The Parliamentary Under-Secretary of State for Communities and Local Government (Mr. Iain Wright): I beg to move,

What a pleasure it is, Mr. Key, to serve under your chairmanship for the first time. I have admired you from afar, so it is a real pleasure. I still have the Easter spirit and I think I should move on swiftly.

The regulations were laid before the House on 5 March and introduced new levels of planning application fees and one new fee. If approved by this Committee and in another place, which I understand is looking at them now, the regulations will come into effect on 6 April, the next common commencement date. The key point that I want to stress to the Committee is the principle underlying the whole planning fee regime, which is that would-be developers, rather than council tax payers, should meet the bulk of costs incurred by local planning authorities.

A local planning authority’s work in this area includes the validation and registration of applications followed by statutory notification, consultation and publicity so that interested parties can comment. It involves maintaining an electronic and a paper version of the planning register incorporating any revisions to these plans. It also includes writing to applicants and objectors, undertaking site visits, assessing the merits of each case and considering any representations about it. The Government’s policy is that, in aggregate across England, the income generated by planning application fees should, as far as possible, cover the estimated total costs incurred by local planning authorities as a result of those activities.

The last fee increase was in 2005, based on evidence gathered in 2003. In 2006, my Department commissioned independent research from Arup to look afresh at the extent to which costs incurred by local authorities are recovered from fees paid by applicants. The research published on the Department for Communities and Local Government website included a survey of local planning authorities and their resources. Arup’s report suggests that the total costs of the development control service is in the region of £290 million to £365 million a year, but fee income for 2005-06 was only £232 million. It concluded therefore that, in aggregate, fee income has dropped below what is required to meet costs, whereas an overall increase of around 25 per cent. would enable authorities to meet the costs incurred.

Notwithstanding the principle of full cost recovery, the Government would prefer to shield householder applicants from the full increase. It is therefore proposed that fees from householder applicants will go up by 11 per cent., which is an extra £15. Other basic fees, as I hinted earlier, will go up by 25 per cent. The effect of this fee increase overall is a 23 per cent. increase in planning fees—a figure at the lower end of what local authorities themselves felt would be necessary for them to maintain a good and efficient service.

We believe that a greater increase would be right for the maximum fee that the regulations impose in some fee categories. For most types of development where a fee cap is currently imposed, the maximum will be raised to £250,000, or £125,000, if the application is for outline permission. By contrast, the maximum fee for certain minerals and waste applications will go up to only £65,000. In setting this particular maximum fee, I acknowledge the point made by the CBI, the Quarry Products Association and other consultees that financial returns in relation to the area of mineral extraction sites tend to be disproportionately low.

Only a small minority of projects trigger payments on that large scale, but it is precisely those large and complex proposals that local councils find most difficult to assess and determine promptly with existing resources. For some large-scale major applications, the separate arrangements for funding planning performance agreements will help, but for every other type of scheme, no matter how demanding of resources, the administrative cost ought to be met from planning fee income as opposed to the general council tax payer.

I remind the Committee that four out of five authorities in England are now achieving the planning application handling targets that we set for them in the context of best value indicators and the planning delivery grant regime. We have also seen efficiencies in the delivery of local authority services where authorities have been required to deliver their overall responsibilities efficiently. Indeed they have a good track record in achieving efficiency savings: not only have they exceeded their SR04 target one year early, but they have forecast achievement of further efficiencies by the end of 2007-08 that would be in excess of this target.

I will be open and blunt and say that the Merits Committee has expressed concerns about where the incentive lies for an authority to control costs. I can say that, in addition to the overall efficiency savings I have just outlined, there is a real incentive for local planning authorities to determine planning applications efficiently and effectively, because where the cost of handling a planning application exceeds the fee payable, any shortfall must be covered from other council revenue, or through subsidy from council tax, both of which may be classed as hard pressed.

We propose to introduce one new fee, which is for a request to the local planning authority for confirmation of compliance with one or more conditions imposed on a planning permission. This is designed to give developers greater confidence, especially where they wish to proceed to the next stage of a phased development, or to sell the land on. The fee would be £85, or £25 if in connection with householder development. The only fee not to change will be that imposed in 2006 for monitoring mining and landfill sites.

The increases set out in these draft regulations will keep planning application fees at an appropriate level for developers, compared with overall project costs, while enabling local councils to recover a fair proportion of their administrative costs from those who benefit most from the service provided and from any permission given, as opposed to the general council tax payer. Research suggests that, if we do not secure increases at the level proposed, the deficit for local planning authorities will be in the region of £65 million in 2008-09.

For those reasons, I suggests that the regulations and the proposed planning fees are necessary. I look forward to a strenuous debate with the Committee on this subject. I imagine that the hon. Member for Beckenham feels slightly lonely on her own. She is more than welcome to cross the Floor; there is more than enough space here. I commend these regulations to the Committee.

Mrs. Jacqui Lait (Beckenham) (Con): I, too, welcome you, Mr. Key, to the Chair of this Committee, particularly if it is for the first time. I hope not to detain you for too long, although I am quite prepared to take on everybody who wishes to challenge me. It is not a problem. I am sure that you have sufficient experience to keep the debate in order.

Perhaps I might begin by potentially going slightly out of order by saying that I think the Minister slightly exaggerates the effectiveness of the targets that the Government have introduced on planning departments, because the high level of refusals within the necessary time is an indication of a distortion of the planning system, rather than clear evidence that planning departments are considering applications thoroughly and properly before they refuse them.

However, I shall move rapidly on to the content to the statutory instrument. As the Minister may understand, the Opposition are not planning to vote against it.

Michael Jabez Foster (Hastings and Rye) (Lab): Go on.

Mrs. Lait: I could be tempted. However, there are two issues where I have my reservations. Otherwise I think that the Government can take the consequences of their SI. The first reservation is one of principle and the other is of sheer practicality. The issue of principle is about the long-term effect on local democracy of planning departments being completely free standing. The explanatory memorandum states that

In one sense I can absolutely understand what the Minister is trying to achieve. My concern for democracy is that as planning, sadly, is falling into greater and greater disrepute, because it is being driven by central Government targets and local authorities are making decisions based on those targets rather than on good planning principles, local people will feel that the planning departments are no longer responsible to their councillors. Councillors, in effect, will not have to take any responsibility because no council tax payers’ money is going towards the planning system.

Planning departments will be regarded as the creatures of those who are applying for planning so, whenever a planning approval is given, it will be seen as the planning department giving way to its funders. In other words, those who pay the piper call the tune. Although that may not happen immediately, in the longer run there is a potential problem with councillors feeling that they can no longer control the planning department and that they have no policy input into it and that it is entirely beholden to the applications from developers.

The practical issue that arises from these increases is that they are well above the Government’s acknowledged rate of inflation, although perhaps not entirely above the rate of inflation that real people are having to live with. Certainly no one argues that inflation is currently running at 25 per cent. So these are genuine increases in costs. They have to be measured not just at the level of the large developer whose planning application is going up from £50,000 to £250,000 if they want to build more than 50 homes, which is what the Government are forcing down the throats of local communities, time and time again, but against the Government’s demand that homes be built to a higher quality of sustainability.

The costs of house building will inevitably go up at the same time as there are demands that all new homes have to be built to whole-life standards. That, too, will add to the cost of homes. Added to that, developers will face the potential of the community infrastructure levy costs and it is not yet clear from the Department whether the householder who is applying for a one-home build will have to contribute to the CIL. The Minister declares that the CIL will be levied at a de minimis level. When one asks whether that equals one, the reply is simply “de minimis”. So it is highly likely that a householder who wants to build a new home will have to pay CIL. That will be on top of these higher planning fees.

For some developers there will also be increased demands under section 106 agreements, particularly for building affordable homes. All those costs are the background of a housing market that is disappearing pretty rapidly down the tubes. The Government have a house building target of 3 million homes. The more costs that they put on developers, the less chance they will have of building those 3 million homes. My concerns are about the impact on the democratic system within local government of taking power away from local councillors when combined with the higher standards for sustainability for whole life, the imposition of the CIL, the potential for increased section 106 costs, and a declining housing market. My view is that on the Government’s head be it, but I suspect that the possibility of building 3 million new homes is unlikely to be met. The opportunity to do so will be worsened by the increased fees.

Paul Farrelly (Newcastle-under-Lyme) (Lab): At the risk of making myself very unpopular by delaying the Committee, I would like to make a few remarks about the measure.

First, I welcome the fee increases in as much as they recover costs. That is important, particularly when we are considering second-tier councils such as mine in Newcastle-under-Lyme, which finds it hard to recruit planning officers, especially as it is in competition with every quango that my Government have set up. The Minister will know that north Staffordshire has every quango in town. Therefore, it is important for councils such as Newcastle-under-Lyme to be able to stand on their own feet and raise their fee income so that they are able to offer more attractive packages to qualified planning officers.

I have merely one question for the Minister. The new fees retain the strong division between outline and full planning consents, and there is a strong incentive for developers to submit outline applications. That concerns me because I suspect that, in many instances, for an easier life, my planning officers encourage outline applications, where reserve matters are usually for officers to arbitrate afterwards.

In one controversial development—Zanzibar and Titleys—there were several proposals over which we went to war with the planning officers and the developers. I came across an instance where the developer had put in an application marked “FULL”, which was redesignated by the planning officer, the head of development control, as “OUT”—outline—and a big cheque was returned to the developer. I have yet to get to the bottom of the matter, but I suspect that that was because the officers wanted to hold all the reserve matters under their ambit, so that things progressed more smoothly and easily for them at the end of the day.

That brings us back to the point made by the hon. Member for Beckenham. I would like a system that incentivises full applications, so that planning committees and local residents know what they are getting and therefore local democracy is more empowered. I wonder whether any of the Department’s reviews have looked at that matter while the fees and other changes have been considered.

Mr. Wright: I thank the hon. Members who have contributed to the debate. In response to my hon. Friend the Member for Newcastle-under-Lyme, as opposed to Newcastle-upon-Tyne, I absolutely agree with him about the need for local planning authorities to have the ability to recruit and retain excellent staff. We expect a lot from planning officers, and many of them are diligent and professional, which we need to encourage still further. Giving councils the tools to recruit and retain excellent staff is key, and I support him on that.

The points made by the hon. Member for Beckenham about objections in principle and in practice are important. I reiterate my point on what I consider to be the key principle. I think that the Government’s policy with regard to planning applications is correct. Those who benefit from the planning application for an extension to a house, an office or a house development, should pay; it should not be the general council tax payer. I absolutely support that as the right way to proceed. I throw the question back to the hon. Lady. Does she want council tax payers to fund the increase in planning application resources? I suggest that she does not, but how the increase is paid for needs to be fair.

I am a former councillor and I note that the hon. Lady also has real experience in the local authority sector, but I disagree with her fundamentally when she says that councillors are being excluded from the whole process. There are measures such as the local development plan documents, in terms of shaping an area, and PPS3 dictates the quality and mix of housing in a local authority area. That place-shaping agenda is key, and councillors have a central role in establishing what their area should look like. In that respect, I do not think that her objections in principle are appropriate.

Mrs. Lait: I understand the Minister’s point, but we are talking about distinct, separate planning applications, not about the development frameworks. Although councillors have a real and fundamental role where the local development framework process is working—that is not universal—if they do not feel that they have any control over planning applications in the long run, the political process might be withdrawn from the planning process. That would be bad.

Mr. Wright: But we have a plan-led system. I hope and expect that all applications coming forward will be evaluated on the basis of whether they are consistent with the framework set out. In that respect, the hon. Lady’s argument is somewhat tenuous.

Let me move on to the practicalities. The hon. Lady mentioned costs and said that the 25 per cent. increase in planning fee applications should be on our head. Could I direct her and the Committee to paragraph 16 of the regulatory impact assessment? It states:

We have kept it as low as is reasonable. There was a tremendous body of evidence to say that 40 per cent. was the appropriate increase, but I think that 25 per cent. is more appropriate.

Lembit Öpik (Montgomeryshire) (LD) rose—

Mr. Wright: I welcome the hon. Gentleman, fresh from his telly exploits.

Lembit Öpik: First, I apologise for being late, Mr Key. I was on other parliamentary business, as opposed to the delights of television on this occasion.

The Minister has referred to the one matter that I hoped to raise with him. Does he have data to show whether the increase in fees will act as a disincentive to individuals to submit planning applications? Is there an objective rationale to believe that this is sustainable, or is it a matter of judgment?

Mr. Wright: I thank the hon. Gentleman for that considered question. I do not think that these planning application fees will act as a disincentive on bringing forward developments. That judgment is based upon the assessment that I mentioned before he arrived in Committee and related to the evidence provided by Arup.

Let me give a few indicative figures. A full application to build up to 15 new houses would attract a fee of £335 per house. The fee for outline permission for a factory or office development would rise from £220 to £335 for each 0.1 hectare of the site. By contrast, and I have mentioned the distinction between a developer’s and a householder’s development, the fee for even a substantial alteration to a house would cost no more than £150. The assessment is that only 0.5 per cent. of all planning applications will be hit with the maximum fee payable. Therefore I suggest that there is no disincentive.

Mrs. Lait: Could the Minister tell us when that research was carried out? Were the respondents also asked about the impact of the higher studies of sustainability, the whole-life standards that the Government wish to see in new houses, CIL, and the changes to section 106, together with a declining housing market?

Mr. Wright: The hon. Lady knows the answer to that question, which is probably why she asked it. This was last looked at in 2006 and I understand that an awful lot has happened since then. There are different economic conditions. There are greater environmental pressures in terms of the code for sustainable homes. The Housing and Regeneration Bill is a major piece of legislation that is going through Parliament and let me commit to the Committee that the fee structures will be looked at again over the coming year, which I hope will also address the points my hon. Friend the Member for Newcastle-under-Lyme made about outline planning permissions. Hon. Members are right. An awful lot has happened. We think that the issue needs looking at again and it will be looked at over the next 12 months.

The hon. Lady mentioned costs as one of her practical objections. I remind her that there is substantial new monetary support available for local authorities in their task of delivering housing growth and new infrastructure. We launched the housing and planning delivery grant in April, which will involve a further investment of £510 million in the next three years. In addition, £384 million is available to local councils to transform and enhance the efficiency of those services. We expect local authorities to match the recommended increases with continuing good service when handling planning applications. The Committee will acknowledge the key role of local planning authorities, which has been mentioned, in facilitating the investment that will provide the necessary jobs, homes, places and environment.

Paul Farrelly: I do not want it to seem as though this issue is a hobby-horse of mine, but when I was elected in 2001, I never thought that I would spend so much time on planning matters. I was a virgin and I am now less of a virgin. I am also a patron of Urban Vision North Staffordshire, which is an architecture and design centre. Will the Minister write to me to justify the continuing difference between the fees for outline and full planning applications, with particular reference to the incentive effects? Time and again, I find that local democracy is disempowered because officers say that when developers are granted outline planning permission, they have carte blanche to do anything. The fees, as well as discretion and latitude, encourage people to go for outline planning consent.

Mr. Wright: My hon. Friend raises an important point, and I shall write to him. Generally, however, close co-operation between developers and local planning authorities at all stages, including before planning applications are made, is key to ensuring that we have constructive and positive relationships that will ultimately result in good, well designed, plan-led development. That is what we all need. I hope that the Committee agrees that we must ensure that local planning authorities have the resources to take on and deal efficiently with the increasing demands being made on them. Our deliberations today will help us to do that.

Question put and agreed to.

Resolved,

Committee rose at three minutes to Five o’clock.