Housing and Planning Bill

Lord Beecham Excerpts

Wednesday 23rd March 2016 Lords Chamber

[Lord Beecham (Lab)]

My Lords, Amendment 103BB deals with a minor but to some people significant point, which is the compensation to be payable when land is acquired by a development corporation. The amendment simply provides that the Secretary of State may by order set out a formula for determining fair compensation to the landowner in those circumstances. That seems a reasonable proposition.

[Viscount Younger of Leckie (Con)]

My Lords, I turn to the detail of the compensation amendments, Amendments 102CK and 103BB, tabled by the noble Lord, Lord Cameron, and the noble Earl, Lord Lytton, but spoken to today by the noble Duke, the Duke of Somerset.

I will outline briefly the principles of compensation for land taken by compulsion. These points have arisen in an earlier amendment in Committee. The compensation code is underpinned by the principle of equivalence. This means that the owner should be paid neither less nor more than his loss. The code provides that land shall be purchased at its open-market value, disregarding the effect of the scheme underlying the compulsory purchase.

The land is valued in a construct called the no-scheme world, whereby any increase or decrease in value that is due to the scheme is disregarded. Land will always have its existing-use value but market value also takes into account the effect of any planning permissions that have already been granted and of the prospect of future planning permissions. This is generally known as hope value, as the noble Duke eloquently pointed out. In the context of compensation for compulsory purchase, this is assessed according to the planning assumptions in the Land Compensation Act 1961, which require the valuer to assume that the scheme underlying the acquisition is cancelled. I remind the House that these were extensively revised and debated in the Localism Act 2011.

In some situations, there will be no hope value, because the individual claimant could not have obtained planning permission for some more valuable use. For instance, the land might be in an isolated rural location where permission for development would have been unlikely to be granted in the absence of a comprehensive scheme requiring compulsory purchase powers. In other situations, perhaps where land is acquired near an existing settlement, there will be pre-existing prospects for development on the land. In lay man’s language, that is development potential that existed prior to the scheme. The strength of those prospects will be reflected in the market value of the land.

On Amendment 102CK, it has been said that land acquired for housing by means of a development consent order should always attract development value. If the land had development potential in the absence of the scheme underlying the development consent order, that hope value would be reflected in the market value and the compensation to be paid. But an increase in the value of the land that is solely attributable to the scheme would be disregarded under the compensation code.

I turn to Amendment 103BB. The noble Lord, Lord Beecham, and the noble Baroness, Lady Andrews, have suggested that there is something unique about the land taken for new towns that requires the Secretary of State to provide a formula for compensation. New towns may well fall into the class of case 1 mentioned earlier, where there is no pre-existing hope value, as there is no reasonable prospect of development in the absence of a comprehensive scheme requiring compulsory purchase powers. In this situation, compensation in the no-scheme world is likely to be at or close to agricultural values. Schedule 1 to the Land Compensation Act 1961 makes it very clear that for new towns any increase in value that is attributable to the development of other land in the new town must be disregarded, where that development would not have been likely to be carried out had the area not been designated as a new town.

I thank the noble Earl, Lord Lytton, for the amendments spoken to by the noble Duke, the Duke of Somerset. I suspect that your Lordships will not be very keen to be further enlightened this afternoon by a technical debate on these particular matters. However, we shall look carefully at what the noble Duke said, and I shall write further to him and the noble Earl before Report about these matters.

--- Later in debate ---

I do not think that this has been thought out properly. There are lots of amendments in this group and I shall not go through them now. The Minister will have answers to them all; I will listen to the answers carefully and I may bring up later any with which I am not satisfied when I reply to the debate on this group. This seems to us to be a scheme which has been dreamed up on the back of the traditional fag packet, or whatever people use nowadays, and dumped on the Commons at the last minute. The best thing this House could do is send it back to the Government and say, “You might have a case, you might not have a case, but go away and bring it back when you have thought it out properly”. I beg to move.

[Lord Beecham]

My Lords, I respectfully adopt most of the arguments advanced by the noble Lord in his critique of this very unsatisfactory set of clauses. After the triumphant successes achieved with the privatisation of services such as prisons, probation, aspects of the NHS, electronic tagging, work capability assessment, residential care and so much more, we are now asked to endorse the involvement of the usual suspects—G4S, Serco, Capita, Sodexo et al—all in the name of efficiency in the planning process.

Many councils have found outsourcing to be expensive in terms of both cost and quality, but government dogma dictates that the process must continue, beginning in the planning field with what the technical consultation, to which the noble Lord has just referred, published last month, describes as:

“Testing competition in the processing of planning applications”.

But this is more than just a matter of councils being at first able—and, no doubt, eventually required—to outsource the work. It allows the applicant to choose who will do the work. The notion of a potential conflict of interest does not seem to have entered ministerial heads—or, if it did, it has been ignored.

As the Town and Country Planning Association has pointed out, this is not necessarily to be confined to a limited number of pilot projects or developments. Once again, secondary legislation may be employed, this time to extend the process to any form of development. The TCPA found no evidence of any prior consultation on these proposals. Can the Minister say whence this policy was derived, who was consulted before it was enshrined in the Bill and, in particular, whether any potential external providers were consulted or offered views before these clauses were drafted?

--- Later in debate ---

[Baroness Evans of Bowes Park]

I will come back to that in a second but, as I say, we will be publishing the response by the end of today. We therefore believe that Amendment 102CLA, tabled by the noble Lord, Lord Greaves, is premature.

I thank the noble Lord for Amendments 102CL and 102DB about consent. An effective test of competition is likely to be achieved with a set of pilots which reflect the different types, sizes and geographic locations of local authorities. To answer the question of the noble Lord, Lord Foster, there will be a number of pilots, not just one. Local authorities have consistently told us that a fair test of competition must include weaker authorities at the lower end of the performance spectrum—pilots cannot just include top-performing, progressive authorities. However, they are concerned that weaker authorities are unlikely to volunteer to be in pilot areas. Therefore, we need powers which give us the necessary flexibility to select an appropriate mix of pilot areas and to be able to respond to the sector’s concern if necessary.

I do not see how compelling a local authority to be a designated provider would work in practice. How would we actually force a local authority, against its will, to compete for work in another patch and to do that work to a high standard? We do not therefore intend to compel any local planning authority to be a designated provider.

I turn now to Amendment 102D. We have been very clear that during any competition pilots we bring forward under Clause 145, the responsibility to determine planning applications will remain with the local planning authority in the pilot area. I will put this as clearly as I can: only the local authority can decide on an application. Clause 145 will give the Secretary of State the power, by regulations, to introduce pilot schemes for competition in the processing of applications for planning permission. Subsection (1) allows the regulations to make provision for a planning application to be “processed” by a “designated person”, and subsection (6) says that “processing” the application means any action “other than determining it”.

Amendments 102CM, 102DA, 102FA and 102FB, tabled by the noble Lord, Lord Greaves, would remove intended safeguards. For example, Clause 145(3), which would be removed by Amendment 102CM, leaves room for the Government to exclude from the pilots certain types of application where local government and others can make a compelling case that they are so significant or sensitive that they should continue to be handled by the relevant local planning authority. Clause 146(1)(a), which would be removed by Amendment 102FA, enables us to specify circumstances where it is inappropriate for a designated person to process an application, for instance because of a conflict of interest. The removal of text that would result from Amendment 102FB would leave us unable to specify the circumstances in which a planning authority should take over an application from a designated person. They could either potentially take them all over without limit, or none, and we believe removing the safeguard is impractical and unworkable.

Amendment 102DAA was tabled by the noble Lords, Lord Kennedy and Lord Beecham. Enabling the private sector to compete with local planning authorities is likely to drive greater reform than if we leave things solely to authorities, as the noble Lords would wish. We are proposing pilots to test the benefits of introducing competition in planning application processing.

[Lord Beecham]

I think the Minister has overlooked the fact that the amendment also refers to “public bodies” being able to take over the role, not just local authorities.

[Baroness Evans of Bowes Park]

My apologies. However, my argument stands. We want to encourage the private sector to be involved as well, but I apologise for that misreading of the noble Lord’s amendment.

Amendment 102EA would extend the definition of “planning application” to include permission in principle and technical details consent. I thank the noble Lord, Lord Greaves, for his amendment. We intend to give it some further thought.

We intend to design the pilot schemes collaboratively with local government, professional bodies and the private sector. We are already consulting on how they might operate. Furthermore, an extensive dialogue with key partners is under way and in the last six weeks we have met with more than 80 local authorities through a range of events. The noble Lord, Lord Greaves, raised a number of technical points. Obviously, these are issues that will be addressed through the pilot schemes.

The noble Lord, Lord Foster, asked about the draft regulations. As I hope I made clear, we are engaging extensively with the sector and consultations are currently out for consideration. As I said, we have already spoken to more than 80 local authorities. I would be happy to write to him to provide an initial summary of the issues raised so far during our engagement with the sector.