Localism Bill

Memorandum submitted by London First (L 16)

Introduction

1. London First is a business membership organisation with the mission to make London the best city in the world in which to do business. We represent the capital’s leading employers in key sectors such as financial and business services, property, transport, ICT, creative industries, hospitality and retail.

2. We welcome the publication of the Localism Bill which paves the way for greater decision making within London. However, in many areas further clarity is needed regarding implementation and resourcing of the new powers and processes that the Bill introduces.

3. This submission addresses the following topics:

a. Involving the business community in neighbourhood planning

b. The Community Infrastructure Levy

c. The power and resources of the Mayor of London

d. Clarity on other aspects of the Bill

Evidence

Involving the business community in neighbourhood planning (Part 5, Chapter 3 and schedules 9-12)

4. The clauses in the Bill relating to neighbourhood planning associate local communities with local residents. Therefore, as currently drafted, the Bill does not take sufficient account of the central role played in local communities by people working in areas different to where they live, the business community and the third sector. In dense urban areas such as London all of these groups, together with residents, form the local community and should be entitled to play a part in neighbourhood planning.

5. It could be argued that the existence of Local Development Orders (LDOs), which enable local planning authorities to allow permitted development in an area, and have been used by businesses such as SEGRO on the Slough Trading Estate, already provide business with a mechanism to engage in helping to shape local neighbourhoods. However, we do not believe that this is the case as LDOs do not match the broad scope of what the Bill proposes in regard to neighbourhood planning. LDOs are narrow in their focus, concentrating on a specific site, whereas what is envisaged for neighbourhood planning encompasses a broader vision for a neighbourhood.

6. Allowing businesses to promote a neighbourhood plan, be given a vote or some form of involvement in the neighbourhood planning process would be an excellent way to help promote local economic growth.

Community Infrastructure Levy (Part 5, Chapter 2)

Maintenance and revenue

7. The Community Infrastructure Levy (CIL) is a new development levy designed to standardise the financial contribution that developers make towards infrastructure that is required to support new development. CIL will sit alongside the traditional mechanism for obtaining developer contributions – section 106 agreements (planning obligations), which will be scaled-back in order to focus on providing infrastructure which is specifically required to support a development project. Whereas CIL will be used to fund strategic infrastructure within an area, without the need for the contribution from a developer to be linked to the infrastructure needs of a specific development project.

8. The amount of CIL that is payable will vary across London and the rest of the country according to, inter alia, the quantity of development in an area, the amount of infrastructure needed to support new development, the availability of other sources of infrastructure funding and crucially, the effect that a CIL charge will have on the economic viability of development in an area.

9. Our members support the introduction of CIL, recognising the need to make a contribution to the provision of infrastructure to support new development. In addition, it is sensible to allow some of the money raised by CIL to be spent on a limited amount of maintenance and revenue, but only where this expenditure is associated with infrastructure that is eligible to be wholly or partly funded by CIL.

10. We are concerned about the open ended nature of clause 95 ‘Use of Community Infrastructure Levy’. Clause 95 (2A)(b), (3)(aa) and (3)(b) enable CIL to be spent on costs in relation to infrastructure on an ongoing basis – i.e. for CIL to be spent on maintenance and revenue expenditure.

11. Clause 95 permits CIL to be spent on activities that are seemingly beyond the scope of CIL’s purpose. For example, an ‘ongoing basis’ could allow a local authority to spend CIL on supporting staff costs for a council service which has little or nothing to do with CIL infrastructure. It should be noted that business already contributes a substantial amount of money, especially in London, towards helping to finance local authority services through payment of the non-domestic business rate. CIL is a different mechanism which should not stray into an area of taxation which is already provided for.

12. There is a danger that if this clause is not amended the use of CIL could creep beyond its intended purpose, reducing the amount of money available to support the provision of new infrastructure and potentially inflating the overall CIL charge, causing development to become unviable.

Passing CIL money to the community

13. Clause 95 (to be amended clause 216A in The Planning Act 2008) allows for CIL money to be passed onto a person other than the CIL charging authority to enable the Government’s wish that local communities directly benefit from CIL money.

14. This is a positive amendment that will allow local communities to see the direct benefits from new development in their area. However, clarity is required about two separate aspects of this clause.

15. Firstly, who constitutes the ‘local community’ for the purposes of receiving CIL money? The Bill enables regulations to potentially cover this point but the Government should indicate whether they intended to devolve responsibility for defining this to local authorities or whether the regulations will provide a definition.

16. Secondly, clarity is required about how much of the CIL money the Government thinks should be passed directly to the local community. It would seem sensible for the Bill, CIL regulations or guidance to state a cap on the percentage of CIL money that can be passed to communities. This would provide local authorities and communities with a sensible set of parameters about how much CIL money should be passed on and prevent the CIL charge from potentially being inflated, causing development to become unviable, because of unrealistic local expectations about the amount of money that new development can afford to contribute to this part of the CIL charge.

London Mayor’s power and resources (Part 7, Chapters 1 and 2)

Mayoral Development Corporation

17. We support the new powers given to the Mayor of London in regard to housing and regeneration (Part 7, Chapter 1) and to establish Mayoral Development Corporations (MDC) (Part 7, Chapter 2). In the capital, the MDC will be used to help facilitate the regeneration of the Olympic Park and surrounding land in East London.

18. If an MDC is to deliver lasting change in East London following the Olympics, it must have real power to facilitate the delivery of large-scale regeneration. This requires strong powers over land, property and planning. The Bill does contain these powers but the detail contained in the accompanying regulations will also be important – they must support a strong MDC which can leverage in private sector investment.

Mayor’s Economic Development Strategy

19. We would welcome clarity on the purpose of clause 163 in the Bill relating to the Mayor’s Economic Development Strategy (EDS). How do the requirements in the Bill differ from the current EDS duties placed upon the Mayor and what powers and resources will be provided to support the Mayor in these duties?

Clarity on other aspects of the Bill

20. There are a number of aspects of the Bill that raise more questions than they answer. Set out below are four particular concerns that need to be addressed in order to provide business in London and beyond the certainty it requires to keep on investing.

Economic growth

21. The Government has stressed that the changes ushered in by the Localism Bill are compatible with facilitating economic growth. However, the detail as to how this will be achieved and how innate tensions between this objective and others (for example devolving power to communities or maintaining macroeconomic stability) still need to be clearly articulated.

Cumulative burden of change and regulation in the planning system

22. The way in which the current planning process in London and the rest of the country functions will be fundamentally altered by this Bill. As these changes are implemented the Government must ensure that in seeking to obtain planning permission the cumulative burden for a developer and indeed a local community does not increase. The transaction costs associated with navigating through the current planning system are already significant; will they be reduced as a result of these reforms?

23. There is also a danger that the time it takes to obtain planning permission increases as a result of this Bill. Developers could be confronted with the problem of being unable to progress a planning application because the production of a neighbourhood plan and a local authority’s core strategy (and in the capital, The London Plan) are out of kilter with each other. As yet, there seems to be no transition arrangements in place to deal with the movement from one type of planning system into another, and no clear answer about how such problems described above will be resolved in the new planning system.

Consultation on planning applications

24. Clause 102 (Part 5, Chapter 4) requires compulsory pre-application consultation on planning applications. London First members and the development industry in general, have significantly improved the quality of pre-application consultation in recent years. Not only does effective consultation help engage local communities it also helps to improve the quality of the application. In making pre-application consultation compulsory, it is important that this requirement is introduce proportionality – at the moment the clause does not state what type of application this is applicable do. The Government previously indicated that this clause will only apply to major developments but clarity is required.

Assets of community value

25. The new concept of assets of community value is introduced in Part 4, Chapter 4, clauses 71-88. Local authorities are required to maintain lists of land that the community values with subsequent restrictions applying if the owner of the land seeks to sell it. As currently drafted, these clauses are opaque, especially those relating to the definition of what constitutes "community value" – a subjective concept. Whilst it is important that communities can protect local assets that they value, much greater detail is required about this process to offer reassurance that it won’t be subverted to become a tool used to frustrate development proposals by groups who are opposed to development per se.

January 2011