Growth and Infrastructure Bill

Lord Davies of Stamford Excerpts

Monday 28th January 2013 Lords Chamber

[Lord Deben]

I am not sure that I entirely follow the noble Lord’s point, but it is true that the Treasury is keen on hypothecation when it suits it and against it when it does not, and this is one of those occasions. The trouble is that hypothecation ought to be between the payment of the bill and the advantages from the bill, but in this case it is not that, and many of those who have to pay the cost of Section 106 agreements are only just above the level of benefiting from them. It is because this is a fundamental flaw in the whole system that I come to be extremely disappointed in the Growth and Infrastructure Bill. As I have said previously, it is a pretentious title for a series of very small alterations, some of which are not terribly helpful.

However, there is a big alteration that we ought to make if we really want people to have housing, which is to say seriously that the cost should not be a tax on a small number and those who are most vulnerable; the cost should be a tax that we all bear for a proper social end. In case the Opposition say that I am moving in their direction, I say that they are as guilty as anyone else. They have imposed taxes in this area that are just as large and always excuse it as a tax on the developer. The developer does not pay taxes; he charges the cost to the people who buy his houses. That is the nature of the market; there is no way of avoiding it. I am very happy to support the drive of the amendment, which suggests that, if we are going to do this, we may as well make sure that we get bang for our buck by tightening it and toughening it. But, my goodness, what a disappointment it is that yet another Bill comes before this House masquerading behind this fraudulent concept that supported housing should not be supported by the nation as a whole but should be a price borne largely on the shoulders of first-time buyers. It is not right, it should not be and we ought to find a different way of dealing with it.

[Lord Davies of Stamford]

My Lords, the noble Lord, Lord Deben, has taken a broad interpretation of the scope of the amendment. I am glad that he has and the Committee should welcome an opportunity briefly to debate Section 106, because it is an enormously important factor in housing development in this country and the House is unlikely to have another, foreseeable opportunity, either during the passage of this Bill or otherwise, to discuss it.

The noble Lord, Lord Deben, argues, and I think that I can follow his argument fairly clearly, that since there is clearly a cost for developers in entering a Section 106 agreement, whether it is to build affordable housing or to meet some other condition that may be imposed by that agreement, that cost must be reflected in the price of the houses that they sell and therefore be borne by those who buy those houses, who happen to be a limited part of the population. I am sure that that is the noble Lord’s argument—I am sure that he will interrupt me if I have got it wrong. He leaves out an important factor in the equation, which is that if there were no Section 106 agreements fewer houses would be built. Affordable houses are built and receive planning consent only because of Section 106 agreements. If more houses are built, there is a greater supply in relation to a given demand, and that will be factor in the equation bringing down the average price of housing, although not necessarily by the same amount as the other factor in the equation brings it up. The noble Lord should take that point into account if he is to try to design a model for how the housing market works.

The noble Lord, Lord Best, set out his amendment with great lucidity and very persuasively—he of course knows a great deal about this subject. I thoroughly agreed both with his analysis of the situation and with his rather ingenious compromise solution, which we may well want to adopt at this particular moment, having got as far as we have. I deeply regret for two reasons that the Government have decided retrospectively to waive Section 106 agreements. First, it will deprive a lot of people of affordable housing. That is a very bad day’s work. It is just the opposite of what we need in the present situation and an extraordinary reflection of the Government’s priorities. The noble Lord, Lord Deben, was concerned also about people who can afford to buy a house which is not designated an affordable house. He might dispense a little bit of his sympathy for those who could not dream of buying a house which was not deliberately built to be an affordable house and was in other words at the bottom end of the market and a good deal cheaper than average houses in this country.

The second reason why I regret what the Government have done is that it seems to falsify to whole system of planning in this country. As I have just explained, many Section 106 agreements result in land being designated for development which otherwise would be not be so designated. The local planning authority, normally the local council, has quite rightly to make a choice, an arbitrage, between considerations, on the one side, as to whether giving planning consent for, let us say, development on green belt areas or areas outside the existing curtilage of towns and villages represents the loss of an environmental amenity, but, against that negative public interest, as to whether there is a positive interest which outweighs that, which in present circumstances is the need for affordable housing. Therefore, the planning authority in the discharge of its responsibilities has quite reasonably weighed those different aspects of local communities’ interest and come out in that particular direction. Now, of course, if the Section 106 obligations are retrospectively withdrawn yet the development goes ahead, it becomes no longer a balance but entirely a one-sided gift to the developer and the community loses both ways. On the one side, it loses through the loss of the land, the loss of the environmental benefit, the loss of the amenity benefit and the visual impact of the development, whatever that may be; on the other, it loses the benefits of affordable housing or the other benefits of the Section 106 agreement which has been entered into. That is a doubly bad deal for the local community.

I dealt with a lot of Section 106 agreements when I was in the other House and on one occasion took the initiative in brokering a major Section 106 agreement between a landlord, a developer, a district council—South Kesteven District Council—and Lincolnshire County Council as the highways authority in order to finance the southern bypass of Grantham. There was no way in the world that the southern bypass was going to get into the then Government’s road programme—it would not have the met COBA thresholds—but it could and was financed in that way. It took a long time and a lot of negotiation, but it was well worth doing. However, it would have been most extraordinary if, retrospectively, we had said to the developer and the landowner, “Well, that’s alright. You can have the planning consent, but you do not need to build a bypass any more”. That is effectively the sort of deal which this Government are now offering developers.

I have to say that not many people are doing very well out of this Government in this country. People on benefit are obviously suffering; the public sector has suffered greatly; the private sector has suffered enormously; and our Armed Forces are suffering. Everybody is suffering except, as far as I can see, two categories of people: those who are lucky enough to be earning more than £150,000 a year, whose tax rate has been reduced from 50% to 45%, and now real-estate developers and speculative builders. I have nothing against real-estate developers and speculative builders—far from it—but it is an extraordinary set of priorities which are reflected in what the Government are doing.

As the Committee knows, I was for a number of years in the Tory party myself—far too many years, I have say; I am very sorry and repent of that particular sin—but, nevertheless, I know a little about how it works. I must say that if you went to Conservative associations up and down the country and did an analysis by sector of the business activities in which donors to local Tory associations are involved, you may well find that that particular section of the market comes out very high. I do not wish to establish a causal link between the two things; I have no evidence to enable me to do that. However, I simply state these two separate facts as an interesting coincidence.

I have considerable distaste for what the Government currently propose, but we need a way out of this situation that makes some sense and makes sure that these developments take place and affordable housing is built. In that spirit, I very much endorse the amendment of the noble Lord, Lord Best.

[Lord Alton of Liverpool]

My Lords, I will be brief. I should like to support my noble friend Lord Best. I declare an interest as a vice-president of the Local Government Association.

My noble friend set out a good case for the amendment and I hope that even if the noble Baroness, Lady Hanham, is unable to accept it today she will at least take on the general thrust of his arguments, not just for this amendment but also for those that he said are in later groupings. I believe that he was trying to help the Committee by discussing some of those at this time in order to save time later on.

I was also taken by the remarks of the noble Lord, Lord Tope, who said that it is really everyone’s desire to see the spades in the ground and housing being built. I was struck by a report in the Times today about how over the next four years many people in poorer categories will see their homes defaulted on because of their inability to pay interest-only mortgages. Therefore, this already difficult situation, with homeless people in this country and people unable to get on the home ownership ladder, as the noble Lord, Lord Deben, said a few moments ago, means that we have to do all that we can to try to find space for affordable housing. We must ensure that those who are in homes at the moment will not have to renege on their mortgages and become part of an issue that then has to be faced by local authorities because they are under other obligations to find them temporary accommodation.

I think back to my own time as chairman of a housing committee in Liverpool 30 years ago when we had vast amounts of derelict land and no money at all to build large amounts of new municipal housing even if we had wanted to. We came up with an innovative scheme at the time which met some of the points that the noble Lord, Lord Deben, addressed in his remarks. By retaining the ownership of the site—the land—in the hands of the local authority, we were able to pioneer the building of low-cost homes for sale in inner-city Liverpool—the first that had been built there in virtually a hundred years. Perhaps more importantly, we gave first priority for those homes to people who were already in existing council properties. This meant that, at the same time as encouraging people into home ownership, we freed up their accommodation—at no cost to the public purse—for people on the housing waiting list. Perhaps, therefore, we should look at something along those lines for first-time buyers and for existing council tenants, who would be able to free up their properties and therefore not only stimulate the building of new affordable housing but also create rented accommodation for people currently on waiting lists.

The other point I would like to make to the Minister concerns the issue of integration. I agree with what my noble friend said about how, particularly in rural areas, it has been very good to have a mixture of social housing alongside quite expensive housing. This has enabled people to stay in communities from which they would otherwise be driven. I think that many noble Lords from all sides of your Lordships’ House will have seen how, in rural areas especially, people have been driven away because they simply cannot afford the cost of homes, which are often taken up as second homes by people who live in cities or urban areas. Our first priority should be to allow those people to stay in, and contribute to, their own communities. Similarly, in urban areas, having a mixture of rented and owner-occupied property ensures that we do not create the municipal Bantustans that stretch facelessly and often aimlessly from the railway lines to the cemetery, and which in the past have caused so many of the social problems that we have to deal with today.