Growth and Infrastructure Bill

Lord Burnett Excerpts

Monday 28th January 2013 Lords Chamber

[Lord McKenzie of Luton]

My Lords, Amendment 55BC is concerned with criteria for evaluating viability. Given our earlier discussions, I do not see any great merit here and now in delving into the RICS draft guidance note on financial viability and where that might lead us. The particular purpose of this amendment is to see that there is some parliamentary process which sets out the framework for the criteria rather than just guidance—I think guidance is the preferred choice of the Liberal Democrat amendments.

I will leave it there tonight but it would be extremely important to have a chance before we get to Report to at least see some outlying guidance or direction of travel from the Government so that we do not have to revisit this in detail on Report. I still hang on to my point about how to divide viability among the various components and what that means. That is an issue that we will come back to, but on that basis I beg to move.

[Lord Burnett]

I gather that there has been a consultation paper and consultations have closed. I understand that there might be a government response. Can my noble friend let me know when that response is likely to be published? I am led to believe that it might be next month. Can my noble friend help me on that?

[Lord Greaves]

My Lords, I have Amendment 55CB in this group, which has the same effect as that of the noble Lord, Lord McKenzie, so I will not repeat what he said.

Viability is increasingly important, and not just in relation to Section 106 and the removal of obligations to make things viable. It is inherent in planning applications and local plans, in which pieces of land should be developed before others and in whether it is any longer possible, in old industrial towns such as in the area in which I live, to prioritise brownfield, formerly developed and regeneration sites over and above greenfield sites. That is fundamental. The definitions which the Government, Planning Inspectorate and local authorities will use for viability on particular sites will also be fundamental. I look forward to future discussion on this.

--- Later in debate ---

[Lord Cameron of Dillington]

My Lords, I will speak to two of these amendments. First, I cannot support Amendment 55EA. It has a mild whiff of retrospective taxation which I do not approve of. More importantly, it fails to understand the motivation of an entrepreneur, and his or her assessment of risk. If a particular project is marginal, then the developer does their own assessment of the upside and downside risk. They will proceed only if they personally believe that the upside returns are sufficient to justify the downside risks. If the upside is threatened, as seems to be the case in this amendment, and only the downside risk remains, I do not believe that they will proceed. In that case, one nullifies the whole purpose of this clause.

Furthermore, it occurs to me that if the local authority wants to share in the upside benefits, it should equally share in the downside risks. I cannot believe that the local authority would be happy to pay the developer if the housing price should drop below the estimated figure. In other words, it seems only fair that if it is going to share in the upside, it might also share in the risk. This applies if it wishes to see the development take place as soon as possible; of course, I would personally prefer that it did neither.

[Lord Burnett]

The noble Lord, Lord Cameron, is making a series of very good points. Does he also believe that were the local authority to share in the upside gain, it might cloud its objectivity?

[Lord Cameron of Dillington]

It would. Local authorities are not the right bodies to involve in entrepreneurial activity. I share the noble Lord’s opinion.

I move on to Amendment 55F. At the risk of being boringly obvious, this surely underlines the whole purpose of the clause and it is amazing that it has been omitted. We are urgently trying to promote infrastructure development and to prevent any further delays at a time when we might be entering a triple-dip recession. Housing development, as we are all aware, is very good for kick-starting our economy. It employs a local workforce, and to a large extent uses UK raw materials, while clearly performing a social good. In fact, the House Builders Federation claims that every £1 spent on housing puts £3 back into the economy, and that increasing housebuilding by 130,000 units per year, which is the Government’s projected level, could create 195,000 direct jobs and 400,000 in the supply chain. We want housebuilders to get on with it. I therefore cannot see the point of renegotiating affordable housing demands if there is not going to be a quid pro quo whereby the house developer has to get on with the development and build now. Otherwise, they are going to renegotiate and wait for the market to recover.