Lord Tope
Main Page: Lord Tope (Liberal Democrat - Life peer)Growth and Infrastructure Bill
Lord Tope Excerpts“Community Infrastructure Levy: Greater London
After section 222 of the Planning Act 2008 (regulations and orders: general) insert—“222A Greater London
CIL regulations may include provisions enabling the Mayor of London to ensure that charging authorities in Greater London have proper regard to the need to be consistent with the spatial development strategy prepared and published under Part VIII of the Greater London Authority Act 1999.””
Lord Tope
My Lords, Amendment 81 stands in my name. We now return to the Mayor of London, as distinct from the lord mayor, and to Greater London, as distinct from the City of London. This amendment would enable the Secretary of State to include a requirement in the regulations for the community infrastructure levy—henceforth to be referred to as CIL—that in setting their CIL rates London boroughs should have regard to the policies of the London Plan. This simple addition to the mayor’s current powers to vet proposed CIL demands would give developers greater confidence in the CIL-setting process and that local and cross-London priorities are being effectively aligned. It would also ensure that the strategic priorities set out in the London Plan are the focus of localised spending for the good of the capital as a whole.
The mayor will continue to vet all local CIL charging schedules in London to ensure that they take the mayoral CIL rates into account. However, according to the mayor, many developers have expressed considerable concern about CIL, worried that substantial payments proposed by local planning authorities could make new and important developments unviable. According to the mayor, a handful of local CIL rates proposed by some London boroughs are now emerging that appear to be prohibitively high and could jeopardise London’s key developments coming forward, despite passing the regulatory tests of viability.
Therefore, the mayor strongly believes that it is vital that the risks to the delivery of strategic development objectives in London are minimised. He wants to ensure that he has strategic oversight over CIL payments that are being demanded from developers by boroughs and has the power to require amendments if payments would make an important strategic development potentially economically unviable. I beg to move.
Lord Adonis
Could the noble Lord give some examples of London boroughs with CIL rates he believes to be too high, given that he has used this as an argument for this amendment?
Lord Jenkin of Roding
My Lords, mention of the community infrastructure levy in this amendment gives me an opportunity—of which I have given my noble friends on the Front Bench notice—to raise an issue that was discussed with my noble friend Lady Hanham when she met the representatives of a very interesting small company called Pocket Living Ltd. This company aims to provide housing that is within the reach of people who can currently only afford to rent, and yet are above the level to qualify for social housing. Pocket Living Ltd has recently published a very splendid brochure, Pocket: Powered by the Mayor of London. This concerns the mayor’s housing covenant fund, but the company is very much a thriving one that fills a hugely important gap in housing provision, not just in London but potentially elsewhere as well.
The question is: what is the definition of affordable housing that would qualify for relief from a community infrastructure levy? When we debated Clause 6 we had a new definition of the affordable housing requirement, and I am told this is the first time that the words “affordable housing” have appeared in any statutory definition. The definition as it stands serves the limited purposes of that clause, but it adds to a plethora of overlapping definitions in this area that have grown up over the years for different purposes. Not only are these confusing, they can sometimes be downright contradictory. This is important because, as we have discussed, the need for genuinely affordable housing has never been greater.
I support the Bill’s objective of ensuring that the new housing developments we need are not held back by unreasonable and unviable demands for affordable housing. However, we must do everything we can to ensure that those who want to deliver genuinely affordable housing—of which I gave a brief outline at the beginning of my speech—have every incentive to do so, and are not held back by the unforeseen consequences of statutory definitions that may have been fit for purpose at the time, but in retrospect turned out to be too restrictive. I am afraid this is what has happened in the case of the regulations implementing the CIL. The regulations quite rightly recognise that we should not increase the burden on those with low or modest incomes, who are already struggling to find a home they can afford, by adding what would be a sizeable additional tax. However, the definitions of relief are so tightly drawn that we now find they do not cover some of the new and inventive models of affordable housing that are emerging.
I have mentioned that I was recently approached by a young company that found a very clever way to build smart new flats in central parts of London that young singles and couples can buy outright, even if they are on a modest income. The company wanted to build a small block of flats in Wandsworth for sale at around £200,000 each. The council wanted them, the Mayor of London wanted them, and they had a waiting list of 13,000 would-be buyers who desperately wanted them. However, as noble Lords may know, Wandsworth was one of the first London boroughs to implement the new levy, and when these people did their sums, they worked out that this would add some £10,000 to the cost of each flat. For a young couple on perhaps £30,000 or £40,000 a year, who have already been saving for perhaps seven or eight years for a deposit and have to pay London rents, £10,000 is an awful lot of money. The company reluctantly had to conclude that the scheme was unviable, and the plans were dropped.
These were genuinely affordable homes. They were available only to people who could prove that their salary was below the mayor’s limit for affordable housing. They were for sale at 20% below the open-market value, with a maximum price of £225,000. They could only ever be sold to other buyers who qualified for affordable homes. They would remain affordable homes, however many hands they went through. In fact, they satisfied every condition that my noble friend’s department sets out in the National Planning Policy Framework to qualify for affordable housing. Council planners say that they are affordable houses. The company had built five blocks of them already before the CIL came into effect. The Mayor of London agrees that they are affordable houses. DCLG says that they qualify for the affordable housing enhancement for the new homes bonus—so one part of the department seems to recognise this while the other does not. However, when it comes to the community infrastructure levy, they are treated in exactly the same way as if they were homes for millionaires. That really cannot be right. The only reason for it is that, when the regulations were drawn up in 2008, that type of home did not exist, so it was not included within the narrow definition for affordable housing.
As I have said, I am extremely grateful to my noble friend and my honourable friend Nick Boles who met with me and the representatives of this company. They listened very sympathetically as we put the problem to them. The company came away from that meeting encouraged by Ministers’ recognition of the problem. I know that Ministers have conceded that the CIL regulations are not perfect. One piece of sticking plaster was already applied just a couple of months ago, but I understand that a consultation paper will shortly be issued with some more proposals for change. Can my noble friend give the Committee some assurance that a priority will be to ensure that relief from CIL will be extended to cover all types of genuinely affordable housing, including the kind of housing scheme that was described to my noble friend and her honourable friend, and that the definition will be broad enough that we do not have to come back to it again within four or five years?
I was very struck by the story that this company told, and I think that Ministers were, too. I hope that we may get a sympathetic response to this plea.
Lord Ahmad of Wimbledon
My Lords, I thank noble Lords who have participated in this short debate. I thank also my noble friend Lord Tope for tabling the amendment. I understand his desire to support the mayor in his efforts to secure London’s growth, but I remain to be convinced that the changes being proposed are necessary and I shall highlight why.
The mayor has sufficient powers under the existing legislation to achieve his objectives. He has powers to set a CIL charge in London. He introduced this charge in April 2012 to help fund Crossrail, an objective that the Government fully support.
The existing CIL regulations are clear that the London boroughs must take the mayoral CIL charge into account when setting their own CIL charges. They cannot set a CIL charge which, when combined with the mayoral charge, would make broad areas of development unviable.
We have recently reviewed the statutory guidance for CIL. It is now clearer about the relationship between the levy and the implementation of local plans. The mayor can use the statutory guidance to challenge councils if he feels that their rates could put implementation of the London Plan at risk. Perhaps I may dwell on this point a little further. The issues within the statutory guidance published in December 2012 make it clear that charging schedules should be consistent and support implementation of the London Plan. It is also clear that the ability to deliver viably the sites and scale of development identified in the local plan should not be threatened. I point the noble Lord specifically to paragraphs 32 and 33 of the guidance, which refer to charge-setting in London and confirm:
“The Government expects the Mayor and the Boroughs to work closely in setting and running the Community Infrastructure Levy in London, including through mutual co-operation and the sharing of relevant information”.
We have also encouraged charging authorities to consult for at least six weeks on their draft charging schedule. This also provides an opportunity for the mayor to review and challenge proposed rates if necessary. As I have already said, the challenge can be made, and the correct place for the challenge is at the consultation and examining stages, when the mayor can make representations on all borough CIL charges. An independent public examination stage is also key to CIL. Any representations can be made to an independent examiner, who must determine whether the proposed CIL charge is appropriate. We therefore strongly believe that the impartial role of the examiner is essential, and the mayor’s role should be to engage with the process rather than take on additional powers to direct. My noble friend talked specifically of several London boroughs that have raised concerns and the noble Lord, Lord Adonis, also spoke specifically of where those matters have been raised. I am certainly not aware of which London boroughs have raised those issues but if that information is shared I am sure that can be looked at.
To pick up on a couple of points made by my noble friend Lord Jenkin, he referred to Pocket, which met with my noble friend and my honourable friend Nick Boles. It raised the issue of CIL payments and discount market sale housing. That case is being looked at and the issues raised have struck a note with Ministers. My noble friend Lady Hanham mentioned to me that she was very impressed by the issues raised. On the definition of affordable housing for CIL, the CIL Regulations 2010 give such a definition, which was quite tightly drawn. That said, if there are continuing concerns about the operation of the levy, they will be listened to. I am sure that as the levy comes more into play and practice, both in the mayor’s office and at a borough level, we will continue to look at how best it can be improved. However, turning back to the specific nature of the amendment, with the points I have made I hope that my noble friend Lord Tope will see fit to withdraw his amendment.
Lord Tope
I am very grateful to the Minister for that helpful reply. I do not know what was in the mind of the mayor when he said that. It would probably be very interesting to know what was in the mind of the mayor. I do not know which London boroughs he had in mind. If I had known, I think I still would not have said so because inevitably we would then be discussing the examples and their merits, rather than the principle here. As the Minister knows, this is the last of a number of amendments that I have spoken to in Committee to consider the whole position of London in the context of the Bill. We have had some helpful replies and some less helpful replies to earlier amendments. I am grateful to the Minister for the reply to this particular amendment, which I hope will give some reassurance and save at least some of the mayor’s worries. I beg leave to withdraw it.