Dan Rogerson: I beg to move amendment No. 573, in clause 165, page 93, line 28, at end insert and.
The Chairman: With this it will be convenient to discuss amendment No. 574, in clause 165, page 93, line 30, leave out from it to end of line 33.
Dan Rogerson: We have discussed the issue of rising land values a little so far. Indeed, the hon. Member for Meirionnydd Nant Conwy mentioned the issue of capital gains tax and we explored the fact that there might be issues that increase land value other than the planning permission being granted at that point, such as the gradual increase over time. I am hoping to probe the Ministers view on that issue.
When one talks to the volume house builders, they all claim that land banking does not occur and that it would not be in their interests because it would be terrible for them to take on land and leave it sitting when they could be building houses on it. However, anecdotally, one hears of areas of land on which builders not only have an option but have bought up and have planning permission for but which has not been built on for some time. The hon. Member for Meirionnydd Nant Conwy mentioned an area in his constituency where planning permission had been granted but that had held back other development because it met the demonstrated need in the area, even though the properties were not built for a number of years.
If the level of CIL and its implications are determined in any way according to the land value at the time when planning permission is granted and the development does not subsequently occur for some time, my concern is that that could be an incentive to get that CIL agreement early, even though costs will rise in the future. There might be a concern that that the costs will be higher later, when builders seek to carry out the development, and smaller developers will not want to incur the cost earlier on, but will want to do so at the time when they are getting the return on the investment. However, that might not be an issue for bigger developers who decide that they can carry the cost as part of their overall financial management and would rather take the cost of the CIL earlier. A later increase in land value would mean that the cost of the CIL could be higher, but they will not have to worry about it because they will have paid it at a lower rate. The purpose of the amendment is to see whether the Minister has considered that possibility and thinks that it should be taken account of.
Mrs. Lait: I seek some information from the Minister. Much of the levy appears to be based on the fact that land values will continue to increase, but they may at least mark time and could go down. If land values go down, I wonder whether the levy will go down, how flexible it is and whether the Minister has done any modellingI use the word advisedlyto see how effective a levy would be if the land values and the value of the development went down.
John Healey: The developers say that they want certainty about how much will be payable. They want that before they start development. They want that as far as possible while they are arranging their financing. That is why they are keen, as we are, to see the CIL set out in a charging schedule rather than calculated on a site-by-site basis as in the previous proposal for a planning gain supplement. So they want certainty about how much is payable. They want the certainty before they commence the development or arrange the financing. That is often only possible after the grant of the permission. We are linking the levy to the planning permission.
To answer the hon. Member for North Cornwall, under town and country planning provisions, planning permission is generally limited to three years, unless the development is then commenced. We are not talking about an infinite period. There is also provision, and we are looking at the appropriate way to do this, for
Dan Rogerson: I was interested to hear what the Minister had to say about indexing. We have discovered a little bit more about the proposals that are under discussion so it is all part of the ongoing revelation of how the levy can work. On the question of planning permission being valid for only three years, the case that was brought to our attention by the hon. Member for Meirionnydd Nant Conwy was on the basis that enough development had occurred to allow the planning permission to remain live, even though the rest of the development was halted. I accept that that is a rare case. My concern was that in terms of financial considerations over the levy, it does not provide any form of incentive for that sort of thing to happen further. I am grateful to the Minister for his response. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Amendment made: No. 538, in clause 165, page 93, line 29, after owner insert or developer.[John Healey.]
(d) CIL is not payable by incorporated companies whose primary purpose is the provision and operation of infrastructure and whose profits are applied solely for that purpose..
The Chairman: With this it will be convenient to discuss amendment No. 593, in clause 165, page 93, line 33, at end insert
(d) CIL shall not be payable in respect of development carried out by registered charities.
Mr. Betts: This is a probing amendment. I understand that the Minister will be reluctant to agree categories of exemptions from CIL. Indeed, it was interesting that during our hearings into the planning gains supplement, although probably not agreeing with the details and some of the complications of the PGS, a number of organisations were supportive of the idea of some form of charge being levied on those who benefited from planning permission that allowed them to develop a particular piece of land. At the same time, they were very much in favour of exemption for themselves and similar organisations from such charges. That is often the case with such proposals.
I am trying to tease out the possibility of the law of unintended consequences applying to CIL and whether there might be one or two perverse developments as a result. The issue was initially raised with me by Network Rail, which, by definition, is a developer and maintainer of infrastructure. As I understand it, because of the way CIL will be constructed without any exemptions, it is entirely possible that when a new railway is developed or an existing railway expanded,
The issue has also been raised by the National Housing Federation and the Home Builders Federation. They asked whether a development by a housing association, which by its very nature is not seeking to make profit out of the development of land, will be subject to CIL. We are trying to use section 106 to encourage the provision of more affordable housing, but on the site next door there could be a housing association development that has to pay CIL. That would reduce the resources that the housing association has to provide social housing. Is there any scope for Ministers to look at the unintended effects that CIL might have in reducing the resources for the provision of social housing when the general intention is that there should be a greater provision of social housing through funds available from the benefits of development?
My final issue goes a little further than the amendment, but is in the same spirit. In a situation where a house builder wants to build a private development, but negotiates a section 106 arrangement to build a number of social housing units as part of it, will CIL be levied on the social housing as well? In other words, will the developer be asked to pay section 106 money on the social housing as well as the CIL, particularly if CIL is a levy based on the roof tax, as in the Milton Keynes arrangement?
These are interesting issues that probe the consequences, which might not be intended, of what I think is the very good proposal of CIL. However, it is one that we need to get right in detail, as the Minister has said repeatedly.
Mrs. Lait: Amendment No. 593 would go further than the amendment No. 444 and would bring in another category for exemption. We are seeking clarification from the Government on charities. All of us as MPs and as subscribers to charities know how strongly they feel about having to pay VAT, and one has a great deal of sympathy with that view. They are asking whether they will also have to pay CIL, given that many charities wish to make property developments for things such as church halls, school halls, new houses for their vicars and ministers, and community sports facilities. Historically, charities have built many social housing developments, of which there are a number in my constituency.
Charities are rightly asking whether they will be asked to pay CIL when they are using charitable money donated by the public that was not foreseen to be used as a contribution towards infrastructure. Much of what the charities will do in developing property will be to provide social infrastructure out of their own pockets. It will be a double whammy for anyone who contributes to charity fundraising. Again, it is another consequence of sparse detail, and I hope that the Minister can reassure the charities in the wider world, and me.
John Healey: For reasons that I will explain in a moment, I cannot give the hon. Lady the reassurance that she thinks she wants. She says that she supports the levy in principle, and I therefore encourage her to reflect on its purpose and the justification for it, which is that the basic goal of a community infrastructure levy is for every development to pay a fair share towards the infrastructure that may be required in the area in which it is located. At this stage of our thinking, we believe it is right that most types of development are liable to pay a levy, subject to what is a low, but important, de minimis threshold, because almost all development has some impact on the need for infrastructure, services and amenities.
The current system of planning obligations does not have any automatic exemptions for a specific type of developer or development. That reflects a planning system that is blind to what developers do with their profits or to whether a developer is also a registered charity, because it is irrelevant to the impact of their development on the local community.
The range of interests and representative organisations that believe they have a special case for an exemption is much wider than Network Rail, housing associations and registered charities. That is not surprising; virtually everyone feels that they have a case for the levy not applying to them. However, at some stage this year, when we have been able to discuss the matter in more detailit will be the basis for a public consultationwe will set out our approach to exemptions. In doing so, we will ensure that any potential qualification for exemption must be fair and justified and refer to an objective set of criteria or there may, at least, be a risk of falling foul of state aid legislation.
I can reassure the hon. Lady that we will discuss in detail with charities and othersthat includes those that have already approached us or those she might wish to point in my directionwhether they could qualify for an exemption from the levy. Our approach is linked to the purpose of CIL and our starting point is that the large majority of developments, irrespective of the developer, should justifiably be liable to pay the levy.
Mrs. Lait: I am slightly concerned and I hope that the Minister takes this on board. Let us suppose that a new faith school is needed, the community recognises that need, the school is built, property prices in the area go up and so do the number of cars that go to that school. If the faith organisation involved in building the school worked with the local authority through the local development framework and was a recipient of the community infrastructure levy, would that organisation also have to pay the levy?
John Healey: I hoped that that was clear from what I said earlier. I cannot give the hon. Lady a categorical answer to a What if? situation.
Our principal starting point is that almost all developments will have some imposition and impact on the need for associated or related infrastructure in the area, and some call on the services or amenities. Our rationale for the basic goal of the levy is that every development should pay a fair contribution towards those costs. If we are to consider any categories for
Mr. Betts: Again, we have returned to the Minister saying that there are further discussions to be had. I generally accept his premise that the presumption is that everyone will pay a levy unless there is a good reason for a particular type of organisation not to. However, I still think that there is a discussion to be had about the effect on social housing in particular. He has said that concerned organisations that have approached the Department, or which do so in the near future, will be party to the discussions, without any promises as to their outcome. On that basis, I beg to ask leave to withdraw the amendments.
Amendment, by leave, withdrawn.
(d) CIL is payable only in respect of development which
(i) generates a significant extra demand for existing infrastructure, or
(ii) requires the provision of significant new infrastructure..
This is another probing amendment that, in a sense, follows on from the amendments on charities, because we are again trying to get the Minister to ensure that CIL would not be used by central Government or other bodies to replace their spending, or to replace, repair or create unrelated projects.
We want CIL to be used primarily for local infrastructure that is agreed locally. Some of the Ministers comments have left me worried that regional and national bodies will be able to charge directly for developments that are outside the locality and do not affect local regions.
John Healey: The hon. Lady needs to understand that regional or national bodies could not charge; it is the Secretary of States power potentially to charge on their behalf.
Mrs. Lait: That terrifies me even more, because it takes the debate straight back into the field of taxation and the worry of my right hon. Friend the Member for Skipton and Ripon about hypothecated taxation. However, we will probably return to that matter on Report. I am sure that Sir John will be concerned that we do not go down that route now.
The amendment is intended not to tease out from the Government the accuracy of my comments about whether it is the regional development strategy or the Secretary of State who will charge, but to ensure that the infrastructure levy is not used to replace spending that should come legitimately from bodies outside the local region and is not spent on projects that are not local. If he can reassure us on that, I will be happy to withdraw the amendment. It is designed to get an assurance on the record that the Government will not take CIL money for their own objectives.
John Healey: I have two short answers for the hon. Lady. First, we have been consistently clear that the purpose, intent and effect of the levy will be to raise funding that is additional to what the Government are already prepared to put forward to support growth, and the document is clear about that. Secondly, it will be done specifically to support infrastructure and is not, as she put it, for the purposes of the Secretary of State.
Mrs. Lait: I remain unconvinced that the money raised by CIL will not be taken away from the local area and community and used for matters outside their control. However, I am prepared at this stage not to press the amendment and will undoubtedly come back to it on another occasion. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
John Healey: Government amendment No. 540 will ensure that CIL regulations can make provision for liability to arise in relation to general consents, such as those granted by local development orders under the Town and Country Planning Act 1990. Essentially, we are seeking for development permitted under such orders also to be able to pay the levy, because such development could clearly give rise to infrastructure but would automatically be exempt without the amendment.
The other amendments will ensure that the regulations can define the point at which planning permission is deemed to first permit the development, which is the time at which the extent of the civil liability is to be determined under the clause. That is necessary to ensure that the amount of CIL to be paid is correctly calculated with reference to the scheme that is permitted. I hope that that is helpful.
Amendment agreed to.
Amendments made: No. 540, in clause 165, page 93, line 38, leave out called)) and insert called, and whether general or specific)).
No. 541, in clause 165, page 93, line 38, leave out and.
No. 542, in clause 165, page 94, line 1, leave out paragraph (c).
No. 543, in clause 165, page 94, line 2, at end insert
(d) the time when planning permission first permits development (and the regulations may, in particular, include provision about outline planning permission and provision treating permission as having been given at a particular time in the case of general consents)..
No. 544, in clause 165, page 94, line 2, at end insert
(3A) The regulations must include provision for determining which owner or developer is liable in respect of development; and the regulations may, in particular
(a) define owner;
(b) define developer;
(c) provide for joint liability (including joint and several liability);
(d) permit one or more persons to assume sole or joint and several liability;
(e) permit one or more persons to assume joint and several liability with a person who is liable in accordance with the regulations;
(f) provide for liability in default of assumed liability;
(g) provide for transfer of liability (assumed or otherwise);
(h) make provision about notices..[John Healey.]
Question proposed, That the clause, as amended, stand part of the Bill.
Mrs. Lait: I hope that I will not detain the Committee for long. Some questions arise on the clause as a whole. We dealt with it in small pieces, but there is the bigger picture. Could the Minister enlighten us on the question of liability to pay? Precisely what size of development does he think should be liable for the charge? There was some merriment earlier when I referred to building a retirement house in the garden. Would that one house be liable? Would a farmer who has permitted development rights be liable to pay CIL if he wanted to change his buildings and processes?
There was also a reference to Network Rail. Most of the infrastructure developers have put forward very eloquent pleas not to be liable for CIL. I can understand that liability where they are building the actual development, but associated developments might be opened up to it because of the infrastructure development. Would there be a difference between the infrastructure provided and the potential opened up by the fact that a new road needs to go into a port or nuclear power station, or round a generating station or grid provider? If land is opened up that belongs to that infrastructure developer, would they be liable for CIL on that land? Would the developer of the land opened up be liable because, say, a road has gone in? Could the Minister enlighten us on those broader questions?
John Healey: Our starting point is that, as I have said before, the liability for CIL should apply widely to almost all developments, unless we become convinced that there is a strong case for exemptions. We are looking at that and we will make decisions and proposals later. But as we stated in paragraph 78 of the document published last week, we do not want complexity for those very small developments, so there will be a de minimis threshold. I said earlier that it would be a low de minimis threshold but as the document states, we do not intend the liability to arise in relation to householder development by homeowners and, subject to further consultation, some further permitted development, such as walls, roof extensions and so on, might also not be liable for CIL.
Mrs. Lait: Is the Minister saying that a householder will not be liable for CIL if they build a room in the roof, but they would be liable if the garden was big enough for them to build their retirement home in?
John Healey: The hon. Lady heard me say that that is exactly the sort of thing that we are considering at the moment. We intend to introduce a low de minimis
John Healey: The short answer to the hon. Ladys point is, were the piece of land that she has talked about to be identified in the charging schedule as attracting a liability for CIL, it would attract such liability.
Question put and agreed to.
Clause 165 , as amended, ordered to stand part of the Bill.
|©Parliamentary copyright 2008||Prepared 1 February 2008|