§ 12.47 p.m.
§ The Earl of Avon rose to move, That the draft regulations laid before the House on 19th April be approved.
§ The noble Earl said: My Lords, I beg to move that the draft Town and Country Planning (Fees for Applications and Deemed Applications) (Amendment) Regulations 1982 be approved.
§ The amending regulations, which are laid under powers contained in Section 87 of the Local Government Planning and Land Act 1980, provide for a number of changes to the fees scheme introduced last April. When speaking to the first set of regulations last year my noble friend Lord Bellwin indicated that we would be keeping the fees scheme under close review during its first year of operation. He undertook that, if changes proved to be necessary in the light of experience, we would be bringing forward amending proposals.
§ Although our experience of the operation of the fees scheme is still limited, we have received a number of representations that the original regulations contained some unintentional unfairness and anomalies. We have also noticed that there are some small loopholes which could allow people to avoid fees in a way which would be contrary to the basic principles of the scheme. These amending regulations seek to respond to those representations and to close loopholes. They also provide for an across-the-board increase of 10 per cent. in the levels of all fees, with scale maxima going up pro rata.
§ Given the relative novelty of the fees scheme, we have thought it right to confine changes this year to a number of relatively modest improvements. Fundamental revisions to what are a complex set of regulations would have been confusing both to local authorities and to applicants for planning permission, and would therefore run the risk of disruptive effects. We entirely accept, however, that the fees scheme is capable of further improvement; indeed, we recognise that there are a number of interest groups who still take the view that fees are unfair to them. For this reason, we propose during the course of this year to undertake more fundamental reviews of the whole operation of the fees scheme. To this end, we will be consulting interested parties in order to elicit their views, comments and suggestions. The aim will be to complete the review in time to bring forward further amending regulations to take effect in 1983–84.443
§ The regulations provide for a modest increase of 10 per cent. in the levels of all fees. Although it is very difficult indeed to estimate with precision the likely income yield, we expect that it would be about £28 million in a full year. Although there have been suggestions that, given the assumptions embodied in rate support grant, the increases ought to be much higher—perhaps over 50 per cent.—we did not think that increases of that magnitude could possibly be justified. It is important that the fees are pitched at levels which, first, are in broad proportion to the costs of processing applications, secondly, are fair between different sorts of application and, lastly, do not act as a deterrent to development. Substantial increases in fees would make it difficult to achieve those objectives.
§ I understand that the local authority associations take the view that the likely shortfall in income as compared with the assumptions made in rate support grant will have the effect of penalising local authorities. Although uncertainties about income yield in both 1981–82 and 1982–83 make it impossible to say exactly what the shortfall might be—and it will be some time before we are in a position to do so—we shall monitor the position carefully and discuss with the associations the implications for local authority expenditure.
§ My Lords, I turn now to the detailed changes to the structure of the fees regulations. These are of three sorts: the removal of anomalies; the closing of loopholes; and drafting amendments designed to clarify matters which have in practice proved to be a little ambiguous. In that category, there are three main changes. The amending regulations introduce an entirely new category for agricultural buildings. Its effect is to exempt from any fee those agricultural buildings of less than 465 square metres which require specific planning permission, and to discount for fees purposes the first 465 square metres of larger buildings. These changes, which are based on the agricultural provisions of the General Development Order amount to a very substantial concession to the agricultural community. They respond to representations that large hut relatively low cost agricultural buildings have been unfairly treated.
§ The second change designed to remove an anomaly responds to the well-publicised case of "The Piggeries", the three vandalised tower blocks in Liverpool. The developer, who proposed to subdivide these three large blocks into smaller flats, found himself faced with a fee of over £6,000 that was clearly quite disproportionate to the amount of work involved in processing his application and was the result of the fact that the relevant fees category had no upper limit. It was certainly not our intention that the subdivision of dwellings should be caught in this way—and we were thinking in terms of the conversion of Victorian and Edwardian houses. We have therefore taken action to put an upper limit on this category of fee. At the same time, we are making some more technical changes in this category to ensure that the subdivision of warehouses and the like are treated in the same way as the subdivision of dwellinghouses.
§ An anomaly in the other direction has turned out to be the treatment of waste disposal applications. At present, they attract a flat rate fee of £40. But it has become clear that controversial matters of this nature 444 can in practice involve a substantial amount of work for planning authorities. The third is an amending regulation which recognises this fact by providing that waste disposal applications should be treated in the same way as those for the extraction of minerals; that is, at a rate of £22 for each 0.1 hectare of the site area, subject to a maximum of £3,300. Noble Lords will be pleased to know that these changes accommodate points which were made last year by the Opposition.
§ My Lords, those are three fairly substantial changes to the regulation. Others are of a more technical nature. Arrangements for charging for reserved matters are tightened up in the amending regulations, thus closing some loopholes. At present, it is possible to frame applications for outline permission in such a way as to include details of design and external appearance, thus ensuring that a subsequent detailed application attracts a low flat-rate fee. Design and external appearance normally involve local authorities in a fair amount of work, and hence costs, and it defeats one of the objectives of the fees scheme for this minor loophole to continue. We are therefore closing it. At the same time, we are extending the scope of the regulation dealing with reserved matters to cover appeals to the Secretary of State, and cases where land has been added to the site covered by the earlier application in order to provide better access. We are also tightening up the working of the regulations dealing with "free go" arrangements, under which one revised application is free of charge within 12 months.
§ At this technical level, there are also two minor but useful improvements to the present arrangements for the payment of fees for the deemed planning application which arises from any enforcement appeal made to the Secretary of State. First, we cater for the situation where someone makes an enforcement appeal—and would normally be required to pay the appropriate fee for it—at a time when he is still waiting for the local planning authority's decision on an application for the development cited in the enforcement notice. In these circumstances, it is obviously unfair to have to pay two fees, so the amending regulations introduce exemption from the fee for the enforcement appeal.
§ Second, we take account of a provision in the Local Government and Planning (Amendment) Act which has the power to quash an enforcement notice, or to dismiss an enforcement appeal in certain specified circumstances where procedural requirements are not carried out. When that happens there is no consideration of the deemed planning application and it is therefore entirely appropriate to refund any fee already paid. The amending regulations provide accordingly. The amending regulations also contain some reorganisation and amendment of the schedules as well as minor drafting amendments.
§ My Lords, as I indicated at the beginning of my speech, we have not sought to make fundamental changes to the fees scheme, We have only limited experience of its operation, and major alterations, for example, in the incidence of fees, would not be justified at this stage. But we propose during the course of this year to look again at the scheme and its details as well as at the way in which it treats different sorts of development. To this end, the department will be seeking the views of interested parties. One issue we shall be examining with particular care is that of 445 minor modifications to existing planning permissions. A number of examples have come our way of local authorities insisting on a fresh application—and therefore another fee—for quite minor changes. It is certainly not our intention that people should be charged twice in this way. We shall also be looking at a number of other matters raised by the local authority associations, developers and others. I commend the regulations.
§ Moved, That the draft regulations laid before the House on 19th April be approved. [18th Report from the Joint Committee.]—(The Earl of Avon.)
§ 12.58 p.m.
§ Baroness Birk
My Lords, may I first thank the noble Earl, Lord Avon, for his lucid explanation of these regulations. We on this side of the House have always opposed fees, since we believe that planning is a community service which controls the use of land and buildings in the interests of the community and of other individuals; therefore it has always seemed wrong to us that individuals should pay directly rather than through the Government, be it central or local. These matters of principle were discussed during the passage of the Local Government (Planning and Land) Act, and when we divided on this matter in this House a number of noble Lords opposite joined us in the Division Lobby. As this instrument has been passed already by the Commons I shall not seek to divide the House this afternoon.
The revised planning fees regulations were supposed to be implemented by 1st June. If we must have these fees then it is imperative that they should operate from the beginning of the financial year; but, seven weeks on, these fees have not yet been agreed to and now we understand that they will not be implemented before 1st June. The absence of the revised regulations has led to great uncertainty in local government. That is what the local government associations feel strongly about. One of the points about which they feel strongly is that it has cost local government money, as the proposed increased fees will only come into effect two months into the financial year. When these revised regulations were discussed in another place I did not notice any explanation or apology for this delay. Perhaps the Minister, when he comes to reply, can explain why the delay was necessary.
My Lords, the detailed changes in the revised regulations are, by and large, welcome and non-controversial. A number of important loopholes have been blocked and I welcome the willingness of the Government to close these gaps. Also, a number of significant anomalies have been resolved. The Joint Minerals and Reclamation Group, recently set up by the three local authorities associations, have welcomed the increase in the level of fees for applications for the disposal of waste. Here the Government have shown themselves willing to respond to the well-documented and reasonable arguments for change which have been put forward by both the local authority associations which represent county councils in England and Wales.
The Minister has told us that there has been an overall increase of 10 per cent. in the scale of fees and in the maximum fees payable under the regu 446 lations. Any increase in the level of fees must, in isolation, be a disappointment to those who are concerned to promote development and encourage growth during this very grave recession. If anything, 10 per cent. is too high. I know the local authority associations have no wish to be responsible for administering a scheme which involves a punitive level of fees which can only bring planning and local government into disrepute.
The problem for local authorities is that most people do not recognise that in this case they act solely as agents for central Government, which sets the level of fees and, through the rate support grant, takes back from local government any money which is collected under these regulations. Local authorities wish to see planning fees kept at the absolute minimum, as the Government assert they also wish to do. If planning fees are to be kept at a reasonable level—and I know that there are many who will think they are already too high—then so must the sum deducted by central Government in the rate support grant. This is the nub of the argument and the distaste which has been expressed by the three local major authority associations.
The evidence which we have seen was set out in detail by my colleagues in another place and shows clearly that central Government are taking back far more from local government than local government are collecting in fees. Obviously, there will be a margin for error in any calculations; but the local authorities calculate that, including this financial year, the likely loss of income as a result of excessive reductions in the rate support grant, which is supposed to cover planning and building regulations fees, will be in excess of £100 million. This is an enormous sum, and it is one which the Government have knowingly and even rather brazenly increased. Again, I see no real explanation or apology for this in the debate in another place on 11th May. The local authority associations have written to say that they view with considerable concern the Government's unwillingness to ensure that income from fees equals the amount deducted from the rate support grant. They accept that in any one year calculations can be slightly astray. However, the Government have in no way proved willing to remedy these mistakes in subsequent financial years.
Therefore, there are a number of questions which the Government must answer and answer unequivocally. First, will the Government make good, subject to detailed agreement on the exact figure, the shortfall in income for the last financial year which was suffered by local government? The local authority associations estimate that figure at £17.1 million, and the Government have accepted that the loss is certainly no less than £12.1 million. Secondly, will the Government pledge themselves to set the level of rate support grant deductions as near to the estimated fee income for any one year as is possible? In this financial year, there seems to be agreement between the local authorities and central Government that the loss will be in excess of £10 million. Will the Government immediately make sure that that loss is wiped out by an appropriate adjustment in the rate support grant? Thirdly, will the Government assure the House that, if, as may well happen, fee income is substantially 447 less in any one year than the amount deducted from the rate support grant, the shortfall will be made good in the following year's rate support grant settlement?
If the Government are unable to give these assurances, then we shall have to accept that they are using these regulations and the building fees regulations—where the loss will have been £72 million over three years—as a means of further penalising local government and reducing the amount of money which local government can spend. If that is their intention, and the planning fees and building regulations fees systems are to be a further tax upon local government, then they should say so. I hope that that is not so and that it is a matter of very grave maladjustment. To equivocate in answering these points would be to show a lack of political courage. It is important that we should know on what basis the Government are operating these fees regulations, and what they intend to do over this grave shortfall.
In another place the Minister gave an undertaking—and the Minister here has reiterated this today—that discussions would take place on the implications of the estimated level of shortfall. Of course, I am not opposed to the idea of discussions, but these surely cannot take the place of making decisions on what are matters of principle. Those matters of principle must be decided by Parliament. The Government have known about these problems for some time now and have had plenty of time to come to a decision.
We all know the implications of the level of shortfall in fees income. It is perfectly simple. It means that local authorities will have less money to spend on essential services to the community. I fail to see what further discussions can reveal unless they are to identify exactly which local authority services are being cut back and just what suffering is being caused to the most vulnerable members of our community. Perhaps if that is the remit of any such discussions this House will be interested to learn of their conclusions. This House does not need an assurance of further discussions—it needs clear answers to the questions that I have posed. The Government are trying to have the best, or more likely the worst, of both worlds, and it is at somebody else's expense. We on this side of the House have always opposed the idea of planning fees and we continue to oppose them.
What we want to see now—and it is a matter of fact: they are in operation—is this tremendous financial gap closed. If it is not closed through the fees—and understandably, I agree, the Government do not want to increase them very much more—the deduction must be reduced. If the result of these discussions is a cease-fire in the attack of the Secretary of State on the rate support grant, that will at least be some comfort to us.
§ 1.8 p.m.
§ Lord Hooson
My Lords, the noble Baroness has already adverted to the fact that these regulations have already been approved in another place. I want to put on record my own objection and the objection of my party to the basic principle behind these regulations. It seems to us that the fee for planning application 448 schemes was originally, and is rapidly becoming more so, a crude and unjust system of taxation.
As the noble Lord said in his introduction today, the Government are proposing to put up the fees by an average of 10 per cent., which he regarded as a modest figure. The truth is that it is tempting once a Government have embarked on this pathway to go further down; and of course a 10 per cent. increase every year will eventually lead to this becoming a very substantial form of taxation.
The planning laws were surely intended to protect the community. They are of fairly recent origin in this country. Before that, an individual had the right to develop his own land in his own way. It was thought —and rightly—to be in the interests of the community to impose restrictions, but one of the criticisms made of our planning provisions is that they are essentially restrictive in character and not creative in character. That having been established as the basic principle, why should individuals be required to pay for that service which is essentially a community service? Why should people who are developing their own property—for example, to take the simplest one, adding a garage to a house which was not originally built with one—have to pay a tax on the application?
Already this year the estimate was that this new form of taxation would relieve the Government by means of the rate deficiency rate by the sum of £38 million. In the event, it has proved that the estimate was wrong, or so the local government associations claim, and the sum realised has been £25 million. Therefore there is an alleged shortfall between the actual realisation and the estimate of about £13 million. It seems to me that the whole object is entirely wrong. First, it relieves the Government of providing a substantial sum by way of rate deficiency grant; secondly, it does so by imposing a tax on an application for planning development. The whole thing is wrong. It is wrong in principle and, as I see it, it is going to develop over the next few years into a substantial addition and, as I have said, a crude form of taxation. We are therefore completely opposed to it.
As to the amending factors in the regulations, the fact that the Government are taking advantage of their limited experience in one area to, as it were, try to iron out anomalies and unfairness in the system, I have no comment to make, save that it seems to me that there are still many anomalies and difficulties, even with these revised regulations. I think that when the Government embarked on this path it was taking this country in a direction in which it ought not to have gone.
§ 1.12 p.m.
§ Baroness Stedman
My Lords, I should like to support what the noble Baroness has said about the effect of these regulations and the fees on the local authority finances. The present situation is that the local authorities collect the charges and retain the income; then central Government make the adjustment through the total RSG to allow for the additional income the authorities have had. But, as the noble Baroness said, this has not worked out fairly in so far as the local authorities are concerned, and the reduction takes place before the income has been collected. It should be based on a best estimate of the income for the next year.
449 Although I am speaking from these Benches, I am speaking today as a vice-president of the Association of District Councils and I have been asked to associate with my remarks the noble Lord, Lord Sandford, president of the ADC, and the noble Viscount, Lord Ridley, president of the Association of County Councils, neither of whom can be with us today. All three associations welcome the changes in the planning fees and also the detailed changes to elements within the scheme, and particularly the proposals put forward for more realistic charges for waste disposal. They are not opposed to the proposed 10 per cent. increase, but they are very concerned, as the noble Baroness and the noble Lord have said, about the level of increase, if it is accepted that the RSG deduction must be reduced to cover the shortfall this year and last year. Until this reduction has been accepted by the Government, the new level of charges cannot really be acceptable entirely to the associations.
In the last financial year the income received by the local authorities was £20 million and the deduction from their rate support grant was £37.1 million. That £17.1 million deficit is not being allowed for in this year's settlement, and the fee income this year, they anticipate, will be no more than £27.5 million. In spite of that, the rate support grant deduction is to be £38.8 million. That means, as other speakers have said, that in the last two years the local authorities have lost something over £28 million. This is an additional burden and it has been very quietly and insidiously placed on the shoulders of local authorities.
Soon we are to receive the changes in building regulation fees. They are likely to come before us, I would guess, within the next month. The local authorities will have lost in grant something like £72 million in the first three years of the operation of the building regulation fees. If you take those together with the fees and grant under discussion this morning, it means that local authorities will have lost something like £100 million in grant in just three years. To make it even worse, the higher planning fees proposed in the regulations, as the noble Baroness has said, are going to come into operation at least two months into the financial year and the building regulation fees will be coming into operation three or four months later in the financial year. There is really no excuse for this sort of delay. I note that the regulations were printed and the date has been blacked out on them, and we have just been left with the year "1982". They have deliberately created a climate of uncertainty, instability and high costs for local authorities, and we need an assurance today that if this level of increase is accepted the rate support grant deduction will be reduced to cover the shortfall for this year and last year.
I should like to leave one other point for consideration when the noble Lord and his department arc discussing this subject with the local authority associations. That refers to the position of districts which have a new town within their boundaries. Their situation is a little different, because they tend to deal with rather fewer individual planning applications since the development corporations put in the large development applications. Therefore these districts suffer not only from a reduction in the fees they might have received but from the fact that they still get "clobbered" for their share of the reduction in the 450 rate support grant. When the grant is reduced their expenditure allowance is also reduced, and this of itself could lead to penalties being imposed on those districts for being in excess of their GRDA. I hope the noble Lord will take this point on board and use it in his discussions with the association and that we shall learn that the Government are going to make good the shortfall in the rate support grant.
§ 1.18 p.m.
§ Lord Stanley of Alderney
My Lords, I have two comments and two questions for my noble friend. My first comment is a somewhat strange one, because I find myself thanking the Government for the concession they have made in this order on agricultural buildings. My noble friend will remember that the case for planning fee reduction was strongly argued in the Local Government, Planning and Land Act 1980, but unfortunately it was rejected by the Government. The fact that the Government have now accepted our argument is, in my opinion, a credit to the Government machine and its willingness to listen to reasonable argument. I hope my noble friend will accept this compliment and my gratitude in the spirit in which they are given, because I am sometimes not very polite about the Government machine.
My other comment concerns the glasshouse industry, whose needs at the moment are great, owing to competition from the Dutch. In fact, although there appears to be a concession to agriculture, it does not in fact help the glasshouse industry, whose requirement per area is considerably bigger than in normal agriculture. Hence, although we do not now pay any planning fee until the area gets to 465 square metres, and after that it is £44 for every 75 square metres as opposed to 40 square metres, when it comes to the glasshouse industry, which is that much larger, it puts it at a disadvantage.
We are therefore seeing a position where horticulture is being discriminated against vis-à-vis agriculture plain and simple. I hope that my noble friend will be able to assure me that he will consult and think further about this matter. If, by chance, over the next year or so he revises his opinion, as he has over this past year in regard to agriculture, and if there is then a rebate or reduction, it should be able to be claimed in retrospect —because, as the noble Baroness, Lady Birk, said, if that is not done you will get a halt in building. I am sure that is something we do not want at the moment, with the financial problems we are facing.
My two questions are quite simple. First, would my noble friend confirm that if an agricultural building is eligible for capital grant the cost of the planning fee can be claimed as an expense for grant? Secondly—and I have to declare an interest here, because I am in one of these positions—can my noble friend say what is the position of a farmer who has applied and, by necessity, has had to pay the planning fee at the old rate, but has not yet either had planning permission from the council or started work? Can he go on to the new rate, rather than the old rate? I have a feeling that my noble friend may say that I am asking for icing on my cake, but I like icing on my cake, as I am sure other noble Lords do. Otherwise, I welcome the order.
§ 1.20 p.m.
§ The Earl of Avon
My Lords, I should like to respond to some of the points which were made during the debate. Although I am sorry to see that some noble Lords, particularly the noble Baroness, Lady Birk, and the noble Lord, Lord Hooson, are not yet reconciled to the principle of fees for planning applications, I hope that they will understand if I do not seek to traverse again that well-trodden ground. We discussed the principle at length during the passage of the Local Government, Planning and Land Act 1980, as the noble Baroness, Lady Birk, said, and Section 87 of the legislation gives the Secretary of State the necessary enabling powers. I note, however, that there has been a general welcome for the detailed changes introduced by these amending regulations.
Both noble Baronesses spoke about the late production of this paper. All I can say is that it concerns rather complex and difficult matters, which required careful consideration and, also, careful interpretation of the first year's figures which were not available until 1st April this year. The regulations were sent in draft form to the local authority associations on 19th April for onward transmission to their own members, so that we could discuss it as fully as possible. Some part of the delay came about because of the loophole which was spotted at the last moment. The associations told us informally that they would like action to close that loophole, which we have done.
Noble Lords have made much of the shortfall likely in income from planning fees, and the noble Baroness, Lady Stedman, mentioned building fees. We are, of course, today concerned only with the former and building regulations will come later. It is an open secret that the levels of planning fees prescribed in the 1981 regulations are likely to fail to raise the £38 million or so which was intended. There are a number of reasons for the shortfall. First, a very large number of substantial planning applications were made in the quarter before the introduction of fees. Secondly, more applications than expected were of a kind which were exempt from fees; for example, those made as the result of an Article IV direction or in a conservation area. In addition, these factors were combined with the liberalising amendments to the general development order and a decline in the volume of planning applications.
Although it is too early to be able to estimate with confidence the total income for 1981–82, we expect it to be in the range of £23 million to £25 million, but we cannot yet be certain. For 1982–83, the position is necessarily even more speculative. Since 1981–82 was clearly a very untypical year, we should be wary about seeking to extrapolate forward the likely income yield. But given these important caveats, it looks as though income in 1982–83 will be of the order of £27 million to £29 million, although the prospects are for a shortfall of income. For the reasons that I outlined in my opening remarks, we have thought it right to confine the overall increase in charges to 10 per cent.
In response to the noble Baroness, Lady Birk, we shall be considering the implications of this level of increases for local authority expenditure and, as I said, discussing the matter with the local authority associations. Of course, I cannot give answers until the 452 discussions have taken place. Otherwise, it would make the discussions themselves a waste of time.
My noble friend Lord Stanley referred to the position of glasshouse developers and the horticultural industry. I should like to thank my noble friend for the kind remarks with which he prefaced his questions. It has been suggested that, even after the very substantial concession to agriculture of discounting for the purposes of calculating fees the first 465 square metres of those buildings which require specific planning permission, large glasshouse developments will be hit hard. Although I should observe that the levels of fees are related to the costs of processing planning applications, I should like to repeat today the assurances given in another place by my honourable friend the Member for Pudsey. It is that we will look again at the position of glasshouses in our more fundamental review of the fees scheme. I am afraid that I could not hold out any hope for retrospective legislation on that point.
The noble Baroness, Lady Stedman, raised a point about new towns, and we will certainly make sure that that is kept in the forefront of our discussions. My noble friend Lord Stanley asked about eligibility of the planning fee. The answer to that is, Yes, and it is at the same percentage rate as the project itself. So that if a building gets a grant of 40 per cent., then 40 per cent. of the fee is also eligible for grant. He also asked whether a farmer who has already put in his planning application and paid a fee will be subject to the new or the old regulations. The answer, I am afraid, is that he will be subject to the old regulations. I am only sorry that my noble friend did not have more confidence in the Government and had waited until after 1st June. I have tried to cover the various points which were raised. If there is any point which I have not covered, I will of course write to the noble Lord concerned. My Lords, I commend these regulations.
§ Baroness Birk
My Lords, before the noble Lord sits down may I say this? I am afraid that Hansard have whipped away my notes and I do not have a list of my questions. But I have a very strong feeling that the noble Earl has not answered all of my questions and I should be grateful if he would write to me, because it is obvious that he cannot go any further at this stage.
§ The Earl of Avon
My Lords, of course I included the noble Baroness in my remarks, when I said that I would write to anyone whose questions I had not answered. I think that quite a lot of her questions were covered in my reply, but until we have discussed with the local authorities I cannot go any further.
§ On Question, Motion agreed to.