Growth and Infrastructure Bill

Simon Hughes Excerpts

Monday 17th December 2012 Commons Chamber

[Roberta Blackman-Woods]

I wish to speak to amendments 45 to 48. Clause 6 greatly exercised us in Committee because of the threat that it presents to the future supply of affordable housing delivered through the application of section 106 agreements. No evidence has been provided in Committee or elsewhere of the necessity of the clause or of why section 106 agreements, as they relate to affordable housing, should be singled out for such treatment. Ministers and other Government Members seemed blasé about what the clause could mean for the development of housing, and particularly about the need to create communities that are both balanced and mixed.

I want to make it clear from the outset that we dislike clause 6 very much indeed, and that in tabling our amendments we have sought to curtail its worst excesses. The Minister was not able to provide an evidence base for it, a point noted by many witnesses, such as the National Housing Federation, which stated that

“no evidence has been provided to suggest that Section 106 generally, and its affordable housing component specifically, are routinely stalling developments.”

The Minister has not explained why the clause is necessary given that local authorities are already renegotiating section 106 agreements. The Local Government Association has emphasised that point, and as I have already pointed out to the Minister, the LGA is currently—I stress that word to my hon. Friends—under the control of the Conservative party. It stated that it believed the whole of clause 6 to be

“unnecessary because councils are already responding to changed economic circumstances by renegotiating Section 106…agreements voluntarily.”

Case studies exist from a range of councils, including Cheshire West and Chester, Exeter and Haringey. Given the relatively short time available I will not go into them in much detail, but it is worth pointing out that Cheshire West and Chester council has already renegotiated the section 106 agreement for Winnington urban village, and that Exeter city council has done the same for a series of new developments. There are a lot of examples of that across the country, and I am happy to pass the information on to the Minister if necessary.

[Simon Hughes (Bermondsey and Old Southwark) (LD)]

Does the hon. Lady accept that there is a problem with the current system? My local authority is run by the Labour party and has done a deal with the biggest developer on the estate near the Elephant and Castle, reducing the agreed planning percentage of affordable housing from 35% to 25%. When I asked, on behalf of those I represent, to see the paperwork justifying the viability of that, the council and the developer said no.

[Roberta Blackman-Woods]

The right hon. Gentleman makes an interesting point, and I hope that he will persuade Ministers to accept our amendment 44, on how viability is measured. It would require more precise guidance to be given to local authorities of whatever political shade so that they know how they should assess viability. Voluntary agreements, which usually mean negotiating section 106 requirements downwards, are occurring across the country, so we and local councils need a better understanding of what is meant by viability in that context.

We know from the evidence provided by the LGA that on average councils are willing to accept a level of affordable housing about a third lower than the amount set in their local plan. We also know that all but 2% of councils have said that they would be willing to renegotiate section 106 agreements. There is therefore a big question about the need to include clause 6 at all.

It may help the House to understand the full nature of what is wrong with the clause if I briefly go through each amendment and its purpose. Amendment 45 would require a local authority to establish first of all that it is the application of a section 106 housing agreement that is making a development unviable. As we pointed out in Committee, such an amendment would place a sensible requirement on local authorities to establish that it is the section 106 agreement for affordable housing that means that a development cannot go ahead as planned. It would also allow other types of obligation, such as highways contributions, to be put forward to the local authority for renegotiation as part of current section 106 arrangements. Developers can already ask a local authority for a renegotiation of section 106 agreements, so we simply cannot understand why the Government would not want to accept such a basic, common-sense amendment.

The LGA has continued to press that point, stating that it does not understand why the clause addresses only affordable housing when section 106 agreements also fund other forms of infrastructure. It has asked why social housing is deemed dispensable, especially since the current lack of funding has had a particular impact on the delivery of affordable housing, which is greatly needed.

After the May 2010 election, the Government cut the budget for new affordable homes by 60%. Labour invested £8.4 billion in the three years between 2008 and 2011, whereas the current Government will invest just over half of that amount in the four years between 2011 and 2015. At the same time, funding for existing affordable homes has fallen. As a consequence, shockingly, 37% of affordable homes do not meet the decent homes standard. I say to Ministers in passing that when we discussed the matter in Committee, no mention was made of the huge amount of money that went into upholding that standard under the previous Government. Of course, that kept a number of affordable houses in occupation.

We know that private rents are soaring. They hit a record high over the summer and are even higher at the moment. The number of homelessness acceptances is increasing, and over the past year rough sleeping has risen by about 23%. Affordable housing is therefore more necessary than ever, which is why the clause is so dangerous.

The Minister should note that the Local Government Association supports amendment 44. It asks the Minister to set out in regulations the criteria by which viability is to be assessed, and to consult relevant organisations before doing so—the issue raised by the right hon. Member for Bermondsey and Old Southwark (Simon Hughes). The LGA states that the clause encourages have-a-go behaviour for developers, because it offers no reason for them not to try to seek a reduction in their affordable housing obligations from the Planning Inspectorate. The LGA has said that the clause could delay house building and economic recovery as developers wait for the new regime to be put in place, while placing additional resources centrally with the inspectorate, rather than properly resourcing local planning authorities.

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[Madam Deputy Speaker (Dawn Primarolo)]

Order. Just before I call the next speaker, I want to remind the House that the knife falls at 7 o’clock. The Minister has not spoken yet and it will be necessary to hear him speak.

[Simon Hughes]

I will be brief. I want to make a couple of comments on clause 6 and affordable housing, and to follow on from the comments made by the hon. Member for City of Durham (Roberta Blackman-Woods) on her amendments.

I have concerns about the protection of affordable housing, both as it is traditionally defined—social rents, council rents or target rents—and as it may be defined now or in the future, which is at a higher percentage of market rents. I have raised this personally with the Minister—he has been very helpful—and the Under-Secretary of State for Communities and Local Government, my right hon. Friend the Member for Bath (Mr Foster). I would be grateful if the Minister addresses three questions.

First, how can I be assured that my constituents, local councillors and I, as the MP, will be able to see any deal that is done between our local council and the developer, and be able to ensure that the argument about viability is justified? To be blunt, I do not often believe developers when they say, “The figures don’t stack up.” I have reasons for not believing them. On the south bank, for example, developers got out of an obligation with the local authority on the basis that the figures did not stack up, but, when the properties were sold, the sale price was much higher than the likely sale price they put down. Clearly, then, their profit was greater and they could have afforded to build many more affordable homes. How can my hon. Friend the Minister assure me that we can know publicly what is economically viable?

Secondly, how can we guarantee input into the discussions about the guidance, about which the Minister has spoken and written to me, to ensure that it is effective? Bills are often outline structures implemented by secondary legislation and guidance, so I would like reassurance about the effectiveness of guidance in ensuring viability—accurately defined—and transparency and a common way of assessing it that applies all over England. It is no good having a viability argument in Southwark that is different from one in the north-east; we need a common formula that developers and councils have to follow.

My final question relates to a point made, perfectly properly, by the hon. Lady. How can we provide for the deliverability of affordable housing to go up and down? If the market drops, I could understand developers saying, “We can’t deliver,” although they would need to explain their case publicly. But if, as with the case on the south bank, the market goes up and the money to be made by the developer is greater, the community, represented by the local authority, needs to be able to say, “We want some money back. We want an additional affordable housing component.”

I hope that the Minister will put on the record some of what he has written and spoken to me about and what I have discussed with the Under-Secretary, my right hon. Friend the Member for Bath. I also hope he can reassure us that in the remaining work on the Bill—before it becomes law and in subsequent secondary legislation and guidance—the House can have an input into what is drafted and confidence that we will not lose affordable housing because developers that can afford to deliver on that simply say that they cannot.

[Mr Betts]

I want to raise a number of points on which I hope the Minister can provide the reassurance that, in previous debates in the Chamber and before the Communities and Local Government Committee, he has not provided.

First, where is the evidence of a problem? The Homes and Communities Agency wrote to me to say that it had had no difficulties with section 106 agreements holding up any of its schemes. The volume house builders, to which I presume the Minister talks—I have been at meetings with them—say that the problem is not the section 106 agreements or the planning system, but getting customers who have access to finance and the confidence to spend it walking through their doors wanting to buy their homes.

The part of the industry most in difficulty comprises the small builders; the volume house builders and larger companies have simply reduced how much they are building. The small builders build on small sites which, by their very nature, do not have section 106 agreements attached to them, yet it is those schemes that have largely stopped across the country, again because of a lack of customers and the fact that banks, by and large, have withdrawn finance from that section of the industry. In that area, there has been almost no growth at all; in fact, the industry is now at a standstill. Once again, that is not due to section 106 agreements.

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[Nick Boles]

I am sorry, but I will not give way because many hon. Members have asked me for explanations and assurances. I am entirely convinced of the merit of this clause, but in Committee I heard good arguments from Members across the House about ways in which the legislation might be applied that would not produce more houses soon, or could threaten that possibility. I will address two of those arguments, which I hope will offer some reassurance to many hon. Members.

My right hon. Friend the Member for Hazel Grove (Andrew Stunell) and the right hon. Member for Greenwich and Woolwich (Mr Raynsford) raised the issue of rural exception sites. I understand that the likelihood of more land being brought forward in the future to supply affordable housing in key rural exception sites might diminish if the clause were to be applied to those genuinely exceptional schemes. I am grateful to the right hon. Member for Greenwich and Woolwich for organising a meeting with the housing association and the national park authority, and to my right hon. Friend the Member for Hazel Grove for attending it. I have been persuaded by the principle of their argument, but the precise way that the right hon. Gentleman’s amendment takes account of the issue is not necessarily right and I hope I can persuade him not to press the amendment to a vote. I am currently looking at proposals that will be brought forward in the other place to achieve a carve-out for rural exception sites from this provision.

I have also been persuaded by some of the arguments about developers achieving a more favourable affordable housing agreement and then sitting on it. That is why, unprompted, the Government have clarified that any affordable housing agreement renegotiated by the Planning Inspectorate will survive for three years but return to its previous level at the end of that period. If the developer has not built out on the basis of the new, lower, affordable housing agreement, the agreement will return to the previous higher level and they will have to continue to build it out at that level.

[Simon Hughes]

Will the Planning Inspectorate system ensure that anybody can see the figures as well as the facts?

[Nick Boles]

I was coming to that. Currently, I am glad to say, the Planning Inspectorate is required to consider in its decision only evidence that is published or available publicly. It is not allowed to take into account anything that it is given on an entirely confidential basis. We intend to apply that principle to its decisions on viability under this clause, and through guidance we will urge local authorities as strongly as possible to adopt the same policy. Currently there is not quite the same expectation, but being a proper localist I am not in the business of compelling local authorities to do such things. However, I reassure my right hon. Friend that we will be nudging them hard.

The further financial support announced at the same time as measures in the Bill—£300 million of subsidy and a further £10 billion of guarantees—was also raised. As I explained in Committee—it is important to repeat it in the House—the subsidy is awarded to particular providers of affordable housing, not particular schemes, and Members across the House will want provision of that subsidy and its allocation to different providers to be based on value for money. We all want more, rather than fewer, houses for the amount of money available. We cannot allocate money to solve the problem of a particular site, because that would not meet the value-for-money test, as some sites will represent worse value for money than others. It is, therefore, right to retain the discretion to give the subsidy where value for money is greatest, but there is nothing to prevent providers who have sites that are affected by such renegotiation from coming forward with proposals for that subsidy and guarantee. If they can make the case that a site represents a good place to invest the Government’s money, there is every chance they will secure some of that subsidy.

What we are trying to achieve is simple. Many local authorities, of all political stripes, have understood that some agreements were based on market values that no longer pertain, or on market conditions that are no longer in place, and are therefore impossible for any developer to build out. Those authorities—and I congratulate them on it—have voluntarily renegotiated the affordable housing elements of their section 106 agreements, and sometimes other elements, to unlock activity and house building now. The Government would like to see every local authority do that willingly, off its own bat, without the application of this clause, and transparently so that the local population can see why it has taken those decisions.

A common thread running through this Bill is that we want many of its measures never to be needed because local authorities have acted first. That is true of clause 1 and equally true of this clause. We want local authorities to take responsibility, and instead of fetishising an agreement that sets out a vague target for affordable homes that might be built, we want them to do whatever it takes, pragmatically and practically, to ensure that homes are built. I have accepted many suggestions from hon. Members on all sides of the House, and I have learned a great deal from those more experienced than me about such things as rural exception sites and the way viability is assessed.

I hope I have persuaded hon. Members that the Government are genuinely trying to make the legislation work to produce more houses now, while retaining the important principle of mixed communities, emphasised by Members across the House. We want mixed communities to remain a key theme; we do not want gated communities. That is why the new section 106 affordable housing agreements will return to their previous level after three years if they have not been built out fully. The Government hope and would prefer local authorities, rather than the Planning Inspectorate, to renegotiate affordable housing agreements. The amendment is a last resort to prevent a very few pig-headed local authorities from doing what is in the interests of their own people and ensuring that more houses get built quickly, rather than waiting for some never-never land where that unrealistic agreement is finally translated into bricks, mortar and roofs over people’s heads.

This debate, and those in Committee and on Second Reading, have shown that the Government—two parties with very different philosophies—believe in practical measures to get things done and make people’s lives better. All too often the Labour party prefers postures, statements and wild aspirations with absolutely no explanation about how it will deliver them. On that basis, I hope that the right hon. Member for Greenwich and Woolwich will withdraw his well-intentioned and sensible amendment with a view to an alternative being brought forward in the other place. I urge the House to resist the amendments tabled by the hon. Member for City of Durham and her hon. Friends.

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[Simon Hughes]

I thank the Under-Secretary, my hon. Friend the Member for Grantham and Stamford (Nick Boles), for what he said about making sure that we have a much more open system for assessing the viability of applications for developments with affordable housing. We have lived in a world where people in communities such as mine have gone to their local authority and developers and asked why the case has been made for a reduction in the original plan for affordable housing, and they have been told that it is all confidential and nothing can be seen. The good news that comes from today’s debate is that the process will be much more visible and transparent. That was called for by Labour Front Benchers, and it was certainly undertaken by my hon. Friend.

I encourage Ministers to consider the fact that we absolutely need to respond to the demand out there in all our constituencies and to go on looking for new ways of finding more affordable housing. I do not think that there is a single constituency in England where there is not a huge demand for affordable housing, and we have pressures that the Government need to work out ways of resisting. In London, we have lots of purchases from abroad of land to be used primarily for marketing abroad, not for marketing at home. Foreign investors will buy to build and then leave the properties unoccupied. That is unacceptable. It forces up prices, it reduces availability, and it may be new housing but it is not new affordable housing. As my hon. Friend the Member for Colchester (Sir Bob Russell) said, public sector land, not only in Greater London but elsewhere, is not being brought back into use.

I hope that the Department for Communities and Local Government will work with the Department for Business, Innovation and Skills to realise the benefits of house building in terms of growth and jobs. It is one of the most certain ways of getting maximum numbers of jobs and apprenticeships into the economy. I hope that the Department will also work with our colleagues in the Treasury to make sure that we have a tax regime that incentivises people to develop brownfield land, not to sit on it. Too many sites in constituencies such as mine have been sitting idle and not used for anything for too long. People want affordable housing and imagination from the Department for Communities and Local Government, but I hope that this Bill is only the beginning of a development that produces far more affordable housing under this Government than was ever developed during five years of the Labour Government.

I did not come to this place just to be critical of a Labour Government who developed far fewer council properties than any preceding Government; I want to encourage this Government to make sure that they do better than our predecessors and develop homes that meet the aspirations of my constituents, who want housing that they can afford and who do not want the only available offer to be the ridiculous costs of some of the new housing currently being built.

Question put, That the Bill be now read a Third time.