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Town and Country Planning Act 1990 (Amendment) Bill

Volume 504: debated on Friday 29 January 2010

Second Reading.

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

I am very fortunate in that, for the second time in my political life—although the first came only a couple of years ago—I have managed to be successful in the ballot. I am grateful to have the opportunity to present the Bill to the House. I am grateful that the Minister is in his place and I hope that I can say things that can command general support. This is not intended to be a matter of party political division, but it is a matter that concerns us all greatly. It is about how we release more money to improve housing and for social housing in all parts of England where the need is significant. I am grateful to my 11 hon. Friends who have shown their support for the Bill and who sponsor it with me.

This is a simple Bill that seeks to amend the Town and Country Planning Act 1990, which contains a section, often referred to in local government circles—section 106. That is the section under which, when a developer applies to a local council for permission to carry out a development, there is a negotiated payment by the developer to the local council that is meant to compensate for the disruption and to pay for the changes that were necessary to the infrastructure as a result of the development.

One problem with that legislation has been that it has been a bit vague. That is one reason why the Government have started to look for an alternative. In the Planning Act 2008, they decided that they wanted to create something called a community infrastructure levy. They went out to consultation on that last year and in that consultation were some draft regulations. The consultation has finished, but the draft regulations have not yet turned into regulations so we do not yet have in place the community infrastructure levy. In any event, it was never the Government’s intention to get rid of section 106 and replace it, but to have both mechanisms operating in parallel. In the draft regulations for the community infrastructure levy, it is proposed to exclude housing from certain categories that could benefit. Section 216(2)(g) of the 2008 Act would be amended to read

“such housing as CIL regulations may specify.”

The intention is to limit the payments for housing.

I am keen to respond to the needs of boroughs such as mine—Southwark—and to colleagues who are in the joint administration of the council there, as well as to colleagues in all parts of the country whatever the colour of the administration. We want to meet the desperate need for more social housing. We still have a social housing crisis. There are too few affordable homes for rent, as my hon. Friend the Member for Brent, East (Sarah Teather) knows as well as anybody. She speaks for us on the matter regularly. Much of our existing stock is in a state of disrepair. I want to allow every possible future revenue stream, from developers and everywhere else, to be used to carry out urgent renovations to local housing stock or to build new homes, if that is what the council wants.

I shall be relatively brief, because I want the hon. Member for Peterborough (Mr. Jackson), who speaks for the Conservatives, my hon. Friend and the Minister to be able to contribute in the hope that they will all be favourably disposed and we can make progress with the Bill.

Housing has been one of the biggest issues in my constituency for all the 26 years since my election. Southwark is the third largest council landlord in the country and the largest local authority landlord in London. As of last October, 40,485 properties were let to social tenants. The borough is the freeholder for approximately 15,000 properties that people have bought under the right to buy. Things may have changed—in the ’70s, nearly 70 per cent. of all housing in the area was social housing; the figure is now down to 45 per cent.— but a third of all the houses in the borough are the council’s responsibility. The waiting list is still in the order of 15,000. On 1 April last year, 15,000 households were registered with the council as wanting social housing. In the same year, only 3,691 social rented homes became available. Southwark faces the same challenge as everybody else in local government—trying to maximise the amount of housing available when there is such huge demand both from people who need their first home and from people in an overcrowded home wanting to move to a better one.

I could easily give more figures, but without doing so, I can say that there has been a changing pattern in the provision of social rented dwellings. In England, 25,000-plus new social homes were provided every year at the beginning of the ’90s. There was a peak of 57,000 in 1992-93, but the number went right down in 2004-05—the lowest year—to 21,000 new homes a year. It has picked up a little since then, but nothing like enough to meet demand.

The same pattern applied in London, as my hon. Friend knows well. In the early ’90s, just over 4,000 new social homes—council and local authority—came on line over a year. The highest number in any one year was 12,000 in 1995-96, since when the lowest was in 2004-05 when just over 5,330 new homes came on stream. In Southwark, which is obviously the borough of most interest to me, in the last full year, 2008-09, no new dwellings were started, although many dwellings were being built as replacement stock. In the same year, 81 social dwellings were started. None was formally recorded as completed, though many have, happily, been completed in the past few months and people have been happily moving into them. The challenge is still the shortage of social housing.

My hon. Friend the Member for Brent, East, our party leader, my right hon. Friend the Member for Sheffield, Hallam (Mr. Clegg) and others launched a policy the other day that would allow us to bring 250,000 empty homes back into use. That is one strategy that we are committed to, and we have set aside the money to do that. We have also made a commitment that, in a future Parliament, income would be used nationally to build new homes, renovate others and make every home, as far as possible over a 10-year period, a warm home. That would create many jobs and insulate homes, but it does not deal with the fact that many local authorities have hesitated to use section 106 money for housing or improvement of housing.

Although I do not disagree with the hon. Gentleman’s argument, may I draw his attention to the concern that his Bill raises? It may be something that he intends to deal with, in which case I apologise for diverting him. He has explained clearly the difficulties that councils face in providing enough housing. There is huge pressure on them to do so. As I understand it, the original purpose of section 106 agreements and planning obligations was to prevent a failure to provide the necessary infrastructure to go with those housing developments. If he enables councils to spend that money on housing, are we in danger not only of failing to solve the problem of inadequate infrastructure, but of adding to it by bringing in more housing without that attendant infrastructure?

The hon. Gentleman makes a good point, which I entirely understand. What often happens is that the local authority, when consulted by the developer, would prefer the money to be used for improving housing adjacent to the development or for building more housing, rather than for what is strictly infrastructure.

I shall give the very best example I can. There is a huge development, which has had local support, called the Shard of Glass at London Bridge. It will be the tallest building in London. It has obtained planning permission and there was no significant objection, but it is cheek by jowl with housing estates, mainly local authority ones. When the development was applied for and agreed to, local people asked, “What’s in this for us?” Obviously, it will change their skyline when there is a huge building outside their windows.

The council in that case has been able to negotiate to get some section 106 money, but what it most needed it for was not what could strictly be called the infrastructure to do with that development. It would rather have used the money for something else. My Bill seeks to give the option—only to give the option, not to be prescriptive—to the local authority to say, “We are satisfied that the infrastructure consequences of the development can be met. We do not need to adjust the pavements, re-route the roads or put in more drains. What we need locally is, for example, to insulate the windows of the estate next door so that the noise from the construction work and later, when the building is in use, will not adversely affect the homes on that estate.”

I understand that the hon. Gentleman wants to make sure that there is clarity about using the money for such purposes. Some local authorities have taken the risk, as I understand it, and used section 106 money for those purposes. Most of them believed that that was slightly beyond the original purpose, so have not done so. The Bill makes it clear that that is an option if the local authority wants it.

Following from the hon. Gentleman’s good point, I should say that sometimes in a development negotiation, the outcome can be that the developer agrees voluntarily to build some affordable housing next door as part of the development or to give money for it to be built or to improve housing.

My proposals would not change that process, because I seek to ensure that, when local authorities receive the money, they do not need the developer’s agreement to undertake the work that they have prioritised. In case the hon. Gentleman does not know, I should say that my party and his party have jointly administered my local authority for the past four years, and his colleague, who is the executive member responsible for housing, agrees with those priorities.

There is also an independent argument in support of my proposal. Southwark council recently commissioned from the Local Government Information Unit a study to seek advice on how it might maximise revenue to deal with our borough’s housing needs. The study’s recommendations were published the other day and included the suggestion that central Government accept the shifted allocation of local resources. The study also supported debt restructuring. Southwark has a huge historical debt from housing that no longer exists and it wants to restructure that debt so that it does not have to pay as much in the short term. It would be able to spend less of its income every year on legacy bills and get on with building houses.

The report also made other proposals on, for example, Government land lending, but it also recommended

“enabling local authorities to make an independent judgment on the use of planning gain, including using commuted sums from private development for the renewal of housing in the immediate area.”

The local authority received the report from an independent non-party body, which said that that proposal was a good option for maximising revenue and for housing.

We are talking about large sums of money, but, interestingly, there is no simple read-across grid of how much section 106 money goes to every local authority. The hon. Member for Vauxhall (Kate Hoey) and I have worked hard to ensure that her local borough, Lambeth, and my local borough, Southwark, produce those figures, and they have. The most recent estimate relates to 2005-06, when the total value of section 106 obligations in England was £4 billion, and £3 billion is likely to be delivered in practice, so the yearly sum is significant. Birmingham city council signed 43 agreements in 2008-09 worth £5 million; Camden council received almost £3.5 million in 2008-09; Islington council has received £23 million since 2005-06; Southwark council signed 45 agreements in 2007-08 worth £15 million; and Tower Hamlets council has received almost £54 million since 2000. Those significant sums of money could make a big difference, and good local authorities, of which Southwark is one, now produce section 106 reports that list all the money that they receive. There was always a problem with transparency, so communities did not know where the money went, but authorities are now much better. Lambeth, next door, has become much better at sharing and discussing that information with the community, so councils of all colours have realised the benefit of making the process much more transparent.

The Government were very keen on the decent homes programme, and I supported it. The right hon. Member for Kingston upon Hull, East (Mr. Prescott) launched it when he was the Minister responsible for housing, and it was due to end this year, but unfortunately it is not going to, because not all the homes that were planned for upgrading have been upgraded. According to the figures that I have, 305,000 have not been upgraded, and the programme is projected to be £18 billion over budget. It is now accepted that not every home in council housing and social housing stock will be a decent home, as defined by the programme, by 2010.

Southwark—the borough that I know best—has estimated that it needs £300 million over the next five years to meet the minimum requirements of the decent homes standard, and up to £700 million to meet our local standard. Clearly, we do not have that income available. The council is very clear that we should be allowed to recycle our debt—I raised this with the Minister the other day, and he was not unsympathetic in terms of national policy—and borrow money at lower interest rates. We are often hemmed in by agreements that require us to borrow at 8 per cent., whereas on the commercial market one could get a loan at 2 or 3 per cent. If we were also allowed to use section 106 money, that could make a significant difference to the renovation of our housing stock, which we could carry out ourselves, and to the new-build housing that we could produce.

I know that the Government have the community infrastructure levy plan in the pipeline. However, given that that project was due to come into operation in April, and that we know that a general election must happen in June at the latest, so Parliament will finish in May at the latest, we must be realistic about its not being a white knight that is going to ride to the rescue. I am therefore keen to see whether we can make this very modest change in legislation. It would change one small bit of one existing Act of Parliament, but in a way that could make a significant difference to every local authority that is a housing authority and a planning authority and is under real pressure to provide more affordable housing. Every council in England would tell Ministers that that is one of the big pressures that they are under, and the Department knows that.

I hope that colleagues in all parts of the House will allow the Bill to make this a hat trick, and that today or next week it can pass from Second Reading into Committee and come out as a piece of legislation before the general election. I am grateful for colleagues’ attention, and I commend the Bill to the House.

I congratulate the hon. Member for North Southwark and Bermondsey (Simon Hughes) on securing a place in the private Members’ Bill ballot. With all due respect, though, I fear that this is a piecemeal Bill that tackles a symptom rather than the substantive issue. I will explain why a little later.

Her Majesty’s Opposition think that section 106 of the Town and Country Planning Act 1990 should be restricted to site-specific improvements to make something acceptable in planning terms that otherwise would not be acceptable without that improvement. In that context, Conservatives have some concerns about the Bill. Improving residential premises might be justified as a site-specific measure, but we believe that building new premises would not. The Bill threatens to turn section 106 into even more of a development tax, on top of the community infrastructure levy.

As regards planning obligations, we are worried that the cumulative effect of regulatory burdens on the house building industry would undermine the viability of many housing regeneration projects, resulting in fewer homes being built. We want to review the whole manner in which the section 106 regime and the proposed additional community infrastructure levy works. We will examine how those levies can be simplified and localised so that individuals and communities affected by new development are not only properly compensated for any loss of amenity but benefit from genuinely improved places to live post-development. We want to give councils greater fiscal incentives to promote economic development and house building in their area by reform of the local government finance process. We will publish more details of those proposals for planning reform within the next few weeks.

I shall be as brief as possible on the specific key questions to allow the hon. Member for Brent, East (Sarah Teather) and the Minister to enter the debate. As I said, section 106 is designed to make something acceptable in planning terms that otherwise would not be acceptable without that improvement. By extending its scope to building new premises, the Bill threatens to be a development tax. Perhaps the hon. Member for North Southwark and Bermondsey will give some consideration to that.

A parliamentary answer in March 2009 stated that of £4 billion of section 106 money, 90 per cent. was going not in cash to local authorities but directly towards the provision of various agreements and planning obligations. That left about £340 million for local authorities. Is not the real point that the levies need to be simplified and localised? Would the measures in the Bill add to the cumulative effect of regulatory burdens on the building industry?

I do not want to delay the hon. Gentleman, but I wish to ensure that his points are dealt with. The Bill would give local authorities an option, but it would make nothing compulsory. It is intended absolutely not to add any burden but to take away one that restricts activity. I understand not wanting to limit local government’s powers, but the hon. Gentleman’s party talks all about localism and the Bill is about giving local authorities more power and more freedom so that they are less restricted.

I thank the hon. Gentleman for that clarification.

It is important that the negotiation of planning obligations does not unnecessarily delay the planning process, thereby holding up development. Would the measures in the Bill add a layer of complexity to planning obligations that would clog up the planning system? How would they tie in specifically with the new community infrastructure levy?

Clearly the Government’s plans to scale back the application of section 106 agreements will effectively make the optional community infrastructure levy system virtually compulsory. In the long term, would the Bill be an effective means of providing more residential properties and improving our existing housing stock? Finally, is there not a clear message from the industry that the Government must clarify how the proposed levy will work alongside section 106 agreements? Perhaps those specific issues will be considered if the Bill gets to Committee.

We have significant concerns about the Bill, but we welcome the opportunity to debate this important subject. I look forward to listening to the Minister’s response.

I shall be extremely brief, because I want the Minister to get through his speech so that the Bill introduced by my hon. Friend the Member for North Southwark and Bermondsey (Simon Hughes) can pass. I just wish to put it on the record that I support the principle of what my hon. Friend is doing. It does not seem at all sensible that section 106 can be used to improve the flowerbeds in a development adjacent to a brand-new building but not to improve the windows to prevent noise from the construction work or to prevent the howling gale that might happen because two tall buildings create a wind tunnel. That does not seem a sensible use of section 106. The Bill would be a helpful change to the law, and I hope that it proceeds to Committee so that it can be considered in detail.

It is a pleasure to engage in this debate under your stewardship, Mr. Deputy Speaker. I welcome the opportunity to discuss the issues that the hon. Member for North Southwark and Bermondsey (Simon Hughes) set out in support of his Bill.

The supply of both homes on the private market and affordable homes is, of course, an important matter, as is the standard upkeep and maintenance of those homes. I know that in the hon. Gentleman’s constituency in particular there are some real challenges to do with the provision of new homes and the maintenance of the existing stock. He made that point clearly.

Homes are the building blocks of our communities and affect our health, our wealth and our opportunities for happiness. The Government are committed to the fact that everyone should have access to a decent home at a price they can afford, whether they own or rent it. The basic propositions of the Bill are to increase the provision of market and affordable housing supply and to ensure that existing homes in need are improved to provide decent accommodation. Of course we support those aims. Indeed, they are already Government policy. However, we believe that the means to secure those objectives are either already available to local authorities by the use of section 106 of the Town and Country Planning Act 1990 or can be secured by other means. Although we support the overall intentions behind the Bill, which are laudable, we therefore do not support the Bill itself.

The figures cannot be disputed. Those that I have been given show that in London 350,000 households are on a waiting list. The figure for England is 1.75 million. Given that the Minister, like me, wants as many people as possible to live in a decent home, surely anything that allows any additional homes to be built or improved—even if it makes only a small contribution—must be a welcome addition to the rest of the Government’s plan, which he will outline.

I will talk about decent homes later, and I am sure that I will answer that question. The hon. Gentleman mentioned decent homes earlier and the fact that the Government might miss their target for 2010. We are clear that well over 90 per cent. of the target will be achieved by 2010. In the past 13 or so years, we have reduced the number of houses that were not decent by about 1.5 million.

Central to the debate is the effectiveness and operation of councils’ empty homes officers. Is the Minister convinced that they have sufficient powers and that councils give them enough funding to enable them to bring more homes, particularly in London, into use?

The debate about whether there are enough powers will continue, but I am sure that the hon. Gentleman welcomes the fact that the Government have initiated a new council house building programme throughout the country. It will help to ensure that there are more decent houses for people from all sorts of background. There are some acute challenges in London in particular.

Although we support the Bill’s overall intentions, we do not support the measure. The proposed amendment to the 1990 Act is not required to deliver the outcomes that the hon. Member for North Southwark and Bermondsey seeks and could negatively affect the use of a valuable planning instrument. Section 106 agreements can already be used to secure developer contributions to the provision of new, affordable housing.

The Government have a range of other delivery routes, such as the decent homes programme, which I mentioned and to which the hon. Gentleman referred, for the investment needed to fulfil our aim to make all social housing decent. Good quality, affordable housing enables stable and secure family lives. We are all healthier, happier and wealthier when we have decent homes close to schools, health care and transport links.

It is not an issue just for families. Good housing can improve our social, environmental and economic well-being. It helps to create better communities that can attract investment and skilled workers. Getting the design right can also improve the environment and reduce our carbon footprint. Strategic housing decisions are critical to the life chances of the next generation. Increasing the supply of housing, including affordable housing, is a central priority for the Government, as is improving the existing housing stock, particularly making all social housing decent.

To achieve that, the Government have four strategic goals. They are: to achieve a wide choice of high-quality homes, both affordable and market housing to address the community’s requirements; to widen opportunities for home ownership, and ensure high-quality housing for those who cannot afford market housing, in particular those who are vulnerable or in need; to improve affordability across the housing market, including by increasing the supply of housing; and to create sustainable, inclusive, mixed communities in all areas, urban and rural.

I will now talk about decent homes.

I hope that the Minister can deal with decent homes relatively quickly because the central issue is the Town and Country Planning Act. Does he accept that, although deals can be done between a developer and a council, which mean that a developer can build more social housing, the Bill does not stand in the way of that? It simply gives the local authority the freedom to say, “Whatever money we receive from the developer, we can choose whether to spend it on home improvement or home building.” My hon. Friend the Member for Brent, East (Sarah Teather) mentioned home improvement. The choice would be for local councils. Surely the Minister and the Government support that.

The hon. Member for Monmouth, I think, touched on the dilemma in the Bill. Section 106 agreements are directly related to the development itself. If there were a central pot of money, it would undermine the rationale for those agreements, which is linked to the impact of the development in a particular geographical area.

The Government strategy to deliver decent homes is highly successful, and has improved the quality of life of people in millions of households. I am not sure why the decent homes programme is not championed more often, as its prime aim is to improve social housing standards and place greater emphasis on long-term asset management. In addition, it has delivered greater tenant involvement in housing management decisions; improved the choice of housing management provider; and provided support for tenants to improve their skills and open up job opportunities.

By 1996, a £10 billion backlog of overdue renovation work had built up as a result of past under-investment in social housing. In addition, an estimated £9 billion-worth of investment was necessary to modernise and improve local authority housing to a decent standard. I said earlier that more than 2 million homes were below the basic standard of decency, but the number of non-decent social homes has gone down by 1.5 million, and nearly 86 per cent. of social homes are decent.

The Minister has confused me with my hon. Friend the Member for Monmouth (David T.C. Davies), who is much better-looking. Peterborough is my constituency.

We are in danger of meandering on to the issue of housing, but we are effectively considering secondary legislation to amend planning legislation. Given that the Government’s main vehicle to deliver infrastructure is the community infrastructure levy, will the Minister comment on the article on the PlanningResource website this month, which showed that 80 per cent. of planning authorities are still unlikely to implement the levy?

Before the Minister replies, the hon. Member for Peterborough has issued a salutary warning that we should concentrate on section 106.

In fact, I meant to refer to the hon. Member for Rugby and Kenilworth (Jeremy Wright), not the hon. Member for Peterborough (Mr. Jackson). I do not want to be the cause of compliments or insults—I will let people make up their own mind.

You are right, Mr. Deputy Speaker, to direct me to section 106, although it is obvious that we have a good story on decent homes, and I was keen to tell it. Section 106 is a vehicle for delivery. As the hon. Member for North Southwark and Bermondsey will know, section 106 agreements, also known as planning obligations, are private legal agreements between local authorities and developers. They can be attached to a planning permission to make acceptable a proposed development that would otherwise be unacceptable in planning terms. Such obligations can be used to prescribe the nature of a new development, for example, requiring a given portion of new market housing on a site to be provided as affordable housing. They can be used to compensate for loss or damage created by a development—for example, loss of open space caused by a new development. Finally, they can be used to mitigate the impact of a development, for example, through increased public transport provision, where the impact of new development puts pressure on existing services. That point was made by the hon. Member for Rugby and Kenilworth.

The Minister is getting to the nub of the matter. Section 106 agreements are often put in place after a large planning application has gone through, to try to help the local community and mitigate the worst effects of the application. Is he not concerned that the Bill might lead to another kick in the teeth for local residents, who see the money that is provided for mitigation being used to build even more houses?

The hon. Gentleman poses a powerful question. That is one of the dilemmas in the Bill. Instead of mitigating the impacts of developments for local communities that are directly impacted, the money could be used elsewhere, which completely undermines the rationale for the section 106 agreement in the first place.

That is completely not what the Bill would do. The local authority, representing the local community, would have the choice. If it thought that a community wanted a development, it could choose to proceed. Communities such as the Tyers or the Whites Grounds estates near London bridge would say, “We are very happy either to have our housing improved, or to see some local, affordable, suitable housing built as well as a very very tall office block.” Local communities will be very supportive of that.

Of course, I understand where the hon. Gentleman is coming from with the Bill, but I will make the point once again that section 106 is drafted as it is so that there is no discretion for the local authority. If there were, there is every likelihood that resources would drift away from the areas that are directly affected by the development itself. That is the rationale of section 106. I understand the laudable objective of getting more housing or improving housing. We all support that, but that is not what section 106 ostensibly relates to. Proceeding with the Bill would take us in a direction with which most of us would be relatively uncomfortable.

Nothing in the Bill changes the present rules that mean there has to be a local benefit, just as under all section 106 agreements. Nothing will suddenly allow a council to move a development to the other end of its area as a benefit. Nothing will change, the Bill will simply allow a council to use the measure for housing, if that is what the council wants.

Debates get to a stage when people are just not going to agree—that is probably where we are now. That is not because I believe the objectives are not laudable—they are—but the vehicle that is being used to achieve them is fundamentally inappropriate. I and other hon. Members have given some of the good reasons why that is so. I accept that our arguments have not penetrated as they might have done, but that is the hon. Gentleman’s prerogative.

It is a long-standing principle that planning obligations should not be used purely as a means of securing for the local community a share in the profits of development. Likewise, planning obligations should not be used solely to resolve existing deficiencies, such as housing in poor repair. That is because planning obligations are intended to be used where there is a strong relationship between the impacts of a new development and the action required through section 106 to mitigate or compensate for them.

The Government’s policy requires, amongst other factors, that planning obligations are sought only when they are relevant to planning; necessary to make the proposed development acceptable in planning terms; directly related to the proposed development; fairly and reasonably related in scale and kind to the proposed development; and reasonable in all other respects.

Local authorities use planning obligations to secure developer contributions towards a wide range of things, including land, transport and travel, open space and the environment, community works and leisure, and education. Around half the value of all contributions, however, is made towards the provision of new affordable housing in the form of either in-kind, on-site provision or by financial contribution to the local authority by the developer—

The debate stood adjourned (Standing Order No. 11(2)).

Ordered, That the debate be resumed on Friday 26 February.