Localism Bill

Lord Jenkin of Roding Excerpts

Thursday 14th July 2011 Lords Chamber

Moved by

[Lord Jenkin of Roding]

148ZZBBBA: Clause 100, page 79, leave out line 20 and insert—
“(b) providing that which CIL provided initially under paragraph (a) on an ongoing basis.”

[Lord Jenkin of Roding]

In moving this amendment, I wish to discuss the other two with which it is grouped. I tabled these amendments before we had the debate last Tuesday in which we discussed the application of the community infrastructure levy. Anxieties had already been aroused with regard to the original purpose of the levy being altered. My noble friend Lord Attlee spelt out that purpose very correctly. It is meant to support infrastructure development and be paid by the developer of a facility such as housing or industry. My noble friend Lord Greaves had moved an amendment which would widen the permitted use of the levy receipts beyond infrastructure matters that support the development of the area. My noble friend Lord Attlee said:

“We want to reflect on whether continuing to limit spending solely to providing infrastructure restricts local authorities’ ability to support and enable development of the area”.—[Official Report, 12/7/11; col. 707.]

He went on to say:

“We want to reflect on the amendments proposed by my noble friends Lord Greaves and Lord Tope to allow the spending of the levy on matters other than infrastructure”.—[Official Report, 12/7/11; cols. 709.]

These words have aroused considerable anxiety. I have a copy of a letter written yesterday by the Institution of Civil Engineers to the Secretary of State. The letter was copied to my right honourable friend Greg Clark and my noble friend Lord Attlee. The institution’s chairman wrote:

“I am writing to highlight concerns regarding the Government’s undertaking to reflect on allowing the use of the Community Infrastructure Levy on matters other than infrastructure. The Levy was specifically conceived and justified to provide for new and upgraded infrastructure—a point reinforced by the Government many times”.

Indeed, they did so most recently last Tuesday through my noble friend Lord Attlee.

The purpose of these three amendments is to try to get clarification on three specific issues. First, Amendment 148ZZBBBA seeks to ensure that the application of CIL is confined to the provision and maintenance of an infrastructure project which is in an approved charging schedule, on the ground that that fulfils the original purpose of the introduction of the CIL. The institution believes—I accept the case that was made on Tuesday and is in the Bill—that this should include what is called in the Bill “ongoing expenditure”, which I understand to mean the maintenance of an approved infrastructure project financed by CIL. I hope that my noble friend can give me a very clear undertaking that there is no question of this levy being used simply to fill a revenue hole in a local authority’s budget. It has to be confined to the provision and maintenance of an infrastructure project.

My second point has been touched on but I would like to be given a much needed assurance. There are plenty of examples of where developers have agreed to make a contribution under Section 106 of the Town and Country Planning Act 1990. If a developer has made such an agreement—sometimes it can last for a number of years—he should not be charged the CIL in addition. I hope that my noble friend can give me a clear undertaking on that. It was briefly discussed, and if we had not risen when we did on Tuesday, I would have intervened, because I was expecting to move the amendment on Tuesday night. I said, “Let’s wait until I am speaking”.

My third point concerns the suggestion of compensating communities by allowing CIL receipts to be passed to other persons. I do not quarrel with that—although I know that some object—but it must be spent on infrastructure projects. It must not be allowed to be a financial recompense paid to a community because it has development in its area. I hope that my noble friend can give me a clear assurance on that.

My final point is that the area must not be too tightly defined. There is anxiety that that may be the effect of the Bill. For instance, if the money has to be spent in the area, how will that fund a bypass which may be necessary as a result of the development, or flood defences, which may have to happen well outside the area but are clearly for its benefit?

I have asked a number of questions, and I do not think that I need to go on longer. Those are seen as serious issues by those concerned with re-establishing our infrastructure in this country. I took part in the original debate on the CIL when the 2008 Bill was going through the House. Indeed, I tried to ensure that both Houses would be able to approve the delegated legislation under it. I carried that in this House, but it was turned down by the then Leader of the House in another place. I have a considerable interest in making sure that we get this right. I beg to move.

[Lord Berkeley]

My Lords, I am very pleased to support the noble Lord, Lord Jenkin of Roding, on this group of amendments. He has articulated very well the problems which the CIL could cause developers. It is particularly important for bigger projects, which might be taken through a hybrid Bill process, through the IPC or the Transport and Works Act, where the decisions are effectively made by Ministers. Ministers will approve—or not—a deal which ends up as a Section 106 agreement. The worry is that, completely separately, the local authority might want to put a CIL charge on the project. One must think of the effect on business confidence when considering ports, airports, logistics centres, railways, roads, power stations or anything else of that size, and of the figures involved.

The people who run Gatwick Airport have told us that they are committed under a Section 106 agreement to contribute about £1 million annually to public transport via a levy on their car park revenues. If they had also been required to pay a CIL to the local authority—probably retrospectively, because it may well have happened after the Section 106 agreement was signed—they would not know what liability they would be stung for, frankly. To give two bigger examples, Hutchison Ports had a Section 106 agreement to extend the ports at both Felixstowe and Bathside Bay. It was committed under the agreement to spend about £100 million on upgrading the railway line to Leeds. We can question why it should be Leeds, but that is what was agreed. I think that the London Gateway port project, downstream on the Thames, had to contribute a similar amount for road improvements between there and the M25. If, having signed up to all that, they are suddenly stung for a CIL, it will put off developers from going ahead with these projects. It is after all the Government’s wish to develop new projects—I return again to the Secretary of State for Transport’s plan to build a high-speed railway line to Birmingham and beyond. You can imagine that people in villages along the route who do not like the plan, having had their referendum to vote against it, will then try to sting the promoters, whoever they may be, for a CIL. It could get quite interesting. It will put off business and I hope that when the Minister responds he can strengthen the assurance that was given in another place that a CIL will not be levied on projects for which a Section 106 agreement has been entered into and agreed.

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[Earl Attlee]

My Lords, I think that I will come to a point later in my speech that should deal with the noble Lord’s concerns.

My noble friend Lord Jenkin also proposes Amendment 148ZZD, the effect of which would be that where regulations require the charging authority to pass funds to another body, it would retain ultimate control over how those resources are used by confining spending to matters it determines appropriate.

[Lord Jenkin of Roding]

It is a question not of control but of what the funds can be spent on. That is what I am asking. If it is going to pass the resources to somebody else, it is with the purpose of giving the somebody else the opportunity to spend them. What I have argued is that it must be infrastructure, whether initial or ongoing. Will my noble friend not accept that?

[Earl Attlee]

I am grateful to my noble friend. I hope that when I have finished my speech, he will be a little bit more satisfied.

We intend to use the powers of Clause 100 to require charging authorities to allocate a meaningful proportion of any revenue generated from development in an area to the parish or community council for that area. The local council will be free to determine how those funds are used to address the demands that the new development will place on its infrastructure. This amendment seeks to take control away from those local councils and the communities that are being asked to accept the new development and will significantly reduce the incentive effect of these changes.

My noble friend Lord Jenkin asked whether CIL can be passed to others on condition that it is spent on infrastructure. Where CIL is passed to another body, it must be spent on infrastructure to support the development of that area. I think I have repeated that answer.

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[Lord Jenkin of Roding]

My Lords, I have listened to my noble friend with great care. I shall clearly want to read very carefully what he has said. I realise that we asked him a number of questions for which he perhaps did not have the original briefing. I do not think that what he has said today will provide any comfort to the bodies that have been very concerned about the provisions in the Bill.

The provision in Section 216 of the original 2008 Act uses the word “includes”, but this has always been taken to mean, “This is what it is”. The purpose of the clause of the Bill is to extend it: that is, the regulation is taken and the powers are there for ongoing expenditure—we have accepted that. However, the question is: can it be extended to something that is not infrastructure? I contend that the original intention of the Act was perfectly clear and that the answer to that has to be no. My noble friend Lord Greaves thinks that it ought to be spent on things like double glazing. I totally disagree. This is not infrastructure in any conceivable sense of the word, and therefore he put forward an amendment to say that it should be used for other forms of development. My noble friend replied to that on Monday by saying that he was going to look at it and reflect on it.

The people who are really concerned with getting on with building infrastructure, and I quoted from the Institute of Civil Engineers, are really very concerned about this, because this is not what was said when the Bill was introduced in 2008. We have to be very careful. We are talking about very large sums of money. I was very grateful for the support of the noble Lord, Lord Berkeley. He made the point that some of these projects are very large. The ICE estimates that the CIL income by 2016 will be around £1 billion a year, so we are not talking about peanuts, we are talking about very large sums indeed. We have to get it right. My noble friends have said that they will consider this and, I hope, be able to meet with some of those who are genuinely concerned before we have to deal with it on Report. What is perfectly clear is that this is not a satisfactory state of affairs at the moment. I will certainly want to return to it, but in the mean time I hope that we can have a meeting to which I can bring along some of the advisers who have been helping me with this, and that we can talk to the departmental officials. It really has to be dealt with so that the position is clear. As I say, we are talking about large sums of investment money. If you are going to have investment, there has to be certainty so that people know where they stand. I beg leave to withdraw the amendment.

Amendment 148ZZBBBA withdrawn.

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[Lord Shutt of Greetland]

My Lords, it may be helpful if I make the point that it is very much the Government’s hope and expectation to publish the forthcoming business early tomorrow. It will set out the programme for next week and, indeed, for the two weeks in September. It has not been possible to be absolutely certain about this because at least one of the participants, particularly as far as September is concerned, has been taking part in the debate, and a little more consultation has to take place. However, it is expected that the forthcoming business can be produced by tomorrow.

[Lord Jenkin of Roding]

Does that mean that we will be taking the Localism Bill next Tuesday?