Growth and Infrastructure Bill

Lord Best Excerpts

Wednesday 27th February 2013 Lords Chamber

[Baroness Whitaker]

My Lords, I agree with my noble friend Lord McKenzie’s inference from the responses to the consultation and welcome the direction of travel of the Minister’s amendment, but I shall argue for more specificity in the Bill. I speak to Amendment 10 in my name and that of the noble Earl, Lord Lytton, who regrets that he cannot be here today. What I shall say has been drawn up with him, and I am grateful for his expert support and that of the Town and Country Planning Association. Perhaps I should also declare that I am an honorary fellow of the Royal Institute of British Architects.

Our amendment is tabled because of a gap in the concept of designation. Of all the evidence of poor performance by a planning authority, the one that has a particularly adverse effect on quality of life, as well as the local economy, is bad design, coupled with lack of sustainability, but that is not specified in the Bill. That power is open to wide discretion, whereas, at the other extreme, the consultation’s proposals for failing authorities are pretty mechanistic and relate to speed and appeal decisions—not tests of quality but, rather, tick-box exercises to check compliance. The impact of designation on local democracy is very powerful, and speed and compliance with the NPPF with regard to appeal decisions should not, I submit, be enough to prompt a designation decision. That should be taken in the round and take full account of the quality of outcomes. That is particularly important because the broad principles in the NPPF are themselves open to quite a degree of interpretation.

The two extremes of a vague, wide power in the Bill and narrow, mechanistic tests for failure omit the real point of good planning—to approve development that is durable and practical, acceptable to residents and capable of improving their total environment as well as, in the long term, saving public money. That cannot be done without an informed approach to design; but design capacity is still very patchy among planning authorities, and many succumb to the will or blandishments of developers who may well not have the long-term interest of the local community at heart.

Therefore, the amendment makes it necessary for the Secretary of State to consider what the authority has done by way of contributing to sustainable development and good design, which complements existing duties in planning legislation rather than enabling them to be overridden. He has also to consider, in addition, what the local views are so that, for instance, if a neighbourhood has developed design criteria but cannot get the planning authority either to accept them or to draw up its own, it is not short changed by the process. Finally, he must consider what any wider public interest might be. That latter obligation enables discretion to be used when necessary, so that it is not a matter of a fixed threshold being triggered. Finally, the Secretary of State must publish his or her reasons for designating according to the criteria in the amendment, which element of transparency I hope that the noble Baroness will also support.

In conclusion, the amendment would go a long way to protect residents from the kind of system failure in design and sustainability which poor planning authorities all too often let themselves in for. In that way, growth and infrastructure really could work properly. I commend the amendment.

[Lord Best]

My Lords, I speak in support of Amendment 10 in the names of the noble Baroness, Lady Whitaker, and the noble Earl, Lord Lytton. As this is my first intervention on Report, I note my relevant interests as president of the Local Government Association, chair of Hanover Housing Association and, in the context of the amendment, which concerns good design, vice-president of the Town and Country Planning Association and honorary fellow of the Royal Institute of British Architects.

In support of the intention behind this amendment, I would like to quote from an excellent speech delivered by the Minister for Planning, Nick Boles, to the Town and Country Planning Association shortly before Christmas. He said:

“People look at the new housing estates that have been bolted on to their towns and villages in recent decades and observe that few of them are beautiful. Indeed, not to put too fine a point on it, many of them are pig ugly”.

He went on:

“Since new housing estates are all too often soulless and formulaic ... existing residents oppose any proposal to build new houses on green field sites, even when the land is of low environment quality”.

He continued:

“In a nutshell, because we don't build beautifully, people don't let us build much. And because we don't built much we can't afford to build beautifully”.

He later said:

“It is now for the planners, architects and developers, large and small, to seize the opportunity we have created and start designing beautiful places, which local people will welcome”.

Poor design not only affects the lives of the people who occupy the new buildings, it also affects those who live in the same neighbourhood. Because so much new development has been, as Nick Boles says, “pig ugly”, the great British public regularly turn out to stymie and oppose the creation of the new homes that are so essential to ending acute housing shortages.

This amendment would strengthen the emphasis on good design, which should always be a hallmark of projects obtaining planning consent. It would, thereby, make it easier to gain the consent of local communities to the building of the new homes this country needs so badly. I strongly commend it.

[Lord Jenkin of Roding]

My Lords, I intervene very briefly to say that I very much welcome the amendments that my noble friend Lady Hanham has tabled to this clause. I have recognised from the beginning that it has been very controversial, not least among local authorities. I, too, declare an interest here as a vice-president of the Local Government Association. I have made it very clear to the association that I support the main thrust of Clause 1, but equally I recognise its desire to see the criteria dealt with more formally in the legislation. The indications that we have had from the Government in this context have been helpful, as has the Government’s amendment that it will be subject to regulations under the negative procedure, as my noble friend has indicated. These amendments are very welcome and take some of the sting, which local authorities have felt, out of the clause.

Local authorities need not be so worried about the remarks made by the noble Lord, Lord McKenzie of Luton, whose handling of this legislation I have always admired; he is extremely thorough. He quoted some of the figures from the summary of the consultation response, which I downloaded on my computer yesterday and read. The important thing to recognise is that, in the light of what I have just said about the general attitude of most local authorities towards this clause, it is hardly surprising that the response rate was not much more than 40 to 45%. One has to recognise that of the 227 replies received, 67% were from councils. A further 12% were from local government, professional or environmental organisations, and around 12% were from development interests or business groups. It was a pretty unbalanced response, but that is the nature of consultation; it is the people who feel strongly about such matters who respond. I am sure that those in the development industry look at the clause and say this is a step in the right direction. It is not surprising, given the figures quoted by the noble Lord, that there should have been what is, in a sense, a very heavily weighted response on the part of the local authority world. This does not in any way detract from the support I give to my noble friend for the amendments that she has tabled to this clause. I think that, with these amendments, the clause is a good deal more acceptable and I welcome it.

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[Lord McKenzie of Luton]

My Lords, the intent of the amendment would be to restrict the application of the provisions relating to modification or discharge of affordable housing requirements to those that were agreed prior to Royal Assent. That amendment was tabled by the noble Lord, Lord Best, in Committee, and I am delighted that he has added his name to it today. I should make it clear that this is not an attempt to usurp his role in this; nobody knows the issues better than the noble Lord, but I was not sure whether he would bring it back.

If these provisions concerning renegotiation of Section 106 agreements are not to be removed from the Bill, they must be constrained. We will come on to sunset clauses shortly, but we should note that the Government’s proposition is only one small step from where the Bill now stands. In Committee, we acknowledged the significant contribution that Section 106 agreements have made to this country’s need for affordable housing. We have noted that local authorities have existing powers to renegotiate Section 106 agreements and that many are using these. We remain sceptical about the need for these new powers. However, notwithstanding these concerns, on the basis of the Government’s own logic, there is no need for the rights in the Bill to carry on for ever. If the rationale for Clause 6 is that developers entered into Section 106 affordable housing obligations when economic times were better, is it the Government’s position that things will continue to get worse?

If the clause is to be brought to an end in three years, unless the Government are expecting a further downturn in this period, it should not stand in its current form. When we debated this in Committee, the Government argued that there was continuing uncertainty in the market. That may be the case, but presumably the Minister is not arguing for a risk-free platform for developers. Clause 6 was, we understand, supposed to address the substantial change in market circumstances fuelled by the global financial crisis of 2008. Applicants should not agree to Section 106 agreements that they consider will render their development unviable. The use of viability appraisals in negotiations is becoming increasingly common.

We have added our names to Amendment 28 which, as we have heard, would introduce a sunset clause bringing to an end the provisions relating to the modification of affordable housing obligations after three years. Given that very new affordable housing requirements are unlikely to be able to make successful applications, this would generally mean a practical cut-off point of obligations entered into by about 2014. So far as the Government’s version of a sunset clause is concerned, this does not move us much further than the Bill, which already gives the power to the Secretary of State by order to repeal Sections 106BA and 106BB of the Town and Country Planning Act 1990. The Government’s version of a sunset clause, while repealing those sections at the end of April 2016, also gives the power to the Secretary of State by order to substitute a later date. In effect, there is no clear end date to these provisions. Therefore, we will look to the Government to explain in detail, when they speak to these provisions, why the firm date of April 2016 is not sufficient. If we are not satisfied, we reserve the right to return to this matter at Third Reading. I beg to move.

[Lord Best]

My Lords, I have added my name to Amendment 22, which was prepared by the Local Government Association. I am grateful to the noble Lord, Lord McKenzie, for introducing this amendment and explaining its purpose and value. My overarching concern is that the intention of Clause 6, which is to see stalled development up and running swiftly, will not materialise without substantial changes to this clause. Indeed, the knowledge that central government may overrule legal agreements between local government and house builders may encourage exactly the wrong response from some elements in the housebuilding industry, and this measure could backfire.

The Clause 6 procedure offers relief for house builders where they have paid too much for a site and now wish to be excused from their obligations to provide affordable housing. Amendment 22 would mean that only agreements already made could be addressed by going down this Clause 6 route. The practice of developers speculatively outbidding others—including housing associations keen to buy a site and fulfil the affordable housing obligations on it—would not be perpetuated into the future. It would no longer be possible for developers to say, “Let us gamble on house prices rising, but if they do not do so, we can go to the Planning Inspectorate and secure a release from our Section 106 agreement”.

In my most charitable moments, I can feel some sympathy for the small builder who is unable to work on a swings-and-roundabouts basis of some highly profitable and some less profitable site purchases and who unwisely paid too much for a site at the height of the boom some four years ago. The bigger house builders are currently doing very well. Persimmon and Bovis have just reported huge increases in profits of more than 50% and more than 60% respectively. Some smaller developers, however, may have been caught out in 2008 or 2009, thinking house prices would rise inexorably when they have been pretty flat outside London and the hot spots. Nevertheless, surely we do not want to encourage continuing speculation on the basis that, from now on, the state will bail out those who bite off more than they can chew. Any developer entering into a Section 106 negotiation at the current time is clearly doing so with their eyes open to the economic realities of the day. These negotiations make use of viability appraisals and the signal must go out to house builders that they can no longer sign agreements in the expectation that they will not really be necessary to honour those agreements because central government’s planning inspectors will set aside their obligations if the developers can show that they will not make a profit of 20% or so.

This amendment draws a line under state intervention in these Section 106 agreements from the date that the Bill becomes an Act. I strongly support it. Alternative amendments for a sunset clause three years hence seem to miss the point. It is now that we want people to get busy and get started on sites that they own and are currently stalled. Every time a local agreement to produce more affordable housing is set aside, households on low incomes waiting for a home are forced to wait longer. We should ensure that this happens on only the rarest occasions. I strongly support an amendment that would stop the perpetuation of the opportunity for developers to renege on agreements that they have signed with local authorities from henceforth.

[Lord Shipley]

My Lords, I will speak to Amendment 28. I strongly support Amendment 22 and the principle behind it that only planning obligations agreed prior to Royal Assent should be included in the Bill. Amendment 28 is a sunset clause, and the Government have, through their own Amendment 32, accepted the principles of this. Our view is that no applications should be made under this section three years after its coming into effect. I accept that there may be a case to give power to renew or extend a subsection if economic circumstances demand it. However, I am not convinced that it should be open-ended and effectively give a power to the Secretary of State to extend it for as long as he would wish it to be extended. I am seeking from the Minister some clarification as to what the Government’s intention actually is with their Amendment 32.

I will be very precise about the questions to which I think the House should seek to secure answers. It would be helpful if the Minister could refine her amendment at Third Reading, so that any extension to the time limit should be for no more than two years from the date it is proposed. That would have to be before April 2016, so it would give an absolute time limit of five years. Secondly, would the Minister commit to presenting a report to both Houses before bringing forward regulations to extend that time limit? Would the Minister also commit to consulting with social housing providers and others prior to presenting that report, in order to inform its contents? Thirdly, will the Minister also commit to accepting the will of both Houses in any vote to extend the time limit?

The Government should still look to extend Clause 6 to include the full range of planning obligations. Not only would this challenge any perception that the Government viewed affordable housing as of secondary importance in planning terms; but if other obligations are causing the delay, that could remove significant impediments to that development. We will have a chance in a further amendment to look at that a little more closely, but I remain concerned that the Government’s amendment is too open-ended.

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[Lord McKenzie of Luton]

My Lords, I turn again to the tardiness of the criteria. The noble Baroness may have been able to look at them over lunch; I was dealing with the consultation responses, which arrived on my desk this morning. Having said that, we need to study the guidance and reserve our right to deal with any residual issues on Report. I was not going to move this amendment, but I did not want to leave hanging the two important amendments tabled by the noble Lord, Lord Best. The purpose of Amendment 25 is to say that it should not just be left to guidance; there should be a process and a statutory instrument that deals with viability issues, given its importance. I will be happy to reserve judgment on that once I have had the opportunity to study in detail what was issued to us late last night. On that basis, I beg to move.

[Lord Best]

Have we reached my amendments? No? I did not think that I had missed my cue.

[Baroness Hanham]

My Lords, I apologise. I always manage to do this once, sometimes more than once. Perhaps we can rest a moment before we hear from the noble Lord, Lord Best.

Amendment 25, in the name of the noble Lord, Lord McKenzie, which I have noted but which I shall say more about, requires local authorities to have regard to regulations setting out how viability will be assessed. Those regulations are to be subject to consultation and the affirmative procedure. I hear what the noble Lord says about returning to this at Third Reading, but in the mean time it might be helpful if I just go through where we are.

The draft viability guidance has been circulated to assist the House’s understanding of how developers, local authorities and the Planning Inspectorate will approach the new process. It is an early draft, and we intend to discuss it further with professional bodies and interested groups before a final version is issued on Royal Assent.

Noble Lords will see that the basic principle of the guidance is that it works with existing industry practice on assessment of viability. It strongly encourages developers to use the same methodology and basic assumptions as in their original assessment and to focus on what has changed. A number of technical questions have been raised on the draft viability guidance. If it would be helpful to noble Lords, I am happy to have a meeting between now and Third Reading to hear views and see whether we can resolve, or at least discuss, some of the issues.

There is a good deal of technical information in the draft guidance, which needs to be kept under review. Using secondary legislation would not allow the flexibility to adapt to changing circumstances and data that statutory guidance offers.

Noble Lords will recall that the legislation for the community infrastructure levy, introduced under the previous Government, makes provision for statutory guidance. That covers the assessment of viability for the purposes of setting the levy. It is a model that allows for the required flexibility and is one that we intend to follow.

I hope that, with that reassurance, the noble Lord will withdraw his amendment, even if only for the moment.

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Moved by

[Lord Best]

30: Clause 6, page 9, line 13, at end insert—
“( ) the modifications necessary to ensure that if the market value of the development has increased over that predicted before the first application under section 106BA in relation to the obligation, the developer will pay a contribution proportionate to the increase in value to the local planning authority, solely for the purpose of providing local affordable housing linked to the development plan for the area.”

[Lord Best]

My Lords, I shall speak to Amendments 30, 31 and 35. I preface my remarks by thanking the Minister for a really helpful and lengthy meeting at which a number of my earlier amendments were discussed. On the basis of that discussion, I have dropped three of my amendments, either because I have better understood where the Government were coming from or because I noticed some modest amendments along the way. I was extremely grateful for that more than helpful discussion.

Amendments 30, 31 and 35 all address the hazards in Clause 6 and are intended to ensure that the clause achieves what the Government intend: to get developers on site and building new homes as a quid pro quo for being able to increase their profits on sites where they have previously signed up to obligations to allocate some homes for affordable housing.

Amendment 30 would protect the local authority, the taxpayer and the people who need affordable housing from developers being excused from their obligations on the grounds of expected low house prices today but making substantial profits in future when house prices have risen appreciably. The amendment inserts a clawback provision for the local authority to receive payment in kind if values rise more than expected. A highly unsatisfactory outcome from the use of Clause 6 by a developer to secure a reduction in the affordable housing on its site would be for it simply to await house price increases and make a killing later. Then, the developer would see bigger gains in the years ahead, but the whole purpose of the Bill—to get sites developed today—would be thwarted.

When I brought a similar amendment from the LGA before your Lordships in Committee, the proposition was that local authorities should share a proportion of the profit from future sales if they turned out to be at higher levels than had been expected when the deal was considered by the Planning Inspectorate. The revised amendment is intended to address concerns raised by your Lordships that that route would not be appropriate. The new version would ensure that the local authority could claw back only a commuted sum—payment in kind—in the form of finance specifically to replace some or all of the affordable housing in the original planning obligation, probably to build offsite. That seems entirely reasonable and I hope that the revised amendment will be acceptable to Ministers.

Amendment 31 takes the story forward. It is intended to address the situation where, after a Clause 6 negotiation has reduced the previous requirement for affordable housing, the developer does not, as the Government hope, start swiftly on site but instead awaits the moment when the market is more favourable and prices are higher. The primary reason why sites are stalled is the reluctance of housebuilders to press forward with developments of homes for sale because the local market is sluggish and, if they build too quickly, it will be impossible to achieve the prices they desire.

Even if they are allowed to produce fewer affordable homes—homes which are usually transferred to a housing association for rent or shared ownership—the market for outright sales will remain the same, and the housebuilder may well prefer to await an upturn rather than, despite the earnest hopes of the Government, getting going with the building work which is so badly needed. Amendment 31 would compel the developer to commence construction within six months if it receives a favourable outcome from invoking the provisions of Clause 6 and secures a reduction in its legal obligation.

That is a fundamental point. Unless there is a benefit to society in the form of a rapid start on site, most people would surely ask why the state should be intervening retrospectively to overrule a legal agreement between a local council and a housebuilder simply to increase the profits of the latter. Why should central Government step in when a speculative land purchase now means that a development is not as profitable as the housebuilder had hoped? After all, no one has suggested that local authorities should pursue housebuilders for an increase in the quota of affordable housing when, a year or two after an agreement was signed, house prices rise dramatically, as they did a few years ago, when unexpectedly high profits were made.

If the developer is able to negotiate a reduction in their Section 106 obligations, they will raise the value of the site without laying a single brick. Amendment 31 is intended to overcome this major defect in Clause 6 and require housebuilders to commence construction within six months if they receive a favourable outcome from their appeal. If the Planning Inspectorate has found the development would not have been profitable because of the level of affordable housing required and has reduced that level accordingly, there should be no good reason why the developer should continue to sit on their planning approval. Instead of being accused of land banking, they should then start delivering the homes the UK so badly needs.

Finally, Amendment 35 puts the finishing touches to these proposed changes to Clause 6 by raising the threshold of what defines commencement of development on site. Planning permissions do not last indefinitely, and in considering whether to extend a permission or allow it to expire, a local authority considers whether the developer has commenced development, defined as a “material operation” in Section 56 of the Town and Country Planning Act 1990. The Act sets out what a developer has to do on site to implement a planning permission. The physical works that make up a “material operation” can be relatively minimal when compared with the totality of the development— for example, digging a trench or starting to lay a road. Case law is clear that it does not matter if the developer carries out those works simply to keep the planning permission alive, rather than with a genuine intention to complete the development. If developers have to start within six months, but simply dig a ditch, Amendment 31 has not taken us forward.

I moved an amendment in Committee to enable local authorities and developers to agree at the outset what the definition of commencement would be. The Minister’s response, which I fully understand, was that this would create a postcode lottery, with every council doing things differently. The problem might be countered with non-statutory guidance on best practice. However, in recognition of ministerial concerns, I am now suggesting an amendment that raises the threshold of what is defined as commencement. This amendment would alter the current definition of what constitutes a “material operation”. It would require a certain percentage of, for example, the foundations to be completed to count as a material operation and thus keep the planning permission alive. Spelling this out would have the benefit of certainty. It would encourage developers to move from commencement to completion faster in the future because a greater proportion of costs would have been incurred at an earlier stage.

In combination, these three amendments salvage something sensible from Clause 6 and save the Government from falling into a trap. The worst possible outcome would see the clause to reduce the amount of affordable homes that developers are required to build proceeding, but developers still not getting on with the job and instead banking the increased value gained from having their obligations reduced and waiting until house prices, pressurised by escalating shortages, rise and bigger profits can be made. I beg to move.

[Lord Deben]

Before the noble Lord sits down, may I ask a question because there is something I do not understand? What is there under present law to stop a local authority saying to a developer, “Yes, we’ll agree to this, but there are other conditions that are part of that deal”? All that the noble Lord suggests could be perfectly properly achieved in a deal with the local authority. What sort of local authority would give its permission without such a deal taking place?

[Lord Best]

These cases are historic, dating back to 2008-09, where a Section 106 agreement has been signed that does not specify that commencement on site must happen within six months or what commencement on site means, other than within the law. The agreement has not been, if you like, sharply enough defined, although it has followed standard practice. The opportunity then exists for the developer to say, “I don’t wish to proceed on this basis. I shall use Clause 6 and the Planning Inspectorate to reduce my obligations. Even though I signed up to that, I don’t want to be held to it any longer because I have decided that the profitability of my scheme would be increased if I waited some time and did the development later”. These amendments put pressure on the housebuilder and enable the job to be started.

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[Baroness Hanham]

My Lords, I thank noble Lords for that debate. The noble Lord, Lord Best, explained clearly that his amendments are aimed at ensuring that development happens. We all want to ensure that happens, as there is otherwise no purpose in this clause. I understand the desire that, in return for an adjusted affordable housing obligation won at appeal, a developer should get on and build. Planning consent is permission to build; it is not a requirement to build. The purpose of this clause is to give developers an opportunity to build, allowing them to review schemes against prevailing market conditions and secure a viable affordable housing agreement. We should remember that without this clause many housing sites will not come forward at all, which is not what we want. Of course, having put in place a revised agreement, we want developers to build, and that is the purpose of the amendment tabled by the noble Lord, Lord Best.

Clause 6 places a three-year time limit on modified obligations made on appeal. If the development is not completed within three years, which is the other side of the coin that the noble Lord referred to—he was talking about commencement while I am talking about completion—the original affordable housing requirement will apply to those parts of the scheme which have not been commenced, so there is a difficulty for the developer in that. Developers are incentivised to build out as much of their scheme as possible within those three years. It will not be sufficient to commence one part of the development to secure the revised affordable housing obligation for the whole scheme.

For example, on a scheme of 100 homes, if 50 units are completed at the end of the three years and the remaining 50 are not commenced, the appeal decisions would require that the original obligation would apply to the remaining 50—so we would go back to 100. If developers are concerned about the viability of their scheme at the end of the three years, they can seek to modify the agreement again. This could be done through voluntary renegotiation or by making a new application under this process.

We believe that the clause ensures that we incentivise build-out and completion. Local authorities are not bound by a three-year decision, but we are clear in our draft guidance that they can follow similar time limits prescribed for appeal decisions. We believe that this decision is best made locally. Where the matter has gone to the planning inspectors, the local authority can of course put its own evidence to the Planning Inspectorate, which could include evidence on commencement of the development. That could become part of the modified planning obligation if the planning inspectors agree to it.

I hope that the noble Lord will take some comfort from our being aware that local authorities have a wide range of tools and powers to encourage development. Those may be through the way they use the Section 106 agreements flexibly or in the way that they support development through investment in infrastructure or the use of land assets. We are aware of local authorities which have introduced clawback agreements to incentivise developments and we understand that those may be appropriate in some circumstances.

More specifically on Amendment 31, which prescribes a six-month commencement for appeal decisions, I said in Committee that I thought setting a six-month period in primary legislation was too prescriptive. I am particularly concerned that placing a six-month limit to commence development will allow little time for developers to get on site—this is the other side of the coin that we have just been talking about. Not all schemes will be ready to go when they are renegotiated. Regeneration schemes where land is in multiple ownership or where planning conditions need to be met before development can commence could be excluded from this process by the six-month limit. Sites where significant work, such as decontamination, needs to be done to prepare the site for development could be excluded. We want to ensure that we deliver as many homes as possible through this measure, not through an overly prescriptive approach, which could be counterproductive and end up with these measures having no effect.

In Amendment 30, the noble Lord, Lord Best, proposes to require the Planning Inspectorate to introduce a clawback in appeal cases whereby the local authority receives increased funds for affordable housing if the market rises. I oppose this amendment because it requires the Planning Inspectorate to make provision for a clawback agreement, which would impose a requirement that will not be appropriate in all cases. I am also concerned that this amendment might have unintended consequences. In cases where a variable agreement would be onerous and unnecessary, the inclusion of the amendment could discourage developers from appealing. We need developers to engage in this process and ensure they can secure viable agreements and we can then secure the affordable housing.

I will now turn to the new clause on redefining commencement. The definition of commencement and material operation serves a wide range of purposes in planning law. It triggers the payment of community infrastructure levy and Section 106 revenues. Perhaps most importantly, it is used by local authorities to establish whether a development needs planning permission and can form the basis of enforcement action if a material operation has taken place without permission. In short, the amendment would have far-reaching and fundamental consequences that go far beyond its intention, which is to prevent developers from doing a minimal amount of work lawfully to implement a planning permission. The noble Lord spelled that out quite clearly.

Changing the commencement threshold in the way envisaged would not have a substantial effect on the behaviour of developers. Any new definition of commencement would simply create a new minimum threshold for such developers to build to. The additional costs for a developer in doing so would be unlikely to be significant in the context of an overall construction budget. Furthermore, the complexity of the threshold proposed would result in uncertainty and confusion that would affect all parties involved in the planning process, including local authorities. As the definition of development is a highly contested part of planning law, it would be likely to result in a significant rise in legal challenges as the courts interpreted the new definition. Any legal definition of commencement should be exactly that: the point at which a development is commenced. It would be counterfactual at best to say in legislation that a building project where the foundations or roads are 49% complete or where only 99% of the pipes have been connected has somehow not legally begun.

In short, while I recognise the problem, this is not the right solution. It would do very little to address the problem, while it would have wide-ranging consequences for other areas of planning practice and have a very significant adverse impact on local authorities, developers and third parties. There is already a power available for a local planning authority to serve a completion notice to deal with uncompleted development. However, a far more productive approach would be to address the underlying reasons for developers delaying their schemes. The Government recognise the importance of this through a number of initiatives, such as the £570 million Get Britain Building fund to unlock stalled sites.

I hope that with these comments the noble Lord will feel able to withdraw his amendment.

[Lord Best]

My Lords, I am very grateful for the debate that this has stimulated and for the interventions from the noble Lord, Lord Deben, and the noble and learned Lord, Lord Mackay. We have explored an issue and taken it a little bit further than anyone has before in these public fora. These ways of trying to persuade the developer to start building—which is what we are all about—are quite difficult, and it is quite messy to concentrate on defining where commencement really lies. Concentrating on completions of developments which are, obviously, at a later date than my six months for a start, sounds a much improved way of looking at this. I had not appreciated—and I am not sure if others had—that it will be possible for the Planning Inspectorate to place conditions relating to a timescale and a definition of starting on more than simply the reduction in the amount of affordable housing. The assumption has been that it is the reduction in affordable housing that the planning inspector can talk about, and these other, more sophisticated, aspects of getting things going have been beyond the remit of the Planning Inspectorate when these appeals come forward. We are hearing tonight that the planning inspector could, in a way, substitute for the negotiation that has failed at the local authority and developer end. These cases have gone forward only because earlier negotiations have failed. It could be that the planning inspector could substitute for that and come up with a set of requirements that go with the consent to drop the amount of affordable housing.

I am grateful to the Minister for explaining these issues in more depth. I will go away and think about them and hope that, within that explanation, there are the seeds of hope.

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[Baroness Hanham]

My Lords, I need to answer this. The inspector will have the power to say that these developments have got to be completed within three years.

[Lord Best]

My Lords, I beg leave to withdraw the amendment.

Amendment 30 withdrawn.