House of Lords
Thursday, 23 October 2008.
The House met at eleven o'clock: the LORD SPEAKER on the Woolsack.
Prayers—Read by the Lord Bishop of Rochester.
My Lords, Parliament has been closely involved in this project. The Parliamentary Estates Directorate was represented on the world squares steering group, the GLA wrote to Members of both Houses to seek their views and a number of submissions were made to the mayor. On 6 August 2008, the mayor announced that he had decided not to proceed with the project on the grounds of traffic impacts, cost and potential loss of green space. That was his decision to make. Parliament was neither the originator nor the owner of the scheme.
My Lords, Parliament was not the originator or the owner, but no one who works in this building can be unaware of how unwelcoming it is for visitors to be faced with so much traffic and no obvious area where they can look at the whole of a world heritage site, compromising the Palace of Westminster and Westminster Abbey but bisected by a road. The mayor said that his decision was not a matter of cash but of design. May I urge the noble Lord and the House authorities to be proactive and energetic in working with the mayor to find a design that is acceptable to all so that we can be more welcoming to visitors?
My Lords, that was nearly a very bad birthday present from the noble Baroness, Lady Hamwee. I thank the Chairman of Committees for his reply, which was extremely helpful to those of us who find it impossible to get home without a taxi. There are many disabled people here, quite apart from visitors. This House exists for its occupants, not for visitors. If any change is going to be made to Parliament Square, could those little tent people be moved to Marble Arch?
My Lords, the noble Baroness made a number of points. Under yesterday’s instruction, I shall keep my reply as short as possible. The noble Baroness’s main point was that by no means everyone agrees on what the mayor’s proposal did not propose. It is not as simple as all that.
My Lords, is the Chairman of Committees aware that Questions were raised on this subject in the House repeatedly, and that many of us found great dissatisfaction with the proposals, not only in what they would do to traffic but in how difficult access to the abbey would have been? Most of us are satisfied that those visitors who come to see us—I have plenty, many of whom come from a long way away—have no trouble at all in getting into this building.
My Lords, it is not for me to get into the merits or otherwise of the proposal, which has now been dropped. Part of the proposal that never got very far was the possible closure of Abingdon Street, which we debated back in July, but that proposal was never considered in detail.
My Lords, does the Chairman of Committees accept that access to the Palace of Westminster for as many people as possible is a basic democratic principle which we should all support? The possibility of opening up what would in effect be a great democratic space, as well as linking together the historic abbey and the Palace of Westminster for pedestrians, would hugely benefit everyone.
My Lords, as we are on anniversaries, I remind the House that it is also the anniversary of the Battle of Alamein, in which I declare an interest. Will the Chairman of Committees tell us how many people would wish to congratulate the mayor on what he has done?
My Lords, I cannot comment on that. I am answering for the administration of the House; I cannot answer for the mayor or for those who agree or disagree with his proposals. I remind noble Lords that it was this House that passed the law that set the mayor up some years ago. If people now do not like some of the decisions that he makes, that is just too bad.
My Lords, although the Chairman of Committees does not want to be drawn into the issues, does he agree that a scheme that would include traffic going along the north side would meet some of the objections enunciated in previous questions? The scheme would be marvellous for tourists, both British and foreign, if that space were created as a piazza for Westminster Abbey and the Houses of Parliament.
My Lords, the removal of the Corus security barriers in front of the Palace of Westminster—in front of our part in particular—was not affected by the scheme that has just been scrapped. They would have been affected only if the scheme had extended to the closure of Abingdon Street, which in many ways would have been a good result for this House.
Human Rights: Same-sex Relationships
asked Her Majesty’s Government:
Further to the Answer by Lord Hunt of Kings Heath on 10 July (Official Report, 10/7/08; cols 843-4), whether they have amended or withdrawn their intervention before the European Court of Human Rights in the case of Horst Schalk and Johann Kopf v Austria (Application No 30141/04) to contend that same-sex relationships fall outside the ambit of family life for the purposes of Article 8 of the European Convention on Human Rights.
My Lords, the Government have not amended or withdrawn the intervention. During the debate on 10 July the noble Lord raised an important technical issue in relation to the approach taken to Article 8. The Government undertook to reflect on that aspect. In accordance with that undertaking, my officials have sought views from other departments and expect to be able to provide the noble Lord with more information by the end of November.
My Lords, I thank the Minister. It is bizarre for the Government, who turned my Civil Partnership Bill into legislation of which they can be justly proud, to intervene in a case against Austria apparently to persuade the Strasbourg court to adopt a narrow interpretation of the Article 8 right to respect for family life for same-sex couples in other European countries. Will the Government urgently reconsider their intervention and note the significance of the leading judgment of the noble and learned Lord, Lord Bingham, given yesterday in the case of EM (Lebanon) against the Home Secretary, where he interpreted the fundamental rights in the following terms—
My Lords, perhaps I may be allowed to put the question without barracking.
The noble and learned Lord, Lord Bingham, said:
“Families differ widely, in their composition and in the mutual relations which exist between the members … Thus there is no predetermined model of family or family life to which article 8 must be applied”.
Forgive me, my Lords. I was not in the House yesterday when my noble friend Lord Bassam spoke to the House about the need for us to have short questions, but I heard him on “Today in Parliament”. He was absolutely right, and I know that the House is very much behind him. I therefore remind all noble Lords to keep their answers and their questions brief.
My Lords, the main purpose of our intervention is to address the argument made by the applicants that the right to marry, which is protected under Article 12, extends to same-sex couples, and I repeat that we are looking with some speed now at the point that the noble Lord made in his Question in July. As far as France is concerned, we have raised our concerns about non-recognition with the French Ministry of Justice. Both that Ministry and the French Finance Ministry have expressed their willingness to work with us to resolve the issue. There are a number of legal obstacles to recognition, but I can tell the House that this subject is on the agenda of meetings to be held between the Justice Secretary and the Europe Minister and their French counterparts in the next few days.
My Lords, does the Minister agree that, while Article 8 of the European convention provides mainly for privacy in the home and Article 14 provides for non-discrimination, Article 12 provides for a view of marriage between a man and woman and of family life that is basic to the existence and continuation of any society?
My Lords, Article 12 speaks for itself. Men and women of marriageable age have the right to marry and found a family according to the national laws governing the exercise of that right. When we passed the Bill of the noble Lord, Lord Lester, we made a distinction in it and did not call single-sex partnerships marriage. In many important ways, it was very similar, particularly in the many legal rights that it quite rightly gave to single-sex partnerships, but it did not call those partnerships marriage, and that remains the Government’s policy.
My Lords, in the light of the Government’s excellent recent legislation on this matter, which we all support, why do the Government apparently object to the Strasbourg court developing any case law on this matter, which is the normal way in which law can be developed?
My Lords, we do not object to the advancement of case law from the European court. Our main objection—I am sorry if I am repeating myself—is to address the argument, made by the applicants in the case referred to in the Question, that the right to marry, which is protected under Article 12, extends to same-sex couples.
My Lords, would it not be a rather good idea if, regardless of the merits of the legislation enacted in this Parliament, we got back to the idea that it is this Parliament that governs this country and makes the laws that govern the people of this country? It would simplify matters an awful lot, and would save us from a great deal of the verbosity of those who cannot read a brief without actually having it in their hot little hands.
My Lords, banks have committed to the recent recapitalisation scheme to maintain over the next three years the availability and active marketing of competitively priced lending to small businesses at 2007 levels. Central government departments aim to pay 100 per cent of invoices within 10 days, and we are providing advice and support services, including health checks for small businesses through Business Link and the “solutions for business” package announced earlier today.
My Lords, I thank the Minister for that reply. I understand that Ministers are meeting the banks today. Will they agree with the banks a memorandum of understanding to ensure availability of finance, competitive interest rates and no increases in fees for small businesses? May I also point out that the issue of small shops has not been addressed? I presented to this House the Retail Development Bill, which the House has passed, and which calls for an assessment of business rates for small shops. Perhaps the Minister will also respond to that point.
My Lords, on the memorandum of understanding, an agreement has already been reached with the banks to maintain the availability and active marketing of lending at competitive prices. I do not think that we have got to the sort of economy in which we can set the fees and interest rates for each loan. We also agreed with the banks this morning that they and the Small Business Forum would meet to iron out problems that come through in the next few months.
My Lords, given the importance of the single European market, will my noble friend re-examine the directive that governs that market on late payment and indeed the 1998 UK legislation which governs the same, especially with respect to the failure of big businesses to pay small businesses on time?
My Lords, we have had a long discussion with small businesses about the Act and the need for legislation. The view which has been reached is that this area would not easily lend itself to legislation and that the 1998 legislation is perfectly adequate in allowing interest to be charged in particular for late payments. We will be encouraging all businesses as well as government and the wider public sector to pay as soon as possible. That is why the Government have set the example by saying that we will pay within 10 days.
My Lords, the noble Baroness will be aware that the Federation of Small Businesses is today calling for the replacement of the small firms loan guarantee scheme by a £1 billion survival fund to be funded by the Government and the European Investment Bank. Is she yet in a position to give the Government’s response to that proposal?
My Lords, we have studied the proposal and have been discussing it with the Federation of Small Businesses for some time. We are currently in discussions with the EIB. Next week there will be a meeting between the Chancellor, my Secretary of State and the president of the EIB to discuss our application to the EIB for funding specifically for small businesses.
My Lords, can the Minister confirm that the Government intend to encourage an extension of flexible working with the cost saving that that brings to families and, indeed, to small businesses? Will she also do her best to see that flexible working requests from men with family responsibilities are treated as seriously as those from women?
My Lords, in response to repeated questioning yesterday on whether the £350 million allocated to training is new money, the Secretary of State said that it,
“is additional training money for small businesses. It is existing money, but it was not previously available to small companies”.—[Official Report, 22/10/08; col. 1155.]
To which projects had that money previously been allocated, which will now, therefore, not receive it?
My Lords, that funding was allocated by DIUS for Train to Gain, but not specially allocated for small businesses. John Denham’s announcement stated that we would create some flexibility in the way that small businesses can access Train to Gain as well as allocate this funding especially for them.
My Lords, yesterday I asked the noble Lord, Lord Mandelson, whether the Government intend to support the European Commission proposal to allow VAT to be reduced on repairs to houses, listed buildings and so on, which comes up at ECOFIN in a few days’ time. Presumably the Government know how they intend to act on this proposal, but the noble Lord, Lord Mandelson, did not seem to know when he responded yesterday. Can the noble Baroness help?
My Lords, while many small businesses would welcome a reduction in interest rates, I am sure that the noble Baroness is well aware that the pound is falling in value against the dollar and other currencies, and that there is a relationship between interest rates and the value of the pound. What protective measures are available to the Government in the event of a run on the pound?
My Lords, we have now had six or seven questions in a row from the Conservative Benches. Will the Minister acknowledge that on this side of the House we believe that she has answered all of them not only effectively but quickly, and we are grateful to her?
My Lords, if the noble Baroness’s answer to that question is one of silence, perhaps I may ask her quickly and effectively to answer this question. To what extent have the individual components of the recently announced bank rescue package now been implemented, so that the banks may be expected to respond accordingly?
My Lords, liquidity is already available and is being utilised. The first issuance under the medium-term guarantee scheme, a central part of the package, has already been undertaken by Barclays and had a positive impact on the market. Recapitalisation will obviously be subject to shareholder votes and to the marketing of the shares, which will be taking place over the next two or three months for closure towards the end of the year.
My Lords, the Government welcome the report. Government reforms to promote employment opportunity for all, to make work pay, and to support vulnerable groups have helped all sections of society to share in rising national prosperity in the last 10 years. Since 1997, living standards have risen strongly across the income distribution. The previously sharp rise in income inequality has been arrested, and relative poverty has fallen significantly among children and pensioners.
My Lords, I thank my noble friend for that reply. Is he aware that what he has described has been achieved not by squeezing the rich, but by helping the less well off, and that this help has been a crusade for the Labour Party for many years? Can he confirm that the Government will continue with it?
My Lords, can my noble friend tell the House whether the OECD report takes account of the fact that the national minimum wage, tax credits, family benefits and pension credits were all introduced by the Government and opposed by those opposite? If the Opposition had been successful, would we have been able to enjoy the statistics produced by the OECD?
My Lords, the OECD report identified that income inequality was increasing markedly during the 1980s and early 1990s and that this process has been arrested. This is as a result of government policies—of which the most important is the employment policy—and the increase in the number of jobs available in our society, together with the other points which my noble friend has identified.
My Lords, the Minister referred to the children and pensioners in poverty numbers decreasing since 1997. However, he will know that since 2005 those numbers have been increasing, and the OECD report only ran to 2005. Do the Government have any policies to turn that negative trend around, especially in the light of the current economic circumstances?
My Lords, we all recognise that the current economic circumstances are difficult indeed and that there is a difficult year ahead. That is why my noble friend, in response to an earlier Question, indicated that the Treasury and the Chancellor will be making clear their strategy in the Pre-Budget Report, which we expect shortly. The answer to the noble Baroness’s question is clear: in these difficult circumstances we will seek to protect those most disadvantaged in our society.
My Lords, does not the Minister agree that it is bad enough for most of us in this House to pay a marginal rate of tax of 40 per cent, but that what is far worse is that at the bottom of the stack people are paying rates of more than 80 per cent when you take into account both tax and loss of benefits? Is it not a scandal that the effective tax rate for people on very low earnings is so much higher than for those on high earnings?
My Lords, the noble Lord has highlighted an important point. I am not sure that it was addressed more than a decade ago but he is right to address it to a Government who feel keenly about this issue. I emphasise that through tax credits more families are getting resources greater than the tax they pay, but certainly the Government need to address the issue identified by the noble Lord.
My Lords, does the Minister recognise that over the past 10 years the Government have presided over a sharp rise in the price of houses and home ownership, despite the recent fallback? Do the Government regard that as a benefit to the citizens of this country?
My Lords, the extension of home ownership is certainly a benefit, as is the security that people derive from what has been invested in their homes. However, a significant percentage of the population need homes, are not in a position to purchase and need social housing. That is why the Government have emphasised that we intend to develop social housing as soon as we are able to do so.
My Lords, does the Minister agree with the OECD that the single biggest reason that income inequality has fallen is that unemployment has fallen significantly? Does he further agree that if there were a reduction in GDP next year of only half a per cent, unemployment is likely to rise by 1 million? Will he therefore consider ending tax perks for the rich so that taxes can be reduced for those at the bottom end of the scale, to benefit those families and communities that are likely to be most affected by the rapidly rising levels of unemployment that we now expect?
My Lords, the noble Lord will know that I agree with his first point because I said earlier that employment policies are by far the most effective way of effecting income redistribution. On the more general point, of course we need to address what will be some increases in unemployment. We can see that taking place at present and it is bound to occur over the coming year. As I have indicated, the Government will outline our plans to cope with that issue in the Pre-Budget Report in the near future.
My Lords, we take pride in the increased flexibility in our economy, and that is a reflection of flexibility at the place of work. It is of particular significance to women, who frequently require flexible hours. We all recognise that over the past decade or so that has been one of the more significant developments in the workplace, and we will seek to sustain that development.
My Lords, I am grateful to the noble Earl, who takes a keen interest in these matters and therefore speaks with authority when he indicates how crucial the issue of childcare is, particularly the role of childminders, relating both to the question I was asked earlier about flexibility with regard to women at work and to the benefit of children.
My Lords, we all know what a challenge that represents, and of the disparities throughout our economic history between the earning power of women and that of men. We are concerned that there should be fair pay for all according to the work that they do and the noble Baroness will recognise the extent to which we have been able to do that in certain areas, overwhelmingly in the public sector. It is more difficult in the private sector, as she will appreciate.
Police Appeals Tribunals Rules 2008
Police (Performance) Regulations 2008
Police (Conduct) Regulations 2008
Immigration and Nationality (Fees) (Amendment No. 3) Regulations 2008
International Criminal Court (Remand Time) Order 2008
Wool Textile Industry (Export Promotion Levy) (Revocation) Order 2008
Rail Vehicle Accessibility Exemption Orders (Parliamentary Procedures) Regulations 2008
Rail Vehicle Accessibility (London Underground Victoria Line 09TS Vehicles) Exemption Order 2008
Air Navigation (Environmental Standards for Non-EASA Aircraft) Order 2008
My Lords, I beg to move the nine Motions standing in my name on the Order Paper.
Moved, That the draft rules, regulations and orders be referred to a Grand Committee.—(Baroness Royall of Blaisdon.)
On Question, Motions agreed to.
Legislative Reform (Local Authority Consent Requirements) (England and Wales) Order 2008
My Lords, I beg to move the Motion standing in my name on the Order Paper. In moving the Motion, I should say that the first-stage legislative reform order was debated in Grand Committee on 13 December and that the revised draft order reflects the comments made by your Lordships’ Regulatory Reform Committee.
Moved, That the draft legislative reform order laid before the House on 26 June be approved. 1st and 12th Reports from the Regulatory Reform Committee, First-stage draft order considered in Grand Committee on 13 December 2007.—(Baroness Andrews.)
On Question, Motion agreed to.
My Lords, I beg to move that the House do now again resolve itself into Committee on this Bill.
Moved accordingly, and, on Question, Motion agreed to.
House in Committee accordingly.
[The LORD SPEAKER in the Chair.]
Clause 198 [The levy]:
435A: Clause 198, page 122, line 36, leave out “with the consent of the Treasury”
The noble Earl said: In moving Amendment No. 435A I shall speak also to Amendments Nos. 435C, 435D, 435E, 435F, 435G, 435J, 435K and 436. This is the first of a lot of large groups. I hope that we are able to discuss all the amendments. I dislike the groupings and I have said so, but I have been overruled in what I wanted to do to try to improve the debate and the structure of our proceedings.
Today we move on to the worst part of the Bill; those in the department should hang their heads in shame for what they have done. Never have a Government been so savaged by the Delegated Powers and Regulatory Reform Committee, which took this part of the Bill apart in its very potent analysis. There is a huge lack of detail. It is very difficult to discuss a levy such as this when there is no detail. What has happened to the assurance given in another place? The Minister, Mr Healey, said,
“we aim formally to consult on draft regulations this autumn”.—[Official Report, Commons, Planning Bill Committee, 31/1/08; col. 599.]
Where are these draft regulations? Why have the Government not stood by what they said they would do? It makes our life extremely difficult, but perhaps the Government’s aim is not to have a proper debate on this part of the Bill. In that way, they can have the flexibility to amend provisions without consultation or debate in the House.
Let us make it absolutely clear: this is not a levy; it is a tax. This is just a variation of development land tax. I can see the scenario in the department: “We can’t call it development land tax. What are we going to call it?”. Someone came up with the bright idea of the community infrastructure levy and was told, “We can’t call it that yet; that will be our fallback position. Let’s think of something worse”. They started off with the planning gain supplement, which created such an outcry that they were able to fall back comfortably on the community infrastructure levy, so now they have the tax they wanted.
It is because of the question of whether this is a tax or a levy that I have tabled Amendment No. 435A, which would delete the words,
“with the consent of the Treasury”.
I have seen those words in lots of Acts and have put them into Acts myself. They indicate quite clearly that this is a tax matter. This is not a levy or a charge, but just another tax.
Yesterday we heard the honeyed words of the noble Lord, Lord Mandelson, saying that he was going to support small businesses and we heard at Question Time today about the help that the Government are giving small businesses. Yet with the other hand they stick a knife into small businesses by adding another tax. The timing could not be worse. It is just like the home information pack; that may have been a lovely idea when it was dreamt up but by the time it got on to the statute book, it was a disaster and has done nothing to help the housing market. CIL will do exactly the same. When this gets on to the statute book, we will be in the middle of a recession and nobody will want to develop anything because of the tax implications.
Amendment No. 435C seeks to insert the words “part only of” the cost. Why should all the costs incurred be paid by this dreadful tax? Amendment No. 435D would provide that the tax should be paid on costs directly incurred in providing the infrastructure. Why should this tax help other projects rather than the one with which it is concerned? That is also the reason for the words “partly” and “wholly or partly”, contained in Amendments Nos. 435E and 435F. If we are to have this tax and developers will have to pay for added infrastructure, it should be related directly to the project in question, not to something much wider. Then we have this terrible phrase at the end of subsection (2), where it says that the tax is paid on land,
“the value of which increases due to permission for development”.
It is quite clear that somebody in the department does not know how development works, because planning permission does not necessarily mean an increase in value. This part of the Bill contradicts Clause 200(5), and it is for that reason that I would like to remove those words.
Amendment No. 435J would delete reference to the Secretary of State. I think that the noble Baroness has an amendment in her own right on that, also deleting reference to the Secretary of State. That takes me on to Amendment No. 436, which again deletes the reference to Secretary of State as well as those to the Welsh Ministers and the Mayor of London. Why are they charging authorities? I beg to move.
I oppose the amendments in the name of the noble Earl, and, in so doing, I draw attention to my interests on the register. Like the noble Earl, I am a member of the Royal Institution of Chartered Surveyors, but I take a different view to the introduction of the community infrastructure levy. I take that view based on almost 10 years’ experience of major infrastructure projects across the length and breadth of England and the difficulties that all parties—central and local government, private developers and housebuilders—have encountered over that time in unlocking land for development because of lack of investment in infrastructure.
The noble Earl drew attention to the previous idea of a planning gain supplement. He was not alone in having grave concerns about the PGS, but, to the Government’s credit, there was widespread consultation on that, and the department went to great lengths to listen, understand that concern and modify its proposals in light of that concern. I pay tribute to my noble friend Lady Andrews for the lead she took in that work.
There is no doubt in my mind that all across England lots of perfectly viable, sensible and sustainable developments are held up for want of a mechanism to fund the necessary infrastructure to release those developments. An example that I could give would be in west Bedford, where five major landowners could not unlock that development for the want of a relief road. Often the issue is not over a massive infrastructure; sometimes it is actually quite small. Because of that, it is below the radar of departments such as the Department for Transport, but it is simply too rich for the appetite for resources of a single authority. In the case of west Bedford, central government brought all those landowners together and with the local council they were able to secure a voluntary contribution to unlock that infrastructure over a period. Again, in Milton Keynes there is now a tariff in place; the 18 landowners there voluntarily came together because they knew that it was in their own interests to unlock that development in a sustainable way and agreed to pay a tariff of just over £18,000 per house for that.
In response to these amendments, I think that the Government have listened very hard. The planning gain supplement was regarded as unworkable and unfair on all sides; on the other hand, there is a very great measure of support in the private sector for the community infrastructure levy. We know that the British Property Federation, from which we have all received interesting and thoughtful correspondence, has concerns about some of the detail here. But it is evident to all of us that if we are to have proper sustainable development across England, we must simply do more to make a contribution to that very necessary infrastructure.
If landowners have a windfall gain because of a change of planning status of the land, it is reasonable that they should pay some of that towards necessary infrastructure on account of that land being developed. I do not believe that the levy is unreasonable; there is widespread support for it; and it is a necessary procedure. For those reasons I urge noble Lords to resist the amendments.
I support the community infrastructure levy in principle. I have grave concerns about the tax on increase in land value, a point the noble Earl, Lord Caithness, touched on. My amendments in this and subsequent groups relate exclusively to the community infrastructure levy. Before speaking to my amendments, I must mention that I am chief executive of London First, a business membership organisation.
Amendments Nos. 435CA and 437CA in this group relate to the purpose of CIL. These are the first of seven of my amendments, which fall into three separate groups. They all fundamentally focus on one goal: the funding and delivery of infrastructure. The community infrastructure levy must be fairly and reasonably levied to broadly reflect the impact of development, through the development plan process, and the moneys collected must be spent on ensuring timely delivery of infrastructure.
My two amendments in this group on the purpose of CIL would ensure that CIL is not a tax on land value and that references to it as such are removed. Critically, referring to increases in land value is inappropriate. First, it sends the wrong message about the purpose of CIL. CIL is not to tax the increase in land value arising from the grant of planning permission; it is to secure a contribution from development to additional infrastructure needs created by new development in the area.
Secondly, the issues around using land value increases as a basis for assessing viability are highly complex. Any simple reference to uplifts in land value flowing from planning permission would inevitably lead to differing interpretations, not least because land can increase in value irrespective of development or planning permission.
The principle is that CIL is not a tax on land value, and I would prefer to see any unintended implication that it is removed from the Bill. That is why Amendment No. 437CA suggests the removal of a subsection which is not required and, indeed, may contradict the later provision in Clause 201(3)(b). Amendment No. 435CA also removes the reference to land value as the basis for establishing CIL. Instead, CIL must be fairly and reasonably levied in a way that broadly reflects the impact of development through the development plan process. I will return to this point in later amendments.
I support very strongly what the noble Baroness, Lady Valentine, has said. Since the last war, we have suffered repeated attempts by successive Labour Governments to try to assess and tax the increase in land value as a result of planning permission. My memory goes back to the Land Commission. At that time, the Minister concerned was firmly advised that the provision was impossible and would simply choke off development; and the Land Commission had subsequently to be abolished.
Then we had the development land tax. That did not work either. We have had the planning gain supplement, which happily seems to have been withdrawn but remains on the statute book. A later amendment deals with that. The community infrastructure levy is the latest attempt. The great mistake is to regard it as a form of capital gains tax on some extremely difficult-to-assess increase in land value. The evidence I have had from a number of organisations on this issue argues that it is extremely difficult to assess what is the increase in the value attributable to planning permission—a point wisely made by the noble Baroness. In practice, this will become a value—not an increase in value—and then the tax will be based on that.
The problem there is that the value may bear absolutely no relation to the increase in infrastructure costs to which this community infrastructure levy is intended to be a contribution. It is no more than a contribution, to give local authorities some extra funds to pay part of the cost of the infrastructure to which a development can give rise. It has been pointed out to me that some of the biggest increases in value may come from retail developments—shopping centres—which may not require infrastructure costs beyond some possible increase in road capacity. Some of the developments that will carry considerable increases in infrastructure requirements may, in fact, pay considerably less. This must be tied to what the local authorities see as their infrastructure needs.
An example pointed out to me was that of an expanding town; with a substantial increase in population, it will eventually need an expansion in the crematoria. How will that be tied in to the development costs? It is clearly an infrastructure need occasioned by the development leading to the increase in population. Simply to try to link this to the extremely difficult concept of the increase in value, however, seems fraught with difficulties.
I take issue with one point made by my noble friend Lord Caithness. On Amendment No. 444, I shall be agreeing with the Delegated Powers Committee, which made a powerful point on this, and arguing that this is a charge, not a tax. It is a charge, in line with a great many others that have preceded it and on which this House has always had its part to play. My amendment is that both Houses should therefore be involved in the approval of the regulations. I am mildly surprised that my noble friend has added his name to it; no doubt he will explain at some stage. However, that is by the way, and we will come to the argument later.
There lies at the heart of the difficulties here, which will be addressed by a number of amendments, the concept that you can somehow tax the increase in value attributable to planning permission. All the advice that I have had suggests that that is in fact a near impossible task. I hope that we will be able in Committee—and, later, on Report—to make some changes to link the charging schedules which local authorities will draw up to their development plans, so that the levy on developments will thereafter bear a close relationship to the infrastructure needs of each local authority.
It may be that that is the Government’s intention, but the advice that I have had is that it is not expressed properly in the Bill. We need to change the Bill, and will come to some of these amendments later on. I emphasise that the noble Baroness, Lady Valentine, has put her finger on an extremely important point.
I have tabled Amendment No. 436 in this group, which deals with a simple and narrow point that I shall address before returning to the generality of the discussion. The amendment is not perfectly worded, but simply makes the point that there should be only one charging authority. By that, I mean that people undertaking development who will pay this charge, or whatever we choose to call it—I shall come to that in a moment—should have only one bill to deal with. It will be immensely complicated if there is any possibility of their receiving two, three, five or any number of bills.
This is a probing amendment designed to ensure that the Government clarify precisely how they will deal with the dilemma which is immediately apparent to anybody who has read the Bill and noted that the London boroughs may charge authorities as planning authorities and that the Mayor of London may also be a charging authority. We have heard of an instance where this problem has to be overcome. Occasionally, in other parts of the country there are cross-boundary developments. Such a development will be difficult if one part pays one rate while another pays an entirely different rate because it happens to be in an authority that takes a different view of what the charge should be. Is this a charge or a tax? My noble friend Lord Jenkin of Roding properly addressed that and rightly said that it should be a charge, with local authorities having the discretion to set it within an approved system.
The other place clearly takes a different view and sees this as a Revenue matter. The Treasury clearly sees it as a Revenue matter. When you sit down and consider the sum that the Government expect to raise from this charge, as suggested in at least one of their consultation papers—£500 million is mentioned—it is big enough to be a tax. We are into the argument that, “A rose by any other name would smell as sweet”, but my noble friend raised the fundamental point that one classification gives us some control over the measure in the future whereas the other does not. I consider that in this instance we ought to have a role to play.
Moreover, this is nothing new. We should not be left with the impression which might have been given by the noble Baroness, Lady Ford, that developers are not already subject, or may be subject, to paying a very considerable contribution towards all infrastructure costs. Section 106 has been in place for a long time. I know from personal experience that it can include playing fields, road improvements, sewerage extension and things that can be way off site. They may be related to a development, but they also provide real benefit to the whole of the wider community. We should not think this is an entirely novel provision that has not been around for a very long time. Indeed, my noble friend gave the background history to it.
However, as I see it, the measure is designed to catch a lot of development that at present does not contribute towards infrastructure. Whether you call this a tax or a charge, it is an additional way of raising money for public finance. We have been given no assurance—I wish that we had—that the existing sources of funding used for these purposes will not be diminished because this new charge is being brought in. If there is any hint that this might be a substitute for existing sources of funding, we are doomed to failure. I suspect that for a time we are doomed to failure anyway, or the Government are because they have an unfortunate but immaculate sense of timing. They are picking the worst possible moment to introduce a charge on the construction and development industry. I put it in its widest sense.
We should realise that this charge usually has to be paid from the landowner’s receipts; but so did Section 106. One must also remember that this will catch a lot of development where there is no change of ownership and in very many instances there will be no enhanced value, perhaps apart from the cost of construction. I am sorry if this seems like a Second Reading speech; it is a Second Reading speech, but it is absolutely vital that we should get the context of what is happening correct.
I am immensely sorry that this provision is here at this time. That is not to say that there might not have been a time when this would have been more favourably received. We continually load fiscal charges on to desirable developments. There is only one long-term effect as a result, which is that the price of everything rises. It will be paid by people improving their houses, if the improvement requires planning permission. It will be paid as part of the cost of site value and the construction cost of a house and, ultimately, it will be paid by house purchasers. It is another twist of the inflationary screw.
It may be said that this is justifiable, but I remind the Minister of the time when the development land tax was proposed. That was a deliberate attempt to tax enhanced value. What happened was quite simple; all development land disappeared from the market for as long as that proposal was around. It remained off the market until the price had risen to the extent that the receipt to the landowner, plus the tax, was sufficient that he was not losing money as a result of the introduction of the charge.
We have picked another one of those glorious moments when that reaction will be significant. The only thing I want to add is that I doubt whether any local authority will want to consider a charge of this nature at present. I only have very limited intelligence—by which I mean information coming to me—but we ought to appreciate that on planning committee agendas, applications for new build have virtually disappeared. There are still applications around for housing extensions and that sort of thing, but very few applications are coming forward for anyone to do anything. I strongly suspect that it is much more important to get the development process moving forward again than it is to introduce this charge.
We welcome the fact that there is a little flesh on the skeleton, although it is still fairly emaciated. There have been comments about the timing of this. If the Government had not run into trouble in the Commons over the principle of the Infrastructure Planning Commission, we might well have been debating this part of the Bill about six months ago, and the comments might have been a little different.
Section 106 and the planning gain supplement have been mentioned. The advantage of Section 106 compared with the planning gain supplement was that the community could see the benefit that would come to it, if not as a result of the development at any rate linked to the development. The community could see benefits which might counter the disadvantages of a development, although Section 106 seems to have pushed at the limits, possibly to an improper extent. If the new levy brings a degree of propriety—perhaps that would be a bit strong—rather, if it puts things into the proper pigeon holes, that is to be welcomed. I agree with the comments made about the difficulty of defining and assessing value and I, too, see this as a charge, although I wonder whether the window tax of centuries ago was a tax or a charge.
I want to ask a question and make a point on government Amendments Nos. 436A and 436B. I disagree with the noble Earl and support making the Mayor of London a charging authority, because, as I understand it, if the mayor is the planning authority for an application, it is necessary for the mayor to be the charging authority as well. What is important is how the money is spent, the relationship between the mayor and the boroughs and the relationship between the boroughs where the mayor is not a party, but the development may affect more than one borough. Outside London there could be a similar situation.
Amendment No. 436B deals with joint committees. I may be wrong, but I do not believe that it covers an arrangement between the mayor and the boroughs. Will the Minister’s amendment deal with that, because there needs to be a structure in which everyone can have confidence?
I have only one series of major amendments today that deal with CIL, but I indicated at Second Reading that I have a series of questions which I will attach to other noble Lords’ amendments throughout the day.
My question has already been asked by other noble Lords, but perhaps I may put it in a rather different way and attach it to Amendment No. 435G in the name of the noble Earl, Lord Caithness. If CIL is a tax, as it were, on the rise in the value of land as a result of development, presumably, if a development does not involve a rise in land value, no CIL would be charged, although I notice that Clause 205 indicates that CIL would still be payable if there were no increase. However, what will happen if there is a decrease in the value of the land? Believe you me, for business purposes many landowners undertake developments that actually decrease the value of their land. I have done that myself.
I pick up the theme that other noble Lords have mentioned as to whether CIL is a tax on the rise in land value or genuinely a levy, which it purports to be, which attempts to raise money for extra infrastructure caused by the development. The same question applies. A development may reduce the strain on the infrastructure, such as the creation of a key worker’s house, or be neutral vis-à-vis the strain on the infrastructure, such as an agricultural development that merely involves enlarging a cattle building, putting up a slurry store or replacing a building on a like-for-like basis—such as the renewal of an office building. Although it is called a levy, is this a tax on renewals? Can the Minister clarify at this early stage whether CIL is a tax or a levy?
Amendment No. 435GA, which is in this group, extends the purpose of CIL to allow compensation to be paid to those who have been adversely affected by permitted developments. I realise that there would need to be consequential amendments if this amendment were accepted, for example, to extend the application of Clause 202(1). I am also uncertain about how this amendment would interact with the new government amendment on compensation, which we debated and adopted last week, replacing the former Clause 151. That amendment, as I understand it, would restore the right of landowners, but not licensees, tenants or anyone else, to bring a claim for compensation by means of a claim for nuisance. Perhaps the Minister will say something about that when she replies.
My amendment relates to my Amendment No. 433, to which I will speak later, which bans the unregulated practice of developers making financial offers at their own discretion to local interests in an attempt to influence planning decisions in their favour. I should like to see all developers, including those of wind power generators, liable to CIL and the proceeds made available to compensate those whose livelihood or health, as well as property, has been adversely affected by the development that has been permitted. That would do much to deal with the problem of the divisiveness that that practice has introduced into communities.
It is not clear to me whether wind power generators are caught by CIL. I should be grateful if the Minister could say something about that with and without, if that is possible, the amendment tabled by the noble Baroness, Lady Valentine. This is a probing amendment.
I have given notice of my intention to oppose the Question that Clause 198 stand part of the Bill because I wish to probe the basic concept of CIL. I have two related concerns, which have already been raised by several speakers. First, I understand it is proposed to introduce CIL while retaining Section 106 planning obligations. That puts potentially excessive burdens on the developer. I declare an interest as a landowner in Hertfordshire. Secondly, a combination of CIL and Section 106 impositions may result in widespread withholding of potential development land, as happened in the case of development land tax in the 1970s. I do not wish to interrupt today’s important debate on the detailed provisions of the Bill, but I should like the Minister’s assurance that if Section 106 agreements are to be retained, the combined burden must be kept within reason.
I shall make a brief speech as a footnote from a flank to the observations made by my noble friend Lord Dixon-Smith from the Front Bench concerning the timing of this legislation and the state of the economy. I realise that when the Government formulated this policy they might not have foreseen the situation in which the economy finds itself and that events have overtaken them. The flank nature of my observation is that I shall allude to planning in the island of Ireland. It is well known that planning laws are more relaxed in the Republic of Ireland, some would say to the disadvantage of the beauty of the Irish countryside. In Northern Ireland 30 or 40 years ago, planning laws were considerably stronger, to the benefit of the landscape. During the Troubles, which inevitably led to a massive economic slowdown, the British Government relaxed the planning laws in Northern Ireland in order to stimulate economic activity. When the Troubles came to an end, it was possible to return to the status quo. Is the Minister contemplating on behalf of the Government that there will be a fine tuning, in the sense of timing, with regard to the introduction of this legislation if it goes through?
I rise to express sympathy for the amendments tabled by the noble Baroness, Lady Valentine. There is a real danger, not only in the Bill but in the consultation documents, of not merely implying but saying that CIL is, effectively, a charge or a tax—or whatever it will be called—on development gain. The amendment proposed by the noble Baroness is an ingenious solution. If the Minister were able to respond positively to the idea behind the amendment, reassurance would be provided that, in discussions, that part of the consultation document would disappear. In expressing sympathy for that, I add that the debate on clause stand part is the only time when we can talk about the principle as opposed to how what is proposed is brought about.
I continue to express to the Minister what she knows are my deepest reservations about the line that the Government are taking. I forecast that enormous tangles will result from this. The idea that it will provide certainty will turn out to be a myth. There will be enormous variations across local government areas and they will tend to emerge, not de minimis, but at modest levels because of the fear, on which I shall comment in a moment, of stopping some developments. In my view, it will be set at modest levels. It is very wise to keep Section 106 because, in my view, local authorities will still want to get additional revenue from developments which are large and which will produce substantial gains. I can see that that is what will happen. If that were not to be done, as a matter of logic and straightforward economics, once you apply a charge, a tax—call it what you want—to all developments, at the margin some developments will become unviable.
This is the point in the Bill when it is worth putting on the record our very grave reservations. In due course, if it came to a vote, I would not vote against the Government, but I simply give a warning that they are opening up a pitfall. As the current recession and depression in development and in property prices—housing, commercial and industrial—show, working out what kind of rates to charge, what you are going to bring in, and when, is a very tricky business indeed. Values have fallen by between 20 and 50 per cent. As the recession takes hold, you will probably find that property values and development values fall even more sharply which will make a mockery of this system if it is in operation. However, this concept would regularise much better the framework in which local authorities set out their infrastructure needs and would provide a basis on which comprehensive discussions could take place with anyone who wants to undertake development. That is warmly welcomed. However, I am not at all convinced that that framework, which is a big step forward, needs to be supported by this kind of funding, in part or in whole.
I thank my noble friend for making that clear. This has been an important debate on the fundamental issues of the community infrastructure levy. I am very grateful to all noble Lords who have spoken. I am particularly grateful to the noble Baroness, Lady Ford, who has brought forward her great experience in positive support of CIL itself. A number of very important questions have been raised in the Committee which I shall try to address, but I begin by setting the scene, as it has moved on since the summer. This is probably more in the nature of a Second Reading speech, but the Committee needs to know how we addressed the issues that arose from the questions raised at Second Reading.
I will refer to the community infrastructure levy as CIL; that will shorten our debate by at least an hour. CIL is a significant change to the way in which development contributions towards community infrastructure are secured. The fundamental point—to address immediately the point raised by my noble friend Lord Woolmer—is that we seek to do that in a way that ensures that development is deliverable and sustainable; that it is framed by the local development plan; that it is related to the specific costs of infrastructure that the community needs; and that, for the first time, we will have certain, transparent and predictable levels of funding to fund the impact on infrastructure that new development generates.
I am sure that noble Lords will have read the report we issued in August, which went into a great deal of detail about our thinking behind the proposal and our testing of assumptions. A great deal of work was done on those relationships in that document. The noble Baroness, Lady Ford, said that the proposal for the levy commands wide support; I can endorse that. As far as we are aware, no local government planning or developer representative body objects in principle to our proposal. I am very grateful to the noble Baroness, Lady Valentine, for saying just that when she opened her speech. For example, there is support in principle from the CBI, the Local Government Association, the British Property Federation, the TCPA, the Royal Town Planning Institute, the Royal Institute of Chartered Surveyors, the Campaign for the Protection of Rural England, and many others. I know that the noble Earl, Lord Caithness, and my noble friend Lord Woolmer do not accept some of those views. I hope that I can persuade them in our debates that there is a lot of merit in what we propose—that it is not only a better system but the right system to provide what we so badly need in future.
It is worth reflecting on that consensus, because everyone is agreed that we need a fairer, more certain and more transparent way to secure developer contributions. That is crucial in the light of what many noble Lords have said about the current state of the economy and the need for long-term secure planning. We need to understand what we have to do and be as transparent and clear about managing risks ahead as possible.
Developers have consistently said to us that they find the existing negotiated system of planning obligations or Section 106 agreements slow and unpredictable. They are certainly not transparent. We know from our recent research that it is the most major developments that bear the burden of contributing to local infrastructure. Only 14 per cent of residential planning permissions make some form of contribution through planning obligations. I take the point made by the noble Lord, Lord Dixon-Smith—this is about capturing more of the development so that it can contribute to the key infrastructures that we use.
We are not talking simply about roads but about hospitals, play spaces, schools and green spaces. We are talking about the green infrastructure and the physical infrastructure but also the social infrastructure. It is all contained in the definition of what the community needs to thrive—what the development plan must work out to ensure that the community has all the resources it needs to thrive. Most minor development makes no contribution.
I think that the noble Lord, Lord Dixon-Smith, referred to household development. I make absolutely clear that we intend to use our regulation-making powers to exempt household development for homeowners, so there is no question that that will be caught by CIL. We have been very clear about that.
I know that we will discuss the impact of the current economic difficulties. As I said, the demographic, social and environmental trends will not change in the long term. We must ensure that, whatever are our short-term difficulties, we are planning for suitable infrastructure for long-term sustainability. That is exactly what CIL is intended to do, and why it is so important to get right in that equation the explicit relationship between the costs of infrastructure, to which the noble Lord, Lord Jenkin, referred, and long-term sustainability.
I am sorry to intervene at this point, but unless the Minister is coming to it, she has missed the point. Different developments impose entirely different pressures on infrastructure costs. That is not represented in the Bill at all. The Bill does not refer to what infrastructure demands will be made by particular developers. There seems to be a flat rate across the board. She may be going to tell us that the schedules will somehow draw a distinction, but I have seen nothing to suggest that.
There are several issues. CIL is a standard charge—an average charge that will be worked out on the basis of assessments, which we will talk about. Specific forms of funding will not be raised for specific bits of infrastructure. The local authority’s job will be to work out the overall costs of the infrastructure that it needs and the overall amounts that can reasonably and viably be raised by CIL. We can have that debate when we talk about value. It is a rational process, which we do not have at the moment.
As I say, the key attraction of CIL is that it will be a straightforward standard charge on development. It might, for example, be pounds per square metre of floor space. It will be framed by the local development plan, and, crucially, it will be independently tested to ensure that the result will be viable and will facilitate, not choke, development. It must be published in advance by the local authority so that a developer can know, perhaps months or years in advance of developing, what they will be asked to pay based on the characteristics of development.
I invite noble Lords to contrast that idea with the existing system of ad hoc negotiations conducted in private, sometimes on the basis of either an unclear or an untested policy. Indeed, the emergence of tariff schemes based on the existing legislation indicates that local authorities and developers alike now realise that we must urgently standardise and simplify what has been a very complex area of planning. That is why there is such support for this measure. I reassure the noble Lord, Lord Dixon-Smith, again that it continues to sit alongside Section 106. It is a voluntary charge, and it will be up to local authorities to decide what will work best in their areas, given the choices that they have. Most infrastructure will continue to be provided through government funds, as it always is.
The rate to be paid will be decided at the local level, not by government, and it must be based on sound infrastructure planning to underpin the local development plan. However, it must evidently also have regard to the realities of development economics. As my noble friend pointed out, the whole purpose of CIL is to facilitate development. The amendments provide safeguards to ensure that local authorities, and the community, take proper account of infrastructure needs and the viability of development when setting their charges.
The noble Earl, Lord Caithness, raised the spectre of a development land tax and a planning-gain supplement. The noble Lord, Lord Jenkin, and the noble Baroness, Lady Valentine, expressed concern that even if it is technically correct to refer to land value uplift in these clauses—I believe that it is—the overall tone of the clauses, particularly the focus on land value uplift in the purpose clause, still leaves some with the misplaced impression that we intend to reintroduce PGS. I hope that our debate today will alleviate that concern, but let me be clear; CIL is not PGS, for the very reasons given by my noble friend Lady Ford. PGS was intended to be levied as a percentage of land value uplift on a case-by-case basis. CIL is an area-wide standard charge. PGS would have been set at a single national rate. CIL is set locally. PGS would have been UK-wide. CIL is an optional local tool. PGS would have been collected and redistributed by HMRC. CIL is collected and retained by local planning authorities. The contrast is significant. If we were to introduce our previous proposals for a planning-gain supplement, we would require substantial new primary legislation.
The most useful comparison is therefore the emergence of tariff schemes, which have grown up organically out of local authority practice. In fact, CIL extends an existing idea that is familiar to many in local government and development communities. It also provides additional benefits. It will be easier to fund larger pieces of infrastructure that are needed as a result of the cumulative impact of development, it will increase the transparency and accountability of charges, and the accompanying reduction in the scope of planning obligations over time will reduce negotiating time and increase certainty for developers.
This policy has not sprung up out of the blue. The reports by Sir Michael Lyons, Kate Barker and Sir Rod Eddington have all considered local government finance, housing and planning, transport infrastructure issues, and the things that are bedevilling, weakening and frustrating them. We are taking action to address that, not least through our widely welcomed new Planning Policy Statement 12, which promotes more robust infrastructure planning at the local level. I emphasise that CIL is part of the solution. It will be ring-fenced for infrastructure, and it will be appropriately monitored, audited and reported on, but we will not seek to solve all infrastructure delivery issues through it because of the Government’s commitment to fund infrastructure.
The document that we produced on 5 August was the result of a very fruitful dialogue with all the bodies that I have mentioned. That dialogue continues, as I will say in many of our debates this afternoon. There is a great deal of detail to work out, which is why we have constructed these powers in an enabling way, as I explained at Second Reading. The existing system has evolved over time, as we expect CIL will do as local authority practice develops and matures.
In July, the Delegated Powers and Regulatory Reform Committee expressed concerns about the extent of these enabling powers, but I am delighted to say that its latest report indicates that the amendments that I am presenting today go a very long way to addressing its concerns. They clarify which authorities will be able to charge CIL, they set out in the Bill the core elements of the process of establishing a charging schedule, and they cap certain enforcement powers.
I thank the noble Lord, Lord Goodhart, who cannot be in his place today, and the committee officials for their great assistance over the summer in helping us to clarify the legislation. We will certainly attempt to make progress on the committee’s remaining concern that the complex issue of crystallising the identity of the liable party will give rise to some very difficult issues in law and determinations. We will work very hard on that, and I pay tribute to the work that my officials did over the summer to produce the amendments, which will make a significant difference to the surety with which we can discuss these issues. It has been extremely hard work, but we now have a lot more detail that we can discuss.
I should note that there is support for our enabling approach from bodies outside, because they want that continuing dialogue and to be able to influence what will happen, and we are happy to facilitate that. I am happy that we have the Opposition’s support in principle for CIL. It really is a very important issue, and I hope that I have set out the context for our discussion on the amendments. I shall try to speed through the amendments as we go.
The first group of amendments relates to the purpose of CIL and the authorities that should be able to charge it, which we have discussed. The noble Earl, Lord Caithness, tabled a number of amendments on the purpose of CIL. His Amendment No. 435A would remove the need for the Treasury’s agreement to the regulations implementing CIL. Treasury involvement does not imply a tax. There is nothing unusual or sinister about Treasury consent being needed for regulations. In this case, CIL relates to the raising and spending of significant amounts of money, and it is right that the Treasury should have a formal role in ensuring that it operates effectively. There are plenty of precedents for this approach. The Treasury is involved in a wide range of measures. Section 365 of the Communications Act 2003, for example, requires Treasury consent for the Secretary of State to make regulations that set the TV licence fee and for entitlement to concessions. I could quote many others. The noble Lord, Lord Jenkin, clearly made the point that this levy is a local charge concerned with revenues for local authorities.
The noble Lord’s Amendments Nos. 435C, 435E and 435F are linked. They seek to ensure that CIL may only partly fund part of the costs of infrastructure, which seems unnecessarily restrictive. While I accept that in most cases CIL will simply form part of the funding package for infrastructure, these amendments would preclude the possibility that CIL could provide the entire funding for a piece of local infrastructure, which could be relatively small; for example, a new playground. The amendment would appear to force local authorities to find some other funding source for the smallest requirement, even if CIL could fund it. We do not want to lose that flexibility.
Amendment No. 435D would place an additional restriction on the use of CIL. It would mean that only direct costs incurred in providing infrastructure may be covered. It is unclear what “direct” means, so it could make this clause a source of potential legal dispute if the courts are invited to decide how direct a cost the charging authority is entitled to meet through CIL. We consider that the approach we have taken already establishes a sufficiently direct connection between the money raised under CIL and the delivery of infrastructure. I hope that the noble Lord feels his proposal has been met.
I turn now to the amendments which seek to alter the overall purpose of CIL. Amendment No. 435G appears to be at odds with the noble Earl’s Amendment No. 437D, which appears to seek to apply CIL only to those developments that realise an increase in value when they are sold. Amendment No. 435CA, in the name of the noble Baroness, Lady Valentine, is partially in line with the current purpose of CIL. I agree with the noble Baroness entirely when she says that CIL must be fairly and reasonably levied, and linked to the cost of infrastructure. The amendment suggests that development should contribute to providing the infrastructure needed,
“to support the development of an area”.
We have said that CIL funding, ultimately, is drawn from the increase in value that results from the granting of planning permission. We have done so in order to help explain a matter of fact and to make the law clear and precise. From our discussions with the industry and from what the noble Baroness and the Committee have said, I know that the notion of value is less relevant to some parts of the development sector than others. It is different in the commercial sector and in the housebuilding sector. We take that point.
I know that the industry feels that this is rather too precise a way of expressing it and that perhaps it is expressed in terms more familiar to economists than anyone else. I can tell the Committee that we will continue to discuss with the industry whether these concerns about the tone of legislation can be addressed. I should add that the noble Baroness’s amendment would also delete the specification of who is liable to pay CIL.
The questions posed by the noble Lord, Lord Cameron, come into this range of questions about land values. In most cases, as we know, development happens because the developers see that the value of their properties will increase as a result, which was inherent in the design of PGS. If land values had not increased, there would be no PGS to pay. But the industry was clear that it did not want an instrument that required a site-by-site assessment of liability. We can understand that; it is precisely what we are trying to meet. It wants a standard charge, which we have tried to provide with CIL. These charges are averaging in their effect.
Clause 205 allows a charge to be imposed where there is no land value uplift or where there is a decrease, because it is an average charge. That said, our regulation-making powers also allow for charging authorities not to impose a charge in the first place on classes of development where value did not generally increase. We rather expect that the guidance we give to charging authorities will remind them that it would be unwise to impose CIL if it prevents development from occurring. All this must be cast in the framework of what will work and what will promote and facilitate development. We are talking about common sense as much as calculation here. The two surely must go together.
It is set out in the August document that the Government are exploring how we might also need an arrangement to deal with truly exceptional cases. In those three ways, I hope that we can arrive at an understanding of how this will work to cover these different situations that develop on the ground in relation to what the local authorities will try to do.
The noble Baroness’s amendment would delete the specification of who is liable to pay CIL. I do not think that the DPRRC would be content with that. It has told us that more rather than less detail is needed on where liability for CIL lies. So we are working hard to see whether we can provide more detail. Accepting this amendment would worsen the situation by removing any indication at all.
Amendment No. 437CA, again in the name of the noble Baroness, Lady Valentine, is related to the amendments to Clause 198. The amendment would delete Clause 200(5), which would remove the ability for CIL to be levied on a development, whether or not the value of land has increased as a result of the granting of planning permission in that case. This amendment raises the prospect that each and every development proposal to which CIL might apply would need to be the subject of a specific assessment of value uplift, which I am sure is not what the industry has said. It is too expensive and has many other defects. CIL allows us to move away from case-by-case to average standard charges.
I understand that parts of the property and development industry have some concerns about the concept of value created by development not only in Clauses 198 and 200(5), which set out the general purpose of CIL, but also in Clause 201, which makes provision for the detail about how a specific charging schedule should be created. We are continuing to discuss with industry whether there is a better way to achieve our shared goal of ensuring that the economic viability of development is properly reflected and taken into account in the design of CIL. Those discussions are not yet complete, but I am still willing to consider bringing forward an amendment on this issue on Report if we can reach agreement. Therefore, I would ask the noble Baroness not to move her amendment.
Amendment No. 435GA, in the name of the noble Lord, Lord Reay, would add to Clause 198(2) and therefore provide an additional purpose of CIL to compensate those who are adversely affected by permitted developments. We have been very clear about the purpose of CIL. It is a new mechanism to raise additional revenue to help delivery of the infrastructure needed. It is not about offering compensation to those who are affected by permitted development. CIL has never been conceived in this way and the rest of Part 11 is not consistent with such an approach. The obligation under Clause 202(1) is for CIL regulations to ensure that CIL is spent on infrastructure.
The noble Lord asked me specifically about wind turbines. We have an amendment later on which I think I will be able to assure him that wind turbines, because they are not buildings, will not be covered by CIL. As he knows, there are already mechanisms and systems in place for addressing those adversely affected by permitted development. It is inappropriate to extend the purpose of CIL in this way.
Government Amendment No. 436A would replace Clause 199. The amendment has been tabled to provide clarity about which authorities will be CIL charging authorities. It partly responds to the concerns that the DPRRC raised in its 12th report about the current Clause 199 since it leaves to regulations the specification of which authorities would be empowered to charge. I think we have satisfied the committee so that it will not come back to this in its 13th report.
Amendment No. 436A is a substantial amendment, which I think will be welcome. First, it removes from the Bill any possibility for the Secretary of State and Welsh Ministers to be empowered as CIL charging authorities. That is a major change. Our August policy document explains that infrastructure sometimes crosses local authority boundaries or sometimes needs contributions from one or more authorities. We have listened to the local government community, which tells us that local authorities can work together on a voluntary basis to identify items of infrastructure of common interest and put in place CIL charging schedules to raise the necessary contributions without the need for the Secretary of State or Welsh Ministers to levy a charge. Our decision to remove the Secretary of State and Welsh Ministers as potential CIL charging authorities is a vote of confidence in local authorities.
The second change will be to reconfigure Clause 199 to make it clear that a starting point of the Bill is that local planning authorities will be the CIL charging authorities. “Local planning authority” has the same meaning here as it has in Section 37 of the PCPA 2004 as regards England and Section 78 of the Act as regards Wales. The CIL charging authority will be the local authority with responsibility for preparing local development plans. CIL is closely linked to the development plan process and is the logical choice. The noble Lord, Lord Dixon-Smith, asked what happens when boundaries are straddled. I refer him to paragraph 446 of the August CIL document. It states:
“Where a development proposal straddles local planning authority boundaries, the Government proposes that, as with current planning obligation policies, the relevant CIL charging schedule (if any) would be applied to the parts of the development within the relevant authority”.
We have addressed the point in that paragraph, which goes into some detail.
Amendment No. 436A also specifies that the Mayor of London is a charging authority for Greater London in addition to the London boroughs. We think that it is right that this should be so in order that the mayor, as a strategic authority, can raise additional revenue for strategic infrastructure projects. The boroughs might establish CILs for the infrastructure needed to support the development envisaged in their local development plans, while the mayor might do so across London for strategic infrastructure.
Crossrail is a clear example of this. Indeed, the heads of terms between the Government and Transport for London on Crossrail which was laid in the Library of the House last year list Transport for London as underwriting £300 million in revenue to be raised from a CIL. This amendment covers that point. We expect that the boroughs will collect CIL on behalf of the mayor so that developers have only one payment to make to a single authority. I hope that that meets the point raised by the noble Lord, Lord Dixon-Smith. I know that he was concerned about the confusion which might arise from there being two Bills. We expect the boroughs to act as a single collection authority.
I am sorry to interrupt the Minister when she is getting through her response so well, but I want to raise a further query on this narrow point. Her description seems to suggest that the mayor will be the charging authority even on occasions when the mayor is not the planning authority. Can she confirm whether that is so?
My understanding is that the mayor can be the charging authority only when he acts as the planning authority. The noble Baroness also raised issues about joint committees. We do not expect these arrangements to reflect joint committee arrangements. The joint committees between local authorities are separate and we shall come to them later, because there is a distinction to be made.
The third significant change made by Amendment No. 436A is that the CIL regulations may provide for substitute authorities to be CIL charging authorities in place of the local planning authority, an example of which might be the Isles of Scilly if the Council of the Isles of Scilly has its planning functions withdrawn, for instance. The council would be granted planning functions by order under Section 116 of the 2004 Act. We think that it is important to provide that power.
A second need for this power relates to the national parks, which have already been a feature of our debates. A national park is a “local planning authority” and prepares a development plan for its area. The national park authority must then consider the infrastructure needs of its area in line with the Government’s policy in PPS12. Clause 199 therefore provides that it will be the CIL charging authority for its area, and not the local authorities within the park boundaries. However, it is important that this is discussed further with stakeholders, including the park authorities, to ensure that it makes sense. Some, with their unusual layout, consist of small areas within other charging authorities. We do not want to create a nonsense here, so for reasons of scale and efficiency it might not be thought appropriate for a small separate area to be the CIL charging authority. The amendment provides the flexibility to continue those discussions.
Amendment No. 435K, tabled by the noble Earl, Lord Caithness, covers similar ground. It would prevent the CIL regulations being able to empower the Secretary of State, Welsh Ministers and the Mayor of London as charging authorities. I am delighted to say that we are in agreement on at least two of those three authorities, but, for the reasons I have set out, we have proposed that the mayor should be a charging authority.
The second government amendment in this grouping, Amendment No. 436B, arises as a consequence of the restructuring of Clause 199 by Amendment No. 436A. The unamended clause would allow for joint committees of local planning authorities established under Section 29 of the 2004 Act to act as CIL charging authorities. Therefore, to allow this to continue, government Amendment No. 436B allows CIL regulations to provide that joint committees established under Section 29, where they include a CIL charging authority, are to exercise CIL functions in their area on behalf of the CIL charging authority. The new subsection (3), which mirrors the order-making power in Section 29(4)(a) of the 2004 Act, will permit CIL regulations to set out how joint committees can exercise those charging authority functions. Provision can be made corresponding to provision relating to joint committees in Part VI of the Local Government Act 1972. It is right that where, as we foresee, local authorities cooperate and enter into joint committee arrangements, they should be able to charge CIL as part of those new arrangements, not least to deliver sub-regional infrastructure across local authority boundaries. However, that is entirely a matter for each local authority.
A few other amendments remain in this grouping. The noble Lord, Lord Dixon-Smith, and the noble Earl, Lord Cathcart, tabled Amendment No. 436. I am a little unclear about this issue. The first possible intention of this amendment would be to provide that a developer should only be charged CIL by a single charging authority. Government Amendment No. 436A sets out that it is the plan-making authority that will be the CIL charging authority—which I hope clarifies the position. However, in London, given the special position of the mayor, we propose that the mayor should be involved. The amendment could also intend to require that the CIL regulations must prevent the mayor from being empowered to charge CIL in London. The alternative, that the London boroughs would be prevented from establishing a CIL if the mayor chose to do so, is equally unpalatable. However, this amendment could alternatively be designed to ensure that CIL revenue from only a single charging authority can be applied to any one item of infrastructure identified through the development plan process. In many cases that might be what happens; but in some instances the infrastructure that might be needed to support growth could be quite substantial, such as a significant flood defence scheme or new motorway junction. CIL is much better placed than existing schemes to fund such infrastructure, and these larger sub-regional pieces of infrastructure benefit from more than one boundary.
I have a note that states that I need to correct something that I said in response to the noble Baroness, Lady Hamwee. She asked if the mayor will be a charging authority only when he is the planning authority. The answer to that is no, although I said yes. We propose that the mayor will be able to charge CIL on all planning permissions in London because he will determine only a handful of applications a year. Setting a charge for all applications will enable lower charges. I will write to the noble Baroness on this point because it needs a proper letter, and of course I shall copy it to all noble Lords who are taking part in these debates. My letters go to all noble Lords, rather like TV licences.
The noble Lord, Lord Dearing, who cannot be in his place today, was also concerned about how CIL would work in London, and he has asked me to ensure that his concerns are registered. I hope that I have done that, but I should say also that we are continuing to work with stakeholders in London to see whether we can do anything additionally to ensure that both the mayor and the boroughs are able to set charges that address their infrastructure needs without overburdening individual developments. He, along with others, is concerned about the eventual impact on viability. I hope that that meets his point.
The problem with going back to the conditions suggested in Amendment No. 436 could be that the voluntary approach to the funding of sub-regional infrastructure would have to be prevented in the CIL regulations, which we do not think is right. It would mean that a CIL could not be used to support sub-regional infrastructure in a meaningful way. For that reason, we have a problem with the amendment. However, I will write to noble Lords in more detail on the point. My flow was interrupted by the need to address and correct what I said previously.
Amendment No. 435J seeks to delete the reference to “Section 206” and “Secretary of State” in the table at the end of the clause which is intended to reflect what Part 11 contains. There is no benefit in amending it so that it is incomplete, and the House authorities will update it as necessary to reflect any changes to the content of Part 11 of the Bill. It can safely be left with the House authorities.
Government Amendment No. 435H seeks to update the text in subsection (3) by providing that the table therein describes the provisions in Part 11. As a consequence of other government amendments that will add more detail on CIL to the Bill, the clauses in Part 11 which follow Clause 198 will no longer only deal with aspects of the CIL regulations but will also expressly set out provisions in regard to CIL. For example, we have tabled amendments on the procedures to be adopted in producing charging schedules and so on. This amendment would reflect the fact that these important changes have been made. They are substantive and on the face of the Bill and not in CIL regulations.
The noble Lord, Lord Cobbold, indicated that he intended to oppose Clause 198 standing part of the Bill. Given my explanation of how CIL will operate and the fact that it is supported by a wide range of industry and local government groups, I hope that he will feel able to support the clause for the reasons that I and other noble Lords have given.
This has been an important debate that has covered a range of different issues, some that are substantial and others that are technical and detailed. I hope that noble Lords have been able to follow what I have said. I am happy to write to clarify details, to continue discussions and to meet noble Lords between now and Report on anything they would like to know about how this will work.
I apologise to the Minister—I am never sure whether I should interrupt her when she is in full spate, and sometimes it is easier to deal with this kind of query at the end. She said that household development would not be eligible to pay the charge, but what are the limits of household development? There must be a limit somewhere, otherwise you could have a two-bedroom cottage being extended into a mansion and not being eligible for the charge. There is also a marginal question of whether building one house is household development. We need to be clear about the definition of what is, or is not, eligible development. In view of what the Minister said about writing, perhaps she would prefer to write on this specific issue. It is important to individuals and builders across the whole country.
I am grateful to the Minister for her full reply; she has lifted the lid on some of the questions and problems which this part of the Bill raises. However, she did not answer one important question, and it would be of great help if she could. When will these regulations be available? The regulations will answer many of the questions. The question which my noble friend Lord Dixon-Smith has just asked the Minister is very important—but where are the regulations? Until we get them we will go on flapping around trying to get answers.
The noble Baroness, Lady Hamwee, bowled the Minister a beautiful googly. It now appears that there will be two charging authorities in London, the mayor and the local borough, whereas if you are outside London, the local authority will be the only body able to charge. Would it not have been so much easier if this had been set out before us? We could have discussed it and had a much more sensible debate. Does the Minister now have an answer for me on regulations?
I am afraid that it is the kind of answer that Ministers sometimes give. The department spent the summer working to ensure that we met the DPRRC’s requirements to put as much as we could in the Bill so that the Committee could debate the CIL architecture as fully as possible. The regulations are being worked on. We are in major discussions with a large number of stakeholders—we will be happy to involve the noble Earl—and will bring them forward as soon as we can. We will do so with the best expedition.
Mr Healey said that it would be done by the autumn, but clearly it has not been done.
Although it has been a wide-ranging debate, I particularly wish to draw attention to what the noble Baroness, Lady Valentine, said. She and I raised the same point but we attacked it from different points of view. I think that her amendments are better than mine. It is obviously the case that the levy should deliver infrastructure that is to the benefit of the development, its occupiers and users, but if you link CIL to the land value then that will make it a tax on the planning permission rather than what the charge is supposed to be about. The noble Lord, Lord Cameron, is right—and I said it, too—that, in key development areas where planning permission is likely, uplift will already have been taken into account in the price. It is confusing to have a reference in the Bill to value as a result of planning permission. It undermines the reason for CIL and what the noble Baroness is trying to do with it. However, I understand that she is still thinking about this and I hope that she will bring forward more sensible wording on Report.
The Minister did not deal with the point raised by my noble friend Lord Dixon-Smith that there would be no reduction in central government funding. Will the charge be used as an opportunity for central government to reduce funding of local authorities? It is clear that developers, individuals and, indeed, bigger companies will be charged CIL, but individuals and small businesses will not get any benefit at all. There will be no increase in infrastructure in their development and they will not get any uplift in value. They are being subjected to a new charge. For that reason, the charge must be closely linked to the development plan. We need to explore that further as we go through the next amendments.
The entire thrust of CIL is that it is explicitly linked to the development plan. It is an additional charge which is made locally for all the reasons that I have given. As I also said, government funding will continue to provide the majority of funding for infrastructure, which is very expensive.
Indeed it is. The Minister has given a full reply. Later today we will cover a great deal of what we have just said as there will inevitably be a run-through following this glorified Second Reading debate. Meanwhile, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
435B: Clause 198, page 122, line 38, leave out “(CIL)” and insert “for Local Investment (CILLI)”
The noble Earl said: The amendment seeks to leave out the word “(CIL)” and to insert “for Local Investment” so that it becomes the community infrastructure levy for local investment.
It is apparent that while one needs to maintain a flexible approach for local infrastructure needs, protections are required to ensure that moneys collected through CIL do not fund infrastructure in parts of a council area that bear no relation to the general area in which the development occurs. One way of dealing with that is to require a nexus between the development being levied and where the infrastructure is provided. That would ensure that any infrastructure provided would be in proximity to the development occurring. That is essential if the benefits from the infrastructure are at least balanced against the costs of the levy.
Having got to that stage, I then thought: “How else can I get this across to the Minister?”. She then came riding to the rescue. In the second paragraph of her letter to us of 14 October, she says:
“There is, I believe, a consensus that an instrument of this sort represents the future for developer contributions towards local infrastructure, building on the existing system of planning obligations. CIL aims to provide certainty and transparency for developers and communities alike”.
She goes into further details in her attachment to the letter. Referring to the charging authorities in Clause 199, she says:
“This makes clear that CIL is a local levy for use by local authorities”.
My amendment is to help the Minister put into the Bill what she wants: a local levy for local investment. I beg to move.
I think we could do with some light relief after the previous amendment. I can be very brief. The amendment would change the name of CIL. It may be inspired by a desire to limit CIL spending to only local infrastructure needs. It may also be intended to make mischief, which the noble Earl is perfectly capable of.
We have made it perfectly clear that CIL is a local measure, but it cannot be limited solely to providing local infrastructure for all the reasons I have given previously, where local authorities consider that they have more strategic infrastructure than is needed to support their growth. We made it clear at paragraphs 2.28 and 2.30 in our August policy statement, which I will not read, that sub-regional infrastructure supports the needs of more than one local authority. There are important examples: hospitals, larger transport projects and waste facilities. Sub-regional infrastructure is critical to the way our communities function. It is often the most critical type of infrastructure in terms of unlocking significant housing or economic development; I have lost track of the number of instances that I know of—I am sure my noble friend Lady Ford knows them too—where development is held up because local authorities cannot agree, an incredible amount of time is wasted while people argue over who is responsible for what and things just do not happen for years on end. We cannot afford that, and we should not rule it out in either name or substance. I am sorry to disappoint the noble Earl, but I cannot accept his amendment.
How disappointing. I thought I was going to be so helpful to the Minister and that she would accept my amendment with alacrity. However, I understand that there can be areas where it will be cross-boundary and that the idea of CIL is not just a local infrastructure in the way that some people would define “local”, but local to a whole planning area.
With regard to the Minister’s letters to us, could they please be a little more personal? To receive a letter for “noble Lords with an interest in the Planning Bill” is rather like getting a letter from the Kremlin. If it could be addressed to a Peer with copies circulated to other Peers, it would be just a little more friendly.
435H: Clause 198, page 122, leave out line 44 and insert—
“(3) The Table describes the provisions of this Part.”
On Question, amendment agreed to.
[Amendment No. 435J not moved.]
Clause 198, as amended, agreed to.
Clause 199 [Charging authorities]:
[Amendments Nos. 435K to 436 not moved.]
436A: Clause 199, leave out Clause 199 and insert the following new Clause—
(1) A charging authority may charge CIL in respect of development of land in its area.
(2) A local planning authority is the charging authority for its area.
(a) the Mayor of London is a charging authority for Greater London (in addition to the local planning authorities),(b) the Broads Authority is the only charging authority for the Broads (within the meaning given by section 2(3) of the Norfolk and Suffolk Broads Act 1988 (c. 4)), and(c) the Council of the Isles of Scilly is the only charging authority for the Isles of Scilly.(4) CIL regulations may provide for any of the following to be the charging authority for an area, or in the case of Greater London one of the charging authorities, in place of the charging authority under subsection (2), (3)(b) or (c)—
(a) a county council,(b) a county borough council,(c) a district council,(d) a metropolitan district council, and(e) a London borough council (within the meaning of TCPA 1990).(5) In this section, “local planning authority” has the meaning given by—
(a) section 37 of PCPA 2004 in relation to England, and(b) section 78 of PCPA 2004 in relation to Wales.”
On Question, amendment agreed to.
Clause 199, as amended, agreed to.
436B: After Clause 199, insert the following new Clause—
(1) This section applies if a joint committee that includes a charging authority is established under section 29 of PCPA 2004.
(2) CIL regulations may provide that the joint committee is to exercise specified functions, in respect of the area specified in the agreement under section 29(1) of PCPA 2004, on behalf of the charging authority.
(3) The regulations may make provision corresponding to provisions relating to joint committees in Part 6 of the Local Government Act 1972 (c. 70) in respect of the discharge of the specified functions.”
On Question, amendment agreed to.
Transfer of Tribunal Functions Order 2008
rose to move, That the draft order laid before the House on 4 June be approved.
The noble Lord said: My Lords, the noble and gallant Lord, Lord Craig of Radley, has indicated that he intends to move an amendment to the Motion. I will address what I believe to be his concerns and, as he will not be surprised to hear, ask him to withdraw his amendment at the end of the debate.
The Act received Royal Assent in July 2007. Part 1, to which the three orders relate, creates a new two-tier tribunal structure—the first-tier tribunal and upper tribunal. As my honourable friend the Parliamentary Under-Secretary of State, Bridget Prentice, noted in moving this order in the other place, the Bill had an excellent passage through both this House and the other place after being announced in November 2006 as part of the Queen’s Speech. This is testament to what the Act will achieve as well as to the stewardship of my noble friend Lady Ashton of Upholland who guided it through its proceedings here, and my honourable and learned friend, now the Solicitor-General, who steered it through the other place when she was at the Department for Constitutional Affairs.
The Act is the culmination of many years of hard work to reform this country’s tribunals system set in motion by Sir Andrew Leggatt in his review Tribunals for Users. Sir Andrew told us that we needed to create a single tribunals system. He told us these tribunals had to be completely separate from the government departments that made the decisions being appealed against, and that they should all be overseen by a separate distinct judiciary and administration.
The Government established a unified administration for tribunals with the creation of the Tribunals Service in April 2006. The Act took tribunal reform much further and addressed the disorganisation of tribunals by creating a cohesive statutory framework with a unified tribunal judicial system. It is a system, however, within which the specialisms of individual tribunal jurisdictions will be supported and, indeed, enhanced.
The first-tier tribunal and upper tribunal will bring together existing Ministry of Justice tribunals and tribunals in other government departments. They will be led by the Senior President, Lord Justice Carnwath, who was appointed under the Act in October last year. The first-tier tribunal will be the first instance tribunal for most jurisdictions; appeals from the original decision-making body will usually commence in this tier. The upper tribunal will deal with appeals from the first-tier tribunal and from some tribunals outside the unified system. It will also have the power to deal with judicial review work delegated from the High Court, and a few specialist cases will commence in the upper tribunal.
Onward appeal from the first-tier will lie to the upper tribunal only with permission and on a point of law. The onward appeal from the upper tribunal to the Court of Appeal or the Court of Session will also be only with permission and on a point of law.
The main base of the upper tribunal will be located in central London; however, it will have the ability to hear cases throughout the UK.
Both the first-tier and upper tribunals will be split into chambers grouping together similar jurisdictions, as set out in the First-tier Tribunal and Upper Tribunal (Chambers) Order, a statutory instrument subject to negative resolution procedures and laid on 15 October 2008. The chambers order divides the first-tier tribunal into three chambers—the social entitlement chamber, the health, education and social care chamber and the War Pensions and Armed Forces Compensation Chamber. The upper tribunal will initially have only one chamber—the administrative appeals chamber. These chambers will be able to maintain and expand expertise and incorporate new jurisdictions where they fit best.
Judges and members can be invited to sit in another jurisdiction, but only if the individual satisfies the eligibility criteria, has undertaken any necessary training and there is a business need. It is essential for providing a good service that specialist expertise is protected and improved.
Each chamber under the Act is required to have a chamber president, whose role is the maintenance and improvement of the chamber’s expertise. They will usually be selected by the Judicial Appointments Commission. Their aim will be to ensure that the proper degree of judicial expertise is brought to bear on cases. They will also be judges of the upper tribunal. In addition to this, each jurisdiction will have a principal judge. These will be the current leads in the jurisdiction and will provide continuity in judicial leadership in the new system.
The Act also creates a Tribunal Procedure Committee that will bring greater consistency and simplicity to tribunal procedure rules. Committee members have been appointed by the Lord Chancellor, the Lord Chief Justice, the Lord President and the Senior President of Tribunals. The membership of the committee includes a representative of the Administrative Justice and Tribunals Council, the noble Lord, Lord Newton of Braintree, whom I am delighted to see in his place. The AJTC was created under the Act to replace the Council on Tribunals and has, through its seat on the committee, a central role in the rule-making process for tribunals. The Tribunal Procedure Committee has made rules for each of the chambers of the first-tier and the upper tribunal. The rules were laid on 15 October 2008.
The new system will have greater flexibility in absorbing new work or responding to fluctuations. It allows the introduction of a more coherent appellate system from tribunals, and clarification of the relationship of tribunals to the principles set out in the Constitutional Reform Act 2005. It will also create more adaptable boundaries between courts and tribunals by allowing the courts to transfer certain types of case to tribunals and reducing the need for judicial review hearings in the High Court.
We conducted a 12-week public consultation on the proposals, which ran from November 2007 to February 2008. The response was published in May, and copies were laid in the Library of the House. While the proposals were, on the whole, very well supported, serious concerns were expressed by members of the Armed Forces community about the possible impact on the service which the Pensions Appeal Tribunals provides for them as a result of implementing the Act. In particular, they were concerned about the proposed transfer of the PAT England and Wales jurisdiction into the social entitlement chamber.
In recognition of these concerns, I would like to advise the House that following further consultation on the chambers’ structure, in recognition of concerns expressed by members of the Armed Forces community and the special relationship between service personnel and the Government, the decision has been made to create a separate War Pensions and Armed Forces Compensation Chamber. I pay tribute to, among others, the noble and gallant Lord, Lord Craig, my noble friend Lord Morris of Manchester and the noble Lord, Lord Cope of Berkeley, whose very effective submissions got us to change our mind.
The Government’s decision has been made with the full involvement of the Confederation of British Service and Ex-service Organisations—COBSEO—and other key organisations. This will ensure that service personnel can benefit from the advantages of being within the new tribunal structure while ensuring that the unique nature of the jurisdiction is not compromised or diluted. The chamber will have its own rules and procedures, and the present role of service members on hearing panels will be maintained without diminution or alteration. The negative statutory instruments laid on 15 October reflect and buttress the unique nature of the Armed Forces jurisdiction within the unified tribunal structure.
In addition, the Lord Chancellor and the Senior President of Tribunals have made a joint statement explaining the basis on which the work of PAT England and Wales will transfer into the new tribunal system. The joint statement was included in Written Ministerial Statements made by the Lord Chancellor and myself on 16 October 2008. If noble Lords have not had the opportunity of reading that Written Ministerial Statement, I invite them to do so. It is a very comprehensive Statement, which includes passages that were helpfully suggested to the authors by the noble Lords to whom I have referred.
Ex-service and service organisations and the noble Lords to whom I referred have worked tirelessly with the Government to reach the best possible outcome for the ex-service and service men and women who are the users of the PAT and should always remain the focus of any proposals that will impact on the jurisdiction. The Government are committed to ongoing transformation of our tribunals, placing the user at the very heart of the service. The orders that I ask the House to approve today are very significant steps towards achieving this. The Government have decided on a phased introduction of the new tribunals system, starting in November. This is to avoid disruption to service delivery. None the less, we aim to implement the new system as soon as is practicable.
The Transfer of Tribunal Functions Order effects the transfer of various existing tribunals listed in Schedule 1 of the order to the first-tier tribunal and the upper tribunal established under Section 3 of the Act. The order has various primary functions, and in addition contains various minor, consequential and transitional provisions in respect of the transfers.
On the First-tier Tribunal and Upper Tribunal (Composition of Tribunal) Order 2008, Schedule 4 to the 2007 Act requires the Lord Chancellor to make provision, by virtue of this order, for the number of members on a tribunal panel and whether these members should be judges or non-legal members. It further enables these duties of the Lord Chancellor to be carried out by the Senior President of Tribunals, which this order will do.
For the first-tier tribunal, the order requires the senior president to determine the number of members of a tribunal. In doing so, he is required to have regard to the practice that existed in the tribunal before it was transferred into the first-tier tribunal. The order sets out the qualifications or experience that a person must have to be eligible for appointment as a member of the first-tier tribunal or upper tribunal who is not a judge of the tribunal. It generally reflects the intentions set out in the Government’s consultation paper by retaining existing qualifications required for non-legal members of transferring tribunals with some additional flexibility introduced to reflect widening areas of expertise suitable in some jurisdictions.
I have spoken of the concerns that were expressed by members of the service and ex-service community in respect of the transfer of PAT into the new tribunal, and the steps we have taken to address these concerns. One concern was that the role of the service member should be preserved for the Armed Forces jurisdiction. While the composition order does not explicitly do this, other measures have been taken to ensure that appeal panels must include those who understand the particular nature of service in the Armed Forces. The Senior President of Tribunals has produced a draft practice statement on composition of tribunals which requires the continued use of service members on hearing panels within the War Pensions and Armed Forces Compensation Chamber. The president and deputy-president of the PAT have been consulted on the draft and are in agreement with it. The qualifications order requires that service members have substantial experience of service in Her Majesty’s naval, military or air forces. These measures will ensure that the present role of service members in the Armed Forces jurisdiction is maintained without diminution or alteration.
The Government believe that any further application for permission or leave should satisfy at least one of the requirements without exception. This restriction is necessary as appellants will already have had two appeals and two opportunities for their case to be heard. I am dealing with some of the more detailed elements of the order relating to appeals from the upper tribunal to the Court of Appeal. I do not think that I need to go into details on those orders, but of course I am in a position to do so if I receive comments and questions about them.
I know that this has been a vexed matter over a number of months and the Government are grateful to those who have taken such an active interest in ensuring that we have got it right; I think that we have now. I commend the draft order to the House. I beg to move.
Moved, That the draft order laid before the House on 4 June be approved. 21st Report from the Joint Committee on Statutory Instruments.—(Lord Bach.)
rose to move, as an amendment to the above Motion, to leave out from “that” to the end and insert “this House declines to approve the draft order laid before the House on 4 June because it abolishes the Pensions Appeal Tribunal in England and Wales”.
The noble Lord said: My Lords, the wording of my Motion, which I tabled before the Summer Recess, makes clear that my worry at that time was about the future of the vital work of the Pensions Appeal Tribunal in England and Wales. I have no issues to raise on other tribunals affected by the orders that we are debating.
At the end of last year, I was alerted to concerns about the Government’s intentions for the future of PAT in England and Wales. I tabled a Written Question then, but the Government seemed determined to transfer the work of PAT in England and Wales into a social entitlement chamber of the new first-year tribunal, even though that was strongly rejected by all PAT members, judicial, military and medical—the experts—and by a number of the service charities that support individuals’ appeals against their war pension or injury compensation awards. The House will appreciate that all too often appellants are young service personnel who, while fighting for their country, have received most grievous physical and mental injuries, which they will have to bear and cope with all their adult lives.
We, the nation, owe such individuals, their families and dependants an absolute duty of fair treatment. This PAT has provided since 1919 as a highly regarded and trusted statutory independent body. Fair treatment for the Armed Forces, their families and veterans has recently been underwritten by the Command Paper entitled The Nation’s Commitment: Cross-Government Support to our Armed Forces, their Families and Veterans. I quote just one sentence form the foreword by the Prime Minister, who said:
“I am determined to ensure that they are fairly treated”.
Perhaps the House will share the concerns and indeed outrage of many much more closely involved with this topic than me that merging Armed Forces’ appellants with asylum support, social security and child support appeals tribunals’ work would be to treat injuries sustained in battle as if they were the same as any other “social entitlement”.
Even following meetings last June with Bridget Prentice, the Ministry of Justice Minister in charge of this issue and the Senior President of Tribunals, Lord Justice Carnwath, the Government remained obdurate. An article for inclusion in service charities’ news letters about the transfer of PAT functions to the social entitlement chamber was widely distributed from the office of the Senior President of Tribunals, although at that time the orders had not been approved by either House. With the help of the noble Baroness who is now Leader of the House, the Ministry of Justice was persuaded to hold further discussions with the service charities, which continued through August. In early September, Bridget Prentice agreed with the concurrence of senior president to set up a separate War Pensions and Armed Forces Compensation Chamber, to which the Minister has referred, in the first-tier tribunal, although she insisted on placing on record that it would be better for the functions of the PAT England and Wales to go to the social entitlement chamber.
Given that ambivalent attitude, and the fact that the PATs in Scotland and Northern Ireland are to continue unchanged, noble Lords may agree that it was and still is important to seek assurances from the Government about future arrangements for PAT England and Wales. The Lord Chancellor and the Senior President of Tribunals last week made a Written Ministerial Statement, published in the Official Report on 16 October—the Statement to which the Minister referred—which deals not only with the various details of the Armed Forces chamber, including rules and membership, but clearly explains to the many who were dubious about the intention to abolish a major part of PAT why the Armed Forces chamber would be as good, perhaps better, for the users—that is, the appellants and their supporters.
I hope to hear from other noble Lords whether they agree that the Government have now done what is necessary to reassure appellants, their supporters and the public at large that the Government are honouring their commitment to treat fairly those in the Armed Forces who have been harmed physically or mentally in discharging their duties.
I have one query for the Minister, of which I have given him notice. Bearing in mind the ambivalence to which I have referred, will he assure the House that the Lord Chancellor and the Senior President of Tribunals have no intention at some future date to abolish the new War Pensions and Armed Forces Compensation Chamber and transfer its work to another existing chamber in the first-tier tribunal, and that if this were ever contemplated, parliamentary approval, ideally by means of affirmative order, would be required? The statutory independence of PAT (England and Wales) goes once it is abolished. It should be on the record that the new Armed Forces chamber still enjoys statutory protection and that parliamentary authority would have to be obtained before it could be abolished. I look forward to the Minister’s response. I beg to move.
Moved, as an amendment to the above Motion, to leave out from “that” to the end and insert “this House declines to approve the draft order laid before the House on 4 June because it abolishes the Pensions Appeal Tribunal in England and Wales”.—(Lord Craig of Radley.)
My Lords, for reasons that many noble Lords will readily understand, I am delighted to be following my good friend the noble and gallant Lord, Lord Craig. The constancy of his commitment to war pensioners is for me reminiscent of a speech by the Duke of Marlborough after Blenheim. Addressing this House on his return from that great victory, he said that much the best way to celebrate it was not to heap praise on him, but to act justly to the men who had fought so bravely with him. It is from that proud tradition that the noble and gallant Lord’s motivation derives. With integrity, intellect and stamina to spare, he has been centrally involved in the issue that we are now met to debate all the way from the grid to this final lap.
I have interests to declare—none of them pecuniary—as the honorary parliamentary adviser nationally to the Royal British Legion since 1988, as a governor of St Dunstan’s, as national vice-president of the War Widows’ Association, as the architect and promoter in 1970 of legislation to strengthen the Pensions Appeal Tribunal; and as the Minister for War Pensions from 1974 to 1979.
This is a rare parliamentary moment, one of proof positive that parliamentary scrutiny is still alive and well in the Palace of Westminster. The noble Lords who worked to bring it about, not least during the Summer Recess, were from all parts of the House but of one mind and a shared determination to avert a wholly unnecessary confrontation with men and women who, alone in this country, contract with the state to make the ultimate sacrifice in its service, and the bereaved families of those who do so.
We were not a cabal, simply a coming-together of concerned parliamentarians as realisation spread that what was contemplated in implementing the Tribunals, Courts and Enforcement Act 2007 was nothing less than the destruction not just of the PAT but of any prospect of a stand-alone, specialised and independent successor to its work. That was made plain in the PAT’s admirably clear response to the Ministry of Justice’s consultation document, Transforming Tribunals. The PAT’s response set out with clarity and in detail how the document’s bland assertion that the purpose of the reforms was to give a better service to its users contrasted with the reality that Armed Forces appellants would be subjected to a marked worsening of the service currently available. The PAT’s response drew attention also to the reality that appellants would in future be dealt with by a tribunal structure in England and Wales very different from those in Scotland and Northern Ireland.
That response, despite the standing and unrivalled experience of its authors, was summarily set aside as the pace of the drive to give legislative effect to the department’s proposals quickened, even to the point of corner-cutting in consulting the ex-service community. Indeed, Sir Roger Carnwath, writing as senior president of tribunals, sent me on 20 June what noble Lords later referred to as his,
“all done and dusted letter”,
which stated that agreement had been reached following a meeting of veterans’ organisations that he had hosted earlier that day and that he would send me copies of a “straightforward explanation” of what had been agreed—already being prepared by his office—for inclusion in their newsletters and websites.
Moreover, Sir Roger’s letter said that it was in,
“an e-mail from The Royal British Legion”,
following the meeting, that the veterans’ organisations had confirmed later that day that they were,
“now content with the new tribunal arrangements”.
The sequel to that letter was sharp and strong. It came in a letter sent to Sir Roger by Christopher Simpkins, the legion’s director-general, within days of his having seen the letter from the senior president of tribunals to me of 20 June. The director-general’s response made it clear that he was disturbed to see the views,
“attributed to The Royal British Legion since they do not reflect our position”.
The legion had made it “consistently clear” that it wished to retain the PAT, and the director-general concluded:
“Our fundamental position, for the avoidance of any doubt, is that we do not support the demise of the PAT which has served our beneficiaries so well”.
Chris Simpkins, like Air Vice-Marshal Tony Stables of COBSEO, became a major contributor to the outcome of all the extra-parliamentary effort involved in helping to achieve a just outcome in this House. Their input was exemplary throughout. High tribute is due also to Dr Harcourt Concannon and his admirable team—some would say fellowship—at the PAT. They deserve well of this House.
That we have come so far since the threatened breakdown in June is much to the credit also of my noble friend Lady Royall, who has won the respect and admiration of the ex-service community. She knows how important, too, has been the help of, among others, the noble and gallant Lord, Lord Bramall, the noble and learned Lord, Lord Lloyd of Berwick, the noble Viscount, Lord Slim, and the noble Lords, Lord Cope, Lord Thomas of Gresford and Lord Henley; and they in turn know how helpful have been the noble Baronesses, Lady D’ Souza and Lady Anelay, and the noble Lord, Lord McNally.
For parliamentarians, there is surely no more compelling duty than to vouchsafe the well-being of the war disabled and bereaved, and it is much to the honour of your Lordships’ House that parliamentary scrutiny has so demonstrably triumphed here in discharging that duty to them. They are very special people.
My Lords, I have one short question for the Minister. Many years ago I served from time to time as a medical member of medical appeal tribunals on appeals against decisions of the Ministry of National Insurance relating to injury in the course of employment. Also from time to time I served as a medical member of the Pensions Appeal Tribunal, which dealt not only with compensation for injuries suffered in service, but also specifically with disease or illness either beginning in or attributed to service. The title of the new Armed Forces compensation chamber suggests that it is likely to be dealing with compensation. Will the Minister clarify whether pension appeals regarding disease or illness beginning during service or attributed to service will be in the authority of the new Armed Forces compensation chamber?
My Lords, in intervening in this short debate I declare the interest already implied by the Minister; namely, that I am chair of the Administrative Justice and Tribunals Council, which, in its former guise as the Council on Tribunals, was involved with the oversight of tribunals for some 50 years.
The Minister has also referred—and I thank him for that—to the fact that in my capacity as chair of that council I am a member of the Tribunal Procedure Committee. In that context, I wish to pay tribute to the huge amount of work put into the procedure committee by one of our members, Bronwyn McKenna.
The Minister has explained the orders, and I have neither the wish nor the intention to ask him a lot of technical questions, difficult or otherwise. My purpose is simply to express the hope that the House will support these orders that enable a further significant step to be taken in the modernisation and reform of the tribunal system, which is due to be taken on 3 November. It will not escape the attention of the House that 3 November is barely 10 days from today, so it might be thought that Ministers have been operating a bit close to the wire. Indeed, they have. The reasons for that have become clear in the speeches already made in the debate.
I do not want to enter into further argument on the matters that have been raised by the noble and gallant Lord and the noble Lord, Lord Morris of Manchester, and which are in the minds of others, I simply wish to say that it is a matter of considerable relief to me and to many others that in recent times there has been a spirit of seeking agreement, which appears now to have been achieved. That provides a way forward, and, as a result, we have avoided actually hitting the wire and not being able to proceed on 3 November.
My contribution is concerned with the broader merits of the programme of change that this is part of. If anyone doubts the worthwhile nature of that overall, I commend paragraph 7, headed “Policy background”, of the explanatory notes circulated with the orders. I shall not quote, repeat or elaborate on it, but it brings out the extent to which tribunals—not only in disputes between the citizen and the state but also in some other important field such as employment rights—are a major part of our justice system which have long been under recognised and given insufficient attention. Over many years they grew piecemeal and they often remained administered by the departments whose decisions were being appealed against. That is something that troubled me well over 25 years ago now when I was a social security Minister. That is now being addressed as a result of Sir Andrew Leggatt’s report, together with the fact that too many tribunals were answerable to the departments that took the decision in the first place and the absence of a proper structure and career path, whether for judiciary or staff. So the provision is very welcome and worth while.
The Minister started with Sir Andrew Leggatt and his report. In a sense, this goes one step back to a previous Lord Chancellor, the noble and learned Lord, Lord Irvine of Lairg, who recognised the problem and the need and asked Andrew Leggatt to prepare his report. It is to the credit of three successive Lords Chancellor—the noble and learned Lords, Lord Irvine and Lord Falconer, and now Jack Straw—and a number of junior Ministers, not least the noble Lord, Lord Filkin, and the noble Baroness, Lady Ashton of Upholland, that this work has been carried steadily forward over six years to bring us to where we are now, with a further step being taken in a significant improvement to our justice system. Many people have worked very hard to get us to this stage, not least Lord Justice Carnwath, the Senior President of Tribunals. I simply say that it is pleasing to see those efforts rewarded by what I hope will be the further step agreed by the House today.
My Lords, I agree with and support all that my noble friend Lord Newton has just said about the overall changes being made today. I want to take a brief opportunity to congratulate the noble and gallant Lord, Lord Craig of Radley, and all the others involved both inside and outside your Lordships’ House on the important success in persuading the Government to change their mind in the past few weeks on the particular aspect of the Pensions Appeal Tribunal. It would have been a grave error simply to abolish the tribunal and put all such appeals into the general social tribunal. The Armed Forces deserve special treatment in this matter. They are under great pressure at present. I declare an interest of a sort in that my son-in-law, a TA soldier, is currently in Afghanistan where he and his colleagues are required to boost the numbers of the Regular Army for their operations.
The Minister’s reference to “flexibility” of the new system might worry some people reading these proceedings. The new war pensions and Armed Forces compensation chamber of the first-tier tribunal will be watched with care to ensure that it is set up and continues to run as the Minister has helpfully explained today. I suspect that he may say to the noble and gallant Lord, in answer to his question, that any change under current legislation will be subject to negative rather than affirmative procedure. That matter is not in the Minister’s gift, but he will no doubt explain that.
I would not want anyone, whether Minister, civil servant or lawyer, to think that after an interval this might somehow slip quietly into some sort of amalgamation with the other chapters or blur the edges. It would be an error to suppose that.
Sense has prevailed. I add my thanks to those already made to the Ministers who saw the light early, particularly the noble Baroness, Lady Royall, and the noble Lord, Lord Bach, who achieved the right result. The main credit and thanks should go to the noble and gallant Lord, Lord Craig of Radley, and, overall, it is a victory for the House of Lords.
My Lords, on the whole, these Benches were fairly supportive of the Bill during its passage, expressing, where we felt necessary, our strong feelings and, indeed, objections, with regard to some of the detail, and, more particularly, how that detail would translate into daily usage and its effect on the applicants in question or, as the Government like to refer to them, the stakeholders. It is in that context that I return without apology to the Government’s decision to abolish the PAT, which we felt was taking streamlining much too far, and the results of which would be seriously deleterious to the military stakeholders at a time when their support within our society is most needed and should be demonstrably visible.
Like others, I thank the Minister, his predecessors and his whole team both here and in the other place—and, of course, the noble and gallant Lord, Lord Craig, the noble Lords, Lord Morris and Lord Cope, and others—for their hard work in giving effect to legislation which was needed to some extent, while protecting the very people it was meant to serve. Directing all of the former Pensions Appeal Tribunal’s work into a specific chamber of the first-tier tribunal, which we seek to put into effect today, will provide a compromise—perhaps one that we would have preferred not to have to even contemplate, but one that all involved parties wish to seek work as constructively as possible.
I wholeheartedly support the noble and gallant Lord, Lord Craig, in the questions that he asks when he expresses his concern as to the future of the newly proposed stand-alone chamber. How can its survival be assured against a backdrop of further reorganisations, future financial constraints, numbers of applications and so on? The list is as long as any scenario one might anticipate, especially in the case of any future change of Administration. It is clear that Parliament should have the final say, especially where abolition or restriction of such a chamber's activities might be concerned. Equally, the current statutory protection enjoyed by the PATs must be expressed somewhere in clear-cut terms with respect to the WPAFC chamber; the initialisms get even longer.
I shall refer briefly, however, to the Minister's statement on the proposed steering committee tasked with ensuring cohesion of jurisdiction between the different PATs and the new chamber. I would welcome the Minister’s assurance that the steering group will continue to coexist with the new chamber; and that the independent chair should have some military and legal knowledge. Who will the steering group actually report to? Will it be in writing? Will Parliament be informed of its work and adhesion to its recommendations? Finally, on the First-tier Tribunal and Upper Tribunal (Composition of Tribunal) Order 2008, which we are considering today, the president must be fully aware and must be guided by the content of the Minister’s statement when addressing issues pertinent to the new War Pensions and Armed Forces Compensation Chamber.
My Lords, I hope that I can be brief; most of what needs to be said has been said. I thank the Minister for coming to this House, making the concession that we all sought and explaining it in some detail—he took some 14 minutes, on the longer side of speeches for such orders. However, we were all grateful for that because, first, they deserve a good explanation and, secondly, we were grateful for the degree of contrition that the Minister showed on the Government’s behalf for having got things right and, then, having listened to the noble and gallant Lord, Lord Craig, and all the others mentioned, coming to some sort of compromise.
We are debating the Motion of the noble and gallant Lord, Lord Craig. I shall concentrate on that and the PATs because the rest of the order is not so controversial. In that spirit, like the noble Lord, Lord Morris of Manchester, I declare that I, too, served as a war pensions Minister from 1989 to 1993, under the then Secretary of State for Social Security, my noble friend Lord Newton. I therefore know a little about the PATs and how they worked.
My first point is about the lack of consultation, and what I suspect is a lack of consultation within government. We all know that there was consultation, but the noble Lord, Lord Morris, has described how that consultation was possibly ignored. It took the later rows of this summer to sort things out. Back in my day as the war pensions Minister, when it was situated in the Department of Social Security—I imagine the same was true when the noble Lord, Lord Morris, was there—a body known as the Central Advisory Committee on War Pensions met under the chairmanship of the Minister at least twice a year and gave him advice in fairly robust terms on its concerns about the current issues within war pensions. The Minister would listen to all of those and, feeling rather bruised, would probably take them off to the Secretary of State to see how these matters could be sorted out. He knew that he would be back in front of that committee six months later and would have to report on how these matters were going.
I ask the Minister what has happened to the central advisory committee. Has it been moved to the Ministry of Defence with the new Veterans’ Affairs Minister? If it has just been wound up, that is rather a retrograde step; I hope that that is not the case. However, if it has been moved, was it consulted on these matters? What did it have to say about that? I take it that the Veterans’ Affairs Minister was consulted, because his response is referred to. What was it asked and what did it say? I hope that the Minister will let us know about that in due course.
Secondly, I underline and repeat the principal question of the noble and gallant Lord, Lord Craig of Radley. What assurances can the Government give us that there will be no further changes to the new chamber that will cover war pensions, without the approval—preferably affirmative—of both Houses of Parliament? In answering that, will the Minister turn also to how pensions appeal tribunals have worked in the past, and tell us a little about burden of proof and standard of proof? The Minister will remember, possibly far better than I, that in the criminal court guilt must be proved beyond reasonable doubt. Within the civil courts, guilt is found on a balance of probabilities. The Minister will remember that war pensions operate on a completely different and lower burden of proof. They just have to show that there is a reasonable doubt that a particular problem was caused by service; as I understand it, that has been the case since 1919. Can the Government assure us further that that will be preserved, and that we will not see a change to the whole question of burden and standard of proof as applied to war pensions as a result of them moving in to this new set-up, even with the assurances we have been given?
Thirdly, there is different treatment between Scotland, and then England and Wales. As the Minister will know, we see the different bodies being transferred to the first-tier appeal tribunal in Schedule 1. Some I have experience of, such as the Special Educational Needs Tribunal, originally set up by the Disability Discrimination Act and the Education Act 1996. On education, Scotland and England can go their separate ways to some extent, because education is a devolved matter. War pensions certainly are not. There is a possibility that in Scottish courts decisions on appeals from the old PATs will vary from appeal decisions in the English courts from the various tribunals here. It does not matter for education because it is a devolved matter, and 100 flowers can blossom—whatever the expression.
My Lords, the noble Lord corrects me. However, that cannot apply to war pensions, where we obviously need a unified structure covering the whole country.
I hope that the noble Lord can deal with those questions. I thank him for his efforts—he was not involved initially and therefore was not responsible for achieving consensus on the matter—as this is a difficult matter and he and his department were put under great pressure. I hope that the new Ministry of Justice will learn that it is better to consult deeply and to listen to what consultees have to say, particularly when many of them have so much experience in these matters.
My Lords, I thank all noble Lords for their support for where we are today. I am particularly grateful to the noble Lord, Lord Newton of Braintree, for describing in slightly broader terms what these reforms are about in a wider context. I pay tribute to him for the enormous amount of work he still does, with his expertise gained from many years’ experience in this important field. I have already congratulated those noble Lords, many of whom are present and some of whom spoke, who put pressure on the Government to reach a more satisfactory conclusion.
I wish to speak briefly. The noble and gallant Lord, Lord Craig, gave me notice that he would ask whether the Government intended at some future date to abolish the new War Pensions and Armed Forces Compensation Chamber. I hope he will not be surprised to hear me say that there is no intention to do that. Moreover, it could not be transferred to any other existing or future chamber without a statutory instrument being laid. However, as other noble Lords pointed out, under the 2007 Act, the negative procedure would apply to such a statutory instrument.
The noble Lord, Lord Walton, asked a relevant question about what would be covered by the new chamber. I am delighted to tell him that the entire jurisdiction of the existing PAT will transfer to the new chamber of the first-tier tribunal, including the matters which he raised. As regards the point made by the noble Lord, Lord Lee, I have information on the advisory steering group, but I think it would be helpful to him and to the House if I wrote him a letter to deal in a little more detail with the questions he asked. I shall send a copy of it to all those who spoke in the debate and place a copy in the Library. I shall do the same as regards the questions asked by the noble Lord, Lord Henley. As I understand it, the central advisory committee is placed at the Ministry of Justice. However, I am sure that the noble Lord will want a little more information than that.
My noble friend Lord Morris of Manchester referred in his excellent speech to COBSEO. On 14 October that organisation wrote to my honourable friend Bridget Prentice and advised her that it was pleased to endorse the proposal to transfer the PAT (England and Wales) into the War Pensions and Armed Forces Compensation Chamber of the first-tier tribunal. I am convinced that it would not have been so persuaded had it not been for the compromise proposed by the Government and the pressure put on the Government by noble Lords.
We were reminded by the noble Lord, Lord Newton of Braintree, that not many days are left before the new system is due to come into place. Like him, I hope that the House will pass these draft orders and wish them good speed. The War Pensions and Armed Forces Compensation Chamber will have the job of doing justice to members of our Armed Forces who have sacrificed so much for the rest of us. I refer noble Lords to the Written Ministerial Statement that has been mentioned. It states:
“To reflect the special nature of a jurisdiction serving those who alone in this country contract with the state to lay down their lives in its service and in recognition of the special relationship between service personnel and the Government as characterised by Command Paper … it has been decided to establish a war pensions and Armed Forces compensation chamber”.—[Official Report, 16/10/08; col. WS 49.]
That in itself pays tribute to our Armed Forces. I was privileged to be a Defence Minister for almost four years, so I am absolutely delighted to stand at this Dispatch Box satisfied that the new arrangements are acceptable to the House, as I hope they will be.
My Lords, I thank the Minister for his considered response. I also thank all noble Lords who supported this very important new arrangement for pensions appeals. I am, of course, grateful for the many kind remarks that noble Lords made about me and my efforts. I am grateful to all those who have worked tirelessly on this issue, not only Members of this House and service charities but those in the Ministry of Justice. A good deal of midnight oil has no doubt been burnt, but a satisfactory arrangement has been reached, which will be kept under review by the steering group to be set up in the next few months. There are too many to thank to mention everybody, but the leadership and guidance of the noble Lord, Lord Morris of Manchester, and the understanding of the noble Baroness, Lady Royall, both as Government Chief Whip and more recently as the Leader of your Lordships’ House, were without parallel. The considerable efforts of COBSEO and its family of service charities have made a major contribution. If there is one lesson to pass on to the Ministry of Justice and the Government it is that when service charities enjoy the support of noble Lords for their efforts, it is a gross error of judgment to think that they can be dealt with serially. We work together to achieve the best result possible for the people we are supporting. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
On Question, Motion agreed to.
First-tier Tribunal and Upper Tribunal (Composition of Tribunal) Order 2008
My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That the draft order laid before the House on 4 June be approved. 21st report from the Joint Committee on Statutory Instruments.—(Lord Bach.)
On Question, Motion agreed to.
Appeals from the Upper Tribunal to the Court of Appeal Order 2008
My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That the draft order laid before the House on 4 June be approved. 21st report from the Joint Committee on Statutory Instruments.—(Lord Bach.)
On Question, Motion agreed to.
House again in Committee.
436BA: After Clause 199, insert the following new Clause—
“Duty to co-operate with charging authority
Partner authorities (within the meaning of Part 5 of the Local Government and Public Involvement in Health Act 2007 (c. 28)) must co-operate with charging authorities in the preparation of the community infrastructure levy.”
The noble Baroness said: This is another long group. At this stage, I shall speak only to my amendment and ask the Minister a question on one of her amendments. Perhaps she will be able to cover it when she speaks to her amendments.
Amendment No. 436BA was discussed with me by the Local Government Association. It would introduce a new clause on a duty to co-operate with the charging authority. It refers to “partner authorities”. “Partner” has an even higher status than a buzzword in local government these days. Almost everything is done through partnership. In the Local Government and Public Involvement in Health Act, of which many of us have memories, if not necessarily fond ones, there are many provisions about partnerships.
The purpose of the new clause would be to ensure that local public bodies co-operate with the charging authorities in order that the charging authorities have full information from which to determine the level and types of infrastructure required in their area. Charging authorities will need access to service-related information held by a variety of agencies if they are fully to understand the infrastructure requirements of local communities. The provision of information relating to long and medium-term service goals, requirements, targets, capacity and so on, will be fundamental to underpinning the charging authorities’ setting of the CIL.
I shall refer quickly to government Amendment No. 438M. I am afraid that I am going back to London on this. There is a provision here about the Mayor of London having personally to approve the charge. The Government have tabled Amendment No. 444C, which restricts delegation on the part of the mayor under the Greater London Authority Act 1999, but it does not take out every provision for delegation. Are the two government amendments consistent with one another?
More broadly on Amendment No. 438M, I look forward to hearing from the Minister whether the examination of the charging schedule will be a tick-box exercise or something more substantive. I hope that when the Minister introduces Amendment No. 438M, she will explain how the process is anticipated to work. I am unclear from the proposed new clause whether the examiner is simply required to ensure that the process has been complied with, or what the powers will be. I beg to move.
I have four amendments in this group. Amendment No. 436BB is designed so that everyone will know exactly what is happening and so that there is a bit of transparency. Anyone purchasing land for potential development or considering planning permission should be able to know how authorities might charge a levy on that land, so that they can ascertain potential liabilities and costs beforehand. That is particularly important given that the legislation will involve a number of authorities, although it now appears that there will be only one charging authority. The aim of the amendment is to have transparency for all those involved in the process.
Amendment No. 438CC addresses the situation whereby some authorities will have greater capacity to implement the CIL regime than others. There is a need to encourage and reward local authorities that have the best practice in infrastructure delivery. Support and guidance are required for those that may need to improve their performance.
My third amendment is Amendment No. 438H. A simple fixed-rate tariff based on different classes of development seems to be a sensible way forward if we are going to have this ghastly levy. It is important that other factors should be considered when calculating the CIL, including such things as any increase in density, any impact on infrastructure demand from the development and existing infrastructure needs of a given local area. What discussion is taking place around the issue of levy collection in local authority areas that are rich in infrastructure? How will infrastructure be provided in those areas that are poor in infrastructure but which have low levels of development generally to support the existing deficits? I want to ensure that levies are not set so high as to prevent development occurring. Where they are set at such a level, the charging authority should compensate the owner or developer if the cost of the charge prevents the development going ahead. I cover that situation in Amendment No. 444B.
There are some quite serious issues in this group of amendments. I refer to government Amendment No. 438C, which refers to what the charging authority must have regard to, and to government Amendment No. 438J, which allows it to charge a nil rate. I refer also to Amendment No. 438H, tabled by the noble Earl, Lord Caithness, considering the economic impacts of the levy.
Earlier, the noble Lord, Lord Dixon-Smith, said that the timing of the levy was not very good. In a private conversation that he and I had yesterday—I apologise for divulging a private conversation, but it seems to be the trend these days—we agreed that developers, entrepreneurs, businesses and the construction industry needed this levy right now like a hole in the head. I would go further than that. My area of interest is rural areas. Some rural areas are desperately in need of regeneration and development, and they will need this levy like a bullet through the head.
Some remote or deprived areas do all that they can to relieve costs for new businesses and to channel government or European funding to aid development, facilitate infrastructure developments and even facilitate planning to attract new businesses and development. Even without CIL, those areas often fail to attract the businesses that they desperately need. There is perhaps a lack of trained staff; in some areas, there might be a lack of fast broadband or easy transport communication; there is probably insufficient housing for workers; or there are perhaps better places to go for businesses. All this happens even without the advent of CIL.
The government paper on the levy, published in August, provided an analysis of how CIL might work in Swindon. I am sure that it would work very well there and provide much needed public funding for infrastructure; but what about some of the more deprived and remote areas, such as the south-west, including west Cornwall, west Somerset, north Devon or Torbay, or even other areas of the country, such as Wales, west Cumbria, east Lincolnshire or north Cambridgeshire? The list goes on. I expect that many of those areas will try to remain competitive by setting a nil rate. My anxiety is: what happens then? What do the partner bodies do with their demands for funds from CIL for their infrastructure? Do they say, “In that case, we will spend our capital on infrastructure projects elsewhere?”, thus, presumably, condemning the deprived area to further, continuous and eternal deprivation?
Another question mentioned earlier is: what will the Treasury do when the CIL receipts flow into the coffers of the high-charging authorities? Will it say, “We will no longer fund infrastructure costs of this nature through the rate support grant or other agency funding”? The Treasury cannot do that for one authority and not another; presumably the remote and deprived authorities then take a further step backwards. It would seem that deprived areas will have to choose between having no development or no infrastructure—or maybe neither.
I do not wish to put the Minister on the spot, but I would be very grateful if she could help me with my largely, but probably not exclusively, rural worries.
I wish to touch on some of the points raised by my noble friend Lord Cameron. I turn to my four amendments in this group, which are in two pairs—Amendments Nos. 438EA and 438HA and Amendments Nos. 438CA and 438CB—because they tackle two specific points on how CIL should be set.
My previous amendments related to the purpose of CIL. These amendments concern how local authorities go about establishing CIL. I will briefly touch on some of my previous comments, because they also apply here. I am extremely grateful for the Minister’s indication that we can continue to discuss some of these issues.
My overall point is that CIL should be set at the right level to fund infrastructure and at a level appropriate to the prevailing economic conditions. CIL should take account of overall development viability in an area and not be linked to any increase in land value arising from the grant of planning permission. Amendment No. 438EA seeks that local authorities should take account of development viability when setting the CIL by ensuring it is not set at a level that would stop land being brought forward for development. If CIL is set too high, landowners will not make their land available. Therefore, the test for the appropriate level of CIL should be that it will still allow the land needed for development plan priorities to come forward.
Amendment No. 438HA removes the reference to land value increase in relation to local authority CIL charging schedules. I have already argued that taxing increases in land value should not form part of the purpose of CIL, nor be a consideration for local authorities when setting CIL. If land value is used as a reference point, it will inevitably become the basis upon which CIL is allocated between different land uses, rather than the demands each use places on infrastructure—a point which the noble Lord, Lord Jenkin, has made. This will mean that uses, such as retail, which generate the highest land value increases, will bear a disproportionate burden, irrespective of their impact on the infrastructure. As I understand it, that is not the purpose of CIL. Amendments Nos. 438EA and 438HA set out to change the mechanism for assessing CIL—the viability of development and its impact on infrastructure. The amendments also seek to change the language to that used in the planning system, rather than the tax system.
My second pair of amendments, Amendments Nos. 438CA and 438CB, propose that the setting and charging of CIL should be done through the development plan process. It is simply common sense that if CIL is to work efficiently and effectively, the development plan, the cornerstone of the planning system, must be used as the structure through which it is formulated, tested, and charged. Without these amendments the unintended consequence of the current drafting is that development which is acceptable in planning terms could be refused planning permission if it is unable viably to meet the full cost of CIL. It is only through incorporating CIL in the development plan process that there is any hope of the levy being independently and robustly tested, and applied in a reasonable way to planning decisions.
At present, the clauses make no reference to the planning process by which the CIL should be determined. The Government’s August 2008 publication on CIL suggests that the charging schedule will be part of the local development framework. Crucially, the report suggests that the charging schedule will not obtain the status of a development plan document. If this is the case, there will be a number of negative consequences for the robustness of the CIL system. If, on the other hand, the CIL charging schedule were to be a development plan document, the resulting CIL policies would have the full weight of the statutory planning system behind them. This would allow the local authority to take full account of the viability of a development when deciding whether to grant planning permission and, in exceptional cases, to vary the CIL to ensure viability.
In particular, for instance, there are brownfield, mixed-use regeneration schemes, like King’s Cross, where the development, while desirable and meeting many planning objectives, may be unable to bear the full cost of CIL without becoming unviable. In these exceptional cases, it is vital that the local authority has discretion to reduce the CIL charge and that this is done within the existing structures of the development plan. In such a case, were the local authority not to grant planning permission on the grounds that the development was unable to pay the full CIL, the applicant could appeal to the planning inspectorate against refusal, and there would be a proper process for resolving the issue and evaluating the proposed development.
We must not allow for the formulation of unnecessary bureaucracy to deal with these exceptional cases when a perfectly adequate and well respected system exists already—the development plan.
The one thing on which a large number of people are agreed regarding this part of the Bill is that it is a good deal better than the planning gain supplement; but that is about the only thing on which people agree. The noble Baroness, Lady Andrews, on this occasion and on Second Reading, made much of all the bodies that have said that CIL is the right way forward. I find that difficult to understand, because some important bodies have severe reservations about CIL and those reservations are being exposed. The speech by the noble Baroness, Lady Valentine, indicated several of the issues which need to be resolved. Some of the opposition goes to the heart of the matter.
The original complaints about this skeleton Bill were wholly justified, which is why I originally proposed to leave out all the important clauses in this part of the Bill. The noble Baroness, Lady Andrews, then tabled, rather belatedly, a string of 25 amendments that attempted to put some flesh on the bones. That led me to withdraw the notices that I had given about the clauses. At one point during Second Reading there was some suggestion that this part of the Bill might be withdrawn and returned after more thought had been given to its structure. Clearly that was not going to happen and, therefore, there seemed to be no point in trying to take out all the clauses one by one.
I withdrew my notices, but a lot of major issues remained, one of which was viability, which was touched on in an earlier debate. It is hugely important that when local authorities set their rates and draw up their schedules on the sort of flat-rate basis that the noble Baroness, Lady Andrews, described on the previous amendment, they must have very close regard to whether the developments that will be liable to those flat rates of CIL will actually go ahead. We have the horrid examples of previous attempts to tax increases in land value due to planning permission, all of which succeeded in doing nothing more than choking off development, as my noble friend Lord Dixon-Smith made clear in his speech on the previous amendment. I find the absence of this requirement very worrying.
Another aspect arises on government Amendment No. 438Q, which is in this group. It is about appeals. They will be allowed based on fact in relation to the application of methods for calculating CIL. Charging authorities can appoint a valuation officer or a district valuer to oversee such appeals, but the amendment does not allow appeals on grounds of viability. Why not? Surely, there should be some point at which a developer can say, before it happens, that if the authority is going to charge a certain amount, it will go somewhere else or not do the development and the authority will not get any investment. There seems to be no formal procedure for that and no right of appeal on viability. The amendment does not address the concerns of some of the bodies that represent major developers. The clause is indicative of the attitude of the Government on this. We will return to this, not least in the present economic climate. There must be some way in which a developer can bring concerns and say that if the authority charges a certain amount, it will go away. Then the developer and the authority can discuss what else the authority can do to help. Otherwise, this will follow the pattern of the Land Commission, development land tax and everything that has gone before. I am sure that the Minister and her colleagues in her department would be dismayed if that were to be the result of this. This is an important issue that the Bill does not address, but it must or Part 11 will be one more piece in the string of failures that we have had over the past 20 or 30 years.
Can the Minister enlighten me on two or three matters? It is natural to assume that local authorities will have different rates of CIL. It will be for them to decide. The circumstances and the procedures are set out in the consultation papers. I assume that each local authority will be able to decide what proportion of its infrastructure it will seek to fund from CIL. Some may decide that the market is so difficult that they will not be able to fund a great deal in this way and others, in prosperous, booming parts of the country—if there is prosperity and boom in the next few years—may have the confidence to aim for a much higher proportion. What average proportion of infrastructure investment do the Government expect local authorities to fund through CIL? What range have they worked on? They must have some idea. The intention is obviously that it will be an important contributor. Will there be any pressure on local authorities from the Government to aim at at least that proportion? What is the relationship between central government and local government on this? Some local authorities might decide that the way to attract development is to go for low rates of CIL. It would be helpful to know how the Government see the dynamics of that.
My second group of questions to the Minister concern changing the rates of CIL. After a while, a local authority might decide that it had got it wrong. It might be doing better or worse than it thought. Can local authorities change their mind? Is there an interval between setting CIL, reviewing it and changing it? In the early days, I was involved in Leeds. If we got developers to come to the city, we were delighted. We were almost begging them to come and were being very generous. Ten, 15 or 20 years later, the city was in a position to be demanding in the way in which it dealt with developers. There is no certainty about these things because of the nature of development. Can local authorities change their rates of CIL and, if so, what time will have to pass before they can do that? What flexibility or inflexibility faces them? If they can change the rates of CIL, where does that leave developers who have already paid into the fund at a different rate? I accept that there will be a levy and am trying to understand how the nuances will work.
I shall try to add to this thoughtful debate about some interesting amendments. I shall touch on the issue of process and viability to be helpful on some of the concerns that have been raised. One of the things that I like about the proposition in front of us is that it combines some certainty for developers with flexibility for local authorities to take account of their circumstances. My noble friend Lord Woolmer referred to the maturity of the development process and local circumstances. The process that has been put in place over the past four or five years, by which various local authorities have developed a tariff, has been worth while, but it is not a quick process. It cannot be done in a matter of weeks. The work done by Milton Keynes Council to develop its tariff took 18 months and took account of all the infrastructure needs. The noble Lord, Lord Dixon-Smith, mentioned crematoria, and the business plan for the expansion of Milton Keynes took account of everything from crèches to crematoria. Everything was put in place. The first thing that was factored in to that process—this speaks to the point made by the noble Lord, Lord Cameron, about the displacement of funds—was the certain commitments of central government departments; the Department for Transport, the Department of Health and the Department for Education and Skills and so on. It was only after the local government contribution was clear and the bill of fare, as it were, for CIL was looked at that the tariff was struck at £18,500, to the satisfaction of the 18 landowners.
In response to the point made by my noble friend Lord Woolmer, once that is legally set in stone, it cannot be changed, so the authority cannot come back three, four or five years later, change its mind and say that the tariff will not be £18,500 but £30,000.
I am grateful to my noble friend. Her experience is extremely helpful. My concern is that many of the examples that people give, including my noble friend’s examples, are in the prosperous, booming areas of the south and south-east. That is not the whole of England, and there are parts of the country where that is not the case. Everyone would like to be in such an area—I apologise. People do not like being in areas where there is a lot of housing pressure, yet politicians do because it is easy to negotiate. I should be grateful if my noble friend would reflect more widely than the areas where there is a lot of pressure for development.
I thank my noble friend for that intervention. I was about to touch on that point when I talked about viability. The noble Lord, Lord Jenkin, made an enormously important point about viability. It is not invariably the case, but it is frequently the case, that the areas that require the most investment in infrastructure are the more prosperous areas where development is on greenfield land and infrastructure has to be built or an existing settlement needs a major extension. In those situations, the way in which CIL is framed will work as it is intended to work. Indeed, the work done on the tariff, not just in Milton Keynes, but also in Bedfordshire, South Hampshire and Ashford in Kent, all follows that logic.
However, it is exceptionally important that authorities which have a large amount of brownfield sites are able to take the time to consider whether they feel it is appropriate to have a zero charge for CIL in such situations. Frequently but not invariably, brownfield sites tend to be rich in infrastructure because they tend to be in city centres or in areas around city centres which have good infrastructure but they may have been neglected in other ways. The reason I like the proposition in front of us is that it gives authorities flexibility so that they do not need an additional take from a development because the infrastructure is in reasonably good shape or it is where it should be.
Finally, I ask the Minister to respond to my noble friend Lord Woolmer’s point about whether charging authorities will have the ability to vary the level of CIL across an authority. That goes to the heart of the point about the viability. You may have a charge which is perfectly viable in one part of an authority but completely unviable in another. I should like some reassurance that that will be possible, but not in a way that one ends up with developers negotiating every single application because that has been the bugbear of Section 106. I should be grateful if my noble friend could respond to some of these points.
I hesitate to intervene as I do not have an amendment in this group, but I am prompted to inquire about one or two things. The noble Lord, Lord Woolmer, and the noble Baroness, Lady Ford, have raised some fundamental issues about the charging scheme. The ability of authorities to change the level of the charge is fundamental. If they have the right to charge it and the right not to charge it, they must also have the right to vary it, and presumably to vary it at will.
That gives rise to other questions. One could have a situation in a region—we still have them—where the RDA was doing its best to encourage development and providing all sorts of incentives and a planning authority decided to levy CIL which would be seen as a disincentive or as a recycling of the RDA’s money—using it in a different way. The relationship there needs to be explored.
The second issue, which we do not appear to have thought about at all, is if there is some sort of expectation that CIL will be charged anyway, can CIL be charged where there is no demonstrable demand for additional infrastructure? We are assuming that it will go through the planning process and, of course, the planning process will throw up demand. From long observation, I am bound to say that if you ask people what they would like, they will always think of something on which to spend money. Is there some sort of standard by which we will judge areas which have a sufficiency of social infrastructure—let us call it that as that is really what we are talking about—against areas where there is a crying need for social infrastructure? That is a separate issue but if there is a clear expectation from the Government that there should be a charge and it should be paid and collected, are we raising false expectations? I really do not know.
I have one final, slightly facetious, but none the less important, point. If an authority can charge CIL, can it have a negative CIL? That is a perfectly legitimate proposition. There is nothing in the papers which would prevent an authority from declaring a negative CIL and providing an incentive for development in its area. This is the kind of sector we are dealing with here. In dealing with her amendments, I ask the noble Baroness whether she could clear that hurdle for us as well.
Noble Lords have put a number of hurdles in my way. A number of complex issues arise on this group of amendments. Many of the issues have evolved around the definition of viability, the way in which it will be interpreted and made to work. I am very grateful for the contribution of my noble friend Lady Ford. She made it clear that we are not inventing a process of huge complexity and universality. Over the past five years at least, we have watched and observed with some pride the way in which local areas have developed local tariffs. But it has been very hard work. They have been extremely local and they have given us a very good clue about how we should approach CIL and what it is capable of delivering for us.
Before I address the amendments, it might be sensible to say something, in the context of the questions which have been raised, about viability in different areas and how CIL mediates and helps to express that. We dealt with this in detail in the August document and CIL will be framed, as I keep saying, by the local development framework. If local authorities are to proceed with CIL, they will need to set charges which reflect the economic circumstances of the area and they will need to subject those to consultation with developers and the local community. On the questions raised by the noble Lord, Lord Jenkin, for example, developers will be able to make representations to the charging authority about the draft charging schedule on the grounds that it would affect the viability of their development.
Of course, the negotiation on the right level of CIL will have to be conditioned by what will be deliverable. We have made that very clear. At that point developers will also be able to put their case in person to the independent examiner if they do not think it is the right level of CIL to facilitate what they are there to do. Subsection (9) of Amendment No. 438M contains a right to be heard. So a process is built in whereby the developer, from the beginning, is alongside the local authority saying, “These are the development plans for the area, this is the infrastructure that we will have to provide and this is how we think your charge, as you are assessing it, will relate to our capacity to pay”, and so on. This is very much a local issue.
In relation to the rural issues raised by the noble Lord, Lord Cameron, and to pick up the point made by the noble Lord, Lord Dixon-Smith, assuming it is a voluntary tool, local authorities in rural areas do not have to take it up. If there is little change or development, a local authority might judge that there is a low infrastructure need or insufficient development, but it can make that choice. The point is that it is for local authorities to decide. Currently, we are considering Matthew Taylor’s report on rural planning issues and he focuses on that. We will be bearing in mind his conclusions on developing CIL in relation to rural areas. Whether it is a rural area or the social areas mentioned by my noble friend Lady Ford, the point is that local economic circumstances will determine the shape and the nature of CIL.
My noble friend asked about revision. We certainly expect that the charges will need to be kept under review and revised; for example, if changes in land values lead to the charges becoming unviable. I shall come back to that later in the context of an amendment. We are considering what the procedures for revision might look like and how they can provide for flexibility as well as certainty. In terms of differential rates, regulations will be able to allow charging authorities to set differential rates, taking into account viability in terms of development situations and so on. I hope I am getting across to noble Lords the local nature, the pragmatic nature and the flexible nature of what we are attempting to do through CIL. That will be relevant when I talk about some of the amendments.
To return to the point made by the noble Lord, Lord Jenkin, about appeal, even where charging authorities take sensible precautions to ensure that schedules set out viable charges, there may still be a very small number of cases where the level of charge set may not be affordable on a particular development. Obviously, that will be less true if the local authority sets differential rates.
Essentially, we want charging schedules accurately to reflect the circumstances of different parts in a local authority’s area and we will seek views as we continue our discussion on how that may be achieved. My noble friend Lord Woolmer asked me what proportion of infrastructure funding we expect to be funded by CIL. That question goes to the heart of it. Frankly, we do not have a view on that. It will depend very much on how much infrastructure need a local area has and what is the viability of development locally. It will be for charging authorities to synthesise those issues in their charging schedules. We cannot second-guess that; it would be wrong for us to do so.
I am sorry to interrupt, but I feel that it is necessary. If we are considering charging schedules and the viability of a project, I can remember many long-term development projects in Essex that went from financial viability to huge periods of deficit, back to viability and into deficit again during the period when they were constructed. There is a really big problem here. I see the planning system that the Government are establishing for this, but, as with all plans, fulfilment may be on a very different timescale from that which the planners—the people initiating the plan—conceive. Development plans now last for a considerable period, a timescale that is much longer than financial certainty.
I have no quarrel with that; that is a challenge to the process of planning for the long term in relation to CIL. As I said, there is provision for review, but that is the sort of discussion that we are having with the development industry.
I now quickly turn to the amendments. Government Amendment No. 438C is intended to provide further certainty and transparency for developers and the local community about how charging authorities will calculate and set out the level of CIL they propose to charge. It is also a serious response to a number of the concerns expressed by the Delegated Powers and Regulatory Reform Committee. To this end, a new subsection (1) would require charging authorities that want to charge CIL to issue a charging schedule, which will set out the rates or criteria that will determine how much CIL will be due from each individual development.
I hope that, along with what I will come to say about the requirement for charging authorities to provide estimates of CIL, liabilities under government Amendment No. 438L will satisfy Amendment No. 436BBA, tabled by the noble Earl, Lord Caithness.
I am sorry if I misled the noble Lord. I meant to say that the charging schedule will probably be based on a notion of metrics, units. The unit would carry a particular charge, and that will be multiplied by the number of units. That does not mean households or anything like that.
As I was saying, I hope that what I have to say will satisfy the noble Earl, Lord Caithness, on his amendment, Amendment No. 436BBA, which would impose a requirement for regulations to specify procedures for informing current and future land owners or developers how CIL will be calculated in individual cases. We have done precisely that; so I hope that that will meet his amendment.
We all agree that the level at which CIL is set is crucial. Amendment No. 438CC would place the Secretary of State right at the heart of the CIL process, with powers to set the upper and lower limits of CIL that charging authorities must operate within and also, it appears, with discretion to allow authorities to operate outside those rules. The noble Earl has talked a great deal this afternoon about viability. In my introduction I addressed the points that he made in his amendment, and I share his concern.
We have made it very clear that CIL is a flexible local level charge to be set as local circumstances dictate. Of course, it is important that effective safeguards are in place against excessively high CIL charges. The framework that the Government are establishing through the amendments will ensure that CIL does not choke off development. Government Amendments Nos. 438C and 438M, in particular, set out the key matters that charging authorities must take into account in setting their CIL and provide for the independent examination in public of the charging schedule. Those are strong safeguards, but the involvement of central government is not warranted.
Subsection (2) of our Amendment No. 438C then sets out three key matters to which charging authorities will have regard; the regulations will follow that up in more detail. First, they will have to consider the actual and expected costs of infrastructure in their area. That will be the infrastructure needed to support implementation of the development strategy set out in their adopted development plan. It will be derived from the infrastructure planning they are required to undertake, in England, by planning policy statement 12 and, in Wales, by planning policy Wales.
Secondly, charging authorities will have to have regard to the actual and expected increase in value that arises from the granting of planning permission. As we debated this morning, expressing the source of CIL funds in that way is difficult for some parts of the industry. We are in discussion and I will come back on that issue.
CIL is not planning gain supplement, for the reasons that we know. If it were, individual development would be assessed and charged a nationally fixed percentage of the difference between the value of land before and after permission is granted. As I said, under CIL, charging authorities should estimate the broad likely uplifts in land value for their area and consider it on a strategic level. We all agree that assessment of viability is not a precise science, but it is essential that the charging authority should have to undertake it, to ensure that they do not risk impacting on the viability of development by setting too high a rate of CIL.
Thirdly, charging authorities will have to have regard to the actual and expected sources of funding for the infrastructure identified. That includes from central, regional and local government grants.
Although government Amendment No. 438C amends Clause 201 to provide certainty about the most important considerations that charging authorities must consider when setting CIL, Clause 201 previously allowed for other detailed factors to be specified in regulations. Our Amendment No. 438D amends that clause to ensure that this continues to be provided for. Government Amendments Nos. 438E to 438G are consequential on new subsections (1) and (2) in government Amendment No. 438C. They delete the paragraphs in subsection (3), the contents of which have been transferred to these new subsections.
The noble Baroness, Lady Valentine, asked important questions. Her Amendment No. 438CA would require CIL to be calculated by reference to rates or criteria in a development plan document prepared by a local planning authority. She has argued that it should be part of the statutory planning framework. One unintended consequence of her amendment would be that CIL could not be applied by LPAs in Wales or at a strategic level in London. I recognise that stakeholders want reassurance that CIL will be managed as part of the planning system, but I cannot agree with her amendment. We intend the CIL charging schedule to be a legal document and part of the folder of documents that make up a local authority’s local development framework.
We have discussed with the industry whether it is necessary for the CIL charging schedule to have the legal status of a development plan document. As the noble Baroness knows, we are after certainty, transparency and viability: hence the standardised charge. Under her proposition, however, the level of CIL would be subject to case-by-case negotiation. It would sit alongside Section 106 arrangements and would have to be part of that way of doing things. That is not what the industry wants. It would not be a sensible approach. We are very willing to continue working with the industry to see whether we can design a procedure that deals with exceptional circumstances in which a developer cannot afford to pay—I referred to that when I responded to the noble Lord, Lord Jenkin—but we are trying to get away from the sort of system where there is the right to negotiate levels of CIL in every case. Such a right would defeat the object of the entire exercise.
As our August policy document made clear, we have, crucially, accepted that charging schedules should be prepared and tested to a standard equivalent to development plan documents. They must be robust and trusted, and there must be the opportunity to test them. The Government’s amendments go further than the industry has asked by setting out in primary legislation, not regulation, tough procedures that deal with the examination and approval of charging schedules and that will be binding on local authorities in the way in which the DPD is binding. This is a much better way of doing things than the noble Baroness’s amendment, and I ask her with respect not to press it.
The noble Baroness’s Amendment No. 438HA would delete the reference to,
“values or expected values or in any other way”,
in Clause 201(5). This clause provides that the CIL regulations can permit or require charging schedules to operate by reference to any measure of the amount or nature of the development. This relates to the question asked by the noble Lord, Lord Jenkin. This might be the floor space of the development, pounds per square metre of floor space, or intended use, and retail development might attract a higher charge than office development. Other options are specified. The amendment aims to narrow these options to prevent the CIL regulations that permit or require the charging schedule from operating by reference to,
“values or expected values or in any other way”.
There is a residual fear that the clause might lead to a PGS by the back door. However, it simply allows us to explore with stakeholders how the charging schedule should best operate. Is a per-metre-of-floor-space charge the best approach? Would a charge that is somehow linked to other relevant values be better? These could include allowances to the developer to reflect other costs arising from the development, and the costs of a planning obligation requiring the construction of a road. The amendment would not allow us to explore that in any other way, and it could prevent us from adopting other people’s good ideas. I therefore ask her not to press it.
I listened very carefully to the debate and did not want to intervene, but I really must ask the Minister a question and quote a case study. I do not understand this. It is fiendishly complex.
A new port at Felixstowe has just received planning permission under what is in effect a Section 106 agreement, which required the best part of £100 million to be spent on upgrading the railway line between Felixstowe and Leeds. I cannot see how a local authority—in this case Suffolk County Council—can create a charging schedule that covers that kind of work and does so regularly. I am sure that it is a very good planning authority, and it may be all right for office blocks, but I do not see how this can work when something like a Section 106 agreement, which I believe this will replace, may be required. How will it work? There must be some negotiation, must there not?
I am sorry that my noble friend was not here for our debate this morning when we said that CIL would fund everything that is needed by way of infrastructure. All the money that presently goes into infrastructure from central government and various government departments will be there still. CIL will be a local charge to meet local infrastructure needs. I take his point and I am happy to have the debate with him outside the Chamber, but it is a contextual issue he is addressing. We now are talking about specific ways in which the charging schedule will reflect the local needs of the community, but within the context of everything available to fund the infrastructure as well.
Amendment No. 438CB would remove the power for the Secretary of State to make regulations about the procedures to be followed by charging authorities in setting CIL rates. To ensure that the charging schedules are prepared and tested to similar standards, we need to be able to set down the processes such as consultation in regulations. Our proposals to place the charging schedule within the LDF and ensure that it is prepared to a similar standard will give the status and connection to the local authority’s development plan that is needed. I therefore would ask the noble Baroness not to press Amendments Nos. 438CA and 438CB.
On Amendment No. 438EA, again in the name of the noble Baroness, Lady Valentine, there is widespread agreement, not least this afternoon, that CIL should not choke off development. It is self-evident that the higher the level that CIL is set, the higher the costs of development. The lower the amount that a developer can spend on purchasing land for development, the more likely it is to remain commercially viable, and so on. Ultimately, if the difference between the existing value of the land and the price proposed by a buyer who wishes to develop is too low and the landowner does not sell, we will not get the delivery that we want. As I said earlier, the amendment is prompted by concerns that development viability is articulated in a way that does not capture the essential nature—or sometimes the essential difference—between parts of the industry, which we will discuss later. We remain open to amending the Bill if the right formulation can be found.
Amendment No. 438H would add to the list of factors in Clause 201(3) which the CIL regulations may permit or require charging authorities, in setting or revising rates, to consider. The purpose is likely to be that the level of CIL set in a charging schedule means development proceeding. Ensuring that CIL does not stop development proceeding is also behind Amendment No. 444B, although the noble Earl, Lord Caithness, comes at this from a novel direction, which does not surprise me given his ingenuity. His amendment appears to require a charging authority to effectively pay compensation to a developer if CIL prevents development going ahead. His amendment would go too far to achieve what I think that he is after; that is, an incentive to the authority not to set too high a CIL charge. It would involve a detailed case-by-case assessment for each development claiming the compensation, probably by someone independent of the charging authority and developer, of the likely increase in value arising from the planning permission and the financial circumstances of the development to show that it was CIL which was preventing a development proceeding rather than other factors. This would be highly contentious and time-consuming, and would encourage perverse behaviour. It might even reward inefficient developers.
I hope that the government amendments, particularly Amendment No. 438C, which provides that charging authorities must have regard to the actual or expected increase in value arising from planning permission, clearly demonstrate that we share the concerns of noble Lords to ensure viability. It may help to allay concerns about the effect of CIL if I now turn to government Amendment No. 438J. This alters the extent of the power in Clause 201(5) and provides that the CIL regulations provide, permit or require provision to make differential rates of CIL. It picks up on the point made by my noble friend. These differential rates may now include provision for nil rates of CIL and not simply reductions.
We think that it is conceivable that a charging authority, in developing its charging schedule, may conclude that a type or class of development or a particular part of their area—for example, warehousing—might be at the limits of economic viability and unable to sustain a meaningful level of CIL charge. This amendment would allow charging authorities to set a zero rate for that area or class or type of development if they can justify it according to local circumstances. It is not enough that we ensure that charging authorities take account of the right things to have legitimacy. We have to ensure that they are prepared to robust standards.
As always, the amendment in the name of the noble Baroness, Lady Hamwee, is well intentioned.
I am sorry if that sounds patronising: I really do not mean it in that sense. She knows how passionately I put forward notions of partnership and the local duties of partnership in the Bill passed last year in this House. At a time when we are trying to reduce the burdens on local authorities and business, we are trying to avoid imposing such a wide-ranging obligation on partner authorities.
The noble Baroness also asked whether the independent examiner is interested only in the process of how the charging schedule is prepared. The answer to that is no because the independent person—this picks up a point of concern to the noble Lord, Lord Dearing—who is likely to be a planning inspector, will look at how and whether the charging authority has properly had regard to the matters set out in Clause 201 and the criteria that we have set out. He will look at how the criteria have been met as well as issues of process. In response to the wider meaning of her amendment, all this is about trusting local councils as regards who they need to engage with. We fully accept that charging schedules have to be tested to the same high standard as development plan documents. As I have said, we go further than that, as reflected in Amendment No. 438M by putting it in the Bill.
I turn now to the questions put by the noble Baroness on government Amendments Nos. 438M and 444C, which reflect a forensic dig into the Bill. These amendments are entirely consistent because the first amendment requires that certain functions are to be exercised by the mayor only, such as the approval of the declaration under subsection (4), while the other amendment prevents the mayor from delegating functions specifically to, say, local authorities or Transport for London. The two clauses are internally consistent in the Bill.
Who is going to do the work of independent assessment? In practice we consider that inspectors who work or have worked for the Planning Inspectorate will be best qualified to carry out these examinations, and we want to encourage charging authorities to choose from this pool. In guidance there will be assistance to supplement the inspector if they need specialist evaluation skills. I can assure the noble Lord, Lord Dearing, that we are still considering ways to ensure that the provision is robust enough.
Some noble Lords will remember a show called “Oliver!” in which Fagin says,
“You’ve got to pick-a-pocket or two”.
As currently drafted, this smacks of a situation where the pick-pocket-in-chief can choose his own jury. I am grateful to the Minister for the assurance that that is not quite what the Government have in mind.
I am grateful for the musical interlude, which is welcome. To ensure that the draft schedules are ready to be examined, subsection (4) requires charging authorities to accompany the draft schedule with a declaration that they have complied with the legal requirements and that they have had regard to the key matters. Subsection (7) requires the independent examiner to consider how the charging authorities dealt with the key issues, and recommend that either the draft schedules should be approved, improved through modifications or rejected with reasons given and published, and in keeping with our commitment that charging schedules are tested to the same high standard, subsection (9) provides that CIL regulations must require the charging authority to allow someone, if they so request, to appear in person at the examination to make oral representations. We do not think it would be appropriate to force a charging authority to approve a schedule if it was strongly opposed to the recommendations, so subsection (10) allows it to be withdrawn.
I turn to government Amendment No. 438N, which deals with how schedules are approved. In keeping with the arrangements for development plan documents, this amendment ensures that if a charging authority wishes to approve a charging schedule, they can do so only in accordance with the recommendations of the independent person who conducted the examination. This effectively makes those recommendations binding on the charging authority unless it chooses to withdraw it. For charging authorities which are local authorities, approval can only be by a majority of voting members at a meeting of the authority or, in the case of the mayor, personally.
Amendment No. 438P is important because it deals with how charging schedules may come into effect and how charging authorities may cease charging CIL. This is because developers and other applicants seeking to apply for planning permission to which CIL will apply have to be able to plan ahead in terms of the likely costs of developing land. In order to do this, they need to be aware of the level of CIL that they will be charged. That is why new subsection (1) prevents charging schedules coming into effect until the charging authority has published it. We will consult through draft regulations on the most effective methods of doing that. It may be that a charging authority’s plans for an area change—for example, if a planned phase of significant growth comes to an end. It will have no further infrastructure needs that are best met by charging CIL. We have to make provision to stop charging CIL if the situation warrants it, and subsection (3) provides for this.
However, allowing charging authorities an unconstrained ability to stop charging CIL could cause uncertainty and would be unfair, so subsection (4) provides that regulations may specify circumstances in which a charging authority may cease to charge, for example—this will be of interest to noble Lords—when there has been a significant and unforeseen downturn in the market. We also require under a power in Clause 205(2) that there be consultation with infrastructure providers. Subsections (5) and (6) of the new clause set out how this will be achieved by a majority of members at a meeting of the charging authority, or in the case of the mayor, by personal decision.
Amendments Nos. 438K and 438Q are integrally linked and deal with the application of the charging schedules once they are adopted. Amendment No. 438Q responds to concerns from stakeholders about the need for further clarity about what should happen in the event of a disagreement between a charging authority and a person liable for CIL on matters of fact. It requires the Secretary of State to make regulations providing for a right of appeal on matters of fact relating to the calculation of the amount of CIL. We hope there will be very few cases but, if there is dispute about whether the development is the kind of development on which CIL should be charged or the quantum has correctly identified the amount of floor space and so on, we need an appeal mechanism.
Most disputes on matters of fact should be capable of being resolved quickly and simply. Under Amendment No. 438L, we are considering a proposal to require charging authorities to recalculate their estimate of the amount of CIL due from a particular development if requested to do so within a set time of being notified of the amount of CIL due. Only if disagreement remains after this stage would the matter become a formal appeal.
It is obviously important that the appeal is decided by a suitably qualified person. Subsection (2) specifies that it must be considered by a person appointed by the Commissioners for HM Revenue and Customs. It is expressed in this way because we want appeals to be considered by a valuation officer or a district valuer. We believe that the Valuation Office Agency, which celebrates its 100th birthday in 2010—I am sure we can all find ways of celebrating that—is best placed to consider these appeals because it has a proven and respected track record in property and land rating assessments. I stress that we do not intend HMRC to have any role in CIL.
Given the relatively straightforward subject matter of any appeal, we propose that it should be conducted by written representations rather than through hearings in person. They would be binding but, of course, a further challenge in the courts would be necessary. We shall consult on the detail in the draft regulations.
Amendment No. 438K is partly consequential. It deletes the previous provision for regulations to provide for a right of appeal. Amendment No. 438L provides the opportunity for further clarity about how much CIL would be payable under a charging schedule and about the revision of charging schedules. New subsection (8) provides that the regulations may set out when charging authorities must provide an estimate of the amount of CIL chargeable on individual developments—for example, at the time planning permission is granted for the development. This estimate could be used as the basis for an appeal on a matter of fact, as I have just described in relation to Amendment No. 438Q.
On the questions raised by my noble friend Lord Woolmer, new subsection (9) would expressly allow for charging authorities to revise their charging schedules, and new subsection (10) makes clear that the requirement for examination, approval and the bringing into effect of charging schedules which are the subject of other government amendments applies to those revisions in the same way as to the first charging schedule. To be clear, charging schedules should seek to reflect the degree of potential change envisaged in the development plan—for example, the anticipated changes in the economic climate—and so formal revisions of charging schedules should not be necessary simply in response to normal variations in market conditions.
But charging authorities should keep under review the effect of the level of CIL on development in their area, perhaps through their annual monitoring report which looks at the delivery of the local development documents. If their monitoring shows that economic circumstances have changed significantly or there is a need to revise the development strategy, the charging authority should also assess the need to revise the charging schedule.
I am conscious that a great deal of heavy, technical detail has been placed on the record. I am not sure that I could answer any further questions but I am happy to write to noble Lords if they require further details.
Will the Minister help me? I got a bit lost at the end there, trying to absorb everything she was saying. If a local authority wants to change the level of CIL or stop it, does it have to go through the full rigmarole it went through when it set CIL? Can it just say at a meeting of the authority, “The rates are coming down from £40 a square metre to £10 a square metre”, or does it have to go back out to consultation and go through the whole process again?
To the best of my knowledge we have not set down any timetables, nor have we anticipated any. We have some examples of the tariffs that have been worked out. The development plan document will be in good shape. We will take advice from the Local Government Association about what we might expect.
Will the Minister write to noble Lords with some idea of how long the consultation process that the noble Earl referred to will take? It is important that we understand this. I draw attention to the recent development at Elephant and Castle, where the Section 106 agreement has been revised over the past two months to enable that development still to go ahead. I suspect that if that had had to go through a whole process, which might have taken six to nine months, we would have missed the market and stalled the development. Will she give that more consideration?
I moved this amendment some time ago. I can speak only for myself; I thought that I understood some of this when we started at 11.30 this morning, but my confidence has drained away over the past few hours. On my own amendment, the Government, in their concern to protect partners, are not just putting an extra burden on local authorities but giving them a difficult, perhaps impossible, task. That, however, is just one of a whole range of matters. It was suggested earlier that there might be some analogy with musicals—picking a pocket or two. I have been wondering if we are somewhere over the rainbow; we may certainly be on a yellow brick road. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 200 [Liability]:
[Amendment No. 436BB not moved.]
436BC: Clause 200, page 123, line 32, at beginning insert “Except as provided in section (Charities relief),”
The noble Lord said: There are three amendments in this group, in my name and others, that provide a comprehensive exemption in the Bill for registered charities. I speak on behalf of the Charity Tax Group, the Churches’ Legislation Advisory Service and the Charities’ Property Association, of the latter of which I am currently chairman. I also speak in response to numerous letters that I have received from concerned individuals.
As I explained at Second Reading, the effect on charities of the proposed CIL is potentially very serious. Charities do not benefit financially when granted planning permission to develop land or property for their charitable purposes. Unlike a commercial developer, charities developing their own property for their own purposes will have no end-point sale from which to pay the tax. If no concession is made and charities are obliged to pay CIL, they will have either to pay for it with their existing funds or to try to raise more money—which, in the future economic climate that we are assured is recessionary, will be quite difficult.
At present in this country and in virtually every other country in Europe, charities do not pay tax. In the UK they are entirely exempt from income tax, corporation tax, capital gains tax, and receive compulsory relief of 80 per cent from council tax, with the other 20 per cent being given voluntarily by almost all local authorities. Charities also have more recently received a total exemption from stamp duty land tax. This general exemption from taxes rests on the fact that charities are voluntary bodies, living primarily off voluntary donations which, by law, must be used exclusively for the public benefit. One quid pro quo for these exemptions is that they are very strictly regulated by the Charity Commission, with their contribution to public benefit continually under review.
There is a general recognition that charities get or give more value for money than anyone else, including government, because they are so close to their beneficiaries and attract a massive number of volunteers—over half the adult population of the country, in fact. They are unique engines of social cohesion and add huge benefit to our community infrastructure. Of course, the Government recognise this and are currently engaged in a programme of encouraging and making better use of this so-called third sector.
Meanwhile, CIL could be particularly damaging to charities. For instance, the liability of charitable housing associations and social housing would be huge, and to what end? There is trouble enough funding social housing. In this context, I refer to the amendment of my noble friend Lord Best, which I strongly support. Anything which gets in the way of the provision of affordable housing should be resisted at all costs, especially, in my view, rural affordable housing. There is still a great lack of clarity regarding the relationship between CIL and the Section 106 agreements, which is yet to be ironed out. However, I will let my noble friend speak to his amendment, saying only that I support it.
On the general exemption for registered charities, schools and colleges need to develop their facilities for the furtherance of their charitable purposes, and the same goes for churches and village halls. A recent survey of village halls in Devon alone shows that over the next three years, £23 million will be spent on extensions, improvements and new build to village halls in that county. As for housing associations, what on earth would be the point of them paying CIL when they should probably be recipients of the funds? It is like a money merry-go-round.
On a larger scale, the Wellcome Trust is hoping to embark on a joint medical research facility at King’s Cross with Cancer Research UK, MRC and UCL. This project will cost something in the region of £500 million and CIL, if charged, could effectively kill it.
These examples will be replicated up and down the country. As certain as night follows day, if charities have to pay CIL, they will have to cut back on their activities—activities which are recognised by all to be the best value for money that society can have. There can be no possible point in charging them this levy. Without a full exemption from CIL, it is certain that many new charity-led community and redevelopment projects will not proceed or will be restricted.
To give credit where it is very much due, the noble Baroness and her department have recognised the importance of everything I have said and of exempting charities from CIL. I thank the noble Baroness very much for her kind personal attention to this matter and for the time that she and her department have spent trying to resolve it. But unfortunately, government Amendment No. 437C does not meet the needs of the charity sector. First, it does not state unequivocally on the face of the Bill that charities should be exempt from CIL. It leaves too much to secondary legislation and subsequent regulations which, I believe is very dangerous, as do most people. It also leaves too much discretion to individual local councils. Charities will not have the resources or expertise to argue for specific relief with each relevant charging authority unless the principle of the relief is enshrined in legislation. In our view, discretionary relief is not sufficient.
Without going into too much detail here, references to exemptions “in specified circumstances”—whatever that means—do not sound very convincing. In addition, too much discretion is given to the charging authorities. As I say, charities might find themselves having to negotiate individual projects with individual councils. Will they find themselves being forced to go where they can get the best deal on CIL, which may not be ideal for their purposes? You have to bear in mind that some charities cannot pick and choose so easily; for example, there are limits to where a new lifeboat station can go.
Then there is a reference in the government amendment to a charity,
“of a description specified by the regulations”.
That is very dangerous. Under English and Scots law, charities operate by definition for the public benefit. We would not want to see charitable purposes cherry-picked by either central or local government. If a body is regarded as charitable by the Charity Commission or the Office of the Scottish Charity Regulator, that should be a sufficient test. We are looking for a definitive exemption in the Bill, as in our amendments.
The Government have indicated that seemingly the only reason why they cannot agree to our amendment is that they are concerned that any concession might breach the EU rules on state aid. We entirely understand that the Government are under an obligation to observe EU law, but the group of charities supporting my amendment have consulted a specialist in European business law, Professor Martijn van Empel, who teaches both at the international university in Rome and the University of Essex, and who concluded that an exemption for charities would not affect trade between member states and would not therefore run counter to the ban on state aid as provided by article 87 of the EC treaty.
I realise that lawyers disagree—that is how they make their money—and that in this case government lawyers are not so certain, but it seems strange that in virtually every other country in the EU apart from Sweden charities can be exempt from tax, including CIL equivalents in some member states, and exempt without challenge. It is also strange that charities in this country can be exempt from every other tax—which, considering the sums involved, would seem far more serious breaches of the rules than an exemption from CIL—without also provoking a challenge. Even if one assumes that no challenge has come because the exemptions from income tax and capital gains tax have been in place too long to be challengeable, why is it that the Government only relatively recently applied the exemption in full for the stamp duty land tax? Our amendment is based on the exemption clauses referring to stamp duty land tax, on the basis that if these clauses were acceptable to the Government, then what is good for the goose must be good for the gander.
I get the feeling that this is a very good example of UK gold-plating to EU legislation, which is a defect to our system that I have come across in many other fields in the past. I regret to say, therefore, that in spite of the Government’s worries about state aid, we would still insist on a mandatory exemption for charities in the Bill. I beg to move.
My name is attached to this amendment and to subsequent amendments. I apologise to the Committee for not having taken part in proceedings before, and not having taken part in Second Reading on 15 July. I was abroad at the time, but when I read Hansard and saw that there were 37 speakers and that the debate finished at half past midnight, I suspected that another speaker would not have been particularly welcome at that time.
I have a particular interest in the charitable and voluntary sector and therefore in the implications of CIL for the sector. I declare an interest, which is in the register, as president of the National Council for Voluntary Organisations.
Like the noble Lord, Lord Cameron, I have noted and read carefully the amendment tabled by the Government in the name of the noble Baroness, Amendment No. 437C. While I accept that it goes a little way towards meeting the concerns of the sector, in essence I find it dangerously imprecise and extraordinarily permissive. The detail of the wording says that the regulations must,
“provide that an exemption or reduction”,
may be allowed. A reduction could be something or nothing; it could be 1 per cent. Therefore, that might provide a useful means to charity but it might also be a means to charge charities at effectively the full rateof CIL.
The second paragraph of the new subsection proposed by the Minister’s amendment states that the regulations will permit charging authorities to make arrangements to reduce. Permission is all very well, but which charging authority faced with a golden goose will step aside?
Like the noble Lord, Lord Cameron, I argue that the Government should recognise the special position of charities, which, as he said, are exempt from tax apart from VAT. This is not a party political matter; it is a situation which has persisted for many years and which the Government should now take on board.
As the police would say, I have form on this matter, because I had the pleasure of taking the Charities Bill through your Lordships' House from the Front Bench. I have put my name to amendments in this group because I have three major areas of concern about what the Government are doing. First, the Government’s proposal is quite at odds with their stated policy objectives as regards the voluntary sector. Secondly, unless a full exemption is given, the practical implications for charities are potentially very serious. Thirdly, the Government fail to recognise the particular role and duties imposed by law on charities and their trustees.
I shall deal briefly with those concerns in order. The first is on the Government’s policy towards charities. At Second Reading of the Charities Bill on 20 January 2005, the Minister’s colleague, the noble and learned Baroness, Lady Scotland of Asthal, said:
“The Government's three aims for the Bill are: first, to provide a legal and regulatory environment that will enable all charities, however they work, to realise their potential as a force for good in society; secondly, to encourage a vibrant and diverse sector independent of government; and thirdly, to sustain high levels of public confidence in charities through effective regulation”.—[Official Report, 20/1/05; col. 883.]
I call that a ringing endorsement of a charity and voluntary sector. I shall not bore the Chamber by quoting more extensively from the noble and learned Baroness’s speech, nor from the Minister who did most of the detailed work during the passage of the Bill, the Captain of the Gentleman-at-Arms, the noble Lord, Lord Bassam of Brighton. In the light of what the noble and learned Baroness, Lady Scotland, said, government Amendment No. 437C is an apology for an amendment, with many weasel words and carefully phrased let-out clauses. If the Government really believe that the voluntary and charity sector is important, as they said it was, they should allow a full exemption now.
Secondly, I turn to the practical implications, some of which were dealt with by the noble Lord, Lord Cameron. In essence, many charities are fixed-asset rich and liquid-asset poor; that is, their assets are tied up in a building—it may be a school or housing. They have relatively little cash apart from working capital. Indeed, we want them to have relatively little cash because we do not want them to be sitting on piles of money, but to use their resources for the society in which they operate.
From time to time, they will need to upgrade their assets. They might wish to put a language laboratory into a school or upgrade sheltered housing with ramps, new alarm systems or some new provision of health and safety. To do this, they will probably have to sell part of their assets—it may be a bit of their land—and they may wish to maximise their return by doing so with planning permission. If CIL is to be imposed on them, either they will have, as the noble Lord said, to raise money to pay the tax—it is not attractive to go rattling the bucket and saying, “Will you give me some money to pay some tax to the Government?”; I am not sure that the Government would wish to be portrayed in that light either—or they will have to skimp on the project, or they will have to sell at a lower price to reflect the impact of CIL.
What about gifts that are not directly linked to the charity? An example might be a well run charitable school in London, meeting all the targets and doing a really good job in its community. It has many supporters, one of whom has, let us say, a weekend cottage in Norfolk with a garden of two acres. He decides because he has supported the charity for many years to leave the cottage and its grounds to the charity in his will. When he dies, the charity will be faced with three options. The first is to sell as is. Secondly, it might be advised that it is in a village where the infrastructure plan suggests that development could take place and that if it applied for planning permission for four houses in the garden, it could then sell at a better price. Thirdly, it will have just to pass it on without getting the full benefit of the enhancement in value. In each case the funds will have to be—not may be—deployed for the educational charity back in London which received the gift. I say to my noble friend Lord Dixon-Smith that I am not sure that his Amendments Nos. 438A and 438B cover charities receiving gifts that are not linked to the original site. Therefore, if CIL is proceeded with, people may be deterred from giving because why give money if the Government are going to garner part of the gain in the form of tax, or the charity has to sell without maximising the full potential return.
Finally, I tackle the special role and position of charities. The 1601 Act presumed charitable purposes for three activities—the relief of poverty, the advancement of religion and the advancement of education. The Government’s 2006 Bill removed that presumption. No longer could you presume that you were charitable because you carried out one of those functions. Now you have to be within one of the 12 purposes laid out in that Act. So every charity has to go through two threshold tests. First, are they charitable? Do they fit into one of those categories? Secondly, and most importantly, do they provide a public benefit? The Charity Commission now has increased powers to ensure that those two tests are being met. So a charity must always deploy its funds in pursuance of its charitable objects, and these must have a benefit for the public. If it fails to do so, its trustees—and, indeed, it—are liable under the law. Therefore, the idea that somehow huge windfalls for private companies or individuals involved with charities might take place if CIL is not imposed is fanciful. If the Government really want to do what they say they wish to do—to enable charities to realise their full potential as a force for good in society—then they will not seek to impose CIL on the sector. I understand, although I am no expert in these matters, that there are in any case the backstop powers in the Town and Country Planning Act to deal with extreme cases.
I have not seen the noble Baroness’s speaking notes but I can probably guess what they are going to say. First, there will be honeyed words about how important the charitable sector is, how the Government believe they are doing a wonderful job, the many things that the Government have done to encourage the charitable sector, and how indeed they have produced a whole Charities Act to show that they mean that the charity sector is very important to them. So we will have, I am sure, a deluge of honey.
After the deluge of honey we will then have a further enticement about regulations. We had the demolition of the regulation argument from the noble Lord, Lord Goodhart, in the Second Reading debate. Indeed, the words of the Minister’s colleague, John Healey, in the Committee stage in the House of Commons caused one to have further doubts about what might lie down the road because, as people have pointed out in several debates earlier today, we do not know what the regulations are going to be. The second thing to be said about regulations, of course, is that when we get them they are unamendable, so we are stuck with what we get at that particular time.
As the noble Lord is representing the NCVO, which is a hugely reputable national organisation, I presume that he has already been involved in discussions at some length with us about these regulations and will continue to want to have those discussions with us as we work through the very complex difficulties that this poses and the need not to create unintended consequences in legislation.
I am grateful to the noble Baroness. I am sorry if she is taking my remarks amiss. Of course I am well aware that discussions have been going on, but the Bill is now passing through the House, and if we do not make these changes now we will be left only with statutory instruments to deal with. We are not yet clear how the charitable sector is going to be dealt with. Indeed, as I pointed out, the Government’s amendment has several lacunae in it.
The noble Baroness and I have debated many times in the past and her responses have always been very sympathetic. I suspect that she feels that she is put in a very unenviable position in trying to force the CIL on to the charitable sector. I suspect that the hidden hand—the elephant in the corner of the room—is the Treasury with its persistence and everlasting concern about tax leakage. I hope that she will understand that there is very strong feeling about this in the charitable and voluntary sector. The amendment has support from all corners of the Committee. I hope therefore that she will be able to commit the Government later today to bringing back a full exemption by means of amendment on Report—no ifs, no buts and no maybes.
I find myself in a similar position to that of the noble Lord, Lord Hodgson, in that I was unable to be present at the Second Reading debate, and have been unable to take part in the Bill so far. However, I have listened a lot today and am attracted to the Bill in many respects, but dearie me, we seem to be dealing with the convoluted infrastructure levy. I am trustee of several charities. I am unconvinced that any of them is likely to be involved in what may happen, but they are listed in the register of interests. Perhaps the Historic Chapels Trust and Pennine Heritage are two, as they own buildings.
“Charity” is a precious word; it is a good word and held in high esteem. It is certainly not mentioned in the same breath as tax in the Bill. It might be mentioned in the same breath as “tax rebate” or “tax payment”, but not tax. I have been looking. Is this a tax or is it a specific sharing of a necessary cost? The introduction to the executive summary, which I just happened to pick up from the Printed Paper Office, says:
“The proceeds of the levy will be spent on local and sub-regional infrastructure to support the development of the area”.
Those seem to be the same sorts of things that income tax, capital gains tax and corporation tax are spent on.
I have been wondering how real this will be. What do charities do? How could it come to pass that this gets serious? I say to myself that a charity will not build a supermarket. What are they going to do? I look no further than where I live, in Calderdale, where our present mayor’s mayoral appeal is for a children’s hospice. That was also the mayoral appeal last year for the adjacent authority of Kirklees. Those promoting the hospice believe it right to have this place built to cover children of both geographical areas. I wonder whether somebody else could do it; perhaps some public sector body could build something of that nature. However, it is being done by a charity. I wonder whether those involved in endeavouring to raise that money will at some point ask whether there is more to raise because of a levy to pay.
They might then be told that, because of highway problems, more money must be raised. They would be rattling the tin or running bring-and-buy sales, or whatever, to pay for highway improvements that it is suggested their project makes necessary. Yet everybody knows that those highway improvements are needed anyway, and it is an excuse.
I mention the hospice being built for two local authority areas because they have chosen a site not in Calderdale, but in Kirklees. If we look carefully at the clause, however, we find that, under the Bill, and even under the Minister’s amendment, there can be different policies in each local authority area. These people have the site but, in future circumstances, would they have to have been scratting about to see what sort of levy proposals there are in this or that authority, to determine where to put this much needed service? So we want none of that, looking at the whole business of charity, its precious nature and people endeavouring to do good in this way.
The government amendment adds yet more doubt. The whole provision introduces doubt. Clause 198 states that the Secretary of State may introduce CIL. An amendment that was agreed states that a charging authority may introduce CIL. Therefore, the Secretary of State and a charging authority may introduce it. Further, government Amendment No. 437C states that,
“regulations must either … provide”,
exemptions or reductions for charitable purposes or “permit” them. That introduces further doubt. We want to get rid of doubt. I hope that, at least as regards the charitable sector, there can be certainty in the legislation. However, if the government amendment were accepted, there would be more doubt.
Clearly, much work has been done on this matter and people have expressed their concerns about it. However, much more could be done, and I encourage the Minister to make certain that it is.
I declare the interests that are recorded in the House of Lords Register of Interests. I give tempered support to the noble Lord, Lord Cameron of Dillington. I echo what he said about our gratitude to the noble Baroness for her tireless, accommodating manner and that of her officials in trying to work through tricky, sensitive issues. I am sure that the Government do not wish to impose additional burdens on charities, especially at a time in our nation’s and world’s history when there are likely to be increased demands placed on their services. Therefore, I am grateful for the concessions in government Amendment No. 437C.
I do not want to duplicate what has been said, but rather to underline it and give it a little added emphasis. What still worries us is not the Government’s intention but its possible execution, particularly given the fact that the wording of Amendment No. 437C is largely permissive. We are worried about the power to specify a description of a charity in the regulations, which might mean that some charities will qualify for an exemption while others will not. That would be invidious for the charitable sector. Equally, permitting,
“charging authorities to make arrangements for exemptions”
rather than requiring them to do so opens up the possibility of some charging authorities being generous to charities while others might make no concession at all. Again, that would be very invidious. I believe that point was made earlier by the noble Lord, Lord Dixon-Smith.
We certainly do not want a situation in which individual charities have to negotiate with individual charging authorities. There is also the danger that adjacent charging authorities might adopt different policies or exemptions or reductions. Charities might vote with their feet and decide not to develop the areas they were going to because of a bad deal on CIL, yet those might be precisely the areas that the voluntary sector ought to develop for the good of the community.
It ought to be remembered that many charitable developments constitute infrastructure. The most obvious example that comes to mind is that of voluntary aided schools. Indeed, earlier the Minister referred to schools as part of the infrastructure. Communities need decent schools if they are to function properly, and it makes no sense to operate a planning system in a way that discourages new school building and school refurbishment. To cut to the quick, we hope very much that the Government intend that charities should be given a general exemption, but we would prefer to see that in the Bill.
I have two amendments in this group, Amendments Nos. 437AA and 444A, which were most helpfully prepared by the National Housing Federation, Shelter and the Chartered Institute of Housing. Both these amendments concern the relationship between CIL and affordable, so-called social, housing. It would be a disastrous unintended consequence of the provisions for CIL if this levy led to a sharp reduction in the number of homes built for those unable to buy or rent on the open market.
We are now discussing the levy against a backdrop of very little new house-building of any kind. Ambitious targets for affordable housing now look painfully vulnerable. The Government have set their target as 70,000 extra affordable homes annually and, if CIL was levied at the kind of level that we think it might be, say, £20,000 per home, CIL would require payment of something like £1.4 billion per annum from the affordable housing sector. At a time when numbers of repossessions are rising, and waiting lists for housing association and council homes are growing rapidly, surely CIL must help, not hinder, the flow of more affordable housing.
Housing associations struggle to make the sums add up and the books balance at present. Adding extra expense is bound to push many projects over the line of viability and affordability. Perhaps the Government will be willing to reimburse any extra cost attributable to producing a housing development to which CIL is added. Unless the Government are prepared to increase the scale of funding overall for social housing, higher grants per home would simply mean fewer homes from the total available. Can it be argued that the imposition of CIL will not lead to a much higher cost of production for each home, because planning conditions already require payments for comparable purposes which, in the future, will simply be absorbed in the CIL?
The hope must be that CIL will raise more for infrastructure and related costs than do the current arrangements. Some of the extra will come from the levy being charged on commercial developments and on smaller scale developments that currently escape planning, but the housing associations would still be affected by CIL being imposed on some of the smaller developments that they currently pay nothing on, because they are below the level at which obligations kick in. Indeed, on their larger developments, it seems certain that schemes will have to pay a major contribution towards increasing the resources available overall towards infrastructure costs.
I hugely welcome the idea of exemptions from CIL for charities and for developments for charitable purposes. I look forward to hearing more about those plans from the Minister. There may be improvements to the Minister’s proposals, as my colleagues are suggesting today, but it is clear that once again the noble Baroness is prepared to bring forward amendments to the Committee that will greatly improve the legislation that we are scrutinising.
Nevertheless, even if those exemptions prove to cover charitable activities adequately, they may not reach much of the affordable social housing created by the housing associations, the local authority arm’s-length management organisations—ALMOs—and the new local housing companies envisaged in the Housing and Regeneration Act. Many housing associations are charities, from the older trusts such as Peabody and Joseph Rowntree, to the newer organisations of the 1960s, such as the Notting Hill Housing Trust, and the one in which I declare an interest as its chair, the Hanover Housing Association. In order to obtain funding from the GLC in the 1970s, when I was secretary to the London Housing Association’s council, it was necessary for a housing association to be registered as a charity, to provide greater reassurance to the GLC as supplier of funds. That rule did not apply in other parts of the UK. Many of the housing associations, for example, most of the bigger ones in the north of England, have never been charitable bodies, even though they are non-profit social enterprises.
Could the work of all these organisations be regarded as—I quote the amendment tabled by the noble Baroness, Lady Andrews—“development for charitable purposes”? Will this be the basis of the description to be specified by regulations? Is it the Government's intention that all affordable housing will be exempt from CIL? As these are murky waters surrounded by uncertainty, my Amendment No. 437AA seeks to put that exemption beyond doubt by ensuring that CIL is not levied on any development of social housing, as clearly defined by Section 68 of the Housing and Regeneration Act 2008. My amendment is clearer and more straightforward than the new charity exemption clause.
My second amendment, Amendment No. 444A, comes at the problem from a different angle. Nowadays, as your Lordships will know, affordable housing is often secured through the planning system. In order to obtain planning consent for what is hoped to be profitable housing for sale, housebuilders and developers are required through a Section 106 agreement to produce a percentage of the homes as affordable social housing. This arrangement counts for some three-quarters of all new affordable housing. Usually, these homes are sold immediately, at a pre-agreed price, to a housing association which will own and manage those homes. To pay the developer’s price, the housing association may need to draw down some social housing grant from the Housing Corporation or, in future, from the Homes and Communities Agency. The developer must also contribute towards the cost at the very least by forgoing some of the profit that it could have made if the homes had been sold on the open market, rather than as affordable housing.
Negotiations on just how much affordable housing can be extracted from a development are often tortuous. The local authority will usually have set a target—say, 35 per cent of all new homes, or 50 per cent in some high-demand areas. Site-by-site reductions will be subject of negotiation. A brownfield site with heavy remediation costs may be unable to absorb the same level of affordable housing as is feasible for a straightforward greenfield site. The local authorities need to have considerable sophistication when dealing with the negotiations. Housing associations are sometimes innocent bystanders when these arguments are raging between councils and housebuilders. Sometimes associations are responsible for the whole development, including sales and affordable housing, and they are the ones who negotiate directly. I have been in this position at the Joseph Rowntree Housing Trust, and I know how delicately the balancing act must be handled between the viability of the whole project and the percentage of social housing that can be including within the scheme.
Amendment No. 444A seeks to ensure that those negotiations are not thrown out of kilter by the arrival of CIL. If the levy increases the cost of the scheme and reduces its profitability for a developer, or its viability for a housing association, it is very likely that affordable housing will take the first hit. My amendment avoids this hazard by ensuring that CIL is not the first call upon the developer’s resources, but affordable housing is. CIL might, therefore, have to take the strain, but not the quantum of affordable housing, if there is not enough in the kitty for both.
I hope that the Minister will once again help us to improve the Bill and protect the affordable homes that will be desperately needed in years to come.
I shall speak to Amendment No. 438 in my name and that of the noble Lord, Lord Bradshaw, who has apologised for not being here. I am afraid that the amendment adds to the list of pleas for exemption from CIL—in my case, the railways.
Some people might think that Network Rail is a charity; it is, in fact, a not-for-profit distribution company—in the private sector, according to the Treasury, although most of its money comes from government in one shape or form. I tabled the amendment before I read my noble friend’s Amendment No. 437A, and it rather looks as if developments of railway infrastructure will be exempt. I would be grateful if my noble friend confirmed that.
However, that leaves stations. They are part of a regulated railway. Network Rail calculates that if it has to pay CIL on station developments, it will cost about £250 million a year. It may have to pay CIL, but it may be that the train operators, which have been given franchises by the Government, will have to pay Network Rail. One is likely to have a virtual circle of train operators bidding for franchises, not knowing how much CIL they will have to pay if they wish to propose upgrades to stations. There will be added risk and uncertainty. I suspect that it will end up with stations not being developed. What normally happens with many station developments is that local authorities contribute to them. We see that in many places around the country. We will go from a situation in which local authorities are contributing to rebuilding station buildings, better platforms or better car parks, to one in which they will tax Network Rail so that it will pay. One does not need a PhD to understand that the consequence will be that station developments will not happen. I hope that the Minister can give me some assurance on this because it is a classic case of the law of unintended consequences.
I have one other question, which follows from Amendment No. 444A, tabled by the noble Lord, Lord Best. Can the Minister explain when, under Clause 208, Section 106 agreements apply and when CIL applies? The circumstances look vague. Is it possible for local authorities to apply both at the same time?
I would like to associate the Liberal Democrats with much of the debate on this group, particularly the representations that have been made about charities and social housing. My noble friend Lord Shutt of Greetland threatened to make a guest appearance in this debate, and I do not think he disappointed us when he followed the noble Lord, Lord Hodgson of Astley Abbotts.
I shall make a few comments about local sporting facilities and sports clubs. I refer to government Amendment No. 437C. It has been suggested that it does not meet the Bill in a number of ways. It refers to charities, but not to community amateur sports clubs, which are not necessarily charities but perform a similar function. In various Acts, they are set alongside charities as benefiting from, for example, gift aid on donations and often relief from non-domestic rates. If the Government are pursuing this amendment in its present form, will the Minister have a look at whether community amateur sports clubs can be added to it? Local sporting facilities are a vital part of community facilities. I do not have to go into detail about their benefit to local communities, not least to those who take part in the sporting events. They benefit health, welfare and so on. It would be unfortunate if they were caught by the community infrastructure levy in the way that charities may not be—I use the word “may”.
There is also a general concern about the effect of the changes on the very real benefits which local sporting facilities and many other local community facilities get, at the moment, from planning obligations through Section 106 agreements. The noble Lord, Lord Berkeley, has raised the relationship between the two. It is estimated by Sport England that, in 2006-07, sport benefited to the tune of £21.3 million from planning gain. Clearly, there is a potential in the new system for bodies, which at the moment are benefiting from money from planning permissions, having to pay over money in future. Where is the balance likely to lie? Those real concerns exist not just in local sporting facilities, but also in a number of different sectors. It needs bottoming.
On a more general point, the more I listened to the debate on CIL this morning and this afternoon, the more I came to the view that it may well be a piece of legislation which we spend a great deal of time worrying about, and which is never brought into effect. The more one looks into it, the more one sees the unintended consequences and complexities. In the end, people will say that it is not the answer and we will have to go back and think again.
The noble Lord, Lord Berkeley, asked about the regulations provided for in government Amendment No. 437A, where it says:
“works, or changes in use, of a specified kind not to be treated as development”.
I have received a representation from the United Kingdom Business Council for Sustainable Energy—a very worthy body—which cuts right across the normal divisions between business and the environmentalists. It represents both and seeks to find as much common ground as possible. It is saying that the inclusion of energy infrastructure projects would be perverse in that CIL is intended to provide funds for infrastructure. The short answer is that CIL is there for things like roads, hospitals and schools, whereas the kind of infrastructure we have been discussing in the earlier part of this Bill is very different. The industry has always been happy to work with local authorities on Section 106 agreements, such as the benefit to society from the introduction of what the noble Lord, Lord Cameron of Dillington, at an earlier sitting of this Committee, referred to as unfriendly neighbour projects, or words to that effect.
In terms of a local community, a major energy installation could well be regarded as a bad neighbour project. At the same time, we all agree that that is essential; it is what the first part of this Bill is all about and it is a matter of how one reconciles local communities to that. The answer is that you can provide them with a variety of advantages and benefits which are specifically related to the building and use of a project, and which can therefore be seen by the developer as part of his good community relations. The question that has been put to me is whether CIL will come on top of that. How will CIL be worked for those very large structures that we talked about earlier in the Bill? More specifically, are these the kind of works which the Government are minded not to treat as development, as regards the regulations referred to in Amendment No. 437A? There is a lot of uncertainty here. The noble Lord, Lord Berkeley, referred to railways and gave a very good example of his Felixstowe railway that required £100 million to be spent on a line from Leeds. There is a variety of projects. If we could have an answer to that when the noble Baroness winds up, I should be extremely grateful.
We are at the core of the problems that CIL throws up. We will have to finish with absolute clarity about this difficulty in the Bill; at the moment, we do not have it.
First, I shall deal with my amendments in the group. Amendment No. 437 is simple. It would ensure that any development not requiring planning permission will not pay CIL. I am moderately happy that the noble Baroness has that situation well and truly covered. I am very grateful to her for that because, as the Bill was drafted, that was not clear.
My other amendment, which I freely admit, as my noble friend Lord Hodgson of Astley Abbotts, said, is not “legally satisfactory”, was tabled deliberately to ensure that we covered absolutely the subject of this debate, which is about charities and charitable works—which, in my view, must have clear exemption expressed in the Bill. The other half of the amendment picks up the point made by the noble Lord, Lord Berkeley, but in a much wider context. It states that the provision of infrastructure should not be eligible to pay CIL. It seems to be the ultimate churning of money to take money from people to provide infrastructure but make the people who provide infrastructure also pay that charge. That is illogical in the extreme.
That applies just as much to road improvements, electricity transmission—power stations have been raised by my noble friend Lord Jenkin—and all the other infrastructure that we require in a modern society. The only effect of adding CIL to those developments will be to increase the charges that the developers have to make for that infrastructure—so far, we use roads without charge, but it will come back in the form of increased excise duty on fuel, or something like that. Putting the charge on electricity generation or transmission will increase the cost to the customer. There is no escaping that. As I said earlier, my view is that the whole scheme will ultimately have an inflationary effect and increase charges generally across the board—not exactly something that I look forward to.
I shall not try to repeat the arguments that everyone made on the question of charity. The case was admirably and clearly set out by the noble Lord, Lord Cameron of Dillington, and finished by the no