Planning Bill

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Clause 166

Mrs. Lait: I beg to move amendment No. 597, in clause 166, page 94, line 10, leave out ‘determining the amount of CIL’ and insert
‘local planning authorities to determine the amount of CIL as part of their local development plan process.’.
The Chairman: With this it will be convenient to discuss the following: Government amendments Nos. 545 to 548.
Amendment No. 588, in clause 166, page 94, line 20, after ‘descriptions’, insert ‘, locality’.
Government amendments Nos. 549, 38 and 551.
Amendment No. 599, in clause 166, page 94, line 27, leave out paragraph (d).
Government amendments Nos. 552 to 554.
Amendment No. 600, in clause 166, page 94, line 30, leave out subsection (5).
Government amendments Nos. 555 and 559.
Mrs. Lait: There is nothing like being defeatist, but we are unlikely to get very far with this issue. However, we believe that local authorities should set the amount for the infrastructure levy, not the Government. We are considerably concerned about how flexible it will be. We have tabled that proposal in the amendment.
I see from Government amendment No. 38 that the Minister and I are of one mind, technically, although I suspect that we are coming at the issue from different angles. I am therefore very interested to hear what his view is. We are looking to take out the references to land value, as part of our continuing campaign to ensure that the planning gain supplement cannot be brought back in any way, shape or form. I cannot imagine that the Minister will use that argument.
Amendment No. 600 would ensure that there is a right of appeal against the CIL. Currently, that can be done through the planning appeals system and we would like to hear whether the Government are prepared to incorporate an appeals system that is part of a well-known process, such as the planning appeals process. This point was put to us quite forcibly by the Home Builders Federation, and I am sure that the Minister has also heard its arguments. That is somewhat ironic because the Home Builders Federation is one of the organisations that succeeded in persuading the Government to go down this route. If the Minister would clarify that point, I would be grateful.
2.30 pm
Mr. Betts: I want to raise two issues: first, land values, which is of great concern to me. There has rightly been a lot of discussion in Committee of the fact that we have not received the detail of the regulations, which will eventually determine whether, and how well, CIL works.
In our very useful evidence sessions we heard from a range of different organisations that will ultimately be involved in the levy implementation: the British Property Federation, the Home Builders Federation and the CBI, which represent those who will have to pay it; and organisations such as the Royal Town Planning Institute, whose members are likely to be involved in its calculation and collection. One thread of concern that ran throughout those sessions was the issue of valuation.
When the Select Committee considered the planning gain supplement some time ago, there was support for a mechanism to collect some of the private gain that results from planning permission being given. But virtually every organisation that gave evidence expressed concern about how it would operate, especially on the issue of valuation. Both the evidence given to the Select Committee and the Committee’s report reflected genuine concern about how the calculations would be done. The Committee considered the options that had existed on land in the past and how they would affect the calculations, but no one had an answer to how to deal with the issue.
When the proposals were introduced, the Minister said that we would proceed with them, but that if someone had a better idea they could come forward with it. Some organisations got together and suggested a planning charge, which has become the community infrastructure levy. What drove them was the wish to get away from trying to calculate increases in value as a result of planning permission being granted on particular sites.
I am not a valuer and I do not understand some of the complex issues that were raised in the Select Committee, but what clearly emerged from the evidence was that everyone was worried that the levy would become as complicated as the planning gain supplement if the issue of value remained. The intention of all those who proposed an alternative to the planning gain supplement was to get away from the issue of value. Will my hon. Friend the Minister therefore explain why it was essential to include value when so many other variables can be used to determine a levy at local level, although I agree that that can be done differently by different authorities to reflect the needs of their areas in different ways?
My second point is about locality, which may be covered by a Government amendment. Another point that emerged in evidence was that what might be appropriate in trying to raise a levy in one part of a local authority area—for example, an affluent suburb where there is a new housing development—might be a very different matter in, say, a housing market renewal area. The local authority might try to encourage developers into a renewal area with a view to uplifting the general value of housing, and it might be inappropriate to levy such developers at the same level as those in a more affluent area. A local authority needs to be able to vary the levy according to the locality in which the development takes place. Government amendment No. 549, which will
“permit or require charging schedules to operate by reference to the nature or existing use of the place”
would allow that variation between different areas where development might take place. Could my hon. Friend reassure me that that variability between developments in very different areas will be possible under his proposals?
John Healey: On the question of value, to which we keep returning, I am clear, as is the industry, that viability is a central concern when setting the community infrastructure levy. It is a central feature in the design of the system and has to be if we are concerned that a levy might choke off development rather than support it. Industry representatives and others, from the British Property Federation to major developers, have told us what we believe to be the case: that it is important to have some reference to value, and therefore viability, in the Bill, and it is hard to see how any assessment of viability can take place without some reference and consideration to land value.
We are in discussion with the industry about whether a more appropriate indicator or a better proxy—my hon. Friend referred to this—could be used for the value that is created by development. As things stand, however, we believe that it needs to be an element of the design of a charging structure. For it to be capable of being taken into account, it needs to be referred to, and that is why I continue to encourage members of the Committee not to accept amendments that would knock it off the face of the Bill.
In addition to infrastructure planning, local authorities will need to produce a draft charging schedule that sets out the rate, and perhaps also the formula, for determining how the levy might be calculated in their area. To answer my hon. Friend’s second point, it is conceivable, in the terms that we intend the levy, that if the infrastructure requirements of different areas within the same local authority boundaries require and justify a different levy charge, that could be incorporated and reflected in the charging schedule.
We have also made it clear that the process of setting charges should ideally be embedded within the development plan process, which is something that we will look to do and that my hon. Friend is keen on. However, the process for setting the community infrastructure levy must at the same time also be flexible enough to respond to changing market conditions. While we are clear that there needs to be a thorough and proper expert testing of the charging schedule, I am keen to avoid a situation in which further delays could be caused to local authorities bringing their development plans up to date.
There is still a question that we need to settle: whether incorporating the development of the charging schedule entirely and solely within the development plan process might be too slow and unresponsive to allow us to design it in the way that we want. We are clear, however, that it has to be plan-led and based on an infrastructure plan, and that devising a charging schedule is the way in which we will avoid one of the principal pitfalls that people saw in the planning gain supplement, which is site-by-site valuations with all the complexities and some of the uncertainties that would come as a result.
I hope that amendment No. 600 is also a probing amendment, as it would remove the requirement for regulations to provide an appeal mechanism on matters of fact against the calculation of the levy in individual cases. We intend the provision that the amendment would otherwise compromise to be a safeguard for resolving factual disputes about the basis of charging CIL in an individual case. For instance, it might be that the charge is calculated by reference to the square meterage of different uses in a development proposal, and there could be a disagreement between the developer and the local authority about the quantum of that square meterage. Otherwis,e judicial review would be the only means to resolve a dispute that was based on facts about the correct level to pay. I hope that those comments are helpful.
Mrs. Lait: The amendment was probing because, frankly, unless there is a little more detail for us to debate, it is difficult to get sufficient information from the Government. The more we can extract from them, the easier it will be. We will consider their response and will probably return to it at a later stage. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Amendments made: No. 545, in clause 166, page 94, line 16, at end insert
‘(which may include provision for consultation, for the appointment of an independent person or a combination).’.
No. 546, in clause 166, page 94, line 16, at end insert—
‘(2A) The regulations may permit or require charging authorities, in setting or revising rates or other criteria—
(a) to have regard, to the extent and in the manner specified by the regulations, to actual or expected costs of infrastructure (whether by reference to lists prepared by virtue of section 167(3)(a) or otherwise);
(b) to have regard, to the extent and in the manner specified by the regulations, to actual or expected increase in value arising from planning permission (calculated in accordance with the regulations);
(c) to have regard, to the extent and in the manner specified by the regulations, to actual or expected administrative expenses in connection with CIL;
(d) to have regard, to the extent and in the manner specified by the regulations, to values used or documents produced for other statutory purposes;
(e) to integrate the process, to the extent and in the manner specified by the regulations, with processes undertaken for other statutory purposes;
(f) to present the rates or other criteria in the form of a document (a “charging schedule”);
(g) to produce charging schedules having effect in relation to specified periods (subject to revision).’.
No. 547, in clause 166, page 94, line 17, leave out ‘authorities’ and insert ‘schedules’.
No. 548, in clause 166, page 94, line 20, leave out ‘calculation’ and insert ‘charging schedules to operate’.
No. 549, in clause 166, page 94, line 21, at end insert—
‘(aa) permit or require charging schedules to operate by reference to any measurement of the amount or nature of development (whether by reference to measurements of floor space, to numbers or intended uses of buildings, to numbers or intended uses of units within buildings, to allocation of space within buildings or units, to values or expected values or in any other way);
(ab) permit or require charging schedules to operate by reference to the nature or existing use of the place where development is undertaken;’.
No. 38, in clause 166, page 94, leave out lines 22 to 24.
No. 551, in clause 166, page 94, line 25, leave out ‘refer to, or permit,’ and insert
‘permit or require charging schedules to operate by’.
No. 552, in clause 166, page 94, line 27, leave out ‘refer to, or permit,’ and insert
‘permit or require charging schedules to operate by’.
No. 553, in clause 166, page 94, line 27, after ‘used’, insert ‘or documents produced’.
No. 554, in clause 166, page 94, line 29, after ‘permit’, insert ‘or require’.
No. 555, in clause 166, page 94, line 31, at end insert—
‘(6) In this section a reference to publication includes a reference to making available for inspection.’.—[John Healey.]
Clause 166, as amended, ordered to stand part of the Bill.

Clause 167

2.45 pm
John Healey: I beg to move amendment No. 556, in clause 167, page 94, line 34, at end insert—
‘(1A) In subsection (1) “infrastructure” includes—
(a) roads and other transport facilities,
(b) flood defences,
(c) schools and other educational facilities,
(d) medical facilities,
(e) sporting and recreational facilities,
(f) open spaces, and
(g) affordable housing (being social housing within the meaning of Part 2 of the Housing and Regeneration Act 2008 and such other housing as CIL regulations may specify).
(1B) The regulations may amend subsection (1A) so as to—
(a) add, remove or vary an entry in the list of matters included within the meaning of “infrastructure”;
(b) list matters excluded from the meaning of “infrastructure”.’.
The Chairman: With this it will be convenient to discuss the following: Amendment No. 443, in clause 167, page 94, line 35, after ‘specify’, insert ‘that charging authorities are to determine’.
Government amendments Nos. 557 and 558.
John Healey: The amendment sets out the types of infrastructure for which CIL could be used. The list includes items of infrastructure that are currently commonly secured through planning obligations. The list is intended to be illustrative, rather than exclusive or exhaustive. It includes items over which some doubts have been raised, such as “open spaces”.
Hon. Members will note that the list includes affordable housing. To be clear, our intention and preference is that affordable housing should continue to be delivered on-site through negotiated section 106 agreements, which have proved successful in many areas in ensuring that we secure mixed communities in important developments. However, the Campaign to Protect Rural England and other bodies have expressed the concern—indeed, the CPRE expressed it in its evidence to the Committee—that the community infrastructure levy should not lead to a reduction in the provision of affordable housing. While we do not initially intend to include affordable housing within the scope of what may be funded by CILs, we propose to include it within the definition of infrastructure so that if it is later demonstrated that affordable housing is necessary, it could be included as part of CIL.
We recognise that the priorities for infrastructure may change over time. Several years ago, few of us would have put flood defence as high up the list of infrastructure priorities associated with growth as it is now. The Government amendments provide for the definition of infrastructure in the Bill to be revised to reflect changing needs. Such changes will be subject to the affirmation of this House.
Flexibility is important, but so are safeguards. The Government amendments will enable the creation of regulations that specify what should not be funded by CIL and regulations to require local authorities to publish and make available for public inspection the list of projects to be funded by the levy. Perhaps the converse power to that is the power to create regulations to restrict the ability of local authorities to use the levy for projects that are not included on the list of infrastructure that they draw up.
I hope that hon. Members will see that these provisions are designed to provide greater clarity about the purposes to which the revenue from the levy will be put to deliver the infrastructure that is required for local communities, developments and growth. I am happy to deal with any questions that hon. Members may have and will respond to any points that my hon. Friend wishes to make when he speaks to amendment No. 443.
Mr. Betts: I seek reassurance. The Local Government Association is concerned to try to ensure that, fundamentally, it would be for each local authority to come to a view about which infrastructure it wanted to be developed and supported by CIL in its area. The Government amendment includes a wide range of infrastructure that it may be appropriate to fund from CIL. Presumably, as we previously discussed that the process is still to be finally determined, will each local authority look at the needs in its area and be able to select the most appropriate requirements for the development of infrastructure from the list of possibilities that amendment No. 556 indicates will be appropriate?
John Healey: Indeed.
Mrs. Lait: I find myself in a bit of a quandary. On the one hand, we have access to very little information, yet the Minister has set out in the Government amendment the list that will be in the Bill of potential projects for which CIL could be used. I thank him for that. The list includes medical facilities—the hon. Member for North Cornwall may wish to raise this point—so the point about the primary care trust is, in a sense, covered. I would like the Minister to clarify whether within “recreational” he includes cultural facilities, so that we can know whether theatres and art galleries will be included if the local community agrees that it would like to have a theatre or art gallery that cannot be paid for in other ways. That would be helpful.
What worries me is that on the one hand we have so little information, and, on the other hand, the information that we are given, particularly in the list, is prefaced by the Minister saying, “We may not need to invoke it now, but we cannot know whether we will need to in the future. Therefore, the widest possible powers are needed.” We could find ourselves agreeing to something that initially sounds reasonable, but, as he himself said about flood defences, who would have thought 10 or 15 years ago that they would be as important as they are now? We could suddenly find ourselves with a piece of legislation that could be distorted, changed or widened in a way that none of us ever thought of or expected. With the best of intentions, the Minister is trying to cover as much as he can, but by so doing he leaves us open to turning something into legislation that might have consequences which none of us can begin to dream of at this stage.
I would be grateful if the Minister could confirm that small point about whether cultural facilities are included in the list under “recreational”, and just be warned about the concerns that I am beginning to feel about the whole approach to this piece of legislation and the fact that we are being asked to put on the statute book the widest possible powers for CIL. That could cause long-term problems.
John Healey: At this stage, the answer to the hon. Lady is “possibly”.
Mrs. Lait: On culture?
John Healey: On culture. As things stand, if the theatre were used for recreation, it would obviously fall directly within the terms of the amendment. I think that this matter probably requires further discussion and reflection with those with cultural and recreational interests, as well with as local authorities and local planning authorities. Indeed, because we are considering a Bill on the practice of planning obligations, we need to look at the current practice of planning obligations. Should we need to make the list any clearer to deal with any wider concerns, we certainly will.
Amendment agreed to.
Amendment made: No. 557, in clause 167, page 94, leave out line 37 and insert ‘funded by CIL,’.— [John Healey.]
Mrs. Lait: I beg to move amendment No. 601, in clause 167, page 94, line 40, at end insert—
‘(d) ring-fenced funding for community infrastructure to ensure that it is additional to other infrastructure monies.’.
The Chairman: With this it will be convenient to discuss the following amendments: No. 603, in clause 167, page 94, line 40, at end insert—
‘(d) that such finding should relate to community infrastructure and be in addition to any other infrastructure funding.’.
No. 575, in clause 167, page 94, line 40, at end insert—
‘(2A) The regulations must be consistent with the principle that funding from the CIL should be used to fund projects, or aspects of projects, for which funds have not already been allocated by—
(a) a Government department,
(b) the Scottish Ministers,
(c) a Northern Ireland department,
(d) the National Assembly for Wales,
(e) a local authority, or
(f) a regional development agency.’.
No. 602, in clause 167, page 95, line 3, at end insert—
‘(c) require authorities to use best endeavours to deliver the infrastructure upon which the level of CIL is predicated;
(d) require all other providers of infrastructure involved in the delivery of infrastructure, for which CIL is being levied, to use best endeavours to assist in delivering the infrastructure upon which the level of CIL is predicated.’.
No. 604, in clause 167, page 95, leave out lines 8 to 10.
No. 576, in clause 167, page 95, line 27, at end add—
‘(6) The regulations must require the charging authority to consult—
(a) relevant parish councils,
(b) relevant community councils in Wales, and
(c) relevant community councils in Scotland,
in the areas affected by the development in respect of which CIL is chargeable.’.
Mrs. Lait: The amendments would insert simple wording to ensure that the community infrastructure levy is additional to other streams of infrastructure development funding, and that the organisations providing that other funding do their bit.
It is easy to envisage a situation in which there might be a sudden call on the funds of the relevant governmental body or of an infrastructure developer, so that the funding promised to the community infrastructure levy for the delivery of a project suddenly dries up. That could be because the Chancellor of the Exchequer has decided to reduce that organisation’s budget, or because the financial calculations of the money available for the project were less than robust.
Therefore, we want reassurance that the community infrastructure levy is in addition to the other streams of funding and is not seen to replace it, and that the other funders carry out what they have promised to do, in a timely way. Anyone who has worked with local authorities that are working in partnership with a variety of different bodies will know the difficulty of ensuring that all the money promised to a project is delivered when needed. If the levy is to work, we need to ensure that everyone plays their part at the right time, in the right way, and without penalising the funding of other projects. Our goal is to ensure robust financial management within all the organisations.
Finally, amendment No. 604 excludes administrative expenses. It is easy to see that a project’s funding could be top-heavy on administration, which could absorb a greater share than it should; or that, by sleight of hand, perish the thought, some administrative charges on an area unrelated to the CIL-funded project could suddenly be offloaded on to it. It is important to ensure that the money raised from CIL is not spent on administration when it should be spent on the project.
3 pm
Dan Rogerson: The hon. Lady makes a good case for questioning that potential problem. Amendments Nos. 575 and 576 were tabled by my hon. Friend the Member for Carshalton and Wallington and me. They concern the principle of additionality, to which the Minister referred under an earlier clause. I certainly welcome his comments on that. We are concerned that money that had been identified for a local project might now be funded through CIL—I cannot think why we are using a soft rather than a hard “c”. Making a “cilling” does not sound quite so dangerous as the alternative.
I am pleased to hear what the Minister had to say. We would not like to see funding, which had already been identified and hard won after long campaigning or much prioritisation for a particular project in a local area, being diverted away. Our amendments would look at funding infrastructure which is particular to the changing situation and the grant of planning permission. I suspect that the Minister will tell me that that is already what is intended. If he does, it will be good to have that on the record once again.
John Healey: I am sympathetic to the spirit of some of the amendments, but not convinced that they are the right thing to do or that they would help. I shall try to respond to the substance of the points that the hon. Lady and the hon. Gentleman have made. The clause provides that the regulations that we make must require authorities collecting the levy to apply it to infrastructure. It provides that the regulations may specify what does and does not constitute infrastructure. Furthermore, clause 163 makes it clear that infrastructure funded from the levy should support an area’s developments. That is the essence of the levy itself.
Amendment No. 603 appears to seek to establish the principle that CIL spending should be additional to existing infrastructure spending. I am not convinced that it is sensible to legislate for that, but let me say a little bit more about additionality, in addition to the points I have already made which the hon. Gentleman has kindly welcomed.
The local authorities will need to assess. They will need to cost the infrastructure they require to support development. In doing that, they should have regard to the level of funding that is likely to be available from other national and regional or local funding sources, including how they use funding sources that are not ring-fenced. It has always been our expectation that the levy will be additional, particularly for larger pieces of infrastructure. In many cases it will provide only a part of the funding required. To underline that I quote directly from our document:
“The Government believes that CIL should not be used for general local authority expenditure, nor to remedy pre-existing deficiencies in infrastructure provision, unless these have been, or will in time be, aggravated by new development.”
Dan Rogerson: I understand the point with regard to local authorities. However, we have already debated how it might be appropriate for the money raised to be spent through other agencies. It would be good to have it on the record that it would also cover the Highways Agency or any other Government agency, rather than just picking on local government.
John Healey: The hon. Gentleman makes a fair point. The principle that I am seeking to establish is that we want the levy and the revenue raised from the levy to be additional. I hope that a combination of the provisions in the Bill and the consistent declaration of that intent will give the hon. Gentleman the reassurance that he seeks. Also, “additional” would be difficult to define and to put in the Bill.
Amendment No. 604 relates largely to the hon. Lady’s concerns. Subsection (4)(c) permits the application of the levy to administrative expenses related to the infrastructure concerned or to the levy. I understand the hon. Lady’s argument, but the measure will help to give charging authorities the resources that they need to set, collect and enforce the levy, and to plan and deliver the infrastructure that can be funded by the levy. The levy builds on the existing provisions and practice of section 106 and, in a sense, the provisions mirror those under many of the section 106 agreements. They provide, in many cases, for local planning authorities to recoup costs related to negotiations or monitoring of the section 106 agreements, for example. Giving authorities insufficient resources to operate the levy would ensure that the levy is not effective.
The hon. Lady’s concerns about administrative expenditure and efficiency are right, but to preclude levy-related revenues from supporting the sort of work that is necessary to make the levy operate effectively would be a mistake. I hope that her amendment is probing and that she will not press it to a Division. Ensuring that charging authorities have sufficient resources is clearly central to their ability to deliver the levy but, more importantly, to the infrastructure that it is designed to support.
I hope that hon. Members feel that I have given them a sufficient answer and that they do not feel the need to press their amendments to a Division. If they do, I shall ask my hon. Friends to resist.
Mrs. Lait: The Minister was right to say that the amendment is probing and aimed more at getting him to put on record the Government’s approach to the issues. I am grateful to him.
Dan Rogerson: I am grateful to the Minister for his comments. I suspected that he would say what he said. If he is happy to take on board the point that agencies other than local government could look at the measure as a way to rejig their spending priorities, I shall not press the amendment to a Division.
Mrs. Lait: I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Amendments made: No. 558, in clause 167, page 95, line 3, at end insert—
‘(c) include provision about the circumstances in which a charging authority may and may not apply CIL to projects not included on the list.’.
No. 559, in clause 167, page 95, line 27, at end add—
‘(6) In this section a reference to publication includes a reference to making available for inspection.’.—[John Healey.]
Clause 167, as amended, ordered to stand part of the Bill.
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