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Amendment No. 438R makes a necessary consequential amendment. Under subsection (5) of the new clause, CIL revenues, if regulations allow, may be used to pay this compensation. However, Clause 202(1) stipulates that CIL regulations must require the charging authority to ensure that CIL is spent on funding infrastructure. Amendment No. 438R adds the necessary qualification to take account of the possibility that CIL may be used to pay compensation under the new clause. The appropriate use of CIL enforcement measures could give rise to loss or damage to developers. Inappropriate enforcement could include where CIL liabilities have been paid or are not due, but the charging authority in any event requires a development to cease. This amendment would allow the CIL regulations to cater for such circumstances and offer the possibility of a significant safeguard against the misuse of CIL enforcement actions for the property and development industry. There is a parallel between these provisions and Section 186(2) of the Town and Country Planning Act 1990, which provides for compensation for inappropriately served planning stop notices.
These amendments provide safeguards against the misuse of CIL enforcement action. I beg to move.
The Earl of Caithness: I have a number of amendments in this group. Amendments Nos. 438S and 442ZE tackle a problem, but in two ways. The Bill provides no certainty that new infrastructure will be delivered, nor does it outline possible consequences for local authorities that do the wrong thing in relation to the delivery of infrastructure. If a levy is collected in good faith for infrastructure, there needs to be a requirement that it is appropriately spent for the intended purpose. We all want to ensure that timely delivery is included to ensure that no local authority can stockpile funds for an unreasonable period. That is why Amendment No. 438S states that the local authority must spend the money within three years of its receipt. Amendment No. 442ZE is a slightly more subtle way of going about that, and requires the local authority to be transparent about how it handles the funds.
I shall not speak to Amendment No. 442ZA, because we have covered that point. On my Amendments Nos. 442ZB, 442ZC and 442ZD, I ask the Minister why there should be regulations to allow CIL to be used to reimburse expenditure already incurred. Surely, if we look ahead to what a local authority wants, why should it be reimbursed for what it has already done? Similarly, why should a regulation permit CIL to be used for administrative expenses? If we are trying to deal with infrastructure, why should the administrative expenses of the local authority be covered by CIL? That would be an abuse. That is why I have specifically proposed that those two provisions not be included in regulations.
I have also tabled Amendments Nos. 442ZF and 442ZG. They are about repayment of money. The Bill states that money can be repaid if there is an overpayment
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My final amendment is Amendment No. 442ZH. It removes subsection (6). I think it pleases my noble friend Lord Jenkin of Roding because it relates to tax. I thought that because the clause relates to tax, it is better out of the Bill.
5.45 pm
Lord Jenkin of Roding: London councils anticipate that they are going to have to collect CIL for their own purposes and for the Greater London Authority. They will incur expenses in doing that. My noble friend’s Amendments Nos. 442ZB, 442ZC and 442ZD remove the ability of local councils and borough councils to cover the costs out of the proceeds. I suggest that it is not appropriate for them to be accepted.
My Amendment No. 442A is in this group. It was tabled before we saw the new clause on compensation introduced by government Amendment No. 442C. The Law Society’s anxiety was that it appeared that part of the penalty for failure to pay CIL would be the removal of the planning permission, apparently without compensation. Amendment No. 442A therefore removed Clause 204(3)(d). Since then, the Government have tabled their amendment on compensation, which provides that,
- “‘enforcement action’ means action taken by a charging authority under regulations ... including ... the suspension or cancellation of a decision relating to planning permission”.
I am not clear how these two measures add up. On the one hand, one of the penalties for failure to pay CIL could be the cancellation of planning permission, but under the compensation clause, the local authority that does that will then have to compensate the developer who failed to pay CIL. I cannot believe that that is right.
It may well be that I have totally misunderstood how these two clauses are going to work together. I understand this might be a complicated question. It might be wise if the noble Lord, Lord Patel, were to write me a letter about this. It may well be that I should have given him notice. We have not seen the compensation clause for very long. If the Minister could write to me about the combined effect of the ability to remove planning permission as a penalty and having to pay compensation for it, I would be extremely grateful.
Baroness Hamwee: My Amendment No. 438T is in this group. It removes the definition of infrastructure. That might seem a little perverse after some of the debates we have had. This is another amendment that I was asked to table by the Local Government Association, which makes the proper point that every local area is different and the needs for infrastructure will vary in different places, so the Bill runs the risk of thwarting
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I am puzzled by the fact that we have a list which is not exhaustive and a provision, in Clause 202(3), for regulations to amend that list. That seems to me to be a little odd. If it is illustrative only and can be revised to reflect changing needs, as the Minister in the Commons said, is it an appropriate way of addressing changing needs? The Minister has already been asked today to give us some idea of how long the process will take in each local planning authority area. We know that the proposals for CIL will have to go through an examination and that the planning inspectorate or examiner will test the authority’s infrastructure requirements, but to have to go through the parliamentary process of amending regulations, when the starting point is that items contained in the Bill are “illustrative only”, seems as odd as many other things we have heard today.
Lord Woolmer of Leeds: I wish to speak to Amendment No. 439 on behalf of my noble friend Lord Berkeley who has had to go to the Institution of Electrical Engineers to deliver a lecture at 6 o’clock. I hope that the Committee will understand that he could not be here.
The effect of the amendment is to make it clear that railways as well as roads and other transport facilities fall within infrastructure. I have come across a number of cases in Yorkshire where local authorities contribute to certain elements of rail, whether signalling, new halts, bridges, lines or rolling stock. It can be quite important in improving regional, sub-regional and local services. It would be helpful if it were clear to local authorities that railways are firmly included in infrastructure.
Baroness Valentine: I wish to speak to Amendment No. 442ZAA in this group. As we have heard, the purpose of CIL is to contribute to the funding and delivery of infrastructure. For the industry coalition, including London First, which last year put forward the proposal for a planning charge as the alternative to planning-gain supplement, the rationale of this new levy has always been about co-ordinated and timely infrastructure delivery.
My amendment concerns the vital issue that local authorities and other infrastructure providers should be required to give a commitment to use their best endeavours to deliver infrastructure financed through CIL in a timely fashion. The amendment would require local authorities and others benefiting from CIL to give a best-endeavours commitment. “Best endeavours” is a familiar term in legislation. It was used in the New Roads and Street Works Act 1991. Given the state of some roads in London, some may feel that even best endeavours are not enough, but it is much better than no promise of endeavour at all.
The commitment to delivery is a vital component of the current tariff system operating in areas such as Milton Keynes. Noble Lords may be aware of a BBC investigation in which a resident of Macclesfield used
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Lord Patel of Bradford: I will try to answer all the points that have been raised, although a few amendments have not been followed through. This group of amendments deals with three core themes: how CIL moneys can be spent; enforcement procedures; and compensation. I will deal with them in turn.
My noble friend Lord Berkeley cannot be here and I am grateful that my noble friend Lord Woolmer has spoken to his amendment. He seeks reassurances about the types of infrastructure that might benefit from CIL and asks that railways be included within the scope of the infrastructure to which CIL may be applied by explicitly listing it in Clause 202(2).
We fully recognise the importance of new rail infrastructure in supporting development and are clear that CIL should support railways where required. Equally, we recognise the irreplaceable role of other services in the lives of communities, such as police and emergency services. However, the amendment is unnecessary.
Let me explain. The purpose of the infrastructure list in Clause 202 is to illustrate the types of infrastructure CIL might finance by providing a wide definition of infrastructure. The list includes examples of infrastructure that CIL could fund without stipulating in detail every item that could benefit from CIL. It is not intended to be an exhaustive list, so the fact that a particular public service or facility does not appear does not mean that it cannot be funded from CIL. The list already covers railways through its inclusion of,
The nature of that definition goes further than the conventional concept of infrastructure, such as transport, schools, and flood defences. Because of its illustrative nature, the list also covers a range of other items that support the development of an area. That may include community facilities, schools and police and emergency services. Thus, the items addressed by the amendment already fall within Clause 202(2). We have no doubt about that. I hope that that reassures the noble Lord.
In reference to the infrastructure list in Clause 202, Amendment No. 438T, tabled by the noble Baroness, Lady Hamwee, would remove Clause 202(2) and (3) from the Bill, which set out the illustrative list of the infrastructure items that CIL might finance and our power to amend that list. Clause 202(2) defines infrastructure by reference to an illustrative list of the types of infrastructure that CIL might finance and does not seek to be exhaustive by stating each and every infrastructure type included. However, it serves the purpose of establishing the scope for appropriate infrastructure and offering some clarity and certainty about how CIL may be used. For instance, without
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Furthermore, by providing a list—albeit indicative—Clause 202(2) gives some indication to developers of the type of infrastructure that their moneys may fund. Removing the list risks a narrow interpretation, so limiting the choice of infrastructure that local authorities may use CIL to fund and potentially undermining their ability to use CIL to support their development plans. I therefore resist the amendment and want to retain Clause 202(2).
Amendments Nos. 442ZB, C and D, tabled by the noble Earl, Lord Caithness, would remove the possibility that authorities could use CIL revenues to pay for expenditure already incurred and to finance administration costs directly connected with the CIL system or the infrastructure funds. Although I recognise the concerns giving rise to the amendments, I will endeavour to explain why we believe that that is probably not the best way forward.
Taking first the suggestion that we preclude CIL from expenditure already incurred, the noble Earl may feel that that is carte blanche for authorities to misuse CIL by channelling it to finance infrastructure that has already been provided, rather than using it to finance new infrastructure or to improve existing infrastructure to unlock growth. I assure the Committee that that is not the intention behind Clause 202(6)(a). The Government have been clear that CIL is designed to support infrastructure for the development of an area, which is what Clause 198(2) provides as one of the purposes of CIL.
Clause 202(6)(a) provides the flexibility necessary to allow authorities to choose how to pay for the infrastructure that makes their communities conducive to growth. This might involve building a new train station or repairing an out-of-use station platform to enable new lines to serve the community. Let us suppose that two developments benefit from this infrastructure, one of which is commenced before the station is built or the platform refurbished and one after. The local authority has counted on CIL from both developments when deciding to fund the station. In such circumstances, it is perverse to insist that only the development that happens in advance of the delivery of the infrastructure should fund the station, while the CIL money from the other development cannot be used to reimburse any of the costs here. We need to enable authorities to collect CIL to pay for the costs of infrastructure that has already been built, but always within the context of providing infrastructure to support the development of an area. They could not get way behind in the development plan. I hope that this reassures the Committee of the intentions and the benefits of this component of the Bill.
The noble Earl proposes that we remove the power to enable authorities to spend CIL receipts on the administration system that directly supports the operation of CIL or the administrative expenses incurred in providing CIL-funded infrastructure. I thank the noble Lord, Lord Jenkin, for his input. I emphasise that our desire to resist this amendment is based purely on the flexibility brought by the retention of this power in the
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The amendment seeks to protect CIL funds exclusively for direct infrastructure delivery and to prevent authorities diluting the benefit to infrastructure by spending CIL receipts on administration costs. I understand that concern, but the removal of the power in Clause 202(6)(c) may be counterproductive. Local authorities may well argue that if they are to introduce CIL, we must equip them to do so. Providing the power to finance the costs directly associated with operating CIL will therefore be an important facility.
The clause has been constructed in such a way that regulations can control how money is spent here, and, crucially, in such a way that limits can be set on the amount of CIL contributing to administration costs. In this way, it allows revenues to be protected for their principal purpose while helping authorities to finance the cost of the system. This approach is entirely consistent with practice on existing charges. The revenue from the levy in business improvement districts, for example, may be spent on administration costs. I recognise that the amendment intends to maximise money for delivery. However, the most effective way of achieving this might be to maximise the number of authorities introducing CIL. Permitting them to finance the cost of the system from receipts could serve as a strong incentive, and greater take-up will benefit developers and communities alike. For all those reasons, I ask the noble Earl not to press his amendments.
Amendment No. 442ZAA in the name of the noble Baroness, Lady Valentine, seeks assurances that authorities and their delivery partners do their best to ensure that CIL revenues result in infrastructure on the ground. I am sympathetic to that aspiration, but the amendment is unnecessary and may be unworkable. CIL will facilitate the delivery of the infrastructure needed to support growth because it will provide necessary funding. However, “best endeavours” creates a significant legal duty of the kind that is placed on managers of airports to assist constables or others in searching buildings, aircraft and people under the Aviation Security Act 1982, and on governing bodies for schools to provide for the special educational needs of children under the Education Act 1996. Why should an authority be required to implement new measures in the delivery of a project simply because CIL is applied to that project? What about other local authority services? Other initiatives ensure that LPAs put infrastructure planning at the heart of the development planning process; for example, the new PPS 12 on local development frameworks.
Clause 202(1) contains a requirement to impose an obligation that CIL is applied, or caused to be applied, to funding infrastructure. Charging authorities would not be acting lawfully if they held CIL revenue indefinitely or spent CIL on things other than infrastructure. Another aspect of the amendment is that it calls for an assessment of what might be called a proof of effort, not only on the part of authorities, but also on the part of third party delivery agents. This requires proof of something that would be very difficult for authorities or third parties to demonstrate or for central government to assess.
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I do, however, appreciate that at its heart the amendment seeks to secure infrastructure delivery and hold authorities to account for their management and use of CIL revenues. The Government share this desire and for that reason the Bill already provides powers under Clause 202(7) to require authorities to monitor and report on their CIL activity. Local communities and developers will be able to spot any wrongful or inefficient use of CIL receipts and could exert pressure on a charging authority to make better use of moneys or to speed up delivery.
Therefore, I believe that we already have sufficient and measurable safeguards within the Bill and through pre-existing practices to achieve the intentions of this amendment. While I have sympathy with its intention, I believe, for the reasons I have set out, that the amendment is unworkable. I therefore ask the noble Baroness, Lady Valentine, not to press her amendment.
On Amendment No. 442A, the noble Lord, Lord Jenkin, said that one of the biggest issues was about stopping planning permission and then having no recourse or compensation, which the government amendment addresses particularly. But he raised a number of other issues on which I will write, if that is acceptable. I therefore ask him not to press his amendment.
Baroness Hamwee: Perhaps I may take the Minister back to a serious point concerning Clause 202(2) and (3). I am increasingly lacking in confidence that the Bill will work under the Government’s terms. Accepting that the Government want to set out the scope—I think that that was the term used by the Minister—of the types of infrastructure that a developer might be expected to fund under Clause 202(2), in order to have that certainty why are regulations needed under Clause 202(3) to,
It does not refer to the scope, but, I repeat, to the matters. I simply cannot understand how those two statements can lie together. I am not asking for a reply now. I am asking for this to be considered as perhaps the one constructive thing that I might have said this afternoon.
The Earl of Caithness: In case the fifth cavalry can come to the aid of the Minister, perhaps I may intervene. I listened with care to what he said, but he did not comment on my Amendments Nos. 442ZF, 442ZG and 442ZH, or on Amendments Nos. 442ZE and 438S. He covered the other amendment to which I spoke, but in his hurry to get through, he missed out speaking on these.
Lord Patel of Bradford:To address the issue raised by the noble Baroness, we will consider it and will write in some detail. Amendments Nos. 442ZF and 442ZG seek to remove the ability of regulations to decide the level of interest that may or may not accompany repayments of overpaid CIL from a charging authority to a developer. Instead, these amendments specify that where such repayments are made, they should do so with added interest of 3 percentage points above the Bank of England base rate. Let me
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On the matter of repayment, the Bill contains provision for regulations to be able to require repayment in cases of CIL overpayment, including where appropriate a suitable amount of interest. However, given the careful balance that needs to be struck by any such interest rate in incentivising the right amount of payment in the first place, this is an issue that the Government would prefer to set out in regulations rather than in the Bill. Overpayment by 3 per cent, as envisaged in the amendment, might actually encourage developers to overpay to secure a better rate of return from the charging authority than from a bank, and it would penalise a charging authority to pay out of public moneys interest, even if overpayment were made through no fault of its own.
I ask the noble Earl not to move his amendment and allow the Government to set out further detail on how charging authorities may be required to repay CIL-liable parties in cases of overpayment in regulations.
On Question, amendment agreed to.
[Amendments Nos. 438S to 442ZD not moved.]
Clause 202, as amended, agreed to.
[Amendment No. 442ZE not moved.]
[Amendments Nos. 442ZF to 442ZH not moved.]
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