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Planning Bill

Volume 705: debated on Wednesday 12 November 2008

Further consideration of amendments on Report resumed on Clause 199.

131: Clause 199, leave out Clause 199

The noble Baroness said: My Lords, in moving this amendment and speaking to the other amendments in this group, I should make it clear that these Benches are not opposed to the community infrastructure levy. It is more a case of: “What do we want? CIL. When do we want it? Not until we are completely satisfied that it will work”. That is perhaps not the greatest of catchphrases, but it is a serious point. I congratulate the Minister on her persistence and my noble friend Lord Goodhart and the rest of the Delegated Powers Committee. The Minister has done a sterling job, and has achieved a sterling outcome in—we have used various anatomical phrases—putting more flesh on the skeleton. It is certainly less emaciated. However, the fact that there were so many amendments at the previous stage and there are so many at this stage, and the amendments are not straight forward, proves my point.

The Minister kindly arranged for me to meet officials so that they could explain the error of my ways in opposing the inclusion of this part in the Bill. I thank her and I thank them for their time. They confirmed that, as the document that the Government published in August stated, it is expected that the regulations will come into force not before spring 2009. Given how much store the Government rightly set by consultation, even if the regulations were ready now for consultation, it would be pushing it to have them in force next spring. I know that the Government have been working with stakeholders. I inquired whether it was intended that CIL would be piloted or trialled. I gather that is not the case, but that there will be so-called early adopters. I do not know whether early adoption is likely to relate to where the local authority is with its local development framework and local development documents, but how that part of the process will work and whether it will work exercises us as much as any other.

The charging schedule will go through the examination process. Who will participate? That was an issue for me as long ago as the mid-1980s when I was chairing a local planning committee and we were going through our local plan. The people who participated were the large landowners. My note reads “Thames Water”. That is to remind me that in my borough it owned a lot of land and had a major interest in taking part in the process. The large supermarket chains always keep a weather eye for opportunities. Will developers who have not yet put sites together, for whom a development may hardly be a twinkle in the eye in the local process, take part? That is unlikely. Perhaps consultants will, hoping then to pick up some fees from those for whom they may keep a watching brief across the country or to whom they may be able to sell the benefit of their services. I worry whether the examination process will be the effective and inclusive process that I know that the Government want it to be.

How long will the process take? I attribute the next piece of analysis to my noble friend Lord Greaves, who has obviously been detained over supper. As he says, the council does research, understands government guidance, holds informal consultations with appropriate developers, regional officers, and so on, prepares reports, revises them and finally gets draft proposals before the council in, say, six months. Council approval of draft consultation takes one month. Publication and the period for consultation take two months. Work on consideration of representation, informal discussions with objectors, and so on, further discussions within the authority, and preparation for revised proposals take four months. Informal discussion with the regional office takes two months. Sometimes, of course, there is a holiday period somewhere in that and further delays such as staff sicknesses and resignations; the regional office personnel may change; informal guidance may change, and all the rest of it. So add on a couple of months for all that.

Then the revised proposal is prepared and put through the council system, which takes a month. Then there is a further period for legal objections, which may take six weeks. Then we get to the examination by the inspector. That takes—what?—six months or so. I have not checked my noble friend’s arithmetic, but I think that he is right in saying that it is about 18 months minimum and probably more than two years. Revisions could be done faster, perhaps within a year.

Another anxiety is whether local authorities will be able to cope. We all know—we have discussed this many times—that there is a shortage of planners and of skills in the financing arrangements that CIL will require. It is not so easy to find people to undertake that sort of work within the public sector. I believe that the Government will allow prudential borrowing for local authorities to resource themselves. Of course, borrowing is not grant, it will have to be paid for. The people will have to be found; where will they be? If they are anywhere, they will be in consultancies.

A further area of concern is the boundary between Section 106 and, in the case of highways, Section 278, and CIL. I am told that 50 to 60 authorities, with the benefit of Section 106, are using a tariff scheme. All my instincts say: stick with that and build on it until the detail of CIL is absolutely pinned down and we can be confident in it. That is not least because, outside the big conurbations, it must be likely that local authorities will set the level at nil. Of course, it is their right to do so. The August document states that stakeholders have expressed concern that CIL could affect the level of developer contributions through planning obligations if it is not set at a sensible level—a sensible level may be nil. Paragraph 5.23 of the document states:

“The Government would be interested to receive evidence which shows that CIL and planning obligations will interact in this way”.

At this point, saying that they would like to receive evidence increases my belief that we are not yet ready for the provision. Paragraph 5.24 states:

“The Government have put in place safeguards which aim to ensure that the introduction of CIL will not result in a reduction in the overall level of contributions secured for affordable housing”,

but it does not follow that that will work.

The answer on the nil level is, in one sense, that that is a matter for them, but there is more to it. If the local authority sets a nil charge or a very low charge, or takes a long time to set the charge, how will that affect central Government’s investment decisions? We know that CIL will by no means cover all infrastructure. Will investment be skewed by the attitude that the Government have to how individual local authorities are co-operating? With the best will in the world, people, by definition, are human. It is unlikely that the Government's decisions will be unaffected by that.

I understand that the Government anticipate zoning within local authority areas. Outside a big conurbation, I find it difficult to understand how that could operate. The charge will be set at X in that part of a district and at Y in this part of the district. I do not know how realistic that is, but I know very different attitudes will be taken in different parts of a district. A development that a local community might want could well be affected by that and driven away.

There will be indexation if the development is not commenced immediately or, to put it more precisely, if the levy does not become payable quickly. Again, I do not know whether in the real world developers will attempt to revisit the matter if there is a delay in commencing work. In London, there is the unfinished business of the mayor and the boroughs. Earlier today, the Minister said that the boroughs would collect—that does not surprise me particularly; they may have more mechanisms—but that the Government are still looking at this and discussing it.

When I mentioned the matter to my noble friend Lady Maddock, who, with me and other noble Lords, lived through the introduction of home information packs, she said what a sorry example they were of the Government introducing primary legislation but still working on developing the project. I cannot remember who it was, but someone on the government side recently told me that CIL should not push at the boundaries of viability. Too right!

I end by reiterating that we on these Benches would like an effective arrangement to be in place to assist the achievement of infrastructure. We seriously do not believe that the Government have got there yet, so it is not appropriate to go ahead with the legislation at this stage. Given the way in which these things come out, my amendments are shown as a whole string of amendments to take out all the separate clauses, but the first two are the most important.

This is not a frivolous amendment, and again I should say that I appreciate how much work has gone into presenting us with something much fuller. However, the sheer effort that has had to go into getting us to this stage makes me feel that my argument is the right one. I beg to move.

My Lords, I have a great deal of sympathy with what the noble Baroness has had to say in support of this group of rejecting amendments. I call them that because they would reject the community infrastructure levy. I may say, just to encourage her, that I am less optimistic about the introduction of CIL than she is, because, if I understand matters correctly, it is supposed to become part of normal planning documentation.

Most of the authorities of which I am aware are working on a local development plan that is already a planning document. Therefore, CIL must be part of a new local planning document if it is to be introduced. If it is, these documents are reviewed more or less quinquennially, so we are looking at CIL being introduced in the next quinquennial document. We are therefore some years down the road before CIL can be introduced as a matter of practice. If the Minister tells us that this is merely an add-on to the existing system, we are dealing with something rather different. This is a very real problem.

There is yet another problem. Under our existing practices in this House, about which I have no complaint, we must consider these amendments before we can consider how CIL might and should properly work. The Government have tabled a whole lot of amendments that might well be helpful and may even improve on what is on the Marshalled List. However, we do not really know whether we want to reject what is before us, because we do not know what is before us, because technically speaking we have not dealt with it yet. There is a real difficulty here, so I have the greatest sympathy for the noble Baroness. This indicates the difficulty of the way in which the Government have chosen to introduce these proposals. My own feeling is that, for anyone to get a viable CIL proposal working in much less than five years—the noble Lord, Lord Greaves, mentioned two years, or whatever it was—would be remarkable.

A related problem is that no one has worked out what the relationship is to be between CIL and the planning obligations under Section 106 of the Town and Country Planning Act. It is very difficult. Perhaps it would be easier if the Government would accept that CIL would be applicable where Section 106 would not be applicable. Everyone would then know where they stand. Historically, Section 106 is applied to large planning applications which particularly involve—the noble Lord, Lord Best, will have an interest, although not a financial one—social housing. You can have large sections of social housing in large planning developments, but not in small ones.

The noble Baroness may reply by saying that Section 106 will be applied to applications where it is appropriate, but where Section 106 is inappropriate CIL will be applied. That might be a solution to this dilemma, but we do not have that or any suggestion that that might be a possibility. We have heard that planning obligations will still apply, that it is still expected that social housing will be largely funded by Section 106 agreements and that CIL will be over and above this obligation. CIL, because it has to be part of the planning documentation system, will take real time to introduce. For a start, all local planning authorities will have to think much more clearly, and in much greater detail than they have previously been accustomed to doing, about what the possible local infrastructure obligations might be as a result of the development for which their local development plan provides.

This has to be a total approach—about that there is no question. I see that the Minister is nodding in agreement. That is why the system will be very complicated. If there is any suggestion that there should be haste or pressure on local planning authorities and local authorities to introduce this in anything other than a wholly considered and thoroughly developed way, I would be bound to say that such pressure would be completely disgraceful. It cannot be done like that.

I have no responsibility for introducing these proposals, but the Government have. It is an obligation for the Minister to explain exactly how she sees these proposals being developed. It would be nothing short of disgraceful if there should be the slightest hint that, because a local authority has not considered the matter thoroughly, there might be pressure on other aspects of its revenue as a consequence. I do not believe for a minute that that is what the Government intend, but we do not know and that is part of the difficulty.

We have very real problems. I would prefer, if it were technically possible, to settle the details of how the CIL might work. Although the Government have moved a long way on many of the aspects of which we have been critical, we still have not arrived at a conclusion. We still have the fundamental difficulty that the easy answer—perhaps I may put it this way in support of the noble Baroness—is that it might be wiser to reject the whole idea rather than to try to settle the details first so that we know how it might work and then consider whether one could accept or reject it.

I am sorry, but this is an instance where parliamentary procedures are not helping us to move forward. They are complicating our lives. I have made that point because I have a lot of sympathy with the noble Baroness’s proposal in the present circumstances.

My Lords, I resist this amendment and, in so doing, apologise to the noble Baroness, Lady Hamwee, for missing the first minute or so of her speech. I was scurrying up from the Barry Room with two very distinguished visitors from the Canadian and Australian housing systems, who are listening to the debate in your Lordships' House. They are very interested in the concept of the community infrastructure levy.

I hope I can assuage some of the concerns that have been articulated. In so doing I would like to draw on experience that certainly convinces me that the idea that local authorities have been doing nothing over the past year, waiting for Parliament to pass this legislation before they begin the process of preparing for the community infrastructure levy, is a bit wide of the mark.

I point to my experience with local authorities in Hampshire, Surrey, Sussex and other parts of England where, in anticipation first of the planning-gain supplement and then of the community infrastructure levy, many local authorities have begun their plans and been working quite hard to think through those projects which would benefit from the community infrastructure levy and how they might go about preparing to first strike the levy and then apply it. I have no doubt that in certain circumstances local authorities will choose not to charge a community infrastructure levy. In Committee it was widely accepted after an intervention by the noble Earl, Lord Caithness, that for brownfield sites it would be quite inappropriate to charge a community infrastructure levy because it would render those developments unviable. That, if nothing else, speaks to the question the noble Baroness, Lady Hamwee, raised about viability and zoning. It is right for zoning to protect those areas which would not be viable if a CIL were charged, while in other areas a CIL is absolutely necessary to pre-invest in necessary infrastructure. Lots of local authorities are busily working up their proposals and plans for the community infrastructure levy in anticipation of this legislation.

In response to the suggestion that we should call a halt to this and think again, I think we do a disservice to colleagues in local government. I hesitate to say this because I know that many noble Lords have had a distinguished career in local government and could claim to be much more expert in the workings of English local government than me, but I believe that across the country lots of councils not only are anticipating this but have donkey’s years of experience in procuring infrastructure. The big counties in England are very finessed and sophisticated in terms of procuring infrastructure. Although the community infrastructure levy suggests a different methodology, we have lots of expert, experienced people who know how to do this and who will adapt those skills to the new regime.

Noble Lords are aware of my interests in the register. I work with lots of local authorities that are interested in investing in infrastructure. Most people expect that this legislation is coming and welcome it. Lots of projects are simply stuck at the moment for want of that final gap that would make projects viable and maintain the momentum. For those reasons I hope noble Lords resist the amendment—

My Lords, I hear the noble Baroness and I am quite prepared to accept that a lot of local authorities will have given a great deal of thought to this. I also agree—particularly at county level; at district level I do not have the same experience—that they are very good at infrastructure provision in all its forms, including what I would determine to be the relevant aspect of this and what I would call social infrastructure.

The difficulty which the noble Baroness has not answered is how you incorporate this into planning documentation. Everybody is working on approved planning documentation. As I understand the process—and maybe I am incorrect—you cannot just add something to an approved planning document. It has to go through the total process. It is extremely difficult because you have one approved plan and the planning documentation is reviewed on a quinquennial basis. I do not see how this system can be incorporated into the existing one without questioning the validity of the current planning documentation—the Minister may be able to answer the point in her response—which means that the process inevitably must take time. I see no escape from that.

My Lords, no doubt my noble friend will correct me if I am wrong, but my understanding is that this could be done through some form of supplementary planning guidance; a number of other things are dealt with that way. However, I leave it to the Minister to confirm whether I am correct in that.

My final point in response to the noble Lord, Lord Dixon-Smith, is that a good feature of Section 106 and the community infrastructure levy is that again it is absolutely within the expertise of local authorities to understand how to distinguish when Section 106 should be applied and when a community infrastructure levy should be applied. Certainly in the examples I have looked at, it is anticipated that the levy will be used for what I would regard as economic development, employment and infrastructure purposes rather than for social housing. I have faith that local authority colleagues will be able to distinguish between these two things and manage them through the process. I hope that this is of assistance.

My Lords, I want briefly to support and supplement the comments of my noble friend Lady Hamwee in moving the amendment. She rightly laid emphasis on the complexity of the system in terms of London and the metropolitan cities, but I want to consider rural areas. Specifically I refer to those shire counties going through a considerable change as they move over to unitary authority status. As the Minister knows, a number are experiencing considerable change after a long period as two-tier administrations. Frankly, although I understand well the views expressed by the noble Baroness, Lady Ford, who says that we should trust the competence of local authorities—I agree that they are quite competent to deal with changes of this sort—those counties changing over to unitary status have had no time to concentrate on the changes. They have been entirely obsessed with the changes in how they will run local services—rightly so; I make no complaint about that. We should make no criticism because these are difficult and complicated changes.

In Part 11 we will be throwing at these authorities a very complex set of new requirements to implement over what I presume is to be a relatively short timescale. I hear what the noble Lord, Lord Dixon-Smith, says about the quinquennial review process, but I do not think that that is what the Government have in mind. I suspect that they are thinking of something a great deal speedier than that. At the very least, I hope that in her response the Minister will give us very clear guidance on expectations in terms of timescale on the implementation of Part 11. Without that, all planning authorities and charging authorities are going to feel that they are being led up the garden path in terms of how this can be introduced. The Government’s assurances of comparative simplicity will be shown to be entirely false.

My Lords, I am against CIL. I said so at Second Reading and I remain so despite a meeting with officials where I came to understand it a little better. However, I could not understand the levy fully because it has not yet been fully thought out. The officials were obviously not able to tell me. It is clear that what has happened in Committee and on Report has helped the department to focus on what CIL really means. But how can we possibly consider something like this when we cannot even see the regulations? We were promised nearly a year ago that the regulations would be ready by this autumn. Of course they have not appeared yet, and they are not going to appear for some time. That is another broken promise from another place.

I have great sympathy with the noble Baroness, Lady Hamwee. There will be horrendous difficulties in implementing this. It is of real concern to me because, when I listen to the Minister’s defence of Amendment No. 153A, it is clear that the Government—or, perhaps, the Treasury, or both—do not think CIL is going to work. The Minister’s defence of not getting rid of PGS was that we need to assess how CIL will work. Why? Because it will not work very well, and central government will say that they have the paving Act for PGS. That is what they will then force on the local authorities, because they have not done their job properly. That is a real concern.

The Minister and the noble Baroness, Lady Ford, said that there is a lot of support for CIL out there. Of course there is. If the gun of PGS is held to someone’s head—if they are told that it, another form of development land tax, will be introduced—or perhaps they will only be wounded with CIL instead, which will they choose? They will prefer CIL. It is very simple and very human. Of course they will tell the Government to rush in CIL, for goodness’ sake, rather than PGS, because they do not want PGS. They do not really want CIL either. It is going to be very difficult.

What happened on Amendment No. 130 is another sign of the real sadness about CIL because this House has quite deliberately been cut out of consultation on the regulations. That is very bad for Parliament and this House. I hope the Minister will confirm clearly that this will not be a precedent for future legislation. I can see this being used by Governments time and again. I remember when I stood in the Minister’s place and some wonderful precedents emerged from the 1950s and the 1960s which I was happy to trot out because they helped my cause. In 10 years’ time I can see all of us being here and the next Minister saying, “Do you remember in 2008 that the House voted and agreed that only the House of Commons should deal with this?”. This is a bad day for Parliament and this House.

The noble Baroness, Lady Ford, was in favour of zoning, as I am. I am sure she will agree that it is just another factor that will distort the planning process. It is quite obvious that developers will look at those areas that can help them a bit more. In the past, if you wished to put up a building, enterprise zones would have helped you. Now, within a local authority there will be zones and you can say that you will not build in one village because you will have to pay CIL. You will build in another village, which will really upset everything because it has no railway station and the post office has just been closed. It does not matter; you will not pay CIL and it will be a more profitable development. Of course that will happen. CIL will bring its problems.

Having said all that, I have regularly been in the Minister’s position, with the House against what I have been trying to introduce. We are trying to improve this. It is the Government’s right to introduce their legislation; it is our job to try to make it work. It is not our job to defeat the principle. Therefore, I will not be able to support the noble Baroness, Lady Hamwee, but I am very sad about CIL. It has not been thought out and we have not given it the consideration it needs to justify to ourselves that this House has done a good job, and justify to the rest of the country that this is a good piece of legislation.

My Lords, I shall intervene briefly, if I may. There was a point early on—after Second Reading, and in the light of the strictures that the Delegated Powers and Regulatory Reform Committee had aimed at what it described as a purely skeleton Bill—when I felt that there really was a case for persuading the Government to drop this part of the Bill altogether and reintroduce it as separate legislation after they had had a great deal more time to work out the details. Since then, the Government have tabled a large raft of amendments. As I said in Committee, I thought that perhaps in the circumstances it would not be right to try to defeat the whole of Part 11, and I withdrew the amendments that I had tabled to delete a large number of the clauses.

However, my noble friend Lord Caithness has said many of the things that I have been increasingly feeling about the Bill as it has emerged. What I find particularly worrying is this creation of a system where developers will be allowed to play one authority off against another because there will be different rates of CIL, different kinds of exemptions and different treatment regarding CIL and Section 106 agreements. There is no doubt that this is going to be a field day for the lawyers. Should we be creating something that leaves so much uncertainty?

After these debates I end up a great deal more worried about this part of the Bill than when I started. At the same time I agree with my noble friend Lord Caithness that our job is to persuade the Government of how to make it work better. I am deeply disappointed that this House will have no role in any of the regulations. Due to the way the system works, as we do not have an amendment to that effect the other place cannot do anything about it. If we had passed the amendment—the noble Lord, Lord Goodhart, made this point—we would have been able to do that, but we lost it by six votes.

I am deeply disturbed by all this but, like my noble friend, I do not think I can support the noble Baroness, Lady Hamwee, in seeking to abolish the whole part; we have gone too far for that. That is the position I will take on this, but I do so with a very heavy heart. I am not a betting man, but I am prepared to bet that within two years we shall have another substantial Bill to try to correct what will be, by then, the apparent deep flaws in this legislation because it has not been properly thought through before it has been introduced. That will probably fall to the next Government. I hope I shall then be sitting behind my noble friends on the Front Bench. The last thing I shall want to say to them is, “I told you so”, but I will say so to the people who will then be sitting on the opposition Front Bench, along with, “Look what a mess you’ve left us”. That is what I feel is going to happen, and I find it a deeply depressing situation. However, I fear I shall not support the noble Baroness’s amendment.

My Lords, when the noble Baroness, Lady Hamwee, began her speech she said that it was not a frivolous amendment. I accept that. I have listened closely, as I always do, to the tone as well as to the content of what noble Lords have said about the difficulties that they feel the inevitable absence of detail at different stages of our discussion has caused. This House is always concerned about workability, and rightly so. We are in the business of improving legislation and I am grateful to all noble Lords who, at each stage, have taken this part of the Bill in all seriousness and attempted to improve it. We have seen a number of improvements and a lot more detail.

The problem with where we are, in relation both to CIL and to the way we are discussing the Bill, is that this occurs at a difficult and rather curious stage of the debate. I take the point that the noble Baroness made earlier, but these amendments strike at the heart of the viability of CIL. I know that, across the House, nobody is in any doubt that we need additional funding for infrastructure because we need additional houses. We need additional homes for millions of people in this country. This Bill will make a significant difference to that. While I listen and take the criticisms in good part, I do have to ask noble Lords opposite what their alternative solution would be. We never said this would be easy but we do say it is necessary. We think it is fair and we know it is an improvement on what has gone before.

I was grateful as always for the contribution from my noble friend Lady Ford who addressed many of the issues which I want to address briefly now. She pointed out that there is a legacy of work already in place and that local authorities are knowledgeable and many of them are leading some of this work rather than trailing behind it. The noble Baroness has been concerned about process and it is worth putting on the record some of that process so that I can address some of the criticisms from other parts of the House.

The record shows and chapter 1 of our August document describes in detail how the CIL proposals were generated by careful analysis and diagnosis over several years. There was extremely wide discussion with stakeholders and public consultation on the best way to fund the infrastructure. We published six consultation documents to explore different proposals and in August we put out our more detailed analytical document. We have had numerous briefing events, conferences, seminars and web chats. I will not read the list I have here as it would take too long. There is widespread agreement and support for both the need for CIL and the broad approach we have taken to implementing it.

The noble Baroness said in the previous debate that she agrees that this is looking less emaciated because we have been able to meet the majority of the major concerns of the DPRRC with the right level of delegation and the committee itself says the Bill is no longer skeleton.

I would like to address the two particular points raised by the noble Lords, Lord Dixon-Smith and Lord Tyler. I say to the noble Lord, Lord Tyler, that regarding the timetable and capacity, CIL is a voluntary charge. No local authority will be required or forced to do this. There is no timetable. We fully respect the changes that are going on, especially in the unitary communities. With regard to the local development plan, CIL will be driven by the vision the local authority has for its community. That vision is set out in its local development framework. CIL is a brand new document. It will accompany—it does not have to be incorporated. These concerns about timetables and capacities, therefore, can be tempered a little by that reality.

Many noble Lords believe that, as the detail of how CIL will be delivered is sufficiently complex, regulations will be appropriate and sensible. We have to continue the serious discussions we began a long time ago with the many stakeholders in this field. It is not only our view; it was certainly the view of the British Property Federation and the Home Builders Federation, to name but two.

The noble Baroness raised serious issues about timing and capacity and I hope she will be comforted by what I am about to say. It is a good opportunity to turn to the matter of timing. We announced that CIL regulations would not be in place before the spring of 2009. These are challenging economic times but, as we begin to see a return to growth, as we surely will, it will be important for communities to have the right tools to hand to provide the infrastructure that their plans have identified as necessary to guide development. CIL will have an important part to play at that time and authorities that choose to use it will want to prepare their charging schedules so that developers can plan ahead with CIL in mind.

I am persuaded, however, that we do need to allow time for confidence to return before this work by local authorities can properly begin and be taken forward to best effect. With that in mind, I can now say that the Government will not seek to make the regulations to implement CIL before October 2009, although we may prepare earlier regulations to facilitate preparatory work by local authorities as we are allowed by Amendment No. 136C, which my noble friend Lord Patel has already explained. We will use the time productively, to allow us extra space to work with stakeholders to develop the regulations, ensuring that we have the best, most substantial and most thoughtful possible basis to enable local authorities to implement CIL. The draft implementing regulations will be prepared for public consultation in the spring. I shall be happy to place copies in the Library for noble Lords to see.

I take issue with some of the things that have been said. It is not right to say that these clauses are undercooked or that the policy is not thought through. The noble Baroness was gracious enough to pay tribute to the hard work that has been done over the summer, not least by many officials in partnership with the DPRRC. We have tried hard to work as comprehensively as possible so that this House can at least be secure about the basic architecture of how things will work. I understand why the noble Lord, Lord Jenkin, spoke as he did.

I was grateful to the noble Baroness for saying that she was not against CIL in principle, and I understand why she has raised the issues as she has. However, if she divides the House, she must also think about her colleague in the other place, Mr Dan Rogerson, who said that the Liberal Democrats support anything that hands more powers to the local community, enabling their local authorities to achieve their vision for their areas. This gives local authorities greater power and scope, and I do not know how she would square her decision with the fact that Liberal Democrat councils, and all other councils that are desperate to build more housing, would look to CIL to raise essential additional funding for the schools, hospitals, roads and power stations that the communities want.

The party of the noble Lord, Lord Dixon-Smith, recognises that. Jacqui Lait, the Member for Beckenham in the other place, said that it was prepared to see this levy introduced, and I have listened to what noble Lords on those Benches have said. I therefore hope that, even if the noble Lord is remotely tempted by the siren on the Liberal Democrat Benches, he will not walk away from that commitment.

I say to the noble Baroness, who I consider a friend, to think seriously about the prospect of putting in peril the hard work that has been done. That would ignore real national and local need. The noble Lord, Lord Jenkin, said that we have come too far, but we have come too far in the right direction. There have been many failed attempts to raise funding for infrastructure. We have got further, because this is a sounder, fairer and more efficient proposition. I really hope that noble Lords can be persuaded of that this evening.

My Lords, I cannot possibly speak for the attitude of future Governments on what is right and wrong. I simply cannot answer that question.

My Lords, I am grateful to noble Lords for their contributions. On all sides, this has been a very thoughtful debate. I know that all noble Lords from different perspectives take the issues very seriously. I do not believe that our approach would put in peril the hard work that has been done. Our intention is not to dispose of it, but to give the opportunity to build on it. I have no problem in squaring this with my honourable friend Dan Rogerson, the Member for North Cornwall. I discussed it with him and he is quite right about enabling local communities to achieve what they want, but unless the mechanisms work, that ambition will not be fulfilled through this route, so we are entirely at one.

As for not introducing the regulations before October 2009, this rather proves my point, or goes towards proving it. That point is not about seeking further primary legislation, but about the workability of what will both underpin and follow the primary legislation.

The noble Baroness, Lady Ford, described these amendments as being “to halt and think again”. They are not: they are “to pause and think more”. That is an important distinction. I accept what she says about how keen many local authorities are to achieve infrastructure through this route. However, what is most important is to get it right, even if that is achieved at the price of, in the scheme of things, a relatively short delay.

The noble Baroness had no need to apologise for missing the start of what I said: neither she nor her distinguished visitors missed anything technical. The question was, “What do we want? CIL. When do we want it? When we are completely satisfied that it will work”.

I wish to test the opinion of the House.

Clause 200 [The charge]:

[Amendment No. 132 not moved.]

132A: After Clause 200, 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 application of CIL.”

The noble Lord said: My Lords, regarding Amendments Nos. 132A, 141A and 142A and 142BA, I declare my interest as president of the London Government Association, which has helped with these amendments. The LGA is troubled, as it often is, to ensure that local authorities are not given new tasks without the tools to do them or that they suffer from unnecessary constraints and bureaucracy imposed upon them, which diminish their autonomy and fail to shift power from central to local government—something we agree we should be aiming towards. These two amendments relate to the local authority’s role first in raising the community infrastructure levy and, secondly, in spending the community infrastructure levy funds.

Amendment No. 132A would impose a duty to co-operate with the charging authority upon the partner authorities with which local authorities work. This is about requiring those partner authorities to be helpful to the local authorities, in their role as charging CIL to others.

The local authority needs to work out what infrastructure will be needed, calculate what it will cost and then determine the levels of community infrastructure levy that it must charge. In doing that, it needs to know about all the development that is going on, not just that in the public domain. For example, it needs to know from health trusts what plans they have to produce new medical facilities. If a new medical facility of any sort is built, there are issues around roads and transport, not just moving the patients or service users, but the staff as well. Therefore, Amendment No. 132A puts a duty upon the partner authorities to co-operate—that is already defined in the Local Government and Public Involvement in Health Act 2007—with local authorities and help them in their task of calculating and levying CIL.

The latter two amendments relate to the local authority’s role in spending CIL funds. This is about the definition of infrastructure on which CIL funds can be spent. It is a plea for more flexibility and less central government rigidity in how CIL funds should be spent. Ministers have already said that the list of items for which CIL could be used is illustrative only. However, this list can be changed only by regulations in Parliament. That sounds like a slow and cumbersome process. It might well mean that some piece of infrastructure was delayed, awaiting those regulations in Parliament.

The list in the Bill is relatively comprehensive, covering transport, flood defences, education, medical, sporting and recreational facilities and affordable housing. However, it cannot be completely comprehensive because each local authority has its own issues and local circumstances differ from place to place. The LGA has identified another list of items on which it might be entirely sensible to spend community infrastructure levy funds. For example, if you build a lot of houses, sooner or later you may need crematoria and burial grounds. Cultural and religious facilities are excluded from the list we are discussing, as are the provision of, and connections to, utilities and telecommunications. The emergency services, which are the subject of a separate amendment in the name of the noble Lord, Lord Harris of Haringey, are excluded. Those could include coastguards in relevant areas, although I do not think that the noble Lord thought of including that. The list in the Bill can never cover all eventualities. Therefore, the two amendments I am discussing seek to loosen up the process. My Amendment No. 141A seeks to insert in the Bill the phrase,

“but is not restricted to”,

after the word “includes” in regard to the items included in the list. I beg to move.

My Lords, I tabled similar amendments at the previous stage. I support the amendments in this group in the name of the noble Lord, Lord Best. Indeed, my name is added to them.

In Committee, we discussed the duties of partners. The noble Baroness, Lady Andrews, said:

“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”.—[Official Report, 23/10/08; col. 1290.]

I am not sure to what extent that sentence stands up to analysis because the point of the information amendment is to assist local authorities, which will have a greater burden if they are not able easily to get information. In any event, I do not think that, in the balance of things, putting an obligation on partner authorities comprises such a burden as was suggested.

We know that the Government think that lists should be resisted. In Committee, the noble Lord, Lord Patel, said:

“Removing the list risks a narrow interpretation, so limiting the choice of infrastructure that local authorities may use CIL to fund”.—[Official Report, 23/10/08; col. 1330.]

I suggest that the opposite is the case. As the noble Lord, Lord Best, said, it is important to get this matter right and for it to be as wide as possible.

My Lords, Amendment No. 142, which stands in my name and that of the noble Lord, Lord Bradshaw, seeks to insert “railways” after “roads” in Clause 208(2)(a), so that it would read,

“roads, railways and other transport facilities”.

It will come as no great surprise to noble Lords that we should table such an amendment. We could go on debating for a very long time what should be in a list, and we have done so on many occasions. However, it seems to me that if roads are included, railways should also be included. If the list does not include roads or railways, it could refer simply to transport facilities, which would be just as good. I am not sure why the Government think it is worth specifically including roads but not railways, especially as they clearly have a policy of encouraging rail traffic and constraining road traffic. It seems rather an odd omission and I shall be pleased to hear what my noble friend has to say about that.

My Lords, I will first consider Amendment No. 142, in the name of my noble friend Lord Berkeley. While we fully recognise the role of new rail infrastructure in supporting development and agree that CIL should support railways where required, we do not think that the amendment is necessary because Clause 208(2) already provides coverage for rail infrastructure.

Railways are already covered at two levels in Clause 208. First, railways are, on any ordinary view, infrastructure and, secondly, they are transport facilities, which subsection (2)(a) explicitly covers. I hope that that explanation addresses the issue sufficiently.

My Lords, my noble friend has not explained why he has roads in there as a specific type. I would accept this if just transport facilities were involved, but why are roads specified and railways not specified?

My Lords, it is covered by all forms of infrastructure. Roads covers a whole gamut of transport. If we specifically started specifying railways people would ask about waterways and other infrastructure.

My Lords, on that basis would he accept an amendment at Third Reading that removed “roads” and read “transport infrastructure”?

My Lords, in a few seconds’ time I will have my briefing notes to challenge that point, so I am buying a bit of time.

My Lords, while the Minister is seeking help from the 5th Cavalry on railways, could he obtain help from the 5th Cavalry on airfields as well?

My Lords, I am hoping that the noble Earl’s comment about airfields was not serious. I will write to my noble friend about his point in detail.

My Lords, will the Minister copy that letter to me? I am serious about airfields, because it is transport infrastructure.

My Lords, we shall cover airfields as well in that response.

Amendment No. 141A, tabled by the noble Lord, Lord Best, and the noble Baroness, Lady Hamwee, seeks to insert words into Clause 208(2) to ensure that the list of items of infrastructure is not exhaustive. I assure the noble Lord that that is already the case. Subsection (2) already states, “infrastructure includes”, so his amendment is unnecessary since the effect he seeks to achieve is already provided for. I would ask him therefore to withdraw the amendment.

Amendment No. 142BA seeks to delete Clause 208(3). That would prevent us from putting in practice our stated policy, which the noble Lord, Lord Best, supports, of ensuring that affordable housing remains supported by developer contributions through the current system of planning obligations, rather than CIL. If Clause 208(3) is deleted, the CIL regulations would have to provide that CIL can be applied to affordable housing in the first instance. I do not believe that the noble Lord wants that. Subsection (3) is not just about excluding affordable housing; it is also about providing clarity. We can add items of infrastructure into regulations to provide certainty to local authorities. Many of the items listed by the noble Lord, Lord Best, would already be within the meaning of Clause 202(2). I hope that that answers the question. I urge him to withdraw his amendment.

I turn to Amendment No. 132A. It is very similar to an amendment tabled by the Baroness, Lady Hamwee, in Committee, but rather than focus on the preparation of the levy, this focuses on the application of the levy. However, my concerns remain the same. It would not be right to place a wide-ranging obligation on partner authorities to co-operate with charging authorities. A duty to co-operate might be unclear in that specific context. For example, the duty here goes further than the duty imposed on partner authorities in relation to local government targets under Section 108 of the Local Government and Public Involvement in Health Act 2007. Where these are incorporated into local area agreements, the duty is simply to have regard to them in the exercise of their functions. The duty relates only to a partner authority where the target relates to its functions. The amendment would make it a positive duty that would be imposed on every partner authority to co-operate irrespective of what functions they have.

Amendment No. 142A tabled by the noble Lord, Lord Harris, was not spoken to, so I will not address it.

My Lords, Amendment No. 132A may not be perfect but the items listed in Clause 202 presumably are not exhaustive. Can the Government give local authorities assurances that their spirit will be in the Government’s mind in framing regulations and that they can extend to partner authorities? That is in a more constructive mode than my previous group of amendments in trying to get the measure to work.

My Lords, without that assurance, I shall study the Minister’s response with some care. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 201 [Joint committees]:

[Amendment No. 133 not moved.]

Clause 202 [Liability]:

134: Clause 202, page 115, line 31, at end insert—

“( ) The regulations must ensure that CIL is not payable in respect of land which the owner or developer is using for the purposes of providing social housing as defined by section 68 of the Housing and Regeneration Act 2008 (c. 17) (basic principle).”

The noble Lord said: My Lords, Amendment No. 134 is grouped with Amendment No. 151, both of which address affordable housing. Their purpose is to ensure that there is not an unintended consequence of reducing the amount of affordable, or social housing as now defined by the Housing and Regeneration Act 2008, as a result of the introduction of CIL. I am grateful to the National Housing Federation, Shelter and the Chartered Institute of Housing for working on these amendments, and I declare my interest as chair of the Hanover Housing Association.

The housing associations are currently struggling to produce any affordable housing. The house-building industry is in dire straits, so fewer affordable homes are emerging from housing associations obtaining a percentage of the homes under Section 106 agreements. Where housing associations are going it alone, they are having big problems in getting the mortgages they need in the current financial banking crisis. When they do get mortgages, interest rates are much higher and they are trying to produce more family homes instead of the many one and two-bedroom flats. They are trying to achieve new environmentally sustainable standards. All those things add to costs, and the very last thing they need is a new community infrastructure levy that will impose additional costs on them.

In the Milton Keynes pilot, the levy was £18,000 for each house. Even if the average in other places was lower—say £10,000 a house—it is a considerable burden for the social housing providers to take on at a time when they are struggling to produce any affordable housing at all. I know that the Government agree with the sentiment behind the amendment and they have already said that the aim is to ensure that there is no reduction in the output of affordable housing. We are as one in our hopes that CIL will not lead to any reduction in the amount of affordable housing.

My proposal for ensuring that that happens comes in these two parts. Amendment No. 134 simply exempts all social housing from CIL. It uses the definition of social housing in the Housing and Regeneration Act 2008. That is nice and clear and clean. The more social housing in a development—25 per cent, 35 per cent or 50 per cent—the more exempt properties as far as CIL goes, and therefore the lower the amount of CIL. In effect, it would be on a sliding scale depending on how much social housing there is in the development, so there would be no encouragement for any house builder not to proceed with a scheme on the grounds that because of CIL it cannot afford to produce as much social housing and affordable housing as it could before. It removes that excuse and allows schemes to proceed. All schemes would be covered; small ones as well as larger ones covered by partnerships under Section 106 which deals with housebuilders. They would all be covered and no CIL would be payable on social housing if Amendment No. 134 is accepted.

Amendment No. 151 comes at this from a slightly different angle. It looks at schemes where there is a deal with a developer, a Section 106 agreement. Some 74 per cent of all social housing last year was secured through this technique of piggybacking on the work done by housebuilders, although since housebuilders are now doing so much less, that figure is in decline. This amendment ensures that the percentage—the quota—of social housing in Section 106 agreement deals will not be reduced because CIL is being charged on the developer. It gives priority to the social housing element. If that means that the scheme does not stack up with the addition of the payment of CIL at £10,000, or whatever it is, per home, the social housing does not take the hit. A reduction in CIL has to bear the consequences of that extra charge. CIL would have to be reduced, but the percentage of affordable housing would not be reduced.

However, each site is different. The circumstances of each piece of land mean that a negotiation would be necessary to see whether CIL has tipped the scheme over the line of viability. I have dealt with sites where we have discovered methane gas, which required all kinds of extra work later on, and where we have had basements that we did not know were there, which added extra cost. I have had to deal with the great crested newt single-handedly in armed combat. There are archaeological finds all around York that hold schemes up interminably. In all those cases, the fee would go up. We can no longer afford either to produce more affordable housing or to pay CIL on top of the other costs that we face.

If my amendment is accepted, CIL would always take the strain, but it would require negotiations in each case. It is a messy arrangement. Of course, local authorities might decide, particularly in the present financial climate, not to risk losing social housing and affordable housing and not to levy CIL at all. That might be an option for them, but that could be throwing the baby out with the bathwater since CIL is there to raise money for infrastructure, and we may well need that funding. I think, but I am not sure, that local authorities could charge differential rates according to how much social housing and affordable housing is delivered—so less CIL if a developer produces 50 per cent affordable housing and more CIL if it produces only 25 per cent. Again, that does not have the advantages of a clean, clear exemption, so I prefer my first amendment which, in effect, treats all social housing as defined by Section 68 of the Housing and Regeneration Act as if it were a charitable endeavour, which it clearly is. It legally is for some, but not for all, housing associations.

That brings me to a critical issue and a critical question about the relationship between social housing, which is what my amendments are about, and developments by charities for charitable purposes, which the Minister has tabled an amendment to cover and which is of much interest to many other Members of your Lordships' House. Will all the provision of social housing by housing associations that are legally charities be exempt in any case, so that Amendment No. 134 is not necessary for charitable housing associations?

About 70 per cent of all housing associations are charities, although probably only 50 per cent of the output comes from those housing associations. Are we safe in relying on the charitable exemption for at least half of the housing, or are we safe for the whole lot? Will all the provision of social housing by housing associations, by those that are charitable and by those that are not registered as charities, but which are producing identical homes for exactly the same people with the same needs as charitable housing associations—activity which is, by definition, being used for a charitable purpose, as it is being done in the same way by charities elsewhere—be covered by the exemption for charitable purposes?

If we have to draw a distinction between housing associations that are charities and those that are not, we get into extremely murky territory. Will housebuilders have to choose to work only with the charitable housing associations to keep CIL down? Will local authorities trying to raise reasonable sums of CIL have to work only with the non-charitable housing associations, which will have to pay CIL? Will the Government have to pay extra social housing grant to the non-charitable housing associations so that there is a level playing field between organisations doing identical things but with different constitutions? Your Lordships would not be able to distinguish between housing associations that are charities and those that are not, because it is often for purely historic reasons that they have chosen in their constitution whether to be a charity. Drawing those lines will create all kinds of difficulties.

Will all social housing be deemed to be outside CIL, if and when the Minister’s amendments on charities and charitable purposes are carried? I can think of no greater charitable purpose than housing the homeless. I very much hope that all social housing will be covered by the amendments that follow and that my amendments will be deemed redundant. Nevertheless, until I am assured that that is the case, I beg to move.

My Lords, for my security, I remind the House of interests that I have previously declared in this field. I preface my remarks by assuring the noble Lord, Lord Best, that I support his plea for social housing to be exempt from CIL.

We need to remind ourselves that Section 106—which, if you listened to the noble Lord, Lord Best, you might think was devoted to social housing—is in fact devoted to a much broader spectrum of infrastructure. I will list merely some of it: off-site road improvements, which may be some way away but can be of significant benefit to the community; off-site major extensions to sewage works; off-site recreational facilities in the form of playing fields; and many other things of that ilk. A Section 106 negotiation with the local authority depends very much on the balance of those facilities and how much the local authority thinks that it can, so to speak, screw out of the developer in total.

There is an individual negotiation on every development. The local authority usually finishes up well satisfied, and the original landowner or developer usually finishes up reasonably satisfied. The balance may depend on all sorts of things. It depends on the priorities of the area at the time. Not least of the complications—this is one of the great difficulties that we face—is trying to assess the impact of CIL on those negotiations, which is why earlier, slightly tongue in cheek, I suggested that where Section 106 applies, perhaps CIL should not apply. If CIL is an additional factor in the negotiation—we will know what the CIL factor is—it will certainly absorb the proportion of benefit that is negotiable for the local community because it will be a fixed sum in the first instance. It will be there, and it will be absolute. The CIL negotiations will start after that. CIL will not be additional to the sum that can be raised; it will be a part of the sum that can be raised. We must recognise that, with CIL in place, the negotiation on Section 106 arrangements will be proportionately diminished. That may conceivably have an effect on the totality of the provision of social housing, although it is impossible to say for sure. That is the brutal reality with which we have to deal.

This is where we get into a different sort of negotiation over the meaning of infrastructure and so on. I absolutely support in simple form the principle that the noble Lord, Lord Best, is applying. I entirely agree with his amendment in so far as it states that social housing should not be eligible to be charged for CIL. That is an absolutely correct principle, but when one gets into the wider fields of what he was saying, and starts to deal with Section 106, I am afraid that the negotiation will be quite harsh.

The noble Lord is absolutely right to mention the enormous change in the atmosphere since the Government prepared the Bill. In that brief period, we have seen the virtual collapse of the housing industry. My understanding, as I said at an earlier stage of the Bill, is that applications for housing development have virtually disappeared from planning committee agendas, because no one knows where anything is going or indeed what the value of the assets about which they are talking might be. They might still be able to calculate their construction costs with a degree of accuracy, but no one knows what the site value is and no one can really say what the underlying value of any product might be. Until those issues are clarified, this standstill will continue.

The noble Lord, Lord Best, and others were absolutely right, for a time, most authorities will not want even a hint of CIL to be floating around as an additional charge on development, because most of them will be desperate to see the construction process recommence. If there is a hint of an additional charge, it will delay that construction. It is in no one’s interests that the construction industry is at a standstill for a day longer that it has to be.

To be honest, when I look at the Bill, I feel rather as I felt when I was in Syria a little while ago—as though I am looking at historical remains that have been newly excavated and exposed, and are in perfect form to some degree, although we have been criticising it like mad. It is a little like digging out a wonderful bit of wreckage from a different era, because the change in atmosphere has been so great. So while I support the noble Lord, Lord Best, in the principle of his proposal, I do not accept the totality of his argument. We need to recognise that we are now—tragically, dare I say—in desperately different circumstances. To some degree, all our discussion on the community infrastructure levy is academic, which it will remain for some time until there is a reasonable recovery in the construction industry.

My Lords, I support the amendment proposed by my noble friend Lord Best. If you ask local government officials or councillors in my part of the world—the south-west of England—what is the biggest problem besetting their communities and that the Government have yet to deal with, the answer will resoundingly come back that it is the lack of affordable housing, either to let or to buy. When I read the Secretary of State’s Second Reading speech in the other place, indicating that the Government hope to raise £500 million per annum from CIL, my first thought was, “Crikey, where does that put affordable housing?”. It undoubtedly will be a serious problem.

I was pleased when I saw that the Government intend to keep Section 106 agreements vis-à-vis affordable housing. They have become a tried and tested method of increasing the affordable housing that is available and are now the main weapon in the armoury of local authorities. The percentage of affordable housing started very small, but now it has increased even for quite small developments, and 30 per cent is not completely unusual. But each agreement takes account of the economics of the scheme in question. They may differ from village to village or from town to town within a local planning authority.

The local authority would not want to kill off housing development per se. Although we need affordable housing, we need all sorts of housing development, because that makes the whole ladder. Affordable housing is the bottom rung, but people have to be able to move up from the bottom rung to make it available for the next generation and others coming along.

I was glad that Section 106 has become an effective tool. It would be a great shame to waste it or—this is the nub of the amendment—have it swamped by CIL to the detriment of affordable housing. I strongly support my noble friend, especially in his Amendment No. 134. I hope that Amendment No. 151 will bring forth greater clarity from the Government on the relationship between Section 106 and CIL.

My Lords, we support the noble Lord, Lord Best. Rather like the noble Lord, Lord Cameron, we support in particular Amendment No. 134.

My Lords, as always, I am grateful to the noble Lord, Lord Best, for enabling us to have this discussion on the implications for affordable housing. I much appreciate the intention of his Amendments Nos. 134 and 151 to seek to protect the provision of affordable housing secured through developer contributions.

I will not repeat what he says so much more powerfully than I can. We are facing a very difficult situation for the reasons given by the noble Lord, Lord Dixon-Smith. The noble Lord, Lord Best, pointed out how it is impacting on the ground. Certainly, the Government are extremely sensitive of the need to protect levels of affordable housing contributions. That is the substance of what I want to say and underlines everything. We have put in place extensive safeguards in the design of CIL to ensure the continued delivery of affordable housing through the use of planning obligations is embedded in the setting and operation of CIL on the ground.

These safeguards include ensuring careful consideration of local economic viability and affordable housing needs in the setting of CIL charges, as well as a prudent backstop measure to address any potential shortfall in affordable housing contributions arising from CIL if evidence shows that that is necessary. These are two extremely important safeguards.

As we set out in the CIL August policy document in paragraph 3.42, local planning authorities that choose to introduce a CIL will be obliged to set a charging schedule in such a way as to ensure it does not impede development. That exercise will be bound to take into account the costs of meeting affordable housing requirements. CIL is going to be driven by the local vision set out in the local development plan with its ambitions for housing and affordable housing. A draft charging schedule will be tested through public consultation and independent examination. This examination will test whether the levels of CIL set out in a proposed schedule would put at risk development when taken with other costs faced by developers, such as affordable housing obligations. My noble friend Lady Ford explained on the previous amendment something of the background to the way these decisions are made. The recommendations of the independent examiner would be binding on the charging authority. The independent examiner could recommend reducing the level of CIL in a draft charging schedule if, when taken with other affordable housing costs and local economic conditions, it would prevent development proceeding. If there is an unexpected reduction in the level of developer contributions for affordable housing as a result of the introduction of CIL, we can make regulations to ensure that CIL revenue could be used to top up such a shortfall.

The amendments seek to provide additional security for affordable housing. Amendment No. 151 would require that affordable housing contributions are calculated without regard to CIL liability. It is difficult to see how Section 106 negotiations between developers and authorities could ignore a clear and known cost in the development’s finances, even if it was illegal to take those costs into account. I fear that this amendment could lead to a lot of legal dispute and confusion. I also think the development industry might be extremely alarmed by this proposal because it makes no provision for CIL charges to be adjusted to take account of Section 106 contributions. That would undermine the existing checks and balances I have already set out which we have provided for in the setting of the charging schedule. So even if it were possible for CIL to be ignored for the purposes of the Section 106 discussion, there would be a real danger that total developer contributions for Section 106 and CIL could be set too high, making development unviable and resulting in no new affordable homes being provided.

Amendment No. 134 again seeks to ensure that the introduction of CIL does not adversely affect social housing development. I am sympathetic to the principle of this amendment in that it seeks to shield social housing explicitly from CIL liability. I regret, however, that the amendment as it stands does not look workable and could give rise to unintended consequences. For example, the amendment refers to a definition of social housing that was written for the Housing Act earlier this year and for entirely different purposes. I fear it could be manipulated for the avoidance of CIL payment. For example, shared ownership is included in the definition contemplated by the amendment. That could present a loophole whereby shared ownership accommodation could be exempted from CIL but quickly staircased out to full ownership and lost to the open market. I think the noble Lord recognises that problem. A developer could build shared ownership housing with the sole intention of qualifying for CIL exemption, but on completion the property could quickly convert to full private ownership. We have to ensure that there is no scope for that sort of abuse of definition. Furthermore, the amendment potentially exempts private housing on developments which are mixed and contain both social and private housing because it does not, for example, contain the words “exclusively” or “wholly”. That could lead to a serious avoidance problem.

The intention of this amendment is to protect social housing contributions through a total CIL exemption. But social housing in itself creates the need for infrastructure and services in much the same way as other housing does. It could not be otherwise. Reflecting that, there is no general exemption for affordable housing providers from the current planning obligations regime. In its present form, therefore, I do not believe that the intended outcomes of this amendment can be guaranteed, or that unintended consequences could be avoided. I therefore propose that this important issue is better served by more detailed consideration in regulations.

We have already taken powers in Clause 203(6)(f) which are necessary to make provision for how social housing developers are to be treated in a more considered way. I want to give the noble Lord and the whole House a firm commitment that we will explore with the social housing sector how a significantly reduced rate of CIL could be specified in regulations for affordable housing development. Indeed, I can tell the House that discussions have already started, focusing initially on the difficult issue of definition that I have mentioned.

My Lords, for the reasons I set out, affordable housing providers already pay something under Section 106 obligations. We do not think that a nil rate is appropriate; I am talking about a significantly reduced rate.

The noble Lord asked about RSLs which are charities and fall into the 70 per cent category. We will come to the charities amendment next, but he will appreciate the complexities of definition in the terms “charities”, “charitable purposes” and so on, and he knows that RSLs come in all shapes and sizes with all sorts of conditions attached. Some RSLs sell on their property and are involved in different sorts of relationships. While I can say that all RSLs which meet the charitable definitions in our amendment could be covered, I also want to be absolutely certain that I do not mislead the noble Lord or the House because of the complexity of these definitions and the situation of different housing associations. I therefore propose to write to the noble Lord, particularly after we have debated the charitable exemption as a whole, to ensure that we understand the position of RSLs. However, we are content that those which meet the definitions could well be covered.

My Lords, the noble Baroness said something that slightly perturbed me. I believe she said to my noble friend Lord Dixon-Smith that, “We are not convinced that a zero rate would apply”. Surely this is for the local authority, or have I got that wrong? Are the Government now going to tell local authorities what the rate should be? If a local authority wants a zero rate, surely it can have that, or are central government going to say, “No, you cannot have a zero rate”? That is rather a new aspect.

My Lords, as I understand it, local authorities can set a nil rate of return, but in terms of the principle, we will set out guidance in the regulations that will observe consistency with the way in which affordable housing developers are treated under other planning obligations. If I am incorrect about that, I shall write to the noble Earl and noble Lords.

My Lords, I am grateful for the support from all parts of the House, particularly for the amendment that simply exempts affordable housing from CIL. There was little sympathy for the other amendment, and I entirely understand why. I would not wish to press it too far myself because, as both the Minister and the noble Lord, Lord Dixon-Smith, pointed out, it adds complexity to complexity. The aim must be simply to try to exclude affordable housing.

I sympathise deeply with the Minister in trying to construct the definitions that would achieve such an exclusion sensibly. She hopes that they will be ready in time to be written into regulations. I would not have thought there was much difference between setting them out in regulations and putting them in the Bill, except for the added comfort of having them in legislation. However, I am grateful to the noble Baroness for undertaking to prepare these definitions in draft form and giving us a chance to look at them, particularly in the light of how they relate to the current obligations. An extraordinarily complicated addition to the mix is that of housing associations that are definitely charities and therefore covered by the next amendment, again adding complexity to complexity. At this point, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

135: Clause 202, page 115, line 34, at end insert “where the building does not form, or form part of, infrastructure to which CIL can be applied under section 208”

The noble Lord said: My Lords, we move from which types of organisation and project can receive CIL—which include roads, railways and maybe even third runways—to who is liable. The question of liability started with everybody being liable, including roads and railways. Then, the Government’s policy of continuous improvement turned “who is liable” in Clause 202 of the last version of the Bill to, in this section:

“‘development’” means,

the creation of a new building”—

or anything done to alter a building. In other words, I thought, from a railways point of view, that the tracks would be excluded and station buildings included. I recall arguing in Committee that, under this structure, we would move from a situation where local authorities often contribute to the cost of new or refurbished stations to one where they could charge Network Rail or the train operators for the dubious benefit of spending their money on doing up the stations, and the consequence would probably be that the stations would not get built or done up. On that basis, I tabled Amendment No. 135, seeking an exclusion from this liability for stations or buildings which do not form part of the infrastructure in which the CIL was applied. That is Amendment No. 135.

It occurred to me, on listening to the debate on the previous grouping when noble Lords talked about charities being exempted, that perhaps we should turn Network Rail into a charity. Some noble Lords might think it is a charity already. It would be a simple way of avoiding this merry-go-round of the Government paying for it, then clawing it back and going around again. I look forward to hearing what my noble friend has to say about Amendment No. 135. My worry—and this will save me getting up again, which I know is not really allowed at this stage—is about Amendment No. 135A, tabled by noble friend, and Amendment No. 136A which now replaces Clause 202. I am afraid I am extremely confused as to what kind of project is liable and what is not. Previously it was quite clear that buildings were liable, but I do not see “buildings” anywhere in these two amendments. The closest I can get to it is in lines 8 to 9 of Amendment No. 136A:

“works or changes in use of a specified kind not to be treated as development”.

I am sure my noble friend can explain to me what that means, because frankly I do not understand it. I would like to know what is and is not included in my noble friend’s two amendments. Does it include bits and pieces on the railway, such as buildings and tracks? Have the Government gone back to including tracks? The same might apply to roads, airfields or ports. I beg to move.

My Lords, I have an amendment in this group on the same subject. It is really a probing amendment to try to determine, if we can, exactly where CIL would or would not be payable. I am bound to say that I would go considerably further than the noble Lord, Lord Berkeley. He has mentioned the problem of railways, which clearly are not included, and railway stations which, under the Government’s definition of buildings, are. What about ports?

My Lords, may I intervene for a second? In the current version of the Bill they are included, but the noble Lord says that they are in the Minister’s amendment. Could he explain how?

My Lords, that is precisely the point; I do not know. That is the problem. My own amendment is directed at trying to find out what is and is not included. My own preference would be for a clear statement in the Bill that infrastructure that is quite clearly infrastructure, whether it be a building or anything else, should not pay CIL. At the moment we have the ultimate irony that a building such as a hospital reception centre, might be produced and funded entirely by CIL funds because of increased local demand as a result of population increase, but nevertheless has to pay CIL. What are we thinking about?

At the other end of the scheme, we need to remember that all this infrastructure is there to serve the community. Of course, much of it provides a service for which the community pays directly; you have only to think of power generation, but the same applies to the railway service, subsidised though it may be. In the end the customer pays, whether it be through the price of his ticket or through his taxes. To the extent that we charge CIL on any of this infrastructure, we are simply churning funds, and we should not be in the business of doing so. If we are providing infrastructure for which the customer pays, and he pays in one way or another for all of it, it should not actually be liable to pay an additional charge of this nature. That is a fairly simple statement of principle that is seriously lacking in the Bill, and which seems to be lacking in the Government’s thinking.

This is another weakness of this part of the Bill. It has not been thought through. That is the reason for my amendment: it is partly to test the limits of the Government’s thinking, if it has any limits—or indeed whether they have thought at all—but it is also to enable me to define the principle on which we ought to be working. If we do not accept that principle, we are in the business of churning the taxpayer’s funds, which means we are churning our own funds. That is not a sensible thing to do.

My Lords, I, too, have two amendments in this group. It appears that we are following the usual procedure of talking about an amendment to an amendment before that amendment has been moved or talked about. That is what we have done so far, so I suppose we will carry on.

In government Amendment No. 136A, subsections (1) and (2) repeat the provisions now in Clause 202 regarding the meaning of “development”. Subsection (1) defines the creation of a new building as development, but also includes,

“anything done to or in respect of an existing building”.

The departmental officials have insisted that by “buildings” they intend to refer to any buildings occupied by people. However, the clause does not specify that. Accordingly, clarification is required on whether the intention is to focus on buildings occupied by people or whether it is intended that buildings occupied by farm livestock, for example, or used for grain or other crop storage should also be liable for CIL; hence the reason for my Amendment No. 136AZB.

Moreover, subsection (2) allows for regulations to bring specified structures into the definition of “development”. It is not clear where that leaves land business structures such as slurry storage facilities, which many farmers will be forced to expand in coming years to comply with the nitrate vulnerable zone regulations, wind turbines, fuel stores, pipelines, flood defence works and such other forms of works. I hope the Minister will make it absolutely clear what types of buildings and structures the Government have in mind to bring within the CIL liability regime and that he will give a clear assurance that they will consult closely with the farming and land management organisations before determining precisely what rural buildings or structures would attract CIL.

I am also concerned about subsection (5) of the new clause. Under its terms, “planning permission” must be defined in CIL regulations,

“which may include planning permission within the meaning of TCPA 1990 and any other kind of permission or consent (however called, and whether general or specific)”.

If one wants a Sir Humphrey clause, there you have it. Let us produce a regulation, let us produce a definition and let us have an all-encompassing clause far bigger than the existing Town and Country Planning Act so that in due course we can protect ourselves in case we miss anything now. That is a terrible way to legislate. It is an abdication of responsibility by government to the Civil Service.

Under the General Permitted Development Order, farmers who wish to use permitted rights to erect smaller buildings up to 465 square metres without full planning permission must now consult with the local planning authority on siting and materials. This subsection would allow for such a consent regime to be brought within the CIL scope. What is the Government’s justification for casting the net so wide? The provision may suit the convenience of the designers of CIL who wish to have maximum flexibility to apply a scheme whose details they have not fully thought through and are not sure will work in practice, but it does not deliver certainty or confidence about fairness to developers large or small, urban or rural. We need a good explanation from the Minister.

My Lords, if it is convenient for the Minister, I have some comments to make about one of the government amendments. I have some questions for the Minister, for which I hope she received adequate notice, arising out of Government Amendment No. 136A, which introduces a new clause on liability and the interpretation of key terms.

In Committee on 23 October, the Minister said, at col. 1252 of Hansard, that wind-power stations would not be liable for CIL because they were not buildings.

In the latest of the Minister’s helpful series of explanatory loose sheets, however, which were sent to noble Lords, the following sentences appear on page 8:

“A new railway line connecting major cities would not be liable for CIL since the development would not comprise a building. A new power station, on the other hand, could therefore be liable because of the building containing the energy supply”.

My first question is: how confident are the Government that a wind turbine is not a building? The first definition of a building in the Shorter Oxford English Dictionary is “a thing which is built”. One of the definitions given of “build” is,

“construct (a ship, vehicle, fire, road or other structure) by putting parts or materials together”.

It could certainly be argued that that covers a wind turbine. It could also be argued that a wind turbine is a building which contains the energy supply which, in the Government’s view, is what makes other forms of power station liable to CIL and distinguishes them from railway lines.

My second question is: why have they chosen the word “building” instead of, say, the word “structure”? What were they trying to exclude and why?

My third question is: did they deliberately seek to discriminate between different types of power station? Did they want to favour wind power-generating stations at the expense of generating stations fuelled by other means? In that case, is this an example of the Government inventing yet another form of discreet subsidy, this time at the expense of local communities, to try to push forward their wasteful and inefficient wind power programme?

My Lords, this is a complex set of government and opposition amendments. In view of the hour, I will be as concise as possible while, I hope, addressing some of these rather technical questions.

Who will be liable to pay CIL was one of two remaining issues of major concern to the Delegated Powers and Regulatory Reform Committee that we have now been able to deal with. I shall address my own amendments first. Land ownership is a complex area and the vital importance of devising a workable solution has meant that this has involved a considerable amount of work. However, after much careful thought, we have found a practical way forward.

Government Amendment No. 135A removes the existing clause setting out provision about CIL liability and replaces it with a new clause. It expressly allows any person—who may be the developer, landowner or other party with an interest in the land such as the bank or financer of the development—to assume liability to pay CIL before development commences. It also provides for default liability to be attached to the owner or developer and enables CIL regulations to provide for liability to be assumed partially, jointly, or jointly and severally.

Amendment No. 144A amends Clause 210 on CIL enforcement to allow regulations to provide for the consequences of failure to assume liability. It is our intention, for instance, that where no party nominates itself to pay CIL, the benefits that it would have enjoyed would be withdrawn. We expect the vast majority of those intent on development to come forward to meet their CIL liabilities in full and on time. By allowing any party to take on liability in this way, we are providing maximum flexibility for the industry to make efficient arrangements.

Where liability has not been assumed, regulations will enable charging authorities to recover CIL from other parties. Subsection (4) of the proposed new clause in government Amendment No. 135A therefore requires regulations to make provision for the owner or developer of the land on which development has commenced, in reliance on planning permission, to be liable to pay CIL. Definitions for “owner” and “developer” are set out in subsection (7) of the clause inserted by government Amendment No. 136A.

As possible liable parties, we want the owner and developer to be fully aware of any liabilities that they may face on purchasing land or commencing development on it. Government Amendments Nos. 144B and 144D therefore enable regulations to provide for further enforcement measures for the payment of CIL. Together, they replace Clause 210(3)(c) with more detailed provisions, enabling regulations to provide for the registration or notification of actual or potential liability—either in a local land charges register or in another statutory register such as the register of planning applications kept by local planning authorities—and the creation, registration and enforcement of local land charges.

These amendments are vital to ensuring that all interested parties are fully aware of any CIL liabilities that they may face when commencing development or purchasing land. Where there is more than one owner or developer, CIL liability may need to be apportioned between them, as provided for by subsection (5)(d) of the proposed new clause in government Amendment No. 135A. Subsection (5)(d)(ii) of that proposed new clause provides for appeals relating to any apportionment, but does not specify the manner in which they may be made. Government Amendment No. 140A ensures that any regulations providing for appeals in relation to the apportionments of CIL liability under proposed new Clause 202(5)(d)(ii) may make provision about the procedure on such appeals, about fees and the award of costs, and when the right to appeal must be exercised.

Government Amendment No. 146A amends Clause 212 to provide that CIL regulations may make provision for the procedures to be followed in connection with actual or potential liability for CIL. Proposed new Clause 202 provides that liability may be assumed and for such liability to be transferable. This amendment ensures that the CIL regulations can set out procedures for how that is to be done. Government Amendment No. 146B enables regulations to provide for procedures to be followed in relation to exemptions from, or reductions in, paying CIL. I commend the government amendments to the House.

Opposition Amendments Nos. 135 and 136AZA seek to prevent CIL regulations allowing CIL to be levied on infrastructure development. Opposition Amendment No. 135 seeks to ensure that development for CIL purposes may not include anything done to, or in respect of, an existing building that forms, or forms part of, infrastructure. Opposition Amendment No. 136AZA seeks to amend subsection (1)(a) of government Amendment No. 136A to ensure that “development”, for CIL purposes, means anything done by way of, or for the purpose of, the creation of new buildings, excluding buildings housing infrastructure.

My noble friend Lord Berkeley asked where in the new amendments we define “buildings”. It is set out in Amendment No. 136A, where we say clearly that “development” means,

“anything done to … an existing building”.

In Committee, my noble friend asked why we are making this distinction and not exempting infrastructure that does not include buildings. A version of that question was raised by the noble Lord, Lord Reay. There is not much that I can add to what I said in Committee. We are trying to deal with the impact that buildings have by generating a need for infrastructure because they are usually occupied by people who create needs. We have come up with the simplest definition of “buildings” that we can: there is clarity there.

In Committee, I said that almost all development has some impact on the need for infrastructure, services and amenities: I say this also to the noble Lord, Lord Dixon-Smith. For example, a school, which is infrastructure, will have significant transport impacts, particularly at 3.30 pm. A hospital, which is infrastructure, will have significant waste impacts that require waste management infrastructure. Excluding infrastructure from the types of development that may be liable to pay CIL risks causing shortfalls in CIL revenue that other types of development might have to cover through higher rates of CIL. That is why our principal starting point has been that most types of development could pay CIL. However, we have given serious thought to which types of development ought to be liable, and, as clarified by Clause 202(3), we have decided principally to define liable development as “buildings”. This is likely to mean that certain items of infrastructure such as phone masts, roads and railway lines would not be liable.

I will answer in a general way the three questions asked by the noble Lord, Lord Reay. CIL is a new mechanism to help support the provision of infrastructure. Needs arise and are planned for by local authorities on the basis of people and their occupation and use of buildings. New homes, offices, shops and schools are all located to support the delivery of homes. Roads are upgraded to support new office developments. Therefore, “buildings” is the right definition of “development” for CIL purposes: it is relatively simple. As a result of defining “development” in this way, it is clear that some other types of development would not be CIL-liable. We include in that roads, railway lines, power lines, pylons and wind turbines.

Opposition Amendment No. 136AZB, tabled by the noble Earl, Lord Caithness, seeks to amend the definition of “development” on which CIL can be charged by amending government Amendment No. 136A. This seeks to ensure that development consisting of anything done to, or in respect of, an existing building only ever gives rise to CIL liability if the building is “occupied by people”. I am sympathetic to the spirit of the noble Earl’s amendment, which seeks to identify which developments may cause a need for infrastructure and which may not. In general, infrastructure needs arise because people are located in certain places: that is our rationale.

The noble Earl raised the point about consultation. As part of the work to develop CIL regulations, I wish to consult widely on how we might exercise powers under subsection (2) to define what works or changes of use to buildings will incur CIL liability. We do not want to further restrict the definition in the Bill. The amendment also raises questions. For example, how often might a building have to be occupied to be charged CIL? Is it to be continuously occupied, or would temporary occupation be sufficient? The amendment would provide plenty of scope to avoid CIL. For example, you move out of a property, develop it and move back in some time later, but you do not pay CIL because you were not in occupation when development commenced. I am sure that the noble Earl takes the point that there are degrees of complication here.

My advice is that many farm buildings are covered by general permitted development orders. We have said that most such developments would be exempt, and representatives of farming will be fully engaged in consultation on that point. I hope that we can pursue that point in written correspondence.

Amendment No. 136AZC might be intended to prevent CIL regulations defining planning permission for CIL purposes as being anything other than within the meaning of the Town and Country Planning Act 1990. We have been clear that we expect that most types of development will be liable to pay CIL. As I have said in previous stages of the Bill’s progress, this could well extend to development consented to through regimes that are other than the town and country planning regime. For example, if an Act of Parliament consents to development, it might be appropriate for it to be liable to pay CIL. Similarly, if we conclude that it is appropriate that developments such as power stations should be subject to CIL, we would not want the largest schemes to avoid CIL by virtue of being consented to by the Infrastructure Planning Commission. The amendment would rule out those possibilities, and it is premature to do so. I hope that on that basis the noble Earl will feel able to not move his amendment.

My Lords, I thank the Minister for being sympathetic towards Amendment No. 136AZB. We need greater clarification. Here is an example of the frustration that we are all facing, as the noble Lord, Lord Berkeley, found, in trying to get hold of what the Government are about; it is like trying to hold the water in a wet sponge. The moment you think you have your hand on what the Government are trying to do, it pops up in another place.

The Minister contradicted herself. In the answer that she gave on Amendment No. 136AZB, she wanted it to be much more definite and she sympathised with my thought behind the amendment. However, on Amendment No. 136AZC she had no sympathy at all. But here is a ghastly, wide, catch-all phrase that is going to take into account any sort of development, whether it is town and country planning, permitted development or even exempt development. That means that the Government, having got the Bill through when it is enacted in two years’ time, can change their mind completely without any consultation of this House, and say, “Let us have power stations and let us have Lord Berkeley’s railways. Yes, we will have the whole lot now; we have it in the Bill”.

My Lords, the noble Baroness made no attempt whatever to answer any of the three questions that I put to her. I may have missed it, but where does the Bill give a definition of what is meant by a building?

My Lords, the Minister mentioned development consents issued by the Infrastructure Planning Commission. Unless I have completely missed something, I did not realise that any of those would be liable to CIL. Will some of the appropriate developments given consent by the Infrastructure Planning Commission be liable to CIL? If so, who will set the level of CIL? Will it be the relevant local authority in that area or will it be the IPC? Will the IPC have to produce its own scheme for CIL in the same way as the local authority? If so, who will approve that?

My Lords, the local authority will of course set the CIL rate. That is the purpose. It is a local regime. There will be no question of the IPC setting CIL. However, if there is going to be some major infrastructure in the local development plan, it is reasonable that the cost of the infrastructure and the impact of that is taken into account within the assessment of what is required to be raised. I cannot anticipate what might be covered by that, but, if the noble Lord allows, I will think some more about that and try to write and give some examples.

My Lords, the noble Baroness referred earlier to the definition of a building. Would she say where that is found in the Bill?

My Lords, my understanding is that it is in (Paragraph (1) of Amendment No. 136A), where it refers to new building creation. There may be a definition clause, which I cannot quickly put my hands on. I agree with the noble Lord that I did not answer all his questions adequately. If he allows, I will write to him in respect of each question.

My Lords, in responding to my amendments, my noble friend promoted me to an opposition amendment. I do not know whether that was intentional, but it was very nice of her—or not. I am grateful for her explanations, but am still pretty confused. The definition of a building is like yesterday’s definition of a goods train—a train that carries goods—in that it does not take you very far. Paragraph (1) of Amendment No. 136) refers to,

“anything done by way of or for the purpose of the creation of a new building,”.

That is not the definition of a building. We would all be pleased to know what a building is. Maybe if you put a roof over a wind farm, it becomes a building. I worry more substantially about the point, made so well by the noble Lord, Lord Dixon-Smith, about this merry-go-round of government money. That particularly applies to the railways, whether they are big or little ones; it is now buildings only.

I do not know how we take this forward. We will have to read the Minister’s response in great detail and have a good think about what to do next, if anything. In the mean time, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

135A: Clause 202, leave out Clause 202 and insert the following new Clause—


(1) Where liability to CIL would arise in respect of proposed development (in accordance with provision made by a charging authority under and by virtue of section 200 and CIL regulations) a person may assume liability to pay the levy.

(2) An assumption of liability—

(a) may be made before development commences, and(b) must be made in accordance with any provision of CIL regulations about the procedure for assuming liability.(3) A person who assumes liability for CIL before the commencement of development becomes liable when development is commenced in reliance on planning permission.

(4) CIL regulations must make provision for an owner or developer of land to be liable for CIL where development is commenced in reliance on planning permission if—

(a) nobody has assumed liability in accordance with the regulations, or(b) other specified circumstances arise (such as the insolvency or withdrawal of a person who has assumed liability).(5) CIL regulations may make provision about—

(a) joint liability (with or without several liability);(b) liability of partnerships;(c) assumption of partial liability (and subsection (4)(a) applies where liability has not been wholly assumed);(d) apportionment of liability (which may—(i) include provision for referral to a specified person or body for determination, and(ii) include provision for appeals);(e) withdrawal of assumption of liability;(f) cancellation of assumption of liability by a charging authority (in which case subsection (4)(a) applies);(g) transfer of liability (whether before or after development commences and whether or not liability has been assumed).(6) The amount of any liability for CIL is to be calculated by reference to the time when planning permission first permits the development as a result of which the levy becomes payable.

(7) CIL regulations may make provision for liability for CIL to arise where development which requires planning permission is commenced without it (and subsection (6) is subject to this subsection).

(8) CIL regulations may provide for liability to CIL to arise in respect of a development where—

(a) the development was exempt from CIL, or subject to a reduced rate of CIL charge, and(b) the description or purpose of the development changes.”

My Lords, I must advise your Lordships that if this amendment is agreed to, I will not be able to call Amendment No. 136 because of pre-emption.

On Question, amendment agreed to.

[Amendment No. 136 not moved.]

136A: After Clause 202, insert the following new Clause—

“Liability: interpretation of key terms

(1) In section (Liability) “development” means—

(a) anything done by way of or for the purpose of the creation of a new building, or(b) anything done to or in respect of an existing building.(2) CIL regulations may provide for—

(a) works or changes in use of a specified kind not to be treated as development;(b) the creation of, or anything done to or in respect of, a structure of a specified kind to be treated as development. (3) CIL regulations must include provision for determining when development is treated as commencing.

(4) Regulations under subsection (3) may, in particular, provide for development to be treated as commencing when some specified activity or event is undertaken or occurs, where the activity or event—

(a) is not development within the meaning of subsection (1), but (b) has a specified kind of connection with a development within the meaning of that subsection. (5) CIL regulations must define planning permission (which may include planning permission within the meaning of TCPA 1990 and any other kind of permission or consent (however called, and whether general or specific)).

(6) CIL regulations must include provision for determining the time at which planning permission is treated as first permitting development; and the regulations may, in particular, make provision—

(a) about outline planning permission;(b) for permission to be treated as having been given at a particular time in the case of general consents.(7) For the purposes of section (Liability)—

(a) “owner” of land means a person who owns an interest in the land, and(b) “developer” means a person who is wholly or partly responsible for carrying out a development.(8) CIL regulations may make provision for a person to be or not to be treated as an owner or developer of land in specified circumstances.”

[Amendments Nos. 136AZA to 136AZC, as amendments to Amendment No.136A, not moved.]

On Question, Amendment No.136A agreed to.

136AA: After Clause 202, insert the following new Clause—


(1) CIL regulations must provide for an exemption from liability to pay CIL in respect of a development where—

(a) the person who would otherwise be liable to pay CIL in respect of the development is a relevant charity in England and Wales, and(b) the building or structure in respect of which CIL liability would otherwise arise is to be used wholly or mainly for a charitable purpose of the charity within the meaning of section 2 of the Charities Act 2006 (c. 50).(2) CIL regulations may—

(a) provide for an exemption from liability to pay CIL where the person who would otherwise be liable to pay CIL in respect of the development is an institution established for a charitable purpose;(b) require charging authorities to make arrangements for an exemption from, or reduction in, liability to pay CIL where the person who would otherwise be liable to pay CIL in respect of the development is an institution established for a charitable purpose.(3) Regulations under subsection (1) or (2) may provide that an exemption or reduction applies only if specified conditions are satisfied.

(4) For the purposes of subsection (1), a relevant charity in England and Wales is an institution which—

(a) is registered in the register of charities kept by the Charity Commission under section 3 of the Charities Act 1993 (c. 10), or(b) is a charity within the meaning of section 1(1) of the Charities Act 2006 (c. 50) but is not required to register under section 3 of the Charities Act 1993 (c. 10).(5) In subsection (2), a charitable purpose is a purpose falling within section 2(2) of the Charities Act 2006 (c. 50); but CIL regulations may provide for an institution of a specified kind to be, or not to be, treated as an institution established for a charitable purpose.”

The noble Baroness said: My Lords, I wonder whether the House will allow me, in speaking to the government amendment in this important group, to address the opposition amendments at the same time, given the time of the evening—if I can make sense of what noble Lords have been seeking as well.

I am very pleased to bring forward Amendment No. 136AA in response to many noble Lords having asked for 100 per cent exemption for charities. I emphasised during Committee that this is a highly complex area in which to legislate and achieving our objectives has required a complex amendment. I am very grateful to the Charity Tax Group and to the noble Lord, Lord Cameron, who provided invaluable advice during the process. However, there are consequently some elements of the provision which I need to explain.

Essentially, this new clause places a duty on the Secretary of State to provide in regulations a 100 per cent exemption from CIL for relevant charities in England and Wales in the case of developments to be used wholly or mainly for their charitable purposes. For example, it will cover many developments used by a charity in connection with its primary purpose: a hostel for the homeless, in the case of a homelessness charity, for instance, a lifeboat station or a building used only as a head office. In addition, it will allow regulations to make exemptions for other institutions established for a charitable purpose and for regulations to require charging authorities to make exemptions or reductions for such institutions.

We listened closely to the concerns raised in this Chamber that the duty placed on the Secretary of State to provide some sort of exemption or reduction in CIL for charities, or developments for charitable purposes, did not go far enough. We listened to the fears of noble Lords and of organisations such as the Charity Tax Group, that regulations would not provide the level of protection from being financially disadvantaged by CIL that we all know they deserve and need to ensure that they work as effectively as possible for the good of the community. We have acknowledged the inevitable confusion that some people had about the meaning of “charity” and “charitable purpose” by specifically providing definitions.

I believe that this amendment delivers the reassurance the charity sector has been asking for. Subsection (1) of the new clause provides a guarantee that CIL regulations must include a 100 per cent exemption from CIL where the liable party is a,

“relevant charity in England and Wales”,

and the development is to be used wholly or mainly for its charitable purposes.

Our amendment also seeks to resolve any confusion on which charities and charitable purposes are covered by the exemption. Subsection (1)(b) makes it clear that the qualifying charitable purposes will be as defined in Section 2 of the Charities Act 2006, while the effect of subsection (4) is that charities registered with the Charity Commission, or which are excepted or exempt from the duty to register with the Charity Commission, will be covered by the duty in subsection (1). We have listened to the point raised by noble Lords in our previous debate on this issue that these definitions must be made explicit in the Bill.

In addition, we have provided a power in subsection (2) for regulations to go further than the duty imposed in subsection (1). Subsection (2)(a) is intended to enable regulations to provide a CIL exemption for charities where the conditions laid out in subsection (1) do not apply. It provides a power in CIL regulations to provide an exemption in CIL to other institutions established for charitable purposes. Subsection (5) defines such purposes as those falling within Section 2(2) of the Charities Act 2006 and allows CIL regulations to add or remove institutions from this definition. I shall explain that a little further.

While the outcome of discussions with the EU over other UK charity tax exemptions remains unresolved, we need to allow regulations to be flexible enough to reflect the possible outcome that UK exemptions may need to be extended to EU equivalents of UK charities should it be necessary. We would also like to have the flexibility to include charities from Scotland and Northern Ireland which choose to develop in England and Wales. One of the effects of subsection (2)(a) is that we would be enabled to do this. Achieving this in the Bill is easier said than done, however. Definitions of charities and regulations on the sorts of activities which they may engage in are significantly different in Scotland, for example, and it is highly likely that this is the case for other EU charities as well. Therefore, we need the flexibility offered in subsection (5) to ensure that regulations could include in this exemption charities from outside England and Wales whose purposes are comparable to those in the Charities Act 2006 and exclude organisations which would not be comparable. This will require extensive discussions inside and outside Government and is a matter best left for regulations.

I am sure that noble Lords will want me to explain the purpose of subsection (2)(b). Under this subsection, a power is provided to require charging authorities to make arrangements for an exemption or reduction to CIL for institutions established for charitable purposes, as defined in subsection (5). This is there for a purpose but it does not dilute the commitment to 100 per cent exemption contained in the duty in subsection (1).

Many noble Lords were concerned by the possibility of a reduction rather than a full exemption from CIL being offered to a charity. Indeed this goes to the heart of Amendment No. 136AF in the name of the noble Lord, Lord Cameron, which removes “reduction” from subsection (2) to preclude the possibility for CIL regulations to require charging authorities to provide a reduction in CIL, effectively ensuring the power in subsection (2)(b) could only be used to provide a 100 per cent exemption in every case.

It is essential that we allow ourselves the ability to require charging authorities to provide reductions in CIL where giving full exemptions would violate EU state aid law—in particular where a full exemption would exceed the €200,000 de minimis level of state aid allowed in any three-year period. That would apply only where a charity was engaged in an economic activity, was in competition with other undertakings and was engaged in an activity where there is trade between EU member states. The provision mentions reductions because that is what we want to be in a position to provide if a full exemption is not possible. On that basis I hope the noble Lord will not press his amendment.

Finally, subsection (3) permits regulations to provide that an exemption or reduction under subsections (1) and (2) applies only if specified circumstances are met. I fully acknowledge that the language in this caveat may cause noble Lords to question why it is there. Let me put on the record that we do not intend to use this provision to find some general way out of providing an exemption of the sort specifically required under new subsection (1). Indeed we could not lawfully use the powers there to render the duty in subsection (1) meaningless or hollow. Subsection (3) is there for specific purposes and is particularly necessary given the complexity of the charity sector both within and beyond the UK. We envisage its primary use is to deal with circumstances where the exemption could be used by a non-charitable body to avoid paying CIL and to ensure all reliefs given meet the criteria set out in EU law, particularly on state aids.

The penalties for failing to take account of state aid law, for instance, could be dire with charities potentially being forced to repay any illegal relief they had been granted, plus the interest accrued on it. I do not wish to put charities at risk in this way. We must have this flexibility, not least because CIL does not feature in a Finance Bill and therefore cannot be amended through primary legislation as quickly as other charitable reliefs. In addition, noble Lords will know there are still aspects of CIL which need further detailing in regulations and which this exemption may need to take account of. It goes without saying that we will continue to work closely with the local government and charity communities in framing these regulations. We have listened closely and will continue to listen carefully to feedback on the proposed details of our exemption when it is consulted on as part of the draft regulations.

This amendment provides a response to the concerns so eloquently raised by noble Lords on the floor of this House a few weeks ago. It contains a duty to provide a 100 per cent exemption. As with so much of charity law in this very complicated area we have had to lay a complicated amendment which takes into account a range of factors. I hope that noble Lords will not allow this to detract from its central purpose.

I turn briefly to the amendments to my Amendment No. 136AA tabled by the noble Lords, Lord Cameron and Lord Dixon-Smith. Amendment No. 136AB would remove the words “wholly or mainly” from subsection (1)(b) of government Amendment No. 136AA, meaning that a 100 per cent exemption from CIL for a charity applies where a development is to be used, to an unspecified degree, for the charitable purpose of the charity.

My Lords, the noble Baroness is attempting to wind up remarks that I have not yet made. While I have every sympathy with her on the position, there are other noble Lords with amendments in this group. It would be wise if the noble Baroness would desist at this point and let us have our say so that she knows what to reply to.

My Lords, I am happy to move my amendment and I will respond to noble Lords’ amendments. I beg to move.

136AB: After Clause 202, line 8, leave out “wholly or mainly”

The noble Lord said: My Lords, I am grateful to the noble Baroness. I feel that I should apologise for interrupting her flow but it was necessary as she does not know what I have to say. I should say at the start that I am grateful to her for Amendment No. 136AA because it moves the Bill forward in a helpful way and provides a substantial degree of immunity for charities. The question is whether that degree of immunity is sufficient. My amendment will enable me to explore those limits further, and I know that noble Lords will want to explore still further.

I remind the noble Baroness that it is a fiduciary duty of a trustee of a charity to maximise the revenue income or asset value. Not least of the problems that CIL might cause, if we accept the sort of exemption provided at the moment, is that the charity might be put into difficulty over the possibility of the future development of, say, a field that may have been left to it. It may originally have been out in the open countryside but subsequently becomes surrounded by development. The only sensible thing would be to develop it, which introduces the question of the best way for the charity to maximise the return on that development. It may be for exclusive use for charitable purposes. If it was a charitable housing operation that might be sensible but if it was a particular type of housing, perhaps like the YMCA, the charity might not be able to take up use of the whole site.

Taking out the words “wholly” or “mainly” would go a long way towards overcoming that. But the trustees may find that maximising the return on that asset could involve commercial development and use for a commercial purpose by providing a revenue stream for the charity. That would be likely to produce greater revenue for the charity than selling the site with a liability to CIL. The question I need to explore with the noble Baroness is whether such a “commercial development”, which aims to produce a revenue stream for the charity and which of course would be used for charitable purposes, is included in the exemption. As I read Amendment No. 136AA, it would not. Therefore, the possibility of the arrival of CIL puts trustees of a charity in a difficult situation vis-à-vis their fiduciary duty.

That may be wild imagination at work but, in my experience, we have to deal with the wilder flights of imagination. When I was heavily involved in local government some of the most productive time we spent was considering how people might defraud the county council. We had some fairly wild flights of fancy on that trip but we saved a lot of trouble as a consequence. We were able to put in place steps that inhibited such operations happening. We need to think about these possibilities. The real question is how far this exemption goes and where its limits are. It obviously extends to developing a site exclusively for use “for a charitable purpose”. That is fine, but then we have this extension if it were to produce a revenue stream to support the charity. Is there a point beyond that? I do not know.

The noble Baroness may find these technical questions difficult to answer tonight and say that she wants time to consider them and come back at a later stage. If that suits her it would be perfectly acceptable to me. At this hour of the night it might save a deal of bother, but I do not know what other noble Lords have to say as they have yet to speak. I beg to move.

My Lords, I rise to speak to my amendments in this group. First, I must thank the Minister for her efforts to overcome our concerns on this issue. I recognise that our desire to exempt charities from the potentially devastating consequences of this levy has caused her and her team some difficulty. We do not really understand that difficulty, and our resolve to get this matter right has not been diminished. She mentioned European state aid. The advice we have had from our legal side is different from hers. As I said in Committee, I strongly believe this whole thing is the UK gold-plating. After all, there are exemptions for charities from income tax, capital gains tax, stamp duty and land tax, an 80 per cent exemption for council tax and exemptions from virtually every other tax in every other member state in Europe, and they have not been challenged. I cannot see this being a problem at all. We have to stick to our amendments as we have laid them down. I shall not repeat all the reasons why charities need exemptions, as I said enough about that in Committee, but suffice it to say that charities are exempt from virtually all other taxes.

The most important thing is that they deliver benefits to society at a far better rate and at far better value than government possibly can. As the noble Lord, Lord Dixon-Smith, said, it cannot be stressed enough that they are very heavily regulated by the Charity Commission or the Office of the Scottish Charity Regulator in Scotland. Regulation that is good enough for Her Majesty’s Revenue and Customs vis-à-vis income tax and capital gains tax must be good enough for CIL. As the noble Lord, Lord Shutt, said in Committee, what we need is certainty, and that we do not have in the Government’s amendment as currently drafted. I still have the feeling that the only people who are going to benefit from it are lawyers and accountants.

I shall run through our amendments to government Amendment No. 136AA, bearing in mind that we want clarity and certainty. I recognise that there is a difference between charities governed by subsection (1) of the new clause, as defined by subsection (4), and other bodies with a charitable purpose as defined in subsection (2). Dealing first with subsection (1), as I understand it, it provides a compulsory exemption from CIL for all charities as defined in subsection (4), but it seems that both subsection (1)(a) and subsection (1)(b) have to be fulfilled before that exemption is a certainty. Subsection (1)(b) restricts the exemption to buildings that are used “wholly or mainly”, as in the amendment tabled by the noble Lord, Lord Dixon-Smith, for charitable purposes. I have no doubt that the Minister will clarify that in her response.

On the question of charitable purposes, the Bill refers to “a charitable purpose”, so I would be grateful if the Minister could confirm that for “purpose” we can also read “purposes” so that three of our amendments are taken care of.

I have the same concerns as the noble Lord, Lord Dixon-Smith, about which buildings are exempt, or even things that are not buildings. Being a rural person, I immediately think of a dilapidated village hall being sold for development to a developer in order to build another village hall. The hall that is being sold is not going to have a charitable purpose any more, or it could be the car park of the village hall that is being sold by the village hall trust, which would most likely be a registered charity, to reinvest in the village hall. In both cases, if CIL were payable, the developer would almost certainly charge the charity for CIL in its price, and it would thus be the equivalent of the charity paying CIL in the first place. I cannot believe that that is the Government’s purpose in the amendment.

In my conversations with the noble Baroness and her team, it was suggested that some of my concerns about the limits of subsection (1) could be covered under subsection (2)(a). If that is the case, that adds weight to the need for our Amendments Nos. 136AD and 136AE, because it is vital that we have the certainty of “must” rather than “may” governing subsection (2). It is also important that subsection (2)(a) stands by itself, making the word “or” in Amendment No. 136AE crucial. The word “or” is needed for another reason. The present draft is entirely unclear as to whether it is the Government who are to make the exemption, the individual charging authority, or both. Those three possibilities are a recipe for utter confusion. I hope that, following our conversations, the Government will agree to both those amendments.

Amendment No. 136AF is again an attempt to achieve clarity and certainty. The noble Baroness mentioned the words “or reduction in”. I see her point of view, but I find them undermining and unhelpful. Giving a charity a 1 per cent reduction in CIL would satisfy the terms of subsection (2)(b), but would be of no use to the charity. We need clarification of what the Government mean by a reduction—or, preferably, an alteration in the subsection.

We come to subsection (3) of the government amendment and our Amendment No. 136AF. Everyone to whom I have spoken in the charitable sector agrees that that subsection undoes all the certainty towards which we are working in the first two subsections. The words “may provide” and,

“only if specified conditions are satisfied”,

need no further comment. Frankly, they undermine the whole government amendment and render it useless. The clause has to go; that is our bottom line.

Our final amendment in the group is as much for clarification purposes as anything else. Why do we need the words “or not to be” in subsection (5)? It might give the persons drawing up the regulation or even the local planning authorities entirely the wrong idea. We would therefore prefer that phrase to be removed.

I will not delay the House much longer, because it is very late, but, as I said at the outset, the principle behind our amendments is that no public benefit is to be gained by taking money from charities and giving it to government agencies. Charities are rigorously scrutinised for public benefit by the Charities Commission and provide benefits for society at far better value than CIL or any of its charging authorities ever could. In my view, the government amendment needs to be totally reworded to give greater certainty and clarity to cater for the grave and sensible concerns of the third sector, as I have set them out. At the very least, we need the undermining subsection, subsection (3), removed from the clause.

My Lords, what would be the application of the new clause in Amendment No. 136AA to cathedrals, such as Winchester Cathedral, where I spent a rather large part of my childhood as I was educated at the cathedral choir school, and Norwich Cathedral, in the city where I now live? I raise that question not out of idle personal curiosity but because I have been made aware that there is uncertainty in the Church of England, and therefore some concern among custodians of cathedrals, as to the meaning of the legislation for cathedrals.

Not having a close knowledge of this field, I none the less have the impression that the application of charity law to cathedrals is somewhat special. That may be because many cathedrals and their educational foundations and other associated charitable undertakings were in existence some hundreds of years before the 1601 Statute of Uses, which is the fountainhead of much subsequent charity law. Be that as it may, it would be very helpful if the Minister could clarify whether and how her new clause applies to cathedrals, and in particular whether they would be exempt from the liability to pay CIL, as the new clause provides. If she cannot give me a definitive answer this evening, perhaps she will write to us in good time before Third Reading.

My Lords, my name is on some of the amendments in the group, and I too thank the Minister for the work that she has undertaken to move towards the position that we so earnestly desired in Committee. I have listened carefully to her explanations, which were quite complex. I was reminded of Sherlock Holmes’s remark in a complicated case: “These are deep waters here, Watson, deep waters indeed”. We are in slightly deep waters with some of the points that she was making, and they repay careful study.

I emphasise one or two points that arise from the amendments that we have tabled. The first is the question of “or purposes”, as opposed to a single purpose in the Minister’s amendment. Section 2(2) of the Charities Act lists very clearly 13 different types of charitable purpose. Some of them overlap very closely. For example, paragraph (a) is,

“the prevention or relief of poverty”,

and paragraph (j) is,

“the relief of those in need by reason of youth, age, ill-health, disability, financial hardship or other disadvantage”.

There will be charities that have more than one, perfectly legitimate, charitable purpose. Indeed, a charity that starts out with a single charitable purpose may have to widen that purpose, as year succeeds to year, because of the changing nature of our society and because the needs that it must reflect are slightly altered.

I reassure the Minister that, under the amendment, all cases would have to meet the charitable purposes test and the public benefit test. The Charity Commission would look at all of it, so there would be no question of people being able to slip through the net. I hope that she will be able to address that in due course.

I have a word or two to say about proposed subsection (1)(b) in Amendment No. 136AA and its implications for charities. My point amplifies the point that my noble friend Lord Dixon-Smith has already made, and relates to how we will get to “wholly or mainly” and the way in which charitable assets are used. I shall give a short example to illuminate what I am trying to get at. Let us assume that we have a successful charitable care home, which is regulated and appropriately looked after. It seeks to extend its operations, which is something profoundly to be sought. It decides that it will fund these additional rooms and facilities by a public appeal. It has that appeal and applies for planning permission. Buildings are constructed and no CIL is payable. However, let us suppose that exactly the same charity, in these difficult economic times, decides that it cannot successfully appeal but has a corner of its land that it could sell, with planning permission, for commercial development. The proceeds will be used in exactly the same way—to build more rooms in the care home. In other words, they will be used for charitable purposes. Clearly the additional rooms are charitable, but the development is commercial. It is unreasonable, unhelpful and disadvantageous to charities that are rich in land assets that they cannot build in this way without having to suffer a commercial disadvantage.

I may have misunderstood the nature of the Government’s amendment and the noble Baroness may be able to reassure me. But at the moment we seem to have a distortion arising out of the choice that the charity makes of the way in which it funds its expansion. If it realises a land asset to build a building which is charitable, from the way I read this, CIL will be payable, but if it did it by public appeal, no CIL would be payable.

On the words “may” and “must”, the hour is late and the noble Lord, Lord Cameron, smote this ball to the boundary very successfully. Clearly, “may” is a weasel word which makes a matter optional. It may mean something or it may mean nothing. As the noble Lord, Lord Shutt, says, we need clarity on this.

On a slightly wider point, I am not quite clear yet as to why charitable purposes, as opposed to a relevant charity, have to be dealt with separately. As the noble Baroness made clear, proposed new subsection (5) defines the purposes of proposed new subsection (2), which refer back to the definitions in the Charities Act 2006, to which I have already referred. Therefore, it seems strange that we need to deal with this in a different way. The words,

“to be, or not to be, treated”,

in proposed new subsection (5) mean that the Government would start to come into conflict with what the Charity Commission is treating as a charitable purpose.

When we considered the then Charities Bill, the noble Lord, Lord Bassam of Brighton, who is not here, and all parts of the House were keen that it should remain independent of all political parties. Therefore, we now appear to be getting to a position where the Government are starting to conflict with the powers of the Charity Commission to decide how and what purposes are charitable. The Charity Commission has powers in its objectives that would enable it to close the loopholes. Like the noble Lord, Lord Cameron, my concerns are further underlined by the words “or reduction in”, which we seek to remove under our Amendment No. 136AF. Again, there is no certainty.

Finally, Amendment No. 136AH would remove proposed new subsection (3). As the noble Lord, Lord Cameron, has said, this appears to drive a coach and horses through everything we have been discussing. Proposed new subsection (3) refers to,

“exception or reduction … specified conditions are satisfied”.

I understand that the Minister, no doubt driven by her colleagues at the Treasury, is concerned about the way in which this could be used to evade fiscal and taxation responsibility. I ask her to ask her officials to look at the Charities Act 1993, which provides for a catch-all clause to prevent the sort of evasion that I think she is concerned about. Section 36 in Part V, “Charity Land”, states:

“Subject to the following provisions of this section and section 40 below, no land held by or in trust for a charity shall be sold, leased or otherwise disposed of without an order of the court or of the Commissioners”,

which, in this case, is the commission.

The section goes on to lay out what has to be done and states that we have to use appropriately qualified valuers. Where connected parties are concerned, the Act lays down that the commission has to be involved. We could reassure the Minister about the dangers of proposed new subsection (3). The Government have powers, within the Charities Act 1993, to block off that loophole and the Minister could reassure her colleagues in the Treasury that there is no loophole, and that the powers and the blocking powers already exist. I hope that in this way we shall be able to make the further step forward that we all earnestly desire.

My Lords, my name is attached to Amendments Nos. 136AC to 136AJ. The best way to tackle this is to try and grasp what Amendment No. 136AA says. Proposed new subsection (1)(a) talks about a relevant charity. This is then defined in proposed new subsection (4). I do not understand “relevant”. Can the noble Baroness define an irrelevant charity? If there is an irrelevant charity, I would like to know what it is. A charity is a charity, so why “relevant”? I am concerned as to whether anything has slipped out because of “relevant” being placed there. Proposed new subsection (1)(b) is about charitable purpose. That is clearly about those who have not taken the trouble or felt the need to register as a charity, but it covers what they wish to do.

Proposed new subsection (2) is where the important concerns of the noble Lord, Lord Dixon-Smith, come in as to the position with what we might describe as investment property or investment land. Is proposed new subsection (2) saying that if it is a case of investment property or land, there is the opportunity for a reduction but not a requirement? Is that what that is about?

Finally, because it is late, I turn to proposed new subsection (3). It has to go. This really is a case of two steps forward and three back. Proposed new subsection (1) says:

“CIL regulations must provide for an exemption”.

That is a very positive thing to say to the charities. Then proposed new subsection (3) says,

“that an exemption or reduction applies only if specified conditions are satisfied”.

That is a very negative thing for charities. Where is the clarity in this? Either charities are not going to be paying CIL or they are. “Must provide an exemption” ought to be as clear as clear can be. Then lo and behold, somebody slips in proposed new subsection (3) and takes that clarity away again. That wants to be crossed out—got rid of.

My Lords, I declare an interest as the chairman of the Royal National Lifeboat Institution and I hold similar positions in a number of other charities. I welcome the distance gone by the Minister in introducing Amendment No. 136AA. However, I will be left with a number of uncertainties in running my various organisations if that amendment goes forward as it stands. I will not test your Lordships’ patience by trying to do better than noble Lords who have gone before me and articulated so well what those uncertainties are, particularly the noble Lords, Lord Dixon-Smith, Lord Cameron, and Lord Hodgson. Suffice to say, I support Amendments Nos. 136AB to 136AJ.

My Lords, I detect some welcome for our amendment but noble Lords have displayed in their extensive forensic examination just why charity law and this clause are so complex. If noble Lords will forgive me, given the hour and the questions which have been raised which are both technical and definitional and explore the relationships between these subsections, I will write a comprehensive letter and pick up everything that noble Lords have said as soon as possible.

I hoped I had reassured the noble Lord, Lord Shutt, when I began this debate some time ago. The question of cathedrals was to be raised by the right reverend Prelate the Bishop of Southwell and Nottingham. I can reassure my noble friend that we intend to ensure that the development by the Church of England of its cathedrals will be 100 per cent exempt from CIL. We need to investigate further how that will be achieved. Our current view is that an exemption could be provided for by using the powers in subsection (2). If that is wrong, other powers to make exemptions exist to allow us to do this, for example in Clause 214(1)(c). I hope that at least gives some clarity.

Many important points have been raised and I appreciate the feeling of the House. I am grateful to noble Lords who understand that we have wrestled with trying to put something in the Bill which actually meets the concerns that have been raised. I can see that noble Lords remain concerned that the amendment I have brought forward may not offer the degree of clarity they seek. With that in mind I will reflect on the issues and see whether I can propose further changes that might reassure the House. In the mean time, I shall write to noble Lords on the specific points of detail. Indeed, I am grateful to all noble Lords who have tried to help us resolve these real difficulties.

My Lords, I welcome the Minister’s offer to pick up on all these points and write comprehensively to noble Lords. I wish to add one more issue that has not been raised; I would be grateful to the Minister if she would take it on board. In raising it I declare an interest as chairman of the Royal National Institute of Blind People. I want to probe further the notion of “charitable purpose” that appears in government Amendment No. 136AA. It is perfectly clear that the charity would be relieved from CIL if it was undertaking a development in pursuit of its core business, such as building a school. But what if it were undertaking a development that was not so clearly an example of provision for a beneficiary group, such as refurbishing its headquarters? Obviously that would be crucial to the maintenance of the charity, but not an activity directly designed to meet the needs of beneficiaries. Would that also be exempt? I would be grateful if the Minister could include this point in her response.

My Lords, I understand the Minister’s concern to write to us, but we are in the privileged position of being able to receive a letter from her. So many people outside, particularly in the charity world, read the Official Report. How does she plan to get the answers that so many people outside want to read into the Official Report?

My Lords, obviously I intend to put a copy of the letter in the Library and I am happy for what I write to be used by Members of the House to inform any person outside whom they feel have a concern. As far as is practicable, I shall circulate the letter if the noble Earl would like me to do that. However, we should bear in mind that there are something like 600,000 charities in this country.

My Lords, I understand that it is my amendment that is under discussion rather than the amendment tabled by the noble Baroness. I am grateful for her offer to try to take the matter forward through correspondence. With that, I beg leave to withdraw the amendment.

Amendment No. 136AB, as an amendment to Amendment No. 136AA, by leave, withdrawn.

[Amendments Nos. 136AC to 136AJ, as amendments to Amendment No. 136AA, not moved.]

On Question, Amendment No. 136AA agreed to.

My Lords, I am sorry to interrupt the proceedings, but I had the impression that the noble Baroness said that she would not pursue her amendment because she was going to clarify the points raised and make amendments to it for Third Reading. I am sorry if I have got it wrong, but that is why I did not consider moving my amendment. Perhaps she could clarify the position.

My Lords, I still have to move my amendment. I shall think further about how I can help noble Lords in respect of my amendment before Third Reading.

Clause 203 [Amount]:

136B: Clause 203, page 117, line 5, leave out paragraph (b) and insert—

“(b) matters specified by CIL regulations relating to the economic viability of development (which may include, in particular, actual or potential economic effects of planning permission or of the imposition of CIL);”

On Question, amendment agreed to.

136C: Clause 203, page 117, line 40, at end insert—

“(6A) A charging authority may consult, or take other steps, in connection with the preparation of a charging schedule (subject to CIL regulations).”

On Question, amendment agreed to.

136D: Clause 203, page 117, line 40, at end insert—

“( ) For the purposes of subsection (6)(f) the regulations may provide, or permit or require provision for differential rates in respect of developments which renew or replace existing buildings, and which do not incur any significant costs to provide infrastructure to support the development.”

The noble Earl said: My Lords, I must confess that I am still confused about what happened on charities. Was the Minister’s amendment agreed? Is she going to alter it? It looks that way, but some of us got left behind on that.

My Lords, I may be able to help on this. I believe the position is that the noble Baroness may bring forward some amendments, but if she does not bring any forward it would be in the spirit of what has just happened that there could be Third Reading amendments. That is what I believe to be the case.

Yes, my Lords, as I have made clear, I have moved my amendment. I have listened to what noble Lords have said and I am going to reflect on what has been said and try to do what I can before Third Reading.

My Lords, I am grateful to the Minister for clarifying that. We now move on to a different subject and I move Amendment No. 136D. Clause 203(6)(f) rightly provides for the regulations on an amount of CIL to allow for different rates, including a nil rate or reductions. There is a strong case for buildings which are replacements for existing buildings, and which do not make any significant fresh call on local infrastructure, to be either free of CIL or subject to a low rate. Where, for example, a farm upgrades a grain store to comply with farm assurance or hygiene standards, or a livestock farmer replaces a building housing livestock with one incorporating higher welfare standards, it would be unfair for these to attract CIL.

Amendment No. 136D acts as a qualification to the subsection by specifically providing for such an approach to be applicable to renewal or replacement buildings. It is appreciated that judgments will need to be made about what is a replacement building and what constitutes significant costs, but surely it is desirable to establish the principle that such buildings should in general not be heavily penalised under CIL. Detailed delivery of this principle can follow in the regulations.

There are other points that I would like to raise with the Minister. There is also the question of cumulative development. Many commercially successful businesses will, over time, extend existing buildings or create new buildings. How does the Minister propose to treat such development for CIL purposes? Does she agree that it would be unreasonable for a business that paid CIL when it first developed a building to be hit again for a second levy payment sometime later if the expansion is on a modest scale? How will CIL distinguish between significant developments which clearly make a fresh call on local infrastructure and small businesses where the infrastructure requirement is small to negligible? I beg to move.

My Lords, Amendment No. 136D seeks a power for regulations either to provide for or to require the provision of differential CIL rates for developments which renew or replace existing buildings, where those redevelopers do not incur any significant costs to provide infrastructure to support them. I understand the noble Earl’s point and we have had discussions with the CBI on similar issues. I am afraid the amendment would be unworkable and I should explain that it is at odds with the approach to CIL, so I have to explain my reasoning.

The amendment includes a test whereby redevelopments would be subject to a differential CIL rate only if it could be shown that they had not imposed a significant infrastructure cost. I understand what is behind the noble Earl’s amendment, but my concern is that charging authorities would, in practice, find it impossible to define and measure a test of significant infrastructure costs for redevelopments in their area without incurring significant administrative costs and invoking prolonged legal debates. We have already had reference to the fun that the lawyers will possibly have with CIL. Should significant infrastructure costs be defined relative to, for example, the costs of other developments or redevelopments in an area, or what? Without the significant cost test, which I genuinely believe is unworkable, the amendment cannot in itself be justified.

Part of the problem is that redevelopments may well impose greater infrastructure costs than a new development. For example, an old house with some land can be replaced by a block of flats. That means many more people living on the same piece of land, many of them with cars, with many more needs for infrastructure support.

More important still, this amendment is also inconsistent with the rationale that underpins CIL. It is a generalised charge; we have gone over this time and again. It is there to enable local authorities to fund the infrastructure needed to support the development of a local area. Unlike planning obligations under Section 106, CIL loosens the relationship between an individual development and the size of its contribution to fund infrastructure, because it is an average cost distributed evenly across a number of developments. The amount of CIL to be paid in a specific case will not be calculated on the basis of the specific need for infrastructure. I think that takes care of the noble Earl’s point about cumulative development as well. We are looking at a generalised assessment and a generalised charge, because CIL is a strategic undertaking. For these reasons, I must ask the noble Earl to withdraw his amendment.

My Lords, I understand the point that the Minister made about replacing a house with a block of flats. However, I do not think she made any attempt to answer the points that I made with regard to agricultural buildings. When a farmer is forced to replace a building not through reasons of his own but to meet new hygiene or quality assurance standards, in order to stay in business he will do so, probably making no difference at all to the infrastructure. Why should that person be subject to a CIL charge?

My Lords, as I have said, CIL is a generalised charge. It is not done building by building or instance by instance. Maybe I am not making myself clear. I had better read tomorrow morning what the noble Earl has said and think about it.

My Lords, given what the Minister has said, I am not going to press this. I wanted to, because it is so important. I ask her to meet me at an early stage to go through this. It is very important for rural industry. At the moment she is delivering a body blow to farmers. The way that she has expressed this is totally contrary to everything she said about the general development order and small buildings. If farmers and those in the land management business are going to be faced with CILs like this, she is going to help destroy an industry.

My Lords, I talked earlier today about the way the GPDO will take care of most of these instances. I thought the noble Earl was raising a different point. I am happy to meet him and talk about this, and I hope I can give him satisfaction.

My Lords, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 137 not moved.]

Clause 204 [Charging schedule: examination]:

137A: Clause 204, page 118, line 30, at end insert—

“(9A) CIL regulations may make provision for examiners to reconsider their decisions with a view to correcting errors (before or after the approval of a charging schedule).”

On Question, amendment agreed to.

[Amendment No. 138 not moved.]

Clause 205 [Charging schedule: approval]:

138A: Clause 205, page 118, line 40, at end insert—

“(4) CIL regulations may make provision for the correction of errors in a charging schedule after approval.”

On Question, amendment agreed to.

[Amendment No. 139 not moved.]

Clause 206 [Charging schedule: effect]:

[Amendment No. 140 not moved.]

Clause 207 [Appeals]:

140A: Clause 207, page 119, line 27, leave out “The regulations” and insert “Regulations under this section or section (Liability) (5)(d)(ii)”

On Question, amendment agreed to.

140B: Clause 207, page 119, line 30, at end insert—

“( ) In any proceedings for judicial review of a decision on an appeal, the defendant shall be the Commissioners for Her Majesty’s Revenue and Customs and not the person appointed under subsection (1).”

[Amendment No. 140C, as an amendment to Amendment No. 140B, not moved.]

On Question, Amendment No. 140B agreed to.

[Amendment No. 141 not moved.]

Clause 208 [Application]:

[Amendments Nos. 141A to 142BA not moved.]

142C: Clause 208, page 120, line 47, leave out subsection (8)

On Question, amendment agreed to.

[Amendment No. 143 not moved.]

Clause 209 [Collection]:

[Amendment No. 143ZA not moved.]

143A: Clause 209, page 121, line 12, at end insert “; and section 208(7)(a) and (c) apply to a collecting authority in respect of collection as to a charging authority.”

On Question, amendment agreed to.

[Amendment No. 144 not moved.]

Clause 210 [Enforcement]:

144A: Clause 210, page 121, line 20, at end insert—

“(2A) The regulations may make provision about the consequences of failure to assume liability, to give a notice or to comply with another procedure under CIL regulations in connection with CIL.”

144B: Clause 210, page 121, line 24, leave out paragraph (c)

144C: Clause 210, page 121, line 41, at end insert—

“(l) for enforcement in the case of death or insolvency of a person liable for CIL.”

144D: Clause 210, page 121, line 41, at end insert—

“(3A) CIL regulations may include provision (whether or not in the context of late payment or failure to pay) about registration or notification of actual or potential liability to CIL; and the regulations may include provision—

(a) for the creation of local land charges;(b) for the registration of local land charges;(c) for enforcement of local land charges (including, in particular, for enforcement—(i) against successive owners, and(ii) by way of sale or other disposal with consent of a court);(d) for making entries in statutory registers;(e) for the cancellation of charges and entries.”

On Question, amendments agreed to.

[Amendment No. 145 not moved.]

Clause 211 [Compensation]:

145A: Clause 211, page 122, line 25, after “authority” insert “or other public authority”

145B: Clause 211, page 122, line 26, leave out “taken by the authority”

145C: Clause 211, page 122, line 28, leave out “by a charging authority”

145D: Clause 211, page 122, line 42, after “permit” insert “or require”

On Question, amendments agreed to.

[Amendment No. 146 not moved.]

Clause 212 [Community Infrastructure Levy: procedure]:

146A: Clause 212, page 123, line 35, at end insert—

“(s) procedures to be followed in connection with actual or potential liability for CIL.”

146B: Clause 212, page 123, line 35, at end insert—

“(2A) CIL regulations may make provision about the procedure to be followed in respect of an exemption from CIL or a reduction of CIL; in particular, the regulations may include provision—

(a) about the procedure for determining whether any conditions are satisfied;(b) requiring a charging authority or other person to notify specified persons of any exemption or reduction;(c) requiring a charging authority or other person to keep a record of any exemption or reduction.”

146C: Clause 212, page 123, line 38, at end insert—

“(3A) A power in this Part to make provision about publishing something includes a power to make provision about making it available for inspection.”

On Question, amendments agreed to.

[Amendment No. 147 not moved.]

Clause 213 [Secretary of State]:

147A: Clause 213, page 123, line 43, after first “authority” insert “(including an examiner appointed under section 204)”

On Question, amendment agreed to.

[Amendment No. 148 not moved.]

Clause 214 [CIL regulations: general]:

148A: Clause 214, page 124, line 7, after “provide” insert “, or allow a charging schedule to provide,”

148B: Clause 214, page 124, line 8, after “confer” insert “, or allow a charging schedule to confer,”

On Question, amendments agreed to.

[Amendment No. 149 not moved.]

149A: Clause 214, page 124, line 18, at end insert—

“(3) An order under section 210(10) or 217(2)—

(a) shall be made by statutory instrument, and(b) may include provision of a kind permitted by subsection (1)(a), (b) or (f) above, but may not amend an Act of Parliament in reliance on subsection (1)(f).(4) An order under section 210(10) shall be subject to annulment in pursuance of a resolution of either House of Parliament.

(5) An order under section 217(2) shall be subject to annulment in pursuance of a resolution of the House of Commons.”

On Question, amendment agreed to.

[Amendment No. 150 not moved.]

Clause 215 [Relationship with other powers]:

[Amendments Nos. 151 and 152 not moved.]

Clause 216 [Community Infrastructure Levy: amendments]:

[Amendment No. 153 not moved.]

Clause 217 [Community Infrastructure Levy: repeals]:

153A: Clause 217, page 125, line 26, at end insert—

“(2) The Treasury may by order repeal the Planning-gain Supplement (Preparations) Act 2007 (c. 2).”

On Question, amendment agreed to.

[Amendments Nos. 154 and 154A not moved.]

Clause 224 [Orders and regulations]:

154B: Clause 224, page 130, line 5, leave out “section 199,” and insert “Part 11 or section”

154C: Clause 224, page 130, line 14, at end insert “(and section 214(5)).”

On Question, amendments agreed to.

Clause 227 [Interpretation]:

[Amendment No. 155 not moved.]

156: Clause 227, page 132, line 1, leave out from ““land”” to “and” in line 2 and insert “includes buildings and monuments, and land covered with water,”

On Question, amendment agreed to.

Schedule 12 [Application of Act to Scotland: modifications]:

157: Schedule 12, page 180, line 15, leave out “(e)” and insert “(f)”

On Question, amendment agreed to.

Clause 232 [Extent]:

158: Clause 232, page 134, line 17, leave out “19” and insert “20”

159: Clause 232, page 134, line 19, leave out “137 to 144” and insert “131 and 137 to 146”

160: Clause 232, page 134, line 20, leave out “189” and insert “and 189;

(ea) in Part 10, sections”

160A: Clause 232, page 134, line 35, at end insert—

“(7) An order under section 217(2) shall extend to each Part of the United Kingdom.”

On Question, amendments agreed to.

Clause 233 [Commencement]:

160B: Clause 233, page 134, line 39, leave out “8” and insert “9 (except section 189(2) to (5) and paragraph 7 of Schedule 7)”

The noble Baroness said: My Lords, Amendments Nos. 160B and 161B are minor and technical amendments to correct an anomaly in the commencement clause. Clause 233(1) provides that the provisions of Parts 1 to 8 which confer power to make secondary legislation shall come into force on Royal Assent. This avoids the need to make a separate order commencing these powers before commencing the substantive provisions.

The effect of these amendments is that the provisions in Part 9 which confer power to make secondary legislation, other than those for which specific provision is made elsewhere in Clause 233, will also come into force on Royal Assent. I beg to move.

On Question, amendment agreed to.

161: Clause 233, page 135, line 1, at end insert “, or making changes to orders granting,”

161A: Clause 233, page 135, line 6, after “200,” insert “203(6A),”

161B: Clause 233, page 135, line 10, at beginning insert “Except as provided by subsection (1)(a),”

162: Clause 233, page 135, line 23, leave out sub-paragraph (v)

163: Clause 233, page 135, line 27, after “(5),” insert “(Meaning of “local authority” in planning Acts),”

On Question, amendments agreed to.

House adjourned at 11.55 pm.