Clause
165
Liability
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 Minister’s 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 modelling—I use the
word advisedly—to 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
indexing a charging schedule. Were that indexing or some form of
buoyancy to be attached to the charging schedule over time, it is
certainly conceivable, were the market or inflation to go down, for it
to be reflected in that way. As the hon. Lady will appreciate from the
provisions in the Bill, these are areas of quite fine detail. We are
looking at them closely at the moment. They will develop as we find a
sensible way forward when we have had the chance to discuss this in
detail with those who have an interest in the
provisions.
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.]
Mr.
Betts:
I beg to move amendment No. 444, in
clause 165, page 93, line 33, at
end insert—
‘(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,
Network Rail could be charged for a CIL that contributes to improving
the road system in the area. With the Government policy of encouraging
the development of public transport, it would seem a little perverse if
the development of railways gave rise to extra funds to build new
roads. That is only an extreme example, but it is a
possibility. 2
pm
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 detail—it will be the basis
for a public consultation—we 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 others—that includes those that have already approached us
or those she might wish to point in my direction—whether 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
exemption, we must do so carefully and with sound debate, as they would
have to be in keeping with the purposes that we have set out for the
levy.
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.
Mrs.
Lait:
I beg to move amendment No. 595, in
clause 165, page 93, line 33, at
end insert—
‘(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 Minister’s 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 State’s
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.
2.15
pm
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:
I beg to move amendment No. 539, in
clause 165, page 93, line 35, at
end insert
‘and’.
The
Chairman:
With this it will be convenient to discuss
Government amendments Nos. 540 to
544.
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—
‘,
and
(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
threshold. Nevertheless, it will be a de minimis threshold below which
liability for the CIL would not
apply.
Mrs.
Lait:
And the infrastructure
point?
John
Healey:
The short answer to the hon. Lady’s 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.
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