Localism Bill

Lord Shipley Excerpts

Monday 17th October 2011 Lords Chamber

[Lord Jenkin of Roding]

My Lords, I am most grateful to my noble friend for the care with which he has set out these quite significant changes to the whole process of charging and applying the community infrastructure levy—or CIL, as he called it. We have moved a long way from the original intention of the CIL. In the Planning Act 2008, Section 205 states:

“In making the regulations the Secretary of State shall aim to ensure that the overall purpose of CIL is to ensure that costs incurred in providing infrastructure to support the development of an area can be funded … by owners or developers of land”.

It was perfectly clear to those of us who debated those provisions during the passage of the Planning Act 2008 what the previous Government were looking at. For instance, if you build a large housing estate, that is going to involve the building of roads. It may well involve the provision of a new school, and a number of other capital infrastructure measures that are necessary to support the community that will be enlarged by the main application when it is allowed and when it takes place.

It is quite clear from what my noble friend has said that we are moving a long way from that. It has caused a good deal of concern among those who are anxious to champion the promotion of more infrastructure. The British Property Federation, referring to what he called a “raft of new amendments”, has said:

“The upgrading of the country’s infrastructure is vital for our future economic success and the contribution from CIL will be a critical part of that at a time when public funding is heavily constrained”.

The letter that I had from my noble friend Lady Hanham, dated 7 October—just a few days ago—makes it perfectly clear that, under the new arrangements proposed, the CIL is not limited to providing infrastructure. Having set out the proposals, she writes:

“We have concluded that spending at the local authority level must continue to be directed to the provision of infrastructure”.

I will press a little further on that in a moment. She continues:

“However, at the neighbourhood and community level the demands and concerns amongst local people that new development creates are more diverse, direct and localised”.

She then refers to the amendments which my noble friend has just spoken to. She goes on:

“We believe this change is vital if we are to genuinely change attitudes to new development and secure sustainable growth”.

Changing attitudes is quite a long way from building capital infrastructure. It has changed the nature of what the CIL was originally introduced to achieve.

It may be that, in the new planning regime, it will be desirable to provide means whereby local communities can feel that they are getting some benefit. This may not take the form of schools or roads but may be some other form of benefit that will compensate them for the impact of the development to which they might otherwise have been opposed. I have always quoted the example of the French electricity system; if you want to build a new power station, in order to reconcile the local population to having to put up with that—after all it involves substantial interference in their normal lives, not only during the building but during the operation—they get electricity at a cheaper rate. That seems to me to be a very sensible thing to do. I am therefore not opposed to the idea that we need to provide something that will secure the consent, as my noble friend was saying, of the local community to the development that is being imposed upon them and to which they might have been quite vigorously opposed.

However, one point that I want to emphasise is still unclear, and I would welcome it if my noble friend could clarify this when he winds up. If councils in spending the CIL are confined to providing infrastructure, which is what I understood him to say and what my noble friend Lady Hanham said in her letter, spending at the local authority level must continue to be directed to the provision of infrastructure. That is fine, but then we are faced with the proposition that a “meaningful proportion” of the proceeds of the CIL, which is charged on the developer, can be devolved to the local parish or community, which, as I understand it, is free to spend it on anything it thinks would improve the condition of the community. What is a “meaningful proportion”? As I understand it, a local authority will be perfectly free to say, “We don’t think any more roads are necessary or that we need to build a new school, or anything like that, and therefore 100 per cent of the CIL for this particular development is going to be devolved to the local parish or community to spend as it wishes”.

I made the point previously in Committee that the CIL must not simply be used as a way of filling the gaps in local authority spending. It is not intended for that. It is intended to balance the provision of a planning application for a new structure of some sort with the infrastructure that is necessary for it. I have of course accepted that that must include the operation, maintenance and upkeep of the infrastructure, a matter that we discussed at length in Committee, but is there no limit to what the devolved body, parish, community or whatever it is can spend of the “meaningful proportion” that is delegated to it?

There is a good deal of concern about this among various bodies. The County Surveyors’ Society, which I understand is now called ADEPT, the British Chambers of Commerce, the British Property Federation, the Chartered Institution of Highways and Transportation and the local government tactical advisers group have all expressed the concern that this seems to be slipping away to the point at which it is simply providing inducements—I will not use the word “bribes”—to persuade a local community that it would be to its advantage to cease to oppose a planning application. I hope that my noble friend will be able to give me some reassurance that it is not intended to go as far as that, but there will have to be some specific measures.

I come to my two amendments, on which my noble friend has given his views. Amendment 204H would make a minor change to replace “may” with “must”, and would compel planning authorities to outline the infrastructure that they actually intend to support through CIL. If local authorities are going to have to confine their spending of CIL to infrastructure, I see no reason why they should not be instructed by the Act to outline the infrastructure they intend to support. Amendment 204J is also intended to link the evidence base used to justify an area’s CIL charging schedule to the levy’s actual expenditure. As I think my noble friend recognised, these are both intended to add to the transparency of the application of what CIL is: a tax on development. So far as local authorities are concerned, I see no reason why both these amendments should not be applied to them.

That leaves the “meaningful proportion” that is to be spent by other people. At the moment I feel that it is wide open for them to decide more or less what they would like to spend it on. I cannot believe that that is a wise way to spend the proceeds of what is in fact a tax. I hope that my noble friend can reassure me on this, but I have to tell him that there is a good deal of apprehension out there. He has told me that he has come under a lot of pressure from local authority and other community interests, which are saying that this sort of thing is necessary in order to reconcile people to new development in their area. But there must be some sort of limit on it, and I am not sure that the government amendments moved by my noble friend and the explanation set out in my noble friend’s letter of 7 October give that reassurance. I hope that my noble friend will be able to allay my anxieties.

[Lord Shipley]

My Lords, I agree with my noble friend Lord Jenkin on the need to be clearer on the gain to neighbourhoods and parishes from the community infrastructure levy. Whether that is done in the Bill, through guidance or by other means, it will be extremely important that local people in neighbourhood areas where development is taking place understand what the community gain might be as a consequence of that development.

My point is a parallel issue which relates to the duty to co-operate. It is implicit in the Bill that there is a duty to co-operate between councils on the community infrastructure levy. However, I am not certain that it is sufficiently explicit and in urban areas where there are boundaries between different local authorities, a development that could take place wholly in one council area might well impact upon the infrastructure and the well-being of one or more neighbouring council areas. To what extent should we make it explicit that there should be a duty to co-operate between local authorities on the community infrastructure levy where a development is taking place very close to a boundary? That will need to be clear, certainly by Third Reading, otherwise there could be a great deal of strain between local authorities over what a duty to co-operate over sustainable development actually means and how it is delivered on the ground.

[Lord McKenzie of Luton]

My Lords, we share some of the concerns expressed by the noble Lord, Lord Jenkin, and have some sympathy with his amendments. When we discussed this issue at Committee I thought we had established that, as previously structured, CIL gave quite a lot of scope for supporting local communities beyond what one might think of as the very strict interpretation of infrastructure, but this seems to be taking us a step further. The letter that I had from the noble Baroness was, I think, generally circulated and says:

“We are proposing amendments that would allow local authorities and parish and community councils to use this proportion of the funds to support development by providing infrastructure or addressing any other matter necessary to address the demands that new development places on the local area”.

This is potentially a very wide extension of what it was anticipated that CIL would be used for.

The noble Lord, Lord Shipley, raises a different point about what happens with adjoining authorities and how that fits together with the duty to co-operate. We also need to consider how this sort of formulation fits together with Clause 130, which we are going to discuss in due course. The noble Lord, Lord Jenkin, said that he would not go so far as to call this a bribe, but it is potentially a substantial inducement to an area to accept development and we need to reflect on that as well. Having expressed concerns about the possible dilution of funding for infrastructure, which is needed up and down our country, I pose the question that we raised when we covered it in Committee—my apologies to the Minister if he covered it—about the prospect of CIL being used for affordable housing. I am not sure where that discussion has gone, but there have been some real questions asked about the extension of CIL which takes it beyond its original intent. The new intent is not necessarily bad, as the noble Lord, Lord Jenkin, said, but we need to reflect on what it means for the funding that is available for infrastructure in an area.