Levelling-up and Regeneration Bill (Twentieth sitting)

Matthew Pennycook Excerpts

Committee stage
Thursday 8th September 2022 Public Bill Committees

[The Chair]

Hon. Gentlemen are welcome to take off their jackets if they wish to do so. I have a few preliminary reminders for the Committee. Please switch electronic devices to silent. No food or drink, except for the water provided, is permitted during sittings of this Committee. Hansard colleagues would be grateful if Members emailed their speaking notes to [e-mail]. I welcome the Minister to his place.

Schedule 11

Infrastructure Levy

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

I beg to move amendment 162, in schedule 11, page 288, line 11, after “development” insert “of the area”.

This amendment seeks to ensure consistency with inserted section 204A(2) on page 282 and ensure that consideration of viability relates to the area as a whole.

[The Chair]

With this it will be convenient to discuss the following:

Amendment 163, in schedule 11, page 289, line 33, leave out “or require”.

This amendment and Amendment 164 would prevent the Secretary of State imposing a nil rate, differential rates, reductions, or a minimum threshold below which IL is not charged and ensure that rates are set by the charging authority.

Amendment 164, in schedule 11, page 289, line 36, leave out “or require”.

See explanatory statement for Amendment 163.

[Matthew Pennycook]

It is a pleasure to reconvene with you in the Chair, Mrs Murray. I warmly welcome the hon. Member for Sutton and Cheam to the caretaker role that he has bravely taken on today. He is the third Minister I have engaged with in proceedings on the Bill. The shadow Department for Levelling Up, Housing and Communities team are setting new records when it comes to the ministerial attrition rate. It may be overly ambitious to hope that we can get through five Ministers by the completion of proceedings on the Bill, but we live in hope.

On a serious note, I place on record our thanks to the hon. Member for Nuneaton (Mr Jones) for his efforts in taking the Bill through Committee in recent weeks, including before the summer recess, and for the constructive way in which he did so. I hope that we can continue in that vein today.

We had, in our last sitting, an extensive debate on the infrastructure levy, and touched on the issue of viability as part of the design of any new proposal. This group of amendments relates to the infrastructure levy rate-setting process, and how viability testing will be used to inform it. Once again, allowing for the fact that we do not have the detail we need, and for the fact that the required forthcoming regulations will be subject to further consultation, I am assuming for the purposes of these amendments—largely because of the remarkable similarity between schedule 11 and the provisions in the Planning Act 2008 that gave effect to the community infrastructure levy—that the Government are minded to base the IL rate-setting process on that which applies to the process for adopting a CIL charging schedule.

If that is the case, the process will require charging authorities to undertake—if not directly, then by commissioning consultants for the purpose—an area-wide viability assessment. Such assessments would be similar to—and indeed could, where appropriate, be combined with—the area-wide viability testing that forms part of the evidence base for the examination of new local plans. As “full viability assessments”, these will involve a large number of residual land valuations for different development typologies, and potentially strategic sites, to test what IL rates could be supported in different circumstances. It is likely that they would have to consider all aspects of development appraisal, including average values, costs, profit and land value, rather than using gross development value as the value-based metric used to determine specific IL liabilities.

The new levy has broader scope than the CIL, incorporating as it does both infrastructure and affordable housing. Higher rates will be necessary as a result. Given that, and given that GDV—the metric to be used—does not take into account site-specific development costs, IL has the potential to result in significant non-negotiable liabilities, so the stakes involved in the IL rate-setting will be far higher than those that pertain in the CIL charging schedule adoption process. Thus it is almost certain that the IL rate-setting process in any given area will be heavily contested; landowners and developers will task their representatives with challenging the scope of the assessment, its methodology, inputs, assumptions and conclusions, with a view to reducing IL rates and their future liability. There is therefore a strong case for putting in place additional measures to ensure that the IL rate-setting examination process is fair, and I hope that the Government are exploring what might be done to ensure that the Planning Inspectorate is able to draw on the necessary expertise so that that is the case.

The aim of amendment 162 is to ensure that the bar for viability testing in the IL rate-setting and examination process is not set unreasonably high, and that there is therefore a more level playing field between charging authorities and those who might potentially object to a proposed IL rate or rates. The amendment seeks to avoid authorities being compelled to either undertake onerously detailed analysis, bring forward overly complex charging structures or set artificially low rates to compensate for the risk that the Bill creates of developers arguing that specific projects in an area are unviable. It does that by specifying, using the language used in proposed new section 204A(2) of the 2008 Act, that when setting IL rates, charging authorities must consider the economic viability of development in the area as a whole. That would make it clear that in the rate-setting process, the test of viability should not be so specific as to relate to individual sites, unless perhaps they are of strategic significance to the charging authority area, but should instead take into account viability across a range of sites, and the overall delivery of the amount of development envisaged in the local plan. That is in line with current practice, and would mean that IL rates would not be unduly influenced by the characteristics of development sites that may not be typical of the area, and that could result in nil or particularly low rates being set across the whole of it.

[Rachael Maskell (York Central) (Lab/Co-op)]

I am grateful to my hon. Friend for tabling the amendments. It is clear that the system is not working, because when going through the planning process many developers argue that the site is no longer viable, and therefore make changes to the plans. What should be put in place to ensure that we have more accurate viability testing before planning permission is granted?

[Matthew Pennycook]

I thank my hon. Friend for that well-made point. We had, as she will know, an extensive discussion on viability in the last sitting. The system is flawed in many respects, but there are ways in which it has been improved in recent years, and it could be improved further. The Mayor’s threshold approach in London is a good example of how that can be done; it draws in relevant expertise to ensure that contentious sites undergo a full viability assessment.

Our issue with the proposed system is that it is premised on removing the viability issue from the process entirely, but the point here is that the system certainly does not do that; at the rate-setting stage, viability is very much an issue. That needs to be addressed through the amendments. Amendment 162 would ensure that IL rate-setting testing and examination cannot be unfairly manipulated by developers seeking to drive down levy rates, because the amendment would clarify that charging authorities will not be expected to test every development site in their area. It would mitigate the risk that the infrastructure necessary to support development will not come forward, and that amounts of affordable housing will be reduced.

Amendments 163 and 164 are necessary to give full effect to the Government’s commitment that the new system will be, to quote the policy paper, a “locally determined Infrastructure Levy”, with Il rates set locally by charging authorities. The amendments do that by altering the provisions that give the Secretary of State the power to impose specific IL rates, nil rates or minimum thresholds that have not emerged as a result of an examination, or been justified with reference to local evidence. By preventing the Secretary of State from overriding a charging authority in those respects, the two amendments seek to avoid a scenario in which a charging authority is either prevented from developing its own IL rates or, after the lengthy and resource-intensive process of determining the IL rates and thresholds appropriate for its area, and after having them verified by an independent examiner, has them overridden by the Secretary of State.

There is nothing in the Bill to ensure that IL rates imposed by the Secretary of State in the way that the Bill allows would be based on local evidence or subject to independent assessment. There is therefore an obvious risk that the Secretary of State may, on occasion, be persuaded to bypass the IL rate-setting process on spurious grounds. We feel strongly that the process should be genuinely local, and that charging authorities should be confident, if they develop a rate or rates that are approved in examination, that they will be able to apply those without interference from the Department. I look forward to hearing the Minister’s thoughts on each of these important amendments.

[The Minister of State, Department for Levelling Up, Housing and Communities (Paul Scully)]

It is a pleasure to serve under your chairmanship, Mrs Murray, and to address the Committee and answer the questions raised. The hon. Gentleman talked about attrition rates, which are important for all of us as constituency MPs, and we all want to make sure that we get this right. I, too, thank the former Minister for Housing, my hon. Friend the hon. Member for Nuneaton (Mr Jones), for the work that he has done over the summer.

I begin by acknowledging the work of the Committee so far. The planning reforms will clearly be important in supporting our growth agenda, so I look forward to the next few days. I understand why the hon. Gentleman seeks to introduce the amendments. I will try to clarify some of the points, and to explain why we do not believe that the amendments are necessary. I will start with amendment 162.

Local planning authorities will be responsible for setting infrastructure levy rates, and for charging and collecting the levy, and they can spend the levy revenues on local priorities. When setting rates, they must have regard to the economic viability of the development of the area. I reassure the hon. Gentleman and the Committee that proposed new section 204A(2) of the Planning Act 2008 already ensures that that is the case. It states that the overall purpose of the levy,

“is to ensure that costs incurred in supporting the development of an area and in achieving any purpose specified under section 204N(5) can be funded (wholly or partly) by owners or developers of land in a way that does not make development of the area economically unviable.”

The overall purpose of the levy applies to all levy regulations, including those made under proposed new section 204G(4)(a), to which the hon. Gentleman has proposed additional text. This means that when charging authorities set rates or other criteria, they must have regard to matters specified in levy regulations relating to the economic viability of development. Although I understand his point, I hope that with that explanation, he will agree that amendment 162 is unnecessary.

Amendments 163 and 164 would prevent the Secretary of State from requiring, through regulations, that differential rates of the levy be set. They would also prevent the Secretary of State from specifying in regulations the basis on which a threshold for such rates may be determined. Again, I recognise that the aim of the amendments is to ensure that the rates are set solely by the charging authority, but I reassure the Committee that local rate-setting is indeed essential to the levy design. However, the levy must be charged in a coherent and consistent way, so that it meets its objectives of capturing more value and raising more revenue for local planning authorities, while maintaining the viability of developments across an area.

How the levy is charged should reflect the different amounts of additional value that might be generated across different kinds of development. In some circumstances, it might be necessary to require in the levy regulations that rates be set at higher or lower levels. For example, the additional value created by new floor space might be a lot greater than that created when existing floor space undergoes change of use. Similarly, the additional value generated by a residential development might be a lot higher than the amount generated by some types of commercial development, and it is right that the difference in value is reflected in levy rates.

There might be types of development on which it is simply not appropriate to charge the levy, or on which it would be appropriate to charge a reduced rate. Providing for that in the levy regulations will ensure the coherence of the regime that I talked about.

How much additional value is generated by a development depends in part on how much it cost to build, and on the value of the land before development takes place. The minimum threshold will broadly account for the costs of development in an area by charging the levy on the final gross development value. Above the minimum threshold, the levy is charged only on the additional value of a development. Without a minimum threshold, the levy would not be able to reliably capture more of the value uplift in different development types and land uses, while maintaining viability. The ability for levy regulations to require that thresholds for nil or reduced rates be determined in a specified way, including the ability to adjust them with reference to the cost of development in a charging authority’s area, is key to ensuring that this aspect of the levy function works in a coherent and consistent way.

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For those reasons, and given that the upcoming consultation will allow plenty of time to discuss, debate and shape these measures, I am unable to accept the amendments and ask the hon. Member to withdraw them.

[Matthew Pennycook]

I appreciate that comprehensive answer from the Minister, but I am afraid to tell him that I am not reassured. I am not sure—I will happily go back and check the record—that he addressed my specific points. As I said, our concern is that the language in proposed new section 204G(4)(a), when it comes to specifying how viability is handled within the rate-setting process, refers simply to “development”. It is not consistent with the language in proposed new section 204A(2), which specifically refers to “development of an area”.

The Minister spoke in general terms about the local rate-setting process. I take no issue with that. It is absolutely right that the local charging authority looks at viability as part of that process, but the specific concern that we have, as I said, is that it may be forced to assess the viability of every site in the area that it oversees, rather than being able to undertake a general assessment of viability in that area and not have specific sites skew the results. This could potentially have very serious implications for the levy rates that are set and the ability of developers to try to drive down those rates as part of the process. We are not satisfied on that score.

On amendments 163 and 164, we do not take issue with the fact that there needs to be a minimum threshold or the need for specified ways of setting or adjusting the levy rates. Our issue is with the powers that the Bill provides for the Secretary of State to intervene and overturn a locally determined rate that has gone through an examination process. The Minister has not convinced me that there is a good reason for those powers. On that basis, I am keen to make the point that we think this is one of the many weaknesses in the Government’s proposed infrastructure levy, so I am minded to press amendment 162 to a vote.

[Paul Scully]

Let me just answer a couple of points as the hon. Member considers whether to press the amendment to a vote. I assure him that charging the levies is very much for the local authorities. The intention is to not have a system that is different for every single development, because that becomes incredibly unwieldy—that is the point of introducing this system rather than the existing, technically complex system, where developers, who have deeper pockets than many local authorities, and more expertise, get round section 106 and CIL and so on. If they so choose, local authorities should be able to have different levies in different areas within their remit, but that should not be just from development to development. That is the intention of the measures here.

The powers of the Secretary of State reflect the current system. As I mentioned, the Secretary of State has powers under the existing system and we are reserving that same right, which is to be used only very sparingly.

[Matthew Pennycook]

I thank the Minister for that useful further clarification of the Government’s intention, but in many ways he made my point for me. No one is taking issue with the fact that the Bill specifies that local charging authorities set the rate. That is absolutely right. It is an advantage of the proposed system vis-à-vis that outlined in the 2020 “Planning for the Future” White Paper, which envisaged a nationally set rate or rates. The issue we have—the Minister spoke directly to this point—is the inequality of arms between developers and local planning authorities. Our concern is that the language in the Bill will allow developers, not in the way they do with the current section 106 system but under the new system, to use their extra resources, skills and expertise to drive down levy rates at the point at which they are set, due to the way that viability is dealt with in proposed new section 204G(4)(a). I am not satisfied by the Minister’s comments, and I will press amendment 162 to a Division.

Question put, That the amendment be made.

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[Greg Smith (Buckingham) (Con)]

It is a pleasure to serve under your chairmanship, Mrs Murray. I join you in welcoming the Minister of State, Department for Levelling Up, Housing and Communities, my hon. Friend the Member for Sutton and Cheam, to his place on the Front Bench. It is also a pleasure to follow the hon. Member for York Central; I recognise the point she made about green lungs in urban environments, and about parkland and green spaces being in towns and cities up and down the land.

Listening to her comments, I remembered my own time in local government some moons ago, in the London Borough of Hammersmith and Fulham. We gave planning permission to one of Europe’s largest regeneration projects on brownfield land, crossing the London Borough of Hammersmith and Fulham and the Royal Borough of Kensington and Chelsea, around Earl’s Court and West Kensington. That development had multiple parks and lots of green space locked into its design, and into the planning permissions that were granted. It was, in fact, the incoming Labour council in 2014 that undid all of that and turned it over. While I have not been there in some time, I think I am right in saying that Earl’s Court still sits in rubble, as opposed to housing and beautiful green parks.

I will speak principally to amendment 59, which is tabled in the name of my right hon. Friend the Member for Chipping Barnet (Theresa Villiers), to which I too have put my name. It goes to the nub of the concerns that many Members across the House have about planning reform and the way we should go forward. There is a debate about where we should build; should we build on brownfield, or should we build on green space—green belt, greenfield, agricultural land and so on? When I look at my constituency, covering 335 square miles of north Buckinghamshire, 90% of that land is agricultural land. We have seen substantial development over the last 20 or 30 years. Some villages that started off small are now almost unrecognisable because of the vast housing estates that have been built, and which continue to be built on greenfield land around them. I think of villages such as Haddenham—close to my home village, for total transparency—where, yet again, another huge acreage of agricultural land is being built on for homes right now. Buckinghamshire Council, a good Conservative-run council, has a clear vision to build the housing the county needs through the light densification of some of the towns in Buckinghamshire.

However, what amendment 59 principally talks to is the need to incentivise developers to consider brownfield sites when they look at where to build the homes needed in Buckinghamshire and the rest of the country, and that they are not disincentivised because it is so much easier for them to build on greenfield, where they do not have the decontamination costs and all the other expensive costs of developing out brownfield sites. We can use the infrastructure levy to do that. If there is a sliding scale that says to developers that we can create that incentive through the taxation system and the infrastructure levy and potentially make these things cost-neutral, we can take the challenges of decontamination and other costs associated with brownfield land out of the equation for them. In that way, they will pay less infrastructure levy for building out on brownfield sites than they would for destroying the great British countryside.

It is not a perfect solution by any stretch of the imagination, because we still need the money for the roads, the GP surgeries, the schools and everything else the infrastructure levy is there to provide. However, unless we can create a system that really does come good on the Government’s welcome and solid commitment to building on brownfield first, I fear—and I had another developer in my inbox yesterday wanting to build out on a partially greenfield site in Waddesdon in my constituency—that all we will see is planning applications come in for greenfield development, and the brownfield first policy will not be realised.

I therefore urge the Minster to consider how we can use the infrastructure levy, in the spirit of amendment 59, to ensure that there are not financial penalties on developers for developing on brownfield land, so that we make that brownfield first policy come true. In that way, we can give local authorities that have lost a considerable chunk of greenfield and agricultural land in recent years—food security is important to all of us, and it is a pretty simple proposition that the more agriculture land we lose, the less food we can grow—the tools and powers as planning authorities to say that certain proposals are not what they need right now. In some areas, the proposals might be fine and might be what they want but, to use Buckinghamshire as an example, we could put in the differential rate enabled by this amendment to protect our greenfield and agricultural land and to drive development of the homes, commercial units and businesses we need on to the brownfield sites that exist predominantly in towns, and in some villages, in Buckinghamshire.

I urge the Government to look at the spirit of the amendment and to incorporate it into what will undoubtedly, after the leadership election, be quite a different Bill by the time it emerges on Report, to see whether we can make these proposals a reality.

[Matthew Pennycook]

First, I congratulate my hon. Friend the Member for York Central on amendment 168. She rightly speaks about the importance of green space in urban areas and about how we can increase the rate of it, if anything, when it comes to individual planning applications.

I will speak primarily to amendment 59, because I think it is worth putting the following on the record. I understand the point that the hon. Member for Buckingham is making, but my reading of the Bill is that the framework established in part 4 already allows charging authorities to set different IL rates according to existing and proposed uses, and those could include different rates for greenfield and brownfield sites. So the means to resolve the issue he is driving are already in the Bill, and Buckinghamshire Council will be able to set different rates on brownfield and greenfield sites if the Bill is given Royal Assent.

Our concern is that, by seeking to make mandatory a sliding scale of charges relating to land type or existing typologies by site, amendment 59 could result in reduced infrastructure contributions and lower levels of affordable housing in areas where development mainly or exclusively takes place on brownfield land, because it would prevent charging authorities from setting rates that are effective and suitable for their area and that consider local circumstances. For example, a mandatory sliding scale of charges, as proposed in the amendment, could result in the expectation that a charging authority whose development sites are entirely or mainly on brownfield land would set low IL rates to incentivise development in that area and disincentivise development in other areas with fewer brownfield sites.

Furthermore, brownfield development in higher-value areas will almost certainly generate sufficient values to support higher levels of contributions than would be possible on greenfield sites. As such, a mandatory sliding scale of charges would mean the loss of developer contributions that could viably have been delivered on brownfield sites, with no assurance that this would be offset by a higher level of contributions on greenfield land. Labour firmly believes in the principle of brownfield first, as do the Government, and that is absolutely right. However, we feel strongly that the setting of different IL rates for different land types should ultimately be determined by individual charging authorities taking account of local circumstances, rather than by the method proposed in amendment 59.

[Paul Scully]

The Government are already providing strong encouragement for the take-up of brownfield sites—we are all agreed on that—and are prioritising suitable brownfield land for development wherever possible. There is significant investment through the £550 million brownfield housing fund and the £75 million brownfield land release fund to unlock brownfield land across different communities across the country. Our national planning policy framework makes it clear that local authorities should give substantial weight to the value of using suitable brownfield land in settlements for homes and other identified planning need.

We recognise the importance of delivery on brownfield sites, as has been raised by the hon. Member for York Central and my hon. Friend the Member for Buckingham. However, we believe that that is better achieved through planning policy rather than through a fixed algorithm that automatically increases levy charges on the basis of the proportion of greenfield to brownfield. This further amendment would add a new element to the levy formula, which would still allow for greater greenfield development in certain circumstances, but would remain a formulaic approach rather than a policy-driven one.

The proportion of greenfield development within the local authority should continue to be policy driven at that local level, as we have heard. I agree with the hon. Member for Greenwich and Woolwich that it should be the local authority—the charging authority—driving that, based on their local circumstances. In any case, proposed new section 204G(5) and (8) in schedule 11 already contains powers for the levy regulations to permit or require local planning authorities to set different levy rates for different kinds of development, and proposed new section 204G(4) makes it clear that the local authority must have regard to the increases in land value that result from planning permission. That provides a framework where, if increases in land values are higher, as we have heard is often the case with greenfield development, higher rates can be set. On that, we agree in terms of policy.

In answer to the hon. Member for York Central, I totally understand her drive when she talks about buildings going up to five storeys, and it is important that it is the local area that determines exactly these things. Whether it is the view of the Minister or the affordability of properties, that should not be determined centrally with an artificial algorithm. It very much needs to be locally driven, so that local families and communities benefit from housing themselves and from the economic value of bringing in new people and new investment. It is about getting that balance right, and that will change for different areas. It was interesting to hear the hon. Member’s tour de force—that tour of York, and I suspect I will get a bit more about green spaces later this morning.

[Matthew Pennycook]

A lot more.

[Paul Scully]

A lot more, the hon. Gentleman says from a sedentary position.

Clearly, we do need those green lungs, as my hon. Friend the Member for Buckingham said. Those of us who have an urban, suburban or semi-urban area need to get that balance right, and I would much rather that that was done through a policy framework than by an algorithm, which can be game-played by developers. It is important to get this right at a local level, so it is important to get for local authorities to get the local plan in, so that they can shape their place. They have the determination to do so. For those reasons, amendments 168 and 59 are not necessary.

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[Rachael Maskell]

I have heard what the Minister has said. I will take his words as authoritative—they will be in the Hansard record of today’s debate—and, as a result, I will withdraw my amendment. The point about energy is significant, not least if I look at the Derwenthorpe development by the Joseph Rowntree Housing Trust in York, which has put energy and a community centre at the heart of that social/private development. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Matthew Pennycook]

I beg to move amendment 165, in schedule 11, page 306, leave out from line 38 to line 2 on page 307.

This amendment would limit the circumstances under which the Secretary of State could direct a charging authority to review its charging schedule.

This amendment, much like amendments 162, 163 and 164, which we debated earlier in relation to the IL rate-setting process, is concerned with ensuring that the new levy system is genuinely local and that charging authorities are fully in control of developing its discretionary elements at a local level. It would remove proposed new section 204Y(1)(b), which provides the Secretary of State with the power to direct a charging authority to alter its charging schedule in a range of circumstances, including

“in any other circumstances that IL regulations may specify”.

That is of particular concern.

Given that the Bill gives the Secretary of State the power to revise individual charging schedules at their sole discretion, with no need to justify that intervention by means of any objective evidence-based criteria, we are concerned that, as drafted, it could have significant implications. For example, it could allow a future Secretary of State to require a charging authority to amend its locally developed charging schedule as a result of lobbying by a developer, without having to provide any evidence that the levy as implemented in the area in question is impairing viability and frustrating development.

We believe that this amendment is necessary to ensure that the Secretary of State cannot direct a charging authority to alter its charging schedule merely due to the passage of time or any other circumstances they see fit, given that the only justified rationale for an intervention from Ministers in relation to a charging schedule—namely, its impact on viability—is already covered by subsection (1). I look forward to the Minister’s response.

[Paul Scully]

Proposed new section 204Y(1)(b) enables the Government to require an authority to review—not necessarily alter—its levy charging schedule if a significant amount of time has passed since its last issuing, review, revision or replacement. Proposed new section 204Y(1)(c) enables the Government to require a review in any other circumstances as may be specified through regulations. It is important to have a power to direct a review to be undertaken after a significant period has elapsed since the schedule was put in place or revised. That is because there may be occasions when a schedule has been in place for many years without a proper review, and so is not up to date.

The levy will be a mandatory charge, and for many local authorities operating a levy on new developments it will be a novel means to capture land value. Monitoring and reviewing charging schedules will therefore be important, especially for authorities that are unaccustomed to charging a levy. That is why we want levy charging rates to be reviewed on a timely basis. We will issue guidance on what that might reasonably mean in terms of time and circumstances. I hope that provides reassurance, including for communities and developers, that the rates remain appropriate. We want to make sure the approach is balanced.

Historically, local planning authorities have not always reviewed and updated key documents, such as local plans, in a timely fashion, which is why it is appropriate to take this power to direct a charging authority to issue, review, revise or replace. Furthermore, it is entirely consistent for the Bill to secure timely reviews of charging schedules and to require that local authorities introduce a charging schedule in the first place. Levy charging schedules are underpinned by evidence on local economic circumstances and viability. Reviews either provide confidence that the charging schedule remains appropriate or starts a process of revision if they are considered not to be.

We also consider it important to have the power to regulate for any other circumstances in which the Government may want to direct that a review be undertaken, such as if a new local plan is issued soon after the publication of a charging schedule. Any further circumstances identified will be introduced through affirmative regulations, and so will be laid before this House and debated and approved here. With that clarification, I hope the hon. Gentleman will agree to withdraw the amendment.

[Matthew Pennycook]

I appreciate that response from the Minister. I am partly reassured, and I note the point that he made about the use of “review” as opposed to directly “revise” in terms of the power available to the Secretary of State. I also note what the Minister said about the forthcoming guidance. I remain slightly concerned about how broadly defined line 2 of page 307 is, in that it does allow the Secretary of State to call for that review on the basis of anything that might come forward in future regulation, subject only to the affirmative procedure. We all know the limitations of that.

I am not going to press the amendment to a Division, but I hope the Government will reflect on the Opposition’s concerns about the ability in the Bill, as presently drafted, for the Secretary of State to intervene in a number of ways that should be the preserve of local charging authorities. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Matthew Pennycook]

I beg to move amendment 166, in schedule 11, page 308, leave out line 25.

This amendment would prevent IL regulations making unspecified provision about how powers under section 106 of TCPA 1990 (planning obligations) are used.

The Committee will be relieved to hear that this is the last of our amendments on the infrastructure levy. It relates to the interaction of the infrastructure levy with other existing powers. As drafted, proposed new section 204Z1(1) in schedule 11 provides for future IL regulations to make unspecified provisions about how a range of existing powers, including CIL and section 106 planning obligations, are to be used or not used.

Our specific concern relates to the application of those broad powers to the use of section 106 agreements. While we appreciate fully that there are circumstances where the use of section 106 will have to be limited—for example, to avoid double charging a development for the same infrastructure item—we feel strongly, for reasons that I went into in exhaustive detail on Tuesday in relation to that part of the Bill in the round, that section 106 agreements have a crucial role to play in ensuring we secure sufficient levels of affordable housing. We are concerned that proposed new subsection (1) could be used to unduly restrict their use.

By deleting line 25 from page 208, amendment 166 simply seeks to ensure that future IL regulations cannot make unspecified provisions about how section 106 agreements are used once the levy system is operational. I hope the Minster will seriously consider accepting the amendment. If not, I feel that we need, at a minimum, far greater clarity about the precise circumstances in which the Government expect to have to restrict section 106 of the Town and Country Planning Act 1990.

[Paul Scully]

Proposed new section 204Z1 in schedule 11 enables the Secretary of State to prescribe how certain powers are to be used or not. As we have heard, proposed new subsection (1)(c) enables the Secretary of State to prescribe how section 106 applications may or may not be used alongside the levy. That power has been used previously to make provision under the community infrastructure levy regulations to ensure that section 106 obligations are necessary in planning terms, directly related to the development, and fair and reasonably related to the scale and kind of development.

We need to be able to continue to ensure, under the new system, that section 106 obligations are used in ways that are appropriate, necessary and fair. We need to be able to delineate between matters that should be funded by the levy, and contributions to infrastructure or mitigation that should be secured by the more narrowly focused section 106 agreement. That means that developers will know that they will receive consistent treatment across different local authorities.

Removing section 106 from the list of powers will mean that the Secretary of State is unable to provide clear, coherent and consistent boundaries between what the levy should be used for, and what section 106 agreements can and cannot be used for. That would remove a key provision that will provide for coherence across the levy and the planning obligations regime. It is important to remember that the levy will take most of that. It will be more complicated, niche or bespoke schemes for which section 106 will remain. That coherence is why we want to keep that power and consistency. For that reason, I hope the hon. Member for Greenwich and Woolwich will withdraw the amendment.

[Matthew Pennycook]

That is a welcome additional clarification from the Minister, and I do not want to rehearse the previous debates that we have had. As I set out at length, we believe that the infrastructure levy should be discretionary and that, if it is not discretionary, affordable housing should not be within scope, so we remain concerned about the ability of this power to restrict how section 106 agreements are used. However, I will not press the amendment to a vote. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Schedule 11, as amended, agreed to.

Clause 114

Power to designate Homes and Communities Agency as a charging authority

Question proposed, That the clause stand part of the Bill.

[Matthew Pennycook]

I have a question relating to clause stand part. The Homes and Communities Agency, which operates under the trading name of Homes England, can already be designated as a local planning authority under the Housing and Regeneration Act 2008. The clause amends section 14 of the Act to provide that, if a designation order is made under section 13 to designate the HCA as a local planning authority for all or part of a designated area, the designation order may also make provision for the HCA to be the IL charging authority for all or part of the designated area.

The current situation with CIL is that the Homes and Communities Agency, urban development corporations and enterprise zone authorities can also be collecting authorities for development where they grant permission, but only if the relevant charging authority agrees. It would appear that the new provision in the clause allows Homes England to be a charging authority for the area where it acts as the planning authority, without the need for agreement from the local planning authority, as is currently the case with CIL.

Given the circumstances, I am more than happy for the Minister or his successor to respond to me in writing at a later date, but I would be grateful if he could explain the rationale behind the change of approach, what engagement and consultation Homes England will be required to carry out with other relevant local bodies in the absence of an explicit agreement to exercise the relevant powers, and what processes Homes England will use to decide how IL should be spent in that area.

[Paul Scully]

I will write to the hon. Gentleman with further details. As he rightly says, the clause is designed purely to act as a framework for having Homes England become a charging authority as well as a local planning authority. That power has not be exercised to date, but if it were, Homes England could become a charging authority. It is important to have the power in order to allow the Homes and Communities Agency to become the charging authority as well as the local planning authority, and to specify the purpose and kinds of development. Without the clause, the levy may not be able to function effectively in areas where the Homes and Communities Agency may be designated as the local planning authority. I commend the clause to the Committee, and I am happy to write to the hon. Gentleman with further details, should he require them.

Question put and agreed to.

Clause 114 accordingly ordered to stand part of the Bill.

Ordered, That further consideration be now adjourned.—(Gareth Johnson.)

Levelling-up and Regeneration Bill (Twenty First sitting)

Matthew Pennycook Excerpts

Committee stage
Thursday 8th September 2022 Public Bill Committees

[The Chair]

I have a few preliminary reminders for the Committee that Mr Speaker has asked me to read out. Please switch electronic devices to silent. No food or drink is permitted during sittings, except for the water provided. Hansard colleagues would be grateful if Members could email their speaking notes to hansardnotes @parliament.uk.

Clause 115 ordered to stand part of the Bill.

Clause 116

Power to specify environmental outcomes

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

I beg to move amendment 173, in clause 116, page 133, leave out lines 13 to 20 and insert—

“(a) protection of the natural environment, cultural heritage and the landscape from the effects of human activity;

(b) maintenance, restoration or enhancement of the natural environment, cultural heritage or the landscape;

(c) protection of people and their long-term health, safety and wellbeing from the effects of human activity on the natural environment, cultural heritage and the landscape;

(d) protection of the climate from the effects of human activity;

(e) monitoring, assessing, considering, advising or reporting on anything in paragraphs (a) to (d).”

This amendment would broaden the definition of environmental protection to allow the Secretary of State to specify outcomes relating to climate change obligations and public health objectives.

It is a pleasure to serve under your chairmanship, Mr Hollobone. Part 5 of the Bill concerns the Government’s proposed new approach to assessing the potential environmental effects of relevant plans and major projects —namely, environmental outcomes reports. The reports are intended to replace the partly European Union-derived systems of strategic environmental assessment, including sustainability appraisals, and environmental impact assessments.

The Government’s rationale for the change in approach—this is gleaned not only from reading the Bill and its accompanying documents, but from the 2020 White Paper—is that the SEA and EIA systems can lead to duplication of effort and overly long reports, which inhibit transparency and add unnecessary delays to the planning process, and that the EOR framework will provide for clearer, simpler and presumably shorter assessments, with designated environmental outcomes that are easier to understand and monitor, and therefore to mitigate, remedy and compensate for, and will ensure that strategic and project scale assessments are properly joined up.

The Government’s critique significantly overstates the weaknesses of the SEA and EIA systems. That is not to suggest that they are perfect; for example, they can rightly be criticised for too often producing assessments that are too complex and cumbersome to be used effectively. However, the Government already have the necessary powers to improve many aspects of the SEA and EIA systems, if they chose to exercise them. Overall, the existing systems have made an enormous difference to how the environmental impact of development is considered. They are well established and understood, and when used correctly, they provide for rigorous, evidence-based, comprehensive assessments of the direct and indirect effects of projects and their mitigation in a way that involves the public.

As things stand, we really have no idea whether the proposed system of environmental outcomes reports provided for by part 5 will ultimately improve the process of assessing the potential environmental effects of relevant plans and major consents, because, as with so much of the Bill, the detail required to understand how EORs will operate in practice is simply not available. For example, we have no idea what range of factors the EORs can consider, or when EORs will be mandated. These and a wide range of other questions will be answered only when the regulations that set outcomes emerge in due course. Given the wide-ranging powers provided for in this part of the Bill, that is a cause of real concern.

When it comes to the basic EOR framework provided for by clauses 116 to 130, we take the view that an outcomes-based system could be an improvement on the present systems, given that they assess on the basis of the significance of effects on all relevant environmental receptors—although, again, it is impossible to arrive at a considered judgment on how much practical difference the EOR system will make when we have no idea how detailed or ambitious those outcomes will ultimately be, or what timeframe they will involve.

However, while we recognise the potential for an outcomes-based approach to establish an improved system of environmental protection, we are extremely concerned that part 5 is likely to lead to an approach that is too limited in scope, is insufficiently aligned with important obligations and requirements in environmental and climate legislation, and—for all the assurances to the contrary—provides an opportunity for environmental regression in the future.

It is essential that we have confidence that the new environmental outcomes report system will maintain the robustness and scope of the strategic environmental assessment and environmental impact assessment frameworks, and will lead to tangible improvements in our natural environment, as well as helping to fight climate change. If we are to build that confidence and provide reassurance that the new system will deliver improved outcomes, the EOR framework provided for in clauses 116 to 130 needs strengthening in a number of important respects. Amendment 173, and others that will be debated later, are designed to achieve that aim.

Clause 116 gives the Secretary of State the power to make regulations that set out specific environmental protection outcomes against which relevant plans and consents will be assessed, and sets out what the Secretary of State must have regard to when making those regulations. Subsection (2) sets out the definition of environmental protection for the purposes of the Bill. The Committee will note that it includes

“protection of the natural environment, cultural heritage and the landscape from the effects of human activity”,

as well as protection of people from the effects of human activity on each of those, and their maintenance, restoration or enhancement.

We take no issue whatsoever with any of the definitions in subsection (2). Indeed, the Government’s decision to explicitly include references to cultural heritage and the landscape in what is meant by “environmental protection” is welcome; but we still believe that the definition is too limited. Specifically, protection of the climate, and protection of people’s long-term health, safety and wellbeing from the effects of human activity, should be explicitly included in the Bill’s definition of environmental protection. Amendment 173 provides for that broader definition, and would enable the Secretary of State, when making regulations under part 5 of the Bill, to specify environmental outcomes relating to both climate change obligations and public health objectives.

In short, the amendment would expand the range of possible environmental outcomes that Ministers could, if they chose, specify by regulation in the future, and therefore expand the range of things that assessments under the EOR regime could encompass. It would allow the Secretary of State to, for example, specify as a desired outcome the long-term flood-proofing of key infrastructure, so that it is climate resilient; or measures to promote walkability and urban cooling, so that development promotes key public health objectives. This is a sensible and proportionate amendment, and I hope that the Minister will consider accepting it.

[The Minister of State, Department for Levelling Up, Housing and Communities (Paul Scully)]

It is a pleasure to serve under your chairmanship, Mr Hollobone. As we have heard, the amendment seeks to expand the definition of “environmental protection” in clause 116 to include explicit reference to public health and climate change. Before I turn to the detail of the clause and the introduction of the new environmental outcomes reports, I should say that the Government have been clear that the new system is intended to improve the assessment of projects’ environmental impacts, and to place environmental matters—including climate change and public health—at the centre of decision making.

In line with that ambition and the commitment to non-regression, the definitions in clause 116 reflect and build on the definitions in the Environment Act 2021. Many of the terms used in the EU system of strategic environmental assessment and environmental impact assessment duplicate existing processes, or are poorly understood. Our broader approach to defining what outcomes may be covered will allow the Secretary of State greater flexibility to consider all relevant matters, including those that form part of the current assessment regime, such as human health and climate change.

As set out in subsection (2)(b) of the clause, the definition of environmental protection includes the protection of people, which would allow the Secretary of State to consider matters relating to health when setting outcomes. Subsections (2)(a) and (b) refer to protection from the effects of human activity, which would include protection from the impacts of climate change. Further, the definition of environmental protection is covered by the definition of the natural environment in subsection (3). This definition includes natural systems, cycles and processes, to ensure that matters such as climate change are properly built into consideration of outcomes under the new system.

While climate change and human health will undoubtedly be important considerations in setting outcomes, it is not necessary to make more explicit reference to them in primary legislation; doing so would risk limiting the range of outcomes that can be set, and risk our suggesting that climate change and health will be considered above other environmental topics that may, in individual cases, be equally important.

It is right that environmental outcomes reports focus on the full range of environmental issues. Developing the detail of what outcomes will be covered in secondary legislation will allow us to consult stakeholders, so that we can ensure that climate change and public health commitments, as well as other environmental matters, are captured. Outcomes will also draw on the extensive commitments made across Government, including the requirement in subsection (5) for the Secretary of State to have regard to the latest environmental improvement plan when setting outcomes. Setting out details around climate change and public health in secondary legislation will also enable us to minimise the risk of duplication and ensure alignment, as these are important considerations across other policy areas in the planning and consenting systems. In the light of these assurances, I hope that the hon. Member for Greenwich and Woolwich is able to withdraw his amendment.

[Matthew Pennycook]

I appreciate that response, but I do not think it addresses the concern raised by the amendment. I very much welcome what the Minister said about the Government’s intention to put public health and climate at the centre of decision making. The concern, though, is that although the clause gives a comprehensive list of what “environmental protection” means, it does not explicitly reference public health—human health—or climate, and I cannot for the life of me understand how inserting those things in the Bill explicitly would in any way limit the outcomes that could be set. We would merely be specifying and clarifying that outcomes relating to those two objectives were caught under the powers in the Bill.

I note what the Minister says about forthcoming secondary legislation capturing those objectives, but this issue speaks to our concern that there is a real gap in how the Bill addresses climate and public health. We feel that while opportunities to reinforce the Government’s commitments are woven through the fabric of the Bill, those issues are often neglected or left out.

I will not press the amendment, but we shall come back to the issue of public health and climate, because they need to have a much more central role in this legislation, and to be written into the Bill in many important respects, including in clause 116. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Matthew Pennycook]

I beg to move amendment 174, in clause 116, page 133, line 29, leave out subsection (5) and insert—

“(5) Before making any EOR regulations which contain provision about what the specified environmental outcomes are to be, the Secretary of State must ensure they are in accordance with—

(a) the current environmental improvement plan (within the meaning of Part 1 of the Environment Act 2021),

(b) biodiversity targets including those required under sections 1 and 3 of the Environment Act 2021,

(c) the duty to conserve biodiversity as required under section 40 of the Natural Environment and Rural Communities Act 2006,

(d) local nature recovery strategies as required under section 104 of the Environment Act 2021, and

(e) lowering the net UK carbon account as required under section 1 of the Climate Change Act 2008.”

This amendment would ensure that when using EOR regulations to specify environmental outcomes the Secretary of State would have to ensure they are in accordance with the current environmental improvement plan and additional criteria.

[The Chair]

With this it will be convenient to discuss new clause 52—Super-affirmative procedure for major regulations made under Part 5—

“(1) If the Secretary of State proposes to make EOR regulations which fall under section 192(5), the Secretary of State must lay before Parliament a document that—

(a) explains the proposal, and

(b) sets it out in the form of draft EOR regulations.

(2) During the period of 60 days beginning with the day on which the document was laid under subsection (1) (‘the 60-day period’), the Secretary of State may not lay before Parliament draft regulations to give effect to the proposal (with or without modifications).

(3) In preparing draft regulations under this Part to give effect to the proposal, the Secretary of State must have regard to any of the following that are made with regard to the draft regulations during the 60-day period—

(a) any representations, and

(b) any recommendations of a committee of either House of Parliament charged with reporting on the draft regulations.

(4) When laying before Parliament draft regulations to give effect to the proposal (with or without modifications), the Secretary of State must also lay a document that explains any changes made to the proposal contained in the document laid before Parliament under subsection (1).

(5) In calculating the 60-day period, no account is to be taken of any time during which Parliament is dissolved or prorogued or during which either House is adjourned for more than 4 days.”

This new clause would require major EOR regulations made under Part 5 to be subject to the super-affirmative procedure.

[Matthew Pennycook]

Clause 116(5) simply states that before making any EOR regulations that contain provision about what the specified environmental outcomes are to be, the Secretary of State must have regard to the current environmental improvement plan within the meaning of part 1 of the Environment Act 2021. At present, that environmental improvement plan is the 25-year environment plan, which was published in 2018 and is due to be reviewed next year. We welcome the fact that the Bill makes it clear that when making EOR regulations, the Secretary of State will have to have regard to that 25-year environment plan, although I encourage the Minister and his departmental colleagues and officials to do what they can to ensure that its review is completed before this Bill receives Royal Assent, so that the measures in the plan are fully aligned with the now operable Environment Act 2021, and so that the nature of the safeguard provided for in subsection (5) of this clause is clear and unambiguous.

However, while the explanatory notes to the Bill make it clear that the Secretary of State can draw on other relevant material when developing outcomes, there is nothing in the Bill to ensure that the Secretary of State must have regard to other important obligations and requirements set out in environmental and climate legislation beyond the environmental improvement plan.

[Rachael Maskell (York Central) (Lab/Co-op)]

I am grateful for the work that my hon. Friend is doing on the environment, and to try to ensure that the climate is front and centre in the Bill. Commitments were made at COP26 and COP15. We need the application of those commitments to come through in planning; there is nowhere else that they can come through. Is it not important that the determinations reached at those summits be brought into the planning process?

[Matthew Pennycook]

It absolutely is. The amendment seeks to ensure that the obligations we have made, and the way that they are written into domestic legislation, is accounted for in the framework that part 5 provides for. After all, we are talking about how to assess the environmental impact of development. It stands to reason that requirements and obligations that flow from things such as the Climate Act 2008 should be written into the Bill explicitly. Leaving them out is problematic because it would lead to important EOR regulations being made without there being sufficient regard to significant relevant targets, duties, strategies and obligations, which, we should remember, the Government themselves legislated for.

Amendment 174 seeks to replace subsection (5) of clause 116 with a subsection containing a more comprehensive list of requirements that the Secretary of State should have regard to—it is only “should have regard to”—before making any EOR regulations that make provision about specified environmental outcomes. In addition to the environmental improvement plan, the Secretary of State would have to have regard to: biodiversity targets, including those under sections 1 and 3 of the Environment Act 2021; the duty to conserve biodiversity, as is required under section 40 of the Natural Environment and Rural Communities Act 2006; local nature recovery strategies, as is required under section 104 of the Environment Act 2021; and lowering the net UK carbon account, as is required under section 1 of the Climate Change Act 2008.

Putting that expanded list of requirements in the Bill would strengthen the EOR framework by making it perfectly clear that the Secretary of State has to take into account those important legislative commitments when making EOR regulations.

In addition to expanding the list of requirements that the Secretary of State must have regard to before making any EOR regulations relating to specified environmental outcomes, we also believe there is a compelling case for greater parliamentary oversight of any such regulations that are proposed. The explanatory notes to the Bill make it clear that set outcomes will be subject only to public consultation and the affirmative parliamentary procedure. I will not detain the Committee with a digression on the limitations of the affirmative procedure as a means of effective parliamentary scrutiny—we are all familiar with them, and have discussed them in the context of the Bill previously.

Clause 116 and the other clauses in part 5 provide the Secretary of State with expansive powers allowing them to pass, by regulation, as yet unspecified, and potentially far-reaching, measures affecting the environment and environmental law, so we strongly believe that any such regulations should be subject to the super-affirmative procedure. New clause 52 would provide for use of that procedure for regulations made under part 5. I hope the Minister will give the new clause consideration, along with amendment 174.

[Paul Scully]

I understand the hon. Member’s concerns, but I hope to explain why the approach that we have taken in the Bill is sufficient. Amendment 174 would require environmental outcomes to be set in accordance with the environmental improvement plan, biodiversity targets, local nature recovery strategies and the Climate Change Act 2008. The environmental improvement plan, the current iteration of which is the 25-year environment plan, is where the Government set out how we aim to leave the environment in a better state than we found it. The Government have made it clear that an outcomes-based approach will be developed to support our environmental ambitions. For the purposes of this legislation, the environmental improvement plan is the most relevant document in informing the setting of outcomes. It is where the breadth of the ambitions are captured, and it is itself informed by a wide range of commitments and matters from other sources.

The Environment Act 2021 created a duty on the Government to prepare annual reports on the implementation of the environmental improvement plan, and to review and, if necessary, reissue the plan every five years. As such, it is a dynamic document that will evolve over time and reflect the most up-to-date position on the Government’s efforts to support the environment.

The environmental improvement plan also sets interim targets in respect of each of the key matters for which the Government have applied legally binding environmental targets, which will be reviewed regularly. That includes the biodiversity target mentioned in the amendment. Other more general duties and local strategies will also be informed by this overarching plan.

The amendment would also introduce a duty to act in accordance with a range of existing legislative provisions, and therefore risks creating potential conflict and unnecessary confusion. It is unclear how, for example, a national outcome could be set in accordance with a local nature recovery strategy, which is by definition spatial and site-specific.

Outcomes will cover a broad range of topics. The intention is not to create an exhaustive list of everything that will be considered when they are being set; rather, it is to recognise that the environmental improvement plan is at the heart of the Government’s agenda. Other duties will of course be reflected in outcomes at the moment they are set, but the duty to have regard to the current environmental improvement plan is the clearest way of ensuring that outcomes reflect the Government’s environmental ambitions.

With that in mind, it is important to note that the environmental improvement plan and commitments such as those under the Climate Change Act 2008 were not conceived as a way of informing outcomes for the EOR. As such, it would not be appropriate to set a hard requirement that EOR outcomes be set in accordance with those commitments.

The purpose of environmental outcome reporting, as is true of the existing system, will be to ensure that the right information is gathered to inform the right decisions, not to prioritise any one particular policy over another. Not everything in the environmental improvement plan will be relevant to development and environmental assessment, and there will be ambiguity as to how the plan should best be translated into outcomes for individual plans and developments. Equally, we will want to set outcomes in respect of landscape and cultural heritage, which are not in the scope of the plan.

When making EOR regulations that specify outcomes, we will have regard to the environmental improvement plan and other relevant considerations. Just as importantly, we will use the process of public consultation to ensure that we are capturing the outcomes that will best support the delivery of our environmental priorities. The amendment therefore risks both confusing and limiting the process by which outcomes are set. Given that explanation, I hope that the hon. Member for Greenwich and Woolwich will be able to withdraw the amendment.

New clause 52 seeks to make the EOR regulations subject to the super-affirmative procedure—something comparatively new to me. We have sought to take a proportionate approach to parliamentary scrutiny and consultation, placing the strongest requirements on the core elements of the new system. Clearly, we want to ensure that we have the best debates, consultations and discussion on such incredibly important issues. The use of powers in this particular part of the Bill, however, is tightly constrained with broad use of the affirmative procedure to ensure that Parliament gets the opportunity to scrutinise regulations properly in detail.

In addition to requiring the affirmative procedure, clause 125 ensures that EOR regulations that cover the most significant aspects of the new regime—for example, those that specify outcomes—will also require public consultation or consultation with stakeholders. That will provide stakeholders and parliamentarians with the opportunity to consider the details of the proposed regulations in advance of their being laid. Regulations requiring public consultation will be followed up by an official Government response on how those views have been taken into account in setting the detailed policy.

Before engaging formally on the detailed regulations, after the Bill achieves Royal Assent we plan to launch a high-level consultation on the core elements of the new system—for example, on the outcomes-based approach to assessment and the use of the mitigation hierarchy in assessing reasonable alternatives. That will be combined with conceptual roundtables and expert policy forums to inform the design of the new regulations and wider implementation.

As such, the super-affirmative procedure would duplicate the consultation and the approval requirements, so we do not deem it necessary. It would only serve to slow down the process of bringing forward necessary reforms that we believe will help to improve the environment in the long run. Given that explanation, I hope that the hon. Member will agree not to press new clause 52.

--- Later in debate ---

[Matthew Pennycook]

I am somewhat reassured by that response from the Minister. However, I take issue with it in a number of respects. I appreciate fully that the 25-year environment plan is the current environmental improvement plan. It may be the most relevant document, but it is limited. I note the point about biodiversity targets, but the document does not contain all the other requirements in the legislation listed in the amendment. The environment plan may be informed by those other requirements, but it does not contain them and does not operate in the same way.

If I am honest, I struggle to understand the issue with the insertion of language relating to legislation the Government have passed, which one would hope has been aligned and made compliant with other bits of legislation that could create potential conflicts during the process of passing it. We remain concerned that the reference in subsection (5) is too limited and we would like to see a wider set of requirements written into the Bill, but I do not intend to press amendment 174 to a vote.

On new clause 52, I welcome the Minister’s comments on the processes that the Government intend to follow when it comes to designing EOR regulations. That measure of public involvement is welcome and will be an important part of the process, but we are still concerned that, overall, the safeguards are insufficient—I will come on to talk about the other safeguards provided in part 5. We do not believe that they tightly constrain the use of the powers; in fact, we think they do the opposite, and there are a number of loopholes that need to be closed.

I cannot for the life of me understand how a public consultation would duplicate the parliamentary oversight that would be afforded to this place by the super-affirmative procedure. I go back to the point I made on a previous amendment. These are broad, expansive powers, which are as yet unspecified. There is a need for greater parliamentary oversight, as well as other stronger safeguards. I am not going to press the new clause to a vote at this point, but we will come back to this and other matters on this part. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

[Paul Scully]

I have said already that we are committed to delivering a modern system of environmental assessment that properly reflects the nation’s environmental priorities. The Bill allows us to introduce a new framework to replace the EU’s systems, while recognising the important role that environmental assessment plays. The previous regime could be overly bureaucratic and disproportionate. Expanding case law has led to a situation where unnecessary elements are being assessed for fear of legal challenges. The costs for big projects run into hundreds of thousands of pounds on occasions; yet, despite the lengthy reports, they often prove ineffective at securing better environmental outcomes or encouraging development to support the country’s most important environmental priorities.

The 25-year environment plan acknowledges that the UK is one of the most nature-depleted countries of Europe. The 2019 “State of Nature” report led by conservation research organisations found that 41% of UK species are declining and one in 10 is threatened with extinction. Given the urgency with which we need to restore the environment to leave it in a better place for future generations, we desperately need a new approach.

The powers in the Bill will extend to all regimes currently covered by the EU system, to ensure the best approach for the interoperability between regimes, particularly for projects that are often in the scope of more than one regime, such as planning and marine. The new approach will be centred around the creation of environmental outcomes reports, which will directly set out how consents and plans should support the delivery of environmental priorities by assessing the extent to which they support the delivery of better environmental outcomes. That moves us away from the uncertainty of assessing likely significant effects to a more tangible framework that provides more clarity on what should be assessed and when.

Assessing consents and plans directly against those outcomes will ensure that reporting is focused on those matters that will make a real difference to environmental protection. In turn, that will support more effective decision making and make reports more accessible to the public.

The outcomes will be fairly high level and user-friendly, simply setting out environmental priorities. It will be the job of indicators underpinning those outcomes to measure the delivery towards the outcomes. Indicators will be created and outlined in guidance for the different types of plans and projects and for different spatial scales. For example, indicators could set out which air pollutants should be measured and against which limits to measure the contribution towards an air-quality outcome seeking to reduce emissions.

--- Later in debate ---

Environmental outcomes reports for relevant consents and relevant plans

[Matthew Pennycook]

I beg to move amendment 175, clause 117, page 134, line 26, at end insert

“relative to the current status of the environment as assessed in a prepared baseline study”.

This amendment would ensure that the preparation of a baseline study which sets the context for assessing the environmental effects of a proposed project remains a core requirement of producing an EOR.

This amendment relates to a technical matter, but still an important one. Clause 117 gives the Secretary of State the power to make regulations requiring the preparation of an environmental outcomes report for relevant plans and relevant consents, the criteria for which will be set out in due course in regulation. It is this provision that establishes the outcomes-based approach to assessment, which the Minister has just described, wherein anticipated environmental effects are to be measured against the specified environmental outcomes, which clause 116 provides the power for the Secretary of State to specify.

Clause 117 ensures that where an EOR is required, it must be taken into account when considering whether to grant planning consent and the terms on which it is given, or to bring a plan into effect. The core requirements of what an EOR should contain are set out in subsection (4). It specifies that an EOR

“means a written report which assesses—

(a) the extent to which the proposed relevant consent or proposed relevant plan would, or is likely to, impact on the delivery of specified environmental outcomes”.

Paragraph (b) specifies any steps that may be proposed in terms of mitigation, remediation or compensation, and paragraph (c) discusses any proposals about how paragraphs (a) or (b) should be monitored or secured.

It would therefore appear that, when it comes to EORs, the Government have in mind, essentially, a simplified environmental assessment report—one, as the explanatory notes make clear, based on the mandatory information required in the reporting stages of the environmental impact assessment directive and the strategic environmental assessment directive. However, in setting out the core requirements of what an EOR should contain, subsection (4) contains no reference to the need for an environmental baseline assessment to have been prepared. We believe that oversight needs to be addressed.

A baseline study is an essential part of preparing an EIA because it is necessary to assess the current status of any given environment prior to development taking place. It covers, for example, what habitats exist within the environment and how they are changing, or the type and number of species present, in order to accurately judge the expected impact of development on the outcomes previously specified. Indeed, because baseline studies are an integral part of the existing SEA and EIA systems, we believe their removal could well contravene the non-regression safeguard provided for by clause 120, which we will debate in due course.

When it comes to EORs, it is difficult to conceive of how they will operate in practice without some kind of baseline study taking place, because quantifying the impact of development on any given outcome requires that the precise characteristics of the locality in question are known.

By amending subsection (4)(a) of clause 117, amendment 175 simply seeks to ensure that the preparation of a baseline study, which would set the context for assessing the environmental effects of a proposed plan or consent, remains a core requirement of producing an EOR. I look forward to hearing from the Minister that the Government are content to accept the amendment or, if not, an explanation as to why the Government believe that baseline studies are no longer required when it comes to assessing the environmental impact of any given development.

[Paul Scully]

As we have discussed, amendment 175 would give an explicit requirement for the impact of a consent or plan to be set up relative to a baseline study on the current environmental state. Subsection (4)(a) of clause 117 explains that an environmental outcomes report must demonstrate how the plan or consent would affect the delivery of specified environmental outcomes. The environmental baseline is a reference point against which the assessment is carried out. It will remain part of the process of demonstrating how a plan or project supports the delivery of environmental outcomes.

While outcomes will reflect national priorities, it is important that they can be translated to the regional or local level, given that that is the level at which the plans and projects, which will require EORs, will normally take place. As such, outcomes will be underpinned by a set of specific indicators, which will measure the contribution of a plan or project towards outcomes. Those indicators will be relevant to the geography of an area and will change over time to reflect the latest scientific understanding. Indicators will outline how a plan or project shows whether they are contributing to outcomes, and will be tailored to the needs and characteristics of different outcomes.

The details of outcomes and indicators will be developed, as I have said, through consultation with relevant stakeholders, and we will work with experts to gain insights on how best to utilise baseline data to inform them and ensure that overall environmental protections are maintained. Following that, clear guidance will be provided setting out how a plan or project should use indicators to demonstrate that they are supporting outcomes.

I do not think that we are that far apart in this, and I hope that the hon. Member for Greenwich and Woolwich will accept my explanation that although the baseline data is clearly important in measuring those outcomes and using those indicators, we do not need the duplicative nature of having it in the Bill. I therefore hope the hon. Member will withdraw his amendment.

--- Later in debate ---

[Matthew Pennycook]

I appreciate that response from the Minister. I think we would still like something to be written into the Bill regarding baseline studies. However, I very much welcome the clarification that he has just provided—that they will “remain part of the process” , and that they will be translated and tailored to the regional and the local level. I think that is very important and, on that basis, I am happy to beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

[Paul Scully]

The outcomes-based approach to assessment will ensure that the Government’s environmental commitments and priorities are placed right at the centre of the consenting process, in a system that is streamlined, transparent, accessible and clear. As outlined in the previous clause, we would want to make reports user-friendly and concise, enabling communities to understand what forms part of the assessment and how impacts are measured via indicators. We also want to improve the accessibility of reports and the data that underpins them by improving their format and avoiding multiple PDFs of tens of thousands of pages, for example.

In order to introduce the new outcomes-based approach to environmental assessment, the Government need the power to require the production of an environmental outcomes report for relevant proposed contents and plans. In taking that power, the Government are able to ensure that, where a report is required for a relevant consent or plan, the report must be completed before consent is granted or a plan is adopted.

Furthermore, the clause ensures that where an environmental outcomes report is produced, it must be considered by the relevant decision maker, which means that decisions are informed by quality information that fully considers the environmental effect of the plan or consent. It also sets out what the content of the reports should be. They will primarily assess how the proposed consent or plan would impact on specified environmental outcomes, supporting our ambition to move towards an outcomes-based system.

In structuring the clause, we recognised the need to provide powers to support the reform of a wide range of environmental assessment regimes across Government, but we have sought to ensure that core requirements are brought to the fore. For example, reports must consider reasonable alternatives to the proposed consent or plan and assess any steps taken in line with the mitigation hierarchy. This is the first time that explicit consideration of the mitigation hierarchy has been included in environmental legislation. Importantly, that hierarchy recognises that prevention is better than cure. In every consideration, plans and projects should first seek to avoid the impact happening in the first place, before considering mitigation and finally compensation, which should be absolutely the last resort. That sequential approach will finally be enshrined in law.

Having the powers to set out specifics in regulations rather than on the face of the Bill will ensure that the new system is more dynamic, allowing for updates to our approach to be considered and consulted on as our understanding of the environment deepens. It will also allow the differences between regimes to be accommodated. The clause sets out crucial provisions required to implement environmental outcomes reports and ensures that reports have sufficient weight and status in the decision-making process. I commend the clause to the Committee.

Question put and agreed to.

Clause 117 accordingly ordered to stand part of the Bill.

Clause 118

Power to define “relevant consent” and “relevant plan” etc

Question proposed, That the clause stand part of the Bill.

--- Later in debate ---

[Matthew Pennycook]

I welcome the detail provided by the Minister, but I will push him a little further on both clauses. Again, in the circumstances, I am more than happy for him to write to me to elaborate on his answers if he feels he needs to.

As the Minister said, clause 118(2) enables the Secretary of State to make regulations setting out those consents that should be considered category 2. Although category 1 consents will always require an EOR, category 2 consents will be required to produce one only where they meet criteria set through regulations made under the provision. I would be grateful if the Minister gave the Committee an idea of the criteria likely to be set through regulations under this provision that will require a category 2 consent, and of the rationale behind those criteria.

Clause 118(4) allows the Secretary of State to make regulations imposing a requirement for a consent in relation to a project. The requirement will be used, as in the current environmental impact assessment agriculture regime, where no other consenting mechanism exists. The Bill simply states that

“EOR regulations may impose a requirement for a consent in relation to project, which is to be a category 1 consent or a category 2 consent”.

Can the Minister explain the rationale for not specifying that the Secretary of State may impose a requirement for a consent in relation to a project only where no other consenting mechanism exists?

Clause 119(1) enables the Secretary of State to make regulations setting out how the delivery of specified environmental outcomes should be assessed or monitored. Can the Minister tell us whether the Government have a general sense of how outcomes will be assessed and monitored under this new framework and, if so, will he share it with the Committee?

Finally, clause 119(3) states that EOR regulations may make provision requiring action to be taken, if an assessment or monitoring under subsection (1) or (2) determines that is appropriate for the purposes of compensating for a specified environmental outcome not being delivered to any extent. Will the Minister explain the thinking behind the penalties and remedies available in the new EOR system when it comes to environmental outcomes not being delivered, and will he tell us whether the Department has undertaken any work to research the impact of introducing an outcomes-based approach on rates of delivery and non-delivery of environmental targets in development projects?

[Paul Scully]

Let me try to answer some of those points, and I will happily write with extra detail should I fail in my objective. We will clearly be consulting on which developments require an EOR when certain criteria are met, and we will publish those following Royal Assent. In line with our commitment to non-regression, we will ensure that any plan or project requiring assessment under the current regime because of its potential impact on the environment will continue to do so under the new framework. We want to avoid unnecessary screening work, so it is likely that more plans and projects will automatically be subject to a proportionate report, but only in borderline cases. As I said, we will work towards that through a consultation process on the criteria approach.

The regulations will determine the process for considering whether the plans or projects meet the criteria for a full environmental outcomes report, and clearly we will work with stakeholders to inform our approach to the criteria, and the processes for determining whether those criteria have been met. We want to ensure that the development management system continues to determine projects. We want the EOR to reform the process, but we do not want to replace it. The majority of consenting regimes base the consenting decision on a range of different factors. They will need to make a subsequent decision following assessment, but we want to ensure that the Secretary of State effectively has a light touch on this because, having done the consultation with stakeholders, this should be done at a local level as best we can.

The hon. Member for Greenwich and Woolwich talked about monitoring. The detail of monitoring regimes, including how long monitoring should be carried out for, will be set out in regulations to reflect the different approaches required for each assessment regime. It is not a one-size-fits-all system, because that is unlikely to be optimal, but the intention is that, with a more streamlined pre-consent process, more time and resource can be put into post-consent monitoring, which will likely be of far more value both in terms of securing positive outcomes and gathering useful environmental data to feed back into the system.

One thing that I am not sure I brought out enough in my speech is that the data that the exercise provides, being more data driven rather than the prose that I was talking about, will not only be useful for permissions and monitoring but have a far wider effect on our understanding of the environment in general, because some really interesting data will be brought out that cannot be captured in the analogue system that we have at the moment. I cannot answer the hon. Gentleman’s question about the research to date, so I will write to him on that, and other points that I have not covered.

Question put and agreed to.

Clause 118 accordingly ordered to stand part of the Bill.

Clause 119 ordered to stand part of the Bill.

Clause 120

Safeguards: non-regression, international obligations and public engagement

[Matthew Pennycook]

I beg to move amendment 176, in clause 120, page 137, line 21, leave out subsection (1) and insert—

“(1) The Secretary of State may only make EOR regulations if doing so will result in no diminution of environmental protection as provided for by environmental law at the time this Act is passed.”

This amendment would ensure that the new system of environmental assessment would not reduce existing environmental protections in any way rather than merely maintaining overall existing levels of environmental protection.

[The Chair]

With this it will be convenient to discuss amendment 177, in clause 120, page 137, line 26, leave out from “Kingdom” to end of line 28.

This amendment would ensure that for the purposes of making EOR regulations international obligations are not limited to those that regulate the process for environmental impact assessment.

--- Later in debate ---

[Matthew Pennycook]

The clause provides for a series of safeguards premised on a commitment to non-regression of environmental protection, suitable opportunity for public engagement and international obligations. While we welcome the inclusion of these safeguards in the EOR framework set out in part 5, we feel strongly that they are insufficiently robust. When it comes to public engagement, we note that subsection (3) of the clause specifies that

“the public will be informed of any proposed relevant consent or proposed relevant plan”,

and should have an opportunity to engage in the process, as per the requirements of the Aarhus convention. We are concerned the force of the provision is undermined by the fact that “adequate public engagement” is defined in subsection (4) as whatever the Secretary of State “considers appropriate”.

When it comes to international obligations, it is welcome that subsection (2) specifies EOR regulations

“may not contain provision that is inconsistent with the implementation of the international obligations of the United Kingdom”,

but we are concerned that in qualifying this constraint by specifying it only applies to those international obligations

“relating to the assessment of the environmental impact of relevant plans and relevant consents”,

the Bill could restrict applicable international obligations to those that simply regulate the process for environmental impact assessment. The Minister may say it is entirely appropriate that they do so, but we feel qualifying the constraint in this way could have the effect of ensuring that international obligations relating to air or water quality standards, for example, need not be considered because they would not form part of the actual “assessment” of environmental impacts. We believe the constraint provided for by subsection (2) should be less ambiguous, so as to close a potential loophole. Amendment 177 would achieve that objective by deleting the relevant qualification to make clear that EOR regulations may not contain provision that is inconsistent with the implementation of any international obligations that apply to the UK.

Finally, we welcome the inclusion of a non-regression clause in the Bill, on the grounds that any additional safeguard that constrains the use of the regulation-making powers in this part of the Bill is beneficial. However, we have three serious concerns about the effect of the non-regression provision set out in clause 120(1). Firstly, its application is entirely at the discretion of the Secretary of State; it is they who have to be satisfied that making the regulations will not result in environmental regression. As such, it is an entirely subjective constraint, and one that is unlikely to ever be challenged in the courts. Secondly, we are extremely concerned about the practical implications of specifying the Government’s non-regression commitment applies only to the

“overall level of environmental protection”.

In failing to make clear that the principle of non-regression, as it relates to the EOR framework, applies to specific aspects of environmental protection, we fear the new system will engender, as the CEO of Wildlife and Countryside Link, Richard Benwell, put it to the Committee in the oral evidence he provided many weeks ago,

“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.”––[Official Report, Levelling-up and Regeneration Public Bill Committee, 23 June 2022; c. 117, Q146.]

Thirdly, we are also concerned about the definition of “environmental law”, cited in subsection (1) and set out in subsection (4) of the clause. In limiting the non-regression constraint in the Bill to environmental law as defined in the Environment Act 2021, a number of relevant considerations would not be covered—including some of those set out on the face of the Bill in clause 116, such as cultural heritage and landscape—as they fall outside of the definition used in the 2021 Act. Section 46 of the Environment Act 2021 defines environmental law as “any legislative provision” that is “concerned with environmental protection”. A literal interpretation of environmental law, so defined, would cover only UK law. The Minister may argue that is unproblematic, given the commitments relating to “international obligations” set out in subsection (2), but for the reasons I have addressed we are concerned they are defined on the face of the Bill in an overly restrictive manner that will limit how much protection they provide against potential future regression.

We therefore believe that subsection (1) should be replaced with a new subsection specifying that the Secretary of State may make EOR regulations only if doing so will result in no diminution of environmental protection as provided for by environmental law at the time that the Act is passed, as provided for by amendment 176. The amendment would significantly strengthen the non-regression constraint provided for in the clause, so that Ministers cannot determine to make EOR regulations that increase environmental harm in some areas if they judge they are somehow offset in others, but must ensure there is no diminution of environmental protection whatsoever. I look forward to hearing the Minister’s response to these two important amendments.

[Paul Scully]

The new system that we have been discussing is all about improving environmental assessment, not weakening environmental protection. Moving to the outcomes-based approach that I have outlined will allow the Government to set ambitious outcomes, building on the Environment Act 2021 and other environmental commitments.

I understand the spirit and reasoning behind amendment 176, which proposes to amend the wording of the non-regression provision in clause 120 so that regulations must “result in no diminution of environmental protection”.

However, in drafting the Bill, we recognised the need to provide assurance that the new system will continue to support the protection of the environment, and the clause was drafted specifically to mirror the provisions of the EU-UK trade and co-operation agreement. That ensures that these reforms live up to our commitment to non-regression with our partners in that area. If we are to meet the complex environmental challenges that we face, we need to take a holistic approach and focus on how well the system delivers for the environment overall. We will concentrate on the aspects of the system that deliver real, positive outcomes for the environment, rather than on bureaucracy.

Where needed, we will seek to streamline the system, for example in areas where there is duplication of other existing processes, thereby allowing resources to be better focused elsewhere. However, along with the commitment to non-regression, we have also included significant duties to consult with the public and relevant stakeholders. We are also giving Parliament the opportunity to scrutinise subsequent regulations through the affirmative procedure, which is entirely appropriate. In the light of those reassurances on our commitment to maintaining environmental protections, I hope that the hon. Member for Greenwich and Woolwich will withdraw amendment 176.

Amendment 177 provides that EOR regulations must not be inconsistent with any international obligations, rather than specifying consistency with international obligations relating to environmental assessment. The inclusion of clause 120(2) demonstrates the Government’s commitment to legislating in a manner that is consistent with our international obligations. The clause seeks to provide explicit assurance of the importance of international obligations in respect of environmental assessments, and those commitments will be at the foundation of the new process of environmental outcomes reports, which builds on the core principles at the heart of the current practice.

Ultimately, the focus of EORs is the assessment of the environmental impact of relevant plans and relevant consents, which is why clause 120 refers to our international obligations relating to the assessment of the environmental impact of relevant plans and relevant consents. That ensures that relevant international obligations, such as those under the Espoo and Aarhus conventions, are properly reflected. To make the provision broader would sacrifice clarity and risk introducing confusion as to which areas of international law are particularly relevant and pertinent in such cases. With that explanation, I hope that the hon. Member for Greenwich and Woolwich will also consider withdrawing amendment 177.

[Matthew Pennycook]

I welcome the Minister’s clarification. Particularly on amendment 176, it is extremely useful to hear that the wording was chosen specifically to mirror that in the EU-UK trade and co-operation agreement. I do not want to digress into that agreement in any way—no one on the Committee would thank me for doing so—but it is a useful clarification.

I take what the Minister said about amendment 177; I do not intend to press it to a vote. However, we strongly feel that, international obligations aside, when it comes to safeguards the Bill still contains too many loopholes, many of which I mentioned when I was speaking to the amendment. In particular, what concerns us about the non-regression provision in clause 120 is the reference to only

“providing an overall level of environmental protection”.

We are extremely concerned that that might mean that environmental harm could take place at a local level because the Government could say, “Overall, we are satisfied that the level of protection has been maintained.” For that reason, and to make very clear how strongly we feel about the point, I am minded to push amendment 176 to a Division.

Question put, That the amendment be made.

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[Paul Scully]

As I have said, we are committed to ensuring that the new system of environmental assessment will provide at least the same level of overall environmental protection as the existing system. The clause enshrines that commitment, building on the landmark Environment Act 2021, and is in line with our commitments in the EU-UK trade and co-operation agreement.

It is a vital commitment, and it will ensure that EORs support the Government’s objective to be the first generation to leave the environment in a better state than we found it. We want to make it clear that, in introducing these reports, we are not trying to lower standards or bypass important environmental protections, and so it is important that we enshrine in legislation this commitment to non-regression.

We have also ensured that the Secretary of State’s powers are tightly constrained when considering whether overall levels of protection have been maintained. We have provided significant commitments to consultation and secondary regulations, which will be laid under the affirmative procedure and will thereby enable parliamentary scrutiny on this issue.

This clause also sets out that regulations made may not be inconsistent with the implementation of the relevant international obligations of the UK. As in other parts of the planning system, public engagement is a crucial feature of environmental assessment, and the clause sets out our commitment to maintaining opportunities for public engagement to take place. This will ensure that the public can be involved in the process of preparing an environmental outcomes report, in line with the requirements of the Aarhus convention, which includes provision on public participation in decision making on environmental matters. The clause provides a strong commitment to non-regression and to maintaining opportunities for public engagement, as we move to that new system, and so I commend the clause to the Committee.

Question put and agreed to.

Clause 120 accordingly ordered to stand part of the Bill.

Clause 121

Requirements to consult devolved administrations

[Matthew Pennycook]

I beg to move amendment 178, in clause 121, page 138, line 3, leave out “after consulting” and insert “with the consent of”.

This amendment, along with Amendments 179 and 180, would ensure that EOR regulations which contain provision within devolved competence can only be made with the consent of the relevant devolved administration.

[The Chair]

With this it will be convenient to discuss the following:

Amendment 179, in clause 121, page 138, line 16, leave out “after consulting” and insert “with the consent of”.

See explanatory statement to Amendment 178.

Amendment 180, in clause 121, page 138, line 34, leave out “after consulting” and insert “with the consent of”.

See explanatory statement to Amendment 178.

[Matthew Pennycook]

Clause 121 specifies that, where EOR regulations contain provisions within devolved competence, the Secretary of State must consult the relevant devolved Ministers. Our concern is that this is an unduly weak requirement that could see EORs imposed in Scotland, Wales and Northern Ireland without the consent of their respective devolved Administrations. Because the requirement is only to consult with the relevant devolved Ministers about EOR regulations containing provision within devolved competence, we could see EORs imposed without consent. We fear this could lead, advertently or inadvertently, to environmental regression if an EOR specified weaker outcomes than that sought by the relevant devolved Administration.

These three amendments simply seek to ensure that the consent of the relevant devolved Minister is obtained when EOR regulations contain provision within devolved competence to safeguard against that particular scenario. I look forward to hearing the Minister’s response to them and the concerns they are designed to address.

[The Chair]

It really is “The Matthew Pennycook Show” this afternoon, is it not?

--- Later in debate ---

[Matthew Pennycook]

I accept those assurances, and on that basis, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

[Paul Scully]

I will be brief, because I think my previous remarks addressed the point about transposition of the EU directive leading to the creation of a range of environmental assessment regimes that have different territorial extents and applications. As I have already explained, discussions are ongoing with the devolved Governments regarding how best to work together to ensure a consistent and coherent approach to environmental assessment across the UK. We are hopeful that we can work closely with devolved Governments to extend the powers in the Bill to place all the nations on an even footing. For those reasons, I commend the clause to the Committee.

Question put and agreed to.

Clause 121 accordingly ordered to stand part of the Bill.

Clause 122

Exemptions for national defence and civil emergency etc

Question proposed, That the clause stand part of the Bill.

--- Later in debate ---

[Paul Scully]

Exactly. This is why you get paid the big bucks, Mr Hollobone. Thank you very much.

[Matthew Pennycook]

The Minister touched on a number of the issues that I wanted to raise. This is a series of important clauses and therefore I have a couple of questions for him. I hope that I can draw out a little more detail, but as ever, he is more than welcome to write to me if he requires to do so.

Clause 122(1) states:

“The Secretary of State may direct that no environmental outcomes report is required to be prepared in relation to a proposed relevant consent which is solely for the purposes of national defence or preventing or responding to civil emergency.”

Subsection (2) of that clause further states:

“EOR regulations may provide for further circumstances in which the Secretary of State is to be able to direct that no environmental outcomes report is required to be prepared.”

Can the Minister give the Committee some examples of the “further circumstances” in which no environmental outcomes report may be required as per subsection (2), given that civil emergencies and national defence, as he said, are already covered by subsection (1)?

Clause 123 is a new provision that sets out the enforcement provisions that can be made in respect of EORs. The Minister touched on a few, I believe, but I would be grateful if he could provide any further detail as to how enforcement of EORs will operate and how they will operate compared with the current SEA and EIA systems.

Clause 125(2) specifies that the Secretary of State, as the Minister has also said, may consult only

“such persons as the Secretary of State considers appropriate”

before making certain EOR regulations, or issuing, modifying or withdrawing certain guidance. Can the Minister give us some idea of which persons or bodies the Secretary of State would be likely to approach before making or modifying regulations and guidance? Specifically when it comes to statutory consultees, which he spoke about, is there any rationale for not specifying statutory consultees in the Bill?

[Paul Scully]

I thank the hon. Gentleman for that contribution. On the formal consultation, I cannot yet give him details as to whom specifically we will speak to, barring the fact that, as I said earlier, we will clearly seek to speak to all the key stakeholders that we work with really closely. Indeed, we have worked with a number of those in the lead-up to the Bill. We want to ensure that we get the expert advice of people not only who can contribute to our knowledge, but who will be using the system, so that we can get the benefit of that on-the-ground experience, because what we do not want to have is unintended consequences.

On enforcement, the Bill amends and strengthens the powers and sanctions available to decision makers. We want to ensure that the new system is effective at delivering on the outcomes, so it will be necessary for the regime to have enforcement mechanisms. The exact details of the new system are in the process of being developed. We will be working with the same stakeholders on the design of the new system, in terms of enforcement as well as exemptions, and we want to ensure that we have a full consultation.

In addition to consultation, there will be parliamentary debate. I hope that reassures the hon. Member for Greenwich and Woolwich that we are prepared to work collaboratively to ensure that this regime—the framework that we are talking about now—works well in practice, and that that coherent approach makes it easier to understand and enforce. Enforcement is no good if we just have a bit of prose that means nothing; we need to make sure we enforce that as well.

Question put and agreed to.

Clause 122 accordingly ordered to stand part of the Bill.

Clauses 123 to 126 ordered to stand part of the Bill.

Clause 127

Interaction with existing environmental assessment legislation and the

Habitats Regulations

[Matthew Pennycook]

I beg to move amendment 181, in clause 127, page 141, line 32, leave out “in particular” and insert “not”.

This amendment would ensure that any specified environmental outcomes arising from EOR regulations made would augment not substitute those arising from existing environmental assessment legislation and the Habitats Regulations.

[The Chair]

With this it will be convenient to discuss amendment 182, in clause 127, page 142, leave out lines 12 and 13.

This amendment would ensure that EOR regulations cannot be used to amend, repeal or revoke existing environmental assessment legislation.

[Matthew Pennycook]

Clause 127 enables the Secretary of State to make regulations on how the EOR framework provided for by part 5 interacts with existing environmental assessment legislation and the habitats regulations. The explanatory notes accompanying the Bill state:

“This is necessary to ensure that where an Environmental Outcomes Report is prepared, where appropriate, this is capable of meeting the requirements of existing environmental assessment so as to avoid duplication.”

It would be recognised as meeting both.

Our serious concern is that by providing for requirements undertaken in relation to an EOR to satisfy the requirements under the habitats regulations, this clause could allow the Secretary of State to substitute the protections afforded by those regulations with weaker requirements that had undergone only limited parliamentary scrutiny under the affirmative procedure. In our view, this is deeply problematic because the habitats regulations provide for an extremely high level of environmental protection for our most precious and vulnerable habitats and species, indeed for greater protection than the SEA and EIA systems, requiring as they do applications proposing a development that will affect a site to first prove that mitigation is in place to avoid significant harm, or that there is an overriding public interest reason to proceed and compensatory measures are necessary. In revising subsection (2) of the clause, amendment 181 would address that concern by ensuring that any specified environmental outcomes arising from EOR regulations made would augment, not substitute, those arising from existing environmental assessment legislation and the habitats regulations.

An additional concern with this clause comes in the form of subsection (3), on page 142 of the Bill, which provides for EOR regulations under the clause to

“amend, repeal or revoke existing environmental assessment legislation”.

Even with the list of what constitutes “existing environmental assessment legislation” set out on the face of the Bill in clause 130(1), we believe this provision is unnecessarily broad. Amendment 182 therefore seeks to remove clause 127(3) to ensure that EOR regulations cannot be used to amend, repeal or revoke existing environmental assessment legislation.

It is essential, as the Minister himself accepted during debate about an earlier clause, that we recover nature and that we do so quickly, or we risk irreparable damage to the natural world upon which life depends. To that end, proven, effective laws should be maintained and strengthened rather than undermined in any way. For that reason, I hope the Minister will appreciate the concerns we raise and give both of these amendments serious consideration.

[Paul Scully]

Given the scale of the underpinning legislation, as we transition from the current complex system of environmental assessment to the new framework of EORs, the Government require powers to manage the interaction between the old and new systems.

The interaction provisions in clause 127 are designed to ensure that when an EOR is prepared, it is capable of meeting the requirements of existing environmental assessment legislation where appropriate. That allows the Government to guard against duplication while the various assessment regime owners bring forward regulations to introduce environmental outcomes for their regimes. It also allows existing environmental assessment legislation to meet the requirements of an EOR, which is to avoid duplication and manage co-ordination across the different assessment regimes. We all know that it takes time to consolidate the complex legislation covering a number of Departments and agencies, and we want to make sure there are no gaps in the process.

--- Later in debate ---

Amendment 182 would limit our ability to remove the old legislation as the new system comes online. The current system would be frozen in time, and there would be no capacity to update its provisions to better reflect current pressures on the environment and the UK’s changing needs. In effect, it could lead to there being multiple overlapping systems of environmental impact assessments and strategic environmental assessments operating at the same time, leading to confusion, additional bureaucracy and wasteful duplication. With that in mind, I hope the hon. Gentleman will agree to withdraw amendment 182.

[Matthew Pennycook]

I thank the Minister for that response. I note and accept what he said about amendment 182, although I will go back and satisfy myself that the concerns raised in that regard are fully addressed.

We continue to have concerns about the issues raised by amendment 181. I heard what the Minister said about the Government’s intention for these provisions to avoid duplications and enable co-ordination, but I remain concerned that, as drafted, they could lead to the powers substituting rather than augmenting the protections provided for by the habitats regulations, in particular. The Minister’s defence was that we are protected in that regard by the safeguards in clause 120, but he has heard our concerns about their robustness. Along with our concerns about clause 120, that is one of the fundamental weaknesses of part 5 that we would like to see addressed. For that reason, I will press amendment 181 to a Division. This will be the final one today.

Levelling-up and Regeneration Bill (Eighteenth sitting)

Matthew Pennycook Excerpts

Committee stage
Tuesday 6th September 2022 Public Bill Committees

[Mr Jones]

As ever, it is a pleasure to serve under your chairmanship, Mr Paisley. I hope that colleagues had a good summer and, in many ways, are suitably refreshed and raring to go with our consideration of the Levelling-up and Regeneration Bill in Committee.

These three amendments are aimed at ensuring that proposed new section 93G of the Town and Country Planning Act 1990, which is created by clause 99, works as intended. The amendments propose two changes. First, new section 93G does not refer to the correct section of the 1990 Act as the basis for the grant of planning permission. Therefore, the two technical corrections set out in Government amendments 74 and 75 are considered necessary to make clause 99 legally accurate. Secondly, to ensure that references in new section 93G concerning when new development has begun have the same meaning as those elements set out in existing section 56(2) of the 1990 Act, a consequential amendment is required. This is set out in Government amendment 76.

Overall, the amendments will ensure that clause 99 works as intended, without ambiguity. For those reasons, I hope that members of the Committee support them.

Amendment 74 agreed to.

Amendments made: 75, in clause 99, page 117, line 25, leave out “58(1)(b)” and insert “70”.

This amendment corrects a cross-reference.

Amendment 76, in clause 99, page 117, line 29, at end insert—

“( ) In section 56 (time when development begins), in subsection (3), after ‘92,’ insert ‘93G,’.”—(Mr Marcus Jones.)

This amendment adds a consequential amendment to section 56 of the Town and Country Planning Act 1990 (which determines the time when development begins).

Question proposed, That the clause, as amended, stand part of the Bill.

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

It is a pleasure to reconvene after the summer recess under you in the Chair, Mr Paisley.

Clause 99 will insert proposed new section 93G into the Town and Country Planning Act 1990, as the Minister said. The new section will require those carrying out certain development types to serve a commencement notice to the relevant local planning authority before any development takes place. Such development notices will be required to outline the expected start date of construction, the details of the planning permission, the proposed delivery rate for the scheme, and other relevant information. The example in the explanatory notes accompanying the Bill suggests that this provision will most likely apply to large-scale residential schemes as a means, albeit a limited one, of preventing land banking and slow build-out by larger developers.

We welcome this sensible new duty. However, I would be grateful if the Minister provided further clarification as to what kinds of developments are likely to fall within the “prescribed description” bracket in subsection (1)(b) of the proposed new section and therefore be required to submit one of the new commencement notices.

[Mr Jones]

As I am sure the hon. Gentleman will appreciate, the description of the particular type of development he refers to will be dealt with in regulations and we will bring forward further details in due course. We will do so in consultation with both local authorities and industry.

Question put and agreed to.

Clause 99, as amended, accordingly ordered to stand part of the Bill.

Clause 100

Completion notices

--- Later in debate ---

[Tim Farron]

I gather it is a struggle to get back into the Toon afterwards—I will cadge a lift to the Bigg Market with you.

My concern is—this is why the amendment is important—that when we talk about planning and the powers that communities have, so often Governments, particularly this one, listen to a range of voices, but especially to the interests of developers. Here is an opportunity for the Government to listen to and give power to communities. In my constituency and around the country, there will be many instances like the one referred to by the hon. Member for South Shields, where planning permission has been given, work begins and then it is not completed. The powers available to the local council or local planning authority—let us be honest, we are talking about the powers available to the local community to have any control over all that—are very limited.

If the Government accepted the amendment, it would indicate that they are serious about empowering communities over the things that happen in them. That way, we are not allowing things to happen to communities, but allowing communities to have real sovereignty over what happens within their boundaries.

[Matthew Pennycook]

Very briefly, I congratulate my hon. Friend the Member for South Shields on this excellent amendment, which we support. She made clear that the problem she has highlighted of private plots lying derelict for extended periods of time with no real prospect of development being completed has a real impact on local communities. Allowing the 12-month completion notice deadline to be circumvented in the circumstances set out in the amendment, with the proportionate requirement set out in proposed new subsection 3B, is sensible and we urge the Government to consider it seriously.

[Mr Jones]

I listened closely and carefully to what the hon. Member for South Shields said. I am sure she knows that because of the role of Ministers in the planning system, I cannot discuss that particular situation in detail, but I can say that I am aware of such situations, even in my own constituency. I am sure there are similar situations across the country.

Amendment 170 relates to the proposed updated legislative framework for completion notices in clause 100. Those notices are an existing tool available to local planning authorities that can be served on developments that, in the opinion of the local planning authority, will not be completed in a reasonable period. We want to equip local planning authorities with the tools necessary to deal with sites that have experienced long periods of inactivity or slow delivery. That is why, through clause 100, we propose to modernise the procedure for serving completion notices to make them simpler and faster to use, giving more control and certainty to local planning authorities in the process. To achieve that, clause 100 will remove the need for a completion notice to be confirmed by the Secretary of State before it can take effect and allow for a completion notice to be served on unfinished developments sooner, providing the planning permission has been implemented.

Amendment 170 proposes two fundamental changes to clause 100. First, there would be a shorter completion notice deadline below the current 12-month minimum in certain circumstances. Those are where a local planning authority is of the opinion that development has not taken place on a site for a prolonged period; that there is no reasonable prospect that the development would be completed in a reasonable period; and that it is in the public interest to serve a notice.

While I support the intention, I remind the Committee that completion notices, when served by a local planning authority or the Secretary of State, must provide the recipient with an opportunity to complete the development. To put it another way, a completion notice requires a person to use or lose their planning permission. Therefore, that person must be afforded the chance to use the planning permission and complete the development before the granting of that permission is removed. Providing the opportunity to complete is a critical aspect of the procedure governing the use of completion notices and reflects the longstanding position that planning permission is a development right and that revoking that right should be subject to compensation.

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These changes will help make completion notices a more attractive option for local planning authorities in England to galvanise delivery or to remove unused or unwanted planning permissions. These reforms make clear to the development industry and communities our commitment to ensuring that planning permission is built out as quickly as possible, and that where there are unreasonable delays to delivery, local planning authorities have more control and confidence in exercising their powers to bring about a timely completion of development. I commend clause 100 and schedule 10 to the Committee.

[Matthew Pennycook]

Clause 100 would amend the provisions in the Town and Country Planning Act 1990 relating to completion notices. It does so by removing two requirements: that the Secretary of State must approve a completion notice and that the notice must be served only after the deadline for commencement of the planning permission has passed. We welcome these sensible revisions to the 1990 Act. I do, however, have two questions for the Minister, but I am more than happy for him to get back to me in writing if needed.

First, given that the changes sought by clause 100 are intended to work in conjunction with the new duty provided for by clause 99 on commencement notices, will the Minister explain why such notices are restricted to certain types of as yet undefined development, while the changes made to completion notice provision will continue to apply to all types of development? Secondly, subsection (2) of proposed new section 93H makes it clear that a local planning authority can serve a completion notice if it is of the opinion that the development will not be completed “within a reasonable period”—a power that in theory would allow the cases my hon. Friend the Member for South Shields just raised to be addressed in a timelier manner. Will the Minister clarify what is meant by “within a reasonable period”? If he cannot, can he tell us who will determine what it will mean in due course and whether there will be any limits whatsoever, given how ambiguous the phrasing is?

[Mr Jones]

On the first question, I will take up the hon. Member’s offer to write to him. To his second point, that reasonable period of time will be set out in guidance. The local planning authority will be the one to deal with the matter directly, rather than getting the Secretary of State involved. The authority will be able to determine how to deal with a particular situation by taking into account the factors relating to each development involved.

Question put and agreed to.

Clause 100 accordingly ordered to stand part of the Bill.

Schedule 10 agreed to.

Clause 101

Time limits for enforcement

Question proposed, That the clause stand part of the Bill.

[Mr Jones]

The Government are clear that effective enforcement action is important to maintain public confidence in the planning system. This chapter introduces a number of measures long called for by colleagues in this place to strengthen the enforcement powers of local authorities and to close loopholes. Local planning authorities presently have a wide range of enforcement powers, with strong penalties for non-compliance, to tackle such situations. While we believe that the current enforcement framework generally works well, we acknowledge that we could make improvements in a number of areas. We want to strengthen planning enforcement powers and sanctions, reinforcing the principle that unauthorised development should never be viewed as preferential to proper, up-front planning engagement.

Within the planning enforcement framework, there are statutory time limits for the commencement of enforcement action. It is necessary to have a statutory time limit to provide certainty when the passage of time means that enforcement action is no longer feasible. However, there are currently two time limits for commencing enforcement action, depending on the nature of the breach. For a breach of planning control consisting of building operations or the change of use to a single dwelling, the time limit for commencing enforcement action is four years. For any other breach of planning control, the time limit for commencing enforcement action is 10 years from the date of the breach.

Stakeholders have raised concerns that the four-year timeframe can be too short, and in some cases can result in opportunities to commence planning enforcement action being inadvertently missed. For example, a person may not initially raise concerns with their local planning authority, assuming that a neighbouring development has the correct permissions or will not cause disturbance. Should the development prove disruptive, they may then try to come to an agreement with the person responsible for the development. By the time they raise their concerns with the local planning authority, some time may well have passed. The local planning authority may not initially be aware of that, prioritising other investigations. When an investigation begins, it may then become clear that the time limits for commencing enforcement action have inadvertently passed.

The four-year time limit can cause frustration for communities, whose initial pragmatism may result in unauthorised, harmful development becoming inadvertently immune from enforcement action. The clause will bring the time limit to commence enforcement action in England to 10 years in all cases, either from the date of substantial completion or the date of the breach, depending on the specific nature of the breach. That will provide greater confidence to local planning authorities that they will have the time to take enforcement action, and indicate to the public that planning breaches are taken seriously and should never be viewed as a preferential approach to proper engagement with the planning system. I commend the clauses to the Committee.

Question put and agreed to.

Clause 101 accordingly ordered to stand part of the Bill.

Clause 102 ordered to stand part of the Bill.

Clause 103

Enforcement warning notices

[Matthew Pennycook]

I beg to move amendment 116, in clause 103, page 122, line 36, at end insert—

“(4) The Secretary of State must provide sufficient additional financial resources to local planning authorities to enable them to implement the provisions in this section.”

This amendment, along with New Clause 36, would require the Secretary of State to provide sufficient additional resources to local planning authorities to enable them to implement the changes required by Chapter 5 of Part 3.

[The Chair]

With this it will be convenient to discuss new clause 36—Duty to provide sufficient resources to local planning authorities for new burdens: enforcement of planning controls—

“The Secretary of State must provide commensurate additional financial resources to local planning authorities to enable them to implement the provisions in Chapter 5 of Part 3.”

See explanatory statement for Amendment 116.

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[Matthew Pennycook]

Planning enforcement is vital if the integrity of the planning system is to be upheld. For that reason, we broadly welcome the measures set out in chapter 5 of this part of the Bill. Taken together, the amendment and new clause 36 would simply require the Secretary of State to provide sufficient additional resources to local planning authorities to enable them to implement the changes required by the provisions in this chapter.

As we discussed in relation to many previous amendments, we know that as a result primarily of local authority belt tightening in response to funding cuts by central Government, the resources dedicated to planning within local planning authorities have fallen dramatically over recent years. Planning enforcement has not escaped the impact of that general resource reduction. When it comes to the impact on enforcement activity, the figures speak for themselves: the Department’s own data on enforcement action show a marked decline in the issuing of planning contravention and enforcement notices over the past decade. Given that planning enforcement action, as opposed to the investigation of planning breaches, has long been classified as a discretionary service—rather than a statutory duty—our concern is that without sufficient additional resources many local authorities will simply determine to cut back on planning enforcement teams, rather than make full use of the new and enhanced powers provided for by the clauses in this chapter.

The National Association of Planning Enforcement, based on feedback from its members, has detailed how funding pressures are even leading some local authorities to consider removing their planning enforcement services budgets altogether, or reducing the provision to essential services only, with the suggestion that that means electing only to enforce certain breach types or taking enforcement action only on a select number of cases. In evidence recently submitted to the Select Committee on Levelling Up, Housing and Communities, the Royal Town Planning Institute highlighted that budgetary pressures were now so acute for some local authorities that they are prepared to risk the challenge of potential judicial reviews and formal complaints to the ombudsman, rather than spend resources they simply do not have on staffing planning enforcement teams.

We believe that it is right for clear expectations to be set when it comes to local authorities fulfilling their planning enforcement obligations. However, they deserve to be properly resourced to carry out those obligations and given adequate funds to undertake enforcement action, including in relation to biodiversity net gain. To the extent that the provisions in this chapter, including extending the period for taking enforcement action to 10 years in all cases and introducing new enforcement warning notices, clearly constitute additional work pressures on planning enforcement teams, it is only appropriate that local planning authorities receive sufficient additional resources to carry them out.

I hope that rather than merely once again paying lip service—as happened on so many occasions before the summer recess—to the need to ensure that planning authorities are resourced to deliver the reforms in this Bill, the Minister will feel able to demonstrate a commitment on the record to resourcing local planning authorities properly by either accepting our proposals or detailing precisely what additional funding authorities can expect in order to carry out the new functions.

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[Mr Jones]

I thank the hon. Member for York Central for that important point. I have acknowledged that there are capacity and capability challenges. I have also acknowledged that the Government want to go further by allowing local authorities to bring in more income. We have discussed and put the principle out there of doubling fees for retrospective planning applications, which often put often unnecessary additional pressure on local authorities, if people would have put forward their planning applications in the first instance in the proper and usual way.

On new clause 36, effective enforcement action is important to maintain public confidence and trust in the planning system. The package of enforcement measures in the Bill will strengthen the enforcement powers available to local planning authorities. Generally, the provisions make the existing framework easy to use by enforcement officers and, as such, they will not create significant additional burdens or resource pressures for local planning authorities. The use of new tools, such as enforcement warning notices, is discretionary. We are also working with partners to deliver a capacity and capability strategy to support the implementation of our planning reforms so that local planning authorities have the right skills and capabilities to make creative decisions and drive forward ambitious proposals, and we are committed to new burdens principles.

For those reasons, we cannot accept amendment 116 and new clause 36. I hope the hon. Member for Greenwich and Woolwich is sufficiently reassured to withdraw the amendment.

[Matthew Pennycook]

I regret to inform the Minister that I am not sufficiently reassured. I note what he said about fees and about the strategy the Department intends to bring forward. Yet, what I hear time and again in responses to amendments that seek to press the Government on local authority resourcing is a seeming unawareness of how acute the problem is. The Minister referred to it in very diplomatic terms as capacity and capability challenges, but it goes way beyond that. Local planning authorities are under acute pressure, which has a direct impact on planning services in those local authorities and, because it is a discretionary service, on the enforcement part of those planning services.

I am concerned to hear the Minister say that he does not think the provisions in this chapter constitute additional work pressures. It seems to me that they do. When looked at in the round, the measures introduced in the Bill certainly constitute additional work pressures on departments. I am not going to press these proposals to a Division, but we will come back time and again to the issue of local authority resourcing, because planning is under acute pressure in terms of capability and skills, and the Government have to provide stronger commitments as to what they will do to address that. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

[Mr Jones]

On the basis that we have debated clause 103 at some length, I commend it to the Committee.

Question put and agreed to.

Clause 103 accordingly ordered to stand part of the Bill.

Clause 104

Restriction on appeals against enforcement notices

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[Mr Jones]

The retrospective planning application process is a necessary part of the planning system. It allows those who have made a genuine mistake to remedy the situation. However, we are aware that it is also used by people who have intentionally undertaken development without permission, who then attempt to delay enforcement action.

Prior to the Localism Act 2011, an appeal could be made both against the refusal of a retrospective application and against enforcement action, on the ground that permission ought to be granted. Through the 2011 reforms, we reduced the circumstances in which an appeal could be made, preventing an appeal on the grounds that permission ought to be granted if an enforcement notice was issued before the end of the statutory determination period. However, the reforms inadvertently created a loophole, which has allowed appellants to continue to appeal twice in certain circumstances, against the refusal or non-determination of a retrospective planning application and against an enforcement notice, on the ground that permission ought to be granted. Both appeals, in effect, assess the planning merits of the case.

The loophole exists because, in some circumstances, a local planning authority might not issue an enforcement notice before the end of the determination period for a related retrospective application. That could be because the local planning authority might have invited the retrospective application in the first place, and does not want to be seen to prejudge the outcome, for example. In such cases, if the development were subsequently found to be unacceptable and retrospective planning permission was refused, an enforcement notice would be issued after the end of the determination period.

There would remain two opportunities to obtain permission retrospectively: first, by appealing the refusal of the retrospective application, and secondly, by appealing the enforcement notice on the ground that permission ought to be granted. A similar situation would occur if the determination of the retrospective application were delayed and the appellant appealed the retrospective application on the ground of non-determination.

Therefore, the clause will extend the period during which an enforcement notice can be issued and during which an appeal on the ground that permission ought to be granted can still be prevented to two years. The applicant will not then be able to appeal an enforcement notice on the ground that permission ought to be granted during that extended period. Instead, they will have only one route to obtain planning permission retrospectively—through a successful appeal of the refusal or the non-determination of the retrospective planning application. Appealing an enforcement notice on other grounds will still be permitted.

The clause will reinforce the message that people should seek planning permission before they start a development. Where they do not do so, they should have only one opportunity to obtain planning permission after the unauthorised development has taken place so that the matter can be rectified as soon as possible. That will speed up enforcement action and prevent resources from being wasted assessing the planning merits of the same case twice. I therefore commend the clause to the Committee.

[Matthew Pennycook]

I would like to make some further remarks on clauses 105 and 106. Clause 105 will give the Secretary of State a new power that allows them to dismiss an appeal in relation to an enforcement notice or an application for a lawful development certificate in England should it appear to them that the appellant is causing undue delays to the appeals process. This is another point of clarification, but I simply wish to get a sense from the Minister of what causing undue delays as per proposed new section 176(6) of the Town and Country Planning Act 1990 will be taken to mean in practice.

Clause 106 will amend sections 187A and 216 of the 1990 Act in relation to England to increase the maximum fine for failing to comply with either a breach of condition notice or a section 215 notice. We do not oppose those changes, but I would like reassurance from the Minister that the Government have properly considered the possibility that increasing the maximum fine in such a way might have the unintended consequence of discouraging from seeking retrospective permission those who have, for whatever reason, made genuine mistakes on their planning applications.

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[Mr Jones]

The Government are committed to increasing opportunities for meaningful and early community involvement in planning decisions. Throughout the Bill, we are introducing measures that do just that. Communities should be given a say on developments that affect them, and should have those views taken into account when decisions are made. We are also keen to ensure that issues are dealt with early on, so that decisions are not unduly delayed. That is why we are introducing this minor but important change.

Clause 108 will make permanent the powers in sections 61W to 61Y of the Town and Country Planning Act 1990 that enable the Secretary of State to mandate the types of applications for which applicants will be required to carry out consultations with those in the vicinity of the development, and with any other specified people—for example, statutory bodies—before submitting a planning application to the local planning authority. The powers also require applicants to have regard to any responses received in the pre-application consultation, including views expressed by local communities.

The powers have been used only to require pre-application consultation on onshore wind turbines where two or more turbines are being installed, or where the hub height is over 15 metres. We want to explore additional opportunities to use the powers where pre-application engagement will be most beneficial, and we will engage on that before bringing forward the necessary changes through secondary legislation. Making the powers permanent will allow the Government to further strengthen community engagement with the system. I commend the clause to the Committee.

Question put and agreed to.

Clause 108 accordingly ordered to stand part of the Bill.

Clauses 109 to 112 ordered to stand part of the Bill.

Clause 113

Infrastructure Levy: England

[Matthew Pennycook]

I beg to move amendment 142, in clause 113, page 131, line 38, leave out “a charge” and insert “an optional charge”.

This amendment would ensure that application of the Infrastructure Levy would be optional rather than mandatory.

[The Chair]

With this it will be convenient to discuss the following:

Clause stand part.

Amendment 143, in schedule 11, page 283, leave out lines 27 and 28 and insert—

“(1) A charging authority in England may, if it determines that IL would be more effective than the community infrastructure levy for delivering infrastructure in its area and would not prevent it meeting the level of affordable housing need identified in its local development plan, in accordance with IL regulations, charge IL in respect of development in its area.”

This amendment to inserted section 204B, which is connected to Amendment 142, would ensure that application of the Infrastructure Levy would be optional rather than mandatory

Amendment 145, in schedule 11, page 289, line 18, leave out “or require”.

This amendment and Amendment 146, would give charging authorities discretion over the basis on which infrastructure levy rates are calculated.

Amendment 146, in schedule 11, page 289, line 30, leave out “or require”.

See explanatory statement for Amendment 145.

Amendment 147, in schedule 11, page 308, leave out from line 40 to line 13 on page 309 and insert—

“may be given under subsection (4) for authorities that have adopted an IL charging schedule, only if it is necessary for–

(a) delivering the overall purpose of IL mentioned in section 204A(2), or

(b) avoiding charging a specific development more than once for the same infrastructure project through both IL and the following powers—

(i) Part 11 (Community Infrastructure Levy) (including any power conferred by CIL regulations under that Part),

(ii) Section 106 of TCPA 1990 (planning obligations), and

(iii) Section 278 of the Highways Act 1980 (execution of works)

unless this is essential to rendering the development acceptable in planning terms.”

This amendment would avoid restrictions being placed on the use of the community infrastructure levy, section 106 obligations, and section 278 agreements at the Secretary of State’s discretion unless necessary to avoid double charging for the same infrastructure provision.

Clause 115 stand part.

[Matthew Pennycook]

Part 4 of the Bill concerns the infrastructure levy, which is the Government’s proposed replacement for the present arrangement by which local planning authorities secure developer contributions, comprised of the community infrastructure levy—or CIL—and section 106 planning obligations, albeit with a significant role, as required, for section 278 agreements providing for permanent alterations or improvements to a public highway.

In our view, this new levy is one of the most consequential aspects of the Bill, with potentially far-reaching implications for not only the provision of core infrastructure but the supply of affordable housing. For that reason, I intend to spend a fair amount of time considering it.

Clause 113 introduces schedule 11, which would amend the Planning Act 2008 to provide for the imposition, in England, of the new levy. It is worth noting at the outset that the levy proposed in the Bill is a quite different proposition from the one suggested by the Government in their 2020 “Planning for the Future” White Paper. The latter was premised on a nationally set rate or area-specific rates, and its introduction was to be accompanied by the replacement of the current system of section 106 planning obligations. The amended approach proposed in the Bill, which allows charging authorities to set their own infrastructure levy rate or rates and retains an important role for section 106 on—albeit presently undefined—large sites, is without doubt an improvement on the excessively rigid system put forward in the White Paper.

However, the Opposition still have serious concerns about the possible implications of the revised infrastructure levy outlined by the Government. I deliberately use the word “possible”, because schedule 11 merely provides the basic framework for the levy; as with so much of this legislation, almost all the detailed design is to follow in regulations after some form of consultation.

In general terms, we have two main concerns about the new levy. First, when we consider how it might work as proposed, it is impossible to escape the conclusion that it will result in a system of developer contributions that is at least as complex as the present one; it is likely to be even more complex. In short, we worry that it may prove onerously complicated to operate in practice.

Secondly, there is good reason to suspect that the levy as proposed will fail to secure as much, let alone more, public gain from developers. In short, we worry that it will lead to less infrastructure and less affordable housing in the future, while putting the development of less viable sites at risk entirely.

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[Matthew Pennycook]

That is a very apt point, and I will address it when I talk about how the levy might work in practice. One of the criticisms of the system that Ministers often cite are the problems relating to viability inherent in it. We know that local planning authorities struggle with that element of the system. This new levy introduces a need to value and incorporate viability into every planning decision covered by the new levy, rather than just those where viability is a consideration, so I think the resourcing pressures will be exacerbated by its introduction.

However, we accept that the Government have no intention of removing part 4 from the Bill, so our focus is firmly on trying to amend it and schedule 11 to mitigate any harmful effects of the levy. This first group of amendments on part 4 seeks to achieve that mitigation simply by reversing the presumption in the Bill that the use of the infrastructure levy will be mandatory for all charging authorities, and by fixing core elements of its design. In short, they all aim to provide for a greater degree of discretion.

Amendment 142 would amend clause 113 to make it clear that IL would be an optional charge. Amendment 143 would have the same effect in relation to schedule 11, while making it clear that the decision to adopt the levy would be premised on a judgment that it would be more effective than CIL for delivering infrastructure and would not prevent affordable housing need from being met. Making IL optional would necessitate allowing charging authorities that choose not to adopt it to continue to make use of the current system, so amendment 147 seeks to ensure that the Bill places no restrictions on the use of the community infrastructure levy, section 106 obligations and section 278 agreements, unless doing so is necessary to avoid double charging for the same infrastructure provision. To give charging authorities that freedom, it is necessary to leave out clause 115 entirely, given that it restricts the use of CIL to Greater London and Wales.

Finally, amendments 145 and 146 are designed to provide an additional safeguard by enabling charging authorities to determine the best way to calculate the amount of IL payable, rather than forcing them to base such a calculation on gross development value—a metric that, as I will come on to explain, we believe is likely to generate a host of serious problems if made the default means of calculating levy charges. We feel strongly that these amendments, by giving charging authorities discretion in these important respects, would help to avoid the obvious risks of imposing the levy universally, given the significant variation in development and land values not only across the country but in individual local authority areas, and would better allow charging authorities to tailor developer contribution arrangements to their local circumstances, so that they can get the best for their area.

I have already alluded to our belief that there are a series of inherent flaws in the levy as proposed. Chief among those are the fact that its proceeds will be expected to cover not only core infrastructure, but all affordable housing, and the fact that charges will be based on a percentage of final gross development value, or GDV. To convey to the Committee precisely why we believe that these features are so problematic, and why we feel so strongly that charging authorities should have discretion on whether to adopt the new levy, as well as on the metric on which it is calculated, let me give a worked example that shows the differences between the existing and proposed systems, based on my understanding of how the new levy is likely to operate.

Let us imagine, for the purposes of this worked example, that under the present developer contributions system, a local planning authority receives an application for a 100-home development, with 1,000 square metres of commercial floor space and an on-site community facility—a simple planning application. We will assume that the LPA has a local plan in place, and that it specifies a requirement of 50% affordable homes by unit; that would be 50 of the 100 homes on this hypothetical site. Let us imagine further that, as so often happens, the applicant uses viability assessments to reduce the affordable housing contribution levels to 40%. If that is approved, under the existing system, the local planning authority will know that in this scenario, despite the reduction on viability grounds, it will secure 40 affordable homes to buy or rent on this site, and with a local CIL rate of, say, £100 per square metre, it has certainty at the point of planning determination that the applicant is required to make a contribution of approximately £520,000 for infrastructure, taking into account social housing relief.

Now let us assume, in contrast, that this Bill receives Royal Assent unamended, and that the same local planning authority receives, some years from now, an identical application, having been forced to adopt the new infrastructure levy. It is an extremely challenging exercise to specify even hypothetical infrastructure levy rates, given the overall lack of detail at present and the numerous assumptions that are required to estimate what sort of rates will be needed to achieve the same level of value capture as at present—a subject I will touch on in more detail when we deal with the amendments relating specifically to rate setting. For the purposes of this scenario, let us specify that the authority’s levy charging schedule has set a minimum cost threshold of say, £3,000 per square metre; an IL rate of 50%—because, whatever the specific range, we know that IL rates will have to be far higher than CIL rates to cover the costs of all required infrastructure and affordable housing; and that the authority in question seeks to apply a ‘right to require’ amount—that is, the proportion of the levy proceeds to be allocated to on-site affordable housing— of 90%.

Under the new system, how many affordable homes would the levy implemented by this charging authority provide on our hypothetical site, and what contribution would the applicant make toward the provision of other local infrastructure? To answer those two relatively simple questions, one would need an assessment of the gross development value of the proposed development, GDV being the metric that the Government wants the new levy to be based on. To assess the development’s GDV, valuations would have to be secured. To accurately assess the value of the mix of flats and houses of different sizes, features and locations across the development, one would need to reference the value of comparable new build properties in the area, assuming those exist. To accurately value the commercial floor space in the proposed development, one would need to undertake an assessment of likely rents, using comparable local properties, again assuming that those exist. Those likely rents would then have to be capitalised using a yield based on an analysis of the sale of comparable commercial buildings in the area, again assuming those exist. The resulting figures would then have to be divided by net saleable and lettable floor space to generate a per square metre value for that commercial floor space. Generic or standardised information could of course be used, but that would run the risk of significantly increasing the margin of error, with consequential impacts for the amount of affordable housing and infrastructure provided on our hypothetical site.

Armed with those assessed values, and given that end value is the metric on which this levy is calculated, in order to estimate the amount of IL generated for affordable housing on the site, the local planning authority would deduct the minimum threshold of £3,000 per square metre, multiply the remaining number by the IL rate of 50%, multiply it again by the 90% “right to require” proportion, multiply that figure by the proposed amount of floor space, and divide the remaining figure by the different values of market homes and affordable homes, which in themselves would require additional valuations.

All of that is to say that the exact proportion of affordable homes that the levy will generate will vary from site to site in any given local planning authority area, even if the authority chooses to set a single rate, rather than multiple rates, as is its right. It will depend on myriad different, and far from simplistic, time-consuming assessments of end value. However, calculating the levels of affordable housing generated by the levy is not the end of the process. The local planning authority will then need to calculate the infrastructure contribution for our site, namely the difference between the total levy amount and the proportion allocated to affordable housing, and the value of the community facility as another piece of on-site infrastructure.

Moreover, every one of these valuations—each critical to arriving at an assessment of the GDV of the development as a whole—will presumably not be set in stone, because the value of the market and affordable homes, the commercial floor space and the community facility on our hypothetical development will change over time, as would any other. That means that the local planning authority will almost certainly have to carry out further valuations at different stages in the development process, with the final liability not being known until years after the application was submitted—and that is setting aside the very real possibility that the new system will, along with problems relating to avoidance, generate frequent disputes over valuations, which could delay and complicate the process further.

Imagine for one moment a senior planning officer or an elected councillor in our imagined local planning authority who is confronting that new system and trying to accurately assess at the planning application stage how much affordable housing will be provided on our hypothetical site, and the amount of infrastructure funding that will be extracted from the developer. I put it to the Committee that doing that would be extremely challenging, if not impossible, for them—let alone for a local resident who has taken a passing interest in the proposed scheme.

As my hon. Friend the Member for York Central said, most local planning authorities simply do not have the expertise and the resource to oversee such a complicated process, and that leaves aside other pertinent questions. What if the final infrastructure levy liability, based as it will be under the Government’s proposals on end-value GDV, turns out to be lower than the value of the on-site affordable housing and infrastructure that has been constructed in the interim? In such circumstances, would the local planning authority have to refund the developer on the basis that an overpayment has been made?

What is more, the difficulty that charging authorities will face in estimating the affordable housing and infrastructure payments generated by the new levy, and by implication they difficulty that they will have in setting rates in the first place, are not the new system’s only weaknesses. The significant uncertainty that will result from the decision to base the levy on a proportion of GDV is likely to cause issues in relation to the price of land and development land sales. It will almost certainly hamper the ability of local planning authorities to properly assess the benefits of proposed development, and whether it will contribute sufficiently to meeting local housing need and infrastructure requirements. Also, the new system will not remove the need for some type of site-specific legal agreement to ensure that the contributions extracted from developers are used to deliver the affordable homes on site, and that all the relevant requirements in terms of tenure type, discount rates and eligibility are ultimately met.

Perhaps most contentiously, the decision to make GDV the metric for the new levy is likely to result in applicants making their IL payments at the end, rather than at the beginning, of the development of a site, because the potential for interim payments or payments on account will be complicated by the fact that the final IL liability will not become clear, due to all the problems inherent in valuing GDV, until near the point of completion. That raises the very real prospect of the new levy creating a system in which the infrastructure required to support development will not be in place when it is needed.

One assumes from several passing comments made by previous Ministers that the Government believe that the answer to this obvious problem is to allow local authorities to borrow against future levy receipts to fund the delivery of infrastructure up front. However, the Minister must surely recognise that all that proposition entails is a transfer of risk and cost from the private to the public sector; it does nothing to address the uncertainty at the heart of the new process. Even with the opportunity to borrow against future levy receipts, it would remain the case that net receipts from post-completion valuation would be hard to predict, and rates on borrowing would reflect that uncertainty, resulting in infrastructure being more expensive to deliver. The idea that local authorities will collectively take up this borrowing option at the scale needed to offset the delay in securing levy contributions is, frankly, for the birds.

It may be that the Government believe that infrastructure on any given site will be paid for by levy contributions extracted from already completed developments, but if that is the case, it will give rise to a situation where there is no guarantee that the infrastructure funding delivered by a new development will be spent in the vicinity of the development. Whatever way one looks at it, the outcome is likely to be fewer overall approvals, more unsustainable development where development does occur, and greater local opposition; either development will not be accompanied by the up-front provision of core infrastructure, or there will be no obvious link between an individual development site and infrastructure provision in the area.

In sum, and with the obvious proviso that the detailed design of IL will be delivered through regulations and so we can only judge the new system based on our current understanding of the Government’s thinking, there is very good reason to suspect that the levy will not be a simpler, more transparent, more certain and more effective system of developer contributions than the one that presently exists. As a result, we feel strongly that the Government should think again about legislating to make its adoption mandatory.

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For the reasons I have set out, I commend clauses 113 and 115 to the Committee.

[Matthew Pennycook]

How to respond to that? That was a valiant attempt to make the best case possible for what is ultimately a flawed proposition.

The Minister has outlined that the existing system has flaws. I agree with him, as I said earlier, although I do not think they are the flaws that he set out. Some of the issues around viability—I spoke to the reasons earlier—have been addressed, and the Government can take other steps, not least under clause 110, to strengthen the existing system. However, we are considering the framework for a system that, as far as I can tell from looking back at CIL and previous attempts, has never been tried. We are talking about a single, fixed-rate levy mechanism for securing all affordable housing and infrastructure. That has never been tried, and certainly not on the basis of a metric as problematic as GDV.

The Minister says that we know the sale value at the endpoint of a development, but we do not necessarily—it depends on what the development is, and with phased development it becomes even more complicated—and knowing that does not address the inherent uncertainty that GDV creates at the point of the planning application being determined. With the current system, there is no sense of how much affordable housing or infrastructure we are going to get, and we certainly have no guarantees that we are going to get that infrastructure up front, which is a live point of concern across the Committee and across the House.

It is okay to say that perhaps local authorities will have greater certainty, by means of the borrowing power that the Bill will provide for, but what will they do—store up infrastructure levy reserves for a couple of years before they start to bring forward infrastructure developments on sites? Even if they can do that, this system will break the link between individual sites and IL contributions, so in all our constituencies we will get greater local opposition to plans because, even more so than with the current system, our residents will not be able to understand the link between a planning application being brought forward and what public gain they and their community will get out of it.

I do not think that the Minister, as much as he attempted to, has responded to the serious concerns that I have set out about GDV and the new system to the extent that we can be reassured that, in passing this framework this morning, we will be introducing a system that will have better outcomes and that addresses the real complexities in the current system.

Levelling-up and Regeneration Bill (Nineteeth sitting)

Matthew Pennycook Excerpts

Committee stage
Tuesday 6th September 2022 Public Bill Committees

[The Chair]

We met this morning, and we come now to the afternoon session. Obviously, some of you have extrasensory perception and have anticipated the fact that I was going to let you take your jackets off—good on you.

Clause 113 ordered to stand part of the Bill.

Schedule 11

Infrastructure Levy

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

I beg to move amendment 148, in schedule 11, page 282, line 29, leave out

“and in achieving any purpose specified under section 204N(5)”.

This amendment and Amendment 149 would prevent the Secretary of State directing the proceeds of the infrastructure levy towards purposes other than supporting the development of an area by funding the provision, improvement, replacement, operation or maintenance of infrastructure.

[The Chair]

With this it will be convenient to discuss amendment 149, in schedule 11, page 294, line 35, after “purposes” insert

“which support the development of the area and”.

See explanatory statement for Amendment 148.

[Matthew Pennycook]

As ever, it is a pleasure to serve with you in the Chair, Sir Mark. Having debated this morning in broad terms the deficiencies of the proposed infrastructure levy as we see them, and the corresponding case for discretion in terms of its adoption and core elements of its design, I turn now to a far more specific concern.

Part 1 of schedule 11 makes changes to the Planning Act 2008 by inserting new part 10A, providing for the introduction of the new levy. The new power replicates section 205 in part 11 of the 2008 Act, albeit with an important change that makes clear that the purpose of the levy now includes anything specified by the Secretary of State under subsection (5) of proposed new section 204N, in schedule 11 on page 294. The proposed new subsection makes clear that regulations may allow for circumstances in which a specified amount of the infrastructure levy is applied to purposes other than funding the provision, improvement, replacement, operation or maintenance of infrastructure, defined so as to include transport, schools, medical facilities, open spaces, flood defences, affordable housing and a number of other items.

That gives rise to two obvious questions. First, what purposes other than the provision, improvement, replacement, operation or maintenance of infrastructure, defined as broadly as it is in proposed new section 204N(3), on page 294, would IL ever need to be spent on? Perhaps the Minister can give us an example of what kind of non-infrastructure the Government believe those powers should fund. Secondly, why should developer contributions secured in relation to a particular area be used to support the provision of non-infrastructure items that may be unconnected to it? Our concern is that allowing the purpose of IL to include anything specified by the Secretary of State may give rise to a situation—as, I might add, the 2020 White Paper explicitly suggested—in which proceeds from the infrastructure levy are used to fund things such as service provision or the reduction of council tax.

There may be a far less problematic reason for the inclusion of the relevant language in proposed new section 204A(2) specifying that IL can be used to achieve any purpose under proposed new section 204N(5). For example, it may simply be the means of facilitating the continuation of the neighbourhood share under the new system. However, if that is the case, why not make that clear in the Bill? Given how widely drawn the language in proposed new section 204N(5) is, we remain concerned that it could lead to much-needed IL funds being directed to purposes other than supporting the development of an area by funding its infrastructure. That is the concern that amendments 148 and 149 are designed to address, by deleting the relevant language from proposed new section 204A(2) on page 282.

In our previous debate, I outlined in detail our concern that the levy as proposed will fail to secure as much—let alone more—public gain from developers than the present system. Allowing specified amounts of IL to be used to fund non-infrastructure items that might be unconnected to a given area would exacerbate that problem by further depleting the funding available for infrastructure, including affordable housing, in that area. The amendments would simply ensure that any funds generated by the levy would have to be spent on infrastructure that supports the development of the area in question. I look forward to hearing the Minister’s response.

[The Minister for Housing (Mr Marcus Jones)]

It is a pleasure to serve again under your chairmanship, Sir Mark. The Bill seeks to give local communities control over what is built, where it is built and what it looks like. It creates an incentive for communities to benefit from development. The delivery of infrastructure is a key pillar in our approach, and the levy is our key tool to support that.

We think that the local authority is best placed to decide which infrastructure projects it should spend the proceeds of the levy on. The Bill will require local authorities to prepare infrastructure delivery strategies. These will set out a strategy for delivering local infrastructure through spending levy proceeds. There is scope to allow even more flexibility on spending, to further incentivise communities to benefit from development. The Bill enables the funding purposes of the infrastructure levy to be extended to such purposes as may be specified by the Secretary of State under proposed new section 204N(5) if certain circumstances apply.

--- Later in debate ---

[Mr Jones]

If the hon. Member bears with me for a moment, I will give her an example.

The measure will enable regulations to set out the circumstances where charging authorities could spend a specified amount of the levy on items that are not infrastructure. This means that in some areas, once local authorities are able to meet their affordable housing and infrastructure needs, they could have scope to increase their flexibility on what they spend levy receipts on, such as improving local services. This would remain a matter for the local authority to decide on, subject to any limitations set out in regulation or guidance, ensuring that infrastructure and affordable housing remain priorities. Furthermore, it is right that even if such extended funding of the levy is permitted and taken up by the local authority, it should be subject to the overall test in proposed new section 204A that such costs must not make the development an area economically unviable. Therefore, we do not believe the amendment is necessary, so I ask the hon. Member for Greenwich and Woolwich to withdraw it.

[Matthew Pennycook]

I think that was a useful answer from the Minister, for the following reasons. He clearly stated that the reason for the flexibility is to allow local planning authorities to spend levy receipts on non-infrastructure items not covered in proposed new section 204N(3). That is very useful, because he has responded to our concern by saying on the record that the infrastructure levy could be spent on things such as the funding of services.

The Minister made an important qualification, which I will address. He made clear that local authorities would be allowed to spend only once they had met their affordable housing targets and infrastructure needs. I applaud his optimism that the levy will cover not only all affordable housing provision and core infrastructure, but other things such as services. I welcome that clarification.

The Minister will do two things, I think. When we come to them in due course, I think he will accept our amendments to strengthen the Bill’s requirements on meeting affordable housing supply. However, I still think the Bill needs to be tightened to specify what kind of non-infrastructure the levy could be spent on in the circumstances he outlines. At the moment, it is incredibly broad—it relates to any purposes specified by the Secretary of State—and that remains a point of concern. Although I will not push this amendment to a vote, we may return to this issue. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Mr Jones]

I beg to move amendment 196.

Proposed new section 204A in schedule 11 sets out the overall purpose of the levy, which is to ensure that the costs incurred in supporting the development of an area can be funded wholly or partly by the owners or developers of land in a way that does not make development of an area economically unviable. The overall purpose also applies to the costs incurred in achieving the other specified purposes that are allowed under the levy regime.

Proposed new section 204A currently cross-references to purposes that may be specified under proposed new section 204N(5). That means that the levy regulations may allow levy receipts to be spent on matters other than infrastructure, such as improvements to local services and delivery of local programmes that are valued by local communities. Although the infrastructure levy will primarily be spent on infrastructure and affordable housing, that will give us the scope to allow local authorities more flexibility over how they spend the levy if those priorities have been met.

The amendment will correct an omission and ensure that proposed new section 204A also correctly cross-refers to the powers in proposed new sections 204O and 204P, which will also allow levy receipts to be spent on other specified purposes, such as non-infrastructure matters. Where that is allowed, it must be subject to the overall purpose set out in proposed new section 204A. To ensure that proposed new section 204A correctly interacts with proposed new sections 204O and 204P, we are introducing a minor technical amendment to ensure the cross-reference is properly made. I therefore respectfully ask the Committee to support the amendment.

[Matthew Pennycook]

I rise to speak briefly to this Government amendment, notwithstanding our debate on the previous group of amendments. There is nothing in the Bill to ensure that local authorities meet a sufficient level of housing need—we will come to that—or of infrastructure need. Even taking into account the Minister’s reassurances on how the levy can be spent, I remain concerned. If anything, Government amendment 196 augments the concerns I have just spoken about. By specifying that the aim of the levy can include any purpose specified under proposed sections 204N(5), 204O(3) and 204P(3) of the Planning Act, the amendment allows proceeds of the levy to be spent not only on non-infrastructure items that might be unconnected to a given area in a way already made clear in the Bill, but on a wider set of, one presumes, non-infrastructure items. In a sense, the amendment’s intention is to widen the scope of the non-infrastructure items to which specified amounts of IL can be directed.

As I have made clear, we strongly believe that funds generated by the levy should be spent on infrastructure that supports the development of the area in question, and we oppose this Government amendment for the same reasons I set out in relation to amendments 148 and 149. I will not press the matter to a vote, but I want to put that on the record. We feel very strongly, as I think local communities will, that the proceeds of an infrastructure levy should be spent on infrastructure in their area. If anything, rather than having surplus amounts to spend on other items specified by the amendment or the Bill, I believe that the levy will not cover all those infrastructure costs.

[Tim Farron (Westmorland and Lonsdale) (LD)]

I am also very concerned. This rings serious alarm bells with me and, I think, many other people, particularly those who work in housing associations and local government. It is hard to build affordable housing—we would have built a lot more of it if that were not the case. Given the price and availability of land, the process of finding a delivery partner, the involvement of contractors and housing associations, and the need to make the money stack up, it is not easy. The problem is that if we create a safety valve that allows infrastructure levy funding to be spent on something other than the infrastructure that underpins new affordable housing developments or the development of affordable housing itself, some people will take the easy option and some of the money garnered for planning gain will not do the community much good at all.

I hope and believe that the Government and this Minister have good intentions, but if we allow the funds gathered by the infrastructure levy to seep out from the pot for developing affordable housing and the infrastructure that underpins it, that is what will happen. We must not allow it to happen.

[Mr Jones]

Let me respond to the point raised by the hon. Member for Westmorland and Lonsdale. Clearly, the firm intention of the policy set out in schedule 11 is that the requirement for relevant infrastructure and affordable housing in a particular area is satisfied. However, there may be circumstances where a local authority, while satisfying those criteria, uses this mechanism. As I have said before, we expect to capture more value from developments because we will be capturing the value of the uplift of the finished product, not just the value at the point at which planning permission is achieved. Therefore, the expectation is that there could be greater value and it could enable local areas to do additional things, alongside the relevant and necessary affordable housing and infrastructure. I hope that reassures the hon. Gentleman about the Government’s intention.

Amendment 196 agreed to.

[Matthew Pennycook]

I beg to move amendment 150, in schedule 11, page 282, line 32, at end insert—

“(2A) The intention of IL is to enable local authorities to raise money from developments to fund infrastructure to support the development of their areas while allowing planning obligations under section 106 of the Town and Country Planning Act 1990 to continue to be used to provide affordable housing and ensure that development is acceptable in planning terms.”

[The Chair]

With this it will be convenient to discuss the following:

Amendment 151, in schedule 11, page 294, leave out line 21.

This amendment would remove affordable housing from the application of the infrastructure levy to with the intention that it would continue to be funded under current system of s106 TCPA 1990 obligations.

Amendment 152, in schedule 11, page 294, line 31, at end insert

“, other than to add affordable housing”.

This amendment would prevent affordable housing being added to the list of matters included within the meaning of “infrastructure” at a future date by regulations.

[Matthew Pennycook]

As the Minister made clear this morning, the Government are not willing to give charging authorities discretion when it comes to adopting the infrastructure levy, or any freedom to determine the best metric upon which to calculate IL rates. However, I want to try to persuade him to reconsider using the levy to deliver affordable housing.

Amendment 150 would insert into proposed new section 204A a proposed new subsection making clear that the intention of IL is to enable charging authorities to raise money to fund infrastructure to support the development of their areas, while allowing planning obligations under section 106 of the Town and Country Planning Act 1990 to continue to be used to provide affordable housing and to ensure that development is acceptable in planning terms.

Amendments 151 and 152 would make consequential changes to the schedule, respectively removing affordable housing from the list of what is designated as infrastructure and preventing regulations from reinserting it into that list at a later date.

When I spoke to amendments 142 and 143 and amendments 145 to 147, I set out our two main concerns about the new levy—namely, that it is likely to prove onerously complicated to operate in practice and that it will almost certainly lead to less infrastructure and less affordable housing overall than those secured under the present system. It is the second of these concerns that lies behind amendments 150, 151 and 152.

Under the present system, funds raised through the community infrastructure levy are used only to fund infrastructure, facilities and services that support development in a given area. It is individual section 106 agreements that, along with any grant funding secured, pay for affordable housing. Under the new system, which is premised on affordable housing as well as all other required infrastructure being funded through a single mechanism, local planning authorities will be forced to set IL at significantly higher rates than the community infrastructure levy, which is typically equivalent to a relatively small proportion of development value.

The obvious resulting risk of having to set such high rates is that development on less viable sites, the majority of which are concentrated in those parts of the country most in need of levelling up and which the Government say is their mission to help, will simply not happen. As such, local planning authorities in areas with higher risk to viability of brownfield sites will be left with a choice: either allow such sites to remain undeveloped, or lower IL rates sufficiently to incentivise development on them but forgo essential infrastructure and affordable housing from more viable sites as a result. In practice, both outcomes are likely to materialise. If that is the case, it will have significant implications for the supply of infrastructure and high-quality affordable housing across the country.

There are very good reasons for the Government to reconsider funding affordable housing through the new levy, and I want to briefly speak to a number of them. First, there has never been a previous attempt to implement a single fixed-rate levy mechanism for securing both infrastructure and affordable housing. That is not for want of some extremely clever people attempting to design such mechanisms, but the desire to incorporate affordable housing into previous systems, including CIL, was ultimately abandoned, because each time they were deemed to be inoperable in practice. That is an obvious warning that the Government would do well to heed.

Secondly, as we have already discussed in the debate on the first group of amendments to part 4, by systematically financialising the provision of affordable housing, and for that matter on-site infrastructure, with the inherent variability and uncertainty that that entails, the levy is likely to unnecessarily complicate the planning process, resulting in additional delays, disputes and resourcing pressures.

Thirdly, the rigidity inherent in applying one or more IL rates in any given charging area to sites within it that will inevitably vary in terms of development and land values will result in a wide range of levels of affordable housing and infrastructure contributions across sites. That is inherent to the design of the levy. As a result, it will be incredibly difficult for local planning authorities to know what levy rates to set in order to fund all necessary infrastructure and meet the affordable housing need identified in their local development plans.

Fourthly, there are inherent problems when it comes to attempting to provide affordable housing through a rigid fixed-charge approach, because of how such a charge interacts with viability. If the Government are adamant about pursuing a fixed-charge approach, they could always consider a fixed-percentage affordable housing requirement delivered through section 106 agreements, which would be preferable to a general levy calculated on the basis of gross development value.

By amending the national planning policy framework as they have done, to place greater emphasis on viability testing as a part of plan-making rather than as a feature of individual site applications, the Government have already firmed up affordable housing requirements while still allowing for flexibility in exceptional cases where there are genuine viability challenges. In our view, the current arrangement strikes the right balance and, as I said this morning, the Government’s time would be better spent focusing on what more could be done—for example, by equipping local authorities with the specialist skills and resources that they need to make the existing system work more effectively.

Lastly, and related to the previous point, setting a fixed IL rate or rates will inevitably result in the loss of affordable housing supply on every site in a given charging area that could viably deliver more than the rate in question would require, while at the same time putting at risk entirely the development of sites grappling with genuine viability challenges that would be unable to provide the requisite level of contributions. That problem is inherent to the nature of a levy premised on a general fixed rate or rates within charging areas where there is variation in values and costs between sites.

Whichever side of the line individual charging authorities ultimately come down on, the overall result will be lower rates of affordable housing delivery in England. If local planning authorities try to overcome that inherent flaw in the proposed levy system by setting myriad different IL rates, in an attempt to respond to the natural variation in development and land values in any given area, the result will be a smorgasbord of rates, which would make for a fantastically complicated arrangement that would make it hard, if not impossible, for developers and communities to understand the extent and nature of the contributions due on different sites in a given locality.

It is telling that despite the Government’s commitment to the levy securing at least as much affordable housing as developer contributions do now, there is nothing in the Bill that guarantees that that will be the case. We need to be confident that we are approving a framework that has a reasonable chance of at least maintaining the supply of affordable housing that we currently secure through developer contributions, and ideally one that allows for improvements to allow that supply to increase, because it needs to increase markedly.

Short of giving charging authorities discretion in relation to adopting the infrastructure levy and the freedom to determine the best metric on which to calculate IL rates, limiting the scope of the levy to the delivery of actual infrastructure and retaining the use of section 106 to fund affordable housing, as amendments 150 to 152 propose, is the best means of achieving that aim, because it would overcome the problems with the setting of IL rates that I have described and the impact that fixed rates will have on overall levels of affordable housing secured through developer contributions. It would also directly address an issue we have not discussed—namely that a fixed levy would not be capable of determining affordable housing requirements for estate regeneration schemes, which necessarily vary from site to site, depending on the existing level of affordable housing that should be re-provided and how much additional affordable housing can be delivered.

I trust that the Minister has carefully considered the arguments I have made and will consider accepting the amendments, which would make the Government’s levy proposals far more workable than they currently are. Either way, he really does owe the Committee an explanation of how the levy will operate in such a way as to ensure that developments are viable and deliver both the required infrastructure and at least as much affordable housing as is currently secured through section 106 agreements, because despite the optimistic claims that successive Ministers have made and the claims that he made in debates this morning, nearly two years after the levy proposal was first put forward in the White Paper no evidence whatever has been published to demonstrate that the infrastructure levy is actually capable of achieving that. I look forward to hearing the Minister’s response.

[Rachael Maskell]

I am grateful to be called to speak to this set of amendments and thank my hon. Friend the Member for Greenwich and Woolwich for tabling them.

It is really important that we think about the consequences and what could happen. I reject the setting of infrastructure against affordable housing. If people are building any form of development, they will have to put infrastructure on that site, whether the infrastructure is a GP surgery, a school or some of the more micro infrastructure that is necessary for a community to function. As a result, the infrastructure will trump affordability in order to reach viability, so we will not see the affordable housing being built; in fact, if anything we will see a regression if the two are set against each other. For people to get the true value of developments with high-value accommodation, there will be a demand for infrastructure on the site. The developer will naturally focus on that and that will be how the situation turns.

It is also important to look at what will happen with this patchwork approach throughout the country, because if different areas set different levels of infrastructure levy, that will create a new market for where developers go and develop. Of course, they will be looking to their profit advantage over what the local communities need. The new system will be another pull: it will direct them to where they can get the deal that best suits them for developing the infrastructure that they want. It is going to skew an already bad situation into an even worse situation in respect of the need for affordable housing, let alone social housing. I cannot see how it is going to bring any advantage to a social developer, let alone a commercial developer, in trying to ensure that we get the mix of housing that we require in our communities. With affordable housing and social housing in particular being developed at such low levels compared with high-value housing—which, let us face it, is going over to being essentially an asset rather than lived-in accommodation—the differential is clearly going to cause a lot of challenge, and even greater challenge, for communities.

As we have debated, supporting infrastructure might not even be infrastructure: it could be services or something else. The provisions create risk in the legislation, so my hon. Friend’s amendments are about ameliorating that risk and ensuring that there is some level of protection to ensure that affordable housing is built.

--- Later in debate ---

[Mr Jones]

We are all concerned with making sure that we get as much affordable housing as we can from housing developments. Clearly, what I am arguing for is a wider package of measures that we believe will deliver at least as much affordable housing as under the current system, if not more, together with the infrastructure that communities need.

It is not fair that communities lose out just because their local authorities have effectively been strong-armed during the negotiation, and it is not fair that developers may face arbitrary variation in the demands for contributions in different places. If developers do not know how much they are going to have to pay, it is much harder for them to price contributions into land. There is currently an incentive to overpay for land and then try to negotiate contributions downwards.

To address the inequality of arms that the Committee has discussed, the new levy will introduce the right to require affordable housing through regulations. The right to require will enable local authorities to determine what proportion of the levy they want delivered in kind as affordable housing and what proportion they want delivered as cash. That will mean that local authorities, not developers, will get the final say on the proportion of affordable homes delivered as an in-kind levy contribution on a site. It is therefore important that affordable housing is considered as a kind of infrastructure that can fall within the levy regime.

It will be equally important that the levy delivers at least as much affordable housing as under the current system. That is why, when the levy rates are set, charging authorities must design them with regard to the desirability of ensuring that the rates can maintain or exceed the amount currently secured through developer contributions.

Let me address a couple of other points. The hon. Member for Greenwich and Woolwich was concerned about less-viable sites and lower-value sites. I reassure him that local authorities will set a minimum threshold that reflects build costs and existing use values, as well as setting levy rates. The minimum threshold will help to ensure that lower-value sites continue to come forward.

The hon. Member for York Central mentioned concerns about risk and about delivering affordable homes and infrastructure while the changes take place. I reassure her that, as we discussed in the earlier debate on the infrastructure levy, we will be driven by a test-and-learn approach. The lessons from that work will be learned to make sure that we achieve our objectives, and the places that are not using that approach in working with the new infrastructure levy will continue to work on the same basis as they do now until the new system is rolled out. I reassure the hon. Lady again that the process could take some years to achieve to make sure we get it right.

On that basis, I hope that the hon. Member for Greenwich and Woolwich will not press amendments 150 to 152 to a Division.

[Matthew Pennycook]

I thank the Minister for his response, but I am afraid I am not reassured, for the following reasons. The Minister rightly said, and I accept, that section 106 is an imperfect mechanism for extracting public gain from developers, but, as we have already debated, it is one that can be improved on, and has been in recent years, and can be reformed further.

The question before us, which goes back to the wider debate we had earlier, is: will the levy system replace the current system with one that will extract sufficient public gain to at least allow the same levels of affordable housing? I have listened carefully to the Minister, and he has made repeated commitments that it will extract at least as much as that gain. However, as we will come on to with the next set of amendments, there is nothing in the Bill that guarantees that the levy framework, even if it does extract the same amount of gain, will lead to a situation in which at least as much affordable housing is required. The language—I will come to this in the next debate—in proposed new section 204G is incredibly weak in that regard.

Nothing I have heard this morning reassures me that we are not implementing a system that will fail to extract the same amount of public gain when it comes to infrastructure and affordable housing as the present system. There is nothing in the Bill to ensure that local authorities spend their levy proceeds on the levels of affordable housing required to meet the housing need in their area. Given all the risk and uncertainty of replacing the existing system with the proposed one, I feel strongly that the Government are making a fundamental mistake by including affordable housing within the scope of the levy. I will therefore press amendment 150 to a Division.

Question put, That the amendment be made.

Division 12

Ayes: 5

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Labour: 4
Liberal Democrat: 1

Noes: 8

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Conservative: 8

[Matthew Pennycook]

I beg to move amendment 153, in schedule 11, page 283, leave out lines 22 and 23.

This amendment would amend the definition of “affordable housing” to ensure that the infrastructure levy could only be spent on social housing within the meaning of Part 2 of the Housing and Regeneration Act 2008.

[The Chair]

With this it will be convenient to discuss the following:

Amendment 154, in schedule 11, page 285, line 35, at end insert—

“(9) IL regulations must provide for exemption from liability to pay IL in respect of a development which exclusively contains affordable housing.”

This amendment would provide for an exemption from liability to pay IL in respect of a development which contains 100 per cent affordable housing.

Amendment 155, in schedule 11, page 287, leave out lines 34 to 42 and insert—

“(2) A charging authority, in setting rates or other criteria, must ensure that—

(a) the level of affordable housing which is funded by developers and provided in the authority’s area, and

(b) the level of the funding provided by the developers,

is maintained at a level which, over a specified period, enables it to meet the level of affordable housing need identified in the local development plan.”

This amendment would require Infrastructure Levy rates to be set at such a level as to meet the level of affordable housing need specified in a local development plan.

Amendment 156, in schedule 11, page 298, line 13, at end insert—

“(aa) set out how the charging authority intends to use IL to meet the level of affordable housing need identified in the local development plan, and”.

This amendment would require a charging authority to detail the way in which it intends to use the infrastructure levy to meet its identified housing need in preparing and publishing an infrastructure delivery strategy for its area.

[Matthew Pennycook]

Having just sought unsuccessfully to persuade the Minister to reconsider using the infrastructure levy as a means of delivering developer-funded affordable housing, I will set out how we believe the Bill needs revising to ensure that the new levy will supply, in practice, sufficient levels of such housing. I have spoken at length about why we are concerned that the new levy will fall short as a mechanism to deliver affordable housing, and our fear that its introduction will lead to an overall reduction in affordable housing supply—a fear not assuaged by a piece written on 22 August for the ConservativeHome website by the recently departed Under-Secretary of State, the hon. Member for Harborough (Neil O’Brien), in which he explicitly argued that the levy would allow for a rebalancing of

“what developer levies are spent on, towards things local residents want, like GP surgeries, schools, roads, and landscaping, rather than social housing for non-locals”.

Dismissing concerns about the impact of the levy on affordable housing, the Government have promised on multiple occasions, and the Minister has again today, that it will deliver at least as much affordable housing as developer contributions do now. Indeed, the policy paper accompanying the Bill explicitly sets out that commitment. The Minister went further this morning, and said that the infrastructure levy will be so successful that not only will it cover all infrastructure and affordable housing but we will have a surplus that we can spend on lovely things in our local areas. As I mentioned, no evidence has yet been published by the Government to substantiate why they believe that the new levy will be able to fulfil that objective.

We are promised a technical consultation soon, and the Department is by all accounts sitting on a study by academics at the University of Liverpool involving the design and implementation of a prospective levy charging schedule. I put it to the Committee, however, that it is telling that in the two years since the levy was first mooted in the White Paper no analysis or impact assessment has been produced to demonstrate that the new levy has a chance of matching the existing system of developer contributions when it comes to the delivery of affordable housing.

--- Later in debate ---

[Mr Jones]

The hon. Member for Greenwich and Woolwich is right to refer to the importance of the new levy in supporting the delivery of affordable housing for local communities and in contributing to meeting local need. As we have discussed, the Government are committed to getting at least as much, if not more, on-site affordable housing through the new levy as we do under the current system of developer contributions.

The definition of affordability, as challenged by amendment 153, is a complex and evolving picture that is better understood and monitored at local level. It is therefore appropriate to allow for infrastructure levy regulations to provide for any other description of affordable housing, beyond that defined as social housing in part 2 of the Housing and Regeneration Act 2008. This will ensure that any new types of affordable housing tenure introduced in the future can be brought into the scope of the levy.

[Matthew Pennycook]

I am sorry to put the Minister on the spot, but it would be useful if we had an example of the type of housing tenures that the Government believe that that specific line in the Bill is required for, given the already very broad definition of social—affordable—housing in part 2 of the 2008 Act.

[Mr Jones]

As the hon. Member knows, when the 2008 Act was brought into effect by the last Labour Government, there was a reasonably wide definition of the different types of affordable housing. One of the evolutions in affordable housing recently has been the introduction of First Homes. I hear what the hon. Member for Greenwich and Woolwich says about that, but we are working to make sure that we have 1,500 first homes by the end of March 2023; that will be significant progress. The vast majority of affordable housing currently provided does fall within the definition that we have discussed, which was put into legislation in 2008, and we envisage that that will continue to be the case under the levy. However, accepting amendment 153 would mean placing a lot of reliance on the definition of social housing in the 2008 Act. Clearly, social housing is an extremely important part of the mix of affordable housing, but amendment 153 would reduce the levy’s ability to respond to any changes in tenure types that arise in the future. That is not helpful or necessary. It is right that the levy regulations should provide future-proofing and regulatory flexibility.

Amendment 154 deals with exemptions for sites that are 100% affordable housing. Subsection (5)(h) of proposed new section 204D of the Planning Act 2008, in schedule 11 of this Bill, already contains a power for levy regulations to make provision about exemptions from or reductions in levy liability. The levy will be used to secure contributions towards affordable housing. We do not expect to charge the levy on exclusively affordable housing developments; we will explore that matter further in consultation. However, all development will be required to deliver the infrastructure that is integral to the functioning of the site, and we will retain the use of planning conditions and restricted use of section 106 agreements to secure that.

Amendment 155 would require infrastructure levy rates to be set at a level that enables an authority to meet the affordable housing need specified in a local development plan. The total value that can be captured by the levy, or indeed any system of developer contributions, will not necessarily match the costs of meeting the entire affordable housing need of an area as specified in the local development plan. Revenues will depend on the amount and types of development that come forward, and when they come forward, as much as on the levy rates and thresholds set. That said, the Bill recognises the importance of using the levy to deliver affordable housing. Proposed new section 204G of the Planning Act 2008, in schedule 11, provides that charging authorities must, when setting their rates, have regard to the desirability of ensuring that affordable housing funding from developer contributions equals or exceeds present levels. That will ensure that affordable housing need is accounted for when levy rates are set; to ensure that, those rates will be subject to public examination.

Importantly, the Bill makes provision for rates to be set with regard to increases in land value—for instance, as a result of planning permission. Targeted increases in rates will allow charging authorities to maximise the revenue that they can capture, and the amount of affordable housing that they can deliver.

We have designed the levy so that it can deliver at least as much affordable housing as the current system, if not more. As I have explained, the new right to require will require affordable housing to be provided. That will be introduced through regulations. That means that local authorities will get the final say on the proportion of levy contributions that go towards affordable homes. Should the levy generate more revenue than at present, local authorities could choose to direct those additional revenues towards meeting their additional affordable housing needs.

[Mr Jones]

I thank the hon. Member for that point. Like many other areas, York’s housing market is affected by the tourist industry that the city attracts. It is for local areas—I am glad that the hon. Member’s area is forming a local plan—to assess the housing need in their local plan; they should take matters such as the amount of affordable housing, and the need in an area, into account when making that plan.

Local authorities will need to balance the objective of providing affordable housing with the levy’s other aspirations. Local authorities will need to use the levy revenues to deliver other critical infrastructure, such as new roads and medical facilities. Local authorities, which know their local areas, are best placed to balance funding for affordable housing with funding for other infrastructure needs.

On amendment 156, proposed new section 204Q, introduced by schedule 11, introduces the requirement for levy charging authorities to prepare an infrastructure delivery strategy, which will outline how a local authority will use the money the levy generates through a strategic spending plan. That will include an outline of how it will use levy revenues to secure affordable housing. It is important that that happens in each area. The charging authority will have regard to that when setting levy rates. The exact detail of the infrastructure delivery strategy and how it should be produced will be determined through regulations. We will consult on matters relating to the infrastructure delivery strategy, and forthcoming secondary legislation and guidance will clarify how to treat affordable housing. All of that will be informed by our commitment to deliver at least as much affordable housing as we do under the current system.

I hope that my explanation gives the hon. Member for Greenwich and Woolwich clear assurances on how the new levy will support the delivery of affordable housing, and therefore I ask him to withdraw the amendment.

[Matthew Pennycook]

I thank the Minister for that comprehensive response. I will take each part of it in turn. I note what he says about the powers provided for in proposed new section 204D(5)(h) to the Planning Act 2008, regarding 100% affordable sites, and I welcome his commitment that the Government do not expect those sites to have the levy applied to them. That should be written in the Bill, but I take that commitment at face value, and I hope to see it fleshed out via the regulations.

--- Later in debate ---

Amendment, by leave, withdrawn.

[Matthew Pennycook]

I beg to move amendment 157, in schedule 11, page 283, line 28, at end insert—

“(1A) But a charging authority may not charge IL on development in its area comprising—

(a) over 150 residential units, or

(b) over 10,000 sq m of floorspace

and instead Part 11 of the Planning Act 2008 (Community Infrastructure Levy) applies to such developments.”

This amendment would specify a threshold for large sites in relation to which the role of section 106 TCPA 1990 agreements would be retained, meaning that the community infrastructure levy would continue to be used to support such development.

I made clear at the outset of our consideration of part 4 that the levy differs from that set out in the 2020 White Paper in several important respects. One of those is that the Government now propose to retain a distinct role for the current system of section 106 planning obligations, rather than replacing it entirely, as per the White Paper. We are told that narrowly targeted section 106 agreements will still be used for securing infrastructure integral to the operation and physical design of a site. The examples in the policy paper that accompanies the Bill—internal play areas and flood risk mitigations—suggest that the use of such agreements in this way will be a frequent occurrence. More importantly, we are also told that the Government want a role for section 106 agreements in supporting the delivery of larger strategic sites. On such sites, infrastructure can be negotiated and provided in kind; the value of what is agreed must not be less than what would have been paid through the levy. This raises a host of questions, as does every aspect of the Government’s proposal.

Will developers have to pay the difference where the cost of delivering infrastructure on large sites is less than the required IL charge would be? Correspondingly, would charging authorities have to refund developers if it transpired that the cost of delivering infrastructure was higher than the given IL charge? Who defines what is on-site infrastructure, and what can act as credit against the nominal levy charge? Will it be set out in regulations—there is then a risk that it will be too inflexible—or will it be defined by each charging authority? There is then an associated risk of additional complexity. How do we avoid developers providing a range of unnecessary on-site facilities in order to reduce their liability vis-à-vis that levy charge?

Those and other important questions aside, in general terms we very much welcome the proposed retention of section 106 agreements, both for the infrastructure that is integral to the operation and physical design of sites and for larger strategic sites. Indeed, when it comes to the latter, the continued use of section 106 is essential to ensuring that they are developed, given the obvious pitfalls of attempting to do so solely via the levy, with all the inherent flaws that we discussed earlier today.

However, schedule 11 does not define what actually constitutes a larger site for the purposes of the ongoing role of section 106 agreements. Amendment 157 simply seeks to place that definition in the Bill, in proposed new section 204B of the Planning Act 2008, so that there is clarity at the outset of the process of introducing and implementing the levy as to the site size threshold above which IL would not be charged.

The amendment proposes that, for the purposes of permitting an ongoing role for section 106 agreements, a large site should be defined as an area comprising over 150 residential units, or over 10,000 square metres of floorspace. We have chosen those threshold values for a number of reasons, but primarily because schemes of over 150 units or 10,000 square metres of floorspace are typically more complex, take longer to deliver and are often phased, and are more likely to require site-specific mitigation, thus benefiting from the ability of section 106 agreements—this is one of their key strengths—to tailor obligations to the specific circumstances of a site.

On large sites thus defined, which would account by our estimates for around 5% of current approved residential projects nationally, affordable housing provision would be delivered via section 106, as under the present arrangement. To avoid the delay and complexity of securing contributions for core infrastructure on the sites by means of such agreements, amendment 157 makes it clear that the existing provisions of part 11 of the Planning Act 2008 would still apply, thereby enabling contributions relating to the sites to continue to be secured by means of the community infrastructure levy.

We believe that straightforward and uncontroversial amendment would provide certainty as to what does and does not constitute a large site where there will be an ongoing role for section 106 agreements at the outset of what will be, by the Minister’s own admission, a lengthy process of testing, implementing and rolling out the new levy. I look forward to hearing the Minister’s response.

[Mr Jones]

The Government intend that the levy will replace CIL, except for the Mayor of London and in Wales, and largely replace the discretionary negotiated section 106 regime. However, following feedback through consultation and engagement with the industry, we recognise that, in some limited circumstances, a case exists for retaining a role for section 106 planning obligations in the delivery of infrastructure. Such circumstances include large and complex sites where infrastructure requirements are site-specific and require a more negotiated approach to ensure that infrastructure is provided at the right time. It is important to set the right definition for large and complex sites. We need to strike a balance between creating a more consistent levy system, while retaining flexibility for some negotiations on sites with complex infrastructure needs. On sites where section 106 agreements will continue to be used, we still expect developers to deliver at least as much overall value. It is just that some of it will be as in-kind infrastructure contributions rather than as a cash payment.

Setting the threshold in the Bill for when section 106 agreements should be used runs the risk of impacting on the effectiveness of the levy. If it is set too low, lots of development will continue to use section 106 agreements, and developers will continue to strong-arm local authorities over the value of their contributions. If we set it too high, it can impact infrastructure delivery on sites with complex and competing infrastructure needs. That is why we intend to consult on what the threshold should be, to allow us to consider stakeholder feedback and different options. The levy regulation, which will be laid before the Commons for approval, will specify the circumstances in which section 106 agreements will continue to be used. For the reasons I have explained, I request that amendment 157 be withdrawn, to allow us to consult further on when the use of section 106 agreements would continue to be more appropriate.

[Matthew Pennycook]

I appreciate the Minister’s response and, taking on board what he has said, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Matthew Pennycook]

I beg to move amendment 158, in schedule 11, page 286, line 38, leave out “IL” and insert—

“that part of the IL not applied to the provision of affordable housing”.

This amendment would mean that charities in England and Wales were not exempt from contributing to the provision of affordable housing on any given development.

[The Chair]

With this it will be convenient to discuss the following:

Amendment 159, in schedule 11, page 287, leave out lines 5 to 14.

This amendment and Amendment 160 would ensure that charitable exemptions were limited to development undertaken by charities in England and Wales.

Amendment 160, in schedule 11, page 287, line 26, leave out from “2011” to end of line 28.

See explanatory statement for Amendment 159.

[Matthew Pennycook]

Proposed new section 240F of the Planning Act 2008 makes provision about exceptions from, or reductions in, IL for charities. The explanatory notes to the Bill make it clear that the provisions in this proposed new section replicate those that currently exist for the community infrastructure levy in section 210 of the Planning Act 2008. That is indeed the case but, as the Minister will know, charities are not exempt from contributing to infrastructure and, most importantly, affordable housing secured through section 106 agreements.

Because the new levy entails a single fixed-rate mechanism for securing both infrastructure and affordable housing, and because there is nothing on the face of the Bill to specify that charities must contribute to the provision of the latter, the limit of charitable exemptions to infrastructure and affordable housing has been drawn far more widely than that which applies in the case of CIL at present. We believe that is problematic, and could hamper development on sites taken forward by charities or reduce the amount of affordable housing delivered on them. By making it clear that charitable exemptions do not apply to that part of IL related to the provision of affordable housing, amendment 158 seeks to enable development led by institutions established for charitable purposes to proceed, and to enable appropriate levels of affordable housing to be secured on the sites in question.

A separate but related issue is the question of what constitutes a charity for the purposes of proposed new section 204F. Subsection (2)(a) of the proposed new section provides for regulations to exempt from paying IL institutions established for charitable purposes, defined in subsection (4) as not only a registered charity under section 29 of the Charities Act 2011, but any charities within the meaning of section 1 of that Act not required to be registered. We believe that defining charities so widely could result in development not taking place, or being unsustainable when it does, because unregistered charities would also be exempt. Amendments 159 and 160 simply seek to limit charitable exemptions from IL to those charities that are formally registered with the Charity Commission, as per the 2011 Act.

We believe that this sensible and proportionate set of amendments will ensure that charities are appropriately exempted, but that the limit of that exemption is not drawn so widely that it could impede development or reduce the levels of infrastructure and affordable housing coming forward. I hope the Minister will agree and signal that he is content to accept all three.

[Tim Farron]

Briefly, I think that the points made by the hon. Member for Greenwich and Woolwich are really good. It is important that we do not provide loopholes to allow developers to get out of providing genuinely affordable homes for local communities.

It is also important to remember the role of the National Trust, which does many good things. In my community and across Cumbria, it is effectively an affordable housing provider at times. Sometimes it is an unaffordable housing provider, and sometimes it is an outfit that moves from having affordable homes to having holiday lets, and it behaves in ways that I, and hopefully many people here, would not approve of. It is also potentially a developer, for better or for worse. There is the prospect of a new gateway development near Windermere railway station, which has the potential to provide genuinely affordable homes for local people. There is also the potential for that to not be the case, so it is important that we do not get overly benign and dewy-eyed about the word “charity”. What we really ought to be concerned about is the delivery of genuinely affordable housing for local communities, which is why it is important that this definition is tight and clear, and that we expect those charities that have the good will and support of the nation to earn that in the communities where they are not doing so at present.

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[Mr Jones]

I thank the hon. Member for that question. I will not get drawn into lots of different examples, but we are very clear that we are talking about charitable purposes under the definition in the 2011 Act.

Turning to amendments 159 and 160, there may be other instances where an institution is established for charitable purposes but does not meet the definition of a charity—for example, a charity established in Scotland, Northern Ireland or overseas. Amendments 159 and 160 would remove the express ability for regulations to set exemptions or reductions in the levy for these types of institutions. This would mean that only English and Welsh charities could be exempt from the levy when delivering development for charitable purposes. While we recognise that this will be less common, it would still be unfortunate if other types of charitable institutions could not deliver important facilities because of increased costs from the levy.

We are aware that different charitable institutions may operate differently from English and Welsh charities. That is why it is important to maintain a separate power to prescribe in regulations in detail the levy liabilities of such institutions. That enables provision to be made in the regulations, which will keep up with future changes that might be made to charities law. There will also be instances where a charitable institution carries out development that itself is not for charitable purposes but that it should none the less be able to claim an exemption or reduction for.

In the current CIL system, the CIL regulations make use of this power to provide for relief from CIL liability at the discretion of the local authority for developments carried out by charities for investment purposes. This approach works, which is why we do not agree with amendments 159 and 160, which would remove the express ability to set this kind of exemption or reduction through regulations in the future.

I hope that I have provided helpful clarification to the hon. Member for Greenwich and Woolwich and other members of the Committee. I therefore kindly ask the hon. Member to withdraw his amendment.

[Matthew Pennycook]

I am partly reassured by what the Minister said, not least because he clearly indicated that the Government are going to go away and give further consideration to designing regulations. However, I urge him—or his successor when he is promoted—to really look into this issue, because I think there is a chance here, as Members have commented on, for a loophole to be exploited in ways that would cut across the purposes of the Bill as per the Government’s thinking. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Rachael Maskell]

I beg to move amendment 167, in schedule 11, page 287, line 28, at end insert—

“204FA Social enterprises and community interest companies

(1) IL regulations must provide for an exemption from liability to pay IL in respect of a development where—

(a) the person who would otherwise be liable to pay IL in respect of the development is a social enterprise or a community interest company, and

(b) the building or structure in respect of which IL liability would otherwise arise is to be used wholly or mainly for the purposes of social enterprise or the community interest.

(2) IL regulations may—

(a) provide for an exemption from liability to pay IL where the person who would otherwise be liable to pay IL in respect of the development is a social enterprise or a community interest company;

(b) require charging authorities to make arrangements for an exemption from, or reduction in, liability to pay IL where the person who would otherwise be liable to pay IL in respect of the development is a social enterprise or a community interest company.

(3) Regulations under subsection (1) or (2) may provide that an exemption or reduction does not apply if specified conditions are satisfied.”

This amendment makes equivalent provisions about the Infrastructure Levy for social enterprise or community interest companies as it does for charities under inserted section 204F.

The reason for the amendment is that there are different forms of businesses across communities. At this point, I should declare an interest as a Member of the Co-operative party. Social business is really important across our communities. Social businesses, enterprises and community interest companies have a different focus from the run-of-the-mill business. They are not there for profit. They are there to reinvest in their service users and facilities and to give back to their communities.

I think there is a real anomaly in the legislation. Today, the voluntary, community and social enterprise sector is referred to as one, recognising the charitable aims and social aims that these organisations bring. In moving the amendment, I am looking for parity, to recognise the fact that not-for-profit organisations—community interest companies and social enterprises—make an investment in their communities. They can make an investment by employing people from a place of disadvantage and by giving people opportunities in life. However, they are businesses as well, running cafés, for instance. Obviously they reinvest the proceeds they make into people in the community or they perhaps run a nursery or another form of business. We have seen the real benefit that that brings—it certainly addresses the levelling-up agenda. It enables people to move forward in their social mobility journey.

These organisations often start out with no assets whatever. They are very small. They build, reinvest and grow, which is good for the local economy. We need only to look at Preston as an example. It has invested—I look at the Chair, who is the MP for Preston—in the community. It has invested in the model of social business as well, and we know the importance of that. We want to see that rolled out across our communities. If these organisations grow and want to invest more and further benefit the community, but they then have to pay the infrastructure levy, that will curtail the opportunities that they can bring to our communities, and we do not want to see that. We want to see community interest companies, co-operatives and social businesses grow in a way that allows them to reinvest in our communities.

One thing that I have found most inspiring over the last few weeks is meeting organisations that are putting incubators for social enterprises in their communities—again, with no asset, but they provide an opportunity to bring forward a generation of new community interest companies and social enterprises. I have seen a little bit of that on the SPARK site in York, which really has put a spark into York. It is built out of old containers on a site and has brought a new energy into the city centre. It has been a fantastic opportunity, running and helping businesses to develop the ethos of community interest companies as they move forward.

I do not understand why in the legislation credible social businesses, social enterprises and community interest companies do not have exemptions when they give so much back to our communities and bring real transformation to our society. I want the amendment to be made. It is an omission; perhaps the Minister will explain why such an omission was made. Will he also reflect on the charities when it comes to the consultation and looking at further regulations? Will he include social enterprises and community interest companies in the substantive next phase of the legislation?

--- Later in debate ---

[Greg Smith]

I will not detain the Committee for long. The amendment very much speaks for itself. It enables a charging schedule to require that, where an infrastructure levy is required, it be paid up front, or, where the infrastructure levy requires the developer to build something out themselves, that the infrastructure they are building—the GP surgery, school, road, or whatever it might be—be built first. It is a straightforward amendment. Having heard so many colleagues speak in the House or around the place, the great frustration that I have seen in my constituency, and that I have heard from others, is that, when in particular big housing developments or huge industrial parks are built, the infrastructure comes far too late.

I congratulate the Government, and welcome their presumption that infrastructure should come first. Through the amendment, which for clarity I will not press to a Division today, I urge them, as the Bill progresses to Report stage, to really think about locking their own desire and stated policy for infrastructure to be built first into the Bill. I warned that I will not press the amendment to a Division because, having lived through the glorious summer recess leadership election, we have heard a lot of talk and commitments about planning policy and the things that are in the Bill and which the Committee is talking about. I suspect that on Report it will be a wholly different Bill from the one that we have been debating over the past few months in Committee. The point that I wish to push is that the amendment marries up with what the Government have stated that they want to do, and I appeal to Ministers to find a way of incorporating the spirit of the amendment into the Bill on Report.

[Matthew Pennycook]

When speaking to the first group of amendments to this part of the Bill, I outlined in great detail why the decision to make GDV the metric for the new levy is likely to result in applicants making their IL payments at the end, rather than the beginning of the development process. As I argued when making the case for charging authorities to have a choice when it comes to adopting the new levy or retaining the present system, if a levy with GDV as its metric is made mandatory, the final IL liability will almost certainly not be known and become due until near the point where a development is completed. Given the problems inherent in attempting to design a levy system that enables interim payments or payments on account, that convinces sufficient local authorities to borrow against future levy receipts with all the risk that entails, or that overcomes the problems that will arise from paying for infrastructure on one site with levy contributions extracted from others, the most likely outcome is a situation where the infrastructure required to support development will not be in place when it is needed, as the hon. Member for Buckingham has just outlined. That is deeply problematic because, as I said earlier, we think it will mean fewer overall approvals, more unsustainable development when it does occur and greater local opposition.

Amendment 161 seeks to address that issue by specifying in proposed new section 204R on levy collection that the payment of IL must take place within a reasonable period of a development or phase of development commencing or in accordance with any instalment policy adopted by the charging authority. In doing so, it simply aims to avoid additional delays to the provision of infrastructure that will be necessary to support development and the resulting pressure that that would place on existing local infrastructure.

Amendment 58 in the name of the right hon. Member for Chipping Barnet (Theresa Villiers) and others similarly seeks to revise the Bill so that IL payments are made earlier than is currently proposed by the Government. We support the principle, for the reasons I have outlined. However, in enabling charging authorities to require developers to pay either their full IL liability or sufficient amounts of it to enable a development to be built before development commences, that amendment goes much further than currently provided for by either CIL or section 106 agreements, which are typically paid prior to implementation of a development or phases. Because it is not mandatory for planning permissions to be implemented, we are slightly concerned that amendment 58 could lead to a situation where IL contributions are paid and infrastructure provided on development that is not subsequently completed. Mandating the payment of IL before development commences would also impact on developer cash flow and viability, particularly in cases of phased developments, which could have the consequence of reducing IL rates and thus the overall level of affordable housing and infrastructure contributions provided.

Lastly, the problems inherent in a levy based on the metric of GDV—in terms of multiple valuations having to be undertaken at different stages in the development process, with the final liability not being known until years after the application was submitted—would be magnified were a provision to be introduced mandating the payment of IL before any development commences. For those reasons, and with all due respect to the hon. Member for Buckingham—I agree with him on the principle—we believe that amendment 161, which merely requires IL payments to be made within a reasonable period of a development or phase of development commencing, is the more proportionate response to a problem that is clearly recognised across the Committee. I hope the Minister will give serious consideration to accepting our amendment so we can ensure that, if the levy is introduced, it allows for the infrastructure required to support development to be in place when it is needed.

--- Later in debate ---

[Matthew Pennycook]

As we have discussed extensively, given that we would not know the end value until later on in the development and that it would be subject to multiple valuations that might be disputed, how do the Government envisage the operation of a system of payments up front? Will the payments be simply scored off against the projected, expected end value, which will be calculated at a later date? Will the Minister give us a sense of how that sort of arrangement might work in practice?

[Mr Jones]

As we have discussed a number of times during the debate, the matter to which the hon. Gentleman refers will be set out in regulations. Clearly, that needs to be considered, because we need to ensure that there is a mechanism whereby payments are required to be made earlier in the development. That mechanism will be there and we can make that happen.

In due course, as I have said, we will consult on how the levy might be collected and paid. For example, we intend to explore whether a substantial proportion of the levy should be paid prior to the completion of the development or a phase of it. That plays into what the hon. Member for Greenwich and Woolwich mentioned. It would give charging authorities confidence that they will secure funds before the development is sold on. I hope that my reassurances that the Bill already provides powers to achieve the objectives laid out in the amendments in this group will mean that at this point my hon. Friend the Member for Buckingham is able to withdraw his amendment and that the hon. Gentleman feels able not to move amendment 161.

Levelling-up and Regeneration Bill (Nineteenth sitting)

Matthew Pennycook Excerpts

Tuesday 6th September 2022 Public Bill Committees

[The Chair]

We met this morning, and we come now to the afternoon session. Obviously, some of you have extrasensory perception and have anticipated the fact that I was going to let you take your jackets off—good on you.

Clause 113 ordered to stand part of the Bill.

Schedule 11

Infrastructure Levy

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

I beg to move amendment 148, in schedule 11, page 282, line 29, leave out

“and in achieving any purpose specified under section 204N(5)”.

This amendment and Amendment 149 would prevent the Secretary of State directing the proceeds of the infrastructure levy towards purposes other than supporting the development of an area by funding the provision, improvement, replacement, operation or maintenance of infrastructure.

[The Chair]

With this it will be convenient to discuss amendment 149, in schedule 11, page 294, line 35, after “purposes” insert

“which support the development of the area and”.

See explanatory statement for Amendment 148.

[Matthew Pennycook]

As ever, it is a pleasure to serve with you in the Chair, Sir Mark. Having debated this morning in broad terms the deficiencies of the proposed infrastructure levy as we see them, and the corresponding case for discretion in terms of its adoption and core elements of its design, I turn now to a far more specific concern.

Part 1 of schedule 11 makes changes to the Planning Act 2008 by inserting new part 10A, providing for the introduction of the new levy. The new power replicates section 205 in part 11 of the 2008 Act, albeit with an important change that makes clear that the purpose of the levy now includes anything specified by the Secretary of State under subsection (5) of proposed new section 204N, in schedule 11 on page 294. The proposed new subsection makes clear that regulations may allow for circumstances in which a specified amount of the infrastructure levy is applied to purposes other than funding the provision, improvement, replacement, operation or maintenance of infrastructure, defined so as to include transport, schools, medical facilities, open spaces, flood defences, affordable housing and a number of other items.

That gives rise to two obvious questions. First, what purposes other than the provision, improvement, replacement, operation or maintenance of infrastructure, defined as broadly as it is in proposed new section 204N(3), on page 294, would IL ever need to be spent on? Perhaps the Minister can give us an example of what kind of non-infrastructure the Government believe those powers should fund. Secondly, why should developer contributions secured in relation to a particular area be used to support the provision of non-infrastructure items that may be unconnected to it? Our concern is that allowing the purpose of IL to include anything specified by the Secretary of State may give rise to a situation—as, I might add, the 2020 White Paper explicitly suggested—in which proceeds from the infrastructure levy are used to fund things such as service provision or the reduction of council tax.

There may be a far less problematic reason for the inclusion of the relevant language in proposed new section 204A(2) specifying that IL can be used to achieve any purpose under proposed new section 204N(5). For example, it may simply be the means of facilitating the continuation of the neighbourhood share under the new system. However, if that is the case, why not make that clear in the Bill? Given how widely drawn the language in proposed new section 204N(5) is, we remain concerned that it could lead to much-needed IL funds being directed to purposes other than supporting the development of an area by funding its infrastructure. That is the concern that amendments 148 and 149 are designed to address, by deleting the relevant language from proposed new section 204A(2) on page 282.

In our previous debate, I outlined in detail our concern that the levy as proposed will fail to secure as much—let alone more—public gain from developers than the present system. Allowing specified amounts of IL to be used to fund non-infrastructure items that might be unconnected to a given area would exacerbate that problem by further depleting the funding available for infrastructure, including affordable housing, in that area. The amendments would simply ensure that any funds generated by the levy would have to be spent on infrastructure that supports the development of the area in question. I look forward to hearing the Minister’s response.

[The Minister for Housing (Mr Marcus Jones)]

It is a pleasure to serve again under your chairmanship, Sir Mark. The Bill seeks to give local communities control over what is built, where it is built and what it looks like. It creates an incentive for communities to benefit from development. The delivery of infrastructure is a key pillar in our approach, and the levy is our key tool to support that.

We think that the local authority is best placed to decide which infrastructure projects it should spend the proceeds of the levy on. The Bill will require local authorities to prepare infrastructure delivery strategies. These will set out a strategy for delivering local infrastructure through spending levy proceeds. There is scope to allow even more flexibility on spending, to further incentivise communities to benefit from development. The Bill enables the funding purposes of the infrastructure levy to be extended to such purposes as may be specified by the Secretary of State under proposed new section 204N(5) if certain circumstances apply.

--- Later in debate ---

[Mr Jones]

If the hon. Member bears with me for a moment, I will give her an example.

The measure will enable regulations to set out the circumstances where charging authorities could spend a specified amount of the levy on items that are not infrastructure. This means that in some areas, once local authorities are able to meet their affordable housing and infrastructure needs, they could have scope to increase their flexibility on what they spend levy receipts on, such as improving local services. This would remain a matter for the local authority to decide on, subject to any limitations set out in regulation or guidance, ensuring that infrastructure and affordable housing remain priorities. Furthermore, it is right that even if such extended funding of the levy is permitted and taken up by the local authority, it should be subject to the overall test in proposed new section 204A that such costs must not make the development an area economically unviable. Therefore, we do not believe the amendment is necessary, so I ask the hon. Member for Greenwich and Woolwich to withdraw it.

[Matthew Pennycook]

I think that was a useful answer from the Minister, for the following reasons. He clearly stated that the reason for the flexibility is to allow local planning authorities to spend levy receipts on non-infrastructure items not covered in proposed new section 204N(3). That is very useful, because he has responded to our concern by saying on the record that the infrastructure levy could be spent on things such as the funding of services.

The Minister made an important qualification, which I will address. He made clear that local authorities would be allowed to spend only once they had met their affordable housing targets and infrastructure needs. I applaud his optimism that the levy will cover not only all affordable housing provision and core infrastructure, but other things such as services. I welcome that clarification.

The Minister will do two things, I think. When we come to them in due course, I think he will accept our amendments to strengthen the Bill’s requirements on meeting affordable housing supply. However, I still think the Bill needs to be tightened to specify what kind of non-infrastructure the levy could be spent on in the circumstances he outlines. At the moment, it is incredibly broad—it relates to any purposes specified by the Secretary of State—and that remains a point of concern. Although I will not push this amendment to a vote, we may return to this issue. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Mr Jones]

I beg to move amendment 196.

Proposed new section 204A in schedule 11 sets out the overall purpose of the levy, which is to ensure that the costs incurred in supporting the development of an area can be funded wholly or partly by the owners or developers of land in a way that does not make development of an area economically unviable. The overall purpose also applies to the costs incurred in achieving the other specified purposes that are allowed under the levy regime.

Proposed new section 204A currently cross-references to purposes that may be specified under proposed new section 204N(5). That means that the levy regulations may allow levy receipts to be spent on matters other than infrastructure, such as improvements to local services and delivery of local programmes that are valued by local communities. Although the infrastructure levy will primarily be spent on infrastructure and affordable housing, that will give us the scope to allow local authorities more flexibility over how they spend the levy if those priorities have been met.

The amendment will correct an omission and ensure that proposed new section 204A also correctly cross-refers to the powers in proposed new sections 204O and 204P, which will also allow levy receipts to be spent on other specified purposes, such as non-infrastructure matters. Where that is allowed, it must be subject to the overall purpose set out in proposed new section 204A. To ensure that proposed new section 204A correctly interacts with proposed new sections 204O and 204P, we are introducing a minor technical amendment to ensure the cross-reference is properly made. I therefore respectfully ask the Committee to support the amendment.

[Matthew Pennycook]

I rise to speak briefly to this Government amendment, notwithstanding our debate on the previous group of amendments. There is nothing in the Bill to ensure that local authorities meet a sufficient level of housing need—we will come to that—or of infrastructure need. Even taking into account the Minister’s reassurances on how the levy can be spent, I remain concerned. If anything, Government amendment 196 augments the concerns I have just spoken about. By specifying that the aim of the levy can include any purpose specified under proposed sections 204N(5), 204O(3) and 204P(3) of the Planning Act, the amendment allows proceeds of the levy to be spent not only on non-infrastructure items that might be unconnected to a given area in a way already made clear in the Bill, but on a wider set of, one presumes, non-infrastructure items. In a sense, the amendment’s intention is to widen the scope of the non-infrastructure items to which specified amounts of IL can be directed.

As I have made clear, we strongly believe that funds generated by the levy should be spent on infrastructure that supports the development of the area in question, and we oppose this Government amendment for the same reasons I set out in relation to amendments 148 and 149. I will not press the matter to a vote, but I want to put that on the record. We feel very strongly, as I think local communities will, that the proceeds of an infrastructure levy should be spent on infrastructure in their area. If anything, rather than having surplus amounts to spend on other items specified by the amendment or the Bill, I believe that the levy will not cover all those infrastructure costs.

[Tim Farron (Westmorland and Lonsdale) (LD)]

I am also very concerned. This rings serious alarm bells with me and, I think, many other people, particularly those who work in housing associations and local government. It is hard to build affordable housing—we would have built a lot more of it if that were not the case. Given the price and availability of land, the process of finding a delivery partner, the involvement of contractors and housing associations, and the need to make the money stack up, it is not easy. The problem is that if we create a safety valve that allows infrastructure levy funding to be spent on something other than the infrastructure that underpins new affordable housing developments or the development of affordable housing itself, some people will take the easy option and some of the money garnered for planning gain will not do the community much good at all.

I hope and believe that the Government and this Minister have good intentions, but if we allow the funds gathered by the infrastructure levy to seep out from the pot for developing affordable housing and the infrastructure that underpins it, that is what will happen. We must not allow it to happen.

[Mr Jones]

Let me respond to the point raised by the hon. Member for Westmorland and Lonsdale. Clearly, the firm intention of the policy set out in schedule 11 is that the requirement for relevant infrastructure and affordable housing in a particular area is satisfied. However, there may be circumstances where a local authority, while satisfying those criteria, uses this mechanism. As I have said before, we expect to capture more value from developments because we will be capturing the value of the uplift of the finished product, not just the value at the point at which planning permission is achieved. Therefore, the expectation is that there could be greater value and it could enable local areas to do additional things, alongside the relevant and necessary affordable housing and infrastructure. I hope that reassures the hon. Gentleman about the Government’s intention.

Amendment 196 agreed to.

[Matthew Pennycook]

I beg to move amendment 150, in schedule 11, page 282, line 32, at end insert—

“(2A) The intention of IL is to enable local authorities to raise money from developments to fund infrastructure to support the development of their areas while allowing planning obligations under section 106 of the Town and Country Planning Act 1990 to continue to be used to provide affordable housing and ensure that development is acceptable in planning terms.”

[The Chair]

With this it will be convenient to discuss the following:

Amendment 151, in schedule 11, page 294, leave out line 21.

This amendment would remove affordable housing from the application of the infrastructure levy to with the intention that it would continue to be funded under current system of s106 TCPA 1990 obligations.

Amendment 152, in schedule 11, page 294, line 31, at end insert

“, other than to add affordable housing”.

This amendment would prevent affordable housing being added to the list of matters included within the meaning of “infrastructure” at a future date by regulations.

[Matthew Pennycook]

As the Minister made clear this morning, the Government are not willing to give charging authorities discretion when it comes to adopting the infrastructure levy, or any freedom to determine the best metric upon which to calculate IL rates. However, I want to try to persuade him to reconsider using the levy to deliver affordable housing.

Amendment 150 would insert into proposed new section 204A a proposed new subsection making clear that the intention of IL is to enable charging authorities to raise money to fund infrastructure to support the development of their areas, while allowing planning obligations under section 106 of the Town and Country Planning Act 1990 to continue to be used to provide affordable housing and to ensure that development is acceptable in planning terms.

Amendments 151 and 152 would make consequential changes to the schedule, respectively removing affordable housing from the list of what is designated as infrastructure and preventing regulations from reinserting it into that list at a later date.

When I spoke to amendments 142 and 143 and amendments 145 to 147, I set out our two main concerns about the new levy—namely, that it is likely to prove onerously complicated to operate in practice and that it will almost certainly lead to less infrastructure and less affordable housing overall than those secured under the present system. It is the second of these concerns that lies behind amendments 150, 151 and 152.

Under the present system, funds raised through the community infrastructure levy are used only to fund infrastructure, facilities and services that support development in a given area. It is individual section 106 agreements that, along with any grant funding secured, pay for affordable housing. Under the new system, which is premised on affordable housing as well as all other required infrastructure being funded through a single mechanism, local planning authorities will be forced to set IL at significantly higher rates than the community infrastructure levy, which is typically equivalent to a relatively small proportion of development value.

The obvious resulting risk of having to set such high rates is that development on less viable sites, the majority of which are concentrated in those parts of the country most in need of levelling up and which the Government say is their mission to help, will simply not happen. As such, local planning authorities in areas with higher risk to viability of brownfield sites will be left with a choice: either allow such sites to remain undeveloped, or lower IL rates sufficiently to incentivise development on them but forgo essential infrastructure and affordable housing from more viable sites as a result. In practice, both outcomes are likely to materialise. If that is the case, it will have significant implications for the supply of infrastructure and high-quality affordable housing across the country.

There are very good reasons for the Government to reconsider funding affordable housing through the new levy, and I want to briefly speak to a number of them. First, there has never been a previous attempt to implement a single fixed-rate levy mechanism for securing both infrastructure and affordable housing. That is not for want of some extremely clever people attempting to design such mechanisms, but the desire to incorporate affordable housing into previous systems, including CIL, was ultimately abandoned, because each time they were deemed to be inoperable in practice. That is an obvious warning that the Government would do well to heed.

Secondly, as we have already discussed in the debate on the first group of amendments to part 4, by systematically financialising the provision of affordable housing, and for that matter on-site infrastructure, with the inherent variability and uncertainty that that entails, the levy is likely to unnecessarily complicate the planning process, resulting in additional delays, disputes and resourcing pressures.

Thirdly, the rigidity inherent in applying one or more IL rates in any given charging area to sites within it that will inevitably vary in terms of development and land values will result in a wide range of levels of affordable housing and infrastructure contributions across sites. That is inherent to the design of the levy. As a result, it will be incredibly difficult for local planning authorities to know what levy rates to set in order to fund all necessary infrastructure and meet the affordable housing need identified in their local development plans.

Fourthly, there are inherent problems when it comes to attempting to provide affordable housing through a rigid fixed-charge approach, because of how such a charge interacts with viability. If the Government are adamant about pursuing a fixed-charge approach, they could always consider a fixed-percentage affordable housing requirement delivered through section 106 agreements, which would be preferable to a general levy calculated on the basis of gross development value.

By amending the national planning policy framework as they have done, to place greater emphasis on viability testing as a part of plan-making rather than as a feature of individual site applications, the Government have already firmed up affordable housing requirements while still allowing for flexibility in exceptional cases where there are genuine viability challenges. In our view, the current arrangement strikes the right balance and, as I said this morning, the Government’s time would be better spent focusing on what more could be done—for example, by equipping local authorities with the specialist skills and resources that they need to make the existing system work more effectively.

Lastly, and related to the previous point, setting a fixed IL rate or rates will inevitably result in the loss of affordable housing supply on every site in a given charging area that could viably deliver more than the rate in question would require, while at the same time putting at risk entirely the development of sites grappling with genuine viability challenges that would be unable to provide the requisite level of contributions. That problem is inherent to the nature of a levy premised on a general fixed rate or rates within charging areas where there is variation in values and costs between sites.

Whichever side of the line individual charging authorities ultimately come down on, the overall result will be lower rates of affordable housing delivery in England. If local planning authorities try to overcome that inherent flaw in the proposed levy system by setting myriad different IL rates, in an attempt to respond to the natural variation in development and land values in any given area, the result will be a smorgasbord of rates, which would make for a fantastically complicated arrangement that would make it hard, if not impossible, for developers and communities to understand the extent and nature of the contributions due on different sites in a given locality.

It is telling that despite the Government’s commitment to the levy securing at least as much affordable housing as developer contributions do now, there is nothing in the Bill that guarantees that that will be the case. We need to be confident that we are approving a framework that has a reasonable chance of at least maintaining the supply of affordable housing that we currently secure through developer contributions, and ideally one that allows for improvements to allow that supply to increase, because it needs to increase markedly.

Short of giving charging authorities discretion in relation to adopting the infrastructure levy and the freedom to determine the best metric on which to calculate IL rates, limiting the scope of the levy to the delivery of actual infrastructure and retaining the use of section 106 to fund affordable housing, as amendments 150 to 152 propose, is the best means of achieving that aim, because it would overcome the problems with the setting of IL rates that I have described and the impact that fixed rates will have on overall levels of affordable housing secured through developer contributions. It would also directly address an issue we have not discussed—namely that a fixed levy would not be capable of determining affordable housing requirements for estate regeneration schemes, which necessarily vary from site to site, depending on the existing level of affordable housing that should be re-provided and how much additional affordable housing can be delivered.

I trust that the Minister has carefully considered the arguments I have made and will consider accepting the amendments, which would make the Government’s levy proposals far more workable than they currently are. Either way, he really does owe the Committee an explanation of how the levy will operate in such a way as to ensure that developments are viable and deliver both the required infrastructure and at least as much affordable housing as is currently secured through section 106 agreements, because despite the optimistic claims that successive Ministers have made and the claims that he made in debates this morning, nearly two years after the levy proposal was first put forward in the White Paper no evidence whatever has been published to demonstrate that the infrastructure levy is actually capable of achieving that. I look forward to hearing the Minister’s response.

[Rachael Maskell]

I am grateful to be called to speak to this set of amendments and thank my hon. Friend the Member for Greenwich and Woolwich for tabling them.

It is really important that we think about the consequences and what could happen. I reject the setting of infrastructure against affordable housing. If people are building any form of development, they will have to put infrastructure on that site, whether the infrastructure is a GP surgery, a school or some of the more micro infrastructure that is necessary for a community to function. As a result, the infrastructure will trump affordability in order to reach viability, so we will not see the affordable housing being built; in fact, if anything we will see a regression if the two are set against each other. For people to get the true value of developments with high-value accommodation, there will be a demand for infrastructure on the site. The developer will naturally focus on that and that will be how the situation turns.

It is also important to look at what will happen with this patchwork approach throughout the country, because if different areas set different levels of infrastructure levy, that will create a new market for where developers go and develop. Of course, they will be looking to their profit advantage over what the local communities need. The new system will be another pull: it will direct them to where they can get the deal that best suits them for developing the infrastructure that they want. It is going to skew an already bad situation into an even worse situation in respect of the need for affordable housing, let alone social housing. I cannot see how it is going to bring any advantage to a social developer, let alone a commercial developer, in trying to ensure that we get the mix of housing that we require in our communities. With affordable housing and social housing in particular being developed at such low levels compared with high-value housing—which, let us face it, is going over to being essentially an asset rather than lived-in accommodation—the differential is clearly going to cause a lot of challenge, and even greater challenge, for communities.

As we have debated, supporting infrastructure might not even be infrastructure: it could be services or something else. The provisions create risk in the legislation, so my hon. Friend’s amendments are about ameliorating that risk and ensuring that there is some level of protection to ensure that affordable housing is built.

--- Later in debate ---

[Mr Jones]

We are all concerned with making sure that we get as much affordable housing as we can from housing developments. Clearly, what I am arguing for is a wider package of measures that we believe will deliver at least as much affordable housing as under the current system, if not more, together with the infrastructure that communities need.

It is not fair that communities lose out just because their local authorities have effectively been strong-armed during the negotiation, and it is not fair that developers may face arbitrary variation in the demands for contributions in different places. If developers do not know how much they are going to have to pay, it is much harder for them to price contributions into land. There is currently an incentive to overpay for land and then try to negotiate contributions downwards.

To address the inequality of arms that the Committee has discussed, the new levy will introduce the right to require affordable housing through regulations. The right to require will enable local authorities to determine what proportion of the levy they want delivered in kind as affordable housing and what proportion they want delivered as cash. That will mean that local authorities, not developers, will get the final say on the proportion of affordable homes delivered as an in-kind levy contribution on a site. It is therefore important that affordable housing is considered as a kind of infrastructure that can fall within the levy regime.

It will be equally important that the levy delivers at least as much affordable housing as under the current system. That is why, when the levy rates are set, charging authorities must design them with regard to the desirability of ensuring that the rates can maintain or exceed the amount currently secured through developer contributions.

Let me address a couple of other points. The hon. Member for Greenwich and Woolwich was concerned about less-viable sites and lower-value sites. I reassure him that local authorities will set a minimum threshold that reflects build costs and existing use values, as well as setting levy rates. The minimum threshold will help to ensure that lower-value sites continue to come forward.

The hon. Member for York Central mentioned concerns about risk and about delivering affordable homes and infrastructure while the changes take place. I reassure her that, as we discussed in the earlier debate on the infrastructure levy, we will be driven by a test-and-learn approach. The lessons from that work will be learned to make sure that we achieve our objectives, and the places that are not using that approach in working with the new infrastructure levy will continue to work on the same basis as they do now until the new system is rolled out. I reassure the hon. Lady again that the process could take some years to achieve to make sure we get it right.

On that basis, I hope that the hon. Member for Greenwich and Woolwich will not press amendments 150 to 152 to a Division.

[Matthew Pennycook]

I thank the Minister for his response, but I am afraid I am not reassured, for the following reasons. The Minister rightly said, and I accept, that section 106 is an imperfect mechanism for extracting public gain from developers, but, as we have already debated, it is one that can be improved on, and has been in recent years, and can be reformed further.

The question before us, which goes back to the wider debate we had earlier, is: will the levy system replace the current system with one that will extract sufficient public gain to at least allow the same levels of affordable housing? I have listened carefully to the Minister, and he has made repeated commitments that it will extract at least as much as that gain. However, as we will come on to with the next set of amendments, there is nothing in the Bill that guarantees that the levy framework, even if it does extract the same amount of gain, will lead to a situation in which at least as much affordable housing is required. The language—I will come to this in the next debate—in proposed new section 204G is incredibly weak in that regard.

Nothing I have heard this morning reassures me that we are not implementing a system that will fail to extract the same amount of public gain when it comes to infrastructure and affordable housing as the present system. There is nothing in the Bill to ensure that local authorities spend their levy proceeds on the levels of affordable housing required to meet the housing need in their area. Given all the risk and uncertainty of replacing the existing system with the proposed one, I feel strongly that the Government are making a fundamental mistake by including affordable housing within the scope of the levy. I will therefore press amendment 150 to a Division.

Question put, That the amendment be made.

Division 12

Ayes: 5

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Labour: 4
Liberal Democrat: 1

Noes: 8

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Conservative: 8

[Matthew Pennycook]

I beg to move amendment 153, in schedule 11, page 283, leave out lines 22 and 23.

This amendment would amend the definition of “affordable housing” to ensure that the infrastructure levy could only be spent on social housing within the meaning of Part 2 of the Housing and Regeneration Act 2008.

[The Chair]

With this it will be convenient to discuss the following:

Amendment 154, in schedule 11, page 285, line 35, at end insert—

“(9) IL regulations must provide for exemption from liability to pay IL in respect of a development which exclusively contains affordable housing.”

This amendment would provide for an exemption from liability to pay IL in respect of a development which contains 100 per cent affordable housing.

Amendment 155, in schedule 11, page 287, leave out lines 34 to 42 and insert—

“(2) A charging authority, in setting rates or other criteria, must ensure that—

(a) the level of affordable housing which is funded by developers and provided in the authority’s area, and

(b) the level of the funding provided by the developers,

is maintained at a level which, over a specified period, enables it to meet the level of affordable housing need identified in the local development plan.”

This amendment would require Infrastructure Levy rates to be set at such a level as to meet the level of affordable housing need specified in a local development plan.

Amendment 156, in schedule 11, page 298, line 13, at end insert—

“(aa) set out how the charging authority intends to use IL to meet the level of affordable housing need identified in the local development plan, and”.

This amendment would require a charging authority to detail the way in which it intends to use the infrastructure levy to meet its identified housing need in preparing and publishing an infrastructure delivery strategy for its area.

[Matthew Pennycook]

Having just sought unsuccessfully to persuade the Minister to reconsider using the infrastructure levy as a means of delivering developer-funded affordable housing, I will set out how we believe the Bill needs revising to ensure that the new levy will supply, in practice, sufficient levels of such housing. I have spoken at length about why we are concerned that the new levy will fall short as a mechanism to deliver affordable housing, and our fear that its introduction will lead to an overall reduction in affordable housing supply—a fear not assuaged by a piece written on 22 August for the ConservativeHome website by the recently departed Under-Secretary of State, the hon. Member for Harborough (Neil O’Brien), in which he explicitly argued that the levy would allow for a rebalancing of

“what developer levies are spent on, towards things local residents want, like GP surgeries, schools, roads, and landscaping, rather than social housing for non-locals”.

Dismissing concerns about the impact of the levy on affordable housing, the Government have promised on multiple occasions, and the Minister has again today, that it will deliver at least as much affordable housing as developer contributions do now. Indeed, the policy paper accompanying the Bill explicitly sets out that commitment. The Minister went further this morning, and said that the infrastructure levy will be so successful that not only will it cover all infrastructure and affordable housing but we will have a surplus that we can spend on lovely things in our local areas. As I mentioned, no evidence has yet been published by the Government to substantiate why they believe that the new levy will be able to fulfil that objective.

We are promised a technical consultation soon, and the Department is by all accounts sitting on a study by academics at the University of Liverpool involving the design and implementation of a prospective levy charging schedule. I put it to the Committee, however, that it is telling that in the two years since the levy was first mooted in the White Paper no analysis or impact assessment has been produced to demonstrate that the new levy has a chance of matching the existing system of developer contributions when it comes to the delivery of affordable housing.

--- Later in debate ---

[Mr Jones]

The hon. Member for Greenwich and Woolwich is right to refer to the importance of the new levy in supporting the delivery of affordable housing for local communities and in contributing to meeting local need. As we have discussed, the Government are committed to getting at least as much, if not more, on-site affordable housing through the new levy as we do under the current system of developer contributions.

The definition of affordability, as challenged by amendment 153, is a complex and evolving picture that is better understood and monitored at local level. It is therefore appropriate to allow for infrastructure levy regulations to provide for any other description of affordable housing, beyond that defined as social housing in part 2 of the Housing and Regeneration Act 2008. This will ensure that any new types of affordable housing tenure introduced in the future can be brought into the scope of the levy.

[Matthew Pennycook]

I am sorry to put the Minister on the spot, but it would be useful if we had an example of the type of housing tenures that the Government believe that that specific line in the Bill is required for, given the already very broad definition of social—affordable—housing in part 2 of the 2008 Act.

[Mr Jones]

As the hon. Member knows, when the 2008 Act was brought into effect by the last Labour Government, there was a reasonably wide definition of the different types of affordable housing. One of the evolutions in affordable housing recently has been the introduction of First Homes. I hear what the hon. Member for Greenwich and Woolwich says about that, but we are working to make sure that we have 1,500 first homes by the end of March 2023; that will be significant progress. The vast majority of affordable housing currently provided does fall within the definition that we have discussed, which was put into legislation in 2008, and we envisage that that will continue to be the case under the levy. However, accepting amendment 153 would mean placing a lot of reliance on the definition of social housing in the 2008 Act. Clearly, social housing is an extremely important part of the mix of affordable housing, but amendment 153 would reduce the levy’s ability to respond to any changes in tenure types that arise in the future. That is not helpful or necessary. It is right that the levy regulations should provide future-proofing and regulatory flexibility.

Amendment 154 deals with exemptions for sites that are 100% affordable housing. Subsection (5)(h) of proposed new section 204D of the Planning Act 2008, in schedule 11 of this Bill, already contains a power for levy regulations to make provision about exemptions from or reductions in levy liability. The levy will be used to secure contributions towards affordable housing. We do not expect to charge the levy on exclusively affordable housing developments; we will explore that matter further in consultation. However, all development will be required to deliver the infrastructure that is integral to the functioning of the site, and we will retain the use of planning conditions and restricted use of section 106 agreements to secure that.

Amendment 155 would require infrastructure levy rates to be set at a level that enables an authority to meet the affordable housing need specified in a local development plan. The total value that can be captured by the levy, or indeed any system of developer contributions, will not necessarily match the costs of meeting the entire affordable housing need of an area as specified in the local development plan. Revenues will depend on the amount and types of development that come forward, and when they come forward, as much as on the levy rates and thresholds set. That said, the Bill recognises the importance of using the levy to deliver affordable housing. Proposed new section 204G of the Planning Act 2008, in schedule 11, provides that charging authorities must, when setting their rates, have regard to the desirability of ensuring that affordable housing funding from developer contributions equals or exceeds present levels. That will ensure that affordable housing need is accounted for when levy rates are set; to ensure that, those rates will be subject to public examination.

Importantly, the Bill makes provision for rates to be set with regard to increases in land value—for instance, as a result of planning permission. Targeted increases in rates will allow charging authorities to maximise the revenue that they can capture, and the amount of affordable housing that they can deliver.

We have designed the levy so that it can deliver at least as much affordable housing as the current system, if not more. As I have explained, the new right to require will require affordable housing to be provided. That will be introduced through regulations. That means that local authorities will get the final say on the proportion of levy contributions that go towards affordable homes. Should the levy generate more revenue than at present, local authorities could choose to direct those additional revenues towards meeting their additional affordable housing needs.

[Mr Jones]

I thank the hon. Member for that point. Like many other areas, York’s housing market is affected by the tourist industry that the city attracts. It is for local areas—I am glad that the hon. Member’s area is forming a local plan—to assess the housing need in their local plan; they should take matters such as the amount of affordable housing, and the need in an area, into account when making that plan.

Local authorities will need to balance the objective of providing affordable housing with the levy’s other aspirations. Local authorities will need to use the levy revenues to deliver other critical infrastructure, such as new roads and medical facilities. Local authorities, which know their local areas, are best placed to balance funding for affordable housing with funding for other infrastructure needs.

On amendment 156, proposed new section 204Q, introduced by schedule 11, introduces the requirement for levy charging authorities to prepare an infrastructure delivery strategy, which will outline how a local authority will use the money the levy generates through a strategic spending plan. That will include an outline of how it will use levy revenues to secure affordable housing. It is important that that happens in each area. The charging authority will have regard to that when setting levy rates. The exact detail of the infrastructure delivery strategy and how it should be produced will be determined through regulations. We will consult on matters relating to the infrastructure delivery strategy, and forthcoming secondary legislation and guidance will clarify how to treat affordable housing. All of that will be informed by our commitment to deliver at least as much affordable housing as we do under the current system.

I hope that my explanation gives the hon. Member for Greenwich and Woolwich clear assurances on how the new levy will support the delivery of affordable housing, and therefore I ask him to withdraw the amendment.

[Matthew Pennycook]

I thank the Minister for that comprehensive response. I will take each part of it in turn. I note what he says about the powers provided for in proposed new section 204D(5)(h) to the Planning Act 2008, regarding 100% affordable sites, and I welcome his commitment that the Government do not expect those sites to have the levy applied to them. That should be written in the Bill, but I take that commitment at face value, and I hope to see it fleshed out via the regulations.

--- Later in debate ---

Amendment, by leave, withdrawn.

[Matthew Pennycook]

I beg to move amendment 157, in schedule 11, page 283, line 28, at end insert—

“(1A) But a charging authority may not charge IL on development in its area comprising—

(a) over 150 residential units, or

(b) over 10,000 sq m of floorspace

and instead Part 11 of the Planning Act 2008 (Community Infrastructure Levy) applies to such developments.”

This amendment would specify a threshold for large sites in relation to which the role of section 106 TCPA 1990 agreements would be retained, meaning that the community infrastructure levy would continue to be used to support such development.

I made clear at the outset of our consideration of part 4 that the levy differs from that set out in the 2020 White Paper in several important respects. One of those is that the Government now propose to retain a distinct role for the current system of section 106 planning obligations, rather than replacing it entirely, as per the White Paper. We are told that narrowly targeted section 106 agreements will still be used for securing infrastructure integral to the operation and physical design of a site. The examples in the policy paper that accompanies the Bill—internal play areas and flood risk mitigations—suggest that the use of such agreements in this way will be a frequent occurrence. More importantly, we are also told that the Government want a role for section 106 agreements in supporting the delivery of larger strategic sites. On such sites, infrastructure can be negotiated and provided in kind; the value of what is agreed must not be less than what would have been paid through the levy. This raises a host of questions, as does every aspect of the Government’s proposal.

Will developers have to pay the difference where the cost of delivering infrastructure on large sites is less than the required IL charge would be? Correspondingly, would charging authorities have to refund developers if it transpired that the cost of delivering infrastructure was higher than the given IL charge? Who defines what is on-site infrastructure, and what can act as credit against the nominal levy charge? Will it be set out in regulations—there is then a risk that it will be too inflexible—or will it be defined by each charging authority? There is then an associated risk of additional complexity. How do we avoid developers providing a range of unnecessary on-site facilities in order to reduce their liability vis-à-vis that levy charge?

Those and other important questions aside, in general terms we very much welcome the proposed retention of section 106 agreements, both for the infrastructure that is integral to the operation and physical design of sites and for larger strategic sites. Indeed, when it comes to the latter, the continued use of section 106 is essential to ensuring that they are developed, given the obvious pitfalls of attempting to do so solely via the levy, with all the inherent flaws that we discussed earlier today.

However, schedule 11 does not define what actually constitutes a larger site for the purposes of the ongoing role of section 106 agreements. Amendment 157 simply seeks to place that definition in the Bill, in proposed new section 204B of the Planning Act 2008, so that there is clarity at the outset of the process of introducing and implementing the levy as to the site size threshold above which IL would not be charged.

The amendment proposes that, for the purposes of permitting an ongoing role for section 106 agreements, a large site should be defined as an area comprising over 150 residential units, or over 10,000 square metres of floorspace. We have chosen those threshold values for a number of reasons, but primarily because schemes of over 150 units or 10,000 square metres of floorspace are typically more complex, take longer to deliver and are often phased, and are more likely to require site-specific mitigation, thus benefiting from the ability of section 106 agreements—this is one of their key strengths—to tailor obligations to the specific circumstances of a site.

On large sites thus defined, which would account by our estimates for around 5% of current approved residential projects nationally, affordable housing provision would be delivered via section 106, as under the present arrangement. To avoid the delay and complexity of securing contributions for core infrastructure on the sites by means of such agreements, amendment 157 makes it clear that the existing provisions of part 11 of the Planning Act 2008 would still apply, thereby enabling contributions relating to the sites to continue to be secured by means of the community infrastructure levy.

We believe that straightforward and uncontroversial amendment would provide certainty as to what does and does not constitute a large site where there will be an ongoing role for section 106 agreements at the outset of what will be, by the Minister’s own admission, a lengthy process of testing, implementing and rolling out the new levy. I look forward to hearing the Minister’s response.

[Mr Jones]

The Government intend that the levy will replace CIL, except for the Mayor of London and in Wales, and largely replace the discretionary negotiated section 106 regime. However, following feedback through consultation and engagement with the industry, we recognise that, in some limited circumstances, a case exists for retaining a role for section 106 planning obligations in the delivery of infrastructure. Such circumstances include large and complex sites where infrastructure requirements are site-specific and require a more negotiated approach to ensure that infrastructure is provided at the right time. It is important to set the right definition for large and complex sites. We need to strike a balance between creating a more consistent levy system, while retaining flexibility for some negotiations on sites with complex infrastructure needs. On sites where section 106 agreements will continue to be used, we still expect developers to deliver at least as much overall value. It is just that some of it will be as in-kind infrastructure contributions rather than as a cash payment.

Setting the threshold in the Bill for when section 106 agreements should be used runs the risk of impacting on the effectiveness of the levy. If it is set too low, lots of development will continue to use section 106 agreements, and developers will continue to strong-arm local authorities over the value of their contributions. If we set it too high, it can impact infrastructure delivery on sites with complex and competing infrastructure needs. That is why we intend to consult on what the threshold should be, to allow us to consider stakeholder feedback and different options. The levy regulation, which will be laid before the Commons for approval, will specify the circumstances in which section 106 agreements will continue to be used. For the reasons I have explained, I request that amendment 157 be withdrawn, to allow us to consult further on when the use of section 106 agreements would continue to be more appropriate.

[Matthew Pennycook]

I appreciate the Minister’s response and, taking on board what he has said, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Matthew Pennycook]

I beg to move amendment 158, in schedule 11, page 286, line 38, leave out “IL” and insert—

“that part of the IL not applied to the provision of affordable housing”.

This amendment would mean that charities in England and Wales were not exempt from contributing to the provision of affordable housing on any given development.

[The Chair]

With this it will be convenient to discuss the following:

Amendment 159, in schedule 11, page 287, leave out lines 5 to 14.

This amendment and Amendment 160 would ensure that charitable exemptions were limited to development undertaken by charities in England and Wales.

Amendment 160, in schedule 11, page 287, line 26, leave out from “2011” to end of line 28.

See explanatory statement for Amendment 159.

[Matthew Pennycook]

Proposed new section 240F of the Planning Act 2008 makes provision about exceptions from, or reductions in, IL for charities. The explanatory notes to the Bill make it clear that the provisions in this proposed new section replicate those that currently exist for the community infrastructure levy in section 210 of the Planning Act 2008. That is indeed the case but, as the Minister will know, charities are not exempt from contributing to infrastructure and, most importantly, affordable housing secured through section 106 agreements.

Because the new levy entails a single fixed-rate mechanism for securing both infrastructure and affordable housing, and because there is nothing on the face of the Bill to specify that charities must contribute to the provision of the latter, the limit of charitable exemptions to infrastructure and affordable housing has been drawn far more widely than that which applies in the case of CIL at present. We believe that is problematic, and could hamper development on sites taken forward by charities or reduce the amount of affordable housing delivered on them. By making it clear that charitable exemptions do not apply to that part of IL related to the provision of affordable housing, amendment 158 seeks to enable development led by institutions established for charitable purposes to proceed, and to enable appropriate levels of affordable housing to be secured on the sites in question.

A separate but related issue is the question of what constitutes a charity for the purposes of proposed new section 204F. Subsection (2)(a) of the proposed new section provides for regulations to exempt from paying IL institutions established for charitable purposes, defined in subsection (4) as not only a registered charity under section 29 of the Charities Act 2011, but any charities within the meaning of section 1 of that Act not required to be registered. We believe that defining charities so widely could result in development not taking place, or being unsustainable when it does, because unregistered charities would also be exempt. Amendments 159 and 160 simply seek to limit charitable exemptions from IL to those charities that are formally registered with the Charity Commission, as per the 2011 Act.

We believe that this sensible and proportionate set of amendments will ensure that charities are appropriately exempted, but that the limit of that exemption is not drawn so widely that it could impede development or reduce the levels of infrastructure and affordable housing coming forward. I hope the Minister will agree and signal that he is content to accept all three.

[Tim Farron]

Briefly, I think that the points made by the hon. Member for Greenwich and Woolwich are really good. It is important that we do not provide loopholes to allow developers to get out of providing genuinely affordable homes for local communities.

It is also important to remember the role of the National Trust, which does many good things. In my community and across Cumbria, it is effectively an affordable housing provider at times. Sometimes it is an unaffordable housing provider, and sometimes it is an outfit that moves from having affordable homes to having holiday lets, and it behaves in ways that I, and hopefully many people here, would not approve of. It is also potentially a developer, for better or for worse. There is the prospect of a new gateway development near Windermere railway station, which has the potential to provide genuinely affordable homes for local people. There is also the potential for that to not be the case, so it is important that we do not get overly benign and dewy-eyed about the word “charity”. What we really ought to be concerned about is the delivery of genuinely affordable housing for local communities, which is why it is important that this definition is tight and clear, and that we expect those charities that have the good will and support of the nation to earn that in the communities where they are not doing so at present.

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[Mr Jones]

I thank the hon. Member for that question. I will not get drawn into lots of different examples, but we are very clear that we are talking about charitable purposes under the definition in the 2011 Act.

Turning to amendments 159 and 160, there may be other instances where an institution is established for charitable purposes but does not meet the definition of a charity—for example, a charity established in Scotland, Northern Ireland or overseas. Amendments 159 and 160 would remove the express ability for regulations to set exemptions or reductions in the levy for these types of institutions. This would mean that only English and Welsh charities could be exempt from the levy when delivering development for charitable purposes. While we recognise that this will be less common, it would still be unfortunate if other types of charitable institutions could not deliver important facilities because of increased costs from the levy.

We are aware that different charitable institutions may operate differently from English and Welsh charities. That is why it is important to maintain a separate power to prescribe in regulations in detail the levy liabilities of such institutions. That enables provision to be made in the regulations, which will keep up with future changes that might be made to charities law. There will also be instances where a charitable institution carries out development that itself is not for charitable purposes but that it should none the less be able to claim an exemption or reduction for.

In the current CIL system, the CIL regulations make use of this power to provide for relief from CIL liability at the discretion of the local authority for developments carried out by charities for investment purposes. This approach works, which is why we do not agree with amendments 159 and 160, which would remove the express ability to set this kind of exemption or reduction through regulations in the future.

I hope that I have provided helpful clarification to the hon. Member for Greenwich and Woolwich and other members of the Committee. I therefore kindly ask the hon. Member to withdraw his amendment.

[Matthew Pennycook]

I am partly reassured by what the Minister said, not least because he clearly indicated that the Government are going to go away and give further consideration to designing regulations. However, I urge him—or his successor when he is promoted—to really look into this issue, because I think there is a chance here, as Members have commented on, for a loophole to be exploited in ways that would cut across the purposes of the Bill as per the Government’s thinking. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Rachael Maskell]

I beg to move amendment 167, in schedule 11, page 287, line 28, at end insert—

“204FA Social enterprises and community interest companies

(1) IL regulations must provide for an exemption from liability to pay IL in respect of a development where—

(a) the person who would otherwise be liable to pay IL in respect of the development is a social enterprise or a community interest company, and

(b) the building or structure in respect of which IL liability would otherwise arise is to be used wholly or mainly for the purposes of social enterprise or the community interest.

(2) IL regulations may—

(a) provide for an exemption from liability to pay IL where the person who would otherwise be liable to pay IL in respect of the development is a social enterprise or a community interest company;

(b) require charging authorities to make arrangements for an exemption from, or reduction in, liability to pay IL where the person who would otherwise be liable to pay IL in respect of the development is a social enterprise or a community interest company.

(3) Regulations under subsection (1) or (2) may provide that an exemption or reduction does not apply if specified conditions are satisfied.”

This amendment makes equivalent provisions about the Infrastructure Levy for social enterprise or community interest companies as it does for charities under inserted section 204F.

The reason for the amendment is that there are different forms of businesses across communities. At this point, I should declare an interest as a Member of the Co-operative party. Social business is really important across our communities. Social businesses, enterprises and community interest companies have a different focus from the run-of-the-mill business. They are not there for profit. They are there to reinvest in their service users and facilities and to give back to their communities.

I think there is a real anomaly in the legislation. Today, the voluntary, community and social enterprise sector is referred to as one, recognising the charitable aims and social aims that these organisations bring. In moving the amendment, I am looking for parity, to recognise the fact that not-for-profit organisations—community interest companies and social enterprises—make an investment in their communities. They can make an investment by employing people from a place of disadvantage and by giving people opportunities in life. However, they are businesses as well, running cafés, for instance. Obviously they reinvest the proceeds they make into people in the community or they perhaps run a nursery or another form of business. We have seen the real benefit that that brings—it certainly addresses the levelling-up agenda. It enables people to move forward in their social mobility journey.

These organisations often start out with no assets whatever. They are very small. They build, reinvest and grow, which is good for the local economy. We need only to look at Preston as an example. It has invested—I look at the Chair, who is the MP for Preston—in the community. It has invested in the model of social business as well, and we know the importance of that. We want to see that rolled out across our communities. If these organisations grow and want to invest more and further benefit the community, but they then have to pay the infrastructure levy, that will curtail the opportunities that they can bring to our communities, and we do not want to see that. We want to see community interest companies, co-operatives and social businesses grow in a way that allows them to reinvest in our communities.

One thing that I have found most inspiring over the last few weeks is meeting organisations that are putting incubators for social enterprises in their communities—again, with no asset, but they provide an opportunity to bring forward a generation of new community interest companies and social enterprises. I have seen a little bit of that on the SPARK site in York, which really has put a spark into York. It is built out of old containers on a site and has brought a new energy into the city centre. It has been a fantastic opportunity, running and helping businesses to develop the ethos of community interest companies as they move forward.

I do not understand why in the legislation credible social businesses, social enterprises and community interest companies do not have exemptions when they give so much back to our communities and bring real transformation to our society. I want the amendment to be made. It is an omission; perhaps the Minister will explain why such an omission was made. Will he also reflect on the charities when it comes to the consultation and looking at further regulations? Will he include social enterprises and community interest companies in the substantive next phase of the legislation?

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[Greg Smith]

I will not detain the Committee for long. The amendment very much speaks for itself. It enables a charging schedule to require that, where an infrastructure levy is required, it be paid up front, or, where the infrastructure levy requires the developer to build something out themselves, that the infrastructure they are building—the GP surgery, school, road, or whatever it might be—be built first. It is a straightforward amendment. Having heard so many colleagues speak in the House or around the place, the great frustration that I have seen in my constituency, and that I have heard from others, is that, when in particular big housing developments or huge industrial parks are built, the infrastructure comes far too late.

I congratulate the Government, and welcome their presumption that infrastructure should come first. Through the amendment, which for clarity I will not press to a Division today, I urge them, as the Bill progresses to Report stage, to really think about locking their own desire and stated policy for infrastructure to be built first into the Bill. I warned that I will not press the amendment to a Division because, having lived through the glorious summer recess leadership election, we have heard a lot of talk and commitments about planning policy and the things that are in the Bill and which the Committee is talking about. I suspect that on Report it will be a wholly different Bill from the one that we have been debating over the past few months in Committee. The point that I wish to push is that the amendment marries up with what the Government have stated that they want to do, and I appeal to Ministers to find a way of incorporating the spirit of the amendment into the Bill on Report.

[Matthew Pennycook]

When speaking to the first group of amendments to this part of the Bill, I outlined in great detail why the decision to make GDV the metric for the new levy is likely to result in applicants making their IL payments at the end, rather than the beginning of the development process. As I argued when making the case for charging authorities to have a choice when it comes to adopting the new levy or retaining the present system, if a levy with GDV as its metric is made mandatory, the final IL liability will almost certainly not be known and become due until near the point where a development is completed. Given the problems inherent in attempting to design a levy system that enables interim payments or payments on account, that convinces sufficient local authorities to borrow against future levy receipts with all the risk that entails, or that overcomes the problems that will arise from paying for infrastructure on one site with levy contributions extracted from others, the most likely outcome is a situation where the infrastructure required to support development will not be in place when it is needed, as the hon. Member for Buckingham has just outlined. That is deeply problematic because, as I said earlier, we think it will mean fewer overall approvals, more unsustainable development when it does occur and greater local opposition.

Amendment 161 seeks to address that issue by specifying in proposed new section 204R on levy collection that the payment of IL must take place within a reasonable period of a development or phase of development commencing or in accordance with any instalment policy adopted by the charging authority. In doing so, it simply aims to avoid additional delays to the provision of infrastructure that will be necessary to support development and the resulting pressure that that would place on existing local infrastructure.

Amendment 58 in the name of the right hon. Member for Chipping Barnet (Theresa Villiers) and others similarly seeks to revise the Bill so that IL payments are made earlier than is currently proposed by the Government. We support the principle, for the reasons I have outlined. However, in enabling charging authorities to require developers to pay either their full IL liability or sufficient amounts of it to enable a development to be built before development commences, that amendment goes much further than currently provided for by either CIL or section 106 agreements, which are typically paid prior to implementation of a development or phases. Because it is not mandatory for planning permissions to be implemented, we are slightly concerned that amendment 58 could lead to a situation where IL contributions are paid and infrastructure provided on development that is not subsequently completed. Mandating the payment of IL before development commences would also impact on developer cash flow and viability, particularly in cases of phased developments, which could have the consequence of reducing IL rates and thus the overall level of affordable housing and infrastructure contributions provided.

Lastly, the problems inherent in a levy based on the metric of GDV—in terms of multiple valuations having to be undertaken at different stages in the development process, with the final liability not being known until years after the application was submitted—would be magnified were a provision to be introduced mandating the payment of IL before any development commences. For those reasons, and with all due respect to the hon. Member for Buckingham—I agree with him on the principle—we believe that amendment 161, which merely requires IL payments to be made within a reasonable period of a development or phase of development commencing, is the more proportionate response to a problem that is clearly recognised across the Committee. I hope the Minister will give serious consideration to accepting our amendment so we can ensure that, if the levy is introduced, it allows for the infrastructure required to support development to be in place when it is needed.

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[Matthew Pennycook]

As we have discussed extensively, given that we would not know the end value until later on in the development and that it would be subject to multiple valuations that might be disputed, how do the Government envisage the operation of a system of payments up front? Will the payments be simply scored off against the projected, expected end value, which will be calculated at a later date? Will the Minister give us a sense of how that sort of arrangement might work in practice?

[Mr Jones]

As we have discussed a number of times during the debate, the matter to which the hon. Gentleman refers will be set out in regulations. Clearly, that needs to be considered, because we need to ensure that there is a mechanism whereby payments are required to be made earlier in the development. That mechanism will be there and we can make that happen.

In due course, as I have said, we will consult on how the levy might be collected and paid. For example, we intend to explore whether a substantial proportion of the levy should be paid prior to the completion of the development or a phase of it. That plays into what the hon. Member for Greenwich and Woolwich mentioned. It would give charging authorities confidence that they will secure funds before the development is sold on. I hope that my reassurances that the Bill already provides powers to achieve the objectives laid out in the amendments in this group will mean that at this point my hon. Friend the Member for Buckingham is able to withdraw his amendment and that the hon. Gentleman feels able not to move amendment 161.

Levelling-up and Regeneration Bill (Sixteenth sitting)

Matthew Pennycook Excerpts

Committee stage
Tuesday 19th July 2022 Public Bill Committees

[Tim Farron]

Good morning, Mr Paisley; it is a pleasure to serve under your chairmanship on this lovely day. I am grateful for the opportunity to move the amendment and to speak to new clauses 38 and 39.

I volunteered for this Committee for many reasons: to spend time in great company and to be involved with a Bill that gives great opportunities to make a difference for this country, if we get it right. However, my fundamental motivation was to try to address a problem that has afflicted my community in Cumbria, and others, for a number of decades, and which I referenced in my maiden speech more than 17 years ago. That problem has got catastrophically worse in the last two years.

Before the pandemic, the average house price in my constituency was about £250,000, and the average household income was about £26,000. In the lakes and the dales, there is a much greater disparity in scale, where average house prices were already pushing towards £500,000 and average household incomes were no greater than in the rest of the district. There were 5,500 people on a council house waiting list and we have fewer social rented properties than that. Second home ownership was creating massive problems with under-population in villages that were losing their schools, their post offices and their bus services. In many communities, more than 50% of properties were empty.

Even before the pandemic, there was a huge problem. We have pushed the Government to take action for years, but we have seen precious little action. Since the pandemic, the situation has gone from crisis to catastrophe and urgent action is needed. The Government are dragging their feet; the one or two things they have talked about doing to address those issues will not even touch the sides.

Let us look at the situation now. Between June 2020 and June 2021—we are awaiting the figures for this year—in South Lakeland alone there was a 32% rise in the number of holiday lets. That area includes the most populated parts of the Lake district and the Yorkshire dales, and there was a colossal number of holiday lets to start off with, so where does a rise of 32% come from? They were not built for the purpose; they were long-term lets that migrated into short-term lets or Airbnbs.

According to estate agents, up to 80% of all house transactions in the last two years fall into the second homes market—to people who own a property but do not live in that property. From live information—literally, given yesterday—AirDNA says that within our community there are 8,111 short-term available lets. Rightmove sent a snapshot yesterday of 262 long-term lets, which means that there are 35 times more short-term lets in our community than long-term lets. We are seeing lakeland clearances, which have taken place in just a couple of years. People have been evacuated and expelled from the communities where they served and worked, where they may have grown up, where they sought to retire. People of all ages, not just the working-age population, have been evicted under section 21. Typically, those homes then migrate instantly into the Airbnb market.

Let me give you some examples. Debbie in Windermere, a hotel manager, was evicted from her property under section 21 and had to move to Lancaster, 30 miles away. She could find no way of staying in that community. As a consequence, that hotel is still without a manager. I think of a couple in Ambleside: him a chef, her a teaching assistant. They have one child in school and one about to go to school. They have been evicted from their property, which is now worth five times more on Airbnb than they were paying for it. They do not live anywhere in Cumbria now. They both had to give up their jobs and pull their children out of school and nursery, robbing that community of their services and their work.

I also think of Mike, who I spoke to on Saturday. He works in Windermere and lived in Troutbeck Bridge, just two or three miles up the road. He was evicted from his long-term let there, where he had lived for years, and he now has to live in Morecambe. It is a lovely place, but it is 30 miles away. He will soon have to give up his job. Good luck to his employer in finding anyone to replace him.

In the relatively small Yorkshire dales town of Sedbergh, 24 people were evicted during a two-week period in April. Not a single property is available on Rightmove to help those people. There is no doubt whatsoever of the reasons for that. I have some schools in our national parks reporting drops in school rolls of between a fifth and a third of their entire school numbers over the past two years. There are consequences to inaction. We are talking about the death of communities. It is happening as we speak.

We are seeing the annihilation of the workforce. In a study a few weeks ago, 63% of Cumbria Tourism’s members reported that they had to operate below capacity last year because they could not find staff. The workforce is being expelled at a rate of knots. What is the impact of that on our economy? Cumbria Tourism is the biggest employer in Cumbria, contributing £3.5 billion to the Exchequer. Our businesses are underperforming because they are understaffed, because the workforce has been cleared out. In Sedbergh, again, just a few weeks ago—in a snapshot of this one dales town—there were 104 unfilled vacancies. By the way, there are zero spaces available for any long-term let on Rightmove.

Look at the care sector. In the census report a couple of weeks ago, we saw a 30% rise in retirement age groups in our communities. Subsequently, there is a massive rise in the demand for care and a massive drop in the number of people available to provide that care. A tragedy is happening on our doorsteps and within our communities, and not just in the lakes and dales, but elsewhere in Cumbria and other parts of rural Britain. What we are seeing is the tragedy not only of divided families, but of lost services—the impact on schools under pressure and on bus services being lost because of a lack of an active, full-time population in our communities.

Those of us who live in or around a national park—I have the honour of representing two—are not trying to hold them tightly and keep them for ourselves. We want to share them with the country. We are stewards of our national parks for the whole country. However, due to Government inaction and the market being broken, we are seeing our communities and national parks being turned into no-go zones for anybody who is not a millionaire.

There is nothing in the Bill that even touches the sides of being able to tackle this crisis. I want the Government to tackle it with the urgency and speed with which the problem itself is developing. Rarely would we find anything like this amendment and these new clauses when looking at legislation, but they are genuinely the silver bullet to give communities the power to take back control and ensure that they breathe life back into those communities.

I will briefly talk the Committee through the amendment and the new clauses. New clause 38 would provide local planning authorities with the power to make a difference. Under current planning criteria, a permanent dwelling, a second home and a holiday let are all the same category of use, technically. Practically, of course they are not the same category of planning use; they are three very distinct categories. All that the new clause would do is allow local council planning authorities in the Lake district and the Yorkshire dales to be able to differentiate between the three. In a community such as Coniston, where more than half of the homes are not lived in all year round, the council will be able to set a cap and say, “No more.” These measures are about simply giving our communities the power to decide their own destiny.

I simply ask the Minister to take this matter seriously and accept the amendment and the new clause. Together, they would allow local communities to decide their own destiny, to prevent the clearance of a local working-age—indeed all-age—population and ensure that our national parks and rural communities, not just in Cumbria but across the country, are available to everyone, not just the wealthy.

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

It is a pleasure to serve under your chairmanship, Mr Paisley. I will be relatively brief, both because we have discussed these issues extensively in Committee and because the hon. Member for Westmorland and Lonsdale made the case so comprehensively, speaking about the communities in his constituency and the lives and livelihoods of those who make up the communities.

As I have said before, one need only speak to any hon. Member with acute housing pressures of the kind the hon. Gentleman set out to realise that the Government have not got the balance right between the benefits of second homes and short-term holiday lets to local economies and the impact of excessive concentrations of them on local people. It has also become apparent over the course of previous debates that there is a divide between those on the Opposition side and those on the Government side when it comes to how urgently and how boldly we must act to address the problems of excessive second home ownership and its staggering growth. The hon. Gentleman gave truly staggering figures of short-term holiday lets, showing the problems they cause around the country.

The Opposition are clear that we need urgent action in a range of areas to quickly bear down on this serious problem. There is no doubt in my mind that the introduction of new planning use classes could—along with a suite of other measures, because more measures would be needed—go a long way to restoring the balance that we all agree must be struck, giving communities back a measure of control that they do not currently enjoy. For that reason, we wholeheartedly support the amendments and urge the Government to give them serious consideration.

[Rachael Maskell (York Central) (Lab/Co-op)]

It is a pleasure to serve under your chairmanship, Mr Paisley. I want to add my support to these amendments. The issue seems to be that holiday destinations in particular have been hit by the Airbnb market. I am sure the hon. Member for Westmorland and Lonsdale will be hearing from many of his colleagues about the implications it has, whether they are from Cornwall or Devon, and it is now spreading across the country.

York has been hit, in particular over the pandemic. We have seen a 45% increase in Airbnbs over that period, and it is hitting our communities hard. According to today’s figures, there are 2,068 Airbnbs in my community. We are seeing an extraction economy, where money is being taken out of our local economy predominantly by people from London and the south-east, who can afford to buy these additional properties. They are clearly trying to make a profit, but it comes at the expense of our communities.

We have heard about the impact on public services and the local economy. Hospitality venues are now not able to open full-time for the guest economy, because they cannot recruit the necessary skills. It is skewing the whole economy and our public services, in particular care work, and that is now orientating into our NHS. It is jacking up the house prices in the area, and we are getting this heated housing market because demand is so great. We hear about people coming and buying six, seven or eight of these properties at one go.

The result of this increased demand is that local people are impacted. They are faithfully saving for their mortgage, but when they go to put an offer on a house, someone undercuts them by tens of thousands of pounds, because they know that they will get the return. Renting a property in York costs, on average, £945 a month. An Airbnb stay over a weekend costs £700. That is why we are seeing this massive reorientation. Section 21 notices are being issued to people in the private rented sector to move them on to make way for Airbnbs.

The undercutting of prices is also impacting on the regulated B&B and guesthouse market, and because Airbnb and second homes are not regulated, the health and safety is not there, and there are so many other checks that are not in place. A registration scheme, which I know the Department for Digital, Culture, Media and Sport is consulting on, is completely insufficient for addressing the challenge. It is a new challenge, and the Bill provides the Government with the opportunity to right the wrongs of what is happening and at the scale it is happening.

Creating these new classes would bring opportunity, but revenue can also be drawn from them. Many of the properties in question are classified under small business rates, so their owners do not pay council tax, but because they reach the threshold for small business rate relief, local authorities such as York are missing out on millions of pounds in revenue that they could get from such properties. It is therefore really important to categorise the properties and then look at how we use the categories.

I mentioned that in York we have 2,068 properties listed as Airbnbs; two weeks ago there were 1,999, so the number of properties that are going out to this new market is going up week by week. That is having a significant impact on York and York’s communities, so I trust that the Minister will not only support the amendment but engage in a wider discussion about what is happening to our communities, particularly in holiday destinations, so that we can ensure that, through this legislation, there is a suite of policies to ameliorate that market.

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[Tim Farron]

We have just talked about what we do with existing housing stock and about seeking to make sure that it is retained and that we increase the amount that is available for permanent occupancy, for all the reasons I set out earlier. The amendment would tackle extreme situations, using some admittedly extreme measures, to ensure that new build also provides for the needs of local communities.

I want to stop for a moment to make it clear that we are not saying, “Only homes for locals.” We are delighted for anybody to come to Cumbria to become new locals and part of our community, to work and to contribute. We are proud of our diversity and of being a welcoming community, but let us ensure that the houses we build are affordable.

It is a pleasure to represent the Lake district and the Yorkshire dales, as well as the Arnside and Silverdale area of outstanding natural beauty, which has many of the features, including some of the planning powers, of a national park. Any property that goes on the market in those areas will be snapped up within seconds for a premium price. That includes new properties that are potentially built for local occupancy. It is easy to get around the occupancy clauses: people can buy the properties and then turn them into holiday lets quite quickly or move away from the area and use them as second homes, so the occupancy clauses are no protection.

The amendment would give planning authorities in national parks, which face extreme circumstances, radical powers that they can use, in some circumstances, for a period of time. We are not saying that they have to use them, but the powers would be there and available to them. If the Lake district or the Yorkshire dales wished to say, as I am sure they would if they were given these powers, that they would permit only developments that were genuinely affordable, which would normally mean social rented or shared ownership properties, they would be able to enforce that.

The experience in the not-too-distant past, when national park planning authorities had greater powers in practice than they do today, was that such provisions worked. There is a wrong view, which I think is held by some in this place, that the more restrictions there are, the less development we get. That is baloney. Practice proves that that is not true. If authorities are crystal clear to developers, housing associations and others that this is what they will get, and no more, people will either come forward or they will not.

I can call on experience in places such as Grasmere; Ambleside, where the Methodist and Anglican churches worked together to provide new affordable housing with the support of the national park; Windermere, where a similar thing happened; Coniston; and Hawkshead. The communities there were the diametric opposite to nimbys: they actively went out to find land to develop, which people gave up cheaply; they worked and fundraised to make sure things happened; and they left properties in their wills to make sure that collaborations could happen and we could build affordable houses. One reason why that was possible was that people potentially leaving a bequest knew that they could trust the national parks to ensure that their property would end up being redeveloped in an affordable way for a local family, which also meant that developers were clear that that was all that would be on the table. The evidence from 20 years’ experience is that if we are more restrictive, clearer and more directive, we will get the homes that we need for communities such as mine.

The simple fact is that in many parts of the country—not just Cumbria but especially there—if we build it, someone will buy it. By not giving local communities that power, we are simply building for demand, not for need. We can carry on building for demand, but as a result, we will lose our workforce and there will be no one to care for the older people in our community, of whom there are many, in their need. The economy will dissolve because of that lack of workforce, and communities will die.

We need to ensure that we build the houses so that they are there and people can afford them, and that affordable means affordable. We need to ensure that the national parks can enforce those criteria for a period of time, so that we can solve this problem through what we do with our new builds, as we should be doing with the properties that already exist.

[Matthew Pennycook]

I thank the hon. Member for Westmorland and Lonsdale for tabling these amendments, the intention behind which we very much sympathise with. We know that excessive rates of second home ownership in rural and coastal areas are having a direct impact on the affordability, and therefore availability, of local homes, particularly for local first-time buyers. Correspondingly, we know that the marked growth in short-term and holiday lets in such areas is having a direct impact on the affordability and availability of homes for local people not just to buy but, as he said in relation to the previous group of amendments, to rent.

Research from CPRE, the countryside charity, makes it clear that our rural housing supply is disappearing and social housing waiting lists in rural areas are lengthening year on year. I agree with the hon. Gentleman that it is crucial that more is done to ensure that national parks and areas of outstanding natural beauty have not just more affordable homes but—I make the distinction—more genuinely affordable homes.

If I am honest, however, I am concerned about the implications of the blanket nature of the restrictions provided for by these proposals. Although there is no doubt in my mind that the provision of genuinely affordable homes to buy and rent must be the priority in such areas, I worry slightly about the potential for unintended consequences, such as ruling out the provision of housing for general demand, which might be needed in some parts of the country to sustain the life of communities.

That said, I appreciate that these proposals are premised on giving communities discretion as to whether they use these powers, and I recognise and support the point that the hon. Gentleman is making with them. I hope the Government respond constructively.

[Rachael Maskell]

I, too, am sympathetic to these proposals, but I want to point out an area of unforeseen consequence. My constituency is not an area of outstanding natural beauty—although I would argue that it is—or a national park, but we sit just beneath the Howardian hills, and the dales and moors are not far away. If these blanket proposals and bans are orientated to those areas, the challenge is that they could heat up the Airbnb market even faster, particularly in somewhere such as York.

On the application process for a world heritage site, it would seem sensible for a world heritage site to be included in the criteria. I would compare the measure with a residential parking scheme: as we know, if we restrict parking on one street, people tend to park on the next street along, and we just build out and out. That may happen if we do not give flexibilities and opportunities to all areas.

Although I am really sympathetic to the sentiment behind these proposals and to the powers they would give, the scope should be broadened to enable all authorities to have the opportunity to control the housing and the lease of housing within their governance.

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[Tim Farron]

I am happy to support this group of amendments and new clauses. Flood resilience is of huge importance. We are dealing with extreme weather—today is an example, but there are other days that are extreme in a different way. In my part of Cumbria, in the past 18 years we have had two storms deemed to be one-in-100-year events, and a third that was deemed to be a one-in-200-year event. That does not add up, does it? It is because our weather and our climate are changing. We need to mitigate, prepare and build to protect homes, families and businesses.

Most recently, in 2015 Storm Desmond devastated the town of Kendal as well as many parts of Burneside, Staveley and other communities. The human and economic consequences are vast, and vastly greater than spending money up front to do the right thing in the first place. It is very wise to build into the Bill powers to ensure that neighbourhood development plans and planning controls can bring on board very powerful bodies that otherwise might seek to shirk their responsibility to ensure people are protected. I am thinking in particular of the water companies, which made nearly £3 billion in profit last year, and the extent to which they are compelled to ensure their drainage and other facilities can cope with new development, not just in that small parcel of land but as regards the impact on the wider community.

There is also the work with farmers, who are desperate to be part of the solution, to make sure we retain water in the uplands so that we slow the flow and minimise the impact on communities. The River Kent is one of the fastest-flowing rivers in the country and only 20 miles or so long from source to sea. When floods come they are dramatic, but the water can be down to quite a reasonable level within 24 or 48 hours. It therefore stands to reason that if we can hold back some of that water in the uplands by investing there and supporting farmers to do that, we can save millions of pounds and thousands of people from the terrible experience of being dramatically flooded.

It is about making sure we build in those things in the first instance. As we speak, we are building flood resilience networks in Kendal: both what can be seen by the river in the town and what cannot be seen up in the hills, where we are seeking to retain the water by tree planting, bunding and other work to slow the flow. We should be doing that sort of stuff in advance, before communities get devastated, as happened to mine. That is why the amendments are important. They are about making sure we build resiliently for the future so that other families do not have to go through what families in my community did in December 2015, with the devastation of soggy, sodden Christmas presents and wrecked Christmas trees on the sides of streets in the estates and people utterly devastated by what they had experienced, unable to get back into their homes for six months or more. Surely it is possible for us to prevent these things. With the right powers and provisions, we can.

[Matthew Pennycook]

I rise to strongly support this important group of amendments, and I congratulate my hon. Friends the Members for Kingston upon Hull West and Hessle and for York Central on proposing them. It is right that my hon. Friends seek to amend the Bill to ensure that planning rules on flood prevention and mitigation are strengthened and that the planning system responds better to the challenges associated with drought. As has been said, the amendments would not only ensure that we enhance the resilience to flooding of communities across England, but reform how the insurance and reinsurance markets operate in terms of data accuracy and how premiums take into account mitigations and defences, as well as beneficially extending reinsurance to small and medium-sized enterprises.

Although I am more than happy to acknowledge the positive steps taken by the Government on flood prevention and mitigation in recent years, such as the publication of the adaptation communication 18 months ago and the investment allocated to improving flood defences up to 2027, it is clear that there has been an absence of cross-departmental working when it comes to addressing the issue explicitly in the Bill. When the adaptation communication was published in 2020, it promised that climate mitigation would be integrated across Government Departments, including, most importantly in this case, infrastructure and the built environment. It is therefore problematic that the Bill lacks any explicit reference to flood mitigation and, indeed, references the term “flood” only once in relation to what charging authorities may spend the proposed infrastructure levy on. It is laudable that mitigating and responding to climate change has been included in the Bill as a new requirement for development plans and spatial development strategies. However, the Bill as a whole does nowhere near enough to address the specific issue of the susceptibility to flooding experienced by so many of our communities.

The risk and frequency of flooding will only increase as global temperatures rise and its effects, as hon. Members will know, can be devastating, not only in terms of its impact on people’s lives but on businesses and the economy. How can we plan, for example, to respond to the increased frequency and potency of flooding events when surface water flood hazard maps for the UK have not been improved upon since 2013? They urgently need updating. Indeed, that issue speaks to a wider concern, which is the dearth of accurate, up-to-date and publicly available data about flood prevention and risk. If accepted, new clause 3 would ensure that data, so that property owners could better plan for surface water flooding in areas at risk and, importantly, insurers could more accurately assess risk and therefore insurance premiums. There is widespread support in the sector for the amendments for that very reason.

When it comes to insurance, the introduction of a certification and accreditation system for flood prevention and mitigation improvements, which new FCA rules would ensure were taken into account in setting rates, is an entirely sensible reform that should help lower premiums. I hope the Government will consider accepting new clauses 4 and 5 on that basis.

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[Rachael Maskell]

I am grateful for the debate. I thank the hon. Member for Westmorland and Lonsdale for highlighting the importance of the upper catchment management work, which is so necessary for mapping what will happen across other communities, and the Environment Agency’s commitment and the work it is doing in that arena.

My hon. Friend the Member for Greenwich and Woolwich hit the nail on the head when he talked about the importance of cross-governmental working, which is clearly not at an optimum at the moment when addressing issues around flooding. While the Minister has talked through a number of steps the Government are taking, I refer him back to the 2016 national flood resilience strategy, which highlighted the importance of co-ordination across Government and of ensuring that resilience was built into the system. That is not happening at the moment. As much as policy may aspire to that, it has further to go. The amendments are therefore still relevant as the Bill does not meet the requirements of the communities that currently flood, and those that will flood in the future as we see weather patterns change and risk increase.

I am not planning to press the amendment to a vote, but I hope the Government will reflect on it, and on my amendment about drought, because this is a significant and serious issue. Right now we recognise that as we move forward we need to build in how we have sufficient water supply. That will be increasingly important. I reserve the right to bring the issue back up on Report, and to give the opportunity to my hon. Friend the Member for Kingston upon Hull West and Hessle to table her amendments too. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Matthew Pennycook]

I beg to move amendment 110, clause 88, page 95, line 17, at end insert—

“(5) After subsection (4) insert—

‘(4A) A neighbourhood development plan which is in effect on the day on which section 88 of the Levelling-up and Regeneration Act 2023 comes into force may remain in effect contrary to the provisions of that section no longer than until the end of the period of five years beginning on the day on which that section comes into force.’”

[The Chair]

With this it will be convenient to discuss the following:

Clause stand part.

Clause 89 stand part.

New clause 35—Report about uptake of neighbourhood development plans—

“(1) Section 38A of PCPA 2004 (Meaning of “neighbourhood development plan”) is amended as follows.

(2) After subsection (11C) insert—

‘(11D) The Secretary of State must prepare and publish an annual report on the uptake of neighbourhood development plans. The report must, in particular, set out—

(a) the uptake of neighbourhood development plans in less affluent neighbourhoods,

(b) the uptake of neighbourhood development plans in urban neighbourhoods, and

(c) the steps that Government are taking to increase this uptake.’”

[Matthew Pennycook]

Statutory neighbourhood plans became part of the system in 2011 when they were introduced under the Localism Act 2011 as a formal part of the development framework. The concept of neighbourhood planning is far from problem free, but we support it in principle as an important means of giving communities a greater say in where future development takes place, how it is designed and what infrastructure is provided with it.

To the extent that it enables communities better to shape development in any given area, neighbourhood planning can—although it is by no means always the case—increase public engagement, reduce the number of objections to planning applications and boost housing supply over and above local authority targets. As the Minister noted previously, neighbourhood plans can also provide communities with an important tool to mitigate the impact of acute housing pressures in their localities—for example, on the issue of excessive rates of second-home ownership and the marked growth of short-term and holiday lets that we have considered a number of times.

Clause 88 is a straightforward one in that it merely confirms the statutory role of neighbourhood planning and sets out a list of the policies and requirements that a neighbourhood plan may include. We welcome that confirmation and clarification, as well as the sensible new requirement set out in proposed new subsection (2B) for the qualifying body to design its neighbourhood plan, so far as it considers it appropriate, in such a way that it contributes to the mitigation of, and adaptation to, climate change.

I wish to raise two specific issues with the Minister, one that relates directly to the implications of the clause for existing neighbourhood plans and another that relates to the future of neighbourhood planning more widely. The first issue concerns potential conflict between a neighbourhood plan and a national development management policy. As the Minister would expect given the arguments we have set out in previous debates, we take issue with proposed new subsection (2C)(b) under clause 88, which stipulates that a neighbourhood plan cannot be inconsistent with any NDMP. However, given that I have set out the Opposition’s reasoning on that issue in considerable detail in relation to both clause 83 and schedule 7, and proposed new paragraphs 15(c) and 15(ca), I do not intend—the Minister will be relieved to hear—to rehearse our arguments once again in the specific context of neighbourhood plans. I do want to know what will happen in the case of any one of the 1,061 neighbourhood plans, which have already been approved via referendum, that turn out not to be consistent with an NDMP published in the future.

--- Later in debate ---

[The Chair]

Mr Pennycook, are you going to continue to live in hope?

[Matthew Pennycook]

I will continue to live in hope—we may get there one day. I am grateful for the Minister’s response; I noted carefully what he said about transitional arrangements, and I think I understood it. However, if he will allow me, I will perhaps at come back to him a later date to seek further clarification on precisely how an existing approved neighbourhood plan could be brought into line with future NDMPs, because there remains a slight concern about the implications.

On take-up, I am disappointed, as the Minister would expect. He will not accept what is, as I said, not a particularly onerous requirement to produce an annual report that sets out progress towards the objective. However, I hear what he said about pilots, and I am very interested to see the work that they produce. The key point, which I think he accepts, is that neighbourhood priority statements for less affluent and complex urban environments cannot be the only means of driving uptake. To drive uptake, we must do much more in a variety of areas. However, he has partly reassured me, and on that basis I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 88 ordered to stand part of the Bill.

Clause 89 ordered to stand part of the Bill.

Clause 90

Requirement to assist with certain plan making

[Matthew Pennycook]

I beg to move amendment 104, in clause 90, page 96, line 15, leave out “public”.

This amendment, together with Amendments 105 to 108, would enable plan making authorities to require a prescribed private body to assist the authority in relation to the preparation or revision of a relevant plan by the authority.

[The Chair]

With this it will be convenient to discuss the following:

Amendment 105, in clause 90, page 96, line 18, leave out “public”.

See explanatory statement to Amendment 104.

Amendment 106, in clause 90, page 96, line 23, leave out “public”.

See explanatory statement to Amendment 104.

Amendment 107, in clause 90, page 97, line 4, leave out “public”.

See explanatory statement to Amendment 104.

Amendment 108, in clause 90, page 97, line 5, leave out

“and certain of whose functions are of a public nature”.

See explanatory statement to Amendment 104.

[Matthew Pennycook]

Clause 90 inserts new section 39A into the Planning and Compulsory Purchase Act 2004, setting out a requirement on specific bodies to assist in the plan-making and plan-revising process. The explanatory notes to the Bill make clear that the clause is intended to support the more effective gathering of the information required for local planning authorities that produce local, strategic, supplementary and other forms of plans.

It appears to us that the clause is the Government’s answer to the question of how to sustain engagement and co-operation between plan-making authorities and relevant bodies after the removal of the duty to co-operate, which is an issue that we debated in relation to schedule 7. However, it is not at all clear how the clause interacts with the Government’s stated intention to introduce a “more flexible alignment test” in planning policy. I would be grateful—again, we have touched on the issue—if the Minister could set out in more detail precisely how the clause and that forthcoming alignment test will ensure that there is sufficient engagement and input in the plan-making process on the part of those bodies that are important contributors to the process of delivering infrastructure at local or strategic levels.

That question aside, we welcome the new duties that the clause places on infrastructure providers to engage with the production of local plans, which is an entirely sensible measure. However, we question why the prescribed bodies referred to in the clause are confined to those that are public. If one considers even for a moment which types of body it might be useful and necessary for a plan-making body to engage in terms of the information required for the production of a plan, it quickly becomes apparent that they would include private infrastructure providers—for example, private utility companies.

Amendments 104 and 105 to 108 would revise clause 90 in a way that would enable plan-making authorities to require prescribed private bodies to assist in the plan-making and plan-revising process. They achieve this simply by clarifying that prescribed bodies need not be public in terms of their ownership or have functions that are entirely of a public nature. The Minister will no doubt surprise me with the ingenuity of his reasoning as to why the amendment is unnecessary, but I cannot imagine what reason the Government have to oppose it. I look forward to the Minister’s response.

[Tim Farron]

This is a really useful amendment, and I hope that the Minister takes it seriously. Utility companies have been mentioned already. When I think of Openreach, or United Utilities, a water company in my part of the world, I think about the impact that these businesses have on our communities. The infrastructure that they oversee and are responsible for is fundamental to the wellbeing of those communities. For example, we have seen sewage on the streets in places such as Staveley and Burneside, and the answer from United Utilities is, “Put it a bid, and we’ll look at it in our next-but-one funding round.” Surely communities ought to have the ability to say to United Utilities or other water companies, or to broadband providers and other such bodies, that their access to the greater public realm and their almost monopoly position in the market mean they have a responsibility to those communities, which will be overseen by those in local authorities who have the right to make these decisions.

It is right that private bodies should be included; it should be specified in the clause. The amendment would help communities like mine to bring in hugely powerful and very wealthy outfits such as Openreach and United Utilities, so that they perform the role they should perform—to provide for every part of our community—and do not take advantage of their power and strength over the relative weakness of local authorities.

[Mr Jones]

As you have probably gathered during Committee sittings, Mr Paisley, I am not necessarily one for surprises, especially on such a hot and sunny day.

The Government support giving local authorities the full range of powers necessary to prepare robust plans. I can offer reassurance that that is our intention. The power as drafted will apply to those private sector bodies that authorities are likely to need to involve in plan making. Clause 90(6) sets parameters for which bodies can be prescribed. It requires them to have functions “of a public nature.” That might, for example, include utilities companies, which are privately owned but serve an important public function and should be proactively involved in the plan-making process. The clause does not exclude relevant private bodies where they are involved in public provision, but the amendments potentially extend the requirement to private landlords, voluntary groups and unrelated businesses, which would be disproportionate where those bodies do not have public functions that are likely to be relevant to plan making.

On alignment policy, the policy will require local planning authorities to engage with neighbouring authorities and bodies involved in their area. That will be covered in the future national planning policy framework. The power places the obligation on the bodies involved. I hope that with those reassurances the hon. Member for Greenwich and Woolwich will feel able to withdraw the amendment.

[Matthew Pennycook]

To surprise the Minister—it is the other way round—I am entirely reassured by his response. The language in the clause is about allowing for private infrastructure companies to be involved in the plan-making process in terms of the provision of information. That is what I took from what he said. I appreciate what the Minister said about the potential disproportionate impact from drawing in other types of bodies; that was not the intention. On that basis, I am content and beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Rachael Maskell]

I beg to move amendment 135, in clause 90, page 96, line 30, at end insert—

“(3A) Where regulations under this section make requirements of a local authority that is failing to deliver a local plan in a timely way, the plan-making authority must consult the local community on the contents of the relevant plan.”.

This amendment would require, in the event of a local authority failing to deliver a local plan in a timely way, those taking over the process to consult with the community.

I will not labour the point because we have already had extensive discussions about the need to break the deadlock in the planning system. York is a very live example of that need: the local plan is going through a very painful process and we are absolutely determined to see the plan amended rather than being imposed. To break the deadlock and to be able to move forward, it is right that communities get a greater say. I do not plan to push the amendment to a vote today, but I trust that the Minister is hearing the importance of being able to engage with communities in order to get the right outcomes in the planning system, particularly where there is deadlock and we are on the naughty step, or at the special measures stage of the process.

Levelling-up and Regeneration Bill (Seventeenth sitting)

Matthew Pennycook Excerpts

Committee Debate: 17th sitting
Tuesday 19th July 2022 Public Bill Committees

[Mr Jones]

Clause 96 is a placeholder clause. The Government’s intention is to replace it with substantive provisions later in the Bill’s passage.

New development is commonly met with hesitance from local residents—it is often perceived as a threat to the beauty of the area or as an unwanted disruption—usually because residents see it as imposed upon them and bearing little relationship to the character of the area. Fundamentally, people are more likely to support development that they feel they can control.

Street votes will provide a new way of consenting to development that will enable residents to come together and bring forward the development they want to see on their streets. A group of residents will be able to develop proposals to extend or replace properties on their street. They will have the option either to provide a detailed development specification, or to prepare a design code that any development they permit must comply with. Development proposals put forward by residents will be independently examined against a set of development and design rules set out in legislation to ensure that they meet high design standards and do not lead to adverse impacts on the local environment and the wider community. Planning permission will be granted only when an examining body is satisfied that the proposal has met these and other statutory requirements, and when the proposal is endorsed by a large majority of residents at referendum.

The use of street votes will be restricted in sensitive locations, such as the green belt. Street votes will encourage residents to consider the potential for new development on their streets. Where residents choose to take up the opportunity, street votes will help to deliver new or more spacious homes in places where they are most needed and in a way that is supported by the people who are most affected by that development. I commend the clause to the Committee.

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

As the Minister has made clear, clause 96 is a placeholder clause. All it specifies is that the Secretary of State may by regulations make provision for a system that permits residents of a street to propose development on it and to determine, by means of a vote, whether that form of development is given planning permission. At the outset, I have to put on the record that we are instinctively uncomfortable with placeholder clauses of this kind. They are an implicit admission that a piece of legislation is incomplete and that policy in a given area has not been finalised. The absence of any detail about what substantive provisions might replace such placeholder clauses in future is an impediment to effective legislative scrutiny.

Furthermore, the increased use of placeholder clauses in recent legislation, as well as the general upward trend in the number of amendments that add new policies to a Bill part way through its passage or following completion, should be a cause of concern to any hon. Member who values good lawmaking. Nor are we satisfied with the reassurances set out in the explanatory notes to the Bill that any new system introduced by means of the clause will receive appropriate scrutiny—we are all familiar with the limitations of an affirmative procedure in that respect. We therefore seek from the Minister some sense—further to what he has just said—of what the new system will look like, how it will operate in practice and what its wider implications might be.

The basic concept of street votes is easy to grasp. We certainly appreciate that, at least in theory, democratically approved codes that permit development, or the extension or redevelopment of all the properties on any given street, may be a way to facilitate the gentle densification of inner suburbs—an outcome that would undoubtedly have a range of benefits, not least boosting productivity. The issue is whether and how such a system would work in practice. My strong suspicion is that any new street votes system introduced will likely be something of a damp squib and, ultimately, we will not see any significant uptake, which is largely why I struggle to get too worked up about the prospect of its introduction.

However, given the powers that the Government are seeking for themselves by means of the clause, we do need some answers from the Minister, and I ask that he provides them on six distinct areas. First, we deserve to know why the Government believe that an entirely new system for the hyper-local devolution of planning powers is required or, to put it another way, what problem are the clause and the substantive provisions to follow attempting to address.

I ask because the Minister will know that the Localism Act 2011 gives neighbourhood forums the power to create and vote on neighbourhood development orders. Such orders grant planning permission for specific types of development in a particular area following a referendum, thus enabling greater control over development, densification and design. That is essentially the same principle that lies behind the street votes concept. As such, is it not simply the case that for all the hype around the clause, it does little more than adjust the electorate for neighbourhood development orders from the neighbourhood level to the street? If that is the case, should we view the intention to introduce a new street votes system as an admission that NDOs have failed to achieve the objectives that the Government set for them, and what makes the Government think that street votes will be any more successful as an initiative?

Secondly, we should be told why the Government believe that a street is the appropriate spatial area for the powers. The Minister mentioned that it might give residents a greater sense of control but, further to the question I just put to him on neighbourhood development orders, is the choice of a street as the appropriate spatial area related to evidence that the size of the electorate involved in approving NDOs is the reason that initiative has not been taken up more extensively? Do the Government have any reason to think that street-level democratically approved codes will be utilised more extensively than NDOs?

Thirdly, we need to know what the Government believe the impact of street votes will be on housing supply and affordability. It stands to reason that successful street votes are likely to lead to substantial value uplifts for those properties that use the planning permission secured as a result. If a street votes to permit mansard roof storeys to be added to existing terraces, the homeowners who take advantage of that will increase the space within, and value of, their properties. However, I struggle to see how the benefit that those homeowners will gain from the new system will be shared in any way by those who do not already own their own home.

Street votes are unlikely to contribute much, if anything, to new housing supply. In practice, how many residents are likely to organise themselves to secure new powers to provide for infill development on their street? I suggest not very much. If, as seems more likely, street votes are largely used to add space and value to existing properties, the system could end up making it harder for first-time buyers to get on the housing ladder. Can the Minister therefore tell us whether the Department has modelled the likely impact of a street votes system on housing supply and affordability, and whether it is likely to exacerbate existing housing inequality? If not, why not, and will they do so before we get to Report and Third Reading?

Fourthly, local planning authorities deserve an indication of how the Department will assist them financially to carry out the new demands that will be placed on them as a result of the introduction of a new street votes system. We have already debated in previous clauses the parlous state of local planning authorities when it comes to capacity and resources. We have considered the new burdens placed on them as a result of numerous measures included in the Bill. If a street votes system is introduced, the Government must ensure that councils are given sufficient resources to oversee it.

We cannot have a situation, as we do at present with neighbourhood plans, where the cost of sending a plan to referendum nearly always outstrips the amount that local authorities can claim from central Government to hold them. The Government must also ensure that we do not replicate the problems experienced in the uptake of neighbourhood plans, with only affluent communities able to take advantage of them. What resourcing can local authorities expect to run a new street votes system? What steps will the Government take to ensure that less affluent communities are able to take advantage of it?

Fifthly, given the concerns expressed that street votes could prove to be an extremely divisive measure to relations between neighbours on a street, we deserve some sense of how the process might work. Will there be a minimum number of residents in any given street required to bring forward proposals to extend or redevelop properties on it, or can a single resident do so? If it is the case that a single resident can submit a proposal, what safeguards are in place to ensure that local authorities do not constantly have to put different proposals to a referendum of residents on a street?

Surely a vote should not pass if a significant minority of residents on a street are opposed to it. I think the Minister mentioned a large majority, but what does that mean? What threshold will apply to a street referendum? Are the Government minded to adopt the recommendation, made by Create Streets, that it be at least two thirds of residents on the electoral register, or Policy Exchange’s suggestion of at least 60% of votes cast? We all know that nothing gets as bitter as a dispute between neighbours, so I would like the Minister to respond to my questions and tell the Committee that the Government’s thinking when it comes to the process by which planning permission via this new system will be secured.

Finally, we need to know how a new street votes system will interact with local development plans and the Government’s wider housing and planning policy objectives. It is an obvious question, but could the Minister confirm that any street votes proposal will have to be in conformity with a local development plan in order to proceed to a vote? I think he mentioned that the new proposals must be examined: does that mean they need to be compliant with a local development plan in order to move to a vote?

How will a street votes system work in an area with a neighbourhood development order already in place, or a design code adopted as part of it? Again, will any proposals need to be found to be in accordance with an existing NDO or design code before it can go forward? Will the new provisions that the Bill puts in place for neighbourhood plans to ensure that they consider climate change mitigation and adaptation apply to street vote proposals, and will similar safeguards be put in place as those that clause 89 provides for in relation to neighbourhood plans, ensuring that street votes cannot be used to block development from taking place?

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[Matthew Pennycook]

As the Minister outlined, clause 97 of the Bill inserts new sections into the Town and Country Planning Act 1990 to provide for two new routes to apply for planning permission in respect of the development of Crown land in England—that is, land in which there is a Crown or Duchy interest. In the case of either route, the provisions in the clause will allow the appropriate authorities to apply for planning permission direct to the Secretary of State, rather than being subject to the same requirements and the same application processes as any other person undertaking development.

In such circumstances, the Secretary of State must notify the local planning authority whether or not they intend to decide the application. If they opt to determine it themselves, they can approve it conditionally or unconditionally or refuse it. They have to consult the local planning authority to which the application would otherwise have been made, but the authority would have no right to veto it.

The policy paper accompanying the Bill portrays the clause as a means simply to

“provide a faster and more effective route for urgent and nationally important Crown development”,

but we are concerned that, in practice, its effect is likely to be far less benign. Specifically, we are concerned about the implications of introducing such an open-ended measure, in terms of both removing appropriate and necessary limits on the exercise of Executive power and denying communities a chance to express views about development in their area and to signal their consent or opposition.

We appreciate fully that there are emergency situations where it is necessary to expedite the planning application process to facilitate essential development, and the construction of the seven Nightingale hospitals during the pandemic to provide critical and step-down care for patients is probably the best recent example—the process exists by which they could come forward, and they did. However, the broad scope of the provisions in the clause, which do not provide for any limit on the type of development that can be approved directly by the Secretary of State or in what circumstances, means that it could be used for a much wider range of proposals.

Let us take the system of large-scale accommodation centres that the Government have announced they intend to establish to house people seeking asylum while they await a decision on their claim. The system includes the “new, bespoke, reception centre” the Government plan to open on an ex-RAF base in Linton-on-Ouse in North Yorkshire for up to 1,500 people—a development that the hon. Member for Thirsk and Malton (Kevin Hollinrake) has raised serious concerns about on a number of occasions.

The Committee will know that the Government have variously opened, or signalled their intention to open, centres accommodating—I use the term “accommodating” very loosely—asylum seekers in Penally in Pembrokeshire, Napier in Folkestone, Barton Stacey in Hampshire and in the shadow of Yarl’s Wood in Bedfordshire. All the sites were either on, or proposed for construction on, Crown land. All have been subject to controversy and, in the case of Penally and Napier, legal challenge—not least because of the lack of consultation with local communities in the areas where they have been, or were proposed to be, situated.

[Rachael Maskell]

I have very much been involved with the community around Linton-on-Ouse. The fact that there has not been any proper consultation on transportation issues or on the impact on the local community has caused real concern that the Government will just press ahead with these developments without considering those issues. Does my hon. Friend agree that a more thorough, thoughtful process needs to be put in place? Also, should we really be offering refugees this type of accommodation? They are clearly in a desperate situation and need community to be wrapped around them, not to be isolated away from people and services.

[Matthew Pennycook]

My hon. Friend gets to the heart of the matter. Our concern is that the powers provided for by the clause will facilitate precisely what she suggests: the driving through of centres such as the one in Linton-on-Ouse, regardless of their impact on the people placed in them or the local communities in which they are situated.

My understanding—the Minister is welcome to correct me—is that in establishing Penally and Napier, the Government sought to rely on schedule 2 to the Town and Country Planning (General Permitted Development) (England) Order 2015, which relates to permitted development rights. In the case of Napier, the Home Secretary granted herself permission to extend the life of the facility for a further five years, without any public consultation, by using a special development order provided for by delegated legislation. In a judgment handed down on 24 June 2022, the High Court ruled that decision unlawful.

Why have I explained that history at length? Because it is difficult to be aware of that history and not assume that the powers in clause 97 are being introduced to provide a more definitive way of securing planning consent for development on Crown land, such as for asylum centres, irrespective of the harm that such centres might cause for those placed in them, or their impact on local communities, who under the clause will be denied any right to influence a decision taken by the Secretary of State without public consultation.

I listened carefully to the Minister, who was quite clear that the powers will be used only in “moments of crisis” and in “exceptional circumstances” when there is a clear and urgent need to do so in the wider public interest. The Minister can correct me, but I see nothing in the Bill defining “exceptional circumstances”, “issues of national importance” or a “clear and urgent need”. Labour feels strongly that it is essential to insert appropriate safeguards into the clause to ensure that there are limits to the use of these powers and that minimum requirements are in place to secure some measure of consent from affected local communities. Without a firm commitment that such safeguards will be introduced at a later stage, we believe that the clause needs to be removed from the Bill. I look forward to the Minister’s response.

[Tim Farron]

I agree that the clause is too much of a blank cheque for the Government. The Minister said in support of the clause that the powers are for emergency use only, but if that is the case, he needs to set out far more specifically the terms for their deployment.

Members have spoken about asylum centres and the powers being a potential route to securing such sites. My concern is for those who are seeking asylum and going through that process. Having visited Napier barracks, I can tell the Committee that those who work there are good people who do their best to provide for the people staying there, many of whom have suffered huge trauma as a result of unimaginable experiences that we have never been through ourselves. There is no doubt, however, that that kind of camp-style site is no place for people who have escaped dreadful things and sought asylum. They are dealing with trauma and mental health issues, and have experienced appalling things. We are seeking to help them—I hope, given that the majority of people who make claims are genuine refugees and will, in time, be given the right to settle here—but how do these places help them to immerse and integrate themselves into society? That is just an aside on one of the potential uses of the clause and why it is particularly dangerous for those people, who are the most vulnerable in our society.

If we care about democracy—we are talking about levelling up and giving communities power—the Bill should not contain such an open-ended clause that seeks to undermine that power. I can understand why a Government would need emergency powers in some circumstances, but they should specify them, because otherwise the clause looks like overreach.

--- Later in debate ---

Minor variations in planning permission

[Matthew Pennycook]

I beg to move amendment 114, in clause 98, page 114, line 21, leave out lines 21 to 28.

[The Chair]

With this it will be convenient to discuss amendment 115, in clause 98, page 115, line 20, at end insert—

“(12A) In relation to an application for planning permission that is made to, or is to be determined by, the Mayor of London, a reference in this section to the local planning authority is to be read as a reference to the Mayor of London.”

[Matthew Pennycook]

Clause 98 is relatively straightforward, in that it simply makes provision concerning minor variations to planning permission, allowing for greater flexibility to make non-substantial changes that would not be possible at present without the submission of multiple applications by various different routes. We broadly welcome it: the change it will give effect to is long overdue, and it will simplify arrangements currently in place that were only ever intended as a short-term holding position. However, we believe that amendments 114 and 115 are necessary to ensure that the clause works as intended by resolving two issues of concern.

First, current arrangements ensure that if a variation to planning permission is sought, whether prior to completion or post completion, the circumstances of the day are taken into account when determining the section 73 application. That includes the policies in place at the time and any other material considerations. As drafted, clause 98(7) suggests to us that the circumstances at the time of the original grant of permission would be the framework for determining applications in future. We are concerned that this would mean, for example, that if a new local plan had been adopted since the original permission, that plan—which might, for example, include more stretching environmental standards—could not be applied in deciding whether or not to grant the section 73 application.

Similarly, many section 73 applications relate to the number of residential units or to floor space. As drafted, we are concerned that the decision maker would not be able to revisit the viability information or amount of affordable housing provided by the scheme, potentially creating a significant loophole that enables the avoidance of key policy requirements. We believe local planning authorities should be able to consider up-to-date planning policy and/or guidance when determining such applications to guard against adverse consequences, such as the prevention of increases in affordable housing or the application of more ambitious sustainability policies. Amendment 114 therefore proposes the removal of subsection (7) from the clause.

The second issue of concern relates to those powers devolved to the Mayor of London concerning strategic planning applications. As the Minister knows, the Mayor has powers to become the decision maker for strategic planning applications subject to certain provisions. However, we are concerned that the Bill as drafted only provides for the Secretary of State’s call-in powers, leaving a vacuum in relation to the mayoral powers. Amendment 115 therefore inserts new language after clause 98(12) to ensure that the powers of the Mayor of London to call in applications in accordance with the terms of the Town and Country Planning (Mayor of London) Order 2008 are taken into account. I hope the Minister will consider accepting both amendments.

[Mr Jones]

First, I want to thank the hon. Gentleman for his proposal in amendment 114, which seeks to remove subsection (7) of proposed new section 73B under clause 98. The effect of the amendment would be to broaden the scope of planning assessment and allow local planning authorities to reconsider the principle of development established under the existing permission to which the variation is sought under proposed new section 73B.

The purpose of the reform is to provide a clearer process for enabling sensible and practical changes to be made to planning permissions that are not possible under the existing framework without the submission of multiple applications under different routes. I am sure we can agree about the importance of ensuring that the planning system is flexible, responsive and proportionate to changes of circumstances to facilitate the delivery of appropriate development.

We are resisting the amendment because it goes against the overarching objective of allowing permitted schemes to evolve where changes are required without having to start the planning application process again. If we were to agree to the amendment, local planning authorities would be empowered to look again at the principle of development for the proposal and refuse it, even though the application may only be for a minor variation. That would undermine the new process and make it more difficult for developers to manage minor change through the planning system.

The ability to amend an existing grant of planning permission is an important flexibility afforded by the planning system. Clause 98 seeks to improve the current framework for varying a planning permission by providing a clearer, more certain and proportionate process for planning authorities, communities and applicants.

Post-permission changes to respond to, among other things, specific design matters and external factors is a common and critical part of the development process. Enabling flexibility for minor changes to development can support delivery in changing circumstances. In the majority of cases it is not proportionate or reasonable to require a new planning application or revisit the principle of development.

Under clause 98, the hon. Member for Greenwich and Woolwich can be assured that the new power has been drafted to ensure that planning permission under the new power will be permitted only where the local planning authority is satisfied that its effect will not be substantially different from that of the existing permission. Local planning authorities have the power to determine whether changes would constitute a substantial difference from the existing permission on a case-by-case basis. That allows for consideration of local and development-specific context.

The “substantially different” test would be assessed against the existing planning permission to ensure that the cumulative impacts of changes to a permission are acceptable in planning terms. In addition to consideration of the existing permission, the planning merits of the proposed change may include consideration of any previous changes made to the existing permission.

I can also assure the hon. Gentleman that the process for applications made under proposed new section 73B will be set out in secondary legislation. We will consult on the details of publicity and consultation for the applications following the passage of the Bill, but I want to emphasise that we will seek to engage widely with the sector to ensure that the new route works. I therefore hope that the hon. Member will withdraw amendment 114.

Amendment 115 would clarify that section 73B of the Town and Country Planning Act 1990 applies to the Mayor of London, in his capacity as local planning authority, when determining applications of potential strategic importance. It is similar to the provision under subsection (12) of that Act for the Secretary of State when he is determining applications under that section.

Although I agree with the principle behind the amendment, it is more appropriately addressed by a consequential amendment to section 2A of the Town and Country Planning Act 1990. That Act provides that if the Mayor is determining applications of potential strategic importance, he is the local planning authority, and the references to local planning authorities in new section 73B should apply to him.

It is likely that a number of consequential technical amendments will need to be made to provisions in the Town and Country Planning Act as a result of the introduction of section 73 provisions to vary permissions. We propose to use the powers set out in clause 191 to do that. This specific example is one such amendment that we could consider. In view of my explanation, I respectfully ask the hon. Member to withdraw his amendment.

[Matthew Pennycook]

Amendment 114 raises an extremely technical matter. I listened carefully to the Minister and I will revisit what he said. I hope he understood that I mean that planning applications must evolve when changes are required. The amendment does not seek to ensure that the principle of development is ever revisited, just that when minor variations are applied for, that updated planning policy and guidance are taken into account. We think that is important. I will go away and study carefully what he said.

On amendment 115, I am grateful for the clarification about where these matters might best be dealt with. I am grateful that the Minister will go away and give that further consideration. We think that the Mayor’s powers need to be formally taken into account when making the changes that the clause makes. On that basis, I am happy not to press either amendment, and I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

[Mr Jones]

On the basis of the debate on amendments 114 and 115, I commend the clause to the Committee.

Question put and agreed to.

Clause 98 accordingly ordered to stand part of the Bill.

Ordered, That further consideration be now adjourned. —(Gareth Johnson.)

Draft Building Safety (Leaseholder Protections) (Information etc.) (England) Regulations 2022

Matthew Pennycook Excerpts

Monday 18th July 2022 General Committees

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

It is a pleasure, as ever, to serve with you in the Chair, Mrs Murray.

As the Minister has outlined, sections 116 to 125 of, and schedule 8 to, the Building Safety Act make provision in relation to remediation of certain defects in buildings and, importantly, include protections from liability for leaseholders in specific circumstances. The Minister knows that the Opposition argued trenchantly throughout the passage of the Bill for all blameless leaseholders facing potential costs to fix historical cladding and non-cladding defects to be fully protected irrespective of circumstance. We still firmly believe that that is the only just response to the building safety crisis.

Although they fall short of what we had hoped to secure, the leaseholder protections in the Act are none the less significant. The regulations before us detail how leaseholders will secure those protections. It is therefore essential that they are approved today, and we have no intention of opposing this statutory instrument. However, I must put five questions to the Minister about the regulations, and I hope he will respond in detail—if not in Committee, then in writing to me over the coming days.

The first is a procedural question relating to the date that the Building Safety Act came into force. The Minister will be aware that the main statutory provisions in the regulations came into force with the Act itself on 28 June 2022. However, in practice, those provisions cannot operate until the regulations before us are approved. My question is therefore: why was the Act brought into force on 28 June before the regulations were ready? That is a procedural question, but it is important none the less because this has caused significant confusion among leaseholders living in buildings with extensive historical non-cladding defects, including a great many in my own constituency, who look to the Act as their only means of escaping financial ruin, but who have spent recent weeks in a state of agitation because the leaseholder protection provisions were unusable.

My second question relates to enfranchised buildings. As the Minister knows, during consideration of Lords amendments we pressed the Government to amend the Bill to ensure that the service charge protections set out in schedule 8 applied clearly to enfranchised buildings and buildings where the right to manage has been exercised. The Government refused to accept the amendments, but the former Minister, the right hon. Member for Pudsey (Stuart Andrew), did commit the Government to a consultation to explore

“how best leaseholders in collectively enfranchised and commonhold buildings and other special cases can be protected from the costs associated with historical building safety defects.”—[Official Report, 20 April 2022; Vol. 712, c. 186.]

My question is simple: where is the promised consultation, and how much longer will leaseholders in such buildings have to wait to learn whether the Government believe that further measures are appropriate to address their plight?

My third question relates to the point in time at which the leaseholder protections that these regulations provide for kick in. It is clear from the guidance that the Department has published that it takes the view that the protections are retrospective and that, as a consequence, any service charge demand for the purpose of paying for the remediation of historical non-cladding defects made but not paid before 28 June is now invalid. However, that is far from the most obvious reading of the Act itself.

The relevant Cabinet Office guidance makes it clear that we cannot implement retrospective law unless the Attorney General and Solicitor General have both approved it. So my question is whether the Department secured the appropriate memoranda from the Law Officers providing for such approval. If not, why is the Department so confident that qualifying leaseholders issued with a service charge demand before 28 June are protected?

My fourth question relates to what advice the Government are giving to leaseholders who face demands for payment right now. The Government are advising leaseholders not to pay invoices relating to relevant historical remediation costs until building owners have fulfilled a series of transparency and financial reporting requirements. Specifically, the guidance issued by the Department makes it clear that landlords can charge qualifying leaseholders only for the cost of fixing historical non-cladding defects if, first, they have sent all leaseholders in the building a formal legal certificate to that effect and, secondly, that they can demonstrate that the costs do not relate to works covered by the Act. Yet as we know—I have live cases of this in my own constituency—landlords and managing agents are making demands for payment without having issued such legal certificates or demonstrated as much.

The guidance implies that any landlord or agent who seeks to enforce a wrongly issued invoice could be committing a criminal offence, but what steps will the Government take to ensure that leaseholders can enforce these rights? In practice, will it be left entirely to leaseholders to challenge the payability of such invoices at the first tier tribunal, with all the barriers that that involves? Or will the Government task the recovery strategy unit with taking up such cases, and if so, how do leaseholders or hon. Members refer individual cases to that unit?

Lastly, I have a question about the robustness of the regulations before us. The Minister will know that the Joint Committee on Statutory Instruments in its recent ninth report of this 2022-23 Session drew the special attention of both Houses to these regulations on the grounds that

“they are defectively drafted in four respects and that there is doubt as to whether they are intra vires in one respect.”

What assurances can the Minister provide that the regulations, which we will shortly approve, are sufficiently watertight to protect leaseholders as the Act intends?

Levelling-up and Regeneration Bill (Fourteenth sitting)

Matthew Pennycook Excerpts

Committee stage
Thursday 14th July 2022 Public Bill Committees

[The Chair]

Before we begin, I have a few preliminary reminders for the Committee. Please switch electronic devices to silent. No food or drink is permitted during sittings of this Committee, except for the water provided. Hansard colleagues would be grateful if Members emailed their speaking notes to [e-mail].

Clause 84

National development management policies: meaning

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

I beg to move amendment 87, in clause 84, page 92, line 9, leave out lines 9 to 16 and insert—

“(2) Before designating a policy as a national development management policy for the purposes of this Act the Secretary of State must carry out an appraisal of the sustainability of that policy.

(3) A policy may be designated as a national development management policy for the purposes of this Act only if the consultation and publicity requirements set out in clause 38ZB, and the parliamentary requirements set out in clause 38ZC, have been complied with in relation to it, and—

(a) the consideration period for the policy has expired without the House of Commons resolving during that period that the statement should not be proceeded with, or

(b) the policy has been approved by resolution of the House of Commons—

(i) after being laid before Parliament under section 38ZC, and

(ii) before the end of the consideration period.

(4) In subsection (3) ‘the consideration period’, in relation to a policy, means the period of 21 sitting days beginning with the first sitting day after the day on which the statement is laid before Parliament under section 38ZC, and here ‘sitting day’ means a day on which the House of Commons sits.

(5) A policy may not be designated a national development management policy unless—

(a) it contains explanations of the reasons for the policy, and

(b) in particular, includes an explanation of how the policy set out takes account of Government policy relating to the mitigation of, and adaptation to, climate change.

(6) The Secretary of State must arrange for the publication of a national policy statement.

38ZB Consultation and publicity

(1) This section sets out the consultation and publicity requirements referred to in sections 38ZA(3) and 38ZD(7).

(2) The Secretary of State must carry out such consultation, and arrange for such publicity, as the Secretary of State thinks appropriate in relation to the proposal. This is subject to subsections (4) and (5).

(3) In this section ‘the proposal’ means—

(a) the policy that the Secretary of State proposes to designate as a national development management policy for the purposes of this Act or

(b) (as the case may be) the proposed amendment (see section 38ZD).

(4) The Secretary of State must consult such persons, and such descriptions of persons, as may be prescribed.

(5) If the policy set out in the proposal identifies one or more locations as suitable (or potentially suitable) for a specified description of development, the Secretary of State must ensure that appropriate steps are taken to publicise the proposal.

(6) The Secretary of State must have regard to the responses to the consultation and publicity in deciding whether to proceed with the proposal.

38ZC Parliamentary requirements

(1) This section sets out the parliamentary requirements referred to in sections 38ZA(3) and 38ZD(7).

(2) The Secretary of State must lay the proposal before Parliament.

(3) In this section ‘the proposal’ means—

(a) the policy that the Secretary of State proposes to designate as a national development management policy for the purposes of this Act or

(b) (as the case may be) the proposed amendment (see section 38ZD).

(4) Subsection (5) applies if, during the relevant period—

(a) either House of Parliament makes a resolution with regard to the proposal, or

(b) a committee of either House of Parliament makes recommendations with regard to the proposal.

(5) The Secretary of State must lay before Parliament a statement setting out the Secretary of State's response to the resolution or recommendations.

(6) The relevant period is the period specified by the Secretary of State in relation to the proposal.

(7) The Secretary of State must specify the relevant period in relation to the proposal on or before the day on which the proposal is laid before Parliament under subsection (2).

(8) After the end of the relevant period, but not before the Secretary of State complies with subsection (5) if it applies, the Secretary of State must lay the proposal before Parliament.

38ZD Review of national development management policies

(1) The Secretary of State must review a national development management policy whenever the Secretary of State thinks it appropriate to do so.

(2) A review may relate to all or part of a national development management policy.

(3) In deciding when to review a national development management policy the Secretary of State must consider whether—

(a) since the time when the policy was first published or (if later) last reviewed, there has been a significant change in any circumstances on the basis of which any of the policy set out in the statement was decided,

(b) the change was not anticipated at that time, and

(c) if the change had been anticipated at that time, any of the policy set out would have been materially different.

(4) In deciding when to review part of a national development management policy (‘the relevant part’) the Secretary of State must consider whether—

(a) since the time when the relevant part was first published or (if later) last reviewed, there has been a significant change in any circumstances on the basis of which any of the policy set out in the relevant part was decided,

(b) the change was not anticipated at that time, and

(c) if the change had been anticipated at that time, any of the policy set out in the relevant part would have been materially different.

(5) After completing a review of all or part of a national development management policy the Secretary of State must do one of the following—

(a) amend the policy;

(b) withdraw the policy's designation as a national development management policy;

(c) leave the policy as it is.

(6) Before amending a national development management policy the Secretary of State must carry out an appraisal of the sustainability of the policy set out in the proposed amendment.

(7) The Secretary of State may amend a national development management policy only if the consultation and publicity requirements set out in section 38ZB, and the parliamentary requirements set out in section 38ZC, have been complied with in relation to the proposed amendment, and—

(a) the consideration period for the amendment has expired without the House of Commons resolving during that period that the amendment should not be proceeded with, or

(b) the amendment has been approved by resolution of the House of Commons—

(i) after being laid before Parliament under section 38ZA, and

(ii) before the end of the consideration period.

(8) In subsection (7) ‘the consideration period’, in relation to an amendment, means the period of 21 sitting days beginning with the first sitting day after the day on which the amendment is laid before Parliament, and here ‘sitting day’ means a day on which the House of Commons sits.

(9) If the Secretary of State amends a national development management policy, the Secretary of State must—

(a) arrange for the amendment, or the policy as amended, to be published, and

(b) lay the amendment, or the policy as amended, before Parliament.”

This amendment stipulates the process for the Secretary of State to designate and review a national development management policy including minimum public consultation requirements and a process of parliamentary scrutiny based on processes set out in the Planning Act 2008 (as amended) for designating National Policy Statements.

It is a pleasure to serve with you in the Chair, Mr Hollobone. We had an extensive debate on Tuesday about the powers provided by clause 83 and the fact that they represent, in our view, an unacceptable centralisation of development management policy and a downgrading of the status and remit of local planning. Clause 84 is important, and the provisions in it relate directly to the previous debate, because it sets out what constitutes a national development management policy and provides the statutory basis for such policies and their operation.

As hon Members will note, the clause provides an extremely broad definition of what a national development management policy is, with proposed new subsection 38ZA(1) clarifying that an NDMP can be anything relating to development or use of land in England that the Secretary of State, by direction, designates as such a policy. Proposed new subsection 38ZA(2) provides for powers that allow the Secretary of State to modify or revoke a national development management policy, and proposed new subsection 38ZA(3) makes it clear that they have to consult about any modification or revocation only if they believe it is appropriate to do so. Given the fact that, as we spent a lengthy period of time considering in the last sitting, it is the Government’s intention that national development management policies will override local development plans in the event of any conflict between the two, we are strongly of the view that the powers clause 84 provides the Secretary of State with are unacceptably broad.

I ask Government Members to look up from their digital devices for a moment and to consider precisely what the Government are proposing here and the future implications of that for their constituencies and the individual communities they represent. These powers would allow a future Minister, of whatever political allegiance, to develop an NDMP that could encompass literally any policy designated by them as relating to development or use of land in England; to determine not to consult on the development of that policy or its modification if they saw fit; and then to use that policy to overrule any local or neighbourhood plan in conflict with it at the stroke of a pen. No one who values localism and the role of effective local and neighbourhood plans in enabling communities to develop a shared vision for their area should feel comfortable with the provisions in the clause.

Amendment 87 simply seeks to impose a degree of transparency and accountability when it comes to the use of the powers, by clarifying the process by which the Secretary of State must designate and review a national development management policy, stipulating, first, that it must include minimum public consultation requirements, just as there are intensive consultation requirements for local plan policies, and secondly, that it must be subject to the same level of parliamentary scrutiny as is currently the case for designating national policy statements, as set out in the Planning Act 2008. It cannot be right that national policies that will have a far greater impact on local communities than any existing national policy statement and that the Government intend will trump local development plans in the event of a conflict can be developed without any public consultation or parliamentary approval process.

If the clause is left unamended, the danger is twofold. First, we fear that the use of the powers will be viewed by the public as yet another means of disempowering communities and hoarding more control at the centre, with all the implications that has for public engagement in a planning system that already suffers from low levels of trust and confidence, with people feeling that their concerns are overlooked and their interests subordinated to other priorities.

Secondly, without a minimum of public consultation or parliamentary oversight in designing NDMPs the Government are far more likely to get it wrong, because they will be developing and designating national policy without appropriate input from communities and their representatives about how the needs and aspirations of their areas are best served. If the Government are determined to force through a suite of NDMPs covering the broad range of policies that, to repeat the test set out in the policy paper, “apply in most areas” and to render local development plans subordinate to them in the event of a conflict, the least they can concede is that the Secretary of State be directed to consult with institutions, authorities and other bodies before making, revoking or modifying NDMPs—not just the initial suite of NDMPs, but any that follow in future years—and to ensure that appropriate parliamentary oversight takes place.

[Rachael Maskell (York Central) (Lab/Co-op)]

I am grateful to my hon. Friend for his amendment and the speech he has just made. This is the pivotal part of the whole Bill. It is about ensuring that there is a full and proper process—one that should eliminate risk and maximise the representation of local interest.

We had a really helpful discussion on Tuesday that explored why the amendment was needed in the first place, and I am sure the Minister soon recognised the democratic deficit the Bill would create. The Government have left a hole in the Bill, because it defines the process for establishing a national development management strategy but not the extent to which the strategy could apply, and it also fails to take forward the considerations of our communities. This provision does not belong in primary legislation, and the Minister should reflect today and over the summer on what his Government are trying to do.

The Minister said that he will be developing more detail over the summer, but we are considering the Bill line by line today. As my hon. Friend outlined, his amendment has done the work on how to govern the process for the Minister. First, on designation, there must be an in-depth consultation and any issue must come before Parliament. If an issue is of such magnitude that it requires Government to say that they need to override a local plan, surely there has to be a proper process. After all, planning does not just suddenly occur. I was scratching my head about what would constitute a national emergency that required planning permission. The only thing I could think of—the Minister may correct me—would be a war, but then we would have separate legislation to address that. On Tuesday, the Minister himself struggled to articulate where the thresholds would be and exactly what would constitute such a situation.

I have been thinking further about how our planning process is devised and the importance of co-production within our planning process. Why would this national development management strategy override a process of local planning? There could be no reason. If we think about unpopular things that the Government want to force through, such as mining hydrocarbons, fracking and so on, they should not be happening, because our planet cannot sustain their use. The same applies to building road infrastructure, but then again there are processes and national policy statements that can be made for those things.

High Speed 2 or an airport are perhaps the only other examples. We cannot sustain more air travel because of the climate crisis, and HS2 had a national policy statement —again, it has had its own legislation and processes. I really cannot imagine what is in the Government’s mind that is of such magnitude that it should require the overriding of a local plan and the hopes and aspirations of our local communities. Certainly in my community, local people have not had their aspirations heard in the planning process, because we have not had a local plan. There has been imposition by developers, using the powers they have, and it has just run into conflict, gridlock and pain. I cannot see why a Government would want to excite that in a community.

I am sure the Minister will give serious consideration to this matter, if not today, then through the summer. Opposition Members have made it clear that these clauses are an unnecessary development, but I am sure the Minister will hear that point even louder from Government Members.

--- Later in debate ---

[Mr Jones]

Clearly, the example I gave follows from national policy and the conditions that can be placed on planning decisions. That necessity came forward when the Secretary of State had to take a view in what was, at the time, a national emergency.

[Matthew Pennycook]

Further to that point, is the Minister seriously saying that a logistical issue about the opening times of supermarkets is the type of policy that will be covered by an NDMP?

[Mr Jones]

What I am explaining is an example of where powers need to be taken, sometimes at short notice, in the national interest.

To move on, let me turn to parliamentary scrutiny. I have listened to the debate with interest, and I appreciate the points that have been made. The existing provisions for scrutiny of national policy statements, on which I believe the amendment has been modelled, play a particular role, given the way that those statements provide a framework for decisions on nationally significant infrastructure projects, which are decided by Ministers.

National development management policies will serve a broader purpose and will sit alongside policies in locally produced plans as the starting points for considering the suitability of development proposals. They will carry forward the role that successive Governments have played since the 1940s in setting high-level national policy that influences plans and decisions. The sort of things that we envisage them covering are standard policies—for example, avoiding inappropriate development in a green belt and areas at significant risk of flooding or coastal erosion; protecting nationally important habitats and heritage, and assets such as listed buildings; and ensuring that access for pedestrians, cyclists and people with disabilities or reduced mobility is taken into account when assessing development proposals.

As I have said, we have committed to consulting on national development management policies, and this is the first step in the process. The prospectus, which we will publish shortly, will set out more of our initial thinking on the scope of the policies, and the principles for their production. I am sure that the hon. Member for Greenwich and Woolwich will read that document with interest when it comes out, and I hope that it will provide further reassurance on our commitment to transparency and full engagement as we develop the policies.

As the national development management policies will be public, parliamentarians and the public may still hold the Government to account, in the usual way, for the content of those policies. The nature of national development management policies differs from national policy statements, so we believe that the clause strikes the right balance.

We will continue to keep national policies under review by listening closely to colleagues, to the public and to the evidence presented to us, as Governments of all complexions do as a matter of course. It is not clear to me that the amendment would necessarily fit into that context. I have listened to the strength of feeling during the debate, and I hope that the national planning policy framework prospectus, when published, and my response to the three major issues that have been raised in discussing the amendment, will reassure Members. I will continue to reflect on the issues that have been raised, particularly in relation to responses to the prospectus. I hope that the hon. Gentleman will feel able to withdraw his amendment.

[Matthew Pennycook]

I am extremely disappointed by the Minister’s response. The hon. Member for Westmorland and Lonsdale was right to use the phrase “tin-eared”. That is what the Minister’s response was, and I hope he will reconsider.

The amendment and the clause go to the heart of the problem with the Bill. Is it a vehicle to empower communities and their representatives, or to override them when the Government of the day think that is the appropriate thing to do? Where the Government fall on that question is clear from the Minister’s answer. Let me reiterate that the level of scrutiny that we are asking for is not excessive or inappropriate; it is a minimum public consultation requirement in the way that currently applies to local planning policies, and the same level of parliamentary scrutiny as for designated national policy statements.

The Minister’s response was very telling. He said: “Well, the Secretary of State”—the previous Secretary of State now—“has committed to consultation.” That is all well and good, and I hope the prospectus will come in the summer, but it is not about that or about what the previous Secretary of State said; it is about what the Bill says. The Bill says that a Secretary of State needs to consult on an NDMPs if he or she considers it “appropriate”. If a Secretary of State in a future Labour Government brings forward an NDMP, does not consult on it, and uses it to override a local development plan in a constituency of one of the Members now on the Government side of this Committee, those Members would be the first to cry foul the use of such powers. The clause guarantees only that a Secretary of State needs to consult if he considers it appropriate.

On parliamentary scrutiny, the Minister said that NDMPs are different from national policy statements because they have a broader purpose. If they have a broader purpose, surely there is all the more need for basic parliamentary accountability and scrutiny, in the way that currently applies to such statements under the Planning Act 2008.

I am extremely disappointed by the Minister’s response, as he can tell. I hope that he will go back and reconsider this issue and those that we raised in the debate on clause 83, because we will certainly discuss these matters again, if not on Report in this place, then in the other place. I will not press the amendment to a vote, but I urge him to reconsider. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

[Mr Jones]

Clause 84 provides the statutory basis for national development management policies in England. As they will play an important part in the planning process, the clause puts a necessary safeguard in place: they must be designated by the Secretary of State so that their status is clear, they must relate to the development or use of land and, most importantly, they must be subject to appropriate consultation before they can have effect.

The clause is necessarily broad in scope so that national policies can address the various planning considerations that apply across the country, from basic policies for protecting the green belt to those for avoiding areas of high flood risk. That will free up local plans to focus on matters of local importance.

We intend to consult fully on the scope and content of these policies before they are first introduced to ensure we have heard a wide range of views before deciding what is best set out at a national level, and before deciding what the policies themselves will say. Alongside clauses 83 and 84, they will be instrumental in making it easier to prepare local plans that reflect communities’ priorities for their areas while providing a sound basis to address the general planning considerations that apply across the country. I therefore commend the clause to the Committee.

Question put and agreed to.

Clause 84 accordingly ordered to stand part of the Bill.

Clause 85

Contents of the spatial development strategy

[Matthew Pennycook]

I beg to move amendment 93, in clause 85, page 92, leave out lines 26 and 27.

This amendment would remove an additional legal test within London’s Spatial Development Strategy that could preclude the insertion of policies which contribute to the effective strategic planning of Greater London but would also apply to other urban areas or are not specific to Greater London.

[The Chair]

With this it will be convenient to discuss the following:

Amendment 94, in clause 85, page 92, line 27, at end insert—

“(c) supporting policies within the Spatial Development Strategy that achieve objectives for the benefit of strategic planning of Greater London.”

This amendment would enable the Mayor of London can include policies in a Spatial Development Strategy that contribute to the effective strategic planning of Greater London.

Amendment 95, in clause 85, page 93, line 5, at end insert—

“(2DA) The determination of whether a matter is of strategic importance to more than one London borough for the purposes of subsection (2D) lies solely with the Mayor of London.”

This amendment is intended to remove ambiguity about whose opinion is relevant in relation to whether or not a matter is of strategic importance to more than one London borough.

Amendment 96, in clause 85, page 93, line 9, at end insert—

“(2F) The spatial development strategy must include statements dealing with the general spatial development aspects of—

(a) such of the other strategies prepared and published, or to be prepared and published, under the enactments mentioned in section 41(1) above as involve considerations of spatial development, and

(b) such of the Mayor of London’s other policies or proposals as involve such considerations, whether or not the strategy, policy or proposal relates to the development or use of land.”

This amendment would retain provisions relating to the Mayor of London’s Spatial Development Strategy which relate to the spatial development aspects of the other Mayoral strategies.

Amendment 97, in clause 85, page 93, leave out lines 13 to 19.

This amendment would remove inserted subsection (10), which would place constraints on the Mayor of London’s Spatial Development Strategy relating to national development management policies.

Amendment 91, in schedule 7, page 241, line 16, leave out “with respect to design”.

Amendment 92, in schedule 7, page 241, line 18, after “met” insert

“in support of plan-making or”.

[Matthew Pennycook]

Clauses 85 and 86 relate to the spatial development strategy in London. I hazard a guess that the subject is not likely to set Government Members’ pulses racing, but it is important none the less, and I feel duty bound to do it justice as the only Member present who represents our glorious capital city.

On the surface, clause 85 appears relatively innocuous. It would seem that it is simply a matter of bringing the London plan in line with other spatial development strategies and providing greater clarity on the matters that can and cannot be covered by a spatial development strategy. However, once one digs into the detail, as I have, it quickly becomes apparent that taken together with two proposed changes set out in schedule 7—proposed new section 15CC, on supplementary plans—it is far more insidious. It amounts, in effect, to the rolling back of London’s strategic planning powers in important ways.

Let me say a little at the outset about why curtailing the strategic planning powers that Greater London enjoys would be harmful. London’s devolved strategic planning powers have been a huge success story over the past two decades under successive mayoral administrations. Since the first draft London plan was published in 2002, successive plans have facilitated a step change in the planning of our country’s only global city. London has been able to lead the way in planning policy approaches in a wide range of areas, whether focused on tackling climate change, addressing biodiversity loss, improving fire safety, addressing poor air quality or increasing the supply of affordable housing and the pace of its delivery.

The results speak for themselves: since the creation of the Greater London Authority, annual net housing supply has doubled and new homes in London lead the country in design, quality and energy efficiency. Indeed, the co-ordinated strategic planning approach that London has adopted has been so successful that the Government are proposing, through this Bill, to allow the new combined county authorities essentially to adopt it.

Despite the tacit recognition of the success of London’s strategic planning powers that the provision of the new power to CCAs implies, clause 85 and parts of schedule 7 explicitly curtail their effective use by putting in place significant additional restrictions on the preparation of future iterations of the London plan. They do so in four ways: first, proposed new subsection (2A)(b) states that policies can be included in a future London plan only if they are designed to achieve objectives that relate to the

“particular characteristics or circumstances of Greater London”.

We believe that is unnecessarily restrictive. There are many objectives that the London plan should appropriately be working toward that are not specific to the characteristics or circumstances of London, whether that is climate change, biodiversity and green infrastructure, supporting town centres and high streets, or parking and suburban housing development.

--- Later in debate ---

[Matthew Pennycook]

I must confess that I am slightly disappointed with that answer. I appreciate that, in reading his remarks, the Minister has addressed each of the amendments in this group, but I do not think he has provided a convincing defence of why the Bill as it stands needs to be that way or of how restricting the Mayor’s powers in the way the Bill intends will not lead to harmful impacts of the kind I set out. I do not intend to press the amendments, but I very much hope that the Minister will continue to engage in dialogue with the Greater London Authority about these specific points. In one way or another, I think we will come back to these issues; if not, I expect that the noble Lords in the other place will do so. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

[The Chair]

With this it will be convenient to discuss clause 86 stand part.

--- Later in debate ---

[Mr Jones]

The clause introduces schedule 7, which will replace the majority of part 2 of the Planning and Compulsory Purchase Act 2004, namely sections 15 to 37. Schedule 7 contains new provisions relating to different elements of the development plan—specifically joint spatial development strategies, local plans, minerals and waste plans, and supplementary plans. The details of those provisions will be debated throughout these sessions.

In summary, the proposed changes will ensure that plans are faster for local authorities to produce, easier for communities to navigate, engage with and understand, and more focused on things that matter locally. The reforms will support local planning authorities to produce local plans and keep them up to date—something that has proven challenging for many under the existing system. Local planning authorities and communities invest considerable time and effort in preparing local plans, but many plans take too long to produce. The average plan takes seven years, and plans are frequently out of date and can be difficult to understand.

Decisions on planning applications are meant to be plan-led, but in practice local plans cannot always be relied on for guiding decisions, especially when they are not up to date or do not set clear standards for development to follow. To make the system more responsive and flexible, local authorities will be given new powers to collaborate voluntarily with each other on joint spatial development strategies. They will also be able to introduce new policy at pace through supplementary plans.

There are two specific elements of the current plan-making system that the Government are not looking to retain. The first is the requirement for local planning authorities to produce a statement of community involvement. Such statements do little to drive meaningful dialogue with communities during plan production. Instead, the Secretary of State will produce guidance setting out much clearer expectations around how local planning authorities should engage people in the planning process.

Secondly, we do not propose to retain the duty to co-operate. The duty has been widely criticised as inflexible and burdensome, causing significant delays to the production of local plans. It will be replaced with a more flexible policy-based approach to addressing strategic issues that cut across authorities. That will be set out in a revised national planning policy framework in due course.

[Matthew Pennycook]

Just to check that I understood the Minister correctly, is he saying that the new flexible alignment test, which is to follow in the Bill, will come in only at the point that the NPPF is finalised in 2025? Is he saying that that is when we should expect this new test to appear?

[Mr Jones]

Clearly we will need to ensure that the new test is workable. We will have to consider that very carefully, and we will no doubt consult on it. I will need to come back to the hon. Gentleman about the timeframe in order to provide him with that information. However, given the important changes that this clause enables us to introduce, I commend it to the Committee.

Question put and agreed to.

Clause 87 accordingly ordered to stand part of the Bill.

Schedule 7

Plan making

[Matthew Pennycook]

I beg to move amendment 112, in schedule 7, page 224, line 14, after “authorities” insert “or county councils”.

This amendment and amendment 113 would enable county councils to prepare joint spatial development plans.

[The Chair]

With this it will be convenient to discuss the following:

Amendment 113, in schedule 7, page 224, line 16, after “authority” insert “or county council”.

See explanatory statement for Amendment 112.

Amendment 103, in schedule 7, page 224, leave out lines 19 to 22.

This amendment would leave out inserted section 15A(2)(b) and make combined authorities eligible for a joint spatial development strategy.

Amendment 102 in schedule 7, page 233, line 41, at end insert—

“15AJ Duty to co-operate in absence of joint spatial development strategy

(1) This section applies in any area in which a joint spatial development strategy is not operative.

(2) Each person who is—

(a) a local planning authority,

(b) a county council in England that is not a local planning authority, or

(c) a body, or other person, that is prescribed or of a prescribed description, must co-operate with every other person who is within paragraph (a), (b) or (c) or subsection (10) in maximising the effectiveness with which activities within subsection (3) are undertaken.

(3) In particular, the duty imposed on a person by subsection (2) requires the person—

(a) to engage constructively, actively and on an ongoing basis in any process by means of which activities within subsection (4) are undertaken, and

(b) to have regard to activities of a person within subsection (10) so far as they are relevant to activities within subsection (4).

(4) The activities within this subsection are—

(a) the preparation of a joint spatial development strategy,

(b) the preparation of development plan documents,

(c) the preparation of other local development documents,

(d) the preparation of marine plans under the Marine and Coastal Access Act 2009 for the English inshore region, the English offshore region or any part of either of those regions,

(e) activities that can reasonably be considered to prepare the way for activities within any of paragraphs (a) to (d) that are, or could be, contemplated, and

(f) activities that support activities within any of paragraphs (a) to (d), so far as relating to a strategic matter.

(5) For the purposes of subsection (4), each of the following is a ‘strategic matter’—

(a) sustainable development or use of land that has or would have a significant impact on at least two planning areas, including (in particular) sustainable development or use of land for or in connection with infrastructure that is strategic and has or would have a significant impact on at least two planning areas, and

(b) sustainable development or use of land in a two-tier area if the development or use—

(i) is a county matter, or

(ii) has or would have a significant impact on a county matter.

(6) In subsection (5)—

‘county matter’ has the meaning given by paragraph 1 of Schedule 1 to the principal Act (ignoring sub-paragraph 1(1)(i)),

‘planning area’ means—

(a) the area of—

(i) a district council (including a metropolitan district council),

(ii) a London borough council, or

(iii) a county council in England for an area for which there is no district council,

but only so far as that area is neither in a National Park nor in the Broads,

(b) a National Park,

(c) the Broads,

(d) the English inshore region, or

(e) the English offshore region, and

‘two-tier area’ means an area—

(a) for which there is a county council and a district council, but

(b) which is not in a National Park.

(7) The engagement required of a person by subsection (3)(a) includes, in particular—

(a) considering whether to consult on and prepare, and enter into and publish, agreements on joint approaches to the undertaking of activities within subsection (3), and

(b) if the person is a local planning authority, considering whether to agree under section 28 to prepare joint local development documents.

(8) A person subject to the duty under subsection (2) must have regard to any guidance given by the Secretary of State about how the duty is to be complied with.

(9) A person, or description of persons, may be prescribed for the purposes of subsection (2)(c) only if the person, or persons of that description, exercise functions for the purposes of an enactment.

(10) A person is within this subsection if the person is a body, or other person, that is prescribed or of a prescribed description.

(11) In this section—

‘the English inshore region’ and ‘the English offshore region’ have the same meaning as in the Marine and Coastal Access Act 2009, and

‘land’ includes the waters within those regions and the bed and subsoil of those waters.”

This amendment would require local authorities and other public bodies to co-operate on local planning measures in the absence of an operative joint spatial development strategy on the lines of section 33A of the Planning and Compulsory Purchase Act 2004. This duty would encompass co-operation by all relevant local authorities on preparation for such a strategy.

[Matthew Pennycook]

Schedule 7 is 40 pages long and it contains a very wide range of provisions on plan making, many of which are complex. The amendments in this group relate to the provisions concerning joint spatial development strategies.

We support the new power in proposed new section 15A that allows two or more local planning authorities to work together to create one of these strategies. If done well, we believe they that will provide a high-level investment framework, more choice of where to direct development, greater opportunity to deliver sustainable growth and a means of translating national policy priorities, from levelling up to net zero, on a place-based basis.

In our view, joint spatial development strategies are likely to provide a much more attractive and deliverable strategic planning model than provided for by existing joint strategic plans, which have proved problematic, given that they are prepared and tested by means of an arrangement essentially designed for detailed local plans. Allowing groups of authorities to come together and collaborate to prepare and test strategic planning policies in relation to matters that cross local boundaries, whether that be infrastructure or affordable housing, by means of a joint spatial development strategy, is clearly a good thing, and it is crucial that more authorities do that.

--- Later in debate ---

[Mr Jones]

Although I understand the reasons for the amendments, our intention is for the reformed planning system to be district-led. As we have discussed previously, we do not want to see planning or any other powers being drawn upwards as a result of our reforms. As such, joint spatial development strategies need to be driven by the authorities closest to their communities.

We agree that county councils should play an important role in the plan-making process. They will have significant influence over the development of a joint spatial development strategy, and we envisage that they will be closely involved with its day-to-day production. To make sure that happens, we are giving them the formal status of statutory consultee so that they can bring their experience and expertise in a range of issues, particularly highways, transport, flood mitigation, education and the rules on waste, to the creation of a joint spatial development strategy. Planning inspectors examining the joint spatial development strategy will want to see evidence of work on those key issues and to make sure that any views expressed by the county council have been properly taken into consideration.

The approach that we are proposing strikes a balance between ensuring that joint spatial development strategies are developed at the right level and ensuring that the views and expertise of county councils are part of the process. Likewise, in areas with an elected Mayor, we believe it is vital that the Mayor is formally involved in the production of a spatial development strategy, in order to provide clear and accountable leadership for it. That is why combined authorities should not be eligible to produce a joint spatial development strategy. In such cases, the Mayor, with the support of all the member authorities, can approach the Government to ask for spatial development strategy powers to be conferred on them as part of their devolution deal.

I hope that was the response that the hon. Member for Greenwich and Woolwich was looking for. His amendments seem to view spatial development strategies as a co-ordinating layer in the planning system. Amendment 102 seeks to resuscitate the duty to co-operate, which is widely agreed—most Conservative Members would agree, at least—to have been an ineffective mechanism, criticised as inflexible, bureaucratic and slow. That is why the Bill abolishes it. We can all agree that it is vital for local planning authorities to work together to make sure that cross-boundary issues are properly addressed. We expect them to plan for, and deliver, the housing and infrastructure our communities need. The planning system provides a number of mechanisms to assist them in doing so to which we are adding.

We intend to replace the duty with more flexible policy within the revised national planning policy framework, upon which we will consult. This will enable local planning authorities to address any issues of alignment during the preparation of a plan. At present, if an authority fails the duty its local plan must be withdrawn. The Bill also introduces a new requirement to assist with plan making, which we will consider more fully in due course. That will ensure the involvement of those who are vital to production of plans, including the delivery and planning of infrastructure. As such, joint spatial development strategies should not be seen as a co-ordinating function, replacing the duty to co-operate. I hope that the hon. Member for Greenwich and Woolwich will agree to not to press the amendments to a vote.

[Matthew Pennycook]

I am grateful to the Minister for that response. On the issue of mayoral combined authorities and combined authorities, I cannot say that I am entirely convinced. However, I note the detailed response he gave me to the amendment, and I will give it further consideration. On the issue of county councils, the Minister says that they will be closely involved. I remain concerned that not giving them equality of status will be harmful. I am aware that the Department is concerned that if we do not get county councils to bring resources to the table for the new joint spatial development strategies, it may have effects that the Government do not want.

On the issue of the duty to co-operate and the voluntary nature of those new powers, I remain concerned about what happens and how that impacts on the Government’s wider policy objectives in areas where authorities do not make use of the power when we have removed the only statutory arrangement to enable them to co-operate. I urge the Minister to go away and give that some thought. If the Minister is not comfortable reintroducing the duty for those who have not taken up those powers, will he at least think again about whether the incentive structure might be tweaked to ensure that the majority of areas make use of the powers? I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Ordered, That further consideration be now adjourned. —(Gareth Johnson.)

Levelling-up and Regeneration Bill (Thirteenth sitting)

Matthew Pennycook Excerpts

Committee stage
Tuesday 12th July 2022 Public Bill Committees

[Tim Farron (Westmorland and Lonsdale) (LD)]

I beg to move amendment 118, in clause 75, page 85, line 9, at end insert—

“(1A) Regulations under this Chapter may require relevant planning authorities to process data in accordance with approved data standards relating to the number and nature of—

(a) second homes, and

(b) holiday let properties

in the planning authority area.”.

This amendment would enable planning data regulations to provide for the collection of data to national standards about second homes and holiday lets.

The amendment seeks to aid transparency and therefore accountability on some of the issues that the Committee has already discussed regarding the number of homes that are not used for permanent dwelling.

I could give the Committee various statistics on excessive second home ownership and holiday lets. For example, estate agents in Cumbria tell me that up to 80% of all house sales since the pandemic began, two and a bit years ago, have been in the second homes market. In one year, from June 2020 to June 2021, there was a 32% rise in the number of holiday lets in the district of South Lakeland. Hon. Members can imagine the number of holiday lets that existed to start with in a district that includes the biggest chunk of the Lake district and a large chunk of the Yorkshire dales; 32% is a huge number. Across England, there has been a 50% reduction in the number of long-term rental properties available. Outside London, there has been an 11% rise in rents; in London, the increase is nearly double that.

All those figures come from local councils, housing charities and research I have carried out myself; none of it comes from central Government sources. The amendment would ensure that there is a real sense of the scale of the problem. I feel it and I know it, from talking to people in my constituency. From Grasmere to Garsdale, from Coniston to Arnside, every community is suffering a haemorrhaging of its working-age population. They have experienced that for years, but in the last two years the situation has been especially awful.

What do we need to know? What are we looking for? Someone who owns a second property that they rent out for 70 days a year counts as a small business, which means they do not pay council tax and they do not pay business rates either. I can think of thousands of homes in my constituency where someone who is, by definition, comfortable—to say the very least—is being subsidised by people working every hour God sends, with two, three or four different jobs, often on minimum wage. Those hard-working people are subsidising second home owners, who do not have to pay any kind of tax whatsoever, either to the Government or to the local authority, on their dwelling, and that is not on. It is not right and we must do everything we can to prevent it.

We can dig down, via various routes, to get the number of holiday lets, give or take, but we do not know anything about second homes—for a slightly good reason. After a Liberal Democrat by-election win in Ribble Valley in 1992, Mr Major abolished the poll tax and introduced the council tax, and gave 50% relief—a subsidy—to anyone with a second home. The Labour Government between 1997 and 2010 reduced that to just a 10% subsidy, so people had to pay 90%. The coalition got rid of the subsidy altogether, so now, in most authorities, second home owners pay full council tax. As a result, there is no incentive to register a home as a second home, so we just do not know; broadly speaking, the information we have is anecdotal.

The purpose of the amendment is to make sure that we know formally the scale of the problem, so that the Government can be held to account and we can take action to alleviate the problem, in order to ensure that there are homes for the permanent populations of our communities.

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

It is a pleasure to serve with you in the Chair, Sir Mark. I take the opportunity to echo the sentiments expressed by my hon. Friend the Member for Nottingham North in warmly welcoming the new Ministers to their places and in thanking their predecessors—the Minister of State, Ministry of Justice, the right hon. Member for Pudsey (Stuart Andrew), and the hon. Member for Harborough (Neil O’Brien)—for the constructive way in which they engaged with us and the thoughtful manner in which they approached the consideration of the Bill. On the basis of this morning’s proceedings, I am confident that we will continue in that vein.

Turning to amendment 118, the hon. Member for Westmorland and Lonsdale is a doughty champion for his constituents on this issue. He will know from previous debates in the House on this subject that we are in complete agreement that the Government need urgently to commit to far bolder action. It is not in dispute that a balance needs to be struck when it comes to second homes and short-term holiday lets; no one is arguing that they are of no benefit to local economies, but the potential benefits associated with them must continually be weighed against their impacts on local people.

At present, the experience of a great many rural, coastal and, indeed, urban communities makes it clear that the Government have not got the balance right. The problem is not second homes and short-term holiday lets per se; as the hon. Member for Westmorland and Lonsdale said, it is excessive numbers of them in a given locality. While individual hon. Members will have a clear sense of the communities in their constituencies that are affected by this problem, the hon. Gentleman is absolutely right to highlight with the amendment the fact that we do not know the precise number of second homes and holiday lets across the country, or their distribution.

Members have heard me say this before, but council tax records are likely to significantly undercount second homes, both because there is no financial incentive to register a property in areas where a council tax discount is no longer offered, and because second home owners can still avoid council tax altogether by claiming that their properties have moved from domestic to non-domestic use.

The estimates of second home ownership produced by the English housing survey are more reliable, but even they are based on a relatively small sample and rely on respondents understanding precisely what is meant by a second home and accurately reporting their situation. Similar limitations apply to short-term lettings. There is no single definitive source of data on rates for what is, after all, an incredibly diverse sector, with providers offering accommodation across multiple platforms.

It therefore strikes us as entirely logical that as well as considering what more might be done to mitigate the negative impact of excessive rates of second home ownership and short-term and holiday lets, the Government should consider whether digitisation of the planning system could allow us to better capture data on overall rates and provide a better sense of which parts of the country face the most acute challenges. We therefore very much support amendment 118, and we hope the Minister will give it serious consideration.

[Rachael Maskell (York Central) (Lab/Co-op)]

I, too, support the amendment. Data is key to everything: we cannot make good, informed, evidence-based decisions unless we have data before us. In my community, I have seen my boundaries change because of the number of empty properties and people not registering. I have seen a real change street by street as well as community by community. Second homes, commuter homes and holiday homes are taking over residential properties, which my local residents cannot afford to live in any more due to the lack of supply. As a result, they are having to move out of my city. We have to look at this extraction economy through the eyes of the people it impacts the most, and collecting data is absolutely key to that.

There is another reason I think data is really important. The Government are driving their whole housing policy through numbers. They are saying, “We are going to build x units in each of these locations across the country.” We have heard hon. Members in various debates discuss whether those levels are right, but if those housing units simply become empty units, second homes or holiday lets, that will not resolve the housing crisis we are dealing with. It will not add to our communities or make a difference to them. It will not have an impact on Government targets for addressing the housing crisis. It is essential that we can identify the issue in the detail it deserves, not just in whole areas but drilling down to understand what is happening in different parts of the community.

In York, we have around 2,000 Airbnbs—last time I checked, the number was 1,999. The vast majority are concentrated in my constituency of York Central. I can name the streets where those properties are. The number of homes is increasing in those areas. We will go on to talk about measures that the Government can introduce—measures that I very much hope they will introduce—to address this serious problem, which is sucking the life out of our community. If we have up to 350,000 Airbnbs nationally, what does that mean for Government targets for house building? How are they going to say they are building additional homes when we are seeing that sharp increase in Airbnbs, second homes and so on?

The Government need the data to drive their own housing policy and to ensure that they are delivering on their targets for improving the housing situation, rather than just watching it get worse while they busily tick boxes and say, “We are delivering, delivering, delivering,” when it is not making a scrap of difference on the ground. That is the feeling in my community. I welcome the amendment. It is a helpful start and a helpful guide to the Government about some of the considerations they should be taking into account in the planning system.

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[Matthew Pennycook]

I beg to move amendment 65, in clause 75, page 85, line 14, leave out paragraph (b).

This amendment would prevent the Government from using the powers in this Chapter for information other than that provided or processed by a planning authority under a relevant planning enactment.

Having had just over four productive and, I am sure the Committee will agree, stimulating days of line-by-line consideration of parts 1 and 2 of the Bill relating to levelling up, local democracy and devolution, we now turn to the first of the Bill’s parts on planning. As my hon. Friend the Member for Nottingham North remarked during, I think, our second session, in practice this is not wholly, or even largely, a levelling-up Bill. Indeed, I would even go so far as to describe the legislation before us as essentially a planning Bill in all but name, albeit in a shiny but ultimately flimsy levelling-up wrapper.

To the extent that this is essentially a planning Bill, it is, as hon. Members are aware, a far different beast from the legislation the Government had in mind when they published the “Planning for the future” White Paper in August 2020. The remnants of that White Paper that have found their way into this Bill, augmented with several new initiatives of varying quality, amount collectively to a rather modest set of proposals that we fear fall far short of the kind of reform that is required to meet the multiple challenges we face as a country.

Some of the planning provisions in the Bill are extremely controversial, and we will consider several of those in the hours and days that remain before the summer recess. Others are less so, and chapter 1 of part 3, which we are now considering, falls squarely in the latter category.

The clauses in chapter 1 seek to digitise the planning system, with the objectives of raising standards across planning authorities, facilitating cross-boundary engagement—particularly around infrastructure by better enabling the comparison of planning information—and, perhaps most importantly, making it easier for members of the public to access and easily comprehend information about specific local planning matters. This represents a real step forward, and I want to make it clear at the outset of the Committee’s consideration of clauses 75 to 81 that we strongly support in principle the digitisation of the planning system.

As Dr Hugh Ellis rightly put it to the Committee in our final oral evidence session:

“There are some very archaic practices in the planning process”.––[Official Report, Levelling-up and Regeneration Public Bill Committee, 23 June 2022; c. 125, Q157.]

As things stand, the planning system is overwhelmingly reliant on outdated software that places a considerable burden on the sector. Often, progress on local planning matters is almost entirely reliant on individual council planning officers and their familiarity with a particular scheme, rather than transparent and accessible information that can be drawn upon by all. Given that the systems in planning authorities more often than not sit on separate platforms, they frequently prevent cross-referencing of data by other council staff and local councillors. More generally, the planning process is too heavily reliant on documents rather than data, and this has a direct impact on the speed and quality of decisions.

Provision for public interaction with the planning system can, in many cases, appear to have been designed to actively discourage engagement, as anyone who has tried to analyse a local plan map will know. Even in cases where online access to information is possible through local authority portals, the data available is often inconsistent, confusing, and a barrier to community participation.

If any hon. Member has had to trawl their local council’s website to find information on a given planning application—I have, many times—they will know that documents often come in the form of hundreds if not thousands of pages of material spread across multiple PDFs, putting off anyone other than committed souls determined for one reason or another to trawl through reams of uploaded documentation to try to understand precisely what changes are being proposed in their local area. In short, there is an unarguable case to upgrade the technology that underpins the planning system in England. Doing so would have myriad benefits.

Perhaps most importantly, digitisation could go a long way to boosting engagement in local planning matters, particularly at the local plan phase, incentivising residents who, as things stand, would not dream of involving themselves in a planning matter. As Tony Burton from Neighbourhood Planners London put it to the Committee in oral evidence relating to local and neighbourhood plans,

“we would point to the opportunities it presents around new, complementary forms of community engagement…and more effective ways of pooling and analysing the evidence that is required”.––[Official Report, Levelling-up and Regeneration Public Bill Committee, 23 June 2022; c. 80, Q107.]

A digitised and integrated system would make it easier to find and search through the detail of a given application, and to see associated data and drawings, and it could well facilitate opportunities to directly interact or submit feedback. New interactive digital services and tools could even allow members of the public to submit their own ideas or take part in discussions and design workshops at an early stage of a proposal, and to explore different site distributions, massing and densities themselves.

Digitisation could also deliver huge benefits for the development and distribution of local plans. If done well, the roll-out of, for example, 3D model platforms could support the creation of local plans by changing the way councils visualise and make assessments of their localities, as well as aiding the monitoring of their delivery. Similarly, making local plans digitally available and interactive across England could help standardise processes and offer greater accessibility, collaboration and community engagement.

I add a small caveat at this point, in that the clauses in chapter 1 really cover only how data will processed and standardised. The Bill contains no indication of how the Government see consultation and decision-making processes being opened up to a more diverse audience as a result of digital technologies. I hope the Minister will give us a sense of the Department’s thinking in that respect, on issues such as digital mapping, when he responds.

However, that the clauses in this chapter present such opportunities is undeniable. That said, we are firmly of the view that a series of safeguards are necessary to ensure that the digitisation of the planning system does not have adverse consequences, intended or otherwise, and amendment 65, along with amendments 66, 67 and 68, seeks to provide some of those safeguards.

The particular concern that amendment 65 is intended to address is the potential for the broad powers provided by clause 75—to regulate the processing of planning data—to be used as a surreptitious way of prescribing the length, layout and content of local and neighbourhood plans. That concern arises in part from the ways in which the Bill, in other places, centralises the planning system by effectively downgrading the status and the scope of local planning—a theme will we return to many times over the course of this Committee’s life.

Given our concern that the powers in clause 75 give scope for excessive central control of local development plan formulation, we believe it is essential that the Bill clarifies that the powers are to be utilised only for the purposes of technical data handling and processing—hence the suggested removal of the broad language in subsection (2)(b) specifying that planning data can mean any information provided to, or processed by, the authority

“for any other purpose relating to planning or development in England”.

The key point here is the need for the Bill to better define what functions can be regulated by the powers set out in this clause.

Binding “approved data standards” applied to a limited range of technical functions, such as standardising contributions to the preparation of a local plan or how local plans are made accessible, is all to the good and will aid access, engagement and cross-boundary comparison. However, if not more tightly circumscribed on the face of the Bill than at present, our concern is that the proposed regulation of the processing and provision of planning data may, inadvertently or otherwise, enable the central imposition of what can and cannot be in a local or neighbourhood plan.

I appreciate the distinction is a subtle one, but I hope the Minister understands the concern we are trying to highlight. I also hope he will accept the amendment or, if not, at least provide the Committee with robust assurances that the powers in this clause will only ever be used for the narrow purpose of regulating the handling of technical data, rather than in any way dictating the form of local plans.

[Mr Jones]

I understand and share the desire to ensure that the information in scope of these new powers is proportionate and focuses on digitising the planning system.

Amendment 65 gets to the heart of our digital reforms—how we define planning data—and would narrow that definition. I fear, however, that the amendment underestimates the breadth of information upon which planning authorities rely. It is important to remember that these powers are designed to underpin the entirety of the planning system. We need to encompass information that will support plan making with interactive map-based plans; the flow of information, such as from the heritage sector, to planning authorities; and accessible environmental outcomes monitoring and reports.

As such, information relevant to planning may not in fact arise from a planning enactment. For example, it may come from activities of local authorities under their general power of competence or from information provided or used by that authority for the purposes of other legislation, such as the Local Government Finance Act 1992. Equally it may come voluntarily from other public sector organisations or from private companies and individuals for purposes that are not clearly related to a statutory planning function. We want to ensure that we do not accidentally exclude any of that valuable information from being made even more valuable to planning authorities and others as a result of our reforms.

As we will cover in subsequent clauses, there are underlying safeguards to protect all the information from inappropriate use. That includes protecting against inconsistency with data protection legislation. Equally, as I am sure we will discuss, our continuing pilot work with planning authorities will ensure that data standardisation can be implemented by them.

We will consult to ensure that we hear a diverse range of voices on how this part of the Bill is put into guidance. We will produce new guidance on community engagement in planning, which will describe different ways in which communities can get involved and highlight best practice.

The hon. Gentleman had some concerns about what is covered in a local or neighbourhood plan. The intent of creating the data standards is to ensure that local and neighbourhood plans can contain more information in a standardised format for the benefit of their communities. Data standards will be introduced gradually, and local authorities will not be prevented from using planning data where standards are yet to be introduced.

I hope the hon. Gentleman is reassured that amendment 65 is not required, and I would be grateful if he withdrew it.

[Matthew Pennycook]

I am grateful to the Minister for that response. I think the best way to put it would be that I am slightly reassured, but not wholly reassured. I welcome what he said about the recognition that the powers need to be used proportionately. I welcome the clarity on the intent. What I did not hear was a cast-iron guarantee that the powers will not, inadvertently or advertently, in any way end up constraining the length, layout and content of local development plans. Therefore, we still think and are concerned that they could be used to do such. While I will not be pressing the amendment to a vote, this is an issue that relates to our wider concerns about the status and scope of local planning, which we will come back to. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

[Mr Jones]

The planning system currently relies on information presented in various formats and contained in lengthy PDF documents from which it is hard to extract. Local plans alone can be hundreds of pages long. As the hon. Gentleman said, they can contain dozens and dozens of PDF files, which are difficult for experts to navigate, let alone members of the public.

This clause is the foundation for changing the way planning authorities hold and present their planning information, moving the planning system from being document based to being data driven. The clause does this in a manner that allows the planning system to keep pace with the innovation we hope to promote. The clause grants the Secretary of State the power to specify in regulations which planning information must meet set data standards.

I know that some are concerned that the data standards will outstrip the ability of planning authorities to meet them. I therefore want to reassure the Committee that the very reason for the approach I have just set out is to allow us to bring information into scope as it is ready. We will proceed incrementally and take into account planning authorities’ capabilities and innovation in property technology. I hope that reassures the Committee on that point.

In order to reduce the burden on planning authorities, clause 76 gives them the power to require those submitting planning data to do so in accordance with new planning data standards. In addition to enabling information in the planning system to flow freely, following that approach will help authorities perform their crucial role more effectively, with more ability to compare and co-ordinate with other authorities; will empower more local people to engage with planning, with better tools to support them in meaningfully shaping their areas; and will drive private sector innovation, improving the efficiency of the housing market as well as the planning system.

In summary, the clause begins the modernisation of the planning system, creating accessible, reusable data to the benefit of planning authorities, communities, central Government, developers and the wider private sector. I commend it to the Committee.

[Matthew Pennycook]

I will be brief, but I have some questions for the Minister. Clause 76(1) allows planning authorities, by published notice, to require a person to provide them with planning data that complies with an approved standard that is applicable to the data. Subsection (4) allows planning authorities to reject all or any parts of planning data from a person if they fail to comply with the requirements under subsection (1). Subsection (5) requires that planning authorities must serve the person with a notice by writing to inform them of any such decision, specifying which aspects of planning data have been rejected.

The two examples in the explanatory notes accompanying the Bill relate, respectively, to local plan creation and the identification of conservation areas nationally, rather than to individual planning applications. Given that the aim of this chapter is the creation of a data-led planning system, as the Minister said, and that the White Paper specifically referenced the intention to create a

“national data standard for smaller applications”,

it strikes me that there is a need for clarity over what “data not documents” means for individual households in the context of clause 76.

As such, I would simply like to get a sense from the Minister of what impact he believes these provisions will have on households seeking planning permission for projects such as extensions and conservatories, or garage and loft conversions. Specifically—this relates to a point that I will return to when speaking to amendment 66 to clause 77—what does the Department have planned, if anything, to ensure that residents making such applications who may lack the requisite digital skills or access to the internet are provided with appropriate support? Is any element of discretion provided, or other means of assisting such people?

[Mr Jones]

I thank the hon. Gentleman for his questions. With regard to that last one, we will probably discuss that as we go through the next few clauses. However, there is no intent to exclude those who do not have the ability to use digital equipment—those we consider to be digitally excluded. I hope that I can reassure the hon. Gentleman on that as we deal with further clauses.

Question put and agreed to.

Clause 75 accordingly ordered to stand part of the Bill.

Clause 76

Power in relation to the provision of planning data

Question proposed, That the clause stand part of the Bill.

[Mr Jones]

Too often planning information is hard to use for all the purposes it should serve. The clause helps to address that problem.

The large amount of information received by planning authorities often comes to them requiring manual intervention to make it usable. Re-entry is then required to use that information later in the system. That is bureaucracy at its worst, actively detracting from the ability of planning authorities to perform their core role, taking time and resources away from the decisions that matter to communities.

The clause works to achieve three effects. First, it works with clause 75 to ensure that complying with data standards does not create a new bureaucratic burden for planning authorities receiving information and then having to render it compliant. Secondly, it gives planning authorities the power to require information in a manner that best suits their systems and the data standards to which they are subject. Thirdly, it protects against the risk that some may attempt to use the requirements under clause 75 to inconvenience authorities’ decision making by deliberately submitting information in a problematic format that is difficult to extract.

The clause also sets out the process that planning authorities must follow to exercise their powers. Planning authorities will be required to publish a notice on their website or through specific communications to inform participants about what planning data will be subject to data standards when it is submitted to a planning authority. If the data fails to comply, a notice must be served specifying the reasons for rejection.

I will touch briefly on the power of planning authorities to refuse information as non-compliant. Planning authorities are not obliged to refuse non-compliant information, although for the reasons that I have outlined we expect them to accept such information only exceptionally. The Committee will see that information cannot be refused where the provider has a reasonable excuse. That is to protect those who, for whatever reason, cannot use the means of submission stipulated by a planning authority or cannot comply with the data standards in the submission. In that way, planning authorities will be under a duty to accept and fully consider such information. Those with a reasonable excuse will not therefore be disadvantaged.

Where authorities refuse information, the clause provides them with discretion to accept a complaint resubmission, although again there is no general expectation that they should do so. The result of the clause will therefore be that, by default, the information received will be usable for all purposes to which planning authorities need it to be put. That will make their work faster and easier and will allow them to focus on planning rather than data entry.

Question put and agreed to.

Clause 76 accordingly ordered to stand part of the Bill.

Clause 77

Power to require certain planning data to be made publicly available

[Matthew Pennycook]

I beg to move amendment 66, in clause 77, page 87, line 3, at end insert—

“(4) On the day any regulations under this section are laid before Parliament the Secretary of State must publish an accompanying statement explaining the steps that the Government has taken to ensure that the regulations do not exacerbate digital exclusion.”

This amendment would require the Secretary of State to publish a statement explaining how the provisions in this Chapter do not exacerbate digital exclusion.

As we discussed in relation to development plans, Labour believes that a series of safeguards are necessary to ensure that the digitisation of the planning system does not have adverse consequences. One of the most adverse consequences that could arise from digitising the present system—we have already touched on it—is of course the exacerbation of digital exclusion, which several of the witnesses who gave oral evidence to the Committee highlighted as a concern. Digital exclusion is already a serious problem and one that does not simply affect a minority of the population. The Office for National Statistics estimates that 7.8% of UK adults have either never used the internet or last used it more than three months ago—that is 4.2 million people. The amendment seeks to address the digital divide in the context of the planning system.

When we discuss digital exclusion in the context of the Bill, it warrants saying, as my hon. Friend the Member for York Central did, that a democratic planning system that takes seriously the right of communities to be heard and to participate effectively in every aspect of development plan formulation can never be entirely digital. As Dr Hugh Ellis told the Committee:

“We can have as much digital information as we like, but we also need access to the arenas where decisions are made”.”––[Official Report, Levelling-up and Regeneration Public Bill Committee, 23 June 2022; c. 126, Q157.]

I make that point simply to stress that meaningful engagement with the planning process requires in-person access to key decision-making forums, and the Bill erodes that right in important respects. That is why we will seek to amend clauses 82 to 84 and schedule 7 in due course.

When it comes to planning data, it is evidently not the case that everyone will be able to access information digitally even once it has become more accessible, as the Bill intends. For some people, that might be because they are digitally literate but do not have the proper means to engage with online data, and that concern was raised by Jonathan Owen, the chief executive of the National Association of Local Councils, in his evidence to the Committee, who suggested the potential need for capital investment to enable remote communities such as his own to engage with online material. Otherwise, it might simply be because a small but significant proportion of the population would not be able to engage with online data even if they had the means of accessing it.

In short, digital exclusion is not merely about whether people can access the internet but about their ability to use it, and a small but significant proportion of the population struggle to do so. The most recent UK consumer digital index published by Lloyds bank estimates that 21% of adults—11 million people—do not have the essential digital skills needed for day-to-day life.

[Rachael Maskell]

I am grateful to my hon. Friend for making this point. It is so important that we ensure that the planning process is accessible to everyone. The all-party parliamentary group on ageing and older people carried out a mini inquiry into the issue of digital exclusion. Its findings show that being able to access the planning process will be excluded from so many people. Does my hon. Friend agree that this is so important because often it is older people, who have slightly more time available to them—we all recognise that from our own constituencies—who do the heavy lifting on planning for everyone else in their community? If they cannot access those planning documents and the data, that will have an impact on their whole community’s ability to access the planning system.

[Matthew Pennycook]

I very much agree that, potentially, some of the proposed reforms could exclude those on whom we rely most in our communities to engage with the planning process. My hon. Friend also touches on the wider point that digital exclusion is inextricably linked to wider inequalities in our society. It is more likely to be faced by those on low incomes, disabled people and, as she said, people over the age of 65. Indeed, so close is the link between digital exclusion and other facets of poverty that it has been argued that it should be considered a key index of deprivation.

Evidence collected by the Local Government Association found that when the pandemic struck, only 51% of households earning between £6,000 and £10,000 a year had access to the internet, compared with 99% of households with an income of over £40,000. Even when poorer households had access to equipment and the internet, they were less likely to have the skills to utilise it. Clearly, to the extent that the pandemic drove many aspects of life online in ways that appear to have stuck, albeit in many instances in a hybrid form, the problem of digital exclusion has correspondingly become more acute.

I fully appreciate that the challenge posed by digital exclusion extends far beyond the issue of access to and engagement with the planning system in England. I am also fully aware that there are a range of policy initiatives beyond the remit of the Department for Levelling Up, Housing and Communities that have been put in place to address the problem—for example, funding for adults to gain a first qualification in essential digital skills. Although, as you might expect, Sir Mark, we would urge the Government to do far more to reduce the prevalence of digital exclusion. However, in the context of the Bill, the fact that digitisation of the planning system is a key feature of it, and the rationale for that is in part boosting engagement and participation, we believe that the Government need to address digital exclusion explicitly. We believe that they should do so in two ways.

First, there should be an explicit recognition that digitisation should enhance more traditional ways of communicating with the public about local planning matters, rather than replacing them entirely. Even if digitisation of the planning system proceeds apace, many people will still want and need practical help and support with understanding and engaging with the system. Simply being furnished with the opportunity to access vast quantities of data online is unlikely on its own to encourage more people to get involved in local planning. Given the chronic lack of capacity within local planning authorities, peer-to-peer, face-to-face support is extremely challenging. But established formats for communication, such as site notices, which were referenced earlier, have a role to play. We believe that they should not necessarily be removed as requirements from the system.

Secondly, there needs to be a focus on ensuring that digitisation is as inclusive as possible. In the context of clause 77 and the other related clauses, that means a focus on ensuring that planning services, data and tools are accessible to all, including those without the confidence or skills to use digital. Amendment 66 is designed to force the Government to engage more directly with those issues, and it does so simply by specifying that on the day any regulations under the section are laid before Parliament requiring certain planning data to be made publicly available, the Secretary of State also publishes a statement on how the provisions do not exacerbate digital exclusion.

I appreciate that this is not the most elegantly crafted amendment, but the issue it seeks to tackle is a real one, and the need to do so is pressing if the Government are serious about making the planning system accessible to as many members of society as possible. As such, I hope that it will elicit from the Minister a clear response, and that the digitisation that the Bill will facilitate will not exacerbate digital exclusion. I hope that by implementing new data standards reporting requirements and transparency measures in the Bill, Ministers will be actively working to adhere to digital best practice and ensure that digital planning tools are built and designed to be easy to use for all, regardless of age or accessibility needs.

[Mr Jones]

I entirely agree with the spirit of the amendment. As we discussed previously, digital exclusion is an important consideration for the design of public services. The statement proposed by the hon. Gentleman would, however, be unnecessary. Currently, as we know, published planning information is often difficult to access. It is inconsistently presented and hard to use for everyone in the planning system. Too few of our constituents engage with planning. We want as many people as possible, and as diverse a range of people as possible, to participate in our planning system, and our digital reforms are central to this endeavour. We can all agree that in a world in which an increasing emphasis is placed on using digital services and tools by default, those who have to use alternative methods can be at risk of exclusion.

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As a consequence, our view is that the statement envisaged by the amendment would be unnecessary, because the regulations could not, by definition, exacerbate digital exclusion. In the light of this and the reassurance I have given about the attention that the Government are giving to this important issue, I hope the hon. Member for Greenwich and Woolwich will withdraw his amendment.

[Matthew Pennycook]

I am grateful to the Minister for that response. I am glad that he agrees with the spirit of the amendment. As he might expect, I am somewhat disappointed that he has not agreed to the publication of a simple statement addressing how the Government are responding to this serious problem, but I am reassured by his assurances that traditional methods of information publication will not be ruled out by these clauses, and by the various initiatives he has mentioned that are already under way to tackle digital exclusion. On that basis, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Matthew Pennycook]

I beg to move amendment 67, in clause 77, page 87, line 3, at end insert—

“(4) The Secretary of State must provide sufficient additional financial resources to local planning authorities to enable them to implement the provisions in this section.”

See explanatory statement for NC32.

[The Chair]

With this it will be convenient to discuss new clause 32—Duty to provide sufficient resources to local planning authorities for new burdens: planning data—

“(1) The Secretary of State must provide commensurate additional financial resources to local planning authorities to enable them to implement the provisions in Chapter 1 of Part 3.

(2) Where local planning authorities have made investments in planning data software that is incompatible with the changes in that Chapter, the Secretary of State must provide compensation for this additional cost.”

This new clause, along with Amendment 67, would require the Secretary of State to provide sufficient additional resources to local planning authorities to enable them to implement the changes required by Chapter 1 of Part 3.

[Matthew Pennycook]

Clause 77 provides powers to require certain planning data to be made publicly available. Along with new clause 32, the amendment would require the Secretary of State to provide sufficient additional financial resources to local planning authorities to enable them to implement the changes required by chapter 2 of the Bill and, where local planning authorities have made investments in planning data software that is incompatible with the changes sought, to ensure that the Secretary of State provides compensation for the additional cost incurred by its replacement. As I argued this morning, although we believe that a series of safeguards are necessary—two of which we have just discussed in relation to amendments 65 and 66—we strongly support the digitisation of the planning system and the introduction of new data standards, reporting requirements and transparency measures as part of that process.  

It stands to reason, however, that a transformation of the kind that the Government are seeking to achieve when it comes to digitising planning will place extra demands on local planning authorities, primarily for their planning departments but also, by definition, for their IT support services. It is therefore important to require that they are provided with additional financial resources and investment. That would be the case irrespective of the current position of local planning authorities when it comes to skills, capacity and resourcing. After all, the kind of change that clauses 75 to 81 seek to facilitate, whether that be the harnessing of new digital technology, new digital engagement processes, or the integration of spatial, environmental and other datasets across England, will by their very nature frequently involve software upgrades as well as investment in other related services.

Yet the need for significant additional investment to meet the new demands that will result from the provisions in chapter 1 is made all the more acute by the parlous present state of local planning authorities when it comes to resources. The Department is well aware of that long-standing problem. For example, it has established a skills and capacity working group to determine what response is required, but precious little urgency is evident. In that respect, will the Minister tell us, when he responds, when the Department intends to publish a skills and capacity strategy and, if so, how much funding will be put behind it?

That answer aside, I am sure the Minister would agree that in general terms the pressures on local planning authorities are acute already. A report published by the National Audit Office in February 2019, entitled “Planning for new homes”, found that between 2010-11 and 2017-18 there was a 37.9% real-terms reduction in net current expenditure on planning functions by local authorities. Even when the income that authorities generated from sales, fees, and charges or transfers from other public authorities was taken into account, the report concluded that total spending on planning had fallen by 14.6% in real terms between 2010-11 and 2017-18, from £1.125 billion to £961 million.

A 2019 research paper published by the Royal Town Planning Institute found much the same, concluding that

“total expenditure on planning by local planning authorities is now just £900 million a year across England. More than half of this is recouped in income (mostly fees), meaning that the total net investment in planning is now just £400 million, or £1.2 million per local authority. This is fifty times less than local authority spending on housing welfare, and twenty times less than estimates of the additional uplift in land values which could be captured for the public during development.”

That same RTPI report also detailed the staggering regional imbalance in funding for planning, finding that the average investment in planning by local authorities in some regions is three times more per inhabitant than in others.

Put simply, as a report published by the House of Lords Built Environment Committee in January of this year put it, there is an “evolving crisis”, with local planning authorities under-resourced and consequently unable to undertake a variety of skilled planning functions effectively.

[Rachael Maskell]

I am grateful to my hon. Friend for moving the amendment. City of York Council has dispensed with the role of the chief planner, so now not only do we not have the skills, but that is really slowing down development. The Government are trying to reach their objectives and to see economic investment, but that just cannot happen without the infrastructure and, crucially, the people in place to see this forward. The amendment is excellent.

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[Matthew Pennycook]

I thank my hon. Friend for that point, which is well made. Not only are local planning authorities overstretched, but they are often outgunned in their relationship with developers and in having that capacity to interrogate properly what is happening in order to get the best deal for local people.

The simplest answer as to why that has happened is a general lack of resourcing for local authorities. At the same time as dealing with budgets cuts, they have had to cope with growing responsibilities, not least in relation to social care. That general lack of resourcing is largely the result of reductions in central Government grants, which have been the most sharply cut component of local government revenue since 2009-10, falling by 37% in real terms between that year and 2019-20, from £41 billion to £26 billion in 2019-20 prices.

We therefore have a situation in which the resources dedicated to planning within local planning authorities—never particularly high by international standards, even before 2010—have fallen dramatically as a result primarily of local authority belt-tightening in response to central Government funding cuts. The Bill does not provide an opportunity to resolve the wider problems of inadequate local authority funding, but we believe—I am certain this is not the only time that we will consider this issue—that any new burdens placed on local planning authorities by this legislation must be adequately resourced and that specific commitments to that end are put on the face of the Bill.

On the new burdens associated with the planning data requirements in the Bill, there are two facets to the argument. First, local planning authorities will need sufficient additional resources to comply with the new work pressures that will be placed on them as a result of the Bill. Without such additional resources, I suspect that many local planning authorities will struggle to comply in practice with the provisions of chapter 1. Without a commitment to new funding, it is not difficult to imagine, to give a practical example, that planning departments in local planning authorities will face a Herculean task to ensure that their already hard-pressed IT services comply with all the new requirements.

Secondly, many local planning authorities will already have purchased software and tools that may ultimately not be approved under the powers provided by clause 78. As such, proposed new clause 32 explicitly specifies that where local planning authorities have made investments in planning data software that is incompatible with the changes sought, the Secretary of State will provide compensation for the additional cost incurred by its replacement.

There is widespread support—if not enthusiasm—in both the public and private sectors for the digital transformation of our planning system. There is also an obvious need to ensure that the requirements in this chapter that will facilitate that transformation can be enacted in a way that will not add further burdens to already overstretched local planning authorities. I trust that the Government accept as much and we will hear from the Minister that he is content to make these changes to the Bill.

[Tim Farron]

This is a good and wise amendment that looks at the additional responsibilities placed on planning departments and how important it is that the Government ensure adequate resourcing for these new functions so that the digitisation of the planning system is performed adequately. It really opens a window on the wider issue that the hon. Member for Greenwich and Woolwich rightly highlighted into the staffing, resourcing and competence of planning departments across the country.

The Bill introduces many measures—perhaps many more than some of us would like. How frustrating will it be to developers, proposers, local residents, members of councils and local communities—everyone—if it turns out that the new powers and functions that might come about simply cannot be enacted? We see around the country a reduction in the quality of planning decisions, not because planners are not good people but because there are too few of them.

There is not the capacity for planners to go and spend a semi-formal hour with a potential developer or householder to scope out what may or may not be possible. That would save people putting in an application that was always doomed to fail, or ensure that an application is more likely to be in line with planning policy and the wishes of the local community. We get bad decisions that end up being appealed, which is more expensive for everybody and sucks all the energy out of that planning department when it should be focused on trying to preserve and promote the community’s priorities.

We will have many debates—we have had some already—about what planning provisions should be in the Bill and what powers local communities should have. It will all be pretty meaningless if there is no way whatsoever of ensuring that the new provisions are enforceable.

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I appreciate that my responses are not what the hon. Member would ideally want to receive. Nevertheless, I hope that I have reassured him. As he has rightly pointed out, we have committed to the skills strategy. We are developing a comprehensive strategy to make sure that local authorities are properly equipped to deliver reform and places that the people who live in them can be proud of. We will publish the details of the strategy in due course. For the reasons that I have outlined, I hope that he will withdraw the amendment.

[Matthew Pennycook]

I am glad the Minister understands the concerns that the amendment seeks to highlight. I welcome his recognition that local planning authorities need to be well equipped and supported to make the changes. In all honesty, I was not reassured by his answer, which I found to be quite vague. We know that, as has already been said, local planning authorities face real challenges in resourcing new capacity. That is a pre-existing problem. They are being given a set of new responsibilities and there has been no reassurance that we will get any additional financing for those new burdens. I do not intend to press the amendment to a vote, but we will come back to the issue of adequate financial resourcing for some of the changes that the Bill seeks to enact many times during its passage. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

[Mr Jones]

The planning information that is currently published is often difficult to access, inconsistently presented and hard to use, limiting its wider usefulness. Clause 77, in combination with clause 75, changes that by requiring standardised information to be openly available to anyone for free. The Secretary of State will set the licence under which the information is to be published and regulations will specify the information to which the requirements apply. There is a limitation on the information that may be made available to ensure that sensitive data, such as where the planning authority has an obligation of confidence or where data protection legislation applies, cannot be subject to the regulations.

We believe opening planning data will drive greater productivity and efficiency levels across the housing, planning and land sectors, which will deliver significant benefits to a wider range of groups. Benefits include time savings, the development of new tools, and increasing accessibility to the information required for decision making.

Without accessible planning information, both local and central Government cannot make faster, better-informed decisions to meet the needs of local communities and understand national demands and challenges. Likewise, the development of innovative digital tools and services that better engage communities and allow planners to work more productively is hampered.

Open, consistent and comparable planning information will unlock a more transparent planning system where communities can better understand, contribute to and, as a result, have greater confidence in planning for their areas. I therefore commend the clause to the committee.

Question put and agreed to.

Clause 77 accordingly ordered to stand part of the Bill.

Clause 78

Power to require use of approved planning data software in England

[Matthew Pennycook]

I beg to move amendment 68, in clause 78, page 87, line 10, at end insert—

“(1A) On the day any regulations under this section are laid before Parliament the Secretary of State must publish an accompanying statement setting out—

(a) the reasons why the planning data software in question has not been approved for use by the Secretary of State,

(b) the steps that the Government has taken to ensure that the decision not to approve the planning data software in question does not undermine effective competition in the procurement of planning data software in England.”

This amendment would require the Secretary of State to publish a statement explaining why the provisions in this section were used to restrict or prevent the use of planning data software and setting out the steps taken to avoid the creation of a Government-granted monopoly in planning data software.

Clause 78 permits the use of regulations to restrict or prohibit relevant planning authorities from using software not approved by the Secretary of State. We have just considered one possible adverse outcome of the use of these powers, namely that local planning authorities who have purchased software and tools may find that in the future they are not approved for use and that their investment has been made redundant as a result. However, we are concerned that another adverse consequence might potentially flow from the use of the powers and that is the limitation of fair and open competition among software providers.

Amendment 68 would add to clause 78 a requirement that on the day any regulations under the clause are laid, the Secretary of State must publish an accompanying statement setting out, first, the reasons why the planning data software in question has not been approved for use and, secondly, the steps that the Government have taken to ensure that the decision not to approve does not undermine effective competition in the procurement of planning data software in England.

The effect of the amendment would not be to prevent the Secretary of State from exercising the powers in clause 78 but simply to ensure that the holder of that office properly justifies their use and has due regard to the need to maintain healthy market competition. The reasoning behind the amendment is that as benign as the provisions in clause 78 might appear to be, in the sense that taken at face value they are merely a means of rolling out new data standards and enforcing standardisation, they could, deliberately or inadvertently, create a Government-granted oligopoly or monopoly in planning data software. We believe the Government should be clear that the intention of the powers is not to foster an oligopolistic or even, dare I say, a monopolistic market in planning data software.

I appreciate fully that the Government are bound by public procurement rules, albeit ones that they intend to overhaul by means of the Procurement Bill that is progressing through the other place, and that within the general procurement framework there is a specific set of rules and handbooks for technology procurement. However, the powers in clause 78 strike us as so expansive, enabling Ministers by regulation to restrict or prevent the use or creation of software used by planning authorities to process planning data, that a further check to their use is required.

Assuming the Government do not wish to fetter rigorous competition in the planning data software market, amendment 68 should be an easy one for the Minister to accept and I hope to hear that he will do so.

[Mr Jones]

We wholeheartedly support the principle embodied by the amendment, although I think there may be a slight misunderstanding about the mechanics of clause 78. Clause 78 aims to ensure planning authorities are supported by modern software that complies with the requirements created by our digital reforms. We will set out clear criteria that the Secretary of State must then apply in deciding whether to approve any given software to which the regulations apply.

The expectations of the Secretary of State will therefore be public and clear before any software is submitted. Likewise, the reasoning of the Secretary of State’s decision to grant or withhold approval will necessarily be the compliance with those criteria. In that context, a statement on individual software decisions would be superfluous and could risk inappropriately disclosing commercially sensitive information. That could, for example, deter submission for approval, undermining the intention of the provision.

That brings me to the second aspect of the hon. Member for Greenwich and Woolwich’s amendment—the statement about the effect on competition in the software market. Regulations could not lawfully be made, nor could decisions lawfully be taken, under that power with the aim of conferring a monopoly. The Secretary of State cannot use the powers other than impartially between software suppliers to foster the innovative market our reforms are designed to achieve. The criteria for approval will be informed and refined by continuing—and continual—work with planning authorities and software suppliers on trial planning software. We have, for example, already funded planning authorities for the creation of new software and supported programmes for local authorities to improve their existing development management software.

We have started to engage with the technology sector through local authority-led pilots and pathfinders. We will continue to engage meaningfully with them and others to establish a realistic adoption timetable for any planning data software that the Secretary of State may wish to approve for use by planning authorities. I hope that provides sufficient reassurance to the hon. Member for Greenwich and Woolwich to allow him to withdraw his amendment.

[Matthew Pennycook]

I am grateful to the Minister for that response. I note that he only said that the clause would prevent the advent of a monopoly and not an oligopoly. I still worry, reading the text of the Bill, that we could inadvertently find that the Government restrict what software can be used by local authorities. That said, I welcome the clarification and reassurances that the Minister has provided. On that basis, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

[Mr Jones]

We have already discussed some aspects of the clause in relation to amendment 68. Many planning authorities are reliant on outdated and expensive software and systems that do not work with one another, forcing manual re-entry of information while locking that information away in formats that are not reusable. Clause 78 allows the Secretary of State to change that entrenched status quo. Without the right software to support processing standardised data, the benefits from the chapter across the planning system will be thwarted.

Clause 78 relies upon, and will therefore follow from, the introduction of data standards set under clause 75. Those data standards will take time to develop. The aim of our reforms is to create a virtuous circle whereby better software enables better information to be published, which in turn allows better tools to be developed for planning authorities. As such, it is not our intention to require approval for all planning data software. We will work with planning authorities and the technology sector to determine where and when the use of that power will most benefit the planning system. The clause enables the creation of the effective, high-quality system that the public rightly expect of Government at all levels. I commend clause 78 to the Committee.

Question put and agreed to.

Clause 78 accordingly ordered to stand part of the Bill.

Clause 79

Disclosure of planning data does not infringe copyright in certain cases

Question proposed, That the clause stand part of the Bill.

--- Later in debate ---

[Matthew Pennycook]

I have a few questions for the Minister about the three clauses. Clause 79 provides that a local planning authority that makes planning data available to a person does not, in doing so, infringe copyright if making the data available is necessary for certain purposes such as the development of planning data software. Will the Minister explain the rationale for restricting the circumstances where planning data will not be in breach of copyright solely to those purposes set out in subsections (1)(a) and (b)? Will he also comment on whether he foresees any other circumstances where it may be desirable for copyright to be limited, for example in relation to academic research?

Clause 80 stipulates that the Secretary of State may only make planning data regulations that contain provision within devolved competence of the Scottish Parliament, the Senedd or the Northern Ireland Assembly after consultation. I presume—the Minister can correct me—that legislative consent is not required for the provisions, but perhaps he could clarify what engagement his Department has had with the devolved Administrations about the planning data aspects of the Bill.

Finally, clause 81 provides definitions of key terms. Will the Minister confirm that the definition of relevant planning authority to include any public body with functions relating to

“planning or development in England”,

as laid out in paragraph (n)(i), covers community and parish councils, and neighbourhood planning forums? If so, what support, if any, will they be provided with to ensure that any plans or priority statements they produce conform with the regulations, given they are generally voluntary organisations?

[Mr Jones]

On the point about devolving planning to neighbourhood planning level, I expect that support will be provided by local planning authorities in that regard.

The hon. Gentleman also mentioned the type of copyright material that is in scope of infringement protection. Any information with the purpose of approving and maintaining or upgrading the planning software that falls under the definition of the planning data defined within the Bill, in which copyright subsists, is in scope of the power. One such example is architectural drawings, where the planning authorities are required to consult on new proposed developments.

The hon. Gentleman raised one other point. I am not able to confirm at the moment but will certainly write to him about the discussions that my predecessor has had with the devolved Administrations.

Question put and agreed to.

Clause 79 accordingly ordered to stand part of the Bill.

Clauses 80 and 81 ordered to stand part of the Bill.

Clause 82

Development plans: content

[Rachael Maskell]

I beg to move amendment 117, in clause 82, page 91, line 8, at end insert—

“(3A) After subsection (4) insert—

‘(4A) A local planning authority must review and update the development plan no less regularly than once every five years.’”.

This amendment would require local authorities to review and update the development plan at least every five years.

This is a probing amendment and I would be grateful for the Minister’s response. York has not had a local plan for 76 years—that is another issue that will no doubt come across the Minister’s desk—and I am trying to work through why that has been the case. There has often been a complex and rapidly changing political context in the city.

We seem to talk about local plans, development plans, minerals and waste plans, transport plans and so on as events, rather than in the context of a place’s evolution. Therefore, if there is a 10-year period—or even longer in the case of York—between plans being updated, the task is so great that it can be very challenging indeed. Thinking about how we can get some sequencing and timelines for how data is produced and how development and supplementary plans are put in place could improve the process.

I have some observations about why it has not worked in York and about the task ahead. For our city, the situation has presented many challenges because developers have taken advantage. It has caused a lot of difficulty over the years, but it has also dominated the political environment and destabilised our city, rather than stabilised the way forward.

I want to touch on the supplementary plans, which feed into the data, and to think about the pace at which things are moving forward. The local transport plan, which feeds into our development plan, dates back to 2011, and the data was gathered two years earlier, so it is already 13 years out of date. That is informing the local plan, which is being discussed with the inspectors is this week. Thirteen years ago, we did not have micromobility, e-scooters and e-bikes. Electric vehicles were not really a thing and bus services were very different. Even our major roads have changed over that time, and we have seen deepening congestion of late.

We now know that climate pressures are bearing heavily on our environment, whether in respect of housing, economic development or transport infrastructure. Anybody who was at the briefing yesterday with Sir Patrick Vallance will understand how pressing it is that we address the climate issue at this moment. Leaving plans for too long could mean that they are not responsive to the call of our time, particularly on climate issues. They will also not recognise the changing environment we are in. I have to hand it to the Government: some of the things they are putting forward on national infrastructure and housing are ambitious. Whether they can deliver is another question altogether, but they are certainly putting out a rapid change, and we need to reflect that in our planning system.

A supplementary plan that is 13 years out of date is not responsive to the logjams that we see in York today—the increase in the volume of traffic and the consequences of that on our air quality—and developments that have happened. We have an outline plan for the York Central site, with 6,500 jobs and 2,500 dwellings. We are talking about placing this new city within York in the middle of our old medieval city, as well as the infrastructure routes feeding into it, but with transport planning that is 13 years out of date, we will rapidly see that bringing all those cars into the city centre will just create a car park. Therefore, it is not responsive enough to the reality of what we are doing. At rush hour, York will come to a complete standstill, yet these supplementary plans are meant to inform what is happening.

I could talk about environmental plans and what is happening on flooding. Fortunately, we have been putting in mitigation to address the flooding challenges in our city, but the Environment Agency tells me that we have 17 years until we are challenged again, unless upstream infrastructure is put in place and we take water out of the rivers, improve soil quality and so on. We really need to think about the rapid changes and pressing issues that we face.

Therefore, we need some time. I put five years as a suggested time period for us to start thinking about how we move on to the next stage of our planning. That is why it is a probing amendment. I am trying to build a culture in our planning system of a thinking process, as opposed to having rigid timetables.

Our major routes around York will have an impact on the way traffic flows in our city, whether it is the dualling of the ring road or the widening of some of the A roads—not in my constituency but on the outside of York. At the same time, we have a city centre that has been declared car-free. That will have a massive impact too, with blue badge holders being locked out of their city. We have changes of routes through various parts of the city, building pressure and volume on some of the core routes through York.

It is important to recognise the pace of the change that is occurring and to think about how we can best address that in the planning system. We can do that through a timetable, and that is why I have said it is a probing amendment. We have to start addressing what is happening on the planet around us in the context of planning. In particular, I am thinking about scheduling and the evolution approach, as opposed to this being an event. It certainly will be an event in York if we do get that local plan over the line. [Laughter.] I am sure the Minister will want to come and celebrate with us all at that moment.

A conversation is needed about planning and about how we bring together our supplementary plans—our minerals and waste plan, and our local transport plan—in sequence for a local plan process. More thinking needs to be done. I thought it was necessary to table an amendment to make that point today and to see how the Minister responds, because this may be something we want to explore at later stages of the Bill.

[Matthew Pennycook]

I congratulate my hon. Friend the Member for York Central on making a strong case for her amendment. The problem she highlights is a very real one—that of out-of-date plans based on out-of-date data and analysis. The Opposition believe that local development plans are vital ways that communities can shape and agree a vision for future development in their area and properly account for the specific housing, employment and infrastructure needs within them. We want to see the proportion of England covered by a local plan increase. We believe it is important that each plan should evolve over time to take into account changing circumstances affecting the area in question, whether it be changes in the level of housing need or new infrastructure requirements.

Paragraph 33 of the national planning policy framework makes it clear that:

“Policies in local plans and spatial development strategies should be reviewed to assess whether they need updating at least once every five years, and should then be updated as necessary.”

I appreciate the argument of my hon. Friend the Member for York Central that this aspect of national guidance should be put on a statutory footing in the Bill. We are certainly sympathetic to that, and I hope the Minister responds to her amendment favourably, with the proviso that, as with so many other measures in the Bill, sufficient resources flow down to local authority planning departments to enable them to carry out a review and an updating exercise at least once every five years, given how onerous a task it is to prepare a local plan or to revise it.

[Tim Farron]

I, too, think this is an important amendment, as it allows us to get a sense of how important the Government consider development plans to be and what support they will give communities to not just have them, but ensure that they mean something. In Cumbria, both at local authority level and in the national parks, we consider development plans to be important. Not having a development plan means basically sub-letting it to the market. The reality is that the developers decide what gets built in people’s communities. We end up seeing development for demand, not for need. In a community like ours—pretty much anything can be built in the lakes and the dales in Cumbria and there would be a market for it—we do not get the buildings that are needed to meet the requirements of a community that will otherwise dissipate, and is doing so.

I suspect one reason a number of authorities are reluctant to have a development plan, or are not as committed to having one as they might be, is that they often think they are not enforceable. Very often, a development plan will outline the priorities in a community. I mentioned earlier the Yorkshire Dales national park authority boldly saying only the other week that it wants to ensure that every new development needs to be 100% for permanent occupancy. That is a brilliant endeavour, which I totally support, but there is a great deal of doubt as to whether the authority will ever be able to enforce it. In fact, I think we all know that it will not be able to do so, unless the Government were to change the law through this or some other process.

--- Later in debate ---

[Mr Jones]

The Government want the planning system to be truly plan-led, to give communities more certainty that the right homes will be built in the right places. To achieve that, plans will be given more weight in decision making. They will be faster to produce and easier to navigate and understand. Currently, communities and applicants can face an alphabet soup of planning documents, leaving all but the most seasoned planning professionals pretty baffled.

The clause provides an important change to the definition of the development plan set out in section 38(2) of the Planning and Compulsory Purchase Act 2004. It outlines the elements that, collectively, will comprise the development plan for any given area of land. It replaces the terminology used to describe constituent documents to align with that used in schedule 7 to the Bill, as introduced by clause 87. It paves the way for a system without local development documents, local development frameworks, area action plans, and local plan part 1s and part 2s. Instead, we will have a simpler approach, with specific references to neighbourhood plans, local plans, spatial development strategies, supplementary plans, and minerals and waste plans, as defined in schedule 7.

That change will leave communities and applicants in no doubt about which are the key planning documents for an area, and will lay the foundation for the later reforms of the planning system through this Bill. I therefore commend the clause to the Committee.

Question put and agreed to.

Clause 82 accordingly ordered to stand part of the Bill.

Clause 83

Role of development plan and national policy in England

[Matthew Pennycook]

I beg to move amendment 86, in clause 83, page 91, line 28, leave out lines 28 to 30 and insert—

“(5C) But the development plan has precedence over any national development management policy in the event of any conflict between the two.”

This amendment gives precedence to local development plans over national policies, reversing the current proposal in inserted subsection (5C).

[The Chair]

With this it will be convenient to discuss amendment 57, in clause 83, page 91, line 30, leave out “national development management policy” and insert “the development plan”.

This amendment would require any conflict between a local development plan and a national development management strategy to be resolved in favour of the local development plan.

[Matthew Pennycook]

In moving to chapter 2 of part 3, “Development plans and national policy”, we confront an altogether more contentious set of issues than planning data, as the new Minister will be acutely aware.

Let me start by making it clear that, in general terms, we welcome efforts to strengthen development plans. Building on clause 82, which updates existing definitions and references to provisions in the Planning and Compulsory Purchase Act 2004 to reflect changes proposed in the Bill, clause 83 makes amendments to that Act in two important ways relating to development plans.

First, proposed new subsection (5B) provides that any determination of a planning matter under the planning Acts must be made in accordance with the development plan and any new national development management policies, unless

“material considerations strongly indicate otherwise”.

In other words, departures from a plan will require stronger reasons than at present, thereby giving residents more confidence that plans will be adhered to and that any safeguards woven into the fabric of such plans will be respected. That is an entirely sensible measure, and we fully support it.

Secondly, however, that measure is immediately undermined by proposed new subsection (5C), which stipulates that at the point an individual planning application is determined, if there is any conflict between a formulated development plan and any new national development management policy that the Government might introduce,

“the conflict must be resolved in favour of the national development management policy.”

The Bill makes it plain that we are not talking only about significant conflicts between local and neighbourhood plans and national development management policies.

Proposed new subsection (5C) is clear that conflict “to any extent” must be resolved in favour of national policy. That is a far more problematic measure that the sensible strengthening of plans provided for by proposed new subsection (5B), in that it clearly accords precedence and a large measure of control to the national over the local. The result is that, in the clause, the Government are giving with one hand while taking away with the other, making it harder to deviate from the local development plan at the same time as giving themselves powers to exert greater control over them.

The amendment would replace proposed new subsection (5C) and, in doing so, reverse the proposition currently in the Bill by making it clear that the development plan would have precedence over any national development management policy in the event of any conflict between the two. We believe that that is one of the most essential changes required in revising the Bill, and I hope that the Committee will forgive me if I explain why in some detail.

The Government contend that the creation of national development measurement policies will help to make local plans simpler and easier to produce by providing greater certainty on the question of whether policies in any individual development plan are consistent with national policy. There is a glaring paradox there, however, because to simplify all local plans sufficiently, NDMPs would have to cover an extensive range of issues in enough detail to be readily applicable to the huge diversity of local circumstances found across England. If they do ultimately cover the broad range of diverse policies that apply “in most areas”—as the policy paper suggests they will—they risk becoming meaningless.

Nor is it clear how NDMPs will actually enable the Government to prevent local planning authorities from duplicating large swathes of national policy in local plans. We should bear in mind that the national planning policy framework already instructs local planning authorities not to duplicate national policy, but most authorities—understandably—like to make it clear how national policies apply to their local area, which highlights the fact that one person’s duplication is another person’s tailoring to local circumstances.

When the Minister responds, could he explain—referring back to the debate we had earlier today—whether duplication of national policy in development plans is an issue that the Government believe can be addressed by the processing of planning data as provided for by chapter 1? Are clauses 75 to 81 intended, in part, to be a means of making local plans shorter? I struggle to see how NDMPs will, in and of themselves, lead to a simplification of local planning.

In any case, when it comes to local plans, the laudable objective of simplicity and certainty should not also require that development plans be subordinate to national policy, as clause 83(2)(5C) clearly renders them in the event of any conflict between the two. The Committee might wonder why such subordination is problematic, because should national policy not be clearly set by central Government, with local planning authorities given no discretion whatever to depart from it? Well, I would make two points in response.

First, we have absolutely no idea from the Bill, from the accompanying notes, or from the non-existent impact assessment, what might be covered by a national development management policy in future, other than that they are likely to relate to policies that, as set out in the policy paper, “apply in most areas”. The fact that none of us knows what future NDMPs might cover is deeply problematic.

As Victoria Hills, the Royal Town Planning Institute chief executive, put it to the Levelling Up, Housing and Communities Committee on Monday 20 June:

“As I sit before you today I could not tell you if 20%, 50% or 80% of local plans are due to be nationalised.”

That is an incredibly concerning state of affairs given the powers provided for by clause 84, which we will come to next, and it should trouble every member of the Committee.

The new Minister is a diligent parliamentarian, and I know that he will have read his brief over the weekend. I fully expect him to stand up and argue that the concerns expressed across the House about this matter are misplaced; that there is no need to worry because NDMPs will only ever relate to areas of policy that are naturally and incontrovertibly matters for national decision making; and that there are already legal protections in place that simply need to be interpreted for planning—policy relating to aspects of the protection of heritage assets, for example.

However, I say gently to the Minister, who I am incredibly fond of, that he will not be around forever. Indeed, as things stand, he is unlikely to make it past early September. Even if he does, on the basis of the average tenure of a Housing Minister under Conservative-led Governments since 2010, whoever replaces him will, by my reckoning, have until the summer of next year before they are also moved on. I am afraid that any personal reassurances that Ministers might offer—as the now previous Secretary of State did, including to the Select Committee—count for little. What matters is what the legislation says, and it offers us no guide to what will be covered by NDMPs.

Let us take as an example a particularly contentious area of policy: the green belt. Will rules on development in the green belt be the subject of an NDMP? If so, what will they specify? At the moment, we have no idea. That matters for the simple reason that there are no limits in the Bill on the scope of the national development management policies; the legislation enables them to be about anything that is common to most areas, which brings me to my second point.

As the Bill specifies no limit to what might be covered by an NDMP, there is potentially no corresponding limit to central interference in areas previously considered to be firmly within the preserve of local decision making. There is therefore no certainty whatever that the changes proposed will mean that local plans will deal with local problems, and national policy will deal with national problems.

--- Later in debate ---

[Mr Jones]

I am not in the position to give the hon. Lady that example today. As she knows, such policies are often developed through the process of making primary legislation, and then are developed beyond the process we have before us today. I take her comment.

As part of the reform, we are also introducing statutory national development management policies. Those policies would sit alongside those in local plans when relevant planning decisions are made, with clear statutory weight. National development management policies will be primarily those nationally important policies used for making decisions. The hon. Member for South Shields should note that a current example is green belt protection.

There are several reasons why we think national development management policies are an important and positive reform. First, they will make it easier for local authorities to produce their local plans. By dealing with universal planning considerations nationally and giving them the same weight as the plan, local authorities will no longer need to repeat those matters to ensure they have sufficient force.

Secondly, introducing national development management policies means that local plans can focus on matters of genuine local importance to communities—saving time and money for authorities, and making plans more locally relevant and easier to use. Thirdly, it will be easier for applicants to align their proposals with national and local policy requirements—something which we expect to be of particular benefit to small and medium-sized builders.

Fourthly, it will provide greater assurance that important policy safeguards that apply nationally, or to significant parts of England, such as protections for areas at risk of flooding, policy on climate change, and policies to protect the green belt, will be upheld with statutory weight and applied quickly across the country, including when any changes are made.

That brings me to the heart of the issue outlined by the hon. Member for Greenwich and Woolwich about the national development management policy taking precedence over local plans. It is extremely important to reiterate that where we have local plans that become very out of date, it is important that the protections set out in national policy continue to be reflected in the decisions.

Finally, this framework of basic national policies can guide relevant planning decisions if a local plan is significantly out of date and cannot be relied upon in certain respects. Introducing national development management policies and giving them statutory weight is, therefore, important to creating much greater clarity around the role of national policy in decisions. Increasing this clarity is crucial to reducing the number of planning appeals local authorities face, and therefore reducing the number of unanticipated developments communities face on their doorstep as a result. That point has been made a number of times this afternoon. That clarity also reduces the cost associated with those appeals, enabling local authorities to divert their resources to planning positively for their area. I think I can safely say that that is an outcome that we all want to deliver.

The amendment deals specifically with what to do in the event of a conflict between national development management policies and the development plan when a planning decision must be made in accordance with both. As I have indicated, I believe the current clause is a necessary safeguard in situations where plans are out of date and important national policies on the environment or other matters need to be reflected fully in decisions.

To explain that more fully, some local plans are woefully out of date. We heard one example in Committee this afternoon and there are a number of examples across the country where the plans, although not quite as out of date as the one mentioned by the hon. Member for York Central, have been out of date since the 1990s.

[Matthew Pennycook]

How does the Minister believe that this clause specifically will address the fact that there is not sufficient coverage of local plans across England? How will the provisions in the clause incentivise people to take up a local plan if they have not already done so?

[Mr Jones]

We have just discussed a clause that will compel local authorities to put in place an up-to-date local plan every five years. What we are discussing here is making sure that, where we get outliers and places with out-of-date local plans, green belt protection and other such things can be maintained through the national development management policies. This is a crucial point. We wish to use national policy to drive higher standards where those standards at the moment are not as they should be, especially on the environment and to tackle climate change. It is important that those policies can take precedence in the event of conflict with the out-of-date policies in plans.

I would nevertheless expect such conflicts to be limited in future, because we are making it easier to produce plans—we have discussed a number of situations today in which that would be the case—and because the Bill makes sure that new plans will be drawn up consistently with national policies, including the new national development management policies.

As I said at the outset, I appreciate the strength of feeling on this issue. Last week, the previous Secretary of State, my right hon. Friend the Member for Surrey Heath (Michael Gove), published his response to the letter from the Chair of the levelling-up Select Committee in which clarification was requested on this question. I have spoken to the new Secretary of State, the right hon. Member for Tunbridge Wells (Greg Clark), who took office this week. His view is the same as that expressed in the letter. We will provide a copy of that letter to members of the Committee.

We are also committed to providing more information about how we expect national development management policies to work in the future, which is why we plan to publish shortly the prospectus I referred to earlier, if not as articulately as I could have, so that we can look at our approach to the preparation of that prospectus. We will welcome views from hon. Members. With those assurances, I hope that the hon. Member for Greenwich and Woolwich will feel able to withdraw the amendment.

[Matthew Pennycook]

Given how long the Minister has been in post, I do not blame him, but the arguments he makes in defence of clause 83(2), and proposed new subsection (5C) in particular, are the same ones we have heard over many months. Frankly, I do not think they stack up. I note with interest the points he made about the new Secretary of State taking the exact same view. I do not think his line that it would be counterproductive to amend this aspect of the Bill will hold.

I do not intend to press amendment 86 to a vote, because we will almost certainly come back to this issue on Report, but I just ask the Minister to go away and satisfy himself that the powers in subsection (2) are appropriate and justified. Will he think through, as the hon. Member for Buckingham said, not only the implications for democratic control of planning, engagement and scrutiny of planning, and the impact on trust and confidence in the planning system, which we know is an issue, but the implications in terms of innovation, undermining devolution deals and the legal delays that I am certain will come if the Government try to use this power? They will have to think about this issue again, and we will certainly come back to it on Report. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

--- Later in debate ---

[Greg Smith]

I have heard the assurances that the Minister has given but agree with some of the reticence of the shadow Minister, so I urge my hon. Friend to consider these points very carefully over the summer. I will not press amendment 57 to a vote right now, but I underline the importance of getting this right for the whole Bill and its meaning.

[Matthew Pennycook]

I beg to move amendment 98, in clause 83, page 91, line 30, at end insert—

“, subject to subsection (5D).

(5D) But any conflict must be resolved in favour of the development plan in an area if—

(a) if, in relation to it, regulations under section 16 of the Levelling-up and Regeneration Act 2023 have been made to provide for the town and country planning function and the highways function and any functions exercisable under the Environment Act 2021 of a county council or a district council that is exercisable in relation to an area which is within a county combined authority area to be exercisable by the CCA in relation to the CCA’s area,

(b) if, in relation to it, regulations under section 17 of the Levelling-up and Regeneration Act 2023 have been made to provide for at least one function of another public body that is exercisable in relation to an area which is within a county combined authority area to be exercisable by the CCA in relation to the CCA’s area,

(c) it has a joint spatial development strategy, or

(d) it is in Greater London.”

This amendment would place limits on the primacy of national development management policies over the development plan where a Combined County Authority had been handed planning, highways, environmental powers and at least one function of another public body under a devolution deal, in areas covered by a joint spatial development strategy and in Greater London.

This is a probing amendment. Given that the Government have just declined to accept amendments 83 and 57, and reconfirmed their intention to have national development management policies override local development plans in the event of any conflict between them at the point of determination, amendment 98 is designed simply to try to elicit from the Government whether they will consider allowing any specific exemptions to that general principle.

The amendment would do so by specifying that any conflict between an NDMP and a local development plan at the point of determination must be resolved in favour of the latter in an area where a combined county authority has had key powers transferred to it under a devolution deal, where a joint spatial development strategy has been agreed, or in Greater London. The idea is that an exemption from the primacy of national policy in the form of NDMPs would be the reward, so to speak, for agreeing a devolution deal with the full panoply of powers available or for engaging in strategic planning by putting a spatial development strategy in place—or, it should be said, for taking part in a new joint spatial development strategy across authority boundaries.

Let me explain my reasoning further by using the example of an area where an SDS or a joint SDS might be taken forward. As the Minister will know, once a spatial development strategy is in place, it provides for a strategic framework for the development plan or plans, which should in theory supersede or take primacy over NDMPs that the Government might happen to bring forward.

While we remain of the view that no local development plan should be made subordinate to national planning policies in the form of NDMPs, if the Government are determined to ensure that they are—it sounded that way from the Minister’s comments in the previous debate—we believe that they should at least consider exempting from that centralising approach areas that have proactively taken on greater powers, including powers to plan strategically, so that they can use them to the full to reflect local priorities and innovate, having regard to national policy but not being unduly constrained by it.

On that basis, I hope that the Minister will give our amendment due consideration.

[Mr Jones]

I thank the hon. Member for his amendment 98, which relates to higher-tier authorities with planning powers. During the debate on amendments 86 and 57, I set out our case as to why it may be necessary for national development management policies to outweigh the development plan in the event of a conflict. Amendment 98 would prevent that from happening where there is a conflict in an area covered by a Mayor or a combined authority.

I understand that the argument behind the amendment is that it would support our efforts to promote devolution by exempting Mayors and combined authorities from any situation in which national development management policies might have precedence over their own. While I understand that argument, it is not one that we are able to agree with at this point. It makes complete sense for Mayors and combined authorities to use their strategic planning powers to make policies that support proper planning in their areas, but it does not follow that those should automatically outweigh national development management policies, given what those policies aim to do.

National development management policies will be nationally important policies, such as for the green belt or flood protection, as I have already mentioned. It remains important that those are not duplicated through strategic plans, which should restrict the chances of conflict occurring in the first place, especially where plans have been kept up to date. More details on what national development management policies could look like will be set out in the prospectus coming this summer, which will also indicate the scope for policies in plans to address matters that are locally important, or of strategic importance in the case of a Mayor or combined authority.

The other arguments made in relation to amendment 87 also apply here. There will be occasions when circumstances arise that mean the Government need to make an urgent change. That became apparent during the pandemic, when we had to act very quickly to protect temporarily closed theatres and live music venues from the threat of development. In those circumstances, it is right that national development management policy is able to override the development plan, even where there is a strategic plan-making body.

I hope that the hon. Member for Greenwich and Woolwich understands those reasons and will withdraw his amendment.

[Matthew Pennycook]

The Minister will appreciate that I am, naturally, disappointed that the Government will not countenance any exemption from the precedence that clause 83 affords to national development management policies, but I do not intend to press the amendment to a Division. The root of the problem is the powers in clause 83, rather than the specific issue raised by the amendment. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

[The Chair]

With this it will be convenient to discuss that schedule 6 be the Sixth schedule to the Bill.

[Mr Jones]

On the basis that we have debated this matter at significant length, I commend clause 83 to the Committee.

[Matthew Pennycook]

I will be extremely brief because a Division is due in the main Chamber, but also because schedule 6 is largely a tidying-up exercise, amending the Town and Country Planning Act to add requirements for local planning authorities to have regard to material considerations in NDMPs when modifying or removing permission, granting outline permission, and enforcement and appeals.

However, reading the schedule prompted two questions in my mind. First, paragraph 12(b) to schedule 6 amends paragraph 8(2) to schedule 4B of the Town and Country Planning Act 1990 to insert paragraph (da), requiring neighbourhood development orders, which implement neighbourhood plans, to be in general conformity with NDMPs. Given that the Government are explicitly legislating in the Bill to ensure that neighbourhood development orders are consistent with NDMPs, can the Minister give the Committee a sense of what kind of national policies covered by an NDMP would have direct relevance to extremely local, sub-district plans, such that conformity with them needs to be required by the Bill?

Secondly, paragraph 15 to schedule 6 amends section 337(2) of the Greater London Authority Act 1999 to insert new paragraph (ca), which adds NDMPs to the list of matters that may require modification of the Mayor of London’s spatial development strategy prior to its publication. Given that the supposed thrust of the Bill is to enable greater devolution to regional authorities and leaders, could the Minister explain the rationale for making the London spatial development strategy subservient to centrally mandated policy?

[Mr Jones]

On the hon. Gentleman’s point about neighbourhood plans, as I have mentioned a number of times, a prospectus will be brought forward in the summer to explain how national development management policies may work. I urge him to wait and see those documents. When he sees the prospectus, he will no doubt provide a response. [Interruption.]