Levelling-up and Regeneration Bill (Nineteenth sitting)

Tim Farron Excerpts

Tuesday 6th September 2022 Public Bill Committees

[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.

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[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.

[Tim Farron]

The No. 1 housing-related concern that I hear from my constituents is the absence of affordable places that they can find to live in, whether they be private rented, private bought or, in particular, social rented.

Perhaps some way down the list, but still high up it, is people’s real concern and anger when they see developments come to pass without infrastructure. We can talk about all sorts of different things. The hon. Member for York Central talked about doctors’ surgeries and school places, and there are sewers, drains, roads and all the other important infrastructure that underpins a successful development and means it does not put extra strain on existing infrastructure and therefore cause problems for and resentment on the part of neighbours and other developments, which in turns fuels opposition to future development.

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We believe that this group of amendments would go a long way in providing reassurance that the levy will not have a detrimental impact on the supply of affordable housing; that the Government’s commitment to ensuring that the levy secures at least as much affordable housing as developer contributions do can be honoured; and that we have a reasonable chance of exceeding that commitment. On that basis, I hope very much that the Minister will at least consider accepting the amendments.

[Tim Farron]

When it comes to these issues, one of the things that makes people look heavenward and tut is the phrase “affordable housing”. Many people see it as a reference to homes that are anything but affordable. In my community, the average household income is less than £30,000 a year, and the average house price is more than a quarter of a million pounds. Given that a wise bank manager is not meant to give a mortgage for anything more than three and a half times someone’s income, the average house is two and a half times the upper limit of what ought to be offered to the average earner of average household earnings in my constituency. We see the problem.

Often, we see developments where homes are built for £180,000, £200,000 or £220,000, and are defined as affordable. They are not. We need a new term—a new name that demonstrates that something is genuinely affordable within the region for people on average and below average earnings, so that we can have a community that meets the needs of everybody, and not, as my area is increasingly becoming, somewhere that is only available for a new entrant if they have an awful lot of money and where, increasingly, those who are in private rented accommodation are not secure. They have been expelled in their thousands in the last year and a half alone, through section 21 evictions; the Government were meant to deal with that, and have failed to do so.

This series of amendments pushes the Government on an area of concern that we need to discuss far more: the lack of a proper, meaningful housing strategy. In reality, everything the Government propose to try to create genuinely affordable housing is via the infrastructure levy, and there is very little out there apart from that. We are far from convinced that the infrastructure levy will create any more genuinely affordable homes than those that exist already, and it may even create fewer, for the reasons we have set out.

We can juxtapose that with the complete failure to do anything proactive. Why are local authority council housing departments not allowed to borrow against the value of their stock? Why are we unable to do the things that would allow the Government to be, in many ways, the developer of last resort? Why are we not doing what we need to do to directly develop and build the homes that we patently need to be genuinely affordable? Here we are, talking about things that might make a difference at the edges, and even then allowing talk of affordable housing that is not affordable.

While nomenclature matters, the fact that we are debating this issue during consideration of these amendments is a reminder of how paltry the Government’s ambition is when it comes to genuinely meeting housing needs in this country. There is an opportunity to do something big—something Macmillanesque—and make a serious attempt to create homes for a new generation, instead of tinkering around the edge of the market with devices that may or may not work, and, if they do, will make little difference.

It is depressing having this debate on the margins, when the Government should be genuinely levelling up by investing and by allowing local authorities and housing associations to have the income and the powers to build the homes we genuinely need. Do not give developers the excuse to build homes that they say are affordable, but that are not really affordable.

[Rachael Maskell]

I, too, want to speak in favour of the four amendments before us. I will not go to Macmillan, but back to Nye Bevan. When he saw how broken the housing system was and how urgent the need was, he brought about a transformation in housing development for a generation, when the homes fit for heroes were built. It was good-quality social housing and housing that people could afford to live in.

In my community in York, we are looking at an affordability ratio of around 8.3, and it is getting harder by the day. Since we started debating the Bill in Committee, I have seen the development of another 133 short-term holiday lets—Airbnbs—in my community, and I am sure the rate of growth over the summer means that number has grown. We know that the nature of housing is complex and has changed, but we need to look at how we develop truly, genuinely affordable homes, which my constituents have to move out of the area to find.

A low-wage economy, such as in the hospitality sector, means that people cannot, and do not, come to work in the area. As a result, we have seen hospitality venues limit their opening times and become unable to benefit from the incoming community, which wants to see a wider offer, and from the tourism industry. That is having a cyclical, negative impact on the economy as well as the community. Those issues should be at the forefront when looking at housing reforms, and this Bill simply does not cut it.

From the moment in the main Chamber when we heard the Minister enhance the value of affordable homes, including those outside London, we all took a sharp breath, particularly those of us from areas that have a low-wage economy. The system is broken and the Bill simply does not tackle the challenges before us. These amendments are vital because they define what we mean by “affordability”, strengthen the Bill and ensure that we bring in the protections that are necessary.

A Minister in a new Government could completely change the definition of “affordability”, meaning we could be lumbered with a definition that does not apply to our situation. For example, my hon. Friend the Member for Hackney South and Shoreditch (Dame Meg Hillier) has said that the affordability ratio in her constituency is 16. How can housing be affordable with that sort of affordability ratio? It is baffling.

We need to have some sort of relationship to the reality of particular economies, and that is not reflected at all in the legislation. There will be very few places where we have the ratio of three and a half times a person’s salary, which I remember from when I bought my first home. Those kinds of ratios were much more affordable and genuine. That means that many people cannot get on the housing ladder, and are dependent on the private rented sector, which at the moment is flipping over to short-term holiday lets. There is a squeeze in the market on both sides. It simply is not working, and I cannot see that coming into play without this level of protection.

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[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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[Tim Farron]

Amendment 58 is really interesting, and probes the Government on an issue that I am also concerned about. The hon. Member for Buckingham set out the case well and I also very much hear the challenges and counterpoints from the hon. Member for Greenwich and Woolwich.

We can all point to developments in our communities where we have seen new housing created without adequate infrastructure being provided. Often, we are talking about utilities such as sewage and draining, and the additional pressure put on those services that they cannot meet. There is clearly huge merit in what is being suggested, because it locks the developer in. I referred earlier to the Church Bank Gardens development in Burton-in-Kendal, where the homes are built and the infrastructure is still not there. The footpaths are not put right. Much of the infrastructure has not been done at all. The road has not been put right. There is often a lack of trust—a sense that the developer will seek to get the benefit of a development without providing the services that were surely part and parcel of the conditions of developing it. The hon. Member for Buckingham is right to press the point, and I hope the Government will take it seriously.

It is important to bear in mind what we are talking about when we think about infrastructure. Several people, me included, have cited GP surgeries, for example, as part of the infrastructure that we would want to have underpinned. I want to be very careful that we do not allow integrated care boards, as they are now, and the Government as a whole to skimp on the provision of GP surgeries, particularly in existing communities, and assume that somehow developers will pick up the tab for them. As we struggle to keep our surgeries in Ambleside and Hawkshead, the issue is not developers not paying the infrastructure levy. The issue is shocking Government cuts in the funding of GP surgeries and complete inflexibility from the new integrated care boards, so let us be careful, when we talk about supporting infrastructure, which we must, and about getting it in place before new developments, that we do not lift or shift responsibility away from our NHS managers and from the Department of Health and Social Care and other Departments.

[Rachael Maskell]

I rise to make a brief point. It is more about the scope of what we have discussed—the infrastructure levy being able to contribute to affordable housing and social housing within a development. One of my fears is that everything is left to the end; it is left to the end to calculate everything, and we end up with what has happened at St Peters Quarter, in York, with the high-value housing—beautiful, spacious housing—in one area and then the section 106 housing in the corner, where there is no proper infrastructure to support it because there is no money left. We therefore get real segregated communities.

I go back to the report that John Hills wrote in 2007. I was at a meeting with him, discussing the report, and he was talking about the importance of place making and mixed communities. We could be in danger of ending up with more divided communities if everything is paid at the end. Therefore scheduling payment is really important. Developers know that that money will have to be paid, and we should ensure that it can be paid in a timely way so that we do not end up with the scenario that we have articulated so much with either the section 106 provision coming never or the infrastructure levy money not delivering on the expectation at the start of the planning process. That could of course occur, but, even worse, we could end up with really divided and segregated communities when we know that the strength and resilience of communities comes where we see that housing jumbled up.

A good example would be Derwenthorpe, in York, where it is not possible to tell what is a social house, what is a privately owned home or where there is equity sharing or anything else, because the houses are all the same and people live in a very mixed and diverse community. That has built strong resilience in the community.

We need to think about more than just housing; we need to think of place making, which I know is Homes England’s real objective. Of course, by holding everything back to the very last minute, we are in danger of not having that. Properly scheduling payment of the infrastructure levy will ensure that we get the proper places that people want to live in and that we build resilience across all communities, as opposed to dividing communities and then developing areas that will create social challenges in the future.