PLANNING CONTRIBUTION

HC Deb 08 December 2003 vol 415 cc794-845

(1) The Secretary of State may, by regulations, make provision for the making of a planning contribution in relation to the development or use of land in the area of a local planning authority.

(2) The contribution may be made—

1. (a) by the prescribed means,
2. (b) by compliance with the relevant requirements, or
3. (c) by a combination of such means and compliance.

(3) The regulations may require the local planning authority to include in a development plan document (or in such other document as is prescribed)—

1. (a) a statement of the developments or uses or descriptions of development or use in relation to which they will consider accepting a planning contribution;
2. (b) a statement of the matters relating to development or use in relation to which they will not consider accepting a contribution by the prescribed means;
3. (c) the purposes to which receipts from payments made in respect of contributions are (in whole or in part) to be put;
4. (d) the criteria by reference to which the value of a contribution made by the prescribed means is to be determined.

(4) The regulations may make provision as to circumstances in which—

1. (a) except in the case of a contribution to which subsection (3) (b) applies, the person making the contribution (the contributor) must state the form in which he will make the contribution;
2. (b) the contribution may not be made by compliance with the relevant requirements if it is made by the prescribed means;
3. (c) the contribution may not be made by the prescribed means if it is made by compliance with the relevant requirements;
4. (d) a contribution must not be made.

(5) The prescribed means are—

1. (a) the payment of a sum the amount and terms of payment of which are determined in accordance with criteria published by the local planning authority for the purposes of subsection (3) (d),
2. (b) the provision of a benefit in kind the value of which is so determined, or
3. (c) a combination of such payment and provision.

(6) The relevant requirements are such requirements relating to the development or use as are—

1. (a) prescribed for the purposes of this section, and
2. (b) included as part of the terms of the contribution, and may include a requirement to make a payment of a sum.

(7) Development plan document must be construed in accordance with section 36(3).'.—[Keith Hill.]

Brought up, and read the First time.

4.22 pm

The Minister for Housing and Planning (Keith Hill)

I beg to move, That the clause be read a Second time.

Mr. Speaker

With this it will be convenient to discuss the following: Amendment (b) to the proposed new clause, in line 3, at end insert— '(1A) Both the payments under section 106 (planning obligations) and the planning contributions will be in the form of the planning condition and therefore both procedures will have the same provisions providing for an appeal to the Secretary of State.'. Amendment (c) to the proposed new clause, in line 12, leave out 'consider accepting' and insert 'accept'.

Amendment (e) to the proposed new clause, in line 18, at end insert

'but this cannot be wider in scope than the current "necessity test" as currently applied in the section 106 procedure.'. Amendment (f) to the proposed new clause, in line 20, at end insert

'(which where this includes the provisions of a benefit in kind this may not be a higher value than the alternative monetary payment).'. Amendment (g) to the proposed new clause, in line 20, at end insert— '(3A) The criteria referred to in subsection (3) (d) may amongst other matters set out—

1. (a) the charge per dwelling;
2. (b) the charge per square metre of all other developments;
3. (c) the minimum size of development to which the charge will apply;
4. (d) whether different charges will apply to "greenfield" and "brownfield" land;
5. (e) the percentage of affordable housing that must be applied to each development;
6. (f) the will not be any R.P.I. escalator attached to these charges.'.

Amendment (h) to the proposed new clause, in line 25, leave out paragraph (b).

Amendment (i) to the proposed new clause, in line 27, leave out paragraph (c).

Amendment (j) to the proposed new clause, in line 43, at end add—

'(8) Provided the planning authority have complied with all the regulations relating to planning contributions the Secretary of State may not cause a plan to be rejected or revised on the grounds that the authority have set the charge at too low a level.'. Amendment (k) to the proposed new clause, in line 43, at end add—

'(8) Provision may be made to enable periodic adjustment of the criteria mentioned in section (Planning contribution) (3) (d).But nothing in these regulations will permit any change in the quantum of the planning contribution unless there is a revision of the development plan document in subsection (7) above and any such change will be the subject to full community involvement.'. Amendment (1) to the proposed new clause, in line 43, at end add—

'(8) The Secretary of State will fully reimburse any local planning authority where it can demonstrate that there is a net cost to them in preparing these regulations.'. Government new clause 2—Planning contribution: regulations—

(1) This section applies for the purpose of regulations made under section (Planning contribution).

(2) Maximum and minimum amounts may be prescribed in relation to a payment falling within section (Planning contribution) (5) (a).

(3) Provision may be made to enable periodic adjustment of the criteria mentioned in section (Planning contribution) (3) (d).

(4) The local planning authority may be required to publish an annual report containing such information in relation to the planning contribution as is prescribed.

(5) If a document is prescribed for the purposes of section (Planning contribution) (3) the regulations may prescribe—

1. (a) the procedure for its preparation and the time at which it must be published;
2. (b) the circumstances in which and the procedure by which the Secretary of State may take steps in relation to the preparation of the document.

(6) Provision may be made for the enforcement by the local planning authority of the terms of a planning contribution including provision—

1. (a) for a person deriving title to the land from the contributor to be bound by the terms of the contribution;
2. (b) for a condition to be attached to any planning permission relating to the land requiring the contribution to be made before any development is started;
3. (c) for the enforcement of a planning contribution in respect of land which is Crown land within the meaning of section 293(1) of the principal Act.

(7) The regulations may—

1. (a) require the local planning authority to apply receipts from planning contributions made by the prescribed means only to purposes mentioned in section (Planning contribution) (3) (c);
2. (b) make provision for setting out in writing the terms of the planning contribution;
3. (c) make provision in relation to the modification or discharge of a planning contribution.

(8) The regulations may—

1. (a) make different provision in relation to the areas of different local planning authorities or different descriptions of local planning authority;
2. (b) exclude their application (in whole or in part) in relation to the area of one or more local planning authorities or descriptions of local planning authority.'.

And the following amendments thereto:

Amendment (a), in line 4, at end insert— '(2A) But nothing in these regulations shall enable either the Secretary of State or the local planning authority to raise the quantum of the planning contribution once—

1. (a) planning permission has been granted;
2. (b) that permission remains in force; and
3. (c) any condition relating to planning contribution has been agreed with the applicant.'.

Amendment (c) in line 5, after 'adjustment', insert 'either upwards or downwards'.

Amendment (e), in line 10, leave out subsection (5).

Amendment (f), in line 18, at end insert 'unless the local planning authority certify that the terms of the contribution have been fully met prior to any transfer of title taking place.'. Amendment (g) in line 22, leave out from 'made' to end of line 23 and insert 'at agreed stages of the development;'. Amendment (h), in line 34, at end insert—

'(7A) The Audit Commission will have a specific duty to ensure value for money in any case to which subsection (7) (a) applies.'.

Amendment (i), in line 37, at end insert—> '(7A) The planning contribution referred to in subsection (7) (b) must take into account any additional cost which the developer may be required to undertake at the request of any statutory body. If this occurs after the grant of planning permission the applicant will have the right to ask the local authority to reduce the amount of the contribution.'. Amendment (k), in line 41, at end add— '(c) state the grounds on which a local authority will decline to accept an amount agreed under subsection (2).'. Amendment (j), in line 41, at end add— '(9) Subsection (8) applies where two or more local planning authorities have prepared joint local development plans under the terms of section 27. Government new clause 3—Planning contribution: Wales.

Government amendments Nos. 21 to 24.

Keith Hill

I want to begin by describing the contents and purposes of new clauses 1 to 3 and amendments Nos. 21 to 24, and then set out the reasons for introducing these new provisions at this time and deal with some of the concerns that have been expressed about them.

New clauses 1 to 3 and amendments Nos. 21 to 24 will replace sections 106, 106A and 106B of the Town and Country Planning Act 1990, as amended by the Planning and Compensation Act 1991, as the legal basis for planning obligations. It is worth noting that the new clauses use the term "planning contribution" rather than "planning obligation". The effect of the amendments is to pave the way for the new approach to planning obligations that I announced to the House on 6 November 2003 and on which the Government are consulting.

A wide range of interests agree that the current system needs reform because it can be slow, uncertain and opaque. The Government's objectives are therefore to provide greater transparency and certainty for all stakeholders in the development. Our proposals also recognise that the ability to use negotiation to tailor contributions to the circumstances of an individual site is important. We want speed and certainty where possible, and flexibility where necessary.

New clause 1 allows the Secretary of State to make regulations that will enable local planning authorities to provide for and to accept a planning contribution in relation to the development or use of land in its area. We will publish draft regulations to inform debate in the other place, once we have considered the response to our consultation. The clause allows the contributions to be made by the provision of an amount set by the planning authority, known as "the prescribed means"—in the Government's consultation document the prescribed means are described as a new optional planning Charge—by a negotiated agreement, known as "the relevant requirements", or by a combination of the two.

The regulations may require the local planning authority to set out in a development plan document, or in another document, the types of developments in respect of which they are likely to seek contributions; developments where a contribution by payment of the amount set by a local authority will not be sought; how funds obtained through planning contributions will be used by the local planning authority; and how any contribution will be calculated. The regulations also provide for the developer to state, where a contribution is payable, whether he will pay the amount set by the planning authority or whether he will negotiate. Where the developer has made a contribution by one method, he may not be required to make further contributions relating to the same matters through the other method. The developer will therefore not be required to pay twice.

In some circumstances, a contribution must not be required by the local planning authority. A contribution made by the "prescribed means"—in other words, the charge—may consist of the payment of a sum calculated in line with criteria set by the planning authority in the development plan document or other document prescribed for this purpose or by providing a benefit in kind, again calculated in accordance with the criteria set out in the development plan document, or a combination of these two.

Mr. Geoffrey Clifton-Brown (Cotswold) (Con)

The fact that the proposals in the new clauses will be an optional alternative to the present section 106 agreement procedures is a critical point. Will the Minister make it clear that that is the case and confirm that nothing in the regulations will enable him, at any subsequent stage, to withdraw the present section 106 procedure?

Keith Hill

To the first question, I give an unequivocal undertaking that the new proposals will be optional. The developer will have the choice. As for the second question, I must say that however important a statutory provision may be, no statutory provision is for ever. It is impossible for any Minister ever to give the sort of undertaking that the hon. Gentleman appears to be encouraging me to give.

Mr. Clifton-Brown

Of course a Minister cannot bind his successors. I was asking the Minister to give an absolute assurance that the regulations contain nothing that would give him any powers to abolish the present section 106 arrangements.

Keith Hill

There is nothing in these regulations that would give the Secretary of State powers to abolish the section 106 regulations, subject to the provision that I explained about any future decision. We must recognise the realities and remember that single Administrations, never mind succeeding Administrations, may seek to change their minds in certain circumstances.

Where contribution is to be made by a negotiated agreement, the agreement must comply with the relevant requirements, and these will be set out in regulations. It is envisaged that, where the contributor opts not to contribute through the prescribed means, the negotiation will be able to cover all the matters that are currently covered.

New clause 2 sets out the types of matters that regulations providing for planning contributions may contain. Those include specifying the maximum and

minimum amounts a planning authority may set as a planning contribution made by the prescribed means, and allowing for periodic adjustment of the criteria for determining the value of planning contributions by the prescribed means—for example, the periodic adjustment could be based on the retail prices index, which would avoid the need for planning authorities to constantly change their documents setting out the planning contribution in order to ensure that the amounts retain their value. The regulations may also require planning authorities to publish an annual report, which could contain information on matters such as how the planning contributions have been implemented, the amounts obtained, and how contributions paid have been used.

4.30 pm

Sir Paul Beresford (Mole Valley) (Con)

The Minister said that he was looking for clarity and I agree that the section 106 system should be adjusted. However, a section 106 system will remain, with new tariffs introduced as an option, and it is not clear whether the choice will be made by the applicant or the local authority. There will be methods to vary or change the system according to the type of development that is requested, depending on the land and so on. Now the Minister tells us that under new clause 2 there could be adjustments in the value of the tariff. That sounds like a much more complicated procedure than the previous one, which was adjustable.

Keith Hill

The procedure is really not as complicated as the hon. Gentleman imagines. The developer will face a simple choice: to pay a charge set by the local planning authority, after a public consultation in relation to the character of the site or development; or to undertake a traditional section 106 negotiation. That is a simple and straightforward arrangement. Furthermore, where there is a charge, rather than the local planning authority having to be involved in an elaborate procedure for recalculating the charge, in the light of changing costs, it is suggested—it is merely a suggestion at this point; there is a consultation process—that one means of ensuring that such a periodic adjustment could occur would be to base it on the retail prices index.

Mr. David Curry (Skipton and Ripon) (Con)

What would happen when a planning development straddled local authorities or had a major impact on more than one local authority? Would there be a system of pooling? What would happen if two authorities opted for a different system and one decided to stay with the section 106 arrangements while the other decided on the tariff proposal?

Keith Hill

I can provide a straightforward answer to the first part of the right hon. Gentleman's question: there is provision for pooling, and we would encourage it where a development straddles two authorities. He raised a serious point about the possibility that local planning authorities might adopt different policies and I cannot offer him a flip answer at present. There is a consultation process and we shall want to look into those matters carefully.

Mr. John Hayes (South Holland and The Deepings) (Con)

rose—

Keith Hill

I give way to the hon. Member for South Holland and the wonderful Deepings.

Mr. Hayes

I am grateful to the Minister.

I gather from what the Minister said to my right hon. Friend the Member for Skipton and Ripon (Mr. Curry) that he is willing to take advice and to listen to comments on this matter. In two-tier authorities, the county council may have a responsibility for some aspect of local government that it shares with a district authority, or a number of district authorities, each of which may take a different view. The matter could thus be even more complex than my right hon. Friend suggested, because a development could straddle many authorities in one area; it is a question not only of horizontal boundaries but of vertical boundaries between different tiers of authority.

Keith Hill

The hon. Gentleman tempts me down the path of tierism, which is dealt with elsewhere in the Bill. In the example that he cited, county councils will continue to retain planning responsibilities for specific matters, notably waste and minerals. On the whole, however, the material consideration in any planning policy devised by a local planning authority will be the regional spatial strategy. Obviously, no policy will be advanced by a local planning authority that does not take cognisance of the regional spatial strategy, so to that extent, when we are dealing with a possible section 106 negotiation, under the terms that I am attempting to set out for the House, we shall be considering a policy in relation to the development that has already been established in the local plan by the local planning authority, having taken into account all the proper influences to be considered in finalising such a policy.

It will be in the light of a developer's response to the policy set out for a particular area that the application will be made and the negotiations that we are discussing will take place.

Mr. Clifton-Brown

rose—

Keith Hill

I see that the hon. Member for Cotswold (Mr. Clifton-Brown) wants to get in on the act.

Mr. Clifton-Brown

The Minister has just raised an interesting issue. What role will the regional planning body and the regional spatial strategy have in the new tariff proposals and, indeed, in the existing section 106 procedure?

Keith Hill

I think that I am right in saying that it is anticipated that the regional planning body will have no direct bearing on the procedures that we are debating. They are essentially for the local planning authority to deal with, subject to the usual scrutiny by the Secretary of State that applies to most planning matters. There is no direct role in the process for either the regional planning body or the regional spatial strategy.

Sir Sydney Chapman (Chipping Barnet) (Con)

rose—

Keith Hill

I cannot resist giving way to the hon. Gentleman.

Sir Sydney Chapman (Chipping Barnet) (Con)

I am trying to save the House time by asking this question now. I cannot determine for sure from reading new clauses 1 and 2 whether a local planning authority will have complete power to decide the spectrum of planning applications in respect of which the planning contributions may be made, or whether the rules or the areas where they apply will be set by the Secretary of State. It might help the House to know the definitive answer to that now.

Keith Hill

I am grateful to the hon. Gentleman for raising an important issue. Perhaps I can put the matter in perspective by pointing out that it is estimated that no fewer than 98.5 per cent. of planning applications are not subject to a section 106 negotiation. In other words, we are dealing with a minuscule minority of planning applications, albeit the larger applications within the major application umbrella. Having said that, in some circumstances, in relation to a particular site or development, the local planning authority may decide that it will not impose a planning obligation. For example, the local planning authority may well decide that, in respect of a site that has a high level of contamination, where the costs of remediation will be extremely significant, it would be inappropriate to impose any sort of planning charge on the process.

To give another example, if a site has a multiplicity of owners, the local planning authority might deem the development to be sufficiently complex to discourage it from wanting to impose a planning obligation. However, it will be for the local planning authority to identify the sites and developments on which it will expect the negotiations to take place. In no sense will that be rocket science: such considerations will apply to the sorts of site in respect of which the negotiation takes place now. The House must remember that the point of the new arrangements is to provide all the stakeholders, to use the jargon—the developer, the local planning authority and the local community—with a high level of predictability and transparency about what will occur in terms of charges relating to a particular development.

Sir Sydney Chapman

I am grateful for that answer, but. I remain concerned. The Minister says that 98.5 per cent. of planning applications do not involve section 106 agreements. However, because the measure is a money—raiser for a local planning authority, it might want to extend the area in which it can introduce this alternative to a section 106 agreement. May I have his assurance that, if necessary, the Government will issue regulations ensuring that the present area in which section 106 agreements apply cannot be extended?

Keith Hill

It certainly would not be the Government's intention or desire to permit a manipulation of the existing arrangements. Those are fairly well defined. The considerations that need to be taken into account in relation to a planning obligation negotiation are fairly well understood in the planning community, so to speak. The hon. Gentleman is greatly experienced in these matters and more familiar than I am with the usual considerations that need to be taken into account. We are consulting, initially on the principles of the matter and subsequently on the detail. The Government will play their full part and consider what limitations they want to impose on the process.

Mr. Andrew Turner (Isle of Wight) (Con)

I have followed with care and interest the Minister's argument and the interventions of my hon. Friend the Member for Chipping Barnet (Sir Sydney Chapman). When a negotiation is taking place, it is possible for the applicant's agents to see how the money is to be spent. It might be spent on a school, a road, a work of so-called public art or a social housing obligation, but when money is simply handed over against a tariff to the local authority, there is no knowing what it will be spent on. How do the Government intend to ensure that money that is handed over is spent on such projects, and does not simply release resources to be shifted from the budget where they would have been spent, rather like some people have suggested tuition fees might be, into another budget?

Keith Hill

Or, one might say, into keeping down the council tax, for example. I take the hon. Gentleman's point, which is extremely important. We have made it clear throughout our consultation and proceedings that we expect the local authority to define in advance the purposes for which the charge will be used, and we propose an annual report that will contain information on how matters such as the planning contributions have been implemented, the amounts obtained and how the contributions paid have been used. The hon. Gentleman is right that it is fundamental that there should be maximum clarity on the matter.

Several hon. Members

rose—

Keith Hill

I could say that I ought to get on with describing the provisions, but as we are in a quasi-Committee stage, I give way to the right hon. Member for Skipton and Ripon (Mr. Curry).

Mr. Curry

The subject of housing is central to the debate. It is probably true that a majority of social housing is built through planning gain. Would the provision supersede the arrangements whereby, if a developer wishes to build market houses, he must build a certain proportion of social houses or affordable houses as well? If that is the case, what guarantees are there that the planning authority will choose not to put its receipts into social housing, so that the social housing sector might be left with difficult developments while the market housing developer might opt to pay the tariff in order to concentrate on the simpler development?

Keith Hill

It will be open to the local planning authority to define the purposes for which the charge will be imposed. If it were the desire of the local planning authority, that could include an element for affordable housing. Indeed, part of the terms of the charge could be that that element of affordable housing could be provided by means of either a financial contribution or an in-kind provision on site. It goes without saying that it will remain open for local planning authorities to attach the usual conditions on affordable housing to planning permission.

Mr. Curry

If a developer develops a site of a certain size, the rules require a mix of market and affordable housing. Will the proposals remove that requirement and leave planning authorities the discretion to use some of their funds for affordable housing? It is a structural aspect of the system at the moment that the building of market housing triggers the construction of affordable housing.

4.45 pm

Keith Hill

The right hon. Gentleman raises an issue of serious concern to which I shall refer later. Let me give him an assurance that no part of the arrangement should impede the extent to which current provisions for affordable housing would be part and parcel of the system for planning permission and developments relating to section 106 negotiations and the proposed charge. The arrangement will simply facilitate the process and make it more transparent and predictable. I propose to deal with that matter in more detail toward the end of my remarks.

Mr. Hayes

rose—

Sir Paul Beresford

rose—

Keith Hill

I see that two further Conservative Members are anxious to intervene. I shall take their interventions on the House's understanding that I will then move on.

Mr. Hayes

The Minister is showing his customary courtesy and generosity. I want to pin him down on what would happen to local authorities if they did not use the money in the way in which he and local people would wish, which was made clear in the earlier description that we heard. In reply to my hon. Friend the Member for Isle of Wight (Mr. Turner), the Minister said that local authorities would need to make their plans clear and that annual reports would be written on what they had done. However, I understand that there are no sticks—no real sanctions or powers—to oblige authorities to do what they say that they will, in detail or substance.

Keith Hill

The hon. Gentleman needs to understand and frame the new provisions in the general context of the far more open and engaged process in the planning sphere that we anticipate as a result of the Bill. We welcome his presence on the extended Office of the Deputy Prime Minister Conservative Front-Bench team. I do not know whether he is billed as a shadow Secretary of State in that team because there seem to be quite a lot of them. As he has come to these issues only recently, there is no reason why he should know that, as a result of the measure, every local authority will be required to produce a statement of community involvement. It is the Government's desire to ensure that there is maximum community involvement and front-loaded engagement with any planning development or set of planning developments under the measure.

The hon. Gentleman's anxieties about the possible non-use—I shall not say misuse—of funds arising from the arrangement need to be set in a local, political and electoral context. If the moneys were not used for the purposes for which they were intended, we would all anticipate a strenuous local response, which would exert great local control on the situation. Having said that, we shall have to give serious consideration to the possibility of giving the Secretary of State a reserve power in such circumstances, but that is a matter for consideration and consultation after which we may come forward with firmer proposals.

Sir Paul Beresford

Bearing in mind the Government's reaction to the pooling of capital receipts and redistribution, if there is a local authority, or a group of local authorities, where there has been considerable development, and if this tariff or betterment tax turns into a windfall tax, how sure can the House be, particularly in the light of the Minister's previous answer, that it will not be reflected in either redistribution or reflected directly in the grant to those local authorities in the ongoing years?

Keith Hill

That is a good try on the part of the hon. Gentleman, but there are no intentions along those lines.

I was saying that planning authorities will need to set out their planning contributions policy in a document. New clause 2 allows the Secretary of State to set out the procedure for preparing and publishing the local planning authority's policy on planning contributions. Where the local planning authority fails to prepare such a document, the Secretary of State will have powers to intervene.

The ability to enforce any obligation to pay a contribution will be important. Subsection (6) of new clause 2 provides for that. A person who has derived title to the land after a commitment to make a planning contribution has been entered into will be bound by the terms of the contribution. That reflects the provision contained in section 106. There is also the attaching of a condition to a planning permission requiring payment of the planning contribution prior to the commencement of the development. The enforcement provisions may also apply to Crown land where a planning contribution has been agreed in respect of Crown land.

Subsection (7) of new clause 2 enables regulations to require the planning authority to spend receipts from planning contributions made by the prescribed means—the amount set by the planning authority—on the matters set out in its planning contributions policy, set out in the development plan document or other document. This provides the transparency that Opposition Members have been correctly concerned about so that everyone—in particular those paying the contribution—will know how the contributions will be used. The regulations will set out the mechanism for setting out the terms of the planning contribution in writing.

Provisions can be made for the modification or discharge of a planning contribution. It is intended that such provisions will be similar to those contained in sections 106A and 106B of the Town and Country Planning Act 1990. Subsection (8) of new clause 2 enables the Secretary of State to make different provisions for different areas or descriptions of local authorities and also to exclude particular areas or descriptions of local authorities. That power might be used where, for example, a smaller local authority was exempted from having to set prescribed means in its planning contributions policy because it rarely negotiates planning obligations under the existing system.

New clause 3 applies the planning contribution provisions to Wales. It confers on the National Assembly for Wales the same powers in relation to the planning contribution as the Secretary of State has for England and it substitutes the local development plan for the development plan document as the document in which planning contributions should appear, unless another document is prescribed.

Mr. Clifton-Brown

New clause 3 is breaking new ground. In effect, it gives the Welsh Assembly a large tax-raising power. What assurances can the Minister give us that, in devolving this amount of power to the Welsh Assembly, we will not suddenly find that obligations in Wales become much more onerous for developers than obligations in the rest of the United Kingdom, thereby stifling economic growth in Wales?

Keith Hill

I think that the hon. Gentleman went a limited way to salvaging his position by his last observation, but I am rather shocked by his intervention. Why should we expect that the Welsh will abuse the system? That is an outrageous suggestion. We have no reason to believe that the Welsh Assembly will behave in anything other than an entirely proper manner. Amendments Nos. 21 and 22 provide that regulations made under the planning contribution provisions will be subject to the affirmative resolution procedure. That means that the House will have the opportunity to see the regulations before they are made.

Amendments Nos. 23 and 24 provide for the repeal of sections 106, 106A and 106B of the Town and Country Planning Act 1990.

I come now to our reasons for introducing the proposals now. Planning Bills are few and far between, so we are taking the legislative opportunity that the Bill represents to reform an area of planning policy that stakeholders from all sides agree needs reform. Introducing the amendments now does not preclude a full discussion on how our reforms might work, nor close off debate on the matters raised in the consultation document. I assure the House that we are listening carefully to the interested parties. Already, we have consulted face to face with hundreds of people drawn from local authorities across the country, a diverse range of businesses and their representatives, and those who are interested in the provision of affordable housing, which is the single biggest use of planning obligations. We are encouraging everyone to respond to the consultation and we will proceed by means of deliberation and discussion throughout. We will ensure that we put as much information as possible before Parliament as it considers our proposals.

Mr. Clifton-Brown

I am grateful to the Minister for giving way. He has been generous. His parliamentary answer to me said that, in the first lot of responses to the original consultation, by far the majority of developers opposed a tariff system. If his second consultation shows that by far the larger number of respondents, other than local authorities, oppose the proposals, will he withdraw them?

Keith Hill

I could not possibly give that undertaking, but looking at the responses to the tariff proposals, the proportion within the industry was about 60:40 in favour. We have begun our discussions, and our impression is that we are receiving a positive interest on the part of the industry, the housebuilders and developers, in the proposals. I have no reason to expect a negative response on these matters. We are a listening Government, but if we think it right, we will proceed with our proposals, and we should do no other. I can tell from the hon. Gentleman's body language that he agrees with me, and in the unlikely event that he were ever in my position, he would do exactly the same thing.

I want to deal with two concerns that have been raised about the proposals. The first is that this is in some way a tax on development. That is untrue. The charge will have to relate to planning matters, as the existing system of negotiated obligations does now. Under our proposals, the level of the planning contribution can be set out in advance and in public, which will allow it to be tested. New clause 2 ensures that we have a power to require that the charge be applied only to the matters identified in the local authority's planning contributions policy, and the developer can opt not to pay the charge at all, but to negotiate over what level of contribution to offer.

The second concern, which has already rightly been raised by the right hon. Member for Skipton and Ripon, is that in some way the new arrangements might undermine provision of affordable housing. I recognise that that is a matter of importance to Members on both sides of the House. The Government are determined to drive forward their agenda for mixed, socially inclusive and sustainable communities. Our consultation document invites views on the best way to provide affordable housing within the reforms.

The House will know that the Government have also issued a consultation on changes to their policy on planning for housing. Our proposed provisions place a new and vital emphasis on planning for the housing needs of the whole community. Planning obligations are one tool that local authorities can use to develop the housing that they need. The House will note that we are not precluding what is currently possible in our new approach. I draw attention to the possibility, which we have provided for, that the charge could be sought either in kind or in cash. One can draw parallels between this and the two main ways in which affordable housing is currently provided through section 106. Precisely how the new arrangements can best be used to deliver our affordable housing objectives is something that we will want to work through as part of our consultation, and we are already talking inside the Government and beyond about how that can be achieved.

5 pm

Mr. Jim Cousins (Newcastle upon Tyne, Central) (Lab)

Will my right hon. Friend give way?

Keith Hill

How can I resist my hon. Friend—a lone voice from the Government Benches?

Mr. Cousins

It is kind of my right hon. Friend to refer to me in that way.

Can my right hon. Friend explain what he means when he refers to a contribution in kind? Might such a contribution mean that some of the housing to be created in a housing development could be dedicated for the use of a social housing provider?

Keith Hill

If I may say so, my hon. Friend is a lone but valued voice on the Government Benches.

Of course, it will be open to the local planning authority to stipulate in setting the terms of the charge the ways in which the developers will be expected to deliver on that charge, if it were to be a contribution in kind. It will be open to the local planning authority to indicate whether it would expect an element of contribution in kind. I fully expect the authority to set out in some detail the terms of that in-kind provision. I hope that that goes some way towards reassuring my hon. Friend.

Mr. Curry

I see from the body language of the hon. Member for Newcastle upon Tyne, Central (Mr. Cousins) that he, like me, feels a pall of incomprehension descending on him. What is the difference between a tariff delivered in kind and an old section 106 agreement?

Keith Hill

There is none in principle, but it would certainly be open to a local planning authority to stipulate that its charge could be delivered in the form of a financial contribution, a contribution wholly in kind or a contribution that is partly in kind and partly financial. That is matter for the authority to set out as part of the charge.

Mr. Curry

In that case, a charge defined as in kind and not in cash might well refer to x number of affordable houses or x provision in education or community centres. Is that what the Minister means by "in kind"? Is he saying that the charge would specify the amount to be delivered and that, while section 106 involves a negotiation, the amount would be clearly set out? Is that the difference?

Keith Hill

The right hon. Gentleman has it. Again, as part of the clarity, transparency and predictability of the arrangement, such a stipulation could be made as part of the charge set by the local planning authority, but of course, whether the developer takes that path or the traditional negotiated path remains a matter of choice.

With those explanations and reassurances, I commend Government new clauses 1 to 3 and Government amendments Nos. 21 to 24 to the House.

Mr. Clifton-Brown

I rise to speak in support of all the amendments standing in my name in respect of Government new clauses 1 and 2.

As I did not declare in the debate on the programme motion my interests as stated in the Register of Members' Interests, I should like to do so now: I am a fellow of the Royal Institute of Chartered Surveyors and I have property interests that are not currently likely to benefit from the provisions, but may conceivably do so in future.

Having got that off my chest, I shall now seek to press the Government on a number of matters, as we are entering a very wide field in debating the new clauses. Despite the Minister's assurances, if what is proposed is not carefully controlled by regulation, it could become a tax by another name. Given that the planning obligations did not have to be published until 1 July 2002, the Government are proceeding with a whole range of changes to the planning system on the basis of information that they have received only since then. The only definitive study on the subject is by John Hennebury of Sheffield university, who, although drawing on information from only 45 local authorities, tells us that the average value of planning applications is £148,000 in the north of England and £753,000 in the south of England. He further says that it is common for negotiations on section 106 agreements to last from one to eight months, but a small number last for up to four years and a very few take five years or more. It would be interesting to see whether the Minister's alternative system will deliver a quicker route to the developer.

My main concern is that the Government are producing a voluntary alternative that will require planning authorities to carry out a huge amount of work to set it up. The Bill is already exceedingly complex, with a raft of regulations several inches thick. Planning authorities will have enough difficulty in coping with those complexities, but the Minister proposes to lay even more on top by changing the section 106 procedure at a time when many authorities in the south of England are desperately short of planning officers. I would not be surprised if some authorities were simply to grind to a halt as a result. I predict that, far from delivering a quicker, more transparent planning system, the Government will deliver a system that leads some local authorities into chaos.

Matthew Green (Ludlow) (LD)

I am a little confused. I had understood Conservative policy to be in favour of decentralising powers to local councils, yet, although the proposal gives local councils decision-making powers on what is appropriate in their areas, the thrust of the hon. Gentleman's argument appears to be that that is far too complex a matter for local people to decide, and that it is better decided by the Secretary of State.

Mr. Clifton-Brown

As usual, the hon. Gentleman is being mischievous. He knows perfectly well that the forthcoming regulations will prescribe exactly how the local authority is to fix the tariff.

In the absence of my amendment (a), which was not selected, I am pleased that the Minister has categorically confirmed that there will be a voluntary option for developers and that the regulations will in no way withdraw the current section 106 procedure.

I therefore move rapidly on to amendment (b), which says: Both the payments under the section 106 (planning obligations) and the planning contributions will be in the form of the planning condition and therefore both procedures will have the same provisions providing for an appeal to the Secretary of State. The Minister did not deal with appeals. Under the section 106 procedure, there is clearly a right of appeal for a developer who cannot reach agreement with the local authority on, for example, the level of payment. I can see nothing in these measures that provides for such an appeal. Will the Minister clarify that?

Keith Hill

I assure the hon. Gentleman that there is a right of appeal.

Mr. Clifton-Brown

That is excellent and positive news—we are making great progress.

Amendments (c) and (d) are straightforward. Amendment (c) would amend paragraph (3) (a) of the new clause, which refers to a statement of the developments or uses or descriptions of development or use in relation to which they will consider accepting a planning contribution". My amendment would clarify that by stipulating that they will accept, rather than consider accepting, a planning contribution. The converse of that is in the Government's wording of new clause 1(3) (b), which refers to a statement of the matters relating to development or use in relation to which they will not consider accepting a contribution by the prescribed means". I have simply amended that so that it would refer to a statement of the matters relating to development or use in relation to which they "will not accept" a planning contribution. It would therefore be quite clear what they would or would not accept. I would be grateful for the Minister's observations on the re-wording set out in those amendments.

Amendment (e) is perhaps the most important of the lot. It proposes to insert at the end of line 18: but this cannot be wider in scope than the current 'necessity test' as currently applied in the section 106 procedure. I want to spend a little time on this because, if the Minister's assurances that this provision is not simply to be a tax by another name with an ever-widening scope, he must live up to the spirit of my amendments. I would like to outline the grounds for applying a section 106 agreement, and to ensure that the new procedure will cover the same grounds but no wider ones. If that were the case, we could make progress, and I shall seek assurance from the Minister on that matter.

The following requirements have to be observed in the section 106 procedure: that the planning obligations should deliver high quality, sustainable development…continue to provide affordable housing…help deliver the physical investment needed to secure high and stable economic growth and higher productivity…be more transparent to all stakeholders in the planning process…provide an effective mechanism for delivering desirable development without causing delays …not impose financial burdens on developers which in themselves deter desirable development; and be sufficiently flexible to reflect the circumstances of individual proposed developments. I hope that we shall hear from the Minister that those seven key requirements of the section 106 procedure are to be followed when setting the new tariff procedure.

The procedure originally set out in section 106 of the Town and Country Planning Act 1990 involved a necessity test, which stipulated that it was necessary to compensate strictly for the development itself. Case law has widened that definition somewhat, in particular the Tesco case in 1995, which came up with a new de minimis test. That test provided that, if the compensation was in any way related to the development, such action would be in order. However, I do not see anything in the new clauses that would give us the clarity that developers need, and I make a plea to the Minister that, when he introduces the regulations, he should clarify exactly what can be expected from the current section 106 procedure and from the new tariff procedure. That would greatly help developers when they come to negotiate or pay the tariffs.

Mr. Andrew Turner

I am being well educated by hon. Members on both Front Benches in this debate, and I thank them for that. Will my hon. Friend assist me by repeating the words in the necessity test, because I am rather surprised that it could be interpreted as requiring the provision of social housing?

Mr. Clifton-Brown

As my hon. Friend knows, the provision of social housing is dealt with in the former Department of the Environment circular 1/97. That, too, forms part of the section 106 payment. If my hon. Friend will allow me, I will deal with that matter when I reach amendment (g) and, in particular, its reference to paragraph (e). I shall also be asking the Minister some questions on that point.

It is important for developers to have clarity on what is required from this new tariff.

My amendment refers to the statement in the new clause that the charge must be revised at regular intervals. That should include the ability to revise the charge upwards and downwards. We do not know what the economic situation is likely to be in the future. We hope that the rate of this country's performance will continue to grow, but supposing it does not and the economy goes into recession, it would be nonsense to have a system that ratcheted up section 106 or tariff payments just when we were going into recession. We must consider that carefully.

My amendment (f), which is important, deals with the question of benefits in kind. I should like to quote the report on affordable housing that the Select Committee on Office of the Deputy Prime Minister: Housing, Planning, Local Government and the Regions published in the 2002–03 Session. I think that the Government have an inflated idea of how much section 106 or tariff payments will yield. In paragraph 41, the report states: The supply of affordable housing through planning agreements is reliant on the development of profitable private housing. Many submissions argued that there was only a limited amount that could be demanded from developers in planning gain if their developments were to remain viable. There are increasing demands on developers to contribute to a wide range of 'planning gains' including transport infrastructure, social and community facilities and schools. We need to know precisely what the Government have in mind when they say that the payment may be made in kind. Should the value be the same as if it was a cash payment, or will it be less? How will affordable housing be provided?

David Wright (Telford) (Lab)

rose—

Mr. Clifton-Brown

It may be relevant to refer to some of the problems with affordable housing, and I shall do just that when I have given way to the hon. Gentleman.

David Wright

Does the hon. Gentleman agree with me that one of the major problems is the fact that many local authorities do not carry out comprehensive housing needs and housing market assessments? They fail to translate calculations on the number of new homes that are needed into their planning strategies. They need to do that to make the system work. It is no good laying the blame at the Government's door. Local authorities need to get a grip of the issue.

Mr. Clifton-Brown

I have some sympathy with the hon. Gentleman's comments. Under the present system, before the Bill becomes an Act, the Government lay down numbers in the regional planning guidance, and county councils negotiate with the authorities in their area or the unitary authorities, which are required to build that number of houses. Many authorities up north and, I suspect, in the hon. Gentleman's area do not achieve the numbers that they set out in their own plans: that is, if they have got a development or structure plan. There needs to be a much closer correlation between the numbers set out in the local structure and unitary plans. If those numbers are in the plans, they should be achieved. Some authorities in the south build more than they set out in their plans, which is what we all want to see, because if they build more housing, they will provide more affordable housing.

Matthew Green

Not all local authorities struggle to build the number of houses that they are allocated. Sometimes the allocation is too small. In the South Shropshire authority there is a great need for a larger housing allocation, as has been identified by a housing need survey carried out last year. I am hopeful that the Minister will deal with that problem. I would not want the hon. Member for Cotswold (Mr. Clifton-Brown) to leave the impression that the problem with housing numbers is purely one of local authorities being asked to build too many. The problem can be the other way round.

Mr. Clifton-Brown

If the hon. Gentleman had listened to my reply to the hon. Member for Telford (David Wright), he would have heard me deal with exactly that point. Hansard will bear that out. Sometimes local authorities want to build more than the number of houses specified in the plan, and I see nothing wrong with a plan providing for greater numbers than are set out in the regional planning guidance, provided that it is carefully worded.

I do not want to be sidetracked too much, as there may be other opportunities to discuss this issue. We should not concentrate entirely on numbers, although they are important, and the Bill will change the procedure completely: the arrangements will be set out by the regional planning body in the regional spatial strategy and will, I understand, be more or less binding for each authority. Whether authorities will be able to deliver is, of course, another matter. I want to discuss how affordable housing can actually be provided.

Paragraph 52 of the Select Committee report says: Contributions towards affordable housing secured through the planning system so far have been modest and the potential is inevitably limited. The Government has unrealistic expectations about the contribution which planning gain can make to meeting the need for affordable housing. Demands on the developers are limited because the scheme has to remain commercial viable. The use of brownfield sites can reduce profitability and there are increasing demands on the developers to pay for a wide range of facilities. The major contribution by planning agreements is to promote mixed tenure development. We all agree with that, but the report goes on to say: However, the value of the contributions from developers through the planning system can be increased. To achieve this, councils need to follow best practice. They also need powers to specify the balance between social rented and intermediate tenure housing on a site by site basis to take forward the conclusions of their housing need assessments. The question for the Minister, posed by amendment (f), is this. How will he ensure not just that the correct amount of affordable housing is provided through planning obligations, but that enough social rented and intermediate-tenure housing is provided? How will he ensure that the planning authorities can deliver the mixed-tenure estates that I have seen working so well in Manchester? Let me say in passing that the right to buy produces such estates.

Amendment (g) deals with the criteria that must be specified. We need to hear from the Minister precisely what they are. In particular, we need to know how the section 106 and tariff charges will apply to not just residential but commercial developments. The amendment asks the Minister to specify whether there will be a "charge per dwelling" and a charge per square metre of all other developments We need to know whether there will be a charge in respect of the provision of social housing in the context of commercial developments.

These are not academic questions; they are real questions, which developers are asking at this very moment.

Paragraph (c) of the new subsection (3A) refers to the minimum size of development to which the charge will apply". Paragraph 47 of the Select Committee report tells us: Planning Circular 6/98 limits the negotiation of planning gain to housing developments of at least 25 dwellings or one hectare in urban centres and 15 dwellings or 0.5 hectares in London. Can the Minister confirm that the new regulations will continue those arrangements so that smaller developments are not caught in the net of the new tariff procedures? Many small builders throughout the country will want to know the answer to that question.

Mr. Mark Field (Cities of London and Westminster) (Con)

Is it not rather hamfisted to legislate for arrangements in London as a whole, apart from the rest of the country, rather than applying different restrictions to inner London or other parts of the built-up south-east?

Mr. Clifton-Brown

Indeed. Each local authority will need to set a different tariff, and flexibility will be needed within it. But the regulations do not yet make it clear whether that will be possible, or whether just a single tariff will be applied in a local authority area. If that proves so, it could lead to some very worrying results. In many authorities throughout the country, particularly the bigger ones, part of the authority is experiencing economic growth and another part is either stagnant or declining. Whatever tariff level is set, it will be too high for one part or too low for the other. My hon. Friend the Member for Cities of London and Westminster (Mr. Field) therefore makes a very good point.

David Wright

I am trying to be helpful to the hon. Gentleman, but I am now somewhat confused by the amendment. He has just suggested that we would need to examine the issue on the basis of each local authority, and that some flexibility would be needed. However, his amendment specifies in great detail what is required and asks the Secretary of State to set that out. I cannot understand where he is coming from in this regard.

Mr. Clifton-Brown

My hon. Friend the Member for Cities of London and Westminster was asking about a more general point.

David Wright

I am trying to be helpful.

Mr. Clifton-Brown

The hon. Gentleman is being very helpful. As I understood it, my hon. Friend's question was a general one that did not relate to this particular amendment. He will doubtless say if that is not the case, and if so I shall answer the alternative question that he may put to me.

Proposed new paragraph (d), in amendment (g), deals with different charges for greenfield and brownfield land. It is essential that this issue be dealt with if we are to encourage the development of brownfield land. Paragraph 39 of the consultation paper states: The charge could be set at different levels for different types of development—such as brownfield and greenfield development or for residential and commercial development. I ask the Minister simply to confirm whether that would be possible.

The percentage of affordable housing is an issue that I have already dealt with in some depth, so I turn to an interesting matter that the Minister let slip today, although I was already aware of it: the question whether these charges will include a retail prices index escalator. I have never heard of an RPI escalator being applied to what is, in effect, a development tax. Let us suppose that, as I said, the economy was not growing but was in recession, and yet an RPI escalator was applied to the charges. Suddenly, there would be little if anything in the way of larger developments. That could produce an absolutely nonsensical situation.

Mr. Mark Field

Surely it is rather idiotic to have any form of RPI escalator. At a given time, the RPI could be quite different from the rate of inflation in the world of development. As my hon. Friend rightly pointed out, the property market could be booming while the RPI is fairly static—indeed, one might argue that that happened in London and the south-east in recent years; likewise, the two could move in opposite directions. Either way, we are talking about the use of a somewhat artificial option to try to ensure that a correct market is put in place. I shall be interested to hear what my hon. Friend has to say about the use of this RPI system, instead of a system that takes account of changes in regional property markets, or in the market in the country as a whole.

Mr. Clifton-Brown

My hon. Friend makes a very good point indeed. Such charges ought to be adjusted through the annual report system, and thence through the development plan system.

Keith Hill

Before the hon. Gentleman moves on, I should be fascinated to hear his response to the intervention of the hon. Member for Cities of London and Westminster (Mr. Field). If I am not mistaken, the hon. Member for Cotswold (Mr. Clifton-Brown) said that the suggestion made was a very good idea. Let us be entirely precise. The RPI is probably running at some 2.5 per cent., yet house prices in London and the south-east are probably growing at a rate of 11 per cent. Is the hon. Gentleman suggesting, on the Opposition's behalf, that if such a system is to be applied, it probably ought to be based on the rate of housing price growth, rather than on that of retail price growth?

5.30 pm

Mr. Clifton-Brown

I am grateful to the Minister for muddying the waters still further. Personally, I do not think there ought to be an escalator at all. There is not one in the current section 106 procedure and the regulations provide a perfectly adequate mechanism for revising the charges upwards and downwards through the annual report, which is translated into the development plan and is subject to community involvement and discussion with developers. That seems to be the proper and fair way of dealing with the matter, rather than having an automatic escalator. If inflation went up—it may well do as a consequence of the Government's tax proposals—and the RPI escalator was in operation, no developers might come forward, to the significant detriment of this country.

Mr. Mark Field

The Minister misunderstood my point. Ten years ago, the property market was moving quickly downwards and RPI inflation stood at 7 or 8 per cent. I am sure that the Minister will point out that that was under a Conservative Government. Nevertheless, my hon. Friend will agree that using an escalator at that time would have had a catastrophic effect on any new development proposals, as the tariff would have made them entirely uneconomic.

Mr. Clifton-Brown

My hon. Friend is right to point to the fact that when economic circumstances are unstable and inflation is likely to be high, we are probably heading towards recession, which could put us in a difficult economic situation. At such a time, property development needs a boost, not the other way round. The RPI escalator could hasten a recession, rather than being a sensible measure to alleviate one. The Minister will need to examine the proposal carefully.

Amendments (h) and (i) are probing amendments to see what the Government mean by removing the clauses concerned. Amendment (j) states: Provided the planning authority have complied with all the regulations relating to the planning contributions the Secretary of State may not cause a plan to be rejected or revised on the grounds that the authority have set the charge at too low a level. The House will be aware that the mechanism will work by negotiation—subject to community involvement and negotiation with developers—after which the local plan will be made. Under the Bill, the Secretary of State has reserved huge powers to himself to cause the plans to be amended. It would be reprehensible if, having gone through all that community involvement and negotiation with developers—that is likely to take some considerable time and to delay plans considerably—the Secretary of State said that the charge was too high or too low and that it should be set at a different level. That flies in the face of local democracy. I hope that the Minister will give us some reassurance on that point.

Matthew Green

I am intrigued. I should be inclined to agree to limit the Secretary of State's powers to rule against what is decided locally, but why is the hon. Gentleman referring only to the charge being set too low? Why is he keen to leave the power to rule with the Secretary of State if the charge is set too high? If he wanted to leave it up to local people, surely he would favour removing the Secretary of State's powers in both directions.

Mr. Clifton-Brown

The hon. Gentleman does try to distort the facts. If he had listened carefully, he would have heard me refer to the charge being set either too high or too low. The amendment has been drafted in this way because I am concerned that the Minister is more likely to ask local authorities to alter the plans if the charge is too low. If the charge is too high—for example, with regard to the Mayor's aspirations that there should be 50 per cent. provision of affordable housing in the larger housing developments—no developer will come forward.

That is a good incentive for local planning authorities not to set these charges too high.

Amendment (k) says that nothing in these regulations will permit any change in the quantum of the planning contribution unless there is a revision of the development plan document". I am concerned that, by intervening through regulations or the annual plan, the local planning authority or the Secretary of State may arbitrarily raise or lower the charges. I want any changes to be subject to the proper plan-making procedure.

Amendment (1) is important. This Government have loaded all sorts of responsibilities, obligations, powers and duties on to local authorities without fully funding them through the revenue support grant. We will find that there is an enormous amount of up-front work for local authorities in producing local plans and formulae, although the process may be quicker in the future, and I do not know whether it will be. I repeat that some authorities will find it difficult to cope with the Bill, particularly if they are short of planning officers. The Minister has told me informally that his Department will provide advice and consultancy. Perhaps he will clarify that, so that local authorities throughout the land can be assured of what physical help, in the form of manpower, or financial help, in the revenue support grant, they will be given to deal with the expensive setting-up operation.

New clause 2 deals with the regulations that will decide how payments are to be made. Amendment (a) is simple: it says that once planning permission has been granted and remains in force, and any condition relating to planning contribution has been agreed with the applicant, the contribution may not be altered. That seems to me perfectly straightforward. It would be monstrously wrong if the developer had got his planning permission and agreed the tariff with the local authority, that tariff was still in force, and it was then altered by periodic revision. The local authority should have a bite of the cherry when the application is being negotiated, and once the tariff has been agreed, it should be a binding obligation on both the Secretary of State and the local authority. Any property contract would have a similar effect.

Amendment (b) is interesting: it would ensure that the maximum amount for the tariff would not be higher than if the case were an application made under the section 106 procedure. I should like to hear from the Minister how he thinks the levels of the new tariffs will compare with the payments under section 106. Will they be higher, because the developer may have greater certainty and speed—although I do not think that he will—or will they be lower, to encourage the applicant to opt for the new tariff procedure? Given that the Government and local authorities will put a great deal of work into the new tariff proposals, I hope that they will be lower, so that developers will, as a norm, opt for the tariff payments. It will be interesting to hear what the Minister has to say.

Amendment (c) deals with whether adjustments to contributions may be made upwards or downwards, and the RPI escalator. Paragraph 39 of the consultation paper says that different charges could apply to different types of land in a local authority area, namely greenfield and brownfield land.

Amendment (d) would ensure that—

Mr. Deputy Speaker (Sir Alan Haselhurst)

Order. The hon. Gentleman is confusing me. Amendment (d) to new clause 2 has not been selected, so he may not refer to it.

Mr. Clifton-Brown

I am grateful, Mr. Deputy Speaker, and I apologise. There are so many amendments in this large group. I now have the selection list in front of me, and I see that your advice is very helpful. I will therefore move on rapidly to amendment (e), which has been selected. It is a probing amendment, to leave out proposed new subsection (5), which states: If a document is prescribed for the proposes of section (Planning contribution) (3) the regulations may prescribe…the procedure for its preparation and the time at which it must be published…the circumstances in which and the procedure by which the Secretary of State may take steps in relation to the preparation of the document. That, it seems to me, could cover almost anything under the sun. It is a very widely drawn clause, and I want the Minister to explain exactly to what he intends it to apply.

Amendment (f), which has been selected, is an interesting amendment that the Government might consider seriously. It relates to the land transfer provision under proposed new subsection (6), which states: Provision may be made for the enforcement by the local planning authority of the terms of a planning contribution including provision…for a person deriving title to the land from the contributor to be bound by the terms of the contribution". I can see why the Minister has included that in the new clause, as he wants the obligations to be carried on, in so far as they are unspent, to the next owner or occupier of the land. My amendment allows for circumstances in which the tariff has been completely met and paid and the land is then transferred—a system should exist whereby the local authority can issue a certificate to say that the contribution has been fully paid and met, and the transfer of the property can then take place without the obligation clogging up the works.

Amendment (g) is also interesting and deals with proposed new subsection (6)(b), which relates to the provision for a condition to be attached to any planning permission relating to the land requiring the contribution to be made before any development is started". I can understand why that provision is included—it is an attempt to improve the cash flow of local authorities by making sure that the contribution is paid before the development starts. The problem is that that is not, in many cases, how the section 106 procedure works. Usually, the developer is allowed to make some money by building some part of the development before he is obliged to pay in relation to the section 106 agreement, because he has some money in the kitty to make the payment. If it is all done up front, however, that is an additional cost, which is unfair on the developer. It would be much more flexible if the same procedure that currently applies under section 106 could also be applied to the new tariff procedure, which is the purpose of amendment (g).

In relation to amendment (h), we have heard concerns expressed in numerous interventions today about how the money is actually spent. We have dealt with what the section 106 procedure and the tariff can be used for—the necessity test and the de minimis test—under previous amendments. What is not so clear, however, is how the money is actually spent. There are anecdotes that in some authorities 90 per cent. of the money raised through planning obligation simply disappears into the general budget. That is not satisfactory, as I hope the Minister will agree, so I have tabled amendment (h), which states that the Audit Commission will have a specific duty to ensure value for money in any case to which subsection (7) (a) applies. That seems to me to be eminently sensible, for two reasons. First, we want to ensure that the money is applied to the purposes for which it is paid. Secondly, even when it is applied to those purposes, we want to ensure that it has achieved proper value for money and that it has not been wasted or squandered. Giving the Audit Commission that duty is a sensible way of getting round that problem.

To move on to amendment (i), currently, in relation to developments and the section 106 procedure, the amount is negotiated at the time of grant of planning permission, or subsequently if it is a condition, but always before the development starts. Often, there are unforeseen costs produced by Departments, which are then taken into account in the section 106 payment, which can be adjusted accordingly. I have in mind such matters as archaeological digs, unforeseen contamination, problems with legal title, and so on. The amendment would provide the opportunity to go back to the local planning authority and have the section 106 agreement adjusted to take into account any extra costs that might be incurred. If there is no opportunity to change the tariff that has been set after the development has started, some developments could become unviable. We need some mechanism for certain narrowly defined categories to allow the tariff to be adjusted in the light of unforeseen circumstances.

5.45 pm

David Wright

Is the hon. Gentleman suggesting that the community contributions should bear the development risk? If a developer purchases a site, it should bear the risk as part of its commercial operation. Is he suggesting that, if circumstances change, the element of the costs that should bear the development risk is the community contribution?

Mr. Clifton-Brown

I am grateful for that intervention, because it helps me to clarify my point. The amendment would apply only when local authorities or Departments imposed additional obligations on developers, such as an extended archaeological dig if some important remains were found during the course of the development. One can think of other unforeseen circumstances in which Departments could impose additional obligations, such as flood alleviation measures that were not foreseen when the development started. Other examples include contamination of land previously owned by the Government that was not fully disclosed at the time of purchase but became apparent after the development had begun. Therefore, we need some mechanism to adjust the costs—not to reduce developer risk, which should be borne by the developer—but to cover additional costs imposed by a local authority or Department.

The Minister said that the local authority can decline to accept a tariff in some circumstances. Amendment (k) seeks to explore the circumstances in which the local authority may decline to accept the tariff, and I would be grateful if the Minister would elucidate further on that point.

Amendment (j) covers the very point that my right hon. Friend the Member for Skipton and Ripon (Mr. Curry) mentioned. It is often the case that two local authorities produce a joint development plan, and the Government hope that that will happen more often. Such a joint development plan, produced by two or more authorities, should allow for joint section 106 or tariff payments. The converse should also apply. If an applicant makes an application for a large development that spans more than one local planning authority, we should have proper arrangements to cover that.

New clause 3 mirrors new clauses 1 and 2, except that it would devolve all the powers concerned to the National Assembly for Wales. I have no problem with the devolution of powers to the National Assembly, except that in the devolution settlement this House reserved certain matters to the relevant Secretary of State, who is accountable to this House. One of those matters is taxation. Before we devolve the powers in the Bill to the Welsh Assembly, we need to be sure that it will produce similar regulations to those that will apply in England. The Minister needs to explain the time scale under which he will devolve the powers to the National Assembly and whether he will delay issuing a commencement order for new clause 3 until he has seen the proposed regulations and is satisfied that they are reasonable. Developers and Welsh communities need to be protected. As we have said many times before, if the charge is set too high, no developers will come forward, but if it is set too low—which is unlikely—the Assembly and the planning authorities in Wales will not get the planning contribution to which they are entitled.

I have come to the end of my amendments. The Bill makes a large and important change, and the Government are rushing it with undue haste. The new clauses are far too general and they do not answer our specific points. I have put a large number of questions to the Minister and he may not be able to answer all of them in the time available, so I should be grateful if, before the Bill reaches another place, he would write to me with the answers to any questions that he cannot answer today, and put a copy of the letter in the Library.

As this huge Bill is of a technical nature, I have no doubt that Members of another place will want to give it close scrutiny. I have major concerns about the tariff proposals, not least because they will put significant burdens on local authorities at a time when the authorities are already overstretched and when they will also have to deal with the onerous regulations in the remaining parts of the Bill. The Government are introducing an entirely new planning system, so it seems an act of folly to reintroduce new tariff proposals that were deemed unworkable by many people when the Government mooted them at the first consultation —that is why the Government withdrew them. Why not ensure that the existing section 106 procedure works properly before trying to provide an alternative?

When the existing procedure does not work especially well, why are the Government trying to provide an alternative that will stretch local authority resources such that the planning system will be paralysed in some areas? In all seriousness, I offer the Minister this positive contribution: why not consider delaying the commencement order for these provisions at least until the current 106 procedure can be clarified and streamlined? When that is working, we can introduce the alternative system.

I commend my amendments to the House.

Matthew Green

I shall try to make a contribution that is a little shorter than 49 minutes. The Government have ended up falling into an unsatisfactory method of dealing with changes to section 106. I realise that planning Bills do not come along often, so I can see why the Government wanted to insert the provisions at this stage and have them enacted through regulations. However, many of the details that have caused concern on both sides of the House will be dealt with in those regulations, and that is unsatisfactory. It is also unfortunate that the Government are in the middle of the consultation process.

None the less, I suspect that the broad thrust of the changes is correct. They should enable local councils to define through a local development document the areas and types of scheme to which planning contributions—planning gain—will be expected.

Mr. Andrew Turner

To what extent does the hon. Gentleman think that we can rely on the Minister's assurances about the regulations that might be made by the National Assembly for Wales? Although local authorities in England may have considerable scope, the Assembly could introduce incredibly rigid provisions.

Matthew Green

The hon. Gentleman is right, but I welcome devolution of power not only to Wales but to local councils, and it seems to me that the proposals will take decision making to a lower level than the current system, which operates by ministerial diktat. I welcome that, whether decisions are to be made by the local council in the Isle of Wight or regulations are to be made by the National Assembly for Wales, so I have no problem with such proposals in principle. If the Assembly makes a hash of things, it is for the electorate to kick out the Labour Administration in Wales.

The new provisions will provide a more satisfactory arrangement and will give power back to local councils, but I want to raise some detailed concerns so that the answers can be put on the record. First, section 106 is not used purely for planning gain—for example, in South Shropshire district council's affordable housing scheme, it is used to put a cap on the price of individual houses for resale. I know that the Government are looking with some interest at the development of that new policy. However, as the thrust of the debate has been about the use of section 106 in terms of planning gain rather than an agreement about a single dwelling, it is unclear how the changes will affect it. My understanding is that the local council could, through its local development document, continue to make stipulations exactly as, for example, the South Shropshire council does under its current policy. I understand that a similar scheme has been taken up on Dartmoor and in some other rural areas where affordable housing is a serious problem. My reading of the provisions is that it will be left to the local authority to deal with them in the relevant local development document, but I should like the Minister to clarify that point and confirm that it is correct.

Secondly, I hope that local authorities will be left with their current freedom to stipulate, through the local development document, a fairly high percentage of affordable housing on a site. Currently, several local authorities, not least South Shropshire, require there to be 50 per cent. affordable housing on sites of two or more houses. That goes well beyond the Government's recommendation of 30 per cent. on sites of 19 or more houses. That is the current legal situation, so I hope that nothing in the regulations will curtail local authorities in the delivery of more affordable housing. Again, I seek reassurance from the Minister on that point.

Sir Sydney Chapman

The hon. Gentleman raises an interesting point, but is not there a difficulty if a local planning authority has power to raise money through a planning contribution or a section 106 agreement? Obviously, the authority would be interested in obtaining as much money as possible—that is human nature—so does not that make it less likely that the authority would insist on a higher proportion of social or affordable housing?

Matthew Green

The hon. Gentleman makes a good point, but again it comes down to local decision making. I know that in Shropshire the priority would be to take little money from developers and to have affordable houses, as that is the overwhelming problem facing my constituency—as both local district councils now recognise. I suspect that the situation will vary throughout the country, but surely that is what we want: local decision making by local people.

Will the Minister confirm that, through the local development documents, councils will still be able to specify a high rate of affordable housing and use that as a way of delivering such houses? Similar schemes could be used in London in the Thames gateway to provide housing for key workers, so I hope for reassurance from the Minister as a sign that the Government are moving in that direction.

I have some concerns about the rates of the tariff and again I should like some reassurances from the Minister. Section 106 is often used to deliver small items of community benefit next to a housing development—for example, a community hall or a children's play area. Those are good uses of section 106. However, I am concerned that if the developer opted to pay the tariff it would be up to the local authority to do the work, to construct the play area or whatever the community needed. However, because the public sector acts more slowly than the private sector, by the time the council gets around to building the item in question it will cost more than it would have done when the tariff was calculated, with the result that either the community ends up with a smaller children's play area or the council tax payer is asked to pay the extra and thus subsidise the construction.

6 pm

The Minister will say that it is up to councils to calculate the tariffs correctly, so that they know that they will get the money they need, but I remain concerned that the route whereby developers can opt to pay the money will lead to more detailed work having to be done—calculations of what something might cost in a year's time, for example—rather than the contribution being made in kind. If the developer opts to produce it in kind, that is probably an appropriate way around that potential problem.

The Minister dealt broadly with another of my concerns, but I would like him to reiterate his reply that it is not intended that the charge will be some form of tax that may be used to keep down council tax. I believe that there is broad agreement in the House that that is not the intention behind the measure. Community gain is the idea underlying planning contributions and it would be worrying if a local authority sought to tax development purely to keep down council tax.

Mr. Hayes

I tried to tease the maximum clarity from the Minister earlier, and he was most helpful. However, what causes me anxiety is not that the whole sum will transparently and obviously be spent on subsidising council tax or on a completely unrelated purpose, but that the money will be divided up and a more complex, more convoluted way found to do something that was not clear at the beginning of the process, that is not in line with local expectations, and that is not in the spirit of the arrangements that the Minister is hoping local authorities will put in place.

Matthew Green

I share that concern. The council is to set out in the local development document what it will use the money for, on which sites or schemes the charge is likely to be an option, and what the levels of charge will be. My concern is that there is a danger of inaction by the local authority—not so much that it will literally take the money out of one account and put it into the revenue account to keep other services running, but that it will sit on the money and use the interest to subsidise other services.

Even though I am not a huge fan of reserved powers, I was relieved to hear the Minister mention that reserved powers may be necessary in this respect. A council could create a local development document. then broadly ignore it. The problem is that we are dealing with fairly technical stuff. Not many members of the public will rush to the local council and ask to see the local development document setting out the charging regime for developments. Nor, dare I say it, will many councillors rush to read that part of the document: they will be far more interested in seeing whether some houses are to be built next to their homes or in their wards than in reading about the charging arrangements. Although I am inclined to agree that the electorate should be the best judge and that adverse publicity about a council that takes money and does nothing with it should be enough, I suspect that because of the technical nature of the matter, there should be some form of reserved powers in this instance. The Minister touched on that subject, but I would welcome hearing about what form the powers might take.

Another of my concerns is probably best dealt with through guidance. We all know that people do not like new housing or industrial developments to be built next door. Often, community gain is used to assuage some of their fears: yes, there will be more housing in the area, but a roundabout will be installed at that really dangerous junction as a result, or the school will get a much needed extension, and the developer will pay for it. That can help to reduce local public opposition to a project, but I foresee problems arising. Let us suppose that a local development document is produced stating that all the charges will be taken from all the schemes in the area and the money used to build a new sports centre at one end of the council area. Although that would be entirely legal, it might excite great resentment in parts of the district, because the people in those areas would feel that the houses had been built next to them so that people 20 miles away could have a new sports centre.

There is a danger of public discontent with that aspect of the system. As it is difficult to deal with such issues in legislation, and nearly impossible to do so in regulations, I hope that the guidance which I assume will accompany the new arrangements will encourage councils to bear in mind that the community that bears the brunt of the development for which the planning application has been submitted should see at least some of the gain as a result.

Mr. Hayes

The hon. Gentleman makes a good point on an important matter, and I have noticed the Minister acknowledging that through his body language. However, there is a more specific issue than just the opportunity costs of the inability to ameliorate local concerns about a specific project. It may be incorrectly assumed that the money is being filtered away, that it is disappearing altogether, or even that it is being used in an underhand manner. That would be untrue, but people who do not understand the system might easily perceive that to be the case. There is the potential not only to lose the ability to assuage people's fears but, worse, to undermine local people's faith in the system.

Matthew Green

The hon. Gentleman makes a good point. The key is not to lose sight of the original concept of planning gain, which is that the community local to the development derives some gain from it. That is how section 106 originated and I am certain that the Government envisage the changes leading broadly to the same end, but local authorities should be encouraged to bear that in mind. That will probably have to be done through guidance, because I do not see another way of dealing with it

I shall not go into the detail of the Conservative amendments because I suspect that, with hindsight, the hon. Member for Cotswold (Mr. Clifton-Brown) realises that most of them curtail local authorities' ability to decide for themselves what is best for their area, and I am sure that that is not what he intended. That he got the wrong end of the stick probably has a lot to do with the fact that he had only a couple of days, and had to burn the midnight oil. It just shows that we should work reasonable hours, because after working a certain number of hours one does not think straight.

The new clauses offer a potential way forward, but I return to my point that the Government have not chosen a satisfactory means of dealing with the issue. My main concern is that the details of how the system will work will not be dealt with on the Floor on the House or in an extended Committee sitting—they will take the form of a statutory instrument, of which there can be little scrutiny. I struggle to see how the Government, in the circumstances in which they have landed up, could have found a different way of achieving their aims. However, when the next planning Bill is introduced in 10 years' time, I hope that the Government do not spring a similar Bill on us. Of course, the Government will be different by then, and if the Liberal Democrats are in government, we shall strive to avoid doing that.

Sir Sydney Chapman

I am grateful for the opportunity to follow the hon. Member for Ludlow (Matthew Green) and agree with some of his comments. He spoke about the House sitting too late and Members perhaps getting confused. Clearly, his twilight hour is not the other side of 6 o'clock. He has done very well.

I shall try to be brief. It may be helpful. as is conventional, if I begin by declaring some possible interests. As I said in Committee, the more I think about them, the more I believe they are reverse financial interests. I do not receive a penny from any organisation outside the House or any part of my profession, but I am a member of the Royal Institute of British Architects and a fellow of the Royal Town Planning Institute, and I pay those bodies not inconsiderable amounts. I found that those sums have been going up so much that I have applied for retired status in both those prestigious professions. I should add that I am an honorary member of the Royal Institution of Chartered Surveyors, an honorary member of the Landscape Institute, an honorary fellow of the Faculty of Building and an honorary fellow of the Association of Building Engineers. If I remember any more, I shall add them later.

I have long criticised aspects of section 106 agreements. In some cases, I believe they border on the corrupt—"You don't get your planning permission unless you give us this amount of money for that particular project"—but they are here to stay, and having listened to the debate so far and thought about these matters quite deeply, I share the worry of my hon. Friend the Member for Cotswold (Mr. Clifton-Brown), who questions whether it is a good thing to have two different mechanisms working in tandem, rather than trying to improve the present regime of section 106 agreements. I put that down as a marker.

As the Minister kindly gave way to me twice on the matter, I shall not dwell on the possibility of local planning authorities, when making their regulations, extending the present area in which section 106 agreements can apply. The Minister rightly said that, in general, section 106 agreements apply to only 1.5 per cent. of the total volume of planning applications throughout the country, but of course, as he also said, they relate to the more significant planning applications. My fear is that, at least in the margins, local planning authorities might find an opportunity under the proposed new regime to extend the area in which permitted planning contributions would apply.

I shall give a rather silly example, for a particular reason. At present, if a development requires a crossover from the highway to the curtilage of the property—say, somebody is building a garage as an extension on his or her house —the local authority might insist that it should carry out the work. Whereas, meeting the proper specification for a crossover, the work could probably be done for £700—I am using a typical example—the council might say that it costs £1,500 or £1,100, making its own profit. It is so easy, under a planning contribution agreement, for the council to set the tariff scale at£1,500.

We are all human beings. I am not criticising local authorities or local planning authorities, but if an authority has the opportunity to charge money, it will seize that opportunity and milk it to its utmost ability. That is not a party political point, but a fact of human nature. It is extremely important that the Secretary of State prescribe the areas in which the new planning contribution can apply. It is a new opportunity for a tax, just as a section 106 agreement is, in effect, a tax. The proposed contribution is a tariff, so it is a tax. I shall not dwell on the matter or call it a stealth tax. There are already section 106 agreements in place. Because it is a tax on some developments, the ability to charge the planning contribution and the amount that can be charged must be carefully prescribed.

6.15 pm

My hon. Friend the Member for Isle of Wight (Mr. Turner) made a good point when, if I judged him correctly, he said that under section 106 agreements, the applicant—I would say generally, but now always—knew exactly where his financial contribution was going. It would be spent on a specific project in a specific place. Under the proposed planning contribution arrangement, it is obvious—again, this is human nature—that the local planning authority will hold on to the money for as long as it can.

The hon. Member for Ludlow gave the example of a new sports centre on the other side of the borough. For such a project, the local planning authority will have to hold on to the money until it has sufficient to go ahead with what is, by any description, a pretty significant project. If the legislation goes through, and the regulations are issued, we must consider carefully how we can ensure that the local planning authority is required to specify the projects on which the money will be spent.

Mr. David Drew (Stroud) (Lab/Co-op)

I thank the hon. Gentleman for giving way and apologise for not being present earlier, as I was serving on a Select Committee. Does he agree that section 106 agreements have been bedevilled by the lack of transparency—in particular, the fact that after a planning application has been agreed, it is often implemented through an individual officer talking to the developer? Communities often feel disempowered when they see that the outcome of the section 106 agreement is not what they expected.

Sir Sydney Chapman

I am glad to tell the hon. Gentleman that I agree entirely. I had some criticisms of section 106 agreements, and the apparent lack of transparency was my main argument for criticising them. That is common ground between us. Unless the regulations are very tightly drawn, the receipts coming from the planning contributions could be even less transparent than the section 106 agreements. I need not pursue the point further.

Mr. Hayes

Not only will the new arrangements be less transparent, but they will be less local, as they will not necessarily be tied to the particular development, and they will arguably be less likely to lead to the development of social housing. That is the view of those in the industry. Will my hon. Friend comment on those aspects?

Sir Sydney Chapman

I cannot disagree with my hon. Friend, but the outcome will depend on the sort of local authority in question. If it is a scattered rural local authority, I think my hon. Friend has cause for concern. I represent a more suburban area, where the metropolis meets the countryside, with all sorts of development. My constituency is much smaller in size than my hon. Friend's. Mine is only about 15 square miles in north London, so there is more sense of community than would be the case 8 miles away or in my hon. Friend's constituency. It is a matter of degree. The Minister confirmed that, if the Bill is enacted, the applicant will be able to choose between a section 106 agreement route or a planning contribution route. We must bear in mind that the system is comprehensive and complicated.

The hon. Member for Ludlow was a little unfair about the amendments tabled by my hon. Friend the Member for Cotswold. The hon. Gentleman might have been burning the midnight oil, but I imagine that my hon. Friend is with it 24 hours a day. There was a short time to consider the matters, so even if some of the amendments are found to be unnecessary, they have given us the opportunity to raise important points and get assurances from the Minister.

Mr. Clifton-Brown

My hon. Friend has great knowledge of the subject and no doubt he has read the submission by the Law Society, which is worried about the new tariff proposals. The society says: The new clause seems to envisage local authorities determining that in respect of some developments a planning contribution would not be appropriate. Does my hon. Friend agree that giving local planning authorities the power to say, "No, on these developments you must pay a tariff", is a step too far?

Sir Sydney Chapman

I am trying to play devil's advocate to my hon. Friend to keep the quality of the debate high. There may be no fundamental difference between that arrangement and the procedure for section 106 agreements. I understand what the Law Society says but I do not necessarily agree. Section 106 agreements are negotiable, but the bottom line is that local authorities may say to applicants, "If you don't do what we want, you don't get what you want." Therefore, applicants might not get planning permission, although I suppose that they could still run off to the Secretary of State to appeal. Section 106 agreements are effectively compulsory, so I envisage no difference in principle compared with the arrangements for planning contributions.

Keith Hill

The hon. Gentleman is making an interesting speech and was absolutely right to respond somewhat cautiously to the invitation of the hon. Member for Cotswold (Mr. Clifton-Brown) to leap aboard the Law Society's bandwagon. Let me remind him of what I said about circumstances in which a local authority might say that a planning contribution would be inappropriate and not required. That would be a case if a development were proposed on a site with heavy contamination that would require costly remediation, or a site under multiple ownership if it were anticipated that there would be enormous complications when engaging in a land assembly exercise. It might be inappropriate to deem that either a section 106 or a planning contribution would be required for a large development in such circumstances. The Law Society has got the wrong end of the stick on this one, so I congratulate the hon. Gentleman, who has deep experience of these matters, on reacting in an appropriately careful, calm, calculated and cautious fashion to his colleague's suggestion.

Sir Sydney Chapman

I hardly know where to put myself. This is all a matter of relativity. The Minister said that the planning contribution was not a tax on developments—he prefers not to use the word "tax" and we should not put words in his mouth, so let us call it a tariff. However, I could equally argue, without being spurious, that a tax on most developments exists because people must pay a certain amount when they put in applications to local planning authorities. That requirement entered planning law only relatively recently. There is a movable shelf and people on both sides of the argument can properly make debating points because the situation is detailed and complicated.

Although I had not intended to speak for so long, I shall make one or two other points. I thought that one of the Government's new clauses stated that the planning contribution must be paid up front—in other words, applicants who had been given planning permission could not begin developments before they had paid the planning contribution. One can relate that situation to a point about the retail prices index escalator. Incidentally, although amendment (g) to new clause 1 says: there will not be any R.P.I. escalator my hon. Friend the Member for Cotswold could have added the words, "or any other building industry inflation escalator attached to the agreement on a planning contribution" to the amendment.

A planning contribution might be agreed at a time when the building industry is booming, but that time could be a turning point before a recession. If there were a national economic recession or a building recession, the boom could go out of the housing market, which would mean that the developer might make a considerable loss. Developers speculate and make judgments, so there is already risk in the process. It is fair to say that an escalator on the contribution would represent an additional risk that developers would have to consider. I agree with my hon. Friend and believe that a planning contribution should not be changed in any way after it has been agreed, especially given that it must be paid up front.

Matthew Green

The hon. Gentleman is making a valuable contribution. I would have more sympathy with his argument if it were not up to developers to decide whether to pay the tariff or to provide work in kind. My understanding of the new system is that a council will not be able to tell developers that they must pay the tariff. A council may say that it is appropriate to impose a tariff on a specific site, but developers will have a choice because a council will not be able to force them to pay rather than undertaking work in kind.

Sir Sydney Chapman

There is little dispute among us. I understand that there may be payment in cash or in kind under a section 106 agreement. I can certainly tell the hon. Gentleman—I think that he knows already—that the new clauses provide that a planning contribution may be made in cash or in kind, or as a combination of both. I am glad to get that on the record.

My hon. Friend the Member for Cotswold talked about new clause 3 and Wales. He properly said that through devolution under the Government of Wales Act 1998, specific powers were reserved by the United Kingdom Government. The Minister will not remember that during the Bill's first Committee stage I asked why we required provisions on Wales, because as Wales has been given devolved powers, what right has the UK Parliament to say how Wales should treat planning issues? I did not receive a satisfactory answer in Committee but I received one today from my hon. Friend because he rightly identified the fact that the planning contribution is taxation—an economic matter—and that this House has the right to decide on such matters. The House owes a debt to my hon. Friend not only for tabling his amendments and making his contribution on new clauses 1 to 3, but for addressing the important aspect of the provisions for Wales.

Mr. Clifton-Brown

I have been consulting the regulations and reading new clause 1 carefully since my hon. Friend mentioned the possibility of paying the obligation in kind. New clause 1(3) says that the local plan must state the "prescribed means" when it is drawn up, and subsection (5) says that the prescribed means are: the payment of a sum…the provision of a benefit in kind…or…a combination of such payment and provision. I am not sure whether the tariffs will be set at a local planning or a more specific development level, so perhaps my hon. Friend will comment on that.

Sir Sydney Chapman

If I may say so, it is for the Minister on duty to respond to that. I see any development in kind being given an amount of money, an allocation of money, and that is deducted from the prescribed fee or the prescribed tax, or the tariff, that will be put on the specific development. That is not a matter for me, but that is my reading of new clause 1(5). That provision underlines that payment can be made in cash or in kind, or a combination of both.

6.30 pm

Mr. Andrew Turner

One problem in dealing with a number of complex new clauses on Report is that our deliberations tend to degenerate, if that is the right word, into something more akin to consideration in Committee. I hope that the Minister will forgive me if I follow his example and probe rather carefully my understanding of some of the new clauses.

I shall begin where my hon. Friend the Member for Chipping Barnet (Sir Sydney Chapman) left off, with new clause 1(5) and (6). Perhaps the Minister will correct me if I am wrong when I say that the developer can decide between subsections (5) and (6). If he opts for subsection (5), he must use whatever prescribed means the local authority prescribes, and if he opts for subsection (6), he must negotiate. That is my understanding of new clause 1. I see that the hon. Member for Ludlow (Matthew Green) shares my understanding, which makes at least two of us. That is good.

It is a question of who should have the right to choose. If it were not the developer—the applicant—that had the right to choose, that would go some way to solving the problem illustrated by the hon. Member for Ludlow and my hon. Friend the Member for South Holland and The Deepings (Mr. Hayes). The problem concerns developers' contributions—I use a neutral term—being gobbled up and spat out by the local authority at some development at the far end of the district or borough that may not provide any compensation for the people in whose backyard the unwanted development had taken place. Why does the Minister feel it appropriate that that should be a developer's decision rather than a community one? People expect something to be provided locally, not at the far end of the borough. They will view with great concern the failure of the supposed benefit to appear.

The hon. Member for Stroud (Mr. Drew), who is no longer in his place, questioned the operation of section 106 agreements. He said that, in many cases, there is agreement in committee, the officers are sent away to write a section 106 agreement, and it is hoped that something turns up that is acceptable to local people. I know that some local authorities behave in that way, but others will reserve the grant of planning permission until the members are content with the section 106 agreement. The members may have a much better focus on whether, for example, a roundabout or a play area is preferable to the people of a particular small village. I know that the people of my villages would prefer a play area to a roundabout, but it is not always the case. Surely it is reasonable that the local authority's development control committee should reserve that matter and make a decision on the basis of officers' negotiations with the developer.

I say to the hon. Member for Stroud, in his absence, that it is unreasonable for local authorities to expect the right result if they do not make clear to their officers what results they expect. It is careless of local members, to say the least, to allow their planning committees to get away with that sort of thing, when doubtless those local members will suffer if they do not come up with the right community benefit.

Mr. Hayes

I shall build on my hon. Friend's point. The position might be disadvantageous to the developer as well. Developers often get, properly, some kudos by having contributed to a local scheme that is popular and that people understand and regard as transparent. If money is given, it will not have the same impact in terms of the local community's understanding. It may not therefore benefit the local developer in quite the same way.

Mr. Turner

My hon. Friend is right. I am sure that a new play area or an extension to a local school, or even some road humps, would be more popular with the local community than a sports centre that is inaccessible by public transport. In some areas, I know that some developers' contributions have been paid in the form of park-and-ride car parks, by payments to public transport and even by works of so-called public art, which in many cases are unrecognisable as either public or art. People resent their money being spent on such ill-chosen things.

That brings me on to a response to the question of whether payments should be made up front. If a tariff is introduced, I understand that the payments are required to be made up front. An up-front payment for a developer may make the difference between the viability and unviability of a development. A payment down stream, if that is the opposite of up front, may be affordable because the profit has been realised on the development.

Mr. Hayes

There are two other aspects. The first is that payment up front may be particularly disadvantageous to small developers as opposed to large ones with large budgets and turnovers. Secondly, high-risk developers may be discouraged. Developers will be less likely to take chances if they have already paid in advance. I do not say that I am against payments up front, but these questions must be answered.

Mr. Turner

Those points indeed have to be answered. I shall illustrate what may have been in my hon. Friend's mind, if I may presume to read his mind. A brownfield development may be close to a densely populated area of housing. The people living in that housing have just as much right to the benefits that might accrue from the provision of, for example, a play area as other people who live in areas that are less costly to develop. Yet the developer may not have the capital necessary to put up front into reclamation or remediation, as the Minister calls it, of the brownfield site, and for the provision of a tariff that can be translated into a community benefit. Will the Minister consider whether an up-front payment is the best and only way in which the tariff may be paid?

Mr. Hayes

I do not want to interrupt my hon. Friend's flow any more than is necessary for the development of his own argument, but many in the industry support his point. The Chartered Institute of Housing and the House Builders Federation both draw attention to the problem of developers being unwilling to take risks specifically in respect of affordable housing on brownfield sites or on any site. They may be discouraged.

Mr. Turner

I was about to pay tribute to my hon. Friend's fertile and inventive imagination, but now I understand that I must give credit to the august bodies that he cited. He is right that there is a problem that could mean that no community benefit is received because no development takes place.

My hon. Friend gives me a cue to move on to the housing obligation—the socialist housing obligation, as some call it. My hon. Friend the Member for Cotswold (Mr. Clifton-Brown) referred to the obligation to provide affordable housing and the necessity test. I have no objection to the provision of affordable housing, but I am curious about how the necessity test applies. How can the construction of 24 luxury flats give rise to the need to provide so many units of affordable housing? The provision of additional units of luxury housing does not push up the price of local housing, and it may even have the effect of marginally pushing down the price of other housing. When the Minister replies, will he go into some more detail on the application of the necessity test, and whether it will be broadened as a result of the implementation of new clause 1?

Mr. Clifton-Brown

My hon. Friend will be aware that, because of the Tesco case and others, case law has already broadened the necessity test to the de facto position where we have a de minimis test. I was gently chiding the Minister to suggest that the regulations should clarify the position—exactly the point that my hon. Friend is making.

On a slightly different but related point, the local authority should be able to set different tariffs in different areas according to the existing infrastructure. Clearly, some infrastructure will be poor and some better, so it makes sense to be able to set different charges in different areas.

Mr. Turner

Whether we use the necessity test or a broader test goes to the heart of whether the contribution—or a section 106 agreement—is merely a form of taxation rather than a reasonable contribution to the cost of a particular development.

What kind of applications should be free from any obligation to pay the contribution? The Minister has not stated what kind of applications he has in mind. It may be possible to speculate. It may be that he has given some opinion in the draft regulations on which he is consulting, but I hope that he will be able to clarify what kind of applications should be free—and, presumably, free at an England-wide level, rather than free at a local authority level—from a particular contribution.

Mr. Hayes

My hon. Friend is being a little ungenerous to the Minister, because, in response to an earlier intervention, he said that the development of particularly difficult sites, or those that were unlikely to be developed without the enthusiastic involvement of keen developers who may be deterred by obstacles in their way, might not incur such a tariff. But will my hon. Friend test the Minister on issues such as parts of a local authority or regions and parts of the country that desperately need an injection of new development and that might as a whole be excluded from the tariff?

Mr. Turner

I apologise to the Minister for not making myself sufficiently clear. He pointed out that certain sites may be difficult, but I was envisaging in the kind of applications that may be excluded from any obligation to make the contribution, developments such as hospitals, schools or railway undertakings—in other words, what would be erected on the site rather than the nature of the site. Perhaps the Minister could respond to that, and in so doing distinguish between schools and hospitals provided by public and private sector funds, if it is his intention that a distinction should be made in the regulations that he lays before the House.

6.45 pm

My hon. Friend prompts me to come on to whether there should be variable tariffs and variable exclusions within local authorities. Like many large authorities—and, I am sure, some small ones—my local authority has areas of relative wealth and relative poverty. The areas of relative poverty may need certain kinds of development more than others and developers of such developments might be dissuaded were the tariff set at a standard level throughout the authority. Does the Minister intend that there should be variable tariffs within local planning authority areas, and, as my hon. Friend prompts me to ask, that developments in certain councils should be exempt from any requirement to make a developer contribution?

Many people see a section 106 agreement as merely a means of extracting money from a developer in return for a development that almost certainly would take place anyway, even though that it usually contributes to some local benefit, and sometimes to a benefit that is provided city-wide. A park-and-ride scheme is a good example of such a section 106 agreement. The developer's contribution set out in new clause 1—and to some extent the section 106 agreement—begins to look like a tax, rather than merely a payment made to the authority to compensate for the consequences of a particular development. Indeed, it begins to look so much like a tax that I am sorry that The Daily Telegraph did not include it as No. 61 on page 3 this morning. This is a tax on development because it is not hypothecated to a particular purpose and it is not a charge because it does not compensate for a particular cost. I hope that the Minister will look carefully at whether the contributions should properly be defined as a charge or a tax. It appears to me to be a tax.

I have only two other points, one of which is on the social housing obligation. In some places—many parts of London are good examples—the profit made from developing housing is so great that the social housing obligation can be met out of profit, and the marginal rate of return on the development is so great that the developer may suffer a bit but not hugely from its imposition. In other parts of the country—parts of my constituency are an example—the marginal benefit from building housing is still regrettably so low that developers wonder whether to go ahead, because they may not make sufficient profit. I am sure that that is even more the case in more deprived parts of the country.

If the developer is not going to make sufficient profit, he will not go ahead, even with private housing, and there will be a dearth of such housing available in an area. Under those circumstances, the only way the developer can meet the social housing obligation is to raise the price of the housing that he builds.

That means that the developer no longer meets the cost of the social housing obligation out of his pocket; in many cases, it is met by first-time buyers who purchase houses that he intended to build in the first place. The price of those houses can be driven up by the social housing obligation. Will the Minister address that issue and refer to the balance that local authorities might strike in drawing up a tariff, variable or otherwise?

Finally, on Wales, the Minister has given us plenteous and generous assurances about the regulations that he intends to lay before the House setting out the details of the path that he wishes to take. For our part, Opposition Members will make a judgment on those assurances. I am sure that we will have faith in him and believe what he says. We may conclude that those assurances are not good enough, but at least a clear set of assurances will have been given. We have no such assurances from the National Assembly for Wales. Nobody has spoken in this House for the Assembly; indeed, nobody can do so. Have there been any discussions behind the scenes between his office and the Assembly that allow him to say that the Assembly concurs with the assurances that he has given?

Matthew Green

Will the hon. Gentleman clarify his comments? He appears to be saying that he wants the Welsh to be protected against decisions that they take for themselves. Is that correct?

Mr. Turner

Not at all. In deciding how to vote on the new clause, I wish to know the circumstances in which it may be applied throughout England and Wales. That is my duty as an English Member of Parliament in legislating for England and Wales.

Mr. Hayes

The Welsh issue is even more complex than my hon. Friend suggests. We heard earlier from the Minister about provision that applied where local authorities of many types were involved in a particular planning application. The border between Wales and England will sometimes be crossed in such cases, as developments may affect authorities on either side of it. Through my hon. Friend, may I invite the Minister to comment on those matters, which seem highly pertinent?

Mr. Turner

I saw the hon. Member for Ludlow (Matthew Green) nodding; I assume that he did so on the basis of some local knowledge. I am unique among Members representing English constituencies in that my local authority area has no borders with any others, so I do not encounter the problem of cross-border planning applications. None the less, I would welcome the Minister's comments on developments that occur partly in England and partly in Wales.

Mr. Clifton-Brown

Does my hon. Friend agree that I have suggested a sensible mechanism to the Minister? Setting up the tariffs will take a great deal of hard work. The Minister might wish to look carefully at the commencement order in that regard and consider the draft regulations proposed by the National Assembly for Wales to establish that they are, at least initially, in line with those in England. Of course, the matter would thereafter be one for the Assembly.

Mr. Turner

That proposal would go some way towards solving the problem postulated by my hon. Friend the Member for South Holland and The Deepings, but it would not solve—I am sure that it was not intended to—the more serious problem of what assurances the Minister is giving us. 'The Minister laughed merrily when I asked rhetorically whether there had been discussions with the National Assembly for Wales. [Interruption.] He is now muttering to my hon. Friend the Member for South Holland and The Deepings. If we are entitled when we introduce legislation to know the direction in which the Government intend to proceed in respect of England, surely we are entitled to know the direction in which the National Assembly for Wales intends to proceed in respect of Wales. Our decision on whether to vote for or against the new clause may hinge on that issue. [Interruption.] The Minister's Parliamentary Private Secretary is now muttering. I did not hear what he muttered, but I suspect that he was telling me that I should not worry my little head about the Welsh, as they can look after themselves. Not at all; I am required to worry my little head about Wales, just as hon. Members representing Scottish constituencies are required to worry their little heads about foundation hospitals and tuition fees. I give way to my hon. Friend the Member for Cotswold.

Mr. Clifton-Brown

I was not seeking to intervene, but another thought has entered my head. Of course, there is a financial settlement for Wales each year. If the wrong level of contribution were set, it could have a material effect on the level of financial contribution given to Wales.

Mr. Turner

From someone who was not seeking to intervene, that is a particularly clever intervention. I thank my hon. Friend for making that point, which I had not thought of.

The Minister and his Parliamentary Private Secretary still cannot give any assurances or reveal whether discussions have taken place with the National Assembly for Wales. Will the Assembly adopt the sensible, rational, honourable and clear position that the Minister has set out, or will it adopt some other position? Until we know that, we cannot come to a conclusion on how to vote on the new clause.

Keith Hill

I am grateful to all hon. Members who have participated in this genuinely good and well-informed debate, which has been none the worse for being largely confined—I note the exception of my hon. Friend the Member for Telford (David Wright), whom I am delighted to see in his place—to the usual cast of characters in such discussions, who might be described as the Planning and Compulsory Purchase Bill repertory theatre. However, it has also been a long debate and I have no desire to protract it unnecessarily, so I give notice that I shall be reluctant to take interventions on the same extremely liberal scale as I did earlier.

None the less, I wish to respond in detail to the amendments tabled by the hon. Member for Cotswold (Mr. Clifton-Brown), although many of his questions and those of other hon. Members relate to matters best dealt with in consultation. In many respects, it would be inappropriate for the Government to express views ex cathedra, as it were, when we are essentially in a listening mode. However, I give him the assurance for which he asked:if I do not fully answer his questions in the course of my response, which I hope will be fairly comprehensive, I shall write to him as far as possible.

Mr. Clifton-Brown

rose—

Keith Hill

I advised the hon. Gentleman that I was reluctant to give way as much I did earlier. I shall immediately break my rule, but I hope that this will be a serious and substantive intervention.

Mr. Clifton-Brown

It is a very important intervention. If the Government's consultation will not finish until 8 January and the Minister is saying that he will not give specific commitments or answers to questions because that consultation is taking place, but this House is being required to legislate on this matter in the absence of those answers, he should not be bringing these regulations before the House.

Keith Hill

I am not bringing regulations to the House; I am bringing enabling amendments, and the House will in due course have ample opportunity to consider regulations relating to them when we bring those regulations before it.

Before I move on to the amendments, let me deal with Wales, with which Opposition Members seemed to be developing an obsession. I have noticed before that such moods can develop in the House—a Member makes a suggestion, someone else picks it up, then everyone begins to think that it is a really good idea. I am sorry to have to dampen the ardour on this occasion.

7 pm

The hon. Member for Chipping Barnet (Sir Sydney Chapman)—of whom, as the House will be aware, I am inordinately fond—made a sturdy effort to raise the spectre of taxation, and was joined by the hon. Member for Isle of Wight (Mr. Turner). However, we are devolving these powers to Wales for a very simple and straightforward reason—the Welsh authorities already have the power to enter into planning obligations with developers, and they should also have the power to set planning contributions and to allow developers in Wales the choice of whether to opt for the charge. All that our approach amounts to is "fair do's" for Wales. If the Conservatives still had any friends in business, I am sure that those in Wales would be enthusiastic about that development; but, candidly, I have nothing more to add to the subject.

Let me attempt to put some meat on the bones of the Government's proposals, which I outlined at the beginning of this long, but properly so, debate. As I explained, the planning contribution provisions set out a framework for planning contributions made in respect of development or use of land. The intention is to add to the provisions of section 106 of the Town and Country Planning Act 1990 an additional provision to enable developers to choose to make a fixed contribution that is calculated in advance by the planning authority. The intention is not to get rid of planning obligations, but to provide speed and certainty where possible and flexibility where necessary.

Planning authorities will be able to consider in advance the possible impacts on their area of increased development and what contributions will be appropriate to mitigate those impacts. The "plan-led" approach to planning obligations is a big improvement on the present, rather ad hoc, arrangements, to which I shall return later. Developers will have more certainty about the likely impacts of their proposed development on the area, will know in advance what contributions the planning authority is likely to require them to provide, and will be able to choose whether to make the contribution as set by the planning authority or to seek to negotiate a contribution more specifically tailored to their circumstances.

In response to the hon. Member for Isle of Wight, new clause 1 provides for two types of contributions: those made by the prescribed means—that is, the charge—and those made by compliance with the relevant requirements under the traditional section 106 negotiations. We give the choice to developers because in some cases that will assist in accelerating the planning process, as I am sure we all desire. It is not inevitable that developers will opt for the charge. That is not because of difficulties associated with the scale of the charge, but because of the commitment that many developers bring to sustainable communities in terms of adding value through their developments. We also intend that local planning authorities should be able to secure full community value from choosing the charge.

Contributions made by the prescribed means are the contributions that will be fixed in advance by planning authorities. Planning authorities will be required to put the detail of the contributions in a document, which may be a development plan document but will, in any event, be subject to consultation and public involvement. It will set out what type of development is likely to give rise to contributions and exceptions, how the contribution will be calculated, and for what the planning authority intends to use the receipts from contributions. The document will show the link between the impacts of development on the planning authority's area and the payment of the contributions. The requirements of a planning authority will, therefore, be contained in an open document that is available for all to see. That provides transparency in terms of the way that contributions are calculated, when they are likely to be required, and what they will be used for; and, in turn, provides certainty and fairness for all involved in the planning process.

Mr. Clifton-Brown

Will the Minister address the point that I raised with my hon. Friend the Member for Chipping Barnet (Sir Sydney Chapman) regarding the level at which the local authority will set the charges? Will they be applied across the whole local planning authority area? Will there be different charges for different areas—for example, if one is in growth, but another is not? Might there even be different charges for separate developments in a very large regeneration development?

Keith Hill

As one would expect, the charge will differ according to the different impacts of the development. It is essentially a matter for consultation, however, and we expect a vigorous input from all interested parties. I am sure that in due course the hon. Gentleman and the House will have the opportunity comprehensively to examine the proposals.

A contribution paid by compliance with the relevant requirements—that is, the traditional section 106 arrangement—enables contributions to be negotiated. As I said, that provides the flexibility to agree a contribution that is tailored to a particular development or its circumstances. It also enables planning contributions to relate to matters that are specific to the development site, such as provision of adequate access. It is intended that the relevant requirements will be similar to the provisions contained in section 106. Where the developer opts to pay the contribution by the prescribed means, our consultation document suggests that a residual negotiation may be necessary to cover matters that could never be covered by the charge. Where that is the case, and in order to ensure fairness, subsection (4) of new clause 1 provides that where a developer has paid the contribution by one means, the planning authority cannot seek more through the other method of securing a planning contribution.

New clause 2 sets out in further detail the matters for which the planning contribution scheme will provide. It allows the Secretary of State to set the minimum and maximum amounts that the planning authority may set as a contribution, enables the planning authority to update the set amounts by reference to a criterion such as the retail prices index in order to avoid a reduction in their value, and requires planning authorities to produce an annual report so that we can all see how the contribution system is working. As in the case of section 106, agreements to pay planning contributions will be enforceable by the planning authority. It is envisaged that the powers that are made available will be similar to those contained in section 106. The contribution may be modified or discharged depending on the circumstances. I am grateful to the hon. Member for Ludlow (Matthew Green) for his support for the broad thrust of the proposals, which he said are probably right and represent a more satisfactory arrangement. On his question about South Shropshire, the Government are considering that approach with interest, and I shall of course reply to him in due course. He also asked about affordable housing. I assure him that the last thing that the Government would want to do is to limit the ability of local planning authorities to secure more affordable housing.

I turn to the amendments tabled by the hon. Member for Cotswold. The fact that they deal with the detail of the provisions rather than general principles suggests that on the whole he accepts what the Government are trying to achieve—I am glad about that. I am concerned, however, that such amendments to new clauses 1 and 2 would fetter the flexibility that they provide in allowing us to respond effectively and sensibly not only to the consultation that we are undertaking, but to changing circumstances.

I cannot understand, for example, why the hon. Gentleman should wish to tie us now, in primary legislation, to how the contribution should be calculated, as he proposes in his amendments (f) and (g) to new clause 1. It would surely be more appropriate to introduce such provisions in secondary legislation, which can be more detailed, and which would also be able to take on board matters arising from the consultation process and future proposals relating to the calculation of contributions. We would not want to be too prescriptive at this stage, and to find that we were bound by the criteria set out in the amendments. For example, requiring developers to pay our optional planning charge on a per dwelling basis might simply have the effect of encouraging developers to build large houses, which would not always be appropriate.

Nor can I understand why the hon. Gentleman should have tabled amendments (h) and (i) to new clause 1, which, taken together, delete the provisions that we have proposed to ensure that developers do not have to pay twice in relation to the same matters. Our intention is that the regulations will ensure that, when a developer opts to pay the charge, he cannot also be asked to contribute through any residual negotiation in relation to matters that the local authority said were covered by the charge. These provisions are an essential ingredient of what we propose. I should also emphasise that, as with the existing system, it will be open to the developer to refuse to make any form of contribution whatever. In such a case, the local planning authority will still be required to consider the application on its planning merits, having regard to the development plan and other material considerations. So it is not necessary to introduce the additional appeal mechanisms proposed in amendment (b) to new clause 1; the existing appeal mechanisms will still be available when a developer feels that a planning contribution is unreasonable.

I detect concern that developers should not be asked to pay more than was originally indicated in the local authority policy on what it would seek through planning contributions. This appears to be the reason behind amendment (a) to new clause 2.

Mr. Clifton-Brown

rose—

Keith Hill

I believe that I can offer reassurances on this point, if the hon. Gentleman will bear with me. We envisage that the local authority and the developer will need to come to some form of agreement, as they do now, on whether they opt to make the contribution by the prescribed means or the negotiated route. That agreement will bind the developer to pay, and the local authority to accept, the charge agreed at that point. The form of the agreement could be decided between the local authority and the developer, or could take a standard form that the Government may prescribe in regulations or issue as guidance. I accept that there are concerns about this issue, and I shall be happy to consider further whether we have the right mechanisms in place to ensure that we have the right balance of flexibility and certainty for all parties in the process.

Mr. Clifton-Brown

I want to use the Brian Walden technique on the Minister to make sure that I have understood this. He has contradicted himself, because he said earlier that there would be an appeal mechanism against these tariffs, yet he now appears to be saying that there will be no such appeal, and that once they have been set in the local plan, that will be it. If that is the case, and if the developer cannot negotiate a satisfactory section 106 agreement and cannot appeal against a tariff, it could result in some areas remaining undeveloped.

Keith Hill

The hon. Gentleman has got me wrong. I was asked a general question, as I recall—I have been asked scores, if not hundreds, of questions during the debate, many of which I have attempted to respond to—and I certainly said that there were appeal mechanisms. Let me also say, in relation to a charge agreed, that in certain cases the circumstances might alter, and that it would be utterly irrational to say that we should not take account of changed circumstances when it could be impossible—for good reason—for the charge, as agreed to be met. In such circumstances, there has to be flexibility in the arrangements and the possibility of the agreement being revisited. On the whole, however, we would not wish to encourage such a situation, and that is not an outcome that we expect to see as a result of our process of consultation or, ultimately, the drafting of regulations.

7.15 pm

I also detect concern that the criteria set by the planning authority for calculating the contributions should be certain, and that any changes should be consulted on. This seems to be the root of amendment (k) to new clause 1, which refers to the power to enable planning authorities to adjust amounts set by a criteria published in advance, for instance the retail prices index, and suggest that any changes should be made through the development plan document process. New clause 1(3) (d) provides planning authorities with the ability to update amounts set out in a document setting out the contribution without the need to go through a fresh consultation, when the principle of how the sum was calculated and what it would be used for has been consulted on, discussed and accepted. Both the nature of the amount and the criteria used to update the amount will have been subject to the development plan document procedure or an equivalent process. There is therefore no need for the additional safeguard proposed in amendment (k) to new clause I.

That also seems to be the root of amendment (1) to new clause 1. Again, the planning contribution document will set out what is expected. If the developer is of the view that other demands will be made of him in respect of similar matters, he will have the option to negotiate a contribution that could accommodate future demands from other statutory bodies. As I have said, the proposals we have put down provide flexibility.

Mr. Clifton-Brown

Will the Minister give way?

Keith Hill

This will be the fourth or fifth time that I have done so, and I did issue a health warning at the beginning of these exchanges.

Mr. Clifton-Brown

I appreciate the Minister's giving way. These are complex matters, and when he does not reply satisfactorily to one of my amendments, it is helpful of him to give way. He has completely misunderstood the import of my amendment (1), which simply says: The Secretary of State will fully reimburse any local authority where it can demonstrate that there is a net cost to them in preparing these regulations. That has nothing to do with what the Minister was saying. I ask him again what would happen if a local authority were overwhelmed by implementing these burdens. He has suggested to me privately that he would be prepared for his Department to provide advice. Will he now say what advice and consultancy the Department will be prepared to advance? Will it merely involve manpower, or will there be a financial contribution to help local authorities?

Keith Hill

If I have misunderstood the import of the hon. Gentleman's amendment, of course I apologise, and I withdraw my strictures on the subject. In regard to any assistance that might be given to local authorities, the hon. Gentleman ought to recognise that we are engaged in a process of re-examining the whole ethos of support for the planning function in this country. As part and parcel of that, we now have in operation the so-called planning delivery grant, worth £350 million, to reward and incentivise local authorities in terms of their planning performance in the current three-year period, £50 million of which has already been allocated to local authorities. Although that investment is not ring-fenced, I am delighted to observe that, by and large, local planning authorities seem to be putting the grants into local planning resources. That has to be a good thing.

There also seems to be some misunderstanding of the way in which the provisions will operate. I have explained that planning authorities will have to set out their contribution policy in a document, probably the development plan document, and new clause 1(3) provides for this. The planning authority will set out the circumstances in which it will consider accepting a contribution, but there may be circumstances in which the criteria are met but the authority decides not to require any contribution. We have debated this issue at some length already. I would therefore submit that amendment (c) to new clause 1 is not appropriate.

Similarly, amendment (e) to new clause 1 would be inappropriate. The "necessity" requirement is not a statutory requirement and would therefore not make sense if referred to in legislation. The connection between the development and the contribution should be contained in the planning authority's planning contribution documents setting out the impacts likely to be caused by the development and how the contributions would be used to mitigate them.

The hon. Gentleman's amendment (j) to new clause 1 suggests that the Secretary of State should not be entitled to reject a local planning contributions policy except on grounds set out in regulations. This would be highly unusual and is not consistent with the Secretary of State's powers in relation to other planning documents or decisions. The Secretary of State is, I suggest, entitled to take exception to planning documents that are not consistent with his policy, even if they are consistent with regulations, especially as the Bill contains a provision that local authorities should have regard to that policy. The provision in the amendment, if inserted, would prevent the Secretary of State from calling in any contributions policy on the grounds that it was not consistent with his affordable housing objectives. I cannot believe that that is right.

Amendment (i) to new clause 2 also relates to development plan documents and the cost of preparing such a document. I believe this amendment is unnecessary, as administrative mechanisms are already in place, as I have described, to take into account new burdens on local authorities.

Amendments (c), (f) and (g) to new clause 2 deal with issues that are already provided for or are not needed. An adjustment of an amount may be up or down, and there is no need to state that explicitly. I have explained the intention that the planning contributions agreed should be contained in agreements setting out the amount and method of payment. That should satisfy the concerns about certainty raised in amendments (f) and (g).

Amendment (e) would remove the Secretary of State's ability to set out a procedure for the preparation and making of a planning contribution document if it was decided not to use a development plan document. Such a power is necessary, and to remove it would curtail the Secretary of State's ability to ensure that such a document is a clear and transparent statement of the planning authority's policy. Amendment (k) is not needed. The planning contribution document will set out the planning authority's policy, and will give reasons why contributions will be sought and why they will not be sought in some circumstances.

I assure the hon. Gentleman that I am happy to consider the relationship between our proposals and those measures in the Bill for joint local development documents. He and other hon. Members referred to that issue and I assure them that it will be dealt with in the provisions relating to such plans. I am also happy to examine further the circumstances in which local land charges become satisfied, and the possibility that charge contributions could be paid at some point other than at the commencement of development. However, I do not think that the specific amendments proposed are necessarily the right way forward.

Mr. Clifton-Brown

The Minister did not respond to my amendment (h), which is an important amendment that tracks how this money is spent by each local authority. There is anecdotal evidence that, in some cases, 90 per cent. of this money goes into the general budget. Will the Minister please give us an assurance that the Audit Commission will have some role in tracking this money and ensuring that proper value for money is achieved from these contributions?

Keith Hill

I am grateful to the hon. Gentleman for drawing my attention to that oversight. I shall write to him in due course, although he stopped me in my tracks as I was precisely at the point of dealing with that amendment. I was about to say that this issue was raised by the hon. Members for Ludlow, for South Holland and The Deepings (Mr. Hayes), and for Chipping Barnet, and by my hon. Friend the Member for Stroud (Mr. Drew), although he is not in his place at the moment. I recognise the concern raised by amendment (h) to new clause 2 that there should be proper accountability in relation to the spending of income raised by both the charge and negotiated routes. The Government have already taken action on this point by requiring local authorities to add information about planning obligations to their planning registers. I believe our new proposals should be welcomed.

In our consultation document, we are proposing that the local authority should set out, in public and in advance, its policies on contributions in relation to the development for which it would seek a contribution and the matters it spends income on.

Secondly, I want to make it entirely clear that we propose to take a power to enable the Secretary of State to insist that receipts are spent in the way envisaged in the public planning contributions policy. I hope that that offers particular assurance to the hon. Member for Ludlow, who has rightly raised this issue persistently.

Thirdly, we propose a power to require local planning authorities to make an annual report on matters relating to planning contributions. Fourthly, we propose that the Secretary of State should be able to prescribe the procedure by which the charging policy is developed, and to take steps if he believes it is not being done appropriately or at all. Those are all sensible new steps, and they are on top of the existing requirements for probity and accountability in local government finance, for which the Audit Commission already has powers.

As we move forward with this policy, I undertake to keep Members of both Houses fully informed of developments. I emphasise that these enabling amendments pave the way to a new approach to planning obligations and are the right way forward. They are designed to tackle the problems that have bedevilled this aspect of the planning process for too long. As I said in my statement last month, they offer speed and certainty where possible, and flexibility where necessary. I invite the hon. Member for Cotswold not to press his amendments.

Question put, That the clause be read a Second time:—

The House divided: Ayes 307, Noes 113.

Division No. 5]	[7:26 pm
AYES
Adams, Irene (Paisley N)	Cunningham, Tony (Workington)
Ainsworth, Bob (Cov'try NE)	Dalyell, Tam
Alexander, Douglas	Davey, Edward (Kingston)
Allen, Graham	Davey, Valerie (Bristol W)
Anderson, rh Donald (Swansea E)	David, Wayne
Atherton, Ms Candy	Davies, rh Denzil (Llanelli)
Atkins, Charlotte	Davies, Geraint (Croydon C)
Bailey, Adrian	Dawson, Hilton
Baker, Norman	Dean, Mrs Janet
Barnes, Harry	Denham, rh John
Barrett, John	Dhanda, Parmjit
Barron, rh Kevin	Dismore, Andrew
Battle, John	Dobbin, Jim (Heywood)
Bayley, Hugh	Dobson, rh Frank
Beckett, rh Margaret	Donohoe, Brian H.
Begg, Miss Anne	Doran, Frank
Bennett, Andrew	Doughty, Sue
Benton, Joe (Bootle)	Dowd, Jim (Lewisham W)
Berry, Roger	Drew, David (Stroud)
Best, Harold	Dunwoody, Mrs Gwyneth
Betts, Clive	Eagle, Angela (Wallasey)
Blackman, Liz	Eagle, Maria (L'pool Garston)
Blears, Ms Hazel	Edwards, Huw
Blizzard, Bob	Efford, Clive
Borrow, David	Ellman, Mrs Louise
Brake, Tom (Carshalton)	Farrelly, Paul
Brooke, Mrs Annette L.	Fitzpatrick, Jim
Brown, rh Nicholas (Newcastle E Wallsend)	Flint, Caroline
	Flynn, Paul (Newport W)
Brown, Russell (Dumfries)	Follett, Barbara
Buck, Ms Karen	Foster, rh Derek
Burden, Richard	Foster, Michael (Worcester)
Burnham, Andy	Foulkes, rh George
Calton, Mrs Patsy	Gapes, Mike (Ilford S)
Campbell, Alan (Tynemouth)	Gardiner, Barry
Campbell, Mrs Anne (C'bridge)	George, Andrew (St. Ives)
Campbell, rh Menzies (NE Fife)	Gerrard, Neil
Campbell, Ronnie (Blyth V)	Gibson, Dr. Ian
Caplin, Ivor	Gidley, Sandra
Casale, Roger	Gilroy, Linda
Cawsey, Ian (Brigg)	Godsiff, Roger
Challen, Colin	Goggins, Paul
Chapman, Ben (Wirral S)	Green, Matthew (Ludlow)
Chaytor, David	Griffiths, Jane (Reading E)
Chidgey, David	Griffiths, Win (Bridgend)
Clapham, Michael	Grogan, John
Clark, Mrs Helen (Peterborough)	Hain, rh Peter
Clark, Paul (Gillingham)	Hall, Mike (Weaver Vale)
Clarke, rh Charles (Norwich S)	Hall, Patrick (Bedford)
Clarke, Tony (Northampton S)	Hamilton, David (Midlothian)
Clelland, David	Hamilton, Fabian (Leeds NE)
Clwyd, Ann (Cynon V)	Hancock, Mike
Coffey, Ms Ann	Hanson, David
Cohen, Harry	Harris, Dr. Evan (Oxford W & Abingdon)
Coleman, Iain
Connarty, Michael	Harris, Tom (Glasgow Cathcart)
Cook, Frank (Stockton N)	Harvey, Nick
Cooper, Yvette	Havard, Dai (Merthyr Tydfil & Rhymney)
Cotter, Brian
Cousins, Jim	Healey, John
Crausby, David	Heath, David
Cruddas, Jon	Henderson, Ivan (Harwich)
Cryer, John (Hornchurch)	Hendrick, Mark
Cummings, John	Hepburn, Stephen
Cunningham, Jim (Coventry S)	Heppell, John

Hermon, Lady	Mole, Chris
Hill, Keith (Streatham)	Moonie, Dr. Lewis
Hodge, Margaret	Morley, Elliot
Holmes, Paul	Mudie, George
Hope, Phil (Corby)	Mullin, Chris
Howarth, George (Knowsley N & Sefton E)	Munn, Ms Meg
	Murphy, Denis (Wansbeck)
Hoyle, Lindsay	Murphy, Jim (Eastwood)
Hughes, Beverley (Stretford & Urmsdon)	Norris, Dan (Wansdyke)
	Oaten, Mark (Winchester)
Hughes, Kevin (Doncaster N)	O'Hara, Edward
Humble, Mrs Joan	Olner, Bill
Iddon, Dr. Brian	O'Neill, Martin
Illsley, Eric	Organ, Diana
Ingram, rh Adam	Palmer, Dr. Nick
Irranca-Davies, Huw	Perham, Linda
Jackson, Helen (Hillsborough)	Picking, Anne
Jamieson, David	Pickthall, Colin
Jenkins, Brian	Plaskitt, James
Johnson, Alan (Hull W)	Pollard, Kerry
Jones, Helen (Warrington N)	Pond, Chris (Gravesham)
Jones, Kevan (N Durham)	Pope, Greg (Hyndburn)
Jones, Lynne (Selly Oak)	Pound, Stephen
Jones, Martyn (Clwyd S)	Prentice, Ms Bridget (Lewisham E)
Joyce, Eric (Falkirk W)
Kaufman, rh Gerald	Prescott, rh John
Keeble, Ms Sally	Price, Adam (E Carmarthen & Dinefwr)
Keen, Alan (Feltham)
Keen, Ann (Brentford)	Primarolo, rh Dawn
Keetch, Paul	Prosser, Gwyn
Khabra, Piara S.	Purchase, Ken
Kidney, David	Quin, rh Joyce
King, Andy (Rugby)	Quinn, Lawrie
King, Ms Oona (Bethnal Green & Bow)	Rapson, Syd (Portsmouth N)
	Raynsford, rh Nick
Kirkwood, Sir Archy	Reed, Andy (Loughborough)
Knight, Jim (S Dorset)	Rendel, David
Kumar, Dr. Ashok	Robertson, John (Glasgow Anniesland)
Ladyman, Dr. Stephen
Lamb, Norman	Rooney, Terry
Laws, David (Yeovil)	Ross, Ernie (Dundee W)
Lazarowicz, Mark	Roy, Frank (Motherwell)
Lepper, David	Ruane, Chris
Leslie, Christopher	Ruddock, Joan
Levitt, Tom (High Peak)	Russell, Bob (Colchester)
Lewis, Terry (Worsley)	Russell, Ms Christine (City of Chester)
Linton, Martin
Lloyd, Tony (Manchester C)	Ryan, Joan (Enfield N)
Love, Andrew	Salter, Martin
Lucas, Ian (Wrexham)	Sanders, Adrian
Lyons, John (Strathkelvin)	Savidge, Malcolm
McAvoy, Thomas	Sawford, Phil
McCabe, Stephen	Sedgemore, Brian
McCafferty, Chris	Sheerman, Barry
McDonagh, Siobhain	Sheridan, Jim
MacDonald, Calum	Simon, Siôn (B'ham Erdington)
McDonnell, John	Simpson, Alan (Nottingham S)
McGuire, Mrs Anne	Singh, Marsha
McIsaac, Shona	Skinner, Dennis
McKechin, Ann	Smith, Geraldine (Morecambe & Lunesdale)
McNulty, Tony
McWalter, Tony	Smith, Jacqui (Redditch)
McWilliam, John	Smith, John (Glamorgan)
Mahmood, Khalid	Smith, Llew (Blaenau Gwent)
Mallaber, Judy	Smith, Sir Robert (W Ab'd'ns & Kincardine)
Mandelson, rh Peter
Mann, John (Bassetlaw)	Southworth, Helen
Marris, Rob (Wolverh'ton SW)	Starkey, Dr. Phyllis
Marsden, Gordon (Blackpool S)	Steinberg, Gerry
Marshall, David (Glasgow Shettleston)	Stevenson, George
	Stewart, David (Inverness E & Lochaber)
Marshall, Jim (Leicester S)
Marshall-Andrews, Robert	Stewart, Ian (Eccles)
Martlew, Eric	Strang, rh Dr. Gavin
Merron, Gillian	Straw, rh Jack
Moffatt, Laura	Stringer, Graham

Stuart, Ms Gisela	Ward, Claire
Sutcliffe, Gerry	Wareing, Robert N.
Tami, Mark (Alyn)	Watson, Tom (W Bromwich E)
Taylor, Dari (Stockton S)	Watts, David
Taylor, David (NW Leics)	White, Brian
Taylor, Matthew (Truro)	Whitehead, Dr. Alan
Teather, Sarah	Wicks, Malcolm
Thomas, Simon (Ceredigion)	Williams, rh Alan (Swansea W)
Tipping, Paddy	Williams, Betty (Conwy)
Todd, Mark (S Derbyshire)	Williams, Roger (Brecon)
Tonge, Dr. Jenny	Willis, Phil
Touhig, Don (Islwyn)	Winterton, Ms Rosie (Doncaster C)
Truswell, Paul	Wood, Mike (Batley)
Turner, Dennis (Wolverh'ton SE)	Woodward, Shaun
Turner, Dr. Desmond (Brighton Kemptown)	Woolas, Phil
	Worthington, Tony
Turner, Neil (Wigan)	Wright, David (Telford)
Twigg, Derek (Halton)	Wyatt, Derek
Tynan, Bill (Hamilton S)
Vaz, Keith (Leicester E)	Tellers for the Ayes:
Vis, Dr. Rudi	Vernon Coaker and
Walley, Ms Joan	Mr. Nick Ainger
NOES
Ainsworth, Peter (E Surrey)	Hogg, rh Douglas
Arbuthnot, rh James	Horam, John (Orpington)
Atkinson, Peter (Hexham)	Jack, rh Michael
Bacon, Richard	Jackson, Robert (Wantage)
Barker, Gregory	Jenkin, Bernard
Baron, John (Billericay)	Johnson, Boris (Henley)
Bellingham, Henry	Key, Robert (Salisbury)
Beresford, Sir Paul	Lait, Mrs Jacqui
Boswell, Tim	Letwin, rh Oliver
Bottomley, Peter (Worthing W)	Liddell-Grainger, Ian
Bottomley, rh Virginia (SW Surrey)	Lidington, David
	Lilley, rh Peter
Brady, Graham	Loughton, Tim
Brazier, Julian	Luff, Peter (M-Worcs)
Burns, Simon	McIntosh, Miss Anne
Burt, Alistair	Maclean, rh David
Butterfill, John	McLoughlin, Patrick
Cameron, David	Malins, Humfrey
Cash, William	Maples, John
Chapman, Sir Sydney (Chipping Barnet)	Mawhinney, rh Sir Brian
	Mitchell, Andrew (Sutton Coldfield)
Chope, Christopher
Clappison, James	Moss, Malcolm
Clifton-Brown, Geoffrey	Murrison, Dr. Andrew
Collins, Tim	Norman, Archie
Curry, rh David	O'Brien, Stephen (Eddisbury)
Davies, Quentin (Grantham & Stamford)	Osborne, George (Tatton)
	Ottaway, Richard
Djanogly, Jonathan	Page, Richard
Duncan, Alan (Rutland)	Paice, James
Evans, Nigel	Paterson, Owen
Fabricant, Michael	Pickles, Eric
Fallen, Michael	Prisk, Mark (Hertford)
Flook, Adrian	Robathan, Andrew
Francois, Mark	Robertson, Laurence (Tewk'b'ry)
Gale, Roger (N Thanet)	Robinson, Mrs Iris (Strangford)
Garnier, Edward	Robinson, Peter (Belfast E)
Gibb, Nick (Bognor Regis)	Roe, Mrs Marion
Gillan, Mrs Cheryl	Rosindell, Andrew
Goodman, Paul	Ruffley, David
Gray, James (N Wilts)	Selous, Andrew
Grayling, Chris	Shephard, rh Mrs Gillian
Green, Damian (Ashford)	Shepherd, Richard
Gummer, rh John	Simmonds, Mark
Hague, rh William	Spelman, Mrs Caroline
Hammond, Philip	Spicer, Sir Michael
Hawkins, Nick	Spink, Bob (Castle Point)
Hayes, John (S Holland)	Spring, Richard
Heald, Oliver	Stanley, rh Sir John
Heathcoat-Amory, rh David	Swire, Hugo (E Devon)
Hoban, Mark (Fareham)	Syms, Robert

Taylor, Ian (Esher)	Wiggin, Bill
Taylor, John (Solihull)	Wilkinson, John
Taylor, Sir Teddy	Willetts, David
Turner, Andrew (Isle of Wight)	Wilshire, David
Tyrie, Andrew	Yeo, Tim (S Suffolk)
Walter, Robert
Waterson, Nigel	Tellers for the Noes:
Watkinson, Angela	Hugh Robertson and
Whittingdale, John	Mr. Mark Field

Question accordingly agreed to.

Clause read a Second time, and added to the Bill.