Levelling-up and Regeneration Bill

Lord Young of Cookham Excerpts

Report stage
Tuesday 18th July 2023 Lords Chamber

Even in Committee, I do not think we looked at this issue properly. On page 431, in Schedule 12, under general regulations, the Government included a new provision that says that they may make provision treating the community infrastructure levy as if it were the infrastructure levy. All the flexibilities that are required are available in this Bill. We do not know yet what the infrastructure levy and new delivery agreements will look like, but they could incorporate many of the best features of the community infrastructure levy and the best features of Section 106—but they absolutely will require local authorities to have a charging schedule and require those additional developer contributions substantially to increase the availability of affordable housing. On that basis, it would be very remiss on our part at this stage to remove Clause 129 or Schedule 12 rather than giving us the opportunity to have those improvements in the structure of developer contributions. So I am afraid that I shall not support Amendment 68.

[Lord Young of Cookham (Con)]

My Lords, I add a brief footnote to what the noble Lord, Lord Best, said in speaking to Amendment 71, to which I have added my name, and to what my noble friend Lord Lansley has said about Amendment 311. I endorse what the noble Lord, Lord Best, and my noble friend said about the willingness of Ministers to listen to us throughout the process. The government amendments respond to the concern that we all expressed in Committee about the potential loss of affordable homes.

I shall pick up the point made by the noble Lord, Lord Best, about the so-called viability loophole. What has been happening is that well-resourced developers, half way through a scheme, have turned to the local authority and said, “It’s no longer viable—and, by the way, we cannot build the affordable homes which were due to be built right towards the end of the scheme”. That left the local planning authority with the nuclear option of pulling the plug on the whole scheme or allowing it to go ahead and at least getting the open market houses. At the time, Shelter did some research, which showed that the use of viability assessments in 11 local authorities across England contributed to 79% fewer affordable houses being built in urban areas than would have built if the original agreement had been adhered to. Following that controversy, the Government introduced guidance and tightened up the rules in 2018; the new rules limited the use of viability assessments to reduce affordable housing to exceptional circumstances, such as a recession or similar economic changes. That was a step in the right direction.

My concern, which was echoed by the noble Lord, Lord Best, is that government Amendment 76 seems to go back on the 2018 changes and revert to the position that generated all the criticism about viability. I note in passing that the technical consultation criticised the current Section 106 agreements by saying that the

“planning obligations are uncertain and opaque … they are subject to negotiation (and can be subject to subsequent renegotiation), can create uncertainty for communities over the level of infrastructure and affordable housing that will be delivered”.

Is that not exactly what Amendment 76 does in referring to a development being economically unviable? It seems that what the Government are doing is virtually guaranteeing that no development will ever lose money, while the developer benefits from any gains above expectation. The levelling up Select Committee’s report expressed the same doubts last week.

I want to say a final word on Amendment 311, to which my noble friend Lord Lansley spoke. On 17 March, the Government published their technical consultation. It ran to 91 pages and asked 45 questions; it is not an easy read. The consultation ended on 9 June and the document said:

“Following the closure of this consultation, the government will assess responses. In doing so, a response will be issued that summarises the themes that emerged, before issuing a final consultation on the draft regulations after the Levelling Up and Regeneration Bill achieves Royal Assent”.


This means that we are debating Schedule 12 in a vacuum because we do not know what its structure will be. I am afraid that this is a feature of too much in this Bill.

When it published its report, Reforms to National Planning Policy, the Select Committee in another place picked up the same point. It also said that we are going to have real issues if we run the infrastructure levy and Section 106 in tandem, leading to arguments and complications. I was not wholly reassured by what the Minister in the other place said in response to the Select Committee’s query:

“If they say that it is too complicated and ask to change things, we will consider that”.


I am not sure that that is a great step forward.

So, on both issues—viability and the absence of the structure of Section 12—I hope that my noble friend the Minister will be able to provide the House with some reassurances.

[The Earl of Lytton (CB)]

My Lords, I will intervene briefly. I declare an interest as a chartered surveyor with some involvement in the development process.

I want to speak to the factor that links Amendments 71 and 94 and follows on from what the noble Lord, Lord Young of Cookham, has just said. I have been in the past a technical operator of the dark arts of development appraisal. I would be much less charitable than the noble Lord, Lord Stunell, in my comments about exactly what goes on here; for instance, how land values under option agreements are arrived at and how, with a click of a mouse on a proprietary development appraisal computer package, the matter can then adapt to a viability test for the local authority’s community infrastructure levy or Section 106 contribution purposes. Noble Lords would be astounded at the way in which a yield change here and a cost base there, as well as the adaption of a timeframe or the alteration of a contingency allowance—I mention just a few means—can be used to alter significantly the entire outcome and colouration of what is claimed on the back of it. Further, all this is done by using the same primary data inputs and, unsurprisingly, there are two factors that developers will never reveal to you if they can get away with it. One is the land value that they paid, coloured as it is by all sorts of associated costs before it gets as far as a planning consent; the second is their construction costs, which are entirely opaque.

Alongside all this and of much longer standing is what I describe as the commoditisation of residential property, which started in the 1990s. It has since financed ever more of the items society wishes to have, in terms of affordable housing, infrastructure, schools et cetera. But that policy has created a consistent and ever more bankable asset within an enhanced lending sector. This results in the very unfortunate situation of driving up house prices and creating a model that is less than satisfactory. Core to this is the issue raised by the noble Lord, Lord Stunell—transparency. Without it, none of this will be demonstrable to anybody, at any time.

--- Later in debate ---

[Earl Howe (Con)]

My Lords, in moving Amendment 95, I will speak also to Amendments 97, 287 and 293, which address recommendations in the report of your Lordships’ Delegated Powers and Regulatory Reform Committee on community land auctions—CLAs. I declare my interest as a landowner.

These procedural amendments will change the power of direction in Clause 133(1)(a), which allows the Secretary of State to direct that a local planning authority preparing a local plan may put in place a CLA arrangement. We are changing this, so that local planning authorities wishing to pilot a CLA arrangement should instead be designated by CLA regulations. These regulations will be subject to the negative resolution procedure to allow for an appropriate level of parliamentary scrutiny of the selection of local planning authorities to participate in community land auction arrangements. We agree with the argument put forward by the DPRRC that the negative resolution procedure is more appropriate than the affirmative, because it will not lead to the delay of the implementation of CLA arrangements.

The policy intent of these amendments is to allow for the appropriate level of parliamentary scrutiny over the selection of prospective piloting authorities. Any potential piloting authorities will need to actively volunteer to participate in CLA arrangements; they will not be forced to do so. These amendments remove any reference to a power for the DLUHC Secretary of State to direct in Part 5, and make associated changes to Clause 231 to ensure that the negative resolution procedure will apply to the new regulation-making power in Clause 133(1). I beg to move.

[Lord Young of Cookham (Con)]

My Lords, I will speak to Amendments 96 and 98 in my name and that of my noble friend Lord Lansley.

In answering a question last week, the Minister, my noble friend Lady Scott, said that the levelling-up Bill was a large one; she gave that as a reason for dropping the repeal of the Vagrancy Act. My amendment directly addresses that concern by deleting eight pages from the Bill: those introducing the untested concept of community land auctions, parachuted into the Bill at a late stage in the other place, hot from the bubbling vat of a think tank, without the normal process of cooling and maturing.

I say again how grateful I am to Ministers for their patience in discussions on CLAs and for the very comprehensive six-page letter received yesterday, addressing some of the concerns that I have spoken about.

One would have thought that a novel concept such as this one would have been subjected to some consultation before it appeared in the Bill: first, with those who have to operate it—namely, the planning authorities—and, secondly, with those who represent the landowners, who have expressed deep reservations about the proposal. So we were surprised to hear the Minister say, in winding up the debate in Committee:

“We will consult on community land auctions shortly”.—[Official Report, 18/5/23; col. 430.]


Over the weekend, I was reading the guidance issued in April last year for civil servants who are charged with developing policies such as this one. It says:

“Engaging with stakeholders as soon as possible gives them the opportunity to understand what’s being asked of the service team and why. It’s also a chance to build trust and understanding of each other’s needs and ways of working and lets them plan their time and involvement with the project”.


Clearly, that engagement with the stakeholders simply has not happened here. I am not blaming the civil servants; Ministers clearly insisted on this clause going in. The guidance then adds a warning to civil servants to

“think about what your users need, not what government thinks they want”.