authorities have the right compulsory purchase enabling powers and processes, and the confidence to use them. This is the intent behind the clauses, which focus on modernising and streamlining the compulsory purchase process to make it faster and more effective.

With clause 140, we are making it crystal clear in the Bill that local authorities in England have the power to use compulsory purchase for regeneration purposes and to bridge the gap the urban centre recovery taskforce identified last year, which we are keen to address. Currently, local authorities in England are able to use their compulsory purchase powers for development, redevelopment and improvement purposes.

Clause 140 will ensure that local authorities have the certainty to acquire land compulsorily for regeneration schemes too. That will align them with other public authorities such as Homes England and the Greater London Authority. That could, among other things, improve the social wellbeing of a local authority’s area, while not actually involving the construction or reconstruction of a building. For instance, this regeneration compulsory purchase order power could be used to transform a vacant commercial building into a community hub. Alongside this change, we will bring forward updated guidance to provide more clarity on the use of compulsory purchase for long-term strategic land assembly by local authorities.

On clause 141, we need to ensure that the CPO process is efficient yet accessible and fair for all involved in it. The clause retains the current requirements for the physical deposit of documents and service of notice. It remains the case that sufficient proof of delivery through electronic communications is difficult. Given the nature of compulsory purchase, it is crucial that affected parties receive—and can prove that they have received—the necessary communications. The clause also requires acquiring authorities to make CPO documents and notices available online, and it creates the flexibility for Ministers to direct, in extreme circumstances where the physical deposit of documents is impractical, that online provision is sufficient. Further provisions in clause 148 provide for the application of common standards to compulsory purchase data. As I have described, these amendments begin the modernisation of the CPO process, and I commend clause 141 to the Committee.

Clause 142 will create a faster, more effective confirmation process. At present, a single affected landowner can demand an expensive and lengthy public inquiry for any CPO. This can be used as a delaying tactic, slowing down the decision-making process and increasing the costs for the acquiring authority and others involved. As we know, cost for the authority means cost for the taxpayer. In turn, this can make acquiring authorities, such as local authorities, less inclined to use CPO powers. We believe that the confirmation procedure should reflect the complexity of the order. Many CPOs involve one or a very small number of properties, with little impact outside the boundaries of those properties. Confirmation proceedings for orders like these do not generally need a public inquiry.

We also believe that it is right to give the discretion to the confirming authority to determine the appropriate procedure based on the circumstances, while protecting the right for affected parties to have an oral hearing if they wish. In keeping with those ambitions, clause 142 enables confirming authorities to decide to hold a public local inquiry, or to follow the new representations procedure, which will include an oral hearing if objectors request one. We will engage with stakeholders in shaping the representations procedure to ensure it works practically and produces a faster and more efficient process.

On clause 143, we want to ensure that authorities have the confidence to achieve positive outcomes in making CPOs. Too often when there is a decision to confirm a CPO, the CPO is rejected because of a specific impediment at the point of decision, and that often results in significant delay or even the complete collapse of the scheme. We want authorities to know that where a specific impediment, such as funding uncertainty, remains outstanding at the point of decision, a condition can be imposed for that to be dealt with and discharged at a later point.

Clause 143 achieves that end by introducing the concept of conditional confirmation, which will allow decision makers to confirm CPOs subject to the conditions being met before the compulsory purchase powers may be used. That may assist progress-stalled developments, as conditions could be imposed to force a landowner to follow through on commitments to undertake developments, and if they fail to do that, that will allow a CPO to become operative.

We also want authorities to make their CPOs earlier in the delivery process of a scheme. That will encourage authorities to make their CPOs concurrently with seeking other consents, rather than sequentially after obtaining other consents. Introducing conditional confirmation will support that aim.

To reassure hon. Members, that does not mean that insufficiently prepared CPOs or CPOs without sufficient justification will be conditionally confirmed. The test of there being a compelling case in the public interest to confirm the CPO will absolutely remain. We expect only very specific conditions to be imposed in most cases—one or possibly two to a CPO that otherwise shows a compelling case in the public interest. Guidance will be updated to provide clarity on the imposition of conditions. Initial confirmations will be a significant lever to provide authorities with more confidence in using CPOs and to deliver schemes more quickly.

Clause 144 gives effect to schedule 14, which makes provision in relation to compulsory purchases by Ministers, corresponding to clauses 141 to 143. Given that Ministers may use compulsory purchase in a number of circumstances —for example, to deliver major highway or rail schemes—it is only right that those provisions benefit from improvements to the process. I hope I can get the support of all hon. Members for the clauses.

[Matthew Pennycook]

The Minister referred to at least two further sets of guidance that are to follow. Can she give the Committee any sense of the timeline for that?

[Dehenna Davison]

I cannot today, but I will endeavour to write to the hon. Gentleman within the next 48 hours to provide that clarity.

Question put and agreed to.

Clause 140 accordingly ordered to stand part of the Bill.

Clauses 141 to 144 ordered to stand part of the Bill.

Schedule 14 agreed to.

Clause 145

Consequential amendments relating to date of operation

Question proposed, That the clause stand part of the Bill.

[The Chair]

With this it will be convenient to discuss the following:

Clauses 146 to 149 stand part.

Government new clause 62—Prospects of planning permission for alternative development.

[Dehenna Davison]

I sincerely hope that we can get agreement for these clauses. New clause 62 goes further to deliver the Government’s priority to ensure that the compulsory purchase system is fit for purpose. It will build on other measures to ensure a fair balance between landowners and acquiring authorities in the public interest when it comes to the payment of compensation.

The Land Compensation Act 1961 contains the principal rules for assessing compensation relating to compulsory purchase. Under the current rules, when assessing the open market value of the land to be acquired, there are statutory assumptions that must be taken into account. They include the discounting effects of the compulsory purchase scheme, known as the no scheme principle, and considering the planning prospects of the land being acquired. The latter gives rise to landowners being able to claim hope value as part of their compensation—an issue that has attracted significant attention in recent years, including from the Levelling Up, Housing and Communities Committee.

One method of assessing the prospect of planning consent is to establish appropriate alternative development, namely development that would have received planning permission if the scheme underpinning the compulsory purchase were cancelled. Where appropriate alternative development is established, it may be assumed for valuation purposes that planning permission is in force on the relevant valuation date. That is known as planning certainty. Assuming the value of the appropriate alternative development is greater than the existing use value creates an uplift in the value of the land.

The 1961 Act allows parties concerned with a compulsory purchase to apply to a local planning authority for a certificate to determine whether there is development that, in its opinion, would constitute appropriate alternative development. Certificates of appropriate alternative development, CAADs, are used as a tool to establish whether there is appropriate alternative development on a site, and thus planning certainty for valuation purposes.

Under the current rules, there is no requirement for a CAAD to be applied to establish planning certainty and secure any resulting uplift in the value of land. In addition, when issuing a certificate, local planning authorities are required to identify all developments that they think are appropriate developments, not just developments that match the description of the development being applied for. That can increase the administrative burden on a local planning authority’s resources and the risk of a legal challenge, which results in further costs to the authority and the taxpayer. Expenses incurred by applicants submitting their CAAD applications must be paid for by acquiring authorities.

My Department has been working closely with stakeholders to develop a package of measures to reform the CAAD process and ensure that the assessment of the prospect of planning permission is aligned with normal market conditions. It is important that a balance is struck between landowners and acquiring authorities. We are therefore seeking to introduce Government new clause 62 to ensure that the compulsory purchase compensation regime does not deliver elevated levels of compensation for prospective planning permissions, which would result in more than fair value being paid. That will be achieved by ensuring that compensation attributed to alternative development is claimable only via the issuing of a CAAD and, further, that value attributable to potential alternative development in the future cannot be claimed. Although the prospect of planning permission will still be claimable, our new clause will bring the assessment of value attributable to prospective planning permission in line with the position in a normal market transaction. It will also ensure that valuations of hope value are not disproportionate.

We are very clear that those affected by compulsory purchase are entitled to a fair value for their land, but we want to ensure that the compulsory purchase compensation regime does not lead to elevated compensation, including costs being paid for prospective planning permission, which would result in more than fair value being paid by local authorities, and thus by the taxpayer. I hope that the whole Committee will support Government new clause 62.

[Matthew Pennycook]

I thank the Minister for that very detailed exposition of the purpose of the new clause. She will be pleased to learn that, in general terms, we are supportive of the provisions in part 7 of the Bill, which concerns compulsory purchase. They are sensible and proportionate measures that will give local authorities clearer, more efficient and more effective powers; greater confidence that they can acquire land by compulsion to support regeneration schemes; and greater certainty that land can be assembled and schemes delivered quickly through compulsory purchase.

We also support the Government new clause, which concerns compensation in relation to hope value. The cost of land is a major barrier—only one of many—to development across the country, and to increasing investment in infrastructure and affordable housing. As the Minister made clear, land values are frequently inflated well above agricultural or industrial values because of hope value—that is, the value attributed to the expectation that land could be awarded planning permission for new housing.

Hope value often makes social housebuilding and the provision of infrastructure unviable for local authorities and developers, and the fact that it is based on the assumption that each plot of land will maximise short-term profitability disincentivises long-term value generation. A landowner with a plot of land that might be ideal for specialist or affordable housing, or other essential uses that the market has no incentive whatsoever to deliver, can under the current regime always choose to refrain from developing it, in the expectation that they will receive a far better price in the future for a standard scheme dominated by market-sale homes at current prices.

The 2020 White Paper, “Planning for the Future”, rightly recognised that less than half of the uplift in land values created by the granting of planning permission is being captured by communities to help to pay for infrastructure and affordable housing. Given the demands on captured value when it comes to infrastructure and affordable housing, we agree with the Government that it is right to seek to reform the system, in order to ensure that assessment of value attributable to the likelihood of alternative development is more akin to what it would be in normal market conditions, and to rebalance the position with regard to costs and compensation between landowner and acquiring authority to make it fairer. To that end, we believe that the Government new clause, which proposes implementing a range of changes to section 14 and other sections of the Land Compensation Act 1961, as set out in the first part of the Government’s compulsory purchase compensation reforms consultation, published in June, is good. We are pleased that the Government felt able to bring it forward.

--- Later in debate ---

[Tim Farron]

Obviously, I extend big congratulations to the Government for taking up a proposal that was in the last two Liberal Democrat manifestos—it was one of the few bits I actually wrote. A revision of the Land Compensation Act 1961 is welcome, given that it inflates land prices, and therefore housing prices. That was clearly not the intention 60 years ago, but that has been the consequence. A revision is a very good thing.

As the hon. Member for Greenwich and Woolwich said, we need to consider this revision as part of a suite of measures, and I am keen to press the Minister to take advice and consult widely; there will no doubt be pushback and comments from landowners and developers. I particularly urge her to talk to housing associations, and to organisations such as Shelter, which has campaigned on this issue for decades with great wisdom and insight.

When hope value drives up the price of land, it does two things. First, it makes affordable housing more difficult to create. I have tabled amendments to the Bill that seek to increase local authorities’ powers to deliver affordable housing. That is much more likely to happen if we can make sure that those developments are viable by reducing the cost of land, making its cost fair, rather than inflated. The Government have pushed back on zero-carbon homes because of the cost element, but they may wish to reconsider that. I propose that they do so, and make zero-carbon homes and other environmental measures compulsory at the planning stage. They will be able to afford to do that, and those proposals are much more likely to be viable, if we can reduce the inflated cost of land.

The hope value of land is such a problem because it also stops land coming forward for development. People hang on to it for the sunny day. We need to very clear that there ain’t no sunny day coming, and to say, “This is what you’re going to get for this land. Do you want to help your community by building 40 affordable homes for it, or don’t you?” In the past, we had very restrictive planning rules in the national parks; the thinking was that the more restrictive and clear we were to people in the long term, the more unlikely it was that land would come forward. It is quite the opposite, because people do not hang on waiting for that sunny day—for that big moment at which extreme wealth lands in their lap. Instead, they realise that they will either get some money and do good by the local community, or get nothing.

I welcome the Government’s action, which I think is a valuable and important step forward, but I hope that they will consult widely, especially with those at the forefront of fighting for and developing affordable housing, as they consider perhaps a wider suite of issues to reduce the cost of building.

[Dehenna Davison]

I thank the hon. Member for Westmorland and Lonsdale for his comments. I loved his point about the Lib Dem manifesto; I would love to claim that it is my favourite bedtime reading, but I would not want to mislead the Committee this early in my ministerial career. I thank him for his recommendations about the bodies with which we should engage. We have already engaged with a wide range of stakeholders to ensure that we get the process absolutely right. I thank him also for his passion for affordable housing, which the Government absolutely share. We are keen to make the developments as straightforward as possible—hence some of the reforms that we are making today.

I will write to the shadow Minister, the hon. Member for Greenwich and Woolwich, with more points of clarity. On certainty, I assure him that that is absolutely the intention behind the new clause and the amendments that relate to CAADs. We want to provide certainty to landowners and local authorities about what the outcomes of the process may look like in order to speed up the process and prevent challenges and delay. I hope that reassures him. I will get back to him in due course on the other points he raised.

Question put and agreed to.

Clause 145 accordingly ordered to stand part of the Bill.

Clauses 146 to 149 ordered to stand part of the Bill.

Clause 150

Designated high streets and town centres

[Alex Norris (Nottingham North) (Lab/Co-op)]

I beg to move amendment 185, in clause 150, page 171, line 4, at end insert—

“(2A) Designations under subsections (1) and (2) can only be made following consultation with the local community.”

This amendment would require designation of a high street or town centre to be consulted upon.

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To make amendments 185 and 186 make sense, amendment 195 defines who is considered local in this regard. It is a light provision: we specify “people in the vicinity” because we know who will be interested in these designations and who will not be. The risk of spurious outside efforts is very low, but the amendment adds protection from them. This is an important point; it is about demonstrating that levelling up is not something that is done to communities, whether by Whitehall or the town hall, but something that is done with them. As part of that, there need to be protections and powers for our communities, and our amendments are a very good way of ensuring that those exist.

[Dehenna Davison]

I thank the shadow Minister for his contribution and for his passion about levelling up, which is right at the heart of this Government—if I did not believe that, I could not in good conscience have taken on the job of levelling-up Minister, given that levelling up is so important to me, who I am and what I stand for.

I am particularly grateful to the shadow Minister for his passion regarding high streets, which are the heart of our communities. We need to do all we can to ensure that local authorities and local communities have the tools that they need to deliver and see their high streets thrive. I also thank him for his constructive approach to our policy regarding high street rental auctions, and I hope that we can have some good debates today to make that policy the best it can be, in order to deliver for local areas. He mentioned meeting CAMRA. I am always pleased to meet representatives of CAMRA—they tend to choose the best venues for meetings—so I will definitely take him up on that offer.

Turning to the shadow Minister’s amendments, amendments 185 and 186 relate to the designation of high streets and town centres for the purposes of high street rental auctions. Amendment 185 would require local authorities to consult the local community before the designation can be made. That is linked to amendment 186, which would allow the local community to apply for a street or area to be designated as a town centre or high street.

While I appreciate the genuine concerns behind the amendments, I do not think they are needed. Local authorities are uniquely placed to make that designation, based on their deep knowledge of their own area. Given that high street rental auctions are an additional tool to enable authorities to take control of regenerating their areas, we have to empower them to do so. As such, the Bill will empower local authorities to use high street rental auctions based on the definitions of “high street” and “town centre” set out in clause 150, which require the local authority to take into account the importance of a street or town centre to the local economy. The designation may also be informed by places defined as high streets or town centres in that authority’s local plan, where one exists. We therefore consider that amendments 185 and 186 add an unnecessary extra layer of complexity to the designation process and a further burden on local authorities, which we are concerned may hinder take-up.

Amendment 195 would define the term “local community” as a result of the proposed addition of amendments 185 and 186 to the Bill, which relate to the designation of high streets and town centres for the purposes of high street rental auctions. As I have explained, we do not think those amendments are necessary. I hope I have provided sufficient reassurance that consideration of the needs of the local community will be built into the high street rental auction process, and I ask the hon. Member for Nottingham North to withdraw the amendment.

[Alex Norris]

I am grateful to the Minister for her response. I am pleased to hear that the commitment to levelling up remains at the heart of the Government’s programme, but may I gently say that that remains to be seen? I am conscious that the Bill is obviously from a couple of Secretaries of State ago. Having seen briefing that a lot of what the right hon. Member for Surrey Heath (Michael Gove) did is now considered socialism, I must say that that is not a socialism I would recognise. The Government may need to re-earn that space and show that this really is a priority, and of course we will make significant efforts in this area.

I am slightly disappointed that the Minister is not minded to take up these proposals, particularly amendment 186. What we are actually talking about is community power, which is a crucial part of levelling up; it is absent from the Bill, and the Minister now has a chance to correct that error. There is an expectation during the levelling-up process that we will see a shift of power from Whitehall to town hall, and from Whitehall to communities. If what communities get out of levelling up instead is a shift of power from Whitehall to regional and sub-regional bodies, the Government will not have passed that test. The challenge here is to add that bit that says yes to town hall, but actually goes even further, to our local communities, and the community power we propose would have been the way to do it. I will not push the amendments to a Division, because we will cover community power in later proceedings, but I hope the Minister might reflect a little in the meantime on the points I have made.

I will conclude by saying that, whatever side of the Chamber colleagues are on, and whoever is sitting in our seats in three, four, five or maybe 10 years—I talked about the Localism Act with an 11-year perspective, and they might be here in 11 years—they will say that high street rental auctions are effective in some parts of the country but not in others. The reason will be that we have not given the public strong enough tools to involve themselves where their local authority does not involve them. I hope the Minister will reflect on that, but I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

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[Dehenna Davison]

I am grateful to both hon. Members for sharing their thoughts, and particularly to the hon. Member for York Central—I have had a number of fantastic trips to York, and it is a brilliant place to go. I have never actually been to Spark, so that is definitely on my radar. I thank the hon. Member for mentioning it.

On the point about warehouses being excluded, this is largely because it is incredibly rare that warehouses are in the area that is determined as the high street. That is why we have excluded them in this way. I am certainly happy to sit down and have a conversation about it, if that would be helpful.

Question put and agreed to.

Clause 150 accordingly ordered to stand part of the Bill.

Clause 151 ordered to stand part of the Bill.

Clause 152

Vacancy condition

[Alex Norris]

I beg to move amendment 187, in clause 152, page 172, line 21, leave out subsections (5) and (6).

This amendment would remove the Henry VIII power for the Secretary of State to alter the circumstances of vacancy.

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I understand that there are times when things are not foreseeable; my hon. Friend the Member for Greenwich and Woolwich still has the scars from the exit from EU legislation. This is not one of those times. I do not think the Government have got this right. I hope that the Minister will reflect on that, and will take the provisions out, so that we can proceed more clearly.

[Dehenna Davison]

Once again, I thank the shadow Minister for his incredibly constructive approach. I certainly hope to be in post long enough to see the Levelling-up and Regeneration Bill make it on to the statute books. Watch this space, but that is certainly my plan. I am grateful to the hon. Member for the points that he raised. As we have discussed, high street rental auctions are a new concept and power for local authorities. The amendments focus on the powers to amend elements of the process for introducing high street rental auctions. We believe that those powers provide much-needed flexibility to ensure that auctions deliver the intended policy outcome of regenerating our high streets and town centres.

Clause 152 sets out the criteria for the vacancy condition, which must be met before local authorities can consider premises for a high street rental auction. For the vacancy condition to be satisfied, as the hon. Member for Nottingham North has highlighted, the property must be unoccupied on that day, and have either been unoccupied for the last year, or for a total of 366 days in the last two years. That provision aims to ensure that only reasonably long-term vacant properties are subjected to high street rental auctions, and to set out where use of premises will not count as occupation when assessing the vacancy condition.

The vacancy condition will have an important bearing on how widely used the measure is, and on the frequency with which the power can be used by local authorities. As it is a new power, the vacancy condition may need to be changed in future. The experience of implementing high street rental auctions may lead us to want to alter the period, so that we can ensure that the measure targets the right premises. For example, there may be evidence that a longer or shorter period should be afforded prior to implementation. Amendment 187 would remove that power and flexibility. The Government accept that changing the vacancy condition would be a significant change. That is why any regulations to amend the vacancy condition will be subject to the affirmative procedure, which means that they will come into effect only if approved by Parliament.

Amendment 192 would remove the flexibility in clause 160 to allow for the addition, amendment or removal of grounds of appeal against a final letting notice set out in schedule 15. A final letting notice informs the landlord of a local authority’s intent to proceed to auction, and must be enforced for an auction to be carried out. I recognise that we may need to amend those grounds of appeal in the future in the light of experience in operating the new power. For instance, we may find a need to increase the safeguards available to landlords, or to revise the grounds of appeal where they are found to undermine the effectiveness of the measures and overall policy objective.

As we have discussed, we appreciate the significance of the change, and the importance of parliamentary scrutiny of the grounds of appeal. To reiterate, any change will be subject to the affirmative procedure, and the approval of Parliament, before coming into force. I hope that has provided reassurance, and I urge the hon. Member for Nottingham North not to press amendment 187 to a Division.

[Alex Norris]

I am grateful to the Minister for that answer, and I am glad that she accepts that these would be significant changes to make by regulation. I am glad of the confirmation regarding the affirmative procedure.

I am not sure that I can accept the argument of flexibility. I understand that we are talking about novel powers, and that we may learn by experience what does and does not work. However, I cannot believe that there would not be appropriate legislative vehicles, either in a local government, property or business space, that would give the Government the opportunity to alter the provision, rather than their doing things in the way that they propose, which I think is a cop-out and backing into the tackle, so I will press amendment 187 to a Division.

Question put, That the amendment be made.

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[Alex Norris]

Very briefly, I have a similar question to the one I asked during discussion of clause 151, which was not quite addressed. Clause 153 reads as follows:

“the ‘local benefit condition’ is satisfied in relation to premises if the local authority considers that the occupation of the premises for a suitable high-street use would be beneficial to the local economy, society or environment.”

Again, whether the condition is met is sort of in the eye of the beholder. Presumably, that provision means that the whole process could be waylaid at the stroke of a pen if the local authority was so minded. To reiterate the question from clause 151, what protection is there if the power is not used appropriately?

[Dehenna Davison]

My apologies for not getting to that point. I will write to the hon. Gentleman with some assurances in due course.

Question put and agreed to.

Clause 153 accordingly ordered to stand part of the Bill.

Clause 154

Initial notice

[Alex Norris]

I beg to move amendment 189, in clause 154, page 173, line 5, leave out “ten weeks” and insert “28 days”.

This amendment would reduce the period after which an initial letting notice would expire to 28 days.

With clause 154, we are getting deeper into the detail of how the process is likely to work. It is right that it should be a tight process. Ultimately, we are talking about private assets, and it is important that the state does not act in an overbearing way; we must establish a balance between private and public interests. At the moment, the balance tilts entirely towards landlords, which leaves long-running vacant and derelict premises blighting our communities. This part of the Bill is about finding the balance, but it must be a fair balance.

That process starts with clause 154 and the initial notice. When a local authority identifies a premise that satisfies the condition of having been on a high street or in a town centre, and satisfies the vacancy condition, it can initiate a high street rental auction, which it does by serving an initial notice that basically tells the landlord to use the premise or an auction will take place.

Clause 154 sets out that an initial letting notice will be in force for 10 weeks, and that a final letting notice can be served only while the initial notice is in force; we will cover that shortly. In essence, I suspect that this 10-week period will act as a de facto time limit—a period during which the landlord must find tenants; otherwise, the local authority can move the process on. This is a point of taste, but our view is that 10 weeks is too long. If we add the 14 weeks of the final notice period, which we will get to shortly, that makes a 24-week process. Of course, the premises will have already been vacant for at least a year, or 366 days in the preceding two years. That is a long time on top.

We want the Bill to deliver swift action to bring about the change that people want in their communities; we do not want a long process. The amendment seeks to rectify that by specifying a shorter notice period of 28 days. We think four weeks is more agreeable than 10 weeks. Given how long the landlord will have had already, four weeks is ample time for them to understand what will happen, and to act promptly if they wish. Certainly once these powers are on the statute book, such a notice should not come as a surprise, especially as it will have been preceded by a long period of vacancy. It is the right amount of time to encourage landlords to find new tenants promptly as a last opportunity before the process starts. That speed strikes the fine balance between private and public interest.

[Dehenna Davison]

I thank the shadow Minister for his contribution. The Government are keen to get the process right, and to make it as speedy as possible. There is no one more keen than I to fill the vacant properties on our high street. He talked about getting the balance right between private and public interest, and we had that in mind when drawing up the legislation. As he outlined, the amendment seeks to reduce the initial letting notice period from 10 weeks to 28 days. It is set at 10 weeks to provide the landlord with a reasonable amount of time to work with the local authority to let the premises. If the landlord fails to let the property within eight weeks, the local authority will then have two weeks to serve a final letting notice. Reducing the initial letting notice period to 28 days increases the risk of a number of high street properties going through the auction process unnecessarily, as landlords will have significantly less time to find a new tenant once an initial letting notice is served. The point is that we want to get properties filled; that is the intention.

We do not think 28 days is a reasonable period for landlords to find a tenant and complete a letting once an initial notice is served. There is also a desire to allow local authorities to work with landlords where possible to find a tenant, and the additional time allows for that. I appreciate the desire from all of us to get vacant premises filled, but we need to strike the right balance, so that we can find sustainable tenants to drive up economic growth. I gently ask that the amendment be withdrawn.

[Alex Norris]

I am grateful for the Minister’s explanation of the Government’s thoughts. Again, as a point of taste, I think that four weeks would be reasonable because of the preceding period of time. I also expect that local authorities—who are very canny in these processes—will be engaging informally. There will be a whole informal discussion before we get anywhere near this process about what might happen if the premises are not used. I would hope that would salve some of the Minister’s concerns.

I am also not 100% convinced that the amendment would cause lots of properties to unnecessarily go through the auction process. If properties have had a year of vacancy, or 366 days of vacancies in two years, I find it difficult to agree with the idea of them just being sat there waiting to be rented out, and landlords having not quite got round to it. Nevertheless, this is a point of taste, and I do not intend to press the amendment to a Division. We will perhaps unpack the issue more when we get to the final notice element. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 154 ordered to stand part of the Bill.

Ordered, That further consideration be now adjourned. —(Nigel Huddleston.)