HL Deb 02 February 2004 vol 656 cc524-46

House again in Committee on Clause 46.

[Amendments Nos. W9ZCD to 109ZCE not moved.]

Baroness Hamwee moved Amendment No. 119ZD: Page 35, line 22, at end insert— ( ) A local planning authority shall, in considering the matters referred to in subsection (3), have regard to the regional spatial strategy for the region or if the local planning authority is a London borough, the spatial development strategy and any supplementary guidance published by the Mayor of London.

The noble Baroness said: We are still on Clause 46, but dealing with a slightly different issue. The amendment provides that a local authority shall have regard to the regional spatial strategy, or the spatial development strategy and supplementary guidance if the authority is in London, in considering matters that we debated at length under Clause 46(3).

The Mayor of London has raised the matter with the Minister for Planning. I have said that I do not pretend, or wish, to speak for the Mayor of London, but the issue he has raised should be aired. I understand that the points he makes are supported by the South East England Regional Assembly— SEERA. He is concerned that neither the consultation paper on planning obligations nor the new clauses reflect or refer to the regional planning context.

The Government are focusing on the need for regional approaches to housing and planning. We have spent time on the draft PPS11 and the same applies to the proposed revisions to PPG3 on housing and the London housing strategy. It does not seem to fit with these approaches to give local authorities discretion to set their own tariff regime—perhaps I should use that term in the widest, almost non-technical sense—and to determine the use to which receipts are put with no regard for either the regional spatial or housing strategies.

I do not argue with the Mayor's concern that the maximum community benefit is secured by, or perhaps from, high-value developments, while at the same time supporting rather than deterring development. The Mayor of London expresses concern about the risks to affordable housing numbers, which is something other noble Lords have touched on. The Mayor says there are major risks that London boroughs will not focus tariff receipts on affordable housing.

Many noble Lords will have come up against the dilemma that boroughs do not necessarily sign up to a regional approach when they are faced with some of the detail. I talk about boroughs, although the point of the amendment is wider. I am sure I am not the only member of the Committee who has, for instance, seen boroughs arguing and agreeing that there should be averages for the percentage of affordable housing in new developments, without any borough apparently volunteering to go above what they say should be the average in order to allow for lower percentages to be compensated. The issue is relevant to other needs, particularly transport infrastructure which will often affect more than one borough.

The Mayor of London also makes the point that developers are seeking a clear and consistent basis. In London, 33 different tariff regimes at different stages of the approval and review process will not meet that objective; that is, 32 boroughs plus the City of London. The mayor is concerned that there is a real danger that some boroughs might want to deter development rather than encourage it and will set their tariffs at an unacceptably high level.

I slightly part company from the Mayor in that a top-down approach is implicit in this. I am sure what he really means to say is that there should be negotiation between the two levels to arrive at the correct answer. However, I sympathise with and support his concern that London as a whole should not suffer and in some ways needs to be treated as a whole.

I inquired of the Mayor's office what response there had been from the Minister for Planning to these representations. I understand that the Mayor was told that the statement on planning obligation would give the necessary reassurances. It does not seem to me to do so. However, I accept that I may have missed something rather subtle. I beg to move.

Baroness Hanham

I intervene to remind the Minister of an earlier debate we had in which there was concern about the relationship of the boroughs to the regional spatial strategy. The argument was that the regional spatial strategy for London was beyond what was required. In her comments, the noble Baroness, Lady Hamwee, takes us even further beyond what is required. I add that caveat.

Lord Rooker

The answer is very simple. First, we believe that the amendment is unnecessary. Planning obligation policies will be included in local development documents. The Bill already states that local development documents must be in general conformity with the regional spatial strategy or, in the case of London, the spatial development strategy. So it is already the case that local planning authorities must have regard to regional policies in regional spatial strategies or the spatial development strategy. Therefore, the amendment is unnecessary.

Baroness Hamwee

The point did not come from me in the first instance. The Mayor's planning officers have expressed considerable concern over this matter. It is right that they should look at what the Minister has to say. It will not take them long to read that. I thank the Minister for that very clear answer. I hope that it satisfies them. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Hanham moved Amendment No. 119ZDA: Page 35. line 22, at end insert— ( ) Planning contributions may not be sought by reference to the value of the land or to any increase in the value of land occasioned by the grant of planning permission.

The noble Baroness said: Amendment No. 119ZDA would prevent the planning contribution proposals being used as a land tax or a development land tax; that is, a tax on increases in value from the grant of planning permission. As it stands, the Bill seems to be capable of either use. We know the temptation for Labour governments to introduce a form of betterment levy or development land tax. Each Labour government have introduced one and every succeeding Conservative government have had to repeal it.

Such taxes on development simply discourage useful development. But the Bill goes further than these general political objections. If Parliament is to allow taxation by taking a percentage of the increase in land values from the grant of planning permission, then it should do so explicitly, setting rates with a proper and accountable procedure. It should not use this scanty provision to do so. I beg to move.

Lord Rooker

We are not going to do so, and it is not a scanty provision. I referred to the amendment earlier as it was originally linked in my speaking notes to another amendment.

As the noble Baroness said, Amendment No. 119ZDA seeks to ensure that planning contributions are not made with reference to value uplift brought about by planning permission. As we made clear in our recent statement, the Government do not see value capture as a primary function of planning contributions. The main focus should be on addressing the impact of a development with a degree of flexibility to take account of its viability and of economic circumstances.

We certainly do not want to see planning contributions used explicitly as a means of raising extra revenue unconnected with the development, so we have some sympathy with the amendment. It fits our concerns about inappropriate revenue raising through planning contributions. We still have some way to go in formulating our policy on planning contributions—that is fairly self-evident from our previous debates—and we want to give careful consideration to the principles we will set out on how the charge is calculated. However, we do not think it is right to set this down in primary legislation. I have made the point about regulations, but I hope I have been explicit enough in response to the noble Baroness, Lady Hanham, for her not to press the amendment.

Baroness Hanham

I thank the Minister for that reply and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

8.45 p.m.

Baroness Hanham moved Amendment No. 119ZDB: Page 35, line 22, at end insert— ( ) A relevant requirement may include an obligation entered into without the consent of the local planning authority.

The noble Baroness said: The amendment retains existing provisions that allow developers to enter into an obligation without the consent of the local planning authority and for that to count as a relevant requirement. Developers may need to make contributions by requirements to address other issues. The Government appear to indicate that these will be agreements with the local planning authority.

However, the present system allows developers to enter into unilateral obligations to which the local authority has not agreed. This is particularly important in planning appeals, where the authority will not—probably understandably—be prepared to sign an agreement. It is important that the ability to make unilateral obligations tailored to a particular scheme is retained. I beg to move.

Lord Rooker

I am grateful to the noble Baroness. My brief refers to the amendment's "purpose and effect". Sometimes in the other place I used to use the "purpose and effect" statement as a substitute speaking note, because it was clearer. In this case, my brief states that the purpose of the amendment is unclear, followed by either/or. I have speaking notes for each possibility, but the noble Baroness has been kind in making it absolutely clear that the amendment is aimed at retaining unilateral undertakings.

It is our intention that the existing system of making unilateral obligations should remain under the new system. They provide a useful mechanism for applicants to appeal to the Secretary of State against refusal of planning permission and to make what he considers to be a reasonable contribution without it having to be negotiated with the local authority. I hope that that is a satisfactory explanation.

Baroness Hanham

I thank the Minister for that clear reply. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Hanham moved Amendment No. 119ZE: Page 35, line 24, at end insert— ( ) 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.

The noble Baroness said: The amendment is designed to prevent an intervention by the Secretary of State after much work has been carried out at local level to reach a consensus on the level of planning contribution. As the Bill stands the Secretary of State has significant power to amend a plan. It would be a great shame and an insult to local democracy if the Secretary of State were able to revise or reject a plan on the grounds that the authority had set the charge at too low, or for that matter, too high a level.

While intervention because the charge was too high would be equally bad, this is unlikely to occur because no developer would have come forward in those circumstances. Much effort at a local level will go into setting the charge. As I understand, it will be subject to community involvement and negotiation with developers. It will no doubt be a lengthy process and undergone at great cost to the local authority in resources and man hours. The Secretary of State should not be able to take matters into his own hands if the authority has complied with all regulations relating to planning contributions. I beg to move.

Lord Rooker

I fully understand why the amendment is there, but, as in one or two other areas of the Bill, it is necessary for the Secretary of State to reserve some powers. It is definitely the function of local planning authorities to determine the appropriate level of charges for their area in relation to the impact of development there. The Government do not wish to intervene in that process; we would do so only sparingly and as a last resort. We believe that it would be acceptable in certain circumstances for the Secretary of State to be able to intervene.

If a planning charge were too low—in a way that sounds subjective—it could mean that the local authority had not properly considered the possible impacts of the development—mistakes can happen— or had disregarded them in setting out the policy in the first place. So it must be reasonable for the Secretary of State to have a power to require the local authority to change such a policy which is detrimental. The point is that the Government need to look out for the interests of local communities and ensure that sustainable patterns of development are delivered. I hope that local planning authorities will agree with that.

In some cases, if the assessment of the impacts has been inadequate and the charge will clearly not cover the cost of the impacts, it may be appropriate for the Secretary of State to intervene. Without such intervention one could end up with a local authority granting planning permission for a whole range of various developments, leading to a lower quality of life for its community because it had not taken account of the impacts of the development. I repeat that, as with all the powers of intervention, it should be used sparingly as a last resort, after the local authority had had the error of its ways pointed out to it. One has to be factual. If the Secretary of State was thought to be abusing his powers and being unreasonable, one could go to my learned friends in the courts. However, that would be an issue of last resort, and not what we would expect to be a normal operation, although we feel that it needs to be there just in case.

Baroness Hanham

I am trying to imagine a scenario in which the Secretary of State would be involved and I am trying to imagine who would appeal to the Secretary of State because there would have to be an appeal about the charge. Presumably it has been negotiated against all these wonderful tariffs about which we spoke two or three amendments ago, and against the criteria that have been laid out so that the developers know exactly what they are signing up to. That is the power of this tariff system. If the charge were set at a level that was too low—that would have been agreed against the criteria—at what stage does the Secretary of State intervene? Does he intervene on the basis of the criteria, that we shall end up with a dog's breakfast, with far too little return for any planning obligation? Or will someone appeal to him, such as a residents' association, saying, "Look what the local authority has done; it has not even bothered to go by its own tariffs"? Or will a developer say, "Look, they have not taken enough money off me; they could have taken loads more"? It would be helpful if the Minister could set the scenario.

Lord Rooker

Without taking advice, I believe I know exactly what would happen. On the basis of such developments, the Government Offices of the Regions, who are our watchdogs in the areas, monitor planning applications and matters such as the density directive. Therefore, I suspect that through the Government Offices of the Regions there would be a call to arms that a piece of advice or a phone call has not worked, and therefore the Secretary of State needs to be informed about it. The noble Baroness is right that they would be able to levy that only if they have had regulations approved by the Secretary of State or the Secretary of State has produced regulations, as we debated earlier, setting out all the criteria. It is difficult to imagine precise circumstances, but they are considered remotely conceivable by the drafters of the Bill. I think the answer would be the Government Offices of the Regions—they are the eyes and ears of the Government—because Whitehall does not always know best.

Baroness Hanham

Too true. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Baroness Hanham moved Amendment No. 119ZF: Page 35, line 24, al end insert— ( ) The Secretary of State shall fully reimburse any local planning authority where it can demonstrate that there is a net cost to them in preparing these regulations.

The noble Baroness said: The new clauses on planning gain will give local planning authorities much extra work. They will have to offer developers the opportunity to pay a tariff on top of continuing to negotiate Section 106 agreements, if that route is chosen instead. Significant resources and man hours will have to go into setting up this new scheme. Will the Government provide local planning authorities with additional funding for the purpose of establishing the tariff system? Our amendment would make it clear in the Bill that where additional costs are incurred by local authorities in preparing these regulations, the Secretary of State shall fully reimburse them. The alternative is to further burden authorities, which are already stretched to breaking point. They would certainly not thank the Government for demanding that they use scarce planning officers and valuable resources to set up this system, without providing any additional funding. I beg to move.

Lord Rooker

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

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

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

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

Baroness Hanham

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

Amendment, by leave, withdrawn.

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

Lord Cobbold

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

Secondly, it says: The Government's objective … is … not to enlarge the scope of planning obligations beyond current practice". Therefore, they propose to stick within the broad line of the Section 106 arrangements. Thirdly, it says: a new policy would make clear that development proposals which are acceptable in planning terms should not be rendered unviable by the introduction of extraneous requirements unrelated to planning". That deals with another problem. Finally, it says: the planning contribution offered, by whichever route, should be related to the impact of development and be relevant, proportionate and reasonable". Those words are significant to the debate.

In paragraph 24, there is another comment that, I thought, best summed up our deliberations and surprised me somewhat: It is also wrong to infer from the introduction of legislation that decisions on how to use that legislation have already been taken. They have not". I finish my speech with that thought.

9 p.m.

Lord Avebury

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

In paragraph 5 of the document, the Government say that they consider that it was, better to supply Parliament with an output from that consultation as soon as possible, and whilst the Bill is still under consideration, than to have the consultation still going on as they consider it". As the Minister said, it made no difference to the amendments to the clause that we have been discussing. If we had not had the document—we very nearly did not—the outcome of those discussions would have been the same. In paragraph 25, the Government say that they will undertake, further … consultation. In the light of the consultation which has recently finished, and the conclusions of the Barker Review of housing supply, the Government will publish draft Regulations and a draft policy to replace Circular 1/97". Was there any point in shortening the statutory consultation period from 12 weeks to nine weeks for the sake of producing such an inadequate document at this stage?

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

Lord Best

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

It is certainly true that the current arrangements for Section 106 agreements are not working too well. A major research project by the universities of Cambridge and Sheffield, led by Professors Christine Whitehead and Tony Crook, showed that negotiations over the agreements lacked clarity, varied in effectiveness between authorities and suffered from shortages of planners with the skills to negotiate sophisticated deals with developers. I declare my interest in the research, which was largely funded by the Joseph Rowntree Foundation, supported by the Housing Corporation, the Royal Institution of Chartered Surveyors and the Countryside Agency. I chaired the project's advisory board.

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

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

Overall, the present system is benign and beginning to be accepted by all parties. As our research project concluded, Section 106 agreements have, changed the geography of new social housing to good effect. The Minister can properly suggest that the Bill includes many safeguards. Today's statement from the Office of the Deputy Prime Minister covers some of those issues. It explains that a revised planning policy guidance note PPG3 will make clear that a financial contribution in lieu of affordable housing will be acceptable only in limited circumstances; for example, where the cash raised might be sufficient to produce a better development solution elsewhere. But my concerns are not just about the planning contribution, the tariff, being payable in cash rather than in kind. I accept that the intention is not to raise revenue for spending on unrelated purposes or even, usually, to subsidise social housing built on a separate site.

There are more subtle dangers from that opening of a Pandora's Box, including intense pressures on politicians to minimise the amount of affordable housing built in anyone's back yard. I know from the work of the Joseph Rowntree Housing Trust that people can feel real hatred for proposals to build what they believe, in the words of one of the anonymous poison-pen letters sent to my home, to be, squalid little houses for the poor"; whereas in reality we are planning a mixed-income community to extremely high standards. The City of York will not succumb to such pressures. But in some places the chances to take the alternative, more electorally popular, benefits from a developer could be seized upon. Those people living beside a planned development will always have a shopping list of alternatives to affordable housing which tariff funds could cover—local amenities and facilities, improvements to the roads around the site, environmental enhancements and so on.

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

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

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

Baroness Hanham

I have had quite a lot to say on Clause 46 stand part so I do not propose to say very much more, except that I think we will be back here again in the not-too-distant future.

The Minister will have the sense that not many noble Lords feel comfortable with planning tariffs. It is not really helped by the Deputy Prime Minister saying in paragraph 21 that the Government's planning obligations policy will need to be consistent with the final version of revised PPG3 and the Government therefore expects that the final version of updated PPG3 and its new policy on planning obligations will be issued simultaneously". The Government's new policy on planning obligations is presumably part of the Bill. Therefore, one hopes, before we get anywhere near the publication of PPG3, the policy will have been made clear and defined in the course of further debate on the clause.

We have still much work to do. My view is that we would do better to scrap the whole proposal, but clearly there will be a long way to go at Report and Third Reading before we reach that stage. This whole question has highlighted the considerable reservations among everybody in the Committee.

Baroness Maddock

I also support the proposition that Clause 46 should not stand part of the Bill and the other propositions grouped with it.

We have had quite a long discussion about this. The noble Lord, Lord Best, with his great expertise, put the case for concern about the provision of affordable housing very well. We are left with one or two questions which we will need to explore further and to which we need rather better answers. The Minister was fairly glib when he was tackled on how local authority planning departments would deal with this. Most of the people who replied to the consultation think this will be a problem. There will be a need for greater expertise, particularly on valuations. We know that planning departments are heavily pressed at the moment. I noticed at the weekend that my local authority, Berwick-upon-Tweed, cannot fill a senior planning post. It has upgraded the person who is currently in post and is desperately trying to get someone to fill it.

The noble Lord, Lord Best, touched on this issue. What worries me is that we do not know how this will work out. There have been no pilots, to the best of my knowledge. Perhaps the Government have done some role-play training and have some idea of what work will be involved—I do not know. But it seems that much of this is supposition and the wish that it will go right when many people can see the problems that might ensue.

I am still terribly concerned about housing. How will local authorities deal with windfall sites—the large proportion of developments in urban areas—and take into account development which is unknown when preparing their local development framework? It has become clear that in some cases we will still need Section 106 agreements—we will still need that expertise. My noble friend Lady Hamwee asked about the repeal of Section 106. I hope the Minister will look further at that because we are still very worried about it.

Reading the statement that came out on Friday on the results of the consultation, I find it even more confusing. The noble Baroness, Lady Hanham, referred to planning policy guidance on housing and how that will fit in. What worries me is how social landlords will procure money for development under this complicated process, especially where two processes may run side by side.

We opened the debate this afternoon from these Benches with the proposition that we look at Section 106. As the noble Lord, Lord Best, said, it took time for people to get used to that. A lot of good work has been done. The section is by no means perfect, but at least people know what they are dealing with. There is a great deal to be said for looking at improving that. Although the Government did not follow them through, many respondees to the consultation had proposals for improving the operation of the current regime. However, the Government have stated that they will launch another consultation and pass the suggestions to a consultant who will be employed to draft the best-practice guide.

We have made a good case for improving Section 106. The consultation has showed that a lot of people are in favour of that. I know that we will return to it at a later stage, but I hope that we can persuade the Government to think again on the matter.

9.15 p.m.

Lord Lucas

It appears to me that far too few in the development industry were brought up on AA Milne or they would have remembered "always keep a hold of nurse for fear of finding something worse". Indeed, they have on this occasion. Having put the Government to a great deal of trouble to develop an alternative to Section 106, they now wish that they had Section 106 back and did not have this new, uncertain beast in front of them.

The noble Lord, Lord Rooker, has been extremely helpful today. I have learnt a lot and will doubtlessly learn more from Hansard. I wonder if I may ask him for one extra bit of help. Between now and Report, I would really like to speak with some of the consultees who have already supported the new arrangements, so that I can understand, particularly if they are developers, what advantage they see in it. I feel that I have missed in the people with whom I have spoken that side of the argument. I presume that the replies are public documents and that it should therefore be possible to acquire names and addresses in whatever way suits the Minister. I should be enormously grateful for that opportunity.

Baroness Hamwee

I have one short question that follows on from the point of my noble friend. Have the Government worked through any examples of how formulae might operate? If they have, and feel they are fit to be shared, it would educate us all well.

Lord Lucas

I have a more immediate question. Given the state of unpreparedness and the Minister's comments on how the beginning of Clause 46 has been drafted, and given the uncertainties and difficulties, can we hope that the idea might be piloted to see how it works before it is rolled out in a large way? I support the comments of the noble Baroness, Lady Maddock, on the abolition of Section 106. It was frightening to find that in the Bill when we had been told that Section 106 would be twin-tracked and would not be lost.

Lord Rooker

In this area, I have probably offered the House poorer responses than for any Bill I have put before it. I feel guilty about that. On the other hand, I do have some solutions. First, we are only in Committee, so time is on my side.

In 18 years in opposition, we had about four days' training. That was in about 1995–96. We had a couple of days at Templeton College. The course did not quite instruct us how to be Ministers, but how to be better than bad Ministers. Of all the lessons I learnt, and I have forgotten some of them seven years later, one stands out: if you are going to make a big change, pilot it if you can. That warning came from former Permanent Secretaries, former Ministers, from the private sector and—dare I say it?—from consultants too. "Pilot it if you can". That is always worth doing. We have done that as a government. An enormous number of policy initiatives since 1997 have been piloted. I do not know about this, but we have certainly had discussions about it as regards parts of other legislation at ODPM. I shall take back that suggestion.

As to the other point, the two speeches given tonight by the noble Lord, Lord Best, were as disturbing as they were practical. That is a compliment, by the way; it is not intended as a criticism. I shall not, at any time in the future, be put in the position where all this is going down the plug hole and somebody observes that, on a dark winter's night at 9.20 p.m. in an empty House of Lords, the Government were warned about this and did not do anything. I am not going to be put in that position.

I need to keep the clauses in the Bill and I would rather we did not have a vote on clause stand part. Therefore, I shall suggest to my colleague, the planning Minister, Mr Keith Hill, and to the Deputy Prime Minister, that the researchers to whom the noble Lord, Lord Best, referred, be contacted by the department, if they have not already been contacted. For Report, I want a precise answer to every one of the concerns that have been raised here tonight, particularly on affordable housing. I have some glib answers, but I shall not use them. They are not, to be honest, substantive to the issues that have been raised. It is absolutely crucial that that be done before we reach the Report stage. In so far as the consultees are concerned, all the consultations are public. I think there is a caveat if one does not want one's name and address given, but, generally speaking, if there is the slightest difficulty in making contact, we will correct it.

This is a highly sensitive, controversial part of the Bill but it need, not be a problem. There are solutions. To help the Committee, we could suggest that between now and Report the Minister creates an incident, if you like, in one of the committees rooms where some of the consultees from both sides could talk to noble Lords. This is not technical to the Bill, but technical to the policy of the Bill.

The Bill is not prescriptive: much can be done by regulations in these clauses. It is therefore important that as much information as possible is available to Peers. It is absolutely clear that the Government have had warnings of a highly practical nature tonight about these clauses. A noble Lord mentioned Kate Barker's review, which will be finalised by the Budget, and which calls for a substantial increase in affordable housing. It is absolutely right that we do not want to lose anything by changing.

One of the other points we were told during those four days—I had it typed up at some time—was that big problems do not always need solutions, but Ministers love big Bills. In other words, where there is a problem one does not have to look for a huge telephone directory to solve it if there are other ways of doing it. But it is the first thing Ministers go for. It is almost an ego trip to have a big Bill. That has never been my view. I think that we should have a year free of Bills and have a look at what the effects of the previous Bills have been. Part of the system is barmy, but that is not the issue here tonight.

One of the points that was raised is one that I want to answer. I did a kind of clause stand part when I introduced the original amendments, before the adjournment. That is the issue—I am sorry, I forget who raised it, I think it was more than one Peer—of the reference to the final version of the revised PPG3. The Government expect that the final version of the updated PPG3 and the new policy on planning obligations will be issued simultaneously. This is in the statement that has come to the House today. The question—it was the noble Baroness, Lady Hanham— was whether this is in the Bill. The answer is. no. We shall finalise the policy in consultation with the stakeholders. By "policy", the Government mean the replacement for Circular 197, which will be issued in draft for full consultation. So, as we implied in the statement, there is much more consultation to take place.

However, frankly, there must be a bit of consultation with me before I get "kebabbed" on Report. We need some answers. I take what has been said on these clauses extremely seriously. I shall ask my colleagues to consider seriously what has been said, to find solutions that do not have unintended consequences and to give serious consideration to the suggestions that have been made by the noble Lord, Lord Best, and in particular by the noble Lord, Lord Lucas.

That is probably the best reply that I have given tonight; the rest have all been quite inadequate for which I apologise. I shall do better on Report.

Lord Cobbold

It is quite clear that we shall return to these very important topics in the future. But in the mean time, the clause should stay part of the Bill.

Clause 46 agreed to.

Clause 47 [Planning contribution: regulations]:

Lord Lucas moved Amendment No. 119A: Page 35, line 28, at end insert— ( ) Provision may be made prohibiting the making by a local planning authority of any or all charges or other requirements of a specified description in respect of a development in which a planning contribution is to be made.

The noble Lord said: I believe that this matter has probably been covered by the Minister today. However, I shall ask him about it again just to make sure that my understanding is correct. If you have paid a planning contribution, there may be many things which you need the local planning authority to do. You may need access roads to the relevant site or flood defences. You may require local schools to be built before you can move families on to a site. There may be a lot of things that you think you are paying for with that money. So how do you specify what you have bought with your planning contribution? How do you know what you will get and, indeed, when you have got it, how do you control the timing and specification of it? It is part of the operation of Clauses 46 to 48 that I do not understand. I should be grateful for some enlightenment. I beg to move.

Baroness Hanham

I have tabled Amendments Nos. 119C and 119D that follow on more or less from Amendment No. 119A in the name of the noble Lord, Lord Lucas.

Amendment No. 119C was tabled in the other place and I hope that it will receive a favourable reaction from the Minister today. It prevents the local authority altering the planning once planning permission has been granted and remains in force, and any condition relating to planning contribution has been agreed with the applicant. Effectively, once an applicant's agreement has been given, the local authority cannot then adjust that upwards. The Government surely cannot condone a situation where a developer had got planning permission and agreed the tariff with the local authority, that tariff was still in force, and it was then altered by periodic revision. It is important that once a sum is agreed, it is binding on both parties.

Amendment No. 119D probes the Government on what they expect to be the relative sums attached to a Section 106 payment and a tariff set by the local authority. This is the type of detail that it would be easy for the Government to say must be left up to the authority in question, but I think it is important that we have some indication at this stage. Does the Minister anticipate that the tariff will be more than indicated in Section 106 because of the time and resources that a developer will save by not entering into negotiations—except that we have all agreed that they will have to enter into negotiations—and because the process will, at least in theory, be quicker? However, I am not sure that it will be quicker. The purpose of the amendment is to probe the question whether, if there was an adjustment to the planning application following the tariff having been negotiated, the original negotiations should be binding unless a major change had taken place. Further, will there be any relativity between Section 106 and the tariff?

Baroness Hamwee

It did not occur to me until I saw Amendment No. 119C to wonder what happens when there is a fairly long gap between setting an amount and its payment. Do the Government anticipate that regulation will allow for some kind of inflation linking; or are local authorities and developers expected to be able to see well into the future regarding how much an amount agreed in year X will be worth in year Y?

9.30 p.m.

Lord Rooker

These are serious issues, and simply because of the stage we are at with these clauses, there are a few things I need to put on the record and not skimp the reply to them. Forgive me for the length— it is important given the issues that have been raised.

I will deal with the amendments in order. Amendment No. 119A seeks to control the exercise by the local planning authority of its powers under the planning contribution provision, by ensuring the planning authority cannot require more benefits where a contribution is already paid. There is a concern here, but the Government think the amendment is unnecessary.

The existing provisions provide that the Secretary of State may by regulation determine the circumstances in which a planning contribution may be sought, and therefore by extension the circumstances in which a contribution may not be sought. This might include circumstances in which there was a danger of other statutory powers to charge being duplicated through a planning contribution. The Government do not want this duplication to occur, nor do we want duplication cases where some planning matters are dealt with by a charge and some by negotiation. These issues will be considered when we prepare the regulations; indeed, we will consult on this very point.

The planning contributions are not intended to cover all possible costs relating to a new development. They are intended to cover planning matters. There may be non-planning matters raised by a development proposal from which it would not be appropriate to preclude other charges.

Amendment No. 119C is unnecessary but we are sympathetic to the principle of seeking to ensure that the size of a charge does not increase once it has been agreed between a developer and a local authority. That is obviously in the context of a planning permission. One of the main objectives of the reform is to improve predictability for the developer about the scale and type of contributions—that is, as an alternative to the long-drawn-out Section 106 provisions, which have taken many years in some cases. We will also want to ensure that developers have the benefit of certainty when they agree to a planning contribution with an authority. So once they have gone through and they have agreed, they can make their decision to proceed or not.

The Government envisage that the local planning authority will be bound not to increase the charge under an agreement made with the developer at the point of planning permission. No developer will opt to pay the new charge unless it can be sure about that in the first place. They will not sign up to a charge if they think it can be varied. We believe that this should remain the case for as long as the permission remains in force. I cannot be clearer than that on the important issue of it being ratcheted up over a period.

Benefits provided through a planning contribution, whether through the optional charge or negotiation, will be material considerations in decisions on whether to grant planning permission, just as benefits offered in planning obligations are at present. Once a planning permission is granted, the local authority cannot prevent the developer implementing permission if the contribution has been met. We cannot see any circumstances in which it would be reasonable to revise charges upwards other than where agreed by the developer at the point of planning permission, in the same way that occurs now through the existing negotiated system. It is down to the agreement by the developer at the point of planning permission.

The other point that needs mentioning is about the reference to the Secretary of State in the amendment. We do not envisage the Secretary of State intervening at all in the case of individual planning contributions, since these are matters basically between local authorities and developers. In any event, after planning permission has been granted the Secretary of State would have no locus to reopen a legal agreement properly arrived at. I hope that puts that one to bed.

The Government think Amendment No. 119D is unworkable and unnecessary, but we certainly sympathise with those colleagues who tabled it. The proposals in the amendment seek to ensure that the charge is not set at an excessively high level which extends beyond meeting the impact of the development and which would be prohibitive to developers. That is a view that the Government share and I believe I made that clear during debate on previous amendments.

There are difficulties with the amendment. First, we do not believe that it would work in practice. It would set a limit on the charge compared with negotiated agreements. However, almost by definition, the outcome of a negotiation is uncertain. Therefore, it would be impossible to say what the cap on the charge should be in any particular case. The negotiated alternative would be hypothetical.

As mentioned, the aim of the amendment is presumably to prevent the charge being ratcheted up beyond what is warranted by the circumstances of the development and what is fair and reasonable to the developer. I hope that the statement that we issued gives reassurances on this matter, and I shall repeat it for that purpose. It is not the Government's intention that the charge should be used to extract more benefit than is necessary to make the development anticipated by the local plan acceptable in planning terms. Local planning authorities will be required to set out their policy on how the charge will be calculated and therefore developers should know, before deciding whether to opt to pay the charge, how much it will be. Therefore, the charge is, indeed, optional. It is not a question of abandoning one system and imposing another. It is an optional way forward.

I could say more on this subject but I believe that I have covered the main points raised. I hope that that has been useful for those who will be thinking about this matter and advising colleagues on Report.

Baroness Hanham

I may have misunderstood what the Minister said. When we discussed my amendments two or three groups further back concerning the Secretary of State being able to intervene if a charge was set at a level to which someone, such as the regional officer, drew his attention, it was clear from the Minister's reply that the Secretary of State would have the right to do that. However, from the Minister's response just now, I understood that the Secretary of State would not be able to intervene in what was a binding agreement. Are these different parts of the same story or are they two different stories?

Lord Rooker

I am working on the assumption that both are correct. Once a planning permission has; been granted, the Secretary of State will have no locus to reopen a legal agreement properly arrived at. That sentence may hang on the words "properly arrived at". If it has not been properly arrived at—that is, if the policy, guidelines and regulations have not been followed—it will be possible to do that.

On the other hand, returning to the answer t:hat I gave in debate on the earlier amendment when I referred to the Government Offices for the Regions, I envisage that the Secretary of State would be alerted before the planning permission had been given. The Government Offices for the Regions would know about planning applications being submitted for big developments. I have discovered that they know far more than I had realised. Therefore, I believe that both are correct and the one does not contradict the other. However, as I said, I believe that the answer to the second part may hang on the words "properly arrived at".

A note which has just arrived will tell me whether or not I am right. In relation to our previous discussion, obviously the Secretary of State cannot intervene once planning permission has been given. The right of intervention at that point relates to the development plan document policy and not to the individual agreements. Perhaps I did not make that clear. In other words, the Government Offices for the Regions would know about the development plan policy but not as it related to an individual agreement about a particular planning permission.

However, that is not to say that we do not monitor planning permissions. We monitor matters such as the density directive and so on. There is also the question of how we know in Whitehall whether to call in one of the thousands of applications that exist. One reason that the Government Offices for the Regions were set up by the previous Conservative government, for which we are extremely grateful, is that they act as our eyes and ears in the region. Therefore, there is no contradiction between the two answers that I have given.

Lord Lucas

I am very grateful for that answer. I missed any reference to the abolition of Section 106. Perhaps it is already in Hansard and I have simply forgotten. However, if the Minister wanted to add anything, I should be very grateful.

Lord Rooker

No, I do not. I will get it wrong now. I have nothing to add to what I said previously in answer to the noble Baroness, Lady Hamwee, who asked me why there was a reference to the matter in repeals. Nobody has contradicted what I said so I have to assume that the answer is correct.

Baroness Hamwee

Before the noble Lord, Lord Lucas, withdraws his amendment, my concern is that while I understood that several sections might be repealed in the future—apparently, that can happen sequentially; it does not all have to happen on the same day—that raises the issue that the system's life in parallel may be limited. That adds to some of the confusion and worry which is present at the moment.

Lord Rooker

Perhaps I may reply to that. I reaffirm what I said about the abolition of Section 106. It will be repealed but reconstituted in regulations. That is what I said in the original debate earlier. In other words, we are rewriting Section 106 and learning from the best practice. It will be put into regulations while at the same time giving an optional alternative approach, not a replacement. I know that it sounds like a contradiction when I say that we are not replacing Section 106 but we are going to abolish it. We are abolishing it in one form only to put it back in regulations. As I have said repeatedly, anyone who wants to continue a negotiated way of planning obligations by the Section 106 route will be able to do so. That route is not being abandoned for any developer who wishes to use it.

Lord Lucas

I am very grateful for that. If the noble Lord can produce for me a short letter saying where in the Bill the powers reside to do that—that is, which particular clauses will be used to reproduce Section 106—I shall be very grateful. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Lucas moved Amendment No. 119B: Page 35. line 28, at end insert— ( ) Provision may be made requiring a local planning authority to provide promptly all the infrastructure for which they are responsible in respect of a development on which a planning contribution has been made. ( ) Provision may be made requiring a local planning authority to consult the community affected by any development for which a planning contribution is to be paid as to the purposes for which that planning contribution shall be deployed.

The noble Lord said: For some strange reason this amendment contains two entirely unrelated subsections. The first is merely to try to tease out how, if one paid a planning contribution which is meant to cover some kind of physical work, one is able to ensure that the work is done. Let us say that, as a major developer, one has given the delightful local authority £5 million or £10 million up front and part of it is supposed to pay for the access road, the new school or whatever it is, and it does not appear. What mechanisms are there, when one has a number of unsaleble houses because there is no road to them, to make sure that the money expended is put to good use?

The second part of the amendment is much more serious. At the root of Section 106 there is the concept that the local community is suffering some pain from the development and a diminution of facilities, such as green space, which it used to enjoy and that its roads will become more crowded. Some of the benefit should appear locally. That is implicit in the way in which Section 106 and the surrounding regulations are worded. Although it is often honoured in the breach, that is there at least as a principle. If Section 106 were better organised, perhaps we would see more of that.

But the new arrangements seem to lose that entirely. One can pay a planning contribution and it can be used 50 miles away on the other side of the planning authority and none of the benefit is seen locally. I believe that that is a retrograde step, particularly in a Bill which is introducing an entirely desirable increased degree of community consultation.

If something major is happening in a community, that community ought to see benefit from it and be able to know that some of the planning contribution is going to finish up in their immediate locality doing things which the community will enjoy as a quid pro quo for putting up for the several years of disruption which a major development entails. Perhaps it is there in the Bill, but I do not see it. I shall be grateful if the Minister can point out how it is all going to work. I beg to move.

9.45 p.m.

Lord Bassam of Brighton

I am sympathetic to both paragraphs in the amendment. Simply put, this is not the right way to get there. We understand what the noble Lord is getting at. It is best that the matters in both paragraphs are dealt with in regulations, where the detail can be set out more fully. We intend that local authorities must say in their plans how they will spend the cash contributions. We intend that they should indicate the timescale within which that spending is likely to occur. Local authorities that claim to be sensibly planning the future of their areas should be doing this as a matter of course.

The realism of that timescale can be tested as part of the plan-making process. The Bill requires that local authorities may only spend contributions on matters identified in planning obligation policies.

We understand why the noble Lord wants the second limb of the amendment. It is better that the consultative framework is developed in regulations. In any event, the local planning authority should be required to consult the community in the same way it does in other policy areas. The Bill enables the Secretary of State to make regulations to require that local authorities spend contributions only on matters identified in planning obligations policies. Therefore, they will have to consult on those. Local authorities are already required to consult affected parties on individual applications under the General Development Procedure Order 1995.

As part of the planning application process, local authorities and developers can develop planning measures implemented through a planning obligation that meets the concerns of the local community. Those measures should be consistent with the development plan. These procedures ensure local authorities devote contributions to the planning needs of local communities and not to extraneous non-planning matters. They will also ensure that developers can plan ahead for these contributions.

Consultation with local communities on the use of planning obligations should occur at the plan and the application stage, and not just at application. That means there will be a longer timeframe for the consultation so that details can be ironed out and problems sorted out. There will be wide consultation when drawing up the planning contribution policy. I hope that reassures the noble Lord.

From my local government experience, where there were Section 106 agreements as a product of major applications, we tried to develop good practice in making it clear at the outset where that money would go and why. We also worked with local communities to ensure that was what they wanted. There was a sensible way of making sure we delivered. I see that as good practice and I hope other local authorities have similar good practice. We want to see that sort of arrangement put in place. However, the noble Lord makes good points in both limbs of the amendment.

Lord Lucas

I am sure the Minister is right that this does not belong on the face of the Bill. I will read carefully what he has said. He said exactly what I feel, that is, that Section 106 agreements have evolved so that these things are dealt with well. There is community involvement and the benefit spread among the community. The agreements are negotiated individually, at the time, when the developer is interested in involving the local community and bringing them on-side in order to get planning permission.

We are now faced with an untried, and in many ways unformed, procedure that potentially presents considerable dangers in people's minds. That is because when a developer has not entered a detailed agreement with a local authority, but just paid a sum of money, it is not clear how there is to be a detailed obligation, such as building an access road.

If the developer has simply paid a sum of money, but not had a detailed involvement with the local planning authority and the local community, it is not clear how the local community will feel that it has been properly consulted and properly dealt with in spreading around the planning benefit.

As the noble Lord said, Section 106 works very well. If the new arrangements are to work well these benefits need to be transferred. It is not at all clear how the basic nature of the mechanism will allow that to happen. Those are some of the concerns which lie at the root of the way that developers, or at least those with whom I have spoken, feel about the clause as drafted. For the moment. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Rooker

I beg to move that the House do now resume.

Moved accordingly, and on Question, Motion agreed to.

House resumed.

House adjourned at nine minutes before ten o'clock.