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Lord Rooker: The effects of this wonderful policy are so great that there will not be lots of new burdens. In fact, local authorities will gain a lot from being released from certain aspects of red tape. We recognise the concern that people might see it as a burden on authorities, but there may be savings as well as costs. We also have a mechanism for dealing with substantially increased burdens on local authorities. I can assure the House that it is the case that where policy initiatives come from other departments, or there is discussion, and this point comes up about new burdens on local authorities, we constantly say to our colleagues elsewhere in the Government, "You cannot do this, you must pay for it". I say to people, "Look, I have to got to go to the House of Lords and face Lord Hanningfield, the leader of a key local authority, who will also tell me that there are new burdens". We have a mechanism for dealing with this.

The new system, once it has bedded in, is likely to lead to less time and resource input in individual applications, particularly if people go down the charging tariff route. Once all the guidance is done, once the regulations are done, if it is a formula, it will be a case of fairly mechanical up-front calculation, and there ought to be less time spent on it.

I remind the Committee that in this spending round the Government have made 350 million extra—new money—available to local authorities over three years. We are about to enter the second year of the three years. I do not know whether the decisions have been announced yet—I have lost track—but the first year was only 50 million to 60 million. The greater expenditure will come in years two and three. This is designed to put extra resources into local planning

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authorities to support them in the reform programme. We are also reviewing planning fees to see whether they are adequate.

There are some savings here, and a lot of new government resources are going directly into planning. The planning delivery grant is only paid out as a result of improvement in planning performance. When it is paid out, it is not ring fenced, and local authorities can use it for whatever they wish, because they will have already achieved the performance standard. If there is a new burden, I genuinely believe that we have the mechanism for taking care of it. In this case, the policy is so wonderful that there will be savings.

Baroness Hanham: The Minister can make himself believe anything. I do not agree with that response. The Minister listened carefully to the noble Lord, Lord Best, so he should understand that this is not something that is capable of being resolved equally easily by someone licking a pen and adding up a formula. It will be far more complicated than that. Whatever happens—whether people continue to go for Section 106, or they go for this new tariff—it is inevitable that there will be negotiation. People must be experienced in dealing with that, and those people are more expensive than those who are not able to deal with these areas. I note what the Minister said, and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

On Question, Whether Clause 46 shall stand part of the Bill?

Lord Cobbold: The arguments in favour of retaining and improving the existing Section 106 agreements and for rejecting this clause have been well rehearsed in our discussions. Some of the major problems associated with the new proposals were ably expressed by my noble friend Lord Best in an excellent speech. My concerns with the new proposals, which were outlined earlier, have been largely met. The Minister has confirmed that local authorities cannot impose planning contributions on developers. In paragraph 12 of the statement, which we were given the opportunity of reading in the short break, I have found a satisfactory answer to some of my other concerns. First:

    "It is not the Government's intention, in reviewing planning obligations policy, to simply enable local authorities to raise extra revenue".

That is an important point.

Secondly, it says:

    "The Government's objective . . . is . . . not to enlarge the scope of planning obligations beyond current practice".

Therefore, they propose to stick within the broad line of the Section 106 arrangements. Thirdly, it says:

    "a new policy would make clear that development proposals which are acceptable in planning terms should not be rendered unviable by the introduction of extraneous requirements unrelated to planning".

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That deals with another problem. Finally, it says:

    "the planning contribution offered, by whichever route, should be related to the impact of development and be relevant, proportionate and reasonable".

Those words are significant to the debate.

In paragraph 24, there is another comment that, I thought, best summed up our deliberations and surprised me somewhat:

    "It is also wrong to infer from the introduction of legislation that decisions on how to use that legislation have already been taken. They have not".

I finish my speech with that thought.

9 p.m.

Lord Avebury: I also had the opportunity to read the document during the hour that we had for dinner. It seems to me that the Government's decision to shorten the period of consultation to nine weeks was not justified by the outcome of the consultation.

In paragraph 5 of the document, the Government say that they consider that it was,

    "better to supply Parliament with an output from that consultation as soon as possible, and whilst the Bill is still under consideration, than to have the consultation still going on as they consider it".

As the Minister said, it made no difference to the amendments to the clause that we have been discussing. If we had not had the document—we very nearly did not—the outcome of those discussions would have been the same. In paragraph 25, the Government say that they will undertake,

    "further . . . consultation. In the light of the consultation which has recently finished, and the conclusions of the Barker Review of housing supply, the Government will publish draft Regulations and a draft policy to replace Circular 1/97".

Was there any point in shortening the statutory consultation period from 12 weeks to nine weeks for the sake of producing such an inadequate document at this stage?

The Government say that there will be an opportunity to comment on the draft regulations and draft policy that will replace circular 1/97 before the policy is finalised. It would have been useful to have that all in one bite, instead of having a partial document now, which is not much use to the Committee in its consideration.

Lord Best: I suggest that Clause 46 should not be in the Bill, partly because of the practical difficulties that we discussed and partly because of the dangers that, I fear, it poses to the provision of affordable housing, despite the Government's good intentions.

It is certainly true that the current arrangements for Section 106 agreements are not working too well. A major research project by the universities of Cambridge and Sheffield, led by Professors Christine Whitehead and Tony Crook, showed that negotiations over the agreements lacked clarity, varied in effectiveness between authorities and suffered from shortages of planners with the skills to negotiate sophisticated deals with developers. I declare my interest in the research, which was largely funded by

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the Joseph Rowntree Foundation, supported by the Housing Corporation, the Royal Institution of Chartered Surveyors and the Countryside Agency. I chaired the project's advisory board.

The defects in the current system of negotiation are not so awful that they cannot be remedied. We should be careful about inventing alternatives before trying out ways of improving the present system. The good news from our research was that the use of negotiated Section 106 agreements had meant that housing associations had obtained 12,000 to 15,000 affordable homes each year on sites being developed by private house builders. In earlier times, house builders would only have built homes for sale on the land that they secured. A housing association would have produced segregated social housing and, perhaps, some shared ownership housing on whatever land was left for it to buy.

That separation of house builders and housing associations led to stigmatised rented estates for poorer households on the worst sites—between the gas works and the motorway, or on an unpopular council estate. That further marginalised those people on low incomes. The deals now being negotiated between developers and planners are enabling housing associations to secure homes on decent sites and to provide rented homes or low-cost home ownership in mixed communities, which raise, rather than diminish, the life chances of those households.

Overall, the present system is benign and beginning to be accepted by all parties. As our research project concluded, Section 106 agreements have,

    "changed the geography of new social housing"

to good effect. The Minister can properly suggest that the Bill includes many safeguards. Today's statement from the Office of the Deputy Prime Minister covers some of those issues. It explains that a revised planning policy guidance note PPG3 will make clear that a financial contribution in lieu of affordable housing will be acceptable only in limited circumstances; for example, where the cash raised might be sufficient to produce a better development solution elsewhere. But my concerns are not just about the planning contribution, the tariff, being payable in cash rather than in kind. I accept that the intention is not to raise revenue for spending on unrelated purposes or even, usually, to subsidise social housing built on a separate site.

There are more subtle dangers from that opening of a Pandora's Box, including intense pressures on politicians to minimise the amount of affordable housing built in anyone's back yard. I know from the work of the Joseph Rowntree Housing Trust that people can feel real hatred for proposals to build what they believe, in the words of one of the anonymous poison-pen letters sent to my home, to be,

    "squalid little houses for the poor";

whereas in reality we are planning a mixed-income community to extremely high standards. The City of York will not succumb to such pressures. But in some places the chances to take the alternative, more electorally popular, benefits from a developer could be

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seized upon. Those people living beside a planned development will always have a shopping list of alternatives to affordable housing which tariff funds could cover—local amenities and facilities, improvements to the roads around the site, environmental enhancements and so on.

Perhaps pressures and temptations will be resisted and just as much affordable housing as now will result. But why risk any reduction when, as Kate Barker's interim report for the Chancellor suggests, we need a step change in output of affordable homes of at least 31,000 extra homes, just to keep pace with rising household numbers?

I believe that Section 106 agreements can be redeemed. I refer your Lordships to the suggestions by the ODPM Select Committee and others for ways of making the current system work better. Obstructive practices could be outlawed and timetables set for Section 106 agreements to be negotiated. Systems could be put in place for arbitration and mediation to break deadlocks and see fair play for all parties. The planning improvement grant, mentioned by the Minister, to up the game for planners, should produce better skilled people, able to negotiate those deals. This week the Joseph Rowntree Foundation is publishing advice for house builders and housing associations on ways they can work better together using standard documents and clearer procedures for partnerships.

Rather than risk the consequences of an untried scheme that could mean less affordable housing, or housing on the worst sites that are away from the mix and community balance of tenures and incomes that we all strive to create, it would seem preferable to test out the various opportunities to improve existing negotiated Section 106 agreements, as the ODPM Select Committee and others have suggested.

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