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.
10.45
am
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.
11
am
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.
11.15
am
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.
The Department retains, through the
involvement of the Secretary of State, the power to ensure that such
opportunities are not misused and that there is not
widespread mishandling of the power to the detriment of taxpayers. It
enables the housing—and the country in general—to be
protected because, should there be widespread misuse of such a power,
the House would be able to question the Secretary of State and
Ministers directly and seek an explanation for what is happening. This
is why we prefer the Secretary of State’s consent to be
there. 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.
11.30
am
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?
Mr.
Wright:
That is a theme emerging from today’s
session. This is not being done in a vacuum, but as part of the
planning framework. We do not expect speculative offers that do not
coincide with the local
development framework. It is important to point out that the agency will
be responsible for ensuring that the specification will be sufficiently
detailed—this will be a key point—to avoid radically
unsuitable bids coming in. I hope I have answered the hon.
Gentleman’s point. The specifications may require the consent of
the Secretary of State if they are to include conditions for the wider
public benefit that have no monetary value. We would expect the agency
to work on that
basis.
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
]
Smith,
Ms Angela C. (Sheffield,
Hillsborough)
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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