Housing and Regeneration Bill

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Clause 10

Restrictions on disposal of land
Margaret Moran (Luton, South) (Lab): I beg to move amendment No. 38, in clause 10, page 4, line 30, leave out from ‘may’ to end of line 31 and insert
‘dispose of land for less than the best consideration which can reasonably be obtained where it will further one or more of the objects of the agency as defined in section 2.’.
The Chairman: With this it will be convenient to discuss the following amendments:
No. 63, in clause 10, page 4, line 31, at end insert
‘provided that the Secretary of State takes into account the wider benefit to the community where such disposal takes place’.
No. 108, in clause 10, page 4, line 31, at end insert—
(1A) “best consideration” means the best outcome secured in respect of the objectives of the HCA in respect of the land being disposed of.’.
No. 39, in clause 10, page 4, line 32, leave out lines 32 to 40.
Margaret Moran: I am very pleased to be here under your chairmanship, Mr. Gale. The purpose of the amendments is really to facilitate the HCA’s objectives. The Bill, as it currently stands, implies restrictions on the disposal of lands by the HCA for less than the best market price. In other words, the opportunities for the HCA to dispose of land that might be in the wider public interest are limited within the Bill. The purpose of this amendment is to give the HCA power to dispose of land at less than best consideration—a Treasury term, as we know, which in practice means highest market price. So the concept can be used to further the objectives of the HCA, as the Minister has repeatedly outlined. The objective of the HCA is not only to improve the supply and quality of housing in England and to secure regeneration of land or infrastructure but to support the regeneration and development of communities and their continued well-being; to meet the needs of people living in England. Now that is a very wide objective which requires wider powers of disposal than are currently outlined in this Bill. So by deleting and replacing the words
“may not dispose of land for less than the best consideration which can reasonably be obtained unless the Secretary of State consents”,
the need is removed for the HCA to gain special permission from the Secretary of State each time it seeks to dispose of land outwith the current requirements for best consideration. So amendment No. 38 removes from the Bill the exception basis, if you like, which means that there has to be specific permission from the Secretary of State.
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Amendment No. 39 deletes subsections (2), (3) and (4), which contain conditions as to where land might be disposed of for less than best consideration—for example, where there is a grant of a term of less than seven years or where the HCA has compulsorily acquired land. The amendment would make the clause a positive rather than a negative one—that is, it would enable the HCA to dispose of land in pursuance of its objects. The restrictions would no longer be needed.
The register of surplus public sector land contains about £10 billion-worth of land—about 4,500 hectares—and that includes a mix of local authority, central Government and Government agency land. There are surplus public-owned sites in just about all of our constituencies. I know that in my own area of Luton the incoming Labour council has, unlike the previous Liberal-Tory administration which did nothing in this respect, spent a great deal of time identifying small pockets of land which can be used for affordable social housing. I emphasise small pockets of land because in my constituency our housing crisis is acute. We are landlocked—we are green-girdled—so every available small bit of infill land is vital to us. Every local authority has a list of public-owned sites, but the details of those sites, to whom they are sold and what price they go for, remain restricted, according to the Town and Country Planning Association.
Of course, one of the biggest and most important objectives in this Bill and indeed in the housing Green Paper is to secure those additional sites, those surplus public-sector sites, for housing and, as stated, to create up to 50 per cent affordable homes on such sites. The Government announced in the Green Paper that 550 additional public sites would be brought from the British Railways Board (Residuary)—about 340 sites—the Highways Agency and the Ministry of Defence.
Unless legislation enables the HCA to dispose of land at less than best consideration in order to achieve its stated objectives, it is very difficult to see how much of that land can be brought into use for affordable social housing, and therefore how the HCA and the Government’s targets are going to be achieved. Without legislation to enshrine the principle that I am outlining in amendment No. 38, so that the HCA can dispose of land for less than best consideration in furtherance of its objects, it is possible that the HCA will find itself in a perverse situation. That has already occurred in a number of areas. For example, agencies such as NHS Estates have sold their land and buildings at full market price, believing that they were required to do so, often to private developers who were able to outbid registered social landlords. At the same time, however, the very same NHS trusts need new key worker accommodation. They then have to apply, or through RSLs bid, for further Government funding to provide key worker homes for their health care staff. So we are finding a double whammy and the Government are paying twice out of the public purse. That is why the amendments are so important.
A recent internal transfer of 96 surplus NHS sites to English Partnerships at a cost of about £320 million was described as a successful disposal scheme. The costs had to be recouped from the residual development. In other words, the developer had to sell off a proportion of those homes to recoup those costs. That makes it extremely hard to secure a significant number of affordable homes from the final scheme.
We all know that because social rented housing does not make a profit, it is usually the first thing to go on a private developer’s site when margins are squeezed. So we see repeatedly that sites like these, even sites that are in public sector ownership and disposed of at full market value effectively, are squeezed of the affordable rented housing that we know is desperately needed. So we have to look to ways in which we can ensure that the public sector land referred to in the Green Paper will be available for genuinely affordable homes that will go on being affordable in the long term and not just at first purchase. I think we have an opportunity to provide some leadership through the HCA. We all know in our own local authority areas of cases in which public sector land is disposed of and RSLs are outbid by private builders who do not take the same attitude to increasing the amount of affordable rented accommodation.
I have had experience in the real world. Before I came to this place, I was chief executive of a housing association. We saw local authorities who had the power to dispose at less than the full market value, but used the protection of the kind of terms that are currently in this Bill to avoid developing land. Dare I mention local authorities in London beginning with the initial W, predominantly Tory authorities, who use the argument that they have to dispose of what land is available at full market value in order to avoid their responsibilities for developing social rented housing? I saw that when I was running an RSL.
We all know that there are difficult sites to develop, such as land-locked sites. In my own constituency we have tiny sites in the most densely overcrowded areas which are simply not viable for RSLs to develop. I have had the experience over and over again of trying to develop sites in the most acutely overcrowded areas of housing need. Such projects simply would not stack up according to the Housing Corporation’s total cost indicator, as it was then. We then saw private builders come in with larger amounts of money to develop those sites for sale rather than social rented accommodation.
Alistair Burt: I am following the hon. Lady’s argument closely. A key part of her amendment involves taking out the consent of the Secretary of State and giving the responsibility solely to the HCA. Is that a deliberate omission or an oversight and does she not feel there is a potential conflict of interest because of the wider powers of the HCA? I agree with the sentiments behind what the hon. Lady is saying, but would it not be safer to retain some element of Secretary of State involvement?
Margaret Moran: I thank the hon. Gentleman for that intervention. I understand his sentiments in raising that. The thrust of the amendment is purposeful. It should not be seen as an exception that land is disposed of for less than best market value. At the moment, having to refer the matter to the Secretary of State in every instance, as suggested in the Bill, is a substantial impediment and it presupposes that land will always be disposed of at full market value. While I agree with him that there may be some caveats and some circumstances in which the Secretary of State’s involvement and interest needs to be safeguarded, that should not be automatic whenever land is disposed of at less than best market value.
My constituency in Luton is part of the Milton Keynes South Midlands growth area. I chaired a housing conference recently, at which I was very pleased that the Minister for Housing was able to speak. There is a great deal of enthusiasm, certainly in my own local authority, about delivering more affordable rented accommodation, and it has taken some time to get to that stage. The idea is perhaps not so enthusiastically supported by our neighbouring authorities of Bedfordshire county council and South Bedfordshire district council, but they are coming round to the idea. The need that we all articulated at that conference was to deal, as the Bill does, not just with physical regeneration—in other words, not just the numbers of new homes, important though they are—but with social regeneration and the wider employment and economic impacts. Often, they require additional subsidy and funding, which is very difficult for RSLs to achieve unless they receive land at less than best market value. Once again, it illustrates that if we are to achieve the stated objects of the HCA, we need to amend this part of the Bill. I thank the Minister for Housing for the helpful letter sent to members of the Committee on this issue. She has clearly gone to some lengths to find a way of overcoming this predicament. It is right that clause 50 contains a general consent, which includes a public benefit test, and also that the Local Government Act 1972 makes it possible for local authorities to be allowed to dispose of land at less than best consideration in certain circumstances. How many times has that been used in proportion to the number of sites that local authorities deal with? My understanding is that the number is very small indeed. It is seen very much as the exception rather than the rule.
I come back to the point that the Bill makes disposal at less than best consideration an exception. The ability of local authorities to dispose of land at less than market value, if it is in the public interest to do so, is a source of a contention. Many local authorities are aware that they have such a power and choose not to use it, sometimes, as I said, deliberately for their own political reasons or because of their view about whether they should have more affordable social housing in their area. I know from my experience as leader of a council, that officers sometimes feel under pressure because the district auditor is breathing down the local authority’s neck to discourage it from selling at other than best market price. More often than not, the financial circumstances of the local authority seeking to achieve the maximum capital receipt to invest back into other services—sadly, often not into housing—simply precludes the frequent use of the existing power.
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So I simply say to my hon. Friend that resting on this existing provision in the Local Government Act and perhaps extending that to the HCA is not necessarily going to deliver the outcomes that we are all seeking to achieve here. I therefore ask him to look again at whether the sentiments behind the amendment could be incorporated into the Bill so that we can ensure that it is not presumed that best market value is the usual way of disposing of land. That would encourage a much wider view of how we can get the best value for our communities.
I remind my hon. Friend that there was a brief discussion of this in the evidence that we were provided with by the chief executive of the National Housing Federation, as I believe it is now called—it is a long while since I have been involved in front line housing. He indicated that the existing local government provision was confused and that the definition of public interest was very confused—and confusing for local government. He offered to help to clarify the definitions so that we could achieve our objectives for the HCA. With that in mind, I ask the Minister to reflect on whether the Bill gives sufficient powers to achieve the objectives that he has stated for the HCA.
Andrew George (St. Ives) (LD): I am pleased, as a co-sponsor of amendments Nos. 38 and 39, to speak to amendment No. 108, which takes another approach to trying to nudge the culture of the public sector in the right direction. Amendments Nos. 38 and 39 do not propose a revolutionary change; nor does amendment No. 108. It is a question of addressing a problem which has existed for many years, which is that there has been a failure of joined-up government in respect of the need to ensure that the assets that the public own—and hold—are put to good public use and that an authority achieves the best possible income.
I congratulate the hon. Member for Luton, South on the manner in which she moved these amendments and give her my strong support. I also pay tribute to my hon. Friend the Member for Chesterfield (Paul Holmes), as I know that he is passionate about this issue. He has been a great champion of securing public benefit for public assets. He is also a genuine champion of social housing and council housing in particular—both across the country and in his constituency.
This is about a change of culture for the public sector and achieving more joined-up government. The purpose of the two amendments tabled by the hon. Member for Luton, South is to ensure that the objects of the HCA are carried through in more of its activities than would otherwise be the case. The amendments will ensure that, when disposing of land, the HCA considers whether it is contributing to an improvement in the supply and quality of housing—particularly affordable housing—securing the regeneration and development of land infrastructure and supporting communities. It should ensure that there is genuinely the greatest public benefit. The context in which all that takes place is the planning system, and although the Bill is not about planning, we all know that when a planning system is fuelled by greed not need, and open-market housing is developed on the site which will net a significant market price in comparison with affordable housing, there is a temptation for any agency or public authority to secure the money and not put the work into achieving what would be, if it did put the effort in, of far greater social benefit to the communities concerned.
The HCA will face those challenges. In considering its position, it may decide to dispose of land, but in doing so, it may apply for planning permission for the site, as many people do for their back gardens. It may apply for planning permission prior to disposal, enter into section 106 agreements, attach a covenant to the land and dispose of it, possibly to an RSL, to ensure that the land achieves the best consideration within its own—the HCA’s—objects. That process would allow the HCA to achieve those objects, whereas the Bill will force the HCA to achieve a private-market value for the land, which will be significantly different from the fettered process that I have just described. A fettered planning permission and covenant would provide a belt-and-braces constraint on development of the land, and ensure that disposal met the HCA’s objects.
Such debates are not new to the House. For decades, the relative merit and value of, for example, cost-benefit analysis has weighed heavily on Members of both Houses on many occasions. If we take a two-dimensional view of cost and benefit, and construct, for example, a road through a piece of land taking into account the land’s development value but not its ecological value, we will end up driving roads and infrastructure through unique landscapes. I am not straying from the point; the point is that nothing in the Bill places a monetary value on the social outcomes and objects pursued by the HCA. The purpose of the amendments is to redress the balance and ensure that the social benefits are not overridden by the obvious attraction to any public organisation of making a quick buck, and to ensure that the social benefits and the objects of the HCA are realised through the manner of, and the regulations that apply to, the disposal of land.
The hon. Member for North-East Bedfordshire, in a very helpful intervention, asked whether it was appropriate to cut the Secretary of State out of the process entirely. That is a very good question. The Bill requires the Secretary of State to intervene too much. I have not previously conceived of circumstances, such as the disposal of burial grounds, in which the Secretary of State’s role is not about considering market value but about considering other issues outwith the objects of the HCA. There may be circumstances in which the Secretary of State would have to play such a role but, in regard to amendment No. 63, she would continue to have a role throughout the process and can intervene far too much and rather unnecessarily. However, the hon. Gentleman may be right that there are circumstances in which the backstop provided by the Secretary of State is relevant, and that is something that we may need to address in future. I strongly support and endorse the amendments tabled by hon. Member for Luton South, and I hope the Minister will give due consideration to the objects of the HCA and ensure they are delivered with regard to the disposal of land.
Sir George Young (North-West Hampshire) (Con): I support the speeches in favour of the amendments, which seek to mediate between two important imperatives. First, if a public body disposes of public assets, it should secure the best price for the taxpayer, and there are powerful arguments within the Treasury for going down that route. There are also arguments about transparency, because when we go down that route, there should be no doubt that the proper price has been secured. The second imperative, which pulls in the opposite direction, is the imperative behind the Bill, and it seeks to bring about a step change in housing output. The Government’s position is that there has been a market failure, and unless intervention takes place, they will not achieve the output of new homes that they wish to achieve. The whole object of the Bill is to address market failure—hence the powers, finances, and the planning powers that we are about to address.
As drafted, clause 10(1) leans very much towards what I would call the Treasury interpretation of best value, as it states that the HCA
“may not dispose of land for less than the best consideration which can reasonably be obtained unless the Secretary of State consents.”
That requirement is nuanced by the letter we received from the Minister, which outlines the circumstances in which the Secretary of State might consent. We will come on to clause 50, which deals with general consents, but I should like to ask the Minister whether there is not a risk that if a certain route obliges the agency to involve the Secretary of State, it would slow the process that the Bill is designed to accelerate—namely the output of social housing?
Let us imagine that the HCA has acquired some land, and wishes to dispose of it so that social housing can be built on it. Two routes are available: it can either dispose of the land for the best possible consideration to, for example, a housing association to which it gives a large grant to produce the required output of housing, or it can dispose of the land to the housing association for less than the best consideration and give it a lower grant. The impact on public funds would be exactly the same. As I read clause 10(1), it nudges towards the first route. In other words, the agency would obtain the best consideration, then give the housing association a large grant to compensate for the fact that it had paid market value. I wonder whether the Minister really wants to have what I would call an un-level playing field and whether the agency, in the circumstances that I have described, might have good reason not to go down the best consideration, high grant route, but go for the less than best consideration, low grant route, which ends up at exactly the same position, albeit by a different route. Having listened to other Members’ speeches, I believe that we need clarity. The last thing we want is a whole lot of test cases in which the HCA or local authority is challenged because it has disposed of land for less than the best consideration and there is a litigious local council tax payer who feels aggrieved. Some people may disagree with the planning decision behind the disposal. I therefore have great deal of sympathy with the speakers seeking clarity. I think that the amendments—and the Minister has been offered a wide range to choose from—seek to inject some clarity what at the moment is a rather ambiguous position.
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Alistair Burt: I rise to support the sentiments behind amendment No. 38 but also to promote amendment No.63 in my name and that of other hon. Friends. I also back the call for clarity made by my right hon. Friend the Member for North-West Hampshire. I disagree to an extent with the letter that the Minister for Housing sent us in response to comments made during the evidence session to try to provide some guidance to the interpretation of clause 10.
Our amendment would keep an involvement of the Secretary of State in the wider issue. We will come to the wider issue of why it is important to have some clarity and why there should be a wide definition of the sense of best value in a moment.
I return to the concern regarding the new agency if it is not a merger of two bodies but something new. The coincidence of powers contained in the new agency makes it very powerful and raises questions that were not necessarily there when we were dealing with two separate entities. It has come up before. The Campaign to Protect Rural England, for example, raised this concern. I quote from its written evidence:
“Given that the HCA’s sweeping powers may include planning powers, careful consideration should be given to ensuring that safeguards are adequate to avoid abuse and to deal with potential conflicts of interest which may arise, eg. between the HCA’s roles as developer, landowner and planning authority.”
That is why I think we still need some involvement of the Secretary of State. It is not necessarily designed to hold up matters but to ensure that somebody somewhere is accountable as the work of the HCA proceeds.
Another fear that has been expressed several times is the conflict between the overall objects of the HCA, as set out in the Bill, the comments made by the Minister and the drive towards achieving a target. Let me pose the situation that there is concern that the target for house-building numbers is not being reached and the pressure, therefore, is on the agency to deliver, or else their chief executive might be sacked like the chief executive of the Thames Gateway. The concern is that, at that stage, decisions are made that are not necessarily in the best interests of the rest of us. In relation to disposals of land, the determination to get the houses built may lead to decisions where the interests of the taxpayer and the nation are subsumed under the interests of reaching a target.
If the Secretary of State is not involved, there is no one for the House to call to account in those circumstances. That is why I think it is helpful to keep the Secretary of Sate still involved in this process because these are big powers. There is a risk of market distortion, the ability of the agency to go in and outbid anyone else——perhaps a small housing association—and the concerns raised by the hon. Member for Luton, South who moved amendment No. 38. I know that my hon. Friend the Member for Welwyn Hatfield had that experience in his constituency, where a small housing association was outbid by English Partnerships. That a late decision was made to dispose of the land for a much smaller sum to get the house building going may be evidence of a conflict of interest, so to have the Secretary of State involved and held to account for such decisions would be helpful.
To turn from why the Secretary of State should be involved to why we are considering clarity in this particular case, I support the general tone of the arguments made by the hon. Members for Luton, South and for St. Ives and my right hon. Friend the Member for North-West Hampshire. It would be helpful to have something on the face of the Bill that indicates that best value may be wider than just market considerations.
A number of those who have given evidence have raised this point with us. Written evidence from the National Housing Federation says:
“The Federation believes that the test of disposal of land is that it should be for the greatest public benefit”.
As my right hon. Friend said, there are a variety of menu options for the Minister to choose from in getting that principle enunciated clearly. It is straightforward: because we are dealing with the provision of community assets, there are circumstances in which going for the pure best financial value may not be the right thing to do. Accordingly, allowing the agency to take the risk of being able to take other matters into consideration is, we believe, necessary—as I know the Minister believes. That was the import of the letter from the Minister for Housing on her explanation of clause 10. The point of her letter was to say that a specific power is not necessary in the Bill, because the Bill contains in clause 50 a general power that relates back to—and is presumably modelled on—section 123(2) of the Local Government Act 1972, which allows the general power. The Minister’s point, and presumably that of the Government, is that that does the job and allows the wider consideration. The Minister suggests that that is the way that it has been used and therefore there is no particular problem, so let us keep it as it is.
My information, in talking to people widely about this, is that that is not quite the case. There is hesitation and uncertainty about the use of the provision and there have been occasions when possible deals have been prevented because officers and councils were not sure whether they had the powers. Someone involved in regeneration and development in urban areas has given me a specific example relating to a project in Birmingham, stating:
“The Council were marketing the former Science Museum and were looking for substantial regeneration benefits including public use of the historic industrial buildings on the site and extensive public realm works, including the restoration of a former spur off the main canal.”
My informant—[ Interruption . ] Well, it is the best term we can use. The gentleman supplying this information to me says that his company made a bid and was recommended by officers to be selected, both on the grounds of highest financial offer, and output, but he adds:
“At the last minute before the Members’ meeting to ratify this——long after the deadline for submission and financial offer——one of the other bidders raised their offer and the officers immediately advised Members that this had to be considered or they would be at risk of a challenge under S123, because they would be accepting a bid which may not represent ‘best consideration’.”
My correspondent points out:
“The dangers this highlights are the descent of formal tenders into Dutch Auctions, but mainly the risk that Councils will not hold out for better regeneration outputs, just most cash. That will always tend to deliver fewer ‘affordable’ homes or community benefits.”
There is other evidence of a lack of certainty about the use of this general clause, which the Minister and his Department are relying upon now. Accordingly, the amendments invite the Minister to give effect to what is plainly both his intention and the intention of the Minister for Housing, namely to allow a wider interpretation, but would it not be far better to put this in the Bill? Accordingly, that is what we seek to do.
For the purposes of clarity, and to ensure that the Bill actually delivers what the Minister says he wants it to deliver, it would be far better to accept one of the amendments at some stage and clarify the Bill, as Members in all parts of the House seem to want. The amendment carries the power of Government Back Benchers, of the representative of the Liberal Democrats and of Conservative Back and Front Benchers. In the spirit of the Committee and the way in which we have been going about our business, it would be helpful if the Minister, with his own particular style and desire to move with the feeling of the Committee in the best interests of all of us, were to accept the amendment.
Mr. Wright: I have enjoyed the debate. I think hon. Members have come at it from different angles, but there is some consensus in the Committee. I hope that I can demonstrate that the amendments are unnecessary and that the current provisions in the Bill are the most appropriate way forward. Mr. Gale, I do not want you to rule me out of order——you would be on your feet very quickly if I were——and I do not want to have a clause stand part debate on this, but as many amendments refer to “best consideration”, it would be useful if I outlined to hon. Members what that phrase really means.
“Best consideration” generally means the best market value that can be obtained. Since the public evidence sessions last December, it has become clear that matters of wider public benefit may be taken into account only if the benefit has a monetary value that can be assessed. The Minister for Housing wrote to the Committee on 10 January on that matter. The hon. Member for North-East Bedfordshire spoke about amendment No. 108, which seeks to set a definition of “best consideration,” particular to the HCA. It adds a requirement that the “best consideration” obtained should mean
“the best outcome secured in respect of the of the objectives of the HCA.”
I suggest that that is unnecessary and provides an added level of complication. It would risk altering the common understanding of “best consideration” with regard to this agency—the HCA—alone. In respect of clause 10, we would expect all the agency’s actions to be in pursuit of its objects.
I now turn to amendments Nos. 38 and 39, ably tabled and passionately argued for by my hon. Friend the Member for Luton, South. As the hon. Member for North-East Bedfordshire said, they would remove any restrictions on how the HCA may dispose of land. That would leave the Secretary of State no obvious mechanism by which to ensure that value for money and/or assets was being obtained. Nor would there be an easy mechanism by which the agency could be held to account for its decisions in relation to the disposal of land. This was the point made by the hon. Gentleman.
In our view, the restriction on the disposal of land is needed to safeguard the public purse and to ensure that resources that belong to the taxpayer are not used inappropriately—for example, to give an unfair subsidy to private companies. Equally—this is an important point, which I fully understand from the oral evidence sessions in December and the sentiments expressed today—we do not want to place unnecessary financial or bureaucratic obstacles in the way of the agency’s objectives. We want the agency to get the best value for public money and I fully accept that that will not always mean selling land for the highest price.
I suggest that the current provisions in the Bill, clause 10 in conjunction with clause 50, is the Goldilocks approach. It is not too onerous, not too free, but just right. I think that is probably the best thing. It is a good balance between providing assurance to the taxpayer and value for money, while making sure that the agency can achieve its objectives—namely, to improve housing supply and regenerate communities.
Mr. Nick Raynsford (Greenwich and Woolwich) (Lab): I have followed the Minister’s argument and supported it up to this point. The question it inevitably poses is the terms of the consent that may be given by the Secretary of State. He may be going on to describe in some detail what terms might be applied under the powers in clause 50 and, if so, I will not pursue it at this point. If not, it is essential, if we are to feel confident, that the right balance is achieved between the two competing objectives of financial probity and facilitating appropriate social housing development, and that there is clear guidance that enables the agency to use its powers appropriately to reduce the price at which property is disposed of in appropriate circumstances to further housing development.
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Mr. Wright: I thank my right hon. Friend for that intervention. I will touch upon that in some respects as I answer the amendments, but I suggest that we put a marker down in terms of discussing it further under clause 50. That would be helpful and useful, both for my understanding of where the Committee is coming from and for setting out what I think is important.
Andrew George: Referring to the words of the right hon. Member for North-West Hampshire—the “imperative” on the Secretary of State—will the Minister clarify whether best consideration would be, in the scenario which I described, the HCA applying for planning permission, welcoming the constraints of a section 106 agreement, placing a covenant on the land in order that it can achieve the agency’s social objectives and then disposing of the land with those fetters or impediments on it?
Mr. Wright: The hon. Gentleman raised an extremely interesting point. It was food for thought. I think he referred to the agency trying to make a quick buck. I know that he was being flippant and I understand the sentiment exactly—it was an honourable and correct sentiment—but according to the agency’s intentions and objectives it is not there to be a land speculator or to make a quick buck. All land that the HCA will own will be sold solely for the purposes of meeting its objects. I remind the Committee of clause 4(2), which states that the
“powers of the HCA are to be exercised for the purposes of its objects or for purposes incidental to those purposes.”
Grant Shapps (Welwyn Hatfield) (Con): Before we move away from the point about the balance between the Secretary of State giving permission for the disposal of land at less than the market rate and the alternative of removing the Secretary of State, as proposed by amendments Nos. 38 and 39, can the Minister—in order for the Committee to fully understand the point—indicate how much that power has been used by the Secretary of State in earlier legislation? If he cannot tell us now, he could reply this afternoon or on Thursday, but how many times has the Secretary of State intervened to allow disposal of land at less than market value?
Mr. Wright: I am grateful for that intervention and I was going to respond in respect of my hon. Friend the Member for Luton, South. If the Committee will forgive me, I will try to provide figures when we discuss clause 50. Given the nature of the general consents regime, the Committee will recognise that it might not be possible to provide accurate and complete figures because records may not be centrally held on the disposing of land at a local level. However, I will do my best to provide them if I can for the Committee.
I was responding to the point about being a speculator. [Interruption.] I do not think that the agency will be in that position. The agency is there to improve the supply of housing and that is the important point. [Interruption.] If I may be allowed, I want to elaborate. This is a very important point: every bid for every site sold by the HCA will have to demonstrate how its proposed developments will meet the agency’s objectives, which we have discussed. Where the agency sells land at best market price I suggest that the receipts of that sale could be reinvested by the agency into further delivery of its objects. I do not envisage a scenario in which the agency would be putting covenants and planning permission on in order to boost the price. I do not think that that is what it will be doing.
Andrew George: In that case, the Minister may have misunderstood what I was saying, which was about restricting the options on the future use of land by placing section 106 agreements and covenants on the land to ensure that it would meet the housing needs of the local community. If on most occasions the HCA were to dispose of land where it is appropriate that the land could be used for housing, made sure that it sought a restrictive planning agreement with a section 106 agreement beforehand and also placed a covenant on that land to ensure that it could be restricted, but then sought the best consideration from those developers who could achieve this—mainly registered social landlords—would that be within the orbit of what the Minister is describing?
Amendment No. 63 would require the Secretary of State to consider wider public benefit if granting permission to dispose of land at less than the best consideration. I was very struck by the oral evidence sessions in December, where people spoke about the need for land disposal to achieve the best possible outcome for the community, not simply the highest monetary value, and I have a lot of sympathy with that. However, I suggest that this amendment is unnecessary precisely because of the Goldilocks principle that I mentioned early on. Clause 50 allows the Secretary of State to issue a general consent, setting out the circumstances in which the agency may dispose of land without seeking specific consent. That general consent can address issues of wider public benefit, including the need to obtain better value for money for the public sector as a whole, as well as ensuring proper accounting and reporting responsibilities, and compliance with state aid rules.
A general consent has been in place in respect of local authorities’ disposals since 2003. That general consent allows local authorities to dispose of land at less than the best consideration in some circumstances. I reiterate to the Committee that my right hon. Friend the Minister for Housing stated that we would wish to issue a similar general consent for the homes and communities agency.
Mr. Raynsford: I am very grateful to my hon. Friend, and I do not intend to push this much further. I appreciate his reassurance that there will be a general consent, and am pleased to hear that, because I myself had something to do with the general consent for local government that was issued in 2003. It is right there should be a parallel general consent for the HCA. It would help members of the Committee if, when we consider clause 50, we could have some indication of what the broad parameters of that general consent would be, how it will compare with the existing local authority consent and whether similar or different principles will apply.
Mr. Wright: I reiterate the point that I made to my right hon. Friend earlier, which is that he set a very important marker down and I will certainly want to cover that in clause stand part debates. The Goldilocks principle is an important one—I like it so much I have mentioned it three or four times. I think that under the system outlined in the Bill, clause 10, in conjunction with clause 50, provides the right balance between making sure that taxpayers have assurance that the Secretary of State will be able to see what the best consideration is so that they get value for money, and making sure that the agency can fulfil its objectives.
My final point before I ask for the amendment to be withdrawn is on what came out clearly from the oral evidence sessions in December: the process of public agencies bidding up land. I have sympathy here. That process makes sure that we do not get good value for money, and I will address that.
The current system operated by English Partnerships is the best approach to take: a closed bid process. English Partnerships treats all bidders the same. If two bidders can meet all the quality standards and satisfy the terms of the brief—do not forget what I said earlier about the specifications of the bid, such as affordable housing or whatever—then English Partnerships will take the highest bid. There are no bidding wars, because the tendering process is closed: individual bids are not disclosed to other bidders and there is no opportunity to make a revised bid.
Given the Goldilocks principle, I think that the current balance is the right one. It satisfies value for money and making sure that the agency’s objectives are achieved. Therefore, I hope that my hon. Friend the Member for Luton, South and other hon. Members will withdraw the amendments.
Andrew George: I do not know whether the hon. Member for Luton, South intends to respond.
The Chairman: Order. I shall call the hon. Lady to wind up the debate, but if I call her, then the hon. Gentleman cannot speak.
Andrew George: I apologise, and am grateful for that clarification. I am still rather unused to the procedures, even after all these years.
In response to the Minister, I am sorry to say that I am not reassured by his attempts to reassure us about the Government’s approach on clauses 10 and 50. I do not entirely follow the Goldilocks principle—I do not know if it is the principle of stealing the baby’s porridge or not. I fear that the Minister did not entirely follow the scenario that I attempted to describe, which was quite the opposite of the speculative principle. My scenario envisaged giving the HCA the power to restrict the market for the potential sale value of the land assets that it owned by restricting that land to certain uses—uses that would assist the HCA or be directed towards the objects of the HCA. It might well dispose of land as a result of obtaining planning permission, seeking and welcoming the restrictions of section 106 agreements and itself applying a covenant on the land in order to achieve a social objective. Only those who could achieve the objectives would then be competing—through tender or other means—to purchase that land.
In other words, such land would not then be sold for expensive executive housing or, in my part of the world, for second or holiday homes and other activities. The HCA, which had owned the land, would restrict it and say that it could be used only for social and low-cost rent accommodation, meeting a local need. Achievement of that would be written into the planning permission and the covenant. I will gladly give way to the Minister, but my intervention sought clarity as to whether the HCA would be entitled to do that routinely and still fall within the Government’s definition or interpretation of what was the best consideration on the disposal of that land.
Mr. Wright: Was not the point that I mentioned during my contribution the absolute importance of the specification? Why is the agency disposing of the land? It may be, as part of the specification of the bid, that it would be that 90 per cent. of the land needs to be on the basis of affordable housing. That is the way that it would go to market. The important point is to set out at the start of the process the whole specification that would provide the certainty required by the market.
11.45 am
Andrew George: That is helpful. If now the Minister is saying on the record that on every occasion where the HCA is disposing of land it can set out that clear objective within the programme for its disposal, then, as I described, I hope that the HCA can go further and ensure that that is the outcome by achieving the necessary planning permissions and attaching the necessary covenants to ensure that it is ultimately delivered and not lost after disposal. I am not personally reassured yet. This is an issue that I think we will come back to. It is a big issue—a challenge. It is an issue about the culture of government and challenging the intervention of the Treasury in the manner in which land such as this is disposed of. It has bedevilled—a term that I know a lot of those in local government like to use—a lot of efforts at local government level to achieve social outcomes from these extremely valuable assets. I hope that the Minister will have the opportunity to reflect upon the debate, because I think and hope that we will have an opportunity to come back to this, not only in the debate on clause 50, but during future stages of the Bill.
Alistair Burt: I thank the Minister for his consideration of the matter, but still do not feel that the issue of clarity and how the general clause is to be used by authorities outside has been settled. As the hon. Member for St. Ives indicated, we have not got what we would like in the Bill. As we have a general consensus here and if we know what we would like to seek, I would be keen to press the Minister further and to press amendment No. 63 to a vote, if need be.
Margaret Moran: I stress at the outset that I do not support amendment No. 63 precisely because of the point that I made earlier. One of the problems is that, where there is a presumption of referral to the Secretary of State, it is a negative presumption. In other words, the general pattern of life will be disposal at full market value, with the exception going to the Secretary of State. What I am concerned about is that, although we all agree on the excellent objectives of the HCA and can will those objectives, we also have to will the means to deliver them. I am forever a practical politician and having also worked on the frontline of finance and development within RSLs, I know the difficulties of delivering affordable social housing. Of course, the new organisation will make a tremendous leap forward in enabling us to achieve our objectives and the delivery targets. However, as the right hon. Member for North-West Hampshire outlined eloquently, the practical realities are that there are two options for RSLs. Either the land is discounted at the outset and developed swiftly or the subsidy—in effect—or grant goes in at a later stage. As I know from my experience and from talking to RSLs in my constituency, that the practical outcome is that, very often, unless RSLs act swiftly to acquire the land, they are outbid by the private sector. Any delay in the process leads to practical outcomes that are not what the Minister wants to achieve. We all what to achieve the delivery targets swiftly, but I fear that what is outlined in clause 10(1) will not deliver the practical outcomes that we want as swiftly as we want and could slow down the whole process. I absolutely agree with the hon. Member for St. Ives about the need for clarity. We talk about “best value”, “best value for communities” and “public benefit” without clear definitions. We all know that the Treasury likes in all things to have clarity and security in numbers, but what we are talking about in the Bill is social value and we have to be a lot clearer in the Bill as to what that means in practical and outcome terms. We need a great deal more clarity.
I raised the issue of how often the Local Government Bill had been used in the way the Minister described and further questions have been raised as to how often the Secretary of State has used her powers to override a market value decision, or had such a decision referred to her. We need an evidence basis for this discussion, because we have a lot of anecdotal evidence from people working on the front line to suggest that those powers are used only in exceptional circumstances and we could face a situation where the Minister’s best endeavours to speed delivery of more affordable homes could be thwarted because of the problem of the exception basis.
I take to heart the point that the Minister made about specifications on disposal, but it is not how that would work in practical terms. I urge him not only to come back to us on the two specific questions that were raised, but to provide greater clarity as to how the proposal would work in practice. That might provide the assurance we need. I agree that if there is to be a debate regarding general consent—as my right hon. Friend the Member for Greenwich and Woolwich said, we need to strike a balance that achieves absolute clarity—when we discuss clause 50, there will be a helpful opportunity to illuminate some of the issues that have been raised. On that basis, I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Amendment proposed: No. 63, in clause 10, page 4, line 31, at end insert
‘provided that the Secretary of State takes into account the wider benefit to the community where such disposal takes place’.—[Alistair Burt.]
Question put, That the amendment be made:—
The Committee divided: Ayes 5, Noes 9.
Division No. 2 ]
Burt, Alistair
Hurd, Mr. Nick
Shapps, Grant
Syms, Mr. Robert
Young, rh Sir George
Blackman, Liz
Brown, Lyn
Gwynne, Andrew
Love, Mr. Andrew
Moran, Margaret
Raynsford, rh Mr. Nick
Slaughter, Mr. Andy
Smith, Ms Angela C. (Sheffield, Hillsborough)
Wright, Mr. Iain
Question accordingly negatived .
The Chairman: Hints have been made, and I am determined in my own mind that there will not be a stand part debate on this clause. I say so now in case anybody has any burning matter they wish to raise and which cannot be discussed in the debate on the next amendment.
Lembit Öpik (Montgomeryshire) (LD): I beg to move amendment No. 97, in clause 10, page 4, line 40, at end insert
‘subject to consultation with landowners whose property borders the land under consideration for disposal.’.
I apologise for my delay in coming to Committee this morning, Mr. Gale. I was in another room preparing for government, but I would, I am sure, be ruled out of order if I justified myself further, although I am tempted to do so. I tabled the amendment with my hon. Friend the Member for St. Ives (Andrew George) to clarify certain concerns.
Harold Macmillan said that at the heart of democracy lies dialogue, but that it could only be made to work if one stopped people talking. We are only on clause 10 after seven Committee sittings. At the current rate of progress, I fear that we will finish our consideration of the Bill on 31 January 2009 as long as we rush through the schedules and new clauses. In an effort to hasten proceedings, I will exercise a self-denying ordinance, and I hope that the Minister can prĂ(c)cis his comments as well. That will help us to speed up, and prevent us from abandoning the Bill in Committee at clause 25 which, at the current rate of progress, is where we will end up.
The amendment seeks to highlight landowners’ justifiable concern about the HCA seeking to dispose of land without consultation when their land borders the property under consideration. Would it not make sense to require the HCA to enter into dialogue with bordering landowners, to ensure that their views and concerns are taken into account? Without that mandatory requirement, there is a risk that the HCA will ride roughshod over local considerations and miss the sage advice of landowners who may have a perspective on the land under consideration. They may also wish to make useful proposals about how the land could be used in the future. The amendment would require the HCA to do something that is not just about being a good neighbour, but about being a good manager of land. I should be grateful for the Minister’s perspective, and I hope that he will accept the amendment.
Mr. Wright: I welcome the hon. Gentleman to the Committee. I am slightly intrigued by the fact that he is preparing for government on his own, but we will leave it there. Despite the fact that I like him, I strongly reject the amendment, which would place the Homes and Communities Agency under an obligation unlike that for any other landowner in England. It would require it to consult neighbours before it could dispose of any land that it owns. The manner in which it is phrased is not the right way to address these concerns.
May I stress again something that I have said in debates on earlier clauses? The way to restrict land use—and I imagine that that is what the hon. Gentleman wants to do—is through the planning system, not through provisions requiring landowners to consult their neighbours on the question of whom they sell their land to. If there are objections to the intended use of a site and planning permission is required, objections can properly be made at that point. If the requirement in the amendment were imposed on the agency it would slow down any progress the agency could possibly hope to make on any schemes that involved the transfer of ownership, by whatever means, of that land.
The amendment would also be likely to limit the value that the agency could obtain for any land that it wanted to sell, although best consideration would still pertain, because if the concerns of neighbours were taken into account, that would probably limit the number of prospective buyers who could be considered and thus reduce competition for any particular site. That would make it impossible for the agency to obtain the best consideration for the land, irrespective of the wider community benefits associated with schemes that we discussed in earlier clauses.
The amendment would therefore make an unnecessary imposition on the agency. It is almost like requiring permission from one’s neighbours to sell one’s house. It is not necessary, and it would slow progress towards achieving our objectives of 3 million new homes by 2020. I have set out my strong objection to the amendment, and I hope that the hon. Gentleman will withdraw it.
Lembit Öpik: To clarify the position, I was not preparing for government on my own—I was preparing for government with the Cabinet, as it will be constituted after the next general election. I am concerned that the Committee will still be sitting then, but as I will be in government, I can table all my amendments whatever way in hell I want.
12 noon
Moving swiftly on to amendment No. 97, I accept that the Minister strongly rejects it, but he does so for the wrong reasons. I am not trying to restrict land use—far from it. The HCA will, necessarily, be an authority; it will probably operate at arm’s length from many of the communities in whose land it involves itself. I was simply seeking to make sure that the HCA is sensitive to the considerations of neighbours of land that it sells. The Minister re-emphasised the fact that the only consideration in the HCA’s eyes is financial use, but it would have been nice if the Government recognised that being a good neighbour sometimes requires taking other things into consideration, if only to acknowledge that landowners of neighbouring property can sometimes provide a perspective that is not self-evidently apparent in the bald facts presented to the HCA by officials. I am sorry that the Minister has taken such a robust position, but we will consider what he said. We want to reserve the right to return to the matter on Report, so I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 10 ordered to stand part of the Bill.
Clause 11 ordered to stand part of the Bill.
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