Levelling-up and Regeneration Bill (Fourth sitting)

Matthew Pennycook Excerpts

Committee stage
Thursday 23rd June 2022 Public Bill Committees

[The Chair]

Thank you. The witnesses can expect questions from Ministers because the object of this Committee is to gather evidence to influence our detailed consideration of the Bill.

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

Q I thank the witnesses for their attendance, which is appreciated. I have a general question to start, and then a few specifics. Do you think the Bill is a missed opportunity to respond as needed to the climate and environment emergency? If that is your view, in what ways would you like to see the Bill overhauled to that end?

Dr Benwell: It is definitely not a missed opportunity yet, because we are only at the start of the process. I would say it is a huge opportunity to tackle two important environmental problems associated with planning and levelling up.

The first of these is environmental inequality. We think of the levelling-up agenda as being about economic inequality, but we live in a country of really deep environmental inequality. We have probably all heard the statistic that there are 40,000 premature deaths a year from air pollution, but it can vary street by street, let alone town by town. It goes deeper than that, because there is environmental inequality in things like access to natural green space, which has been brought to the fore over the past couple of years when so many people have depended on it. Those inequalities are, again, really deep. People from the lowest socioeconomic backgrounds are nine times less likely to have access to high-quality natural green spaces, which is hugely important for our physical and mental health. People from ethnic minority backgrounds are twice as likely to live in places that are bereft of access to natural green space.

At a wider level, there are deeper environmental inequalities still. Think, for example, of folk living in areas where degraded uplands mean that water flows more quickly over surfaces, flooding homes and businesses. Think of the same in urban areas, where densification and the use of impermeable surfaces is increasing flood risk and other environmental risks. There are huge levelling-up aspects to environmental inequality, which this Bill is an opportunity to fix.

Secondly, the planning system can help us environmentally through its impact on nature. We know that more than 40% of species are in long-term decline, and 15% of species here in Great Britain are at risk of extinction. The last “State of Nature” report made it clear that planning and unsustainable development play a big role in that. The Bill is a chance to make sure that, in future, the planning system is not imbalanced as it so often has been in the past when it focused on things like housing numbers alone. We need to balance that with the need for spatial planning and careful development that contributes to nature’s recovery. At the moment though, those opportunities have not been realised. On the contrary, some provisions in the Bill will do quite the opposite and bring in new environmental risks.

I will quickly address how to grasp those opportunities. It would be excellent if, among the levelling-up missions set in clause 1, you included access to a healthy natural environment. I was really surprised to see that the levelling-up White Paper’s list of capitals included human capital, financial capital, intellectual capital and social capital but not natural capital. Not to list environmental capital as one of those fundamental assets reflects a 1980s philosophy, really. So we should have access to a good-quality natural environment as a levelling-up mission, and a duty on public bodies to help people achieve that with access to natural green space.

On improving the planning system, there are some obvious missed wins there, such as making sure that planning and development decisions are in line with section 1 of the Environment Act 2021 and section 1 of the Climate Change Act 2008, to meet our carbon budgets and halt nature’s decline by 2030. You could go further, with things like implementing the findings of the Glover review to improve the contribution of national parks to restoring nature here in the UK. So there are some really missed opportunities for positive planning.

On the negative side, I do not know whether we will touch on this later, but although the environmental outcome reports proposed in the Bill sound positive in principle for the natural environment, the way they are framed risks undermining some of our most important conservation laws. Those clauses and that part of the Bill need some attention to make sure they do what I think they are intended to do, which is to add a new layer of protection, not to weaken our long-standing, important environmental protections in this country.

[Matthew Pennycook]

Q Many thanks. Ms McKenzie and Mr Miner, do you have anything to add?

Carolyn McKenzie: The earlier speaker made some really good points; I back up all those points, but I will not reiterate them. At the local level, it is very much about integration across different policies. There is some really good stuff in the Bill, but integration across all the different policies will be key. This is not just about the big infrastructure, such as wind farms or EV charging; it is about making sure that environmental considerations are integrated across all projects in infrastructure and all levelling-up projects, because a pound spent on levelling up can deliver on your outcomes for net zero or biodiversity, and investment in net zero and biodiversity can deliver on your levelling-up ambitions as well.

In addition, although there is a real need for some of the big infrastructure projects, if I take a look at Surrey as a whole and our net zero emissions, the biggest proportion of those emissions, 41%, is down to private sector transport, and 31% to 33% is down to domestic housing. Those local actions—local public transport and active travel to get people out of their cars, and remote working, as well as tackling retrofit—have the potential to not only reduce emissions, but to drive jobs and growth and tackle inequalities, because inequality is hugely linked to the environment: a lot of our poorer communities have the poorest environments. The one thing I will repeat from Richard’s comments is that there is a lack of recognition that a healthy environment for all is really important when it comes to having a healthy economy and a healthy social area as well.

The last point I would like to make is about taking a place-based approach. Funding is often fragmented, competitive, and focused on specific things like EV cars or renewable energy. At the county level, we are very much looking at a place-based approach where we can link things together and look at a community as a whole. If we could link all that funding together and have a pot that delivers on an evidence-based approach that says what is needed in the area and links up all of our ambitions around health, economy, social and environment, that would be a lot easier, and we could make funding deliver more than the separate, individual pots could. Having place-based funding that is based on local evidence of need would be really helpful.

Paul Miner: I should say at the beginning that I am speaking today on behalf of CPRE, the countryside charity, and point out that CPRE is leading the Better Planning Coalition, which includes a wide variety of environmental, social and community organisations that have come together to put forward a shared view on how we can improve the Levelling Up and Regeneration Bill and make it stronger for people and nature more generally. We are working in a number of key areas. Climate change is one of them.

In CPRE’s view, at the moment the planning system has an institutional weakness in dealing with climate change. There is a duty on local authorities in the Planning and Compulsory Purchase Act 2004 for their development plan document—so local plans essentially—to contribute towards the mitigation of and adaptation to climate change. However, that duty is not strong enough. It does not consistently influence local authorities or planning inspectors examining plans or appeals. The Bill merely reiterates this existing and insufficient duty. We have seen, for example, recent planning stats reports for 24 recently adopted local plans that show only one mention of climate change for 24 of boosting housing supply. The priorities of the planning system have become massively skewed and unbalanced.

We want to see in the final version of the Bill some additional clauses that apply the climate change duty both more meaningfully, so that it clearly reiterates the national commitments made in the Climate Change Act 2008, but also applies the climate change duty to national planning policy as well as just local plans. It should also apply to decision making on specific planning applications, as well as just in the making of local plans. We also need to see more detail about what the duty means both in terms of mitigation, achieving Climate Change Act targets on budget and climate budgets, and in terms of adaptation, relating it to relevant statutory risk assessments and compliance. The coalition is coming forward with some further ideas on this, which we are very keen to discuss further with the Committee in due course.

[Matthew Pennycook]

Q There were lots of very general points there; I want to get into the specific. I would like to ask you two questions, so I ask the witnesses to be as brief as they can to ensure I can do that. Dr Benwell, you mentioned environmental outcome reports. What is the panel’s view on them as a replacement for environmental impact assessments and strategic environmental assessments? To an extent, can you give a considered view given the lack of detail in the Bill as to what they will look like in practice?

Dr Benwell: We cannot give a complete view, because so much is proposed to be done in regulations and that itself is a problem. The idea of taking a more outcome-based approach to environmental impact assessments is a good one and there are definitely areas where environmental impact assessment and strategic environmental assessment can be improved. So things like making sure that you get the thresholds right to include all potentially environmentally damaging plans; that could be improved. Things like making scoping decisions mandatory; that could be improved. The problem as we see it with the environmental outcomes proposed in the Bill is that the outcomes set can simply be spliced in in place of existing environmental requirements. We do not know that those will be robust enough.

For example, in the environmental impact assessment process, if anything proposed in a plan or a project is likely to cause significant harm to the environment, there is a duty to avoid, mitigate or compensate for that potential harm. In the new system, if an environmental outcome is set that, for example, talks about a general outcome of improving the abundance of species at the national level, any sort of project that claims to be doing that nationally could ignore local impacts. It could ignore the impacts on particularly important sites and species at the local level. That could be extremely damaging for things like sites of special scientific interest and UNESCO sites, which are afforded their main protection through the planning system and through the EIA and SEA.

I should point out that these clauses will affect not just the EIA and SEA; it is really important to note that the habitats regulations and the habitats regulations assessments are also affected. If you look at clause 127, you will find an extraordinary provision that says that anything done in an environmental outcomes report can be treated as satisfying any existing duties under the habitats regulations assessment process. That process, which is what protects our most internationally important wildlife sites from harm, is even stronger than the EIA and SEA, because under the habitats regulations process, before a site can be affected by a project that causes significant harm on site or by contiguous activities, the developer must prove that mitigation is in place to avoid that significant harm, or that there are imperative overriding public interest reasons to proceed and compensatory measures are in place.

That is a really high legal bar to protect our most important sites and species of international significance. Under the Bill, the Government could put in its place a more parochial and limited environmental outcome, such as saying that the best available technology has been used to reduce water pollution, or that overall national trends will be going in the right direction. That would weaken and undermine the extremely important protection provided by the habitats regulations. You do not often see a clause in a Bill that says that anything in regulations can be treated as satisfying existing legal duties, or indeed that anything in them can amend, replace or repeal any of the most fundamental parts of the habitats regulations that we have come to rely on for decades. The concept is quite good, but the way in which it is being applied brings serious risks of undermining long-standing environmental rules that would potentially create huge uncertainty in the planning system, because developers and conservationists alike have become used to operating under this system.

Paul Miner: I agree with Richard about the environmental dimension of the environmental outcomes reports. It is also worth the Committee considering that under the current system, local authorities have to do a sustainability appraisal, looking not only at environmental factors but at social and economic factors.

To pick up on what Richard and Carolyn pointed out, there is quite an important issue about the effect of the planning system on human health. It seems particularly strange that in a Bill about levelling up we are not using the outcomes reports as a means of embedding the Government’s levelling-up objectives in the planning system. For example, the levelling-up White Paper calls for measures on increasing healthy life expectancy and regenerating town centres, but those will not be assessed at all through the planning system under environmental outcomes reports, whereas they would have been under the current system of sustainability appraisals.

Carolyn McKenzie: I agree that taking an outcome-based approach allows us to be more flexible and achieve more, but it depends on how narrow the outcomes are, which is Richard’s point. It would be really good to ensure that the outcomes in the Bill match the performance targets and indicators that the Department for Environment, Food and Rural Affairs is currently consulting on under the Environment Act 2021. They need to link up so that we have one set of environmental indicators that all sectors and all areas are delivering on.

To pick out one example, there is no mention of natural capital in the Bill, as Richard pointed out. How can we put in an outcome relating to natural capital, which could be really important for health, attracting businesses to areas or carbon sequestration? That is a key element of levelling up, so I urge caution in ensuring that any new outcomes link directly to the Environment Act and the 25-year environment plan.

[Matthew Pennycook]

Q Finally, do you believe that clause 117 could potentially lead to an erosion of existing environmental protections? Do you believe that clause 120 provides adequate protection? Will it ensure that, at a minimum, there is no regression from existing protections? If not, how would you ideally like to see the Bill strengthened?

Dr Benwell: I should have brought my copy of the Bill. There are actually some very good bits in clause 117. The Government have done quite a good job of writing in the mitigation hierarchy, which is welcome to see. The problem is linked through to clause 127, which allows everything in preceding parts simply to replace existing environmental law. It would be much better if the Government came forward with fully worked-up proposals for how to strengthen the existing system of the EIA and SEA, rather than taking the approach of giving themselves the powers to take out layers of environmental law and put in something different.

You mentioned clause 120, the so-called non-regression clause. It is obviously a good thing to have a commitment not to weaken environmental protection, but I am afraid that the efficacy of such a clause is really in doubt, for a number of reasons. First, it is the Secretary of State in whose opinion environmental law has to be maintained at an equal level. That is a highly subjective opinion left in the hands of Ministers—and, just to emphasise, not a court in the land would challenge that on the basis of ultra vires without it being patently absurd. Courts are really deferential to decision makers, so if a Minister were to say, “Yes, this is equivalent,” that statement would have to be really, really daft for a court to challenge it. So we think that that kind of non-regression provision is unlikely to be robust.

Secondly, the other noteworthy part of the non-regression provision is that it talks about overall levels of protection. That is where we come back to the idea of talking about the environment in aggregate and those big broad trends of species-level data, which is really important—like Carolyn, I think that we should be linking back to the Environment Act targets—but it is not sufficient. We must keep in place the rules that protect the particular, the peculiar and the exciting at the local level that matter to important people, and those local populations of species and habitats that are so important. Otherwise, we get into a runaway offsetting mentality where the assurance that things will be better overall can be taken to obscure a lot of harm to the natural environment at the local level.

So there are some good things in clause 117 and some nice sentiments in clause 120, but overall they do not give the reassurance that would be provided by simply taking time to work up provisions in full and bring them forward in primary legislation rather than giving Ministers the power to swip and swap through regulations.

Paul Miner: I have nothing further to add on this question.

Carolyn McKenzie: I have nothing further to add other than to reiterate the local element. You do get lots of peculiarities in different areas, and they can be lost, so we must make sure that they are not.

[Neil O’Brien]

Q This question is directed at Paul in the first instance. The Bill contains a number of measures from the infrastructure levy to strengthening compulsory purchase order powers, high street rental auctions and heritage protections that are intended to drive more brownfield, urban regeneration. It also contains measures to create more combined authorities with transport and regeneration powers as part of building on the Government’s urban uplift and shift towards a regeneration-led approach to planning and housing. What assessment have you made of the advantages in embodied carbon of building reuse and of denser, better public transport-connected cities in reducing pollution? What is your take on that model of development?

Paul Miner: We think that a brownfield-first approach to new housing and commercial building development can have a number of benefits. We have seen constantly over the years that there is enough brownfield land available for over 1 million new homes in any given year, and this supply of brownfield is constantly replenishing as more sites come forward, and it is possible to build at higher densities.

We think there are a number of clauses in the Bill that could help with brownfield regeneration, such as those relating to changing compulsory purchase order powers, as you have mentioned, and the infrastructure levy. Getting local plans in place more quickly will also help to bring brownfield sites forward. So we see a lot of benefits to a brownfield-first approach.

However, the problem we have consistently had over the past 15 years, under both Conservative and Labour Governments, is that it has been easier for large housebuilders to bring forward speculative developments through the planning system, often not contained within local plans, than to be able to get these schemes through at appeal. We think there are a number of measures the Government need to look at.

Some of these may involve legislation but more involve changes to policy to give councils more power to set targets for the amount of housing needed in their area, to make sure that housing targets reflect what is likely to be built in the area, as opposed to what house builders say when they claim to be meeting housing targets that they then do not build, and to identify local needs for affordable homes. In many areas of the country they are crying out for affordable homes, but the kind of housing that is being built is not meeting those identified needs.

We recognise that there is a lot in the Bill that is helping to bring forward the benefits of a brownfield-first approach, in terms of, as you say, embodied carbon, saving precious agricultural land and regenerating communities in of need levelling up. At the same time, we think there is scope to do much more.

--- Later in debate ---

[The Chair]

I call the shadow Minister, Matthew Pennycook.

[Matthew Pennycook]

Q Thank you, Hugh, for giving up your time to speak to us. I want to start with some of the measures you have spoken about in terms of local planning. The TCPA is on record as having concerns about some of the centralising thrust of the Bill. What impact do you believe clauses 82 to 84 and schedule 7 could have on public participation, trust and confidence in the planning system, and how would the TCPA ideally like to see them amended?

Dr Ellis: There are two issues. One is about rights to be heard. We have decided now in the Bill to call several documents “development plan documents,” which has a specific legal meaning and a specific legal way. So the strategic plan, the supplementary plan and the local plan are now all development plan documents. If a development plan document is being prepared, it has legal weight in planning, and the quick answer is there therefore must be a right to be heard. On the strategic plans, the Bill currently says that it positively excludes the right to be heard at an examination. That seems to us wholly wrong and unnecessary. If people want to, we should give them the opportunity turn up at an inquiry and test the evidence.

To be clear, even if the criteria are set nationally, green belt allocations will probably be set in those strategic plans. In other words, the issues that people really care about have to be debated in an arena where there is a right to be heard. That would be an easy modification to make, and I so hope that Ministers will seriously give it consideration.

The other issue is centralisation. That worries us even more, because nationally described development management policy has a new legal status. There has been some debate about that, and we are absolutely convinced that it does have a new and special legal status as national policy described in law. The clauses elevate that policy so that where there is a dispute, it is resolved in favour of the national policy.

There are no limitations on what the Secretary of State can include in that national development management policy; nor is there a robust process of parliamentary scrutiny, which there is for national policy statements in major infrastructure. That has to change. If the Government are determined to have such a policy, parliamentary scrutiny and public participation in setting it are crucial.

[Matthew Pennycook]

Q The Bill proposes the abandonment of the duty of co-operation. What do you think are the likely consequences of that proposal for strategic planning and the delivery of new homes?

Dr Ellis: Simply, there will not be any. The duty to co-operate was a problematic measure—a stop-gap measure—inserted after the abolition of regional planning. You would expect me to say this, and it may not be popular, but regional planning in this country was critically important to our future. I understand and have to accept that there was insufficient public support for it. Again, it simply did not have the right kind of governance, but it was important.

Put simply, for the reasons you have heard, which I will not repeat, it is absolutely essential that we have bigger-than-local decision making. That enables communities to make decisions; it does not trump them. If you want to preserve the east coast from a sea level rise of 1.5 metres by the beginning of the next century, which is predicted by the Environment Agency, you cannot expect 33 district councils between the Humber and the Thames to do that on their own, so it is very important that we get that right.

Removing the duty to co-operate and replacing it with a policy imperative just makes a situation even worse. Devolution could help, but of course, that is an ad hoc process; we do not yet know who wants to do devolution. I am sat in Derbyshire, and I have no idea whether Derbyshire wants to be a combined authority or not. It is vital that we have that strategic tier.

[Matthew Pennycook]

Q Part 6 of the Bill aims to standardise the range of powers available to each type of development corporation, and gives local authorities the power to request their formation. Are those measures likely to have much of an impact? If not, how might the Bill be strengthened to ensure that development corporations can contribute more effectively to delivery?

Dr Ellis: Development corporations are really welcome, but it is worth remembering that when you have effective planning, which links planning to delivery—that is what a development corporation does; you can really drive change—the most important thing is that their governance needs to be modernised so that they are genuinely accountable and participative. The purpose of a development corporation is to draw on what Oliver Letwin recognised in his review: the critical role of the public sector as master developer in de-risking development.

Much of the challenge in why we are not delivering the homes that we consent in the planning process is because the private sector has limited incentive to deliver beyond certain levels, based on absorption rates. Development corporations can do that. It is worth reflecting on the fact that, within 20 years of the war, we consented 33 new towns, which housed 2.8 million people and paid for themselves. That record is largely forgotten but still very powerful.

The answer is that the challenge in giving the powers solely to local authorities is that they work only when Government stand behind them. I think it is the Government’s role in housing that we need to draw out. They need to be more muscular in supporting local authorities. The experience from the locally led development corporation in north Essex illustrates that point.

[Matthew Pennycook]

Q In our previous session, we had an interesting and thoughtful discussion with witnesses about how the planning system might help us to respond to the climate and environment emergency. I will finish with a question that I asked in our second session. You will know that nowhere in legislation is the purpose of the planning system set down. Do you think there is any value in more clearly defining in legislation the aims of the planning system on climate change and other issues? Is the Bill an opportunity do to that, and if so, what would that look like?

Dr Ellis: I think there is a huge opportunity to do that. It is essential that the Bill contains a purpose for planning if you want to recreate public trust by making it clear in statute what the system is for. It is interesting that there are currently four outcome duties in law on planning, but there is nothing in the Bill equivalent to what we see in Bills on social care or in national parks, where there is a clear sense of what planning is meant for.

If you want this new journey—we all do—to benefit the future of England, you need to need to set down that purpose around sustainable development. That is an inclusive goal; we are already internationally signed up to it, and for me, it is the only development goal that is credible for the future of this nation. Underneath that, I would quickly say that it is heartbreaking to see the potential that planning has to deal with climate change mitigation and adaptation and the dysfunction that we are currently presented with.

I have just seen an inspector remove a net zero policy from an area action plan for a new development in West Oxfordshire. That tells you that Government policy urgently needs to be reviewed. The whole sector has been calling for an urgent ministerial statement to clarify how net zero is delivered. We really cannot wait for the NPPF review at the end of 2024 for that; it must happen now. On adaptation, the issue is even more serious, in terms of having to begin to think about shifting population off the east coast, the challenges of surface water flooding, the endless flooding in Calder valley and how plans need to grasp the allocation of land for natural flood defence.

I know that I cannot go on, but all I can see is huge potential. We need to bind the planning and climate Bills together. The climate Bill must have specific requirements on the sixth carbon budget, and stronger requirements on adaptation, specifically around water and flooding.

[The Chair]

I call the Minister.

--- Later in debate ---

[The Chair]

Thank you. We are going to take questions from members of the Committee, starting with the shadow Minister.

[Matthew Pennycook]

Q May I start with the infrastructure levy? We touched on it with an earlier panel, and I will ask almost the same question that I put to witnesses earlier. The potential for local authorities to set multiple levies and threshold rates—no doubt by a cumbersome examination process with some of the issues around viability that already exist—strikes me as not too dissimilar from CIL, so I am trying to get from witnesses a sense of whether you think that is fair. If that is not a fair assessment, what clear advantages, if any, do you think the levy will provide for? How do you see it operating in practice on complex brownfield sites? Finally—and particularly importantly, given the thrust of the Bill—given the ability to vary rates, will the levy do much for levelling up? Will local authorities in areas with low land value not just set low levy rates that do not lead to much in the way of public gain?

Gavin Smart: The levy is certainly similar to CIL, but I believe it is managed in a way that CIL is not. I share some of your concerns about the impact of the levy on lower-value sites. One of our concerns is that we are currently struggling to deliver the housing that we need, particularly affordable housing and social rented housing. Whether a levy on a lower-value site will be able to deliver the resources needed to support the delivery of new homes for social rent is a significant concern.

The other issue that I would raise with respect to the levy is that we are very aware of the role that, historically, section 106 planning gain has played in the delivery of affordable housing and social rented housing. About half of affordable housing is delivered in that way. Although there are commitments from the Government that affordable housing delivery will be maintained, we are anxious to understand the detail of that, because section 106 has been such an important part of the delivery mechanism.

Kate Henderson: Thank you for the opportunity to speak to the Committee today. We really support the Government’s ambition to address regional inequalities in our towns and cities’ economies through levelling up. It is also very good to see housing and planning as part of the Bill, but we share have concerns around the impact of planning reforms on the ability to deliver much-needed affordable housing.

When it comes to the infrastructure levy, we are really looking at four areas where we would like to have a bit more detail and some assurances. The first is the issue of protections for the delivery of affordable housing. The second is around the importance of on-site delivery of affordable housing. The third is around the risk to viability, and the fourth is that we would like to see an exemption from the levy for sites that are 100% affordable.

[The Chair]

We are going to carry on, but we are having a slight problem with your sound and picture, Kate. If it breaks down, we might turn the video off and just have your audio, but we will see.

[Matthew Pennycook]

Q Kate, may I pick you up on the first point you raised: the potential impact of the levy on affordable housing supply? In responding to the publication of the Bill, the NHF stated on your website—I hope I have got this right—that it was pleased that the Government had written into the Bill a mechanism

“to ensure affordable housing levels will be maintained, with current levels as a minimum.”

Correct me if I am wrong, but I assume that you were referring to proposed new section 204G of the Planning Act 2008, which is discussed in schedule 11. I wanted to probe why you think the language in that clause, or anything else the Government have said in relation to the Bill, is anywhere near robust enough to guarantee the maintenance of current affordable housing levels. I read the language, which is

“must have regard…to the desirability of ensuring”

as quite weak in terms of ensuring that we see that affordable supply of housing come forward.

Kate Henderson: My starting point is that we really welcome the Government’s commitment to ensuring that as much affordable housing will be delivered. As Gavin Smart mentioned, at the moment section 106 planning obligations deliver around 50% of all affordable housing in England. It is vital that what replaces it delivers, ideally more, but at least as much. We are pleased that there is that reference in schedule 11, in proposed new section 204G, around having a mechanism to ensure that affordable housing levels will be maintained at current levels, but what we would like is a greater commitment and assurances from the Committee and ideally in the legislation about what we mean by current levels of affordable housing delivery.

There is a risk that in some areas minimum affordable housing requirements, which should be based on objectively assessed need, are actually being delivered by what is coming through the planning system now, and that is not enough in some areas and we do not want that under-delivery to be baked in. We would really like clarity from Ministers that, to protect affordable housing delivery, current levels will be based on current targets for affordable housing, which should be based on objectively assessed need.

[Matthew Pennycook]

Q That is really helpful, thank you. It seems—how do I phrase this?—that it is not entirely explicit on the face of the Bill, but we have got a sense from what Ministers have said on this on previous occasions and what they are saying generally that they see a continued use for section 106 on certain sites. Do you think the Bill is an opportunity to reform and strengthen the operation of section 106 agreements? If so, how might the legislation be amended to that end?

Kate Henderson: I think the Bill suggests that section 106 agreements will be retained for larger sites. I do not think we have necessarily determined the size of those sites yet and potentially that will come through in secondary legislation.

What we are learning from section 106 is that there are some really important considerations. We have been having positive conversations with the Government about this, particularly around the delivery of on-site affordable housing. The Government are bringing forward a new infrastructure levy. That levy has got to ensure that we get inclusive, mixed communities—that we get the integration of different housing types and different tenures, and that they are built to good, high standards. We know that mixed communities are far more successful than exclusively, for example, poor ones. We want to have the affordable housing integrated in.

That is one of the really important lessons from section 106—when it works well, you get an integration of your housing all on site and you get other good on-site infrastructure delivered at the right time as well. That helps with public acceptance of development, particularly at scale.

I think we would want to see in the design of the new levy that early engagement with housing associations is there absolutely at the outset and that on-site delivery is considered the default position when it comes to significant sites. We would really like to ensure that local authority use of contributions for purposes other than affordable housing would have to come after the agreed level of delivery of affordable housing on site.

Gavin Smart: I strongly agree with Kate, particularly around needing to be sure that we are not baking in low levels of performance on the delivery of affordable housing. We need to be sure that the expectation of the continuation of delivery of affordable housing is at a sensible level, supported by some sort of assessment of need. Like Kate and anybody involved in the delivery of affordable and social housing, we are acutely aware that the key benefit of section 106 has been the delivery of on-site in-kind provision that delivers the mixed communities that we all know work. It actually helps a scheme’s viability, because it means that developers know a proportion of the scheme they are developing will be sold immediately on completion to a landlord who will immediately fill it with tenants. That helps with speed of completion at the site.

The most important point is that levies do many things, but what they do not do is give you actual physical buildings; they give you an amount of money. If you are struggling to find a site to deploy that money, they do not perform in the same way as section 106 reforms. So we have concerns about the levy and that is why we welcome the fact that, although what we mean by larger sites is not yet defined, the Government are signalling that they want to retain section 106 for larger sites. That is important. I think it will help delivery and help to build mixed communities.

[Matthew Pennycook]

Q Final question. Assuming the Government do not fall in the coming months, and the Bill becomes law and is implemented, you know that the infrastructure levy will be rolled out—the Minister has made much of this—on a test and learn basis. What is your understanding of how that will work and progress? Do you foresee any challenges once the Bill has come into force, where that infrastructure levy is not operating around how the new provisions in the Bill interact with the existing system as we transition towards the levy?

Gavin Smart: First of all, there is more flexibility in setting the levy than we previously expected. That is welcome because we want local authorities to be able to respond to the facts on the ground. However, like many public policy problems this is a matter of trade-offs. You do not want such complexity in the system that we are down to negotiating levies on individual sites, so it is about getting the balance right.

More important, something that I think is a bugbear of every attempt at planning reform is that, although we all believe that no planning system is perfect so it is always worth looking at how you can improve it, the other issue with planning policies is whether they are properly resourced enough to enable the local authorities that are operating them from London. Certainly, we have a concern that it might prove challenging for local authorities to be able to manage the complexity of negotiating a large number of different levies in different places. We know that elsewhere in the planning system local authorities can be outgunned by the development industry in terms of capacity. That remains a concern, because we think that overall capacity in local authority planning is stretched.

Kate Henderson: We think the test and learn approach is really to be welcomed. Alongside that, obviously we would want to see a transitional approach. Test and learn is particularly important when we are looking at viability and the delivery of much-needed affordable housing. It is really important, given that development and land values vary greatly from site to site and place to place, that we get the levy set at the right level to ensure viability, to ensure delivery, and to ensure we are creating great communities that include much-needed affordable housing. We have advocated a test and learn approach and it is really positive that the Government are looking at that. We would want to be a part of that approach to make sure we are able to get affordable housing, and that we have the good working relationships between local authorities, developers and housing associations on-site working with the community—

[The Chair]

We are having slight problems with the sound. We will just give it a second. Do you want to carry on?

Kate Henderson: I was just saying that we are very, very keen that, as test and learn is rolled out, housing associations, working with councils and developers, are part of that programme, so we ensure we set the levies at a level that enables the delivery of great places with high-quality affordable housing on site in mixed communities. Doing that in a phased way to make sure it is working, while retaining parts of the old system as this is transitioned out, sounds like a sensible, pragmatic way forward.

--- Later in debate ---

[The Chair]

Mr Pennycook.

[Matthew Pennycook]

No questions.

[The Chair]

Ah, right. We come to Mr Henry.