Draft Community Infrastructure Levy (Amendment) Regulations 2014
The Committee consisted of the following Members:
Anne-Marie Griffiths, Committee Clerk
† attended the Committee
The following also attended, pursuant to Standing Order No. 118(2):
Draft Community Infrastructure Levy (Amendment) Regulations 2014
It is a pleasure to serve under your chairmanship, Mrs Main. I apologise to the Committee for the complexity of the regulations before us, and therefore for any possible delay in my ability to give full and comprehensive answers to any questions that I am sure members of the Committee have prepared. The provisions are quite detailed. Looking both opposite and behind me, I know that there are members of the Committee who are interested in particular aspects of them, and who probably have greater expertise than me.
I would like to set out the basic principles behind the community infrastructure levy, which was introduced by the previous Government towards the end of their time in office, but which this Government support. We believe that the basic principles behind the levy are right. The levy is fairer, faster, and more certain and transparent than the system of individually negotiated section 106 planning agreements, which the CIL will replace in part.
Development of the levy is subject to public consultation, a robust evidence base and independent examination. Given the levy’s role in facilitating the delivery of infrastructure for local communities, it is right that the levy be subject to great scrutiny.
Good progress is being made in introducing the levy around the country. We are seeing a steady increase, month on month, in local authorities introducing charging schedules. There are now 30 charging schedules in place, including the Mayor of London’s for Crossrail. A further 45 charging schedules are with the Planning Inspectorate for examination, and 12 have been approved on examination but have not yet been adopted.
The increase in uptake of the levy will ensure an overall rise in revenues from it over the next 10 years. Our most recent estimate suggests that average annual levy revenues could be in excess of £450 million, which will make a significant contribution to the infrastructure that our communities need.
However, implementation of the levy is still in its early days. The first set of CIL regulations came into effect in 2010. It was right for us to have listened to local authorities, communities and representatives of the property development industry in looking at changes that might need to be made to reflect feedback on the practical application of the CIL. We have engaged closely, actively
I now turn to the amendments we are proposing to make today, and I will set out briefly what each tries to achieve. First, we are strengthening the evidence requirement when setting proposed levy rates. Local authorities will be allowed to set levy rates by the scale of development as well as by its use and location. It is vital that local authorities be able to set levy rates that do not inhibit development because they are based on good evidence of the viability of proposed developments. The draft regulation 123 list—I am afraid that is just the first in a series of numbers the Committee will hear today—is the list of the infrastructure projects towards which the levy can provide funding. It will now form part of the evidence during the rate-setting process, including during the examination of the proposed levy.
The second area we are looking at is the relationship between the levy, section 106 and section 278 highways agreements. We have extended by a year the date from which pooling restrictions on section 106 agreements apply, to April 2015. That will give local authorities enough time to reflect the changes we are debating today to the operation of the levy, but will still provide an incentive for them to take up the levy. That is still the right way forward.
We want local authorities to move away from the tariff-based approach of section 106 agreements. [ Interruption. ] Developments should not be regularly charged for infrastructure requirements based on standard calculations—[ Interruption. ]
Nick Boles: Mrs Main, it is a source of great regret to me that we will lose the forensic abilities of the Colonel, my hon. Friend the Member for Beckenham (Bob Stewart). I am sure, however, that some other Committee will now benefit from that.
If I may return to the slightly thorny issue, we are restricting the use of section 278 highway agreements relating to infrastructure that the levying authority intends to fund through the levy in order to remove the potential for overlapping contributions being sought under this levy and section 278. That is a rather complicated way of saying that we are bringing forward changes to avoid what people have referred to as double-dipping, whereby a development is charged through both the levy and a section 106 agreement for the same infrastructure.
We are also looking to give local authorities further flexibility on the certainty of infrastructure provision. We are allowing the provision of infrastructure as a payment, or part payment, in kind, in certain circumstances. For example, a developer could provide a school or community centre instead of up-front levy payments. That also ensures greater value for money to local
I hope the Minister can help me. I have recently had conversations with very senior practitioners in the planning and development field. They are entirely supportive of the overall thrust of the regulations and where the Minister wants to take us, but they have some concerns about the wording of new regulation 73A and think that it may not have its intended effect. Neither I nor they would want to hold up implementation of the regulations package as a whole, but if there were the risk that they would not produce the flexibility we want or strengthen the link between levy payment and infrastructure, would the Minister be prepared to meet with those developers and, if need be, revisit this measure either through guidance that might improve operation, or through an early revision?
Nick Boles: I am grateful to my hon. Friend for joining us even though he is not a member of the Committee, because he has such enormous experience in planning, both as a former Minister and through his own practise. He raises a thorny issue that has been a matter of open debate between different parties. While we do want to make it possible to provide the levy commitment in kind in certain circumstances, equally, we want to ensure that we do not undermine the now much more focused section 106 provisions that will remain for those improvements and infrastructure investments that are necessary to make a development acceptable in planning terms.
I have reviewed the letters sent by those who have concerns, and I believe we are striking the right balance in the regulations before the Committee. Of course, one never quite knows until something has operated, so we are happy to monitor the situation as it unfolds and if any of the concerns raised by my hon. Friend or others come to light, there will be an opportunity in future to look again.
We all want these regulations to bed down, because CIL has only just been brought in and already we are bringing forward some quite substantial changes, but there will certainly be an opportunity in 2015 to have another look if, by then, we have clear evidence that something is not working. Of course, as my hon. Friend said, guidance is always an opportunity to nudge people towards a better outcome if the regulations are being misinterpreted.
Sir Bob Russell (Colchester) (LD): I would like to follow up the question put by my good friend, the hon. Member for Bromley and Chislehurst (Robert Neill), whose knowledge I think Members on both sides of the Committee will agree is without equal. The Minister mentioned monitoring. Does he agree that it is crucial that the local planning authority—or the local education authority, in the case that he knows I am referring to—monitor exactly what is in the agreement and ensure that the money is received? Essex county council has lost millions of pounds by failing to implement the legal agreements that the planning authority gave it.
Nick Boles: I know that that problem has been a common experience, and there may have been examples of it even in your own county, Mrs Main. One of the reasons for introducing the community infrastructure levy is that it makes transparent how much money is coming in and what it will pay for. If a local authority fails to secure one of the projects for which it originally raised the levy, that fact will be very public and the local authority will be held to account for it. Of course, we need to monitor whether the levy generates the projected revenues, whether local authorities keep their lists of projects up to date and whether they spend the money on those projects. I assure my hon. Friend that we will want to do that.
Robert Neill: I am grateful for the Minister’s constructive approach, which is no less than I would expect from him. May press him a little more? If monitoring is carried out as he has agreed and there are issues, will he undertake to ensure that we do not have to wait too long for guidance or a formal revision of regulations? In addition, is he aware that there is a practitioners’ working group that includes local authorities, as the hon. Member for Colchester mentioned, and private sector and public sector practitioners elsewhere in the field, who will be happy to work with him and his officials on the matter? Is he happy to use their good offices to improve on and sustain the monitoring process?
Let me return to some of the changes that we are proposing. Each phase of a development will now be treated as a separate development to allow levy liabilities to be staggered. We are allowing levy liabilities to be recalculated when the provision of affordable housing is later varied. Developers will be able to offset levy paid if they switch to a new scheme on part or all of the same site, as long as the first scheme was not completed. We believe that that will improve fairness and flexibility. We are also committed to bringing vacant buildings back into use. The regulations support that aim by removing liability altogether if there is no change of use, or by otherwise considerably reducing liability.
I turn to exemptions and reliefs, a subject that I know is of interest to at least one member of the Committee. We are extending social housing relief from the levy to include communal areas such as stairs and corridors, and ancillary areas such as car parking, to make the exemption complete. Local authorities will now have the discretion to apply social housing relief to new forms of social housing, such as discounted market sales housing. We are clarifying what types of social housing qualify for mandatory relief.
I have been keen to exempt from the levy those who build their own homes, and I have been regularly chivvied into achieving that by the hon. Member for Bassetlaw. The Government have made it clear that we are absolutely committed to supporting anyone who wants to build their own home, and we want to double the size of the self-build housing sector. The self-build industry has told us that the community infrastructure levy can be a significant barrier for self-builders and make many projects simply not viable. Our exemption will help to
I turn to appeals. Comments on appeals will now have to be received within 14 days, and the review and appeals process will be extended to those obtaining planning permission after development has commenced. On transitional measures, changes relating to the charge-setting process and examination will not apply to authorities that have already published a draft charging schedule. As my hon. Friend the Member for Bromley and Chislehurst (Robert Neill) pointed out, we are in the final stages of completing the review of planning guidance and, as part of that, we are consolidating all the guidance on the levy into one comprehensive web-based format, in line with the recommendations of Lord Taylor’s review on planning guidance. We anticipate that format going live around the same time as the regulations come into effect.
Local authorities are making good progress in bringing forward the levy, which we see as the best way of delivering infrastructure to meet the needs of local areas. That certain delivery of infrastructure will reduce the level of objection to new development, which communities often feel is necessary when no such infrastructure is planned. We are, however, always willing to listen and learn from those bringing forward and working with the levy, as can be seen with this latest set of regulatory amendments, and I welcome any questions that the Committee might have on them.
Roberta Blackman-Woods (City of Durham) (Lab): What a pleasure it is to serve under your chairmanship, Mrs Main. I have concluded that the Minister and his officials think I have much too much time on my hands at weekends and must therefore spend part of the weekend trying to decipher complicated statutory instruments. The regulations contain difficult formulae and equations, and I was tempted to ask the Minister to explain some of them.
Roberta Blackman-Woods: I decided to avoid that, however. I accept that the Government are bringing forward regulations to implement the response to the consultation on the community infrastructure levy. Nevertheless, I want to make a number of points.
We know that the regulations bring forward new exemptions for certain residential development and restrictions on the ability of local planning authorities to require developers to enter into highway agreements where the levy applies. The regulations group the changes
Cumulatively, the regulations raise important issues that go to the heart of what the Government intend CIL to do and what they see its future role to be. I will come back to the more general points at the end. Regulation 4 amends regulations 8 and 9 of the Community Infrastructure Levy Regulations 2010 to allow phasing of CIL payments for all types of permissions—not just outline—including full permission, where the development is expressly defined as being phased. That change has wide support and will allow developers to spread CIL payments over realistic phasing periods, rather than paying up front, to assist cash flow. That point has been made to us and, I expect, to the Minister on a number of occasions by developers. It is sensible and worthy of support.
Regulation 5 amends regulation 13 of the 2010 regulations and allows for the setting of differential CIL rates by floor space and the number of dwellings or units, as well as by different zones and uses. It will allow local planning authorities to set differential rates by reference to the proposed size of development or the proposed number of units or dwellings. I can see the point of not wanting small developments to have a burdensome CIL. However, CIL is already complicated, which is why a number of changes have had to be made to the initial regulations. I wonder whether the amendment will unduly complicate an already complicated system.
I also wonder what will happen if CIL is reduced on the understanding that a particular size of development is going to be built, but a larger development is actually built. Who will check that the correct level of CIL has been applied? Will that not place a particular burden on local authorities, particularly their enforcement teams, to check that the CIL level is accurate?
Regulation 5 will also amend regulation 14. The amendment will require authorities to charge rates that strike an appropriate balance between the CIL level and the potential effect of CIL on the economic viability of the development. Why do the Government want to strengthen the regulation—instead of just aiming to strike a balance, authorities have to strike an appropriate balance? That seems a little pedantic and puts an undue burden on local authorities. What sort of evidence does the Minister or his officials have in mind will be required for local authorities to demonstrate that they are striking an appropriate balance?
The Minister and I discussed my next issue a little during the passage of the Growth and Infrastructure Act 2013. I had some concerns about how the viability of sites is demonstrated. A lot is required to be put in the public domain to make it clear that a development will be unviable if the level of CIL is too high. Perhaps the Minister intends to set out clearly in guidance what will be expected of a local authority in implementing the regulation and what is meant by viability to assist local authorities in making a judgment.
Regulation 5 will also require that a list be made to identify the projects or types of infrastructure that a local planning authority intends to fund or part-fund
Again, I can see that the change in the regulations is quite helpful. What the local authority intends to do with the CIL should be clear and transparent. However, it is a good idea only as long as it is not set in absolute stone. It will be necessary to look at the guidance on the change. If a local authority puts something on a list—for example, a new school—but then decides that it no longer wants to fund the school, but a new health centre instead, will the fact that a new health centre was not on the list mean that it is not possible to use the CIL for it? It is not clear from the way that the SI is structured whether that will be the case, so I would appreciate some clarity from the Minister.
Regulation 6 will change regulation 40 by extending the vacancy test to cover buildings that have been used for a continuous period of six months in the past three years. Buildings that have had no change of use will be exempt from the CIL, unless there is an increase in floor space or the building has been abandoned. An in-use building
“contains a part that has been in lawful use for a continuous period of at least six months within the period of three years ending on the day planning permission first permits the chargeable development”.
The change is sensible because it will make it easier for developments to benefit from existing floor space being debited from their CIL calculation and liability. There has been a lot of lobbying from developers who thought that the provision was extremely unfair. The previous one-year rule was difficult to satisfy in practice, especially for large-scale and phased schemes. However, the change will lead to a general reduction in the amount of CIL collected for infrastructure spending. I will return to that point in a moment because it is not the only change that will reduce the amount of CIL collected. It will also allow credit for the demolition of existing buildings to be transferred to later phases of planning permission. Again, that is a broadly sensible change.
Regulation 7 will change regulations 42A to C by creating an exemption for residential annexes and extensions, which will take many household developments out of CIL liability. Although it is a sensible change, it will place an additional admin requirement on collecting authorities to verify exemption claims. It will also lead to a general reduction in the amount of CIL collected for infrastructure spending. It partly goes against the original principles of CIL that it should be paid for almost any additional floor space to deal with the additional infrastructure demand generated, and it will create an additional layer of confusion around CIL. I understand that the Minister seeks to make that change and the changes to self-build to ensure that an anomaly between existing and new-build residences is not created, but there are some issues that may require monitoring in the longer term.
Regulation 7 will also alter regulation 49. Affordable rents will benefit from social housing relief as part of the redrafted CIL social housing relief criteria. The regulation will give local planning authorities discretion to apply social housing relief to discounted market sales in their areas and ensure that ancillary and communal areas are also taken into account, and charging authorities
Regulation 7 will also amend regulation 54A by introducing an exemption for self-build housing and relief from the CIL for certain self-build homes. All homes built or commissioned by individuals or groups of individuals for their own use, either by building the home on their own or by working with builders, will be entitled to the relief. Community group self-build projects will also qualify for the relief. That type of relief will be reviewed after three years. Again, that is a sensible measure that will, I hope, encourage more self-building, which all of us in this Committee support. However, there is the issue of how the infrastructure to support self-build units will be paid for.
Regulation 7 also changes 2010 regulations 55 and 57 by changing the way that exceptional circumstances relief is to be granted. That is a major change to the original intentions of CIL, and it raises several concerns that I hope the Minister can address today. How will he ensure that the request for exceptional circumstances relief really is made in exceptional circumstances, and that the developer does not just make something up to try to get around the CIL regulations? Will specific criteria be set down for what is meant by an exceptional circumstance, and if so will that guidance be given to local authorities? Who will check that the exceptional circumstances relief has been applied properly, and that changes will not subsequently be made to a scheme? There is a list of questions that arise from this particular change and I would like to hear in detail from the Minister how it will be implemented.
Regulation 9 changes 2010 regulations 73A and 73B, allowing local planning authorities to choose to accept payments-in-kind through the provision of land or infrastructure, either on-site or off-site, for the whole or part of the CIL. Again, the problem is that that is a major change to how CIL was envisaged. It could produce benefits, for example, if a developer is going to fund and build a school; that could be helpful. However, it could be subject to abuse, or at least it could cause prolonged argument between a developer and a local council about what is satisfactory in terms of infrastructure delivery. The example of a school is fairly straightforward; most people would think that that was reasonable. However, if there is a scrappy bit of land that the developer wants to give to the local authority, which might subsequently be built on 10 or 15 years down the line, is that a sufficient benefit-in-kind? Who will decide whether it is a sufficient benefit-in-kind? Will it be completely at the discretion of the local authority to decide? If that is the case, I would be slightly more reassured than I am at the moment. Again, will there be some guidance on that issue, so that it is clear to local authorities what they will be required to do, and so that
Regulation 9 also amends 2010 regulation 74B to extend the “abatement” provisions for phasing CIL payments to all types of planning permission, to deal fairly with more complex developments. That is something we welcome.
Regulation 11 modifies the appeals procedures and allows appeals in certain cases after development has commenced. Comments on appeals will have to be “received” rather than “sent” within 14 days, with discretion to extend that period. The review and appeals process will also extend to those obtaining planning permission after development has commenced. Broadly, those are sensible and helpful changes.
Regulation 12 amends 2010 regulation 123 and extends the date from which the pooling restrictions on section 106 obligations apply nationally to April 2015. Again, that is a generally welcome change to push back the date on which section 106 pooling limitations come into effect, where there is no CIL charging schedule in force. However, it is very likely that some authorities will still not be able to bring a CIL charging schedule into effect before that date. I wonder whether the Minister intends later in the year to extend that date even further.
Regulation 12 also extends regulation 123 of the Community Infrastructure Levy Regulations 2010 to include section 278 highway agreements, so that they cannot be used to fund infrastructure for which the CIL is earmarked. Interestingly, responses to consultation were evenly split, and I had not realised until I read them that the issue was so controversial. Many developers have raised with me their concern about being double charged for contributions to highways through the CIL charge. This is broadly speaking a sensible move, but again, it takes money out of the infrastructure pot.
These incremental changes add up to substantial alterations to CIL regulations. Does the Minister intend to monitor the changes and build that into the review of CIL that has to take place in 2015? What evidence for urgency was there to require these wide-ranging changes to be made now and not in 2015, when CIL will be reviewed in any case?
It is worth noting that the original intention of CIL was to give local authorities a relatively reliable source of infrastructure funds to allow them proactively to plan infrastructure that would enable further development and growth in their areas. That would come partly through small developments but also larger ones. As I said, these changes appear to take a great deal of certainty out of the system. There will be a lot more argument between developers and local authorities. Does the Minister acknowledge that? Can he tell us what he is going to do to compensate local authorities for the loss of income, and for the additional time they are going to have to spend on the operation of CIL?
The Government’s narrative on CIL is that it is primarily an incentive for communities to accept development. That is important and I agree that it should be a function of CIL, but care needs to be taken so that vital money, including money that will have to go to those communities, is not lost through changes that might in practice unduly assist developers.
I also wonder whether the proposed changes mean that CIL’s relevance will be much reduced in future. There may unintended consequences further down the line. How is the Minister’s Department going to monitor the impact of the changes, and what evidence will it take from local authorities and developers over the year?
John Mann (Bassetlaw) (Lab): It is a pleasure to serve under your chairmanship, Mrs Main. This statutory instrument has been a long time coming. I recall the host of questions I have asked, the letters written and my corridor discussions. This seems to be a Department led by a Secretary of State who is keen to do other people’s jobs, but less keen to make his own Department work properly.
When we look at this raft of new red tape, it is quite clear that this Department has exempted itself from the principle of one in, one out or one in, two out. They put one in, and then come back with a swathe of additional bits that do not classify themselves as red tape. It would be better for Members if we had occasional sessions in forums such as this where we suggest to Ministers things that could go and, if they cannot give a coherent reason why not, they should be automatically removed. In that regard, I could fill up the rest of today just on this Minister’s portfolio.
I start by asking the Minister about this new tax the Government have brought in. When the impact assessment was made of the CIL’s application, what was the finding for small builders, the rural economy, self-builders and housing provision? This legislation has led, through the chaotic way in which it has been introduced—
John Mann: I begin with regulations 1, 2 and 3, on the community infrastructure levy, and why the Government have to introduce these amendments. In doing so I will concentrate, if I may, on the definition of self-build, the effect of the delays and whether the amendments will have the impact that the Government’s consultation demands.
Sir Bob Russell: Does the hon. Gentleman intend to force a Division? I did not pick up that intention from the Opposition Front Bench spokesperson, and as three of his Opposition colleagues have not bothered to turn up, I am intrigued to hear the answer to that.
John Mann: With respect to the hon. Gentleman, I have not heard the Minister’s response yet, so it is difficult to make a judgment. I have only just begun to ask my questions. I repeat, to ensure that the Minister does not miss it, that my first question was on the findings of the impact assessment. That is fundamental, because it determines whether these amendments are sufficient.
I put it to the Minister that the impact on self-build, which some of the amendments attempt to deal with, has been catastrophic. The first local authority to implement the CIL was Newark and Sherwood, and since then there has been no self-build. Applicants who were proposing to build their own house, on seeing the level of tax imposed on them, have not proceeded with their plans. I could cite a whole series of such exact examples, but I will cite just one. A young couple in Tuxford, near my constituency, are being asked to pay £64,000 up front to build their own first home. That is the scale of the sums involved. This is not some minor amendment, so it is essential to check with the Minister that the policy will work. In fact, that figure is at the lower end compared with other local authorities. The largest figure seems to be £187,000, payable in advance for the privilege of building one’s own home.
There has been a catastrophic impact on small businesses—builders, architects, surveyors and others—in Nottinghamshire, in parts of which the policy was first introduced. There has been no self-build. A whole raft of developments by people wishing to build their own home—be it the soldier returning from Afghanistan, the pensioner wanting to build a home for his disabled son, or the couple in Tuxford whom I cited—have not happened. Those are real-life examples from last year.
Is my understanding correct of how the levy will apply? Does the definition of “self-build” include anybody building their own home, however it is built? That is a fundamental point. Part of the problem with the policy is the perception that “self-build” means literally that: that the individuals concerned put together the bricks and mortar with their own hands. It should be made absolutely clear that the definition of “self-build” includes those who contract others to build their own home. They constitute the vast majority of people who have been impacted by the way in which the handful of local authorities that have introduced the levy have defined the term “self-build”.
Will the Minister confirm whether the chaotic way in which the levy has so far been introduced will be improved by the amendments? Individual authorities have been introducing it on a scattergun basis. Other authorities—perhaps they are more savvy—have waited to see what the competitive advantage has been for development and industry in their own areas, either by undercutting or matching their neighbour’s rates. If we continue with the situation in which one authority charges hugely more than the next, we will see a distortion of the housing market that serves no one and which will lead to further delays, particularly for small building plots.
In changing the regulations, does the Minister intend to look beyond the single property and to other small developments? From how he outlined his case, it seems more likely that there will be discounts for large builders than for small builders. It is likely that there will be
One of the reasons why self-build is important is that not everyone wants to live in monolithic estates in villages, towns or cities, where every house is identical. It is important that a variety of construction styles, and creativity in architecture and building in this country, are allowed to flourish again, instead of being trampled on by the clumsy introduction of charges by this Government.
I know that the Minister inherited the whole mess from his predecessor, who was promoted to become the chairman of the Conservative party. It is to the Minister’s credit that he, unlike his predecessor, has been prepared to look at the reality and listen to the concerns that I and others have raised about the major impact that the policy has had on local economies—and, critically, on people’s aspirations, because that is what we are talking about. The term “developers” has been used, and I put it to the Minister that a developer should be defined as someone who does multiple building on a repeat basis. An aspirant is someone who attempts to improve their life and perhaps their immediate neighbourhood, but nothing more.
Has the Minister considered, in respect of the amendment on annexes, the question of the granny flat? If a granny flat has to be part of the main dwelling—not physically, but legally—in order to be exempt from the CIL, does that not lead to the possibility that some people will not be able to build one because they will be unable to recoup their investment in that property? Is there not scope for considering the extension of the definition of granny flat or annexe to cover a second property—a separate dwelling that is eligible for sale when it is no longer needed, on which investment can therefore be recouped—for use by immediate family? After all, such accommodation is built primarily to reduce the social care bill and save the taxpayer money. If my reading of the legislation is correct, the Minister will confirm that that is not the case at the moment.
Andrew Bridgen (North West Leicestershire) (Con): The hon. Gentleman is making a valid point. Does he agree that the definition of the granny flat or annexe—whether it has to be part of the main building—may affect whether VAT is recoverable on the build of that part of the house?
John Mann: Indeed. I am trying to ascertain whether the regulations will be as helpful to the small builder and the individual, whom I would not class as developers, as they will be to the commercial developer. The Minister mentioned that the Government would now allow in-kind donation by developers, but in reality that will apply only to large conglomerates. Such a change will further bias the system in favour of large developers and against small builders and individuals who want to improve their own life and their immediate neighbourhood. Those individuals are often trying to do that in situations where the alternative is continued blight, so their efforts are hugely popular among their neighbours.
Do the regulations allow a neighbourhood development plan to incorporate all the money raised through the CIL in that neighbourhood, to prevent the ludicrous situation that arises in areas such as mine where the Government want to build lots of new housing? Big
Payments have been a huge blight on the system. Local authorities are relishing the opportunity to demand the huge up-front payments that have led to many people determining not to invest their savings and their income in new self-build developments. Local authorities are relishing the opportunity to demand the huge up-front payments that many people to determine not to invest their savings and income in new self-build developments. Are the payments now such that the amendment does not require those proceeding with small developments to put all their money up front, rather than staging it to the completion of the development? If the change is to be staged, as I understand the Minister to be indicating, will he clarify the basis of the staging? Will he confirm that there are no loopholes, and that local authorities will be obliged to demonstrate the staging? Again, this has been a blight on development and on local economies.
Finally, the Minister knows that the points about self-build and the figures I quote relate not just to the CIL but to the Government’s unwise move to change the affordable housing levy down from what was previously the section 106—
John Mann: Thank you for that clarification, Mrs Main. My question to the Minister was: is it, and if not, when will it be? Would he like to tell us when he will be consulting on getting rid of the other problem that self-builders have, which is the overall tax? Can we anticipate immediate progress to take away the second tax that he and his predecessor have unwisely put on self-builders and small businesses?
Nick Boles: If the hon. Member for City of Durham will forgive me, I will start by addressing the concerns raised by the hon. Member for Bassetlaw, who is one of the most persistent campaigners for any cause in which he believes, but perhaps particularly the cause of small builders and self-builders. I hope I can reassure him, although I am slightly tempted to say that he is a gentleman who finds it very difficult to take yes for an answer. We have listened to him, and he has been effective in his lobbying. He should rightly take much of the credit for the changes that we are introducing.
Yes, the definition of self-build includes custom-built housing and community projects that are for owner occupation; it does not require the owner or the future occupant to build the property themselves. Secondly, the hon. Gentleman raised the concern that small developments might be particularly penalised by the
I can also say yes to the hon. Gentleman’s question on granny flats. Residential annexes that are a new dwelling can nevertheless be exempt under the provisions we are introducing to exempt annexes, so long as they are within the curtilage, to use one of my least favourite planning phrases, of the main building.
I think the hon. Gentleman is keen that I should say no to something that he said, so he included the question whether neighbourhood plans can now secure 100% of the CIL revenues. I hope he has noted that we introduced the provision that areas that have completed a neighbourhood plan and had it approved in a referendum will secure 25%, uncapped, of CIL revenues, which was controversial in many quarters among local authorities and developers alike. It is reasonable to leave the figure at that level, because although much infrastructure might be very local and in the community in which a development is taking place, the fact is that every community benefits from the roads and the broader services that every area has. Those roads and services are provided and paid for by county councils and district councils. It is right to have a balance, but I share with him the desire to make it clear to every neighbourhood that if it produces a neighbourhood plan and brings forward development as a result, it deserves to have a substantial proportion of the revenues—something that no previous Government have ever allowed parish councils, town councils and community groups to have.
The hon. Gentleman asked whether there was any risk of small builders and developers having to pay more of the levy up front. I had hoped that this was clear in my original speech, but I will now try to spell it out even more clearly: the point of the amendments is to allow phasing of payments. That phasing will be clearly set out by the local authorities, and each authority will determine the phasing for itself, but usually authorities will look at four instalments—a relatively substantial instalment up front, and then three further instalments. Authorities can vary the phasing, however; so long as they make the process fair and transparent, phasing is for them to decide.
I hope that I have given the hon. Gentleman some reassurance. I will look at him, in case I have not. I will also rightly and properly put on the record his role in persuading the Government of these changes. I would just like to finish, though—
As ever, the hon. Member for City of Durham asked some very pertinent questions. I welcome both the general support that she gave for many of the changes that we are proposing, and the detailed and forensic way with which she went through the proposed amendments. My response might be a little clunky, but I will try to respond to all the questions that she put.
I believe that the hon. Lady asked who will check whether the differential rates that are brought in for different sizes of development have been properly applied and enforced. I suggest to her that, in a sense, that same requirement applies to section 106. Of course, up front a local authority will have reached an agreement on section 106, but it then needs to check that that agreement has been implemented. To the extent that section 106 can allow for things to be done on site as well as for payments of money, there needs to be a process of checking that things have been done on site and that the development that was proposed is indeed the development that is being built. We do not believe that there is any evidence that there will be a further burden on local authorities in enforcement as a result of the introduction of the potential for differential rates.
The hon. Lady asked why we are removing the concept of aiming to strike a balance, and why we are requiring authorities to strike a balance. The answer is simply this: if all that we ask is for people to aim to do something, there is no possible way of evidencing that they have failed, because evidence that they have failed to strike a balance is not evidence that they did not aim to do so. We think that it is reasonable to require that a balance be struck. We are not suggesting what that balance should be in each specific case, but it is right that authorities should be required to strike a balance. We felt that because the test of aiming to strike a balance was so difficult to fail, it was more important to be clear about what we are expecting the outcome to be, while recognising that there are many different balances that can be struck, which will depend on the local area.
Roberta Blackman-Woods: Presumably, local authorities will be required to bring forward evidence to show that they are striking a balance. That was also at the heart of my question. Will they be given guidance on what is evidence to demonstrate that they have struck a balance?
Nick Boles: I will give a general answer, which is yes, they need to provide evidence, but I will get more specific details; perhaps we will be able to update the hon. Lady before I wrap up my remarks.
The hon. Lady then asked whether the section 123 lists, which are the lists of infrastructure projects that the levy should be funding, are set in stone. It is important to understand what the lists are: they set out the projects that cannot be funded through a section 106 agreement or a pooled section 106 agreement. A section 123 list is not an exclusive list of the projects that can be funded by the community infrastructure levy; it is simply anything
The hon. Lady made a general point, which I respect, on the changes on vacant buildings, annexes and social housing relief. She said she was inclined to support all those changes on their merits, but asked whether they chipped away at the levy. That is a reasonable question, but where social housing is viewed, in a sense, as something we secure because of development, it would be a bit bizarre to start charging a tax that is meant to be on development. Similarly, with vacant buildings, the contribution should have been made when they were originally constructed under whatever system. Is it fair to give them a double hit just because they happen to be empty at some time? It is often the most marginal buildings that are empty, so it would be a bit strange to start charging that tax. I accept her general concern and she is right that we need to monitor that issue, but she is also right to support the principle of those changes.
The hon. Lady asked about the exceptional circumstances relief and how to ensure that the situation in question is genuinely exceptional. The first thing is that local authorities have the power to switch on the relief, but also the power not to do so. The relief is not something that they have to switch on. If they do so, they have to set out a policy that will guide its implementation, and which will be transparent and consulted upon. Furthermore, the relief must comply with state aid rules. That will be clear, but we will, as she asks, provide further guidance on that.
The hon. Lady asked about payments in kind and whether an in-kind contribution is adequate. The position is that the local authority must adopt a policy setting out what sort of in-kind contribution it is willing to accept. An agreement will then be entered into between the developer and the local authority that sets out the specifications of any infrastructure that is to be provided. If a developer feels that the local authority is being unreasonable in refusing a certain in-kind contribution, they can challenge that, but the policy will set out how that will be judged.
Sir Bob Russell: The Minister might not be able to answer this question immediately, but perhaps he and his officials could look at the issue and put a letter in the Library. One local authority and one developer are one thing, but what about where a local authority grants planning consent for a residential development slap-bang on the boundary with a neighbouring authority, and the neighbouring authority bears the brunt of the consequences of that development while the authority that granted consent gets the financial benefit? That cannot be fair, can it?
Nick Boles: My hon. Friend asks a sensible, practical question about something that we all encounter. The issue is complicated, because ultimately every area needs to have an authority that is responsible for the matters within it, but an authority’s decisions can have an impact on communities over the boundary. Given that people in those communities do not vote for the originating authority, that authority might feel slightly less inclined
An authority charging the levy can accept an infrastructure payment relating to infrastructure to be provided outside its area, if it considers that the infrastructure will support the development of the area. My hon. Friend will then point out that the fact they can do that does not necessarily mean that they will. That is a proper concern, which is probably best dealt with case by case, but I am grateful to him for raising the question.
Roberta Blackman-Woods: Let me bring the Minister back to his last point before the intervention. How can developers challenge a local authority’s refusal to apply the exceptional circumstances case? That is not clear.
Nick Boles: It is so irritating that the hon. Lady always catches me out. She always finds a way, because she tends to know the detail of these things better than I do. I had assumed—I think wrongly—that it was possible to appeal an unreasonable decision, as it is usually possible to do so, but I am now advised that that is probably not the case. Rather than making up another answer on the hoof, perhaps I could write to her about the precise position and copy that letter to members of the Committee. I think the position is that the local authority needs to set out a policy of what incoming contributions it will or will not accept. However, I do not think it is then possible to challenge the particular application of that policy.
The hon. Lady asked about the delay by a year of the date on which the pooling of section 106 contributions will be restricted. She rightly pointed out that that is, in effect, the main method we have for incentivising local authorities to get their levies in place and consult on their charging schedules. It has been a balance. Some have argued that we should delay it by two years, and
The hon. Lady asked about the general issue of double-dipping. Is there a risk of that reducing revenues? I do not believe so, or at least if there is, it is only that to some extent those revenues have been secured under false pretences. We should not be charging any builders and developers twice for the same road project. That is, in effect, what was being allowed by the regulations as they were drafted, so it is right to bring in that change.
Finally, the hon. Lady made a very good general point about needing to monitor the effects of all the changes before the 2015 review. She implied that the changes perhaps should themselves have waited for the 2015 review, and I simply say that too many self-build houses would not have got built, too many families would not have got housed and too many local authorities would have just decided not to get involved in producing a community infrastructure levy, so it has been right to make the changes. She is also right that it has been a pretty substantial piece of work. We now want to let it bed in. If further changes need to be made, let us gather evidence and introduce them at the time of the 2015 review.