rose to move, That the Grand Committee do report to the House that it has considered the Town and Country Planning (Fees for Applications and Deemed Applications) (Amendment) (England) Regulations 2008.

The noble Lord said: I apologise to the Committee in advance for any errors that I make; I am rather full of cold, so you will have to bear with me, but I will try to be as clear as I can about this important order.

The regulations were laid before the House on 5 March. They introduce new levels of planning application fees and one new fee. If approved by this House and in another place, the regulations would come into effect on 6 April, the next common commencement date.

The principle underlying the planning fee regime is that would-be developers, rather than the council tax payer, should meet the bulk of the costs incurred by local planning authorities. A local planning authority’s work in this area includes the validation and registration of applications, followed by statutory notification, consultation and publicity, so that interested parties can comment. It involves maintaining an electronic and a paper version of the planning register and incorporating any revisions to the plans. It also includes writing to applicants and objectors, undertaking site visits, assessing the merits of each case and considering any representations about it.

The Government’s policy is that, in aggregate across England, the income generated by planning application fees should, as far as possible, cover the estimated total costs incurred by local planning authorities as a result of those activities. The last fee increase was in 2005, based on evidence gathered in 2003. In 2006, the Department for Communities and Local Government commissioned independent research to look afresh at the extent to which costs incurred by local authorities are recovered from fees paid by applicants.

The research, published on the Department for Communities and Local Government’s website, included a survey of local planning authorities and their resources. Arup’s report suggests that the total cost of the development control service is approximately £290 million to £365 million per annum, but fee income for 2005-06 was only £232 million. It concluded that, in aggregate, fee income has dropped below what is required to meet costs; whereas an overall increase of around 25 per cent would enable authorities not only to meet those costs but to maintain their standards of performance.

However, the Government would prefer to shield householder applicants from the full increase. Their fees are to go up by 11 per cent—that is, an extra £15. Other basic fees will go up by 25 per cent. The effect of this overall is a 23 per cent increase in planning fees—a figure at the lower end of what local authorities felt would be necessary for them to maintain a good and efficient service.

We believe that a greater increase would be right for the maximum fee which the regulations impose in some fee categories. Last year, in our consultation, we were proposing to abolish these maxima altogether, an idea that many local authorities supported. However, following representations and on reflection, an increase is now proposed. For most types of development where a fee cap is currently imposed, the maximum would be raised to £250,000, or £125,000 if the application is for outline permission. By contrast, the maximum fee for certain minerals and waste applications would go up only to £65,000. I acknowledge the point made by the CBI, the Quarry Products Association and other consultees that financial returns in relation particularly to mineral extraction sites tend to be disproportionately low. Only a small minority of projects trigger payment on that scale, but it is precisely those large and complex proposals that local councils find most difficult to assess and determine promptly with existing resources. For some large-scale major applications the separate arrangements for funding planning performance agreements will help, but for every other type of scheme, no matter how demanding of resources, the administrative cost ought to be met from planning fee income.

I remind the Committee that four out of five authorities in England are now achieving the planning application handling targets we set for them in the context of best value indicators and the planning delivery grant regime. We have also seen efficiencies in the delivery of local authority services where authorities have been required to deliver their overall responsibilities efficiently. Indeed, they have a good track record in achieving efficiency savings; not only have they exceeded their SR04 target one year early but they have forecast achievement of further efficiencies by the end of 2007-08 that would be in excess of the SR04 target.

The Merits Committee of the House has expressed concerns about where the incentive lies for an authority to control costs. In addition to the overall efficiency savings I have outlined, there is a real incentive for local planning authorities to determine planning applications efficiently and effectively because, where the cost of handling a planning application exceeds the fee payable, any shortfall must be covered from other council revenue or through subsidy from council tax, both of which are hard pressed.

We propose to introduce one new fee, which is for a request to the local planning authority for confirmation of compliance with one or more conditions imposed on a planning permission. That is designed to give developers greater confidence, especially where they wish to proceed to the next stage of a phased development or to sell the land on. The fee would be £85, or £25 if in connection with householder development. The only fee not to change will be that imposed in 2006 for monitoring mining and landfill sites.

The increases set out in the draft regulations before the Committee will keep planning application fees at a modest level for developers, compared to overall project costs, while enabling local councils to recover a fair proportion of their administrative costs from those who benefit most from the service provided and from any permission given. Research suggests that, if we did not secure increases at the level proposed, the deficit for local planning authorities would be in the region of £65 million in 2008-09. For those reasons, I commend the regulations to the Committee. I beg to move.

Moved, That the Grand Committee do report to the House that it has considered the Town and Country Planning (Fees for Applications and Deemed Applications) (Amendment) (England) Regulations 2008. 12th Report from the Joint Committee on Statutory Instruments.—(Lord Bassam of Brighton.)

Listening to the Minister reminds me of what a vexed local question planning invariably is. There is no getting away from that. Equally, there is no getting away from the vexed problem that all local authorities have when dealing with their budgets in total, of which, for planning authorities, planning runs away with a considerable amount of cost. No one can object to the principle that the cost of planning ought largely to be borne by those who are undertaking development. It was good to hear that what you might call the household proposals are to be protected by a lower increase in fee. Having said that, a better way to protect them would be to take the very small applications out of the playing field altogether, and I know that in various places there are some moves in that direction. Apart from that, the proposals are not wholly unreasonable in the circumstances. I have no reason to oppose them, and the Minister can go away happy that this is a part of an updating of the financial situation that we do not have any difficulty with.

We on this side of the Committee are quite happy with what is proposed. However, there seems to be something of a dilemma for the Government and local authorities in that, in seeking to protect householders while keeping business happy, local authorities will not be able to raise the income that they would like to have done. I think that the Minister would accept that this may be problematic for local authorities which, as he has pointed out, have done extremely well in creating efficiencies. There probably is not much further that they can do, although one hopes that they continue to try.

There is also a problem with cutting the service down too far. The capacity for development control officers to maximise things like Section 106, and whatever follows from it, requires investment in officer time. It might be a false economy overall to reduce by too much the capacity for local authorities to raise money. So, it is a difficult juggling act and I accept that. The Government have probably got it about right here, but I ask the Minister how they intend to monitor this in future, to ensure that local authorities are not too disadvantaged.

The maxima are in some cases still quite low; I do not know whether the Minister can say a word or two about that. Very large planning applications are hugely costly and go on a long time. One is ongoing in my area which we would have hoped to have had resolved well over a year ago. In fact, I have had another letter from the noble Baroness about the ongoing appeal. Costs are being racked up here all the time. I would not think that £250,000 would begin to cover the local authority’s costs on that one.

Finally, what has happened to Michael Lyons’s proposal that local authorities ought to be able to set their own local planning fees according to local circumstance?

I am grateful to the noble Lord, Dixon-Smith, and the noble Baroness, Lady Scott, for their support for our increased fees. It is perhaps worth saying that the increases have also been supported by the Local Government Association.

The noble Baroness asked what we would do to monitor the implementation of the fees. Following the approval of the fees, the Department of Communities and Local Government has undertaken to review the impact in 12 months’ time and hold further discussions with the Local Government Association and other stakeholder groups about how best to fund the planning system in future.

We also recognise that the planning fees regulations need consolidation. While that is something that we have not been able to contemplate during the recent spate of planning reform activity, we will obviously look to it in future. Because the increases are across the board, they do not impact more heavily on particular sectors of business or the community. The mechanisms for calculating fees are not being altered. As I explained, there is only one entirely new fee; that, too, was welcomed.

The noble Baroness, Lady Scott, made a valid point about the size of applications and the relative impact in terms of cost burden on the local authority. Obviously, any scheme for raising fees and charges has some imbalances in it. We think that we have got the balance about right here. The noble Baroness also asked whether we had thought about fees being set locally. We consulted on that point, because there has been an expression of interest in the past. However, I am afraid that it has not attracted widespread support from planning authorities. Of course, fashions and habits change and it is something we would keep an open mind about for the future. In April, we will publish a new explanatory fees circular, which will set out how fees work. As I have said, we will informally review the impact next year. Obviously, we will seek to identify with the LGA and others areas of communal ground on how to ensure that we more than adequately continue to resource planning services in the future.

I do not think that I need to cover anything else. I am grateful to both noble Lords for their support. In conclusion, it perhaps should be noted that the impact of the fees increases will not add significantly to the cost of development for developers. The typical planning application for a major development accounts for something like 0.3 per cent of the total cost of development, so it is a very small amount. But it has to be calibrated at the right level to ensure that we properly collect income into the local authorities.

I hope that the noble Lord will appreciate that 3 per cent plus 3 per cent plus 3 per cent plus 3 per cent, which is the way the system tends to work, soon becomes a large sum. Although of itself this may be small, a whole lot of other things are going on and development costs are inflating at above the average rate.

I did not say 3 per cent. I said 0.3 per cent, so the figure is less than one-third of a per cent. I take the point made by the noble Lord, but in reviewing the fees structure and the overall inflation in development costs, we do not think that we have added significantly to the burden on development. It would not be our wish to do so. However, we want to encourage adequate, full-cost recovery. As I have explained, it is likely that these increases will net nationally some £65 million to bridge that gap which the research by Arup identified.

On Question, Motion agreed to.