Levelling-up and Regeneration Bill (Third sitting)

Matthew Pennycook Excerpts

Committee stage & Committee Debate - 3rd sitting
Thursday 23rd June 2022 Public Bill Committees

[The Chair]

I now call the shadow Minister, Mr Pennycook, to start the questioning.

[Matthew Pennycook (Greenwich and Woolwich) (Lab)]

Q95 Thank you, Mrs Murray, and thanks to those attending for taking the time to come and speak to us. Could I start with the potential impact of the Bill on the status and functioning of local planning? To what extent do you believe clauses 80 to 84 of the Bill, relating to development plans and national policy, and schedule 7 strike the right balance between the aim of streamlining local planning and the need to allow councils to tailor plans to local circumstances and encourage participation?

Victoria Hills: We think the intention to streamline local plans and take some of the bureaucracy out of them is something to be welcomed. We support that. At the moment, it is not clear to what extent the policies are going to be nationalised or not. We know the intention is there, but if you take an average local plan, we do not know—because we have not seen the detail yet—whether, for example, 10%, 50% or 80% of local policies will be effectively nationalised in this way.

In addition to the streamlining—as I say, we are not against the streamlining; if there is an opportunity to streamline, we support that—one of the areas of interest to us is the extent to which the community and, indeed, both Houses of Parliament will be involved in any consultation on these policies, which are very important policies. If they are to be pulled out of the local plans and put into a national framework, we think it is really important that an element of consultation and engagement, both with the community and across both Houses, is included in that. That is not in the Bill as currently drafted, and we think it is important.

I cannot answer the question exactly, because we have not seen the detail as to what proportion of local policies are going to be nationalised. If it were to be a significant proportion, we would be making the case even more for local consultation, engagement, and involvement of both Houses.

David Jackson: I entirely support what Victoria has said. There are some significant prizes to be won if we can streamline the process: speeding up decision making, adding certainty for investors and communities alike, and, through that process, building the prosperity and the flourishing communities that the Levelling-up and Regeneration Bill anticipates. But it is in the nature of the planning system and the complex legislative framework that it sits within that there are also downside risks. Victoria has identified those in terms of perhaps less room for discussion and negotiation. I would also put in there the risk of reduced flexibility—we might come on to that under another topic.

The other downside risk I would identify is the inevitable disruption as we go through the transition from the old system to the new system. Indeed, we will see some examples of that, so I think there are some downside risks. Again, I agree with Victoria that we have not seen the detail yet to be specific about the nature of those downside risks in their totality.

Tony Mulhall: I would like to add to that. We take soundings from our members around the country quite regularly. The sense I get is that members would like to see settled national policy and standards incorporated into these national development management policies, so that the same issues do not keep arising and being reconsidered. It is administratively efficient to do it this way, but it is also in line with the levelling-up agenda, where agreed standards and policies should apply to all areas. Many of the issues that are arising to do with climate change apply across the country. It also avoids the criticism that high planning and development standards can only be had in high-value locations.

In that regard, I refer back to a piece of work that we did called “Placemaking and value”, where we looked at exemplar places in the south-east of England. The criticism that we got about that was that a lot of people in the north of England said, “That would not be possible here because we do not have those land values.” It is very important that when we set national development management policies, we recognise what it is we are doing. We are ensuring that the standards apply to all areas and that all areas get the benefit of these standards.

[Matthew Pennycook]

Q Can I ask about the NPPF? The review was announced in the White Paper in August 2020. The publication of the final version will not come until 2024, and therefore the revised version will be operational only at that point. Given the number of place makers in the Bill—you have already spoken about the lack of detail in certain areas—that relate to the NPPF, will that delay or have an impact on the legislation? What more needs to be clarified in the Bill in terms of issues such as five-year land supply to ensure the legislation can operate effectively?

Victoria Hills: I think that any further delay to where we are currently—reminding ourselves that this process of the White Paper initially started back in 2020—is something to be avoided, because it creates uncertainty not only for those preparing local plans, but for those who want to bring forward proposals. We would urge that any changes, including the NPPF, come forward quickly—as soon as possible—to get shot of that uncertainty. It is really important. We have seen the slowdown of local plans already. You will be aware that only somewhere in the region of 60% of local authorities have an up-to-date local plan. There are some really important aspects in the NPPF that we think need to be improved, not least adding in the climate change legal requirement and putting a greater emphasis on that. We would like to see that expedited, and I think that any further delay is not going to be helpful.

[Matthew Pennycook]

Q Tony or David, do you want to briefly add to that?

David Jackson: Very briefly, I think that is absolutely right. The Government are now referring to this as a prospectus of changes, multi-level—[Inaudible.] I think in those circumstances, we risk delay. Each component is a crucial part of the overall system. I referred earlier to the complex legislative framework within which planning sits, and it all comes together as a unified process. Any missing component or uncertainty risks being a drag anchor, if I can use that phrase, on the whole system, so we want to see these issues addressed as urgently as possible. Again, we are seeing local planning authorities withdrawing their local plans because of this uncertainty. Given the costs of preparing them, authorities do not particularly want to have to do the process twice. Equally, given the costs that our clients are putting into the local planning process and their commitment to it, any delay is hugely unhelpful.

Tony Mulhall: I would like to add to that. I am particularly watching this in relation to the infrastructure levy, the implementation of which seems to be quite a long way down the line. The delivery of effective infrastructure is such a critical part of the system, so it would be useful to have a clear picture of the timeframe for implementation, given that there is quite a lengthy testing period associated with that as well.

[Matthew Pennycook]

Q Tony, you mentioned the infrastructure levy, and I would like to move on to that aspect of the Bill. Again, there is a noticeable lack of detail on the face of the Bill about how the Government arrived at a considered judgment about how the levy will work, but how do you think it might operate in practice? I put it to you that there is the potential for local authorities to set multiple rates and thresholds —probably by means of a cumbersome examination process—and many of the issues around viability already exist.

It strikes me that the levy is not that dissimilar to the current set-up of the community infrastructure levy. Do you think that is fair? If not, what advantage, if any, do you think the levy will provide over the current system? How do you see it operating in practice on complex brownfield sites? Given the ability to vary rates—in the sense that the Government are proposing a new metric for end-use value, not a new flat rate—what will that do for levelling up? Will local authorities in areas with low land value not just set low levy rates that do not afford much public gain?

Tony Mulhall: Yes, that is a concern we have expressed all along. For the last three or four years, we have expressed the view that a concept of land value capture as a way of funding your infrastructure is not adequate in itself. There are lots of areas where there will not be value to be captured, and we would like to see where the funding is for essential pieces of infrastructure.

One of the interesting aspects of the Bill is that the Secretary of State can intervene if they feel that the levy was set too high and will impact on viability. I think something like that should be directly connected to the alternative infrastructure source for that particular area. The funding for the infrastructure needs to be pointed out by the Secretary of State if they decide to reduce the levy. Quite a lot of small areas of the construction and design of the levy really need to be resolved fully. I know there is a consultation coming, but those details will be very important.

One of the main objectives is to capture additional land value, but also to avoid the contentious area of viability being contested at so many different stages in the process. We are very happy to help the Department to devise a system that will be easy to apply. Being easy to apply means that the metrics being used are easily discoverable and not contentious. That is a fundamental part of an efficiently operating taxation system, which is how this is described. What we are dealing with here is not an assessment of viability for planning purposes; these are valuations for taxation purposes.

You asked about two other issues—one was complex brownfield sites. It is quite understandable that the Government would look for a measure to deal with this subject, and I think something like the section 106 agreements will be the natural fall-back position here. Officials often say that it is amazing how derided these measures are until you try to remove them, but there is a logical reason for using a section 106 agreement on complex sites because the developer is in the best position to phase and programme the necessary infrastructure. The question then will be how this is to be set off against the liabilities that would have accrued under the infrastructure levy. Varying the rate is an important aspect as well, and I think it should be retained.

This is quite a complex proposal, and it sounds as if it is intended to be rolled out in phases, to make sure that lessons are learned in operation, as they had to be for the CIL measures. The real question is: will this be the replacement of one complex system by another complex system that we will have to learn and run simultaneously, because there will be a transition period? There is quite a lot to be resolved with regard to the infrastructure levy and we are quite happy to contribute to resolving it, to make it work better.

[Matthew Pennycook]

Q I think that is an under-statement, Tony, but your response is very useful. Do you have anything to add it that, David?

[The Chair]

David, could I ask you to face the microphone please? The sound quality in your last answer was not good, and if you face the microphone, Members may be able to hear your evidence better. Thank you.

David Jackson: I beg your pardon. I think what Tony has said is correct. There is uncertainty around this new system. Fundamentally, it is one tax being replaced by another form of tax. The benefit of the new system is that it is charged on development value. That is a clearer metric than the rather complex viability assessments that led the CIL process, which was front-loaded in that respect and did not take account of changing market conditions, whether up or down. Clearly, there is a benefit in that simplification of the process based on value.

It is welcome that there is flexibility or variability in the system to take account of different circumstances. Complex brownfield sites are clearly very different from greenfield sites, as the question rightly identifies. The most important thing is that new development, new growth and new investment is facilitated rather than obstructed by the system, because none of those good things can come unless development and growth is facilitated. That is beneficial, whether it is by way of taxation, the CIL, the new infrastructure levy or, indeed, the investment that is brought forward through section 106. We started off with some uncertainty around the future of section 106, and one of the most welcome aspects of the legislation is that section 106 is being retained. It gives both developers and the community certainty about when that new infrastructure—whether it be social, physical or other infrastructure—is to be provided.

One area where there is less certainty, so far as we can see at the moment, is where the infrastructure levy is going to be spent. Previously, under the CIL system, we had regulation 123, which set out local authority priorities for investment and how money should be spent. The emphasis in discussions to date has been on affordable housing, but is this investment going to be directed towards other locally set measures? I think there needs to be transparency in relation to that.

Finally, I agree with Tony’s point about the need for road testing. This is complex new regulation. It needs to be road tested by way of pilot schemes before we invite local authorities across the country to invest resources into this complex process.

--- Later in debate ---

[The Chair]

I call the shadow Minister.

[Matthew Pennycook]

Q Thank you, Mrs Murray, and I thank both witnesses for attending. I would ideally like to get through four questions, so I would appreciate it if you could trim your answers to help me do that. The first question relates to national development management plans. Do you take issue with them on principle, on the grounds that they undermine the primacy of local and neighbourhood plans? If not, do you think their use should be circumscribed? If so, how tightly?

Jonathan Owen: As I said, we are strongly supportive of a plan-led system, and we are concerned that those national development management policies might well take primacy over neighbourhood plans and cause difficulties. We would like to see the Bill amended so that they do not have primacy over those other local deals. I also think there should be consideration to make sure that if those national policies are changed, it does not require an immediate updating of a neighbourhood or local plan. I think there is a risk that we will have waves of new national plans that will then set aside some of the local policies.

Tony Burton: I agree with that. [Inaudible.] There is merit in setting out at a national level those policies that are appropriate to be expressed at a national level: policies that are universally applicable and set the framework within which other things happen. We see completely unnecessary repetition, rewording, obfuscation and a lack of clarity when they are carried forward through development plans and some neighbourhood plans.

The risk is that national policies stray too far into matters that are much better decided at the local or neighbourhood level. There will always be a very strong temptation for Whitehall to overstep the mark, as history shows. We think that there need to be clear measures that prescribe and limit the national development management policies to those things for which they are appropriate and which do not fetter the nuance and local understanding that is brought at local and neighbourhood level.

[Matthew Pennycook]

Q Thank you. I am sure you both know that, unlike national policy statements, the Bill proposes no parliamentary approval process for NDMPs and stipulates that the requirement to consult is entirely at the discretion of the Secretary of State. Can I take it that you both agree there should be a greater degree of consultation and parliamentary oversight of these plans?

Tony Burton: Yes, indeed. We don’t necessarily think that they are sufficient on the NPSs or indeed the national planning policy framework, so it is not just about equivalence. That could all be significantly improved to a much more citizen and community-led insight into how these policies are being drawn up.

Jonathan Owen: As for the first tier of local government, I think that the more engagement and consultation, the better. So yes, I think that is something that should be looked at.

[Matthew Pennycook]

Q I have a very specific question relating to clause 83, which states that planning determination must be made

“in accordance with the development plan and any national development management policies, unless material considerations strongly indicate otherwise.”

Is that language sufficiently clear to be easily understood by councils?

Tony Burton: May I digress briefly? This is a personal question, because over 30 years ago, in a different campaigning role, I was responsible for drafting all the amendments to what became the Planning and Compensation Act 1991, which includes the provisions that clause 83 now seeks to change. At that time, we went through about a dozen variations of how to express on the face of the Bill what we were seeking to achieve. Sir George Young was the Minister responsible and was seeking a plan-led system. We even tried “strongly” at the time and, if my memory serves me right, it was rejected by Parliament’s legal experts. So although the language is clunky—it is legalistic—it has a 30-year track record. The insertion of a single word is a helpful expression of a more plan-led approach. It might be more helpful to go down that route than it would be to develop an entirely different set of wording, which would then trigger a whole new set of case law having to be established. In terms of the pragmatic achievement of what we are trying to do here—to strengthen a plan-led approach—the pragmatic approach, as suggested in the Bill, is reasonable.

Jonathan Owen: I agree with Tony. Adding “strongly” is helpful.

[Matthew Pennycook]

Q The Bill introduces two new development plan documents: spatial development strategies and supplementary plans. However, it provides only for extremely limited opportunities for the public to participate in producing them. Should the Bill be amended to ensure that members of the public can be involved in every aspect of development plan formulation? If so, what might that look like?

Tony Burton: Again, it is the same point that we have made throughout. You cannot, on the one hand, have a Bill that has written through it political rhetoric about communities having more insight and influence, being less done to, and strengthening the role in local planning, but on the other hand have critical documents prepared by other parts of the system being drawn up without the benefit of the insight that those communities that will be involved in other ways can bring. Providing those legal safeguards is an essential process, in our view, and that needs to be more than six weeks of a PDF being on a website; it needs to be something that requires positive interaction being secured with those who are going to be interested and engaged in it.

Jonathan Owen: There is some helpful evidence from the neighbourhood planning process. Where communities have been engaged and have inputted effectively to the development of neighbourhood plans, they have understood the reasons for some of the development pressures and other things. Actually, where there are neighbourhood plans, additional housing to that anticipated in the local plan has often been put in place. Engagement and full consultation, as Tony suggested, is sensible.

[The Chair]

I call Greg Smith.