The
Committee consisted of the following
Members:
Ainsworth,
Mr. Peter
(East Surrey)
(Con)
Brown,
Lyn
(West Ham) (Lab)
Dobbin,
Jim
(Heywood and Middleton)
(Lab/Co-op)
Dunne,
Mr. Philip
(Ludlow)
(Con)
Follett,
Barbara
(Parliamentary Under-Secretary of State for Communities and
Local
Government)Goldsworthy,
Julia
(Falmouth and Camborne)
(LD)
Hamilton,
Mr. Fabian
(Leeds, North-East)
(Lab)
Horam,
Mr. John
(Orpington)
(Con)
Jackson,
Mr. Stewart
(Peterborough)
(Con)
Jones,
Lynne
(Birmingham, Selly Oak)
(Lab)
McDonagh,
Siobhain
(Mitcham and Morden)
(Lab)
Marsden,
Mr. Gordon
(Blackpool, South)
(Lab)
Prentice,
Mr. Gordon
(Pendle)
(Lab)
Rogerson,
Dan
(North Cornwall)
(LD)
Scott,
Mr. Lee
(Ilford, North)
(Con)
Sharma,
Mr. Virendra
(Ealing, Southall)
(Lab)
Sarah Davies, Committee
Clerk
attended the
Committee
Fifth
Delegated Legislation
Committee
Tuesday 16
March
2010
[Janet
Anderson in the
Chair]
Draft Community Infrastructure Levy Regulations 2010
10.30
am
The
Parliamentary Under-Secretary of State for Communities and Local
Government (Barbara Follett): I beg to
move,
That
the Committee has considered the draft Community Infrastructure Levy
Regulations
2010.
It
is a pleasure to serve under your chairmanship again, Mrs.
Anderson. The regulations are good news for the United Kingdoms
economy. They will facilitate the faster growth that we need at this
crucial point, create jobs and reduce the wasted costs of unemployment.
The regulations introduce a comprehensive and coherent package of
reforms, which will better enable the infrastructure needed to unlock
development and assist economic recovery.
A flexible
new local charge, called the community infrastructure levyfor
the sake of brevity, I will refer to it as
CILwill give local authorities in England and
Wales the means to fund infrastructure in their areas. CIL will provide
valuable top-up fundingI stress thatfor local
communities that see the need for additional facilities in their area,
to ensure that they have in place the infrastructure so essential to
allow residential and commercial developments. CIL will not replace the
need for mainstream public funding, which will continue. Alongside
this, a leaner and more focused planning obligations regime will allow
for the mitigation of individual development impact issues not covered
by the local CIL. That includes the provision of affordable housing as
part of mixed communities.
The case for
change is convincing. Planning obligations, also known as section 106
agreementswhich have haunted so many hon. Members, including
meallow charging authorities to seek a contribution from
developments to mitigate their impact. However, they have been much
criticised. They have to be negotiated, which can lead to substantial
delays and costs to developers and local planning authorities. The
system lacks transparency, because it is usually based on ad hoc
negotiations conducted in private. Above all, planning obligations are
inherently unfair, with major developers bearing the burden of funding.
Planning obligations are not well suited to addressing the cumulative
impact of development, whether big or small, on the need for
infrastructure. Currently, only 6 per cent. of planning permissions in
England make any contribution under the planning obligations
regime.
CIL will help
to solve such problems. Unlike planning obligations, CIL is a
predictable and transparent instrument specifically designed to help
fund the local infrastructure needed for development across an area in
a fair and predictable way. Yet it will also preserve incentives to
develop in a variety of circumstances. As the Minister for the East of
England, I know that it will be greatly welcomed in that region,
because we need to find money to fund infrastructure
developments.
CIL
is good news for developers. It is fairer, as it is levied on most
types of new development in a local authority area, although there are
common-sense exemptions. It is simple and predictable, applying in
pounds per square metre on the net additional increase in floor space.
Rates will be published in a charging schedule, enabling developers to
predict the size of their potential liability months or even years in
advance, enabling better allocation of financial resources and a faster
planning process. Charges will be consulted on and tested in a public
inquiry. Developers have the reassurance of knowing that there are
rigorous safeguards against charges being set too high, thus putting at
serious risk the economic viability of an areas
development.
CIL
is also good news for local communities. It will help fund the key
infrastructure that neighbourhoods need, and which they have identified
through infrastructure planning in support of their development plans.
CILs application is wide and could include roads, public
transport, open space and health centres. It is also flexible. Several
authorities could pool their CIL revenues to support the delivery of a
sub-regional infrastructure, which would make it more able to be
applied in several areas, for example, in respect of a larger transport
project when individual pooling authorities are satisfied that a
unified CIL would support development in their areas. In London, the
Mayor and the boroughs will be able to levy CIL, enabling support for
vital strategic infrastructure in the capital, such as Crossrail, as
well as local infrastructure needs. CIL revenues will all be retained
locally and charging authorities must monitor and report annually on
the use of CIL, ensuring local accountability for developers and local
communities.
As
I have said, the community infrastructure levy is part of a wider
package of reforms. We remain convinced that planning obligations are
the right tool for mitigating the site-specific impacts of a
development, but their use does need to be better controlled. CIL will
therefore function alongside a scaled-back planning obligations regime
as part of a pro-development package. In other words, it is an
integrated system designed to remove barriers to development. We want
planning obligations to make individual developments permissible, and
CIL to help unlock vital development throughout an area that would
otherwise be completely stalled due to the lack of necessary
infrastructure.
I
wish to reassure members of the Committee that a healthy development
industry is essential to our economic recovery. In the short term, many
jobs will come from that industry. We could not countenance a system
that enabled local authorities to bleed developers dry. Our changes to
planning obligations are a case in point. For the first time, section
106 will legally only be able to deliver what is essential to make a
development acceptable in terms of planning and affordable housing.
Developers will be protected from paying tariffs under section 106 for
a piece of infrastructure that is intended for CIL funding. Section 106
tariffs will cease on the adoption of a local CIL or nationally after
2014, whichever is sooner, because CIL is the right vehicle to achieve
the objectives of pooled contributions.
Developers
should not fear that CIL charges will be set too high. It is designed
to support and enable development, and there are rigorous safeguards to
ensure that that is exactly what it does. A local authority will have
to strike an appropriate balance between funding infrastructure from
CIL and the potential effects on the economic viability of development
across its area. It will be able to set differential CIL rates if it
thinks that that is the best option for the area. All charging
schedules must be publicly consulted, and then subjected to a public
inquiry before an independent examiner. The recommendations of the
examiner will be binding on the charging authority if it wants to
proceed with CIL, including when an examiner sets a lower
rate.
CIL
has long been supported as the right concept, and that has been borne
out by our many discussions with stakeholders over the past two and a
half years. We have tried at every stage of the process to seek the
views of all those affected by the changes in the regulations, from
local authorities to developers. In 2007, when the Department for
Communities and Local Government was in the capable hands of my right
hon. Friend the Member for Bolton, West (Ruth Kelly), we listened to
the concerns of the development industry and opted for CIL, instead of
the planning gain supplement. We listened as the Bill passed through
the House and we have listened again. The consultation on the draft CIL
regulations last July generated 392 responses from across the
development industry, local and regional government and voluntary and
community bodies. The consultation showed that the package of reforms
continues to enjoy broad support from developers and local
authorities.
Let me now
turn to the changes that we have made after the consultation. The
revised regulations before the Committee reflect several key changes as
a result of that process. In response to the concerns of developers,
CIL will now be levied on a net, not a gross, basis, which is fairer
because CIL is intended only to fund the infrastructure needs created
by growth. It will also create incentives for development on previously
developed land, which we are extremely keen to
encourage.
We
have listened to calls for CIL relief to be extended, and we have
acted. Developers have asked us for a procedure to give a reduction
where a specific scheme cannot afford to pay CIL, so the regulations
now contain exceptional circumstances relief. We have provided the
facility for local authorities. The social housing sector and some
developers asked for a social housing exemption. Accordingly, the
regulations will give 100 per cent. CIL relief to social housing,
protecting the delivery of, we hope, up to 1,300 additional social
homes. Taken alongside the relief for charities, that will ensure a
level playing field for all providers of social
housing.
We
listened to local authorities and developers when they asked for ways
of unlocking infrastructure earlier in development. Accordingly, the
regulations will allow authorities to use CIL to support the timely
provision of infrastructurefor example, by using CIL to
backfill early funding provided by a financier, such as the Homes and
Communities Agency. The Secretary of State may direct authorities to
borrow prudentially against future CIL income should the Government
conclude that, subject to the overall fiscal position, there is scope
for local authorities to do
so.
When
it comes to paying CIL, we have listened too. Developers will benefit
from greater flexibility and an easing of their cash flows through the
extension of the
standard payment period from 28 to 60 days. There will be up to 240 days
to pay by instalments in the case of the largest liabilities. Finally,
echoing the views of many stakeholders, regulations will allow CIL
payments in kind of land where all parties agree and where the land is
being transferred with the intention of providing infrastructure on
it.
I
believe that the regulations strike the right balance between local
authority flexibility and providing certainty and consistency for
developers. They are pro development, creating a flexible local levy
system alongside more focused planning obligations. They are essential
to support development and protect economic recovery. This is the right
time to introduce CIL, so that developers and charging authorities
alike can plan ahead with confidence and build the infrastructure that
we need to enter a new economic cycle with
confidence.
10.44
am
Mr.
Stewart Jackson (Peterborough) (Con): It is a pleasure to
serve under your chairmanship once again, Mrs. Anderson. I
am sure that this will probably be the last opportunity to make a
valedictory speech to praise the Minister. It feels like a long
goodbye, as we have served on Committees debating statutory instruments
over a number of weeks. I would like to put it on record that we wish
her well in the future, and acknowledge the excellent work that she has
done in a difficult time for the country and for her party as Minister
for the East of England.
We do not see
a huge ideological difference between the parties on the regulations.
We have not prayed against them and will not seek to divide the
Committee, but it is appropriate to consider the context of the
regulations and what we hope to achieve, which is that infrastructure
be recognised as an important corollary of development. The regulations
are the best way of achieving appropriate community infrastructure such
as roads, bridges, community centres, police stations and schools. When
one considers that the sustainable communities plan was first
enunciated eight years ago by the right hon. Member for Kingston upon
Hull, East (Mr. Prescott), when he was Deputy Prime Minister
at the Office of the Deputy Prime Minister, it is probably appropriate
to say that the Government have taken a significant time to come to
their conclusion on the community infrastructure levy. That plan
involves a lot of infrastructure and planning, and a lot of stress is
placed on probably the best-known section of an Act: section 106 of the
Town and Country Planning Act 1990. That section is clearly
now not fit for purpose, and we therefore need to assist developers in
these difficult times to be aware of their responsibilities to work
collaboratively with local authorities, registered social landlords and
others in providing the appropriate
facilities.
We
do not oppose the statutory instrument, not least because it clearly
arises from the Planning Act 2008, on which we had a useful and
comprehensive debate. Although there is not a great ideological
difference of opinion, it would be remiss of me not to mention that,
given that the public consultation closed in October, the regulations
were published late in the daybarely six weeks before CIL was
due to be enacted. There is some concern about the efficacy of CIL, as
seen in a survey that was produced by Drivers Jonas in January. It
found that almost 80 per cent. of local authorities were still
undecided,
or were unlikely to implement the levy. We can publish any number of
regulations, but if they are not implemented because planning
specialists or elected members are unclear about how they work and do
not engage proactively with developers and others, that is a key
problem. The Government need to think carefully about the guidance that
they issue for local authorities, and its timeliness, so that there is
maximum transparency and clarity on the
issue.
For
the avoidance of doubt, and hopefully to inform the debate, I will
enunciate my partys policy, which is not a million miles from
the Governments. We believe that the principle of expecting
developers to contribute to the additional infrastructure needed to
make their development viable is sound. However, the
Governments proposed twin-track approach is unnecessarily
complicated and does nothing to address the uncertainty and delays that
exist in agreeing planning obligations. We will simplify the system by
returning planning obligations to their original function by limiting
their use to stipulations relating directly to site-specific
remediation and adaption. At the same time, we will scrap CIL and
non-site-specific planning obligations, and introduce a single unified
local tariff, applicable to all residential and non-residential
developmentseven a single dwellingbut at graded rates
depending on the size of the development. The background to that is
that the prototype for the levy was developed in Milton Keynes as a
roof tax. We believe that the system can be nuanced in a more flexible
and effective way to facilitate an appropriate link between development
and the infrastructure needed to support it, which is something that we
have not seen over the past few years in places such as the Thames
Gateway, Milton Keynes, south midlands andas the hon. Lady will
knowin the Stansted-Cambridge-Peterborough growth
corridor.
However,
it would be churlish not to concede that the Government have gone some
distance in moving the regulations forward to ameliorate the
significant concerns that were outlined by key stakeholders in the
industry last year. I will not rehearse those changes again. We welcome
them, particularly the standard period of payment, payment by
instalment and CIL being levied on net additional increase in floor
space, as well as some of the other issues that the Minister
mentioned.
I
will finish with specific issues and the generic question that many
people ask: what steps are being taken to prevent developers from being
charged under both section 106 and CIL? Will the Minister
focus on that? I know that she has mentioned it, but it is important to
clarify that
point.
The
agriculture community has serious concerns about CIL and its
application to agricultural buildings. The Minister may wish to touch
on that in her concluding remarks. I have other specific questions,
which I hope she will be kind enough to address. What assumption have
the Government made of the profit margin per dwelling in terms of the
implementation of CIL? Will this charge put up the cost by, say,
£5,000 per dwelling? How does it apply to affordable housing
other than through a social housing landlord? I beg the
Ministers indulgenceI did not give her notice of those
specific questions, but they are pertinent to consideration of the
regulations.
I would not
say we wholeheartedly welcome the regulations. We have proposals of our
own, which we think will achieve the same outcome by a more circuitous
route, in the event of a Conservative Government. Equally, it would not
be appropriate to vote against the regulations. On that basis, we hope
that our concerns will be taken on board when the Minister answers the
points that I have
raised.
10.52
am
Dan
Rogerson (North Cornwall) (LD): It is a pleasure to serve
under your chairmanship this morning, Mrs. Anderson. I echo
the remarks of the hon. Member for Peterborough about the
Ministers contributions in her time in the Department and in
Parliament generally. I wish her well for the future.
My party
supported the CIL and the Planning Act 2008. I had the
pleasure of serving on the Committee that considered the measure. There
were aspects of which we did not approve, such as the Infrastructure
Planning Commission, but the general approach of attempting to help the
wider community catch up with the benefits of development that accrue
to the developer personally or corporately is something that we have
supported for a long time. I have been involved with Liberal Democrat
councils and dealing with the tax system, and it has long been a
tradition in our party to look at land value taxation, and ways in
which we can capture the increase in the value of the land to ensure
that the wider community
benefits.
Having
supported CIL, I was keen to raise concerns at the time about how
sketchy it was in the Bill. We then moved into a period of consultation
on detailed regulations. As the hon. Member for Peterborough said, we
now have themsomewhat at the eleventh hour, but we have them.
Therefore, there are a number of questions that I would like to raise
with the Minister. Again, I fully accept there are matters to which she
may wish to return later or in writing, but anything she is able to
address this morning will be helpful.
The first
matter is consultation and an authority moving to consultation. We very
much welcome the list of statutory consultees and, in particular, the
inclusion of parish councils. Again, during debate on different
provisions of the Planning Act 2008, I tabled amendments, which were
not accepted at the time, to include parish councils as consultees. I
am delighted that parish councils will be consulted on
CIL.
I
could not see in the recommendations mention of NHS trusts as
consultees. I might have missed that. I want them on the list, like the
local authorities and voluntary and representative bodies. If I have
missed that, I apologise, but I shall welcome any steer from the
Minister as to how she feels about those who are responsible for taking
local NHS money decisions being consulted and having the opportunity to
contribute to the
plan.
On
London, what is the balance of responsibilities between the Mayor and
the boroughs? That is important for people in London. When a charging
authority decides to withdraw a draft charging schedule, as is its
right under section 212(11) of the Planning Act, why is the Minister
determined that that should be deleted from history?
Moving to
approval, before submitting a draft charging schedule, an authority has
to agree a declaration that the schedule complies with the law. For
local councils, that quite rightly must be agreed at a meeting of the
whole authorityI welcome any attempt to widen participation of
all local authority members in such important decisionsbut for
London the power given under section 212(6) of the Act goes to the
Mayor of London personally. Is there not a case, echoing the situation
for local authorities, for the power to be shared with the London
assembly to give wider consideration to representations from across the
whole of
London?
Moving
on to costs, the 2008 Act provides that the charging authority can
appoint whomsoever it wishes as the examiner, provided that they are
independent of the authority and have appropriate qualifications and
experience. Regulation 30 sets out how the Secretary of State can
recover costs connected with an examination from a charging authority.
Will the Minister clarify the Secretary of States role in the
approval process? Is it expected that local authorities will approach
the Secretary of State or the Planning Inspectorate as the appropriate
examiners? What costs does the Minister anticipate would need to be
recovered under regulation
30?
I
would also be grateful for some clarification of the chargeable amount.
We recently debated issues around planning conditions in which, because
of the economic climate, it was felt appropriate to make it easier to
extend planning permissions and for development not to have to commence
immediately in order to preserve those planning applications. There is
now provision for a planning application to lie dormant for much
longer. I was a little concerned that a developer might seek to land
bank. In other words, once planning permission is grantedwhen
the chargeable amount is determinedit could sit there until
development commenced at a later date, at which point the local
authority or planning authority might well have increased the charges
for other developers. By land banking, the developer could effectively
pay a lower contribution rate than others when development
commenced.
I
noticed the exemptions for charitiessomething we discussed, as
the Minister said, when debating the Planning Act. The clawback period
is sensibleif a charity gets an exemption and then transfers
the land to someone else within seven years, the new owner could be
liable to pay CIL. However, it is important to recognise the
distinction between a charity constructing something of benefit to the
local community for example, to do with how the charity carries out its
activities, as opposed to something that is designed to raise revenue
for the charity, which might have an indirect positive impact on the
local community, but could have negative implications for those living
in the immediate area. It is important to recognise the difference
between such developments by a
charity.
On
the relief for social housing, it is important that local authorities
have the ability to negotiate and take a view. I am interested,
however, in how that might set a precedent. Although I very much
support local authority discretion, I am a bit concerned that we need a
strong framework to protect local authorities when allowing exemptions
for some social housing, where, in some
cases, they may take a different view later. Local authorities need the
ability to use their discretion effectively without facing too much
challenge.
As the hon.
Member for Peterborough said, we still have section 106 on the statute
book. That will still be used to fund affordable housing and other
things. The regulations are not a replacement, but an add-on. When we
look at the business rates supplement, which is now a possibility,
local authorities have all sorts of tools for raising revenue to
contribute to infrastructure in the area. While I generally support the
provision of those tools, we still have to see what the interaction
between them will be in the future, and whether there can be a better
of way of clarifying that interaction, ensuring that its benefits are
there, but that it does not act as a brake on development.
In essence, I
would like to echo the hon. Member for Peterborough. My party supports
the concept. We have some concerns about specific issues, which I have
raised. It would have been better to have the regulations earlier, but
we are where we are, and I hope that the Minister will pick up some of
the
issues.
11.1
am