To ask Her Majesty’s Government whether they have plans to legislate to introduce secret ballots for all employees to ratify decisions made at a company’s annual general meeting on the remuneration of that company’s directors and its five most highly paid employees.

My Lords, the Government have no such plans. The remuneration of company directors is primarily a matter for the company and its shareholders. Comprehensive reforms to the reporting and governance of directors’ pay in 2013 have boosted transparency for shareholders and given them a binding vote on companies’ remuneration policies. All company directors must have regard to the interests of employees in discharging their legal duty to promote the success of the company.

My Lords, my question starts, “Does the noble Baroness know?”. However, does the noble Earl know that the UK now has very high income inequality compared with most other developed countries? Further, does he know that, even with the coming living wage increases planned over the next few years, it is possible that the wage gap will still be the same by 2020 as it is now and as it was in 2010? Is it not time, after a decade of stagnation, that we had some thoughts about how we can try to bring about a narrowing of that gap? Will the Minister please go back—or at least give an indication that he will go back—and come forward with some ideas about how we will narrow it?

I thank the noble Lord for his question. He raised a number of points, including the national living wage, which is about to come into force. We must also remember that the national minimum wage has had one of the biggest increases in its history. We take into account all the matters that he raised. He referred also to employee engagement and how important that is in the workplace.

My Lords, is the Minister aware that, at a time of fast economic growth for several decades, the ratio of remuneration from the top to the bottom in companies—as a member of the Royal Commission on the Distribution of Income and Wealth I remember the numbers going back to the start of the 20th century—came down from 100:1, to 90:1, to 80:1, to 70:1, winding up at 15:1 or something like that? Would he not agree with the Labour Party’s manifesto that there should at least be workers’ representatives on boards’ remuneration committees?

At least the noble Lord, Lord Lea of Crondall, has asked me a question that I can answer. The answer is, of course, no. My right honourable friend the Chancellor of Exchequer has been working throughout his period as Chancellor to reduce inequality.

Oh!

My Lords, there is always more that can be done and we hope that, with the policies we have introduced, inequality will reduce.

My Lords, does my noble friend think that many people in the country agreed with that proposal in the Labour Party manifesto last May?

We all remember what happened at the general election in May. I, by the way, was in Kuala Lumpur at the time. I will not bore noble Lords with what I was doing there, but I do, of course, agree with my noble friend.

Let us get back to the Question. This raises important issues about transparency and equity. In 1980, to back up what my noble friend was saying, the median pay of directors of FTSE companies was £63,000 and the ratio to the average wage was 11:1. In 2013 that ratio had risen to 130:1 and median board pay is now £513,000. You have tried transparency, it does not work. What plans have the Government really got to regulate those who abuse their position by taking excessive pay and whose warped judgments prioritise short-term gains instead of long-term growth?

My Lords, regulation of pay throughout the banking sector, the high pay and the differences between all these subjects—I am sorry, I have lost track. Basically, it is important that there is equality in pay, and regulation of various sectors is so important in this area. I will write to the noble Lord. I apologise for that answer.

My Lords, in the interest of the transparency and effective democracy to which the Government constantly refer, will the noble Earl ensure that, in all private organisations, when it comes to the forthcoming discussions about party funding, no individuals will find themselves contributing to the funds of a political party they do not support?

The noble Lord is quite right. I agree.

My Lords, in an earlier answer the Minister made a somewhat surprising statement to the effect that his right honourable friend the Chancellor had been working throughout his tenure to reduce inequality. Can he tell the House how things would have been different if he had not?

Inequality is reducing, my Lords. As I said earlier, we are working hard on the national minimum wage increases, which are the highest ever, and we have the national living wage coming in in April.

What conversations do the Government have with the Welsh Assembly? GDP in Wales is only 67% of that throughout the rest of the United Kingdom.

My Lords, I am glad that the noble Lord, Lord Roberts, mentioned the situation relating to Wales. There are always continuing relationships between the Assembly in Wales and the department here in London.

My Lords, given that fewer than one in four eligible voters voted for the Conservatives in the election, does the noble Earl have much confidence that the majority of voters also approved of the Conservative manifesto’s proposals?

My Lords, I did not quite catch the last bit but I caught the first bit. An awful lot more voted for the Conservatives than they did for the Liberal Democrats.

To ask Her Majesty’s Government whether, under their shared ownership scheme, a property owner can let out a room to another person, and if not, why not.

My Lords, shared ownership has an important role to play in helping those who aspire to home ownership but may be otherwise unable to afford it. Grant-funded shared-ownership leases do not allow subletting, other than in exceptional circumstances, to prevent any use for commercial gain and to ensure that affordable homes are there for those who genuinely need them. However, individual shared owners are still able to take in a paying guest or lodger.

My Lords, I thank the Minister for his Answer but would like some further clarification on why the subletting cannot be done up to a maximum of £7,000 a year. We have young people in London working in the public sector who are totally unable to afford the overheads of facility costs and council tax but who are keen to get into shared ownership.

Shared-ownership leases prohibit subletting by the leaseholder, as mentioned earlier, to protect public funds and to ensure that applicants are not entering shared ownership for commercial gain. Landlords can make an exception in exceptional circumstances and they have to consider such requests on a case-by-case basis.

My Lords, can the Minister tell us what proportion of homes in Great Britain today are under shared ownership? I wonder if the Government are doing any research to find out how successful this sector is. I know, for example, that when you want to move it is no simple matter. The legal attitudes to this are really quite difficult. Can the Minister inform us what research the Government are doing into this?

Yes, indeed. I will have to write to the noble Baroness with the actual statistics but we are looking at this as one of several serious options for ensuring that young people get a hand on the housing ladder. The noble Baroness may know that a shared owner can come in and purchase a share of between 25% and 75%. We are following up on the current statistics but this is a future policy that we are working on.

My Lords, if the Minister cannot tell me now, will he write to me with information about the current rate of shared ownership in London and the south-east and the Government’s prediction of what it will be in the light of their housing policy? Is the Minister aware that many people, such as nurses and police officers—lots of people working in the public sector—despair of being able to take jobs that are available in London, and that staff recruitment is very weak?

Indeed, this is the very thinking behind our policy, which is to enable those who do not earn too much to get a hand on the housing ladder by buying a share. This would include the very people who the noble Baroness has mentioned, such as teachers and particularly those who work in the very important healthcare and NHS sector. It is exactly what the policy is about. It is obviously more expensive in London—we have had many discussions on that in the housing Bill—but we believe that it is possible. If someone bought a 25% share of a two-bedroom house in London the deposit they would put down would be £3,800, which I understand could still be quite high, but is possible.

Will the Minister clarify the position with regard to the actual term “lodger”? Even the Revenue now has a special provision and has increased the amount you can have if you have a lodger. I would have thought it logical that everyone would want people to be able to afford these properties. Can he therefore explain the position, and whether the point to which he has just referred will be amendable in the housing Bill?

I mentioned that people who take a share in a house in a shared ownership scheme can take in a lodger, but I will answer the noble Baroness’s question by saying that there is no statutory definition of a lodger. The term is known in case law, where the test as to whether someone is a lodger or a subtenant is determined by the degree of control retained by the householder over let rooms.

My Lords, does the Minister appreciate the House’s understanding of the care with which he has approached this issue of home ownership and the question of shared space, and how it contrasts with the way in which the Government introduced the bedroom tax?

I think the noble Lord will know that the Government’s main aim is to increase the supply of houses across all tenures. We are focusing today on one of many aspects of our policy, which is to ensure that more people, particularly young people, are able to get on to the housing ladder. It is an urgent and important part of what we are doing.

My Lords, in the rent-a-room scheme, to which the Minister referred earlier, there is a cap. Is that cap costing the Revenue very much; and if so, how much is it actually costing?

I do not have a figure for the cost, but the noble Lord might like to be reminded that the income cap for this shared ownership policy has gone up from £60,000 to £80,000 in England, and I am pleased to say that it has gone up to £90,000 in London. That means that we are allowing 175,000 more households to have access to shared ownership.

My Lords, is the fact that London houses are going up in price by £500 a day, according to the January figures, likely to have an effect on how many people can afford even a shared home?

Obviously when prices go up it has an effect. However, we have put a lot of thought and research into this particular policy, in conjunction with other policies, and we believe that it is affordable. In London, for example, we look at a two-bed house costing £275,000, and we believe that the figures show this to be affordable.

To ask Her Majesty’s Government what representations they have made to the Palestinian Authority following the broadcast of programmes on official Palestinian Authority television encouraging violence against Israeli citizens.

I beg leave to ask the Question standing in my name on the Order Paper and give notice to the House of my non-financial registered interest as president of CFI.

My Lords, we regularly raise incitement with the Palestinian Authority. The Minister for the Middle East, Tobias Ellwood, did so during his visit to the region in February. The UK’s consul-general to Jerusalem last discussed incitement with President Abbas on 17 March, including our concerns about television broadcasts. We also raise incitement with Israel. We encourage the revival of a tripartite committee on incitement to address precisely these issues.

I thank the Minister for her Answer. Since September 2015, ironically, 34 Israelis have been killed in terror attacks and there have been 206 stabbings, 83 shootings and 42 car rammings. Is the Minister aware that only three weeks ago—on 1 March—on a programme on the official PATV called “Children’s Talk”, a young girl recited a poem which included the line: “To war, that will smash the oppressor and destroy the Zionist soul”? Can the Minister be certain that this sort of appalling incitement is not supported directly or indirectly by the British taxpayer? On the day after the atrocities and shocking acts in Brussels, where another 34 innocent lives were snuffed out, will the Minister join me in condemning incitement and terror, wherever they occur?

My Lords, I do indeed join my noble friend in condemning incitement and terrorism wherever they occur. It was a mark of respect from this House that at 11 am today we had one minute’s silence in memory of the appalling events with the murder of those in Brussels. I know the Prime Minister has said that we will do all we can to help there. I also note that both President Abbas and Prime Minister Netanyahu expressed their opposition to the terrorism that had taken place in Brussels.

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My Lords, if I may just answer the mainstay of my noble friend’s question, he asked about expenditure by the British taxpayer. No expenditure by the British taxpayer supports any form of incitement or terrorism, either in Israel or in the Occupied Palestinian Territories. We support projects that support peace, such as the project by the NGO Kids Creating Peace, which brings together young Israelis and Palestinians to learn why peace works.

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My Lords, we have plenty of time to go around the House. The House was not indicating who it wanted to hear from next but I suggest that we go to the Labour Benches, if among them they could decide who they would like to go first.

My Lords, is the Minister aware that I have a film clip on my computer—I am happy to show it to her—which shows a little girl aged three and a half saying on Saudi television that she hates Jews because they are apes and monkeys, and this is what is repeated in the Koran? Then, straight to camera, the announcer says, “Is Allah to be praised that, Bismillah, this little girl, has such supporters after her?”. This was broadcast across a whole range of Arab countries. Will the Minister perhaps join me in condemning this kind of broadcast quite publicly? I am happy to send her the film.

My Lords, noble Lords around the House have made me aware of matters of incitement that have been broadcast, not only on television and media outside the Occupied Territories and Israel but within both. We give no equivalence to incitement, whether it is against those who are Israelis or those who are in the Occupied Palestinian Territories. What we say is that incitement is wrong.

My Lords, I am reluctant to enter into a tit-for-tat argument but is the Minister aware of a devastating report by two Israeli organisations into the recent abuse and torture of Palestinian prisoners at the Shikma interrogation facility in Ashkelon? If so, will the Government consider joining our European partners in making appropriate representations to the Israeli Government?

My Lords, our diplomats in Israel make regular representations of concern about events there. As I have already said, we draw no equivalence with regard to incitement and activity. We say that it is important for those who want to achieve peace to ensure that they work together. It is only by negotiating a peace that we can achieve it; incitement is an enemy of peace.

My Lords, the Minister has mentioned the consul-general in east Jerusalem and our diplomats there. Can she tell the House what representations have been or will be made to the consul-general following the International Women’s Day message on the official Palestinian Authority TV channel on 7 March this year, which urged Palestinian women to remember the terrorist Dalal Mughrabi who led the lethal coastal massacre which killed 38 Israelis, including 13 children?

My Lords, I am able to give a little detail about the most recent contacts, which might help the noble Lord. In January, Her Majesty’s consul-general in Jerusalem met Fatah Central Committee member Jibril Rajoub, who had called the recent attacks there “heroic”. Our consul-general also met the Minister of Health, Jawad Awwad. The ministry had issued a statement praising the Tel Aviv New Year’s Day shooter, Nashat Melhem.

As for television, the director of pro-Israeli NGO Palestinian Media Watch describes decades-long propaganda campaigns on PA-sponsored children’s programmes which depict Jews and Israelis as enemies of God. Her Majesty’s consul-general in Jerusalem has raised this with the Palestinian Authority as part of broader lobbying on incitement since this Question was tabled. I thought it would be helpful to update the noble Lord on that.

My Lords, raising the matter of incitement, to use the noble Baroness’s word, does not seem to have had much effect. Will she remind the House of the amount of aid that we give the Palestinian Authority, both directly and via EU projects? Will she consider saying clearly to the Palestinian Authority that it is quite unacceptable for it to be taking British public money on the one hand and, on the other, using its own resources to subsidise networks that produce the propaganda in favour of terrorism that we have heard quoted in the House today?

My Lords, the noble Lord is correct to point out that, through DfID, we provide significant humanitarian aid to the people who are suffering in Gaza. It is conditional on the basis that it goes only to people in need. The Palestinian Authority should make best efforts to resume control of Gaza and re-engage in discussions with Israel about how peace may be achieved.

My Lords, there is no justification for terrorism or for the actions that we saw yesterday. We unequivocally condemn them. The Minister is absolutely right. Our focus is on keeping the two-state solution and hopes for peace alive. We need to invest in interfaith, intercommunity activity. Will she commit to doing more of this because, at the moment, it is extremely limited?

My Lords, I whole- heartedly agree with the noble Lord. During the early part of this year, we reopened bids for the Magna Carta Fund for Human Rights and Democracy, which is FCO-based. It has been doubled this year to its highest ever level. We will welcome bids if they qualify for support. The noble Lord is right; we need to do more to help.

To ask Her Majesty’s Government how many army helicopter pilots are being required to repay wages apparently paid in error; and how many have resigned as a result.

My Lords, in 2012, the MoD discovered that a number of Army pilots were being overpaid as the result of an inconsistent interpretation of policy over a prolonged period. That resulted in 146 personnel receiving incorrect pay. In accordance with standard government practice, arrangements have been made to ensure personnel now receive the correct pay and recovery action for overpayments has been initiated. Since notification of the recovery action, we are unaware of any linked resignations.

My Lords, I am grateful to my noble friend for that reply. In view of the fact that, in public at least, some 200 personnel have apparently been involved in this matter, what steps are being taken to maintain the operational effectiveness of the Army Air Corps, both for the present and in the future?

My Lords, the Army has done several things. Most importantly, it has implemented a comprehensive manning strategy for building and sustaining the Army Air Corps. There is also now a financial retention incentive for Army Air Corps pilots which has resulted in an 81% take-up rate, including from personnel affected by the recovery of previous overpayments. In addition, a more flexible—and therefore more attractive—career as an aviation specialist will be available, including recruiting some direct entry, senior other ranks aircrew and improving the return on initial training investment.

First, and less importantly, is the noble Earl aware that admirals have been overpaid? That is an interesting point. More importantly, will this impact at all on the increased number of naval pilots that we need to recruit and train for the new Sea Lightning aircraft that are coming in? We have been promised that they will be ordered, and we will need those pilots, so this must not impact on recruiting and training.

Let me first make it clear that the overpayment referred to in the Question has not affected Royal Navy air crew, nor indeed RAF pilots. I can give the noble Lord the reassurance that he seeks, because the action now being taken is in the wake of mistakes made in the past. The system is now working correctly.

My Lords, I served as Colonel Commandant of the Army Air Corps from 2004 to 2009, and many of the pilots involved came under my control and command. Will the Minister accept that, although remedial measures are being taken, stories such as the one that has given rise to the Question asked by the noble Lord, Lord Trefgarne, are enormously damaging to morale? Will the Minister commit to publicly refuting these stories and getting a much better message out there? In the context of the regular Army having been reduced from 102,000 to 82,000 in the lifetime of the coalition and Conservative Governments, and now having fallen to a strength of around 79,000, such damaging stories are extraordinarily destructive of morale and do not help the safety and security of our country.

I can only agree with my noble friend—these stories are damaging. At the same time, the Army is very aware of the need to retain and, indeed, recruit skilled personnel of this level. It has been careful to adopt a case-by-case approach when overpayments have occurred, taking account of people’s individual circumstances when they are brought to its attention; certainly, that includes hardship where necessary. What we are now hearing in general from Army pilots is that they like what they see in the package available to them, in terms not only of pay but how their skills are being used. Many are signing up now for five years.

My Lords, when I served as a Wales Office Minister, officials came in to tell me that a Harrier jet had crashed into the sea off west Wales— a very expensive piece of kit was lost but a more expensive pilot was saved. The point is that we invested more in the pilot than in the plane. I cannot for the life of me understand why the Government would be prepared to lose some of our most experienced and expensively trained Army helicopter pilots over this overpayment issue. I hear what the Minister has said and hope that the Government will use some common sense and, if necessary, write off this debt rather than lose these very skilled servicemen—or perhaps the Government will prove that my late mother’s advice to me when I was young was correct. She told me that in life, I would find that sense was not that common.

My Lords, I take the noble Lord’s point about common sense. At the same time, he will realise that this is public money; it cannot simply be written off in bulk. Having said that, each debt will be dealt with individually and recovered over a long period. Recovery from serving personnel commenced in January, less those that have submitted an objection to recovery, and we have not seen anyone cite this issue as the reason for leaving the Army Air Corps since that recovery process started.

My Lords, we are where we are as a result of human error. In just over a week, the new employment model commences for the Armed Forces. Why should we be confident that the transfer will be error free?

My Lords, the pay system that is now in place is mature, and people have got used to using it. There is far less scope for error, although I cannot obviously give a guarantee that no errors will ever occur. More generally, running in parallel to this is a five-year tri-service review of flying retention pay, which is currently being staffed and should put in place a sustainable and more retention-positive remunerative package for the air crew of all three armed services.

That the draft regulations laid before the House on 22 and 25 February be approved. Considered in Grand Committee on 22 March.

My Lords, I take this opportunity to apologise profoundly to the House for missing the Question asked by the noble Lord, Lord Brooke of Alverthorpe, and to thank my noble friend Lord Courtown for answering in my stead. I would be very happy to meet the noble Lord, Lord Brooke, to discuss the issues, if that would be helpful. I beg to move.

That the draft regulations laid before the House on 2 February be approved. Considered in Grand Committee on 22 March.

That the draft regulations laid before the House on 25 February be approved. Considered in Grand Committee on 22 March.

My Lords, I shall speak also to the other amendments in this group. If I can make a slightly irrelevant comment, if the EU working time directive were to apply to Ministers in this House, the two Ministers who are dealing with this Bill might be better treated than they are now. That is a dig at the Chief Whip.

There cannot be many occasions when an amendment commands the support of all parties in this House and of most Members of Parliament, would command widespread support from many parts of London and possibly other parts of the country where people are affected and which, were the Minister to agree to the amendment or something like it, would mean that she would be serenaded in the headlines of the Evening Standard. That is a pretty good win-win, and there cannot be many of those around, so later on I will give the Minister a chance to say that she accepts this amendment.

If I were a Minister, I would not understand why officials were advising me not to accept the amendment because there is nothing wrong with it. It is absolutely right in terms of local democracy for local people to have a say and right in terms of good governance in the benefits to London and other parts of the country. It is a total win-win for the Government. I should have kept this amendment until there was a Labour Government, and they could have benefited from it, but I have generously given it to the Minister today.

Given the widespread support, outside people have got on to me. I pay particular tribute to the Ladbroke Association and its chair Sophia Lambert who has been extremely helpful and has given me and other people a lot of advice. The amendments in this group are actually a complete Bill. If the Minister were to adopt them, or much of them, her officials would have been saved a great of work in drafting something. Not only has there been widespread support, but there have been many previous instances in this House when Members have put forward legislation with similar proposals. I am thinking of the noble Baroness, Lady Gardner of Parkes, Lord Jenkin of Roding, the noble Lord, Lord Selsdon and the noble Lord, Lord Berkeley, who have all tabled amendments to Bills. The noble Lord, Lord Selsdon, has also tabled an excellent Bill himself with the help of surveyors from the Pyramus and Thisbe Club. In the Commons, several MPs have put this forward as well, including Karen Buck, MP for Westminster North. Essentially, this proposal goes across parties; I hope that the Government will feel able to support it.

My Lords, as the noble Lord, Lord Dubs, said, I discussed this at Second Reading and his amendments here are a great improvement on what I have commented on before, but there are still one or two things that certainly need to be ironed out before Report.

In his first amendment, Amendment 101BB, there is no mention anywhere—unless he is planning to put in a code of practice—that there should be no weekend work in these places. Without doubt people require a weekend to recover from a heavy week’s work. Many areas allow work only from 7 am to 1 pm on a Saturday, but even that should not be permitted, as it will really cut into your one quiet time of the week.

On another important point—and having looked at every detail of these words I am not sure whether I have missed the point—there should be no work permitted before the granting of permission. Often, neighbours where I lived told me that they woke up to find someone breaking through their wall. That is not something that you would want or expect.

I have one real objection to the noble Lord’s second amendment, Amendment 101BC. That is to the word “presumption” against subterranean development. I do not like a presumption about anything. Earlier the noble Lord, Lord Dubs, commented on whether a family felt that it needed something more, which was a very subjective assessment. Fortunately he has now removed this and made it much more objective. That is good. But I do not like “presumption” and do not want to see it. It is far better for things to be either in law or not in law, but just to be presuming that something is there worries me.

“Notice to adjoining owners” in Amendment 101BD is interesting, but I move on to Amendment 101BE. That is about the surveyors holding a sum. I thoroughly approve of that. When work went on behind me before I moved house that is exactly what happened. In fact, there was no need whatever to draw on the amount, because the work all went quite well, but it is important that it does go well; the security of having a deposit held is important.

I recall cases, one in Montpelier Square and another in St John’s Wood, where people went bankrupt, leaving a giant hole in the ground, which filled with water and turned into a disastrous pool under the house. Because the people had gone bankrupt, no one ended up with any liability for it at all. It is very important to determine a sum to be held. I was surprised at the amount required to be held, for what was only a single basement going in near me, but it was right that it was a large amount, because it should relate to the area and the cost of the works that would have to be done to make the place liveable again.

I do not know whether more could be done to deal with bankruptcy cases, to help people to get out of that hole, but that could be looked at.

My Lords, the noble Lord, Lord Dubs, is definitely on to something here. What one reads about in the Evening Standard and elsewhere being done to basements is amazing. I do not know whether anyone else here watches the “Grand Designs” programme, but being an addict of property porn I watch it from time to time. Recently, there was an example of a small, typical mews house in a mews area of London, where the owner decided that he wanted to have a ballroom in the basement and, underneath that, it could be collapsed into a swimming pool. This was constructed, after immense difficulty affecting the local inhabitants. Unfortunately, a subterranean stream was discovered when they dug down into the basement, which flooded the whole area. That is the sort of thing can happen as a result of the megalomania, frankly, of some people. One billionaire in London wanted to show all his 24 Jaguars in an exhibition space in his basement. This is absurd and should not be allowed; it will have consequences.

Secondly, the noble Lord is absolutely right: party wall agreements do not protect people at present. I live in Hammersmith and Fulham, and I know from personal example that the noise is horrendous. My noble friend Lady Gardner is quite right: you want some relief at weekends from the noise. A friend of mine has had to vacate her property in Piccadilly, where someone is constructing a huge bar and God knows what in the basement, to live somewhere else at her own expense, because she cannot live with the noise at night: it is horrendous. That is all-night work, never mind at weekends.

So London is experiencing a real problem at the moment, and not just in rich areas. As a former MP for Orpington, I could give examples of what is happening there. Although I understand that the amendments may not be perfect, as my noble friend Lady Gardner said, I hope that the Government will be sympathetic. It is a widespread problem in London, and the Government should look at it with great care.

My Lords, I apologise to the House, and in particular to the noble Lord, Lord Dubs, with whom I have had the pleasure of discussing the issue, for arriving slightly late. I was actually delayed on the District line; I hope that it was not by some underground development in South Kensington, where we were held.

I was at one point tempted to sign the noble Lord’s amendment because, like my noble friend, I think that he is very much on to something. Before my noble friend on the Front Bench was a Minister, and over several years, there have been talks between local authorities, particularly in London, and the department. There have been various efforts—my noble friend Lord Selsdon was trying to get something moving for a time—to propel a response from the Government. Time and again, we are told that Article 4 directions are the answer. We spoke a little about Article 4 directions last night. I marvel to see my noble friend here on the Front Bench after her efforts after midnight last night. Article 4 directions are not the whole answer here. It is the strong view of local authority leaders in London, across party, that there needs to be a statutory response here. The fact is that in many cases one is dealing with extremely wealthy people who will stop at nothing to push through. It is nothing to them to spend thousands of hours and tens and hundreds and millions of pounds in pushing these things. Frankly, communities need defence here and I think some statutory response is needed at the end of the day. I look forward to hearing what my noble friend has to say and I congratulate the noble Lord, Lord Dubs, on and thank him for bringing this issue before Parliament.

My Lords, I endorse what the noble Lord said about my noble friend, who managed to survive yesterday’s long sitting. He hoped to get on before midnight, but unfortunately that was not possible, or perhaps fortunately because otherwise we might have been there until 2 am instead of something like a quarter to one. My noble friend has devoted a lot of time and energy to what is clearly a pressing issue.

There seems to have been an outbreak of megalomania in certain circles in London, in particular. From a distance, one is not as involved with the process, but every so often, just reading the Standard, one hears of case after case of absurd would-be developments. I have friends living in north London where similar idiotic adaptations are made to buildings. We warmly support the amendments and I hope the Government will acknowledge the real problem here and agree to deal with it. While they are doing that, could they protect the block of flats in Balham where I have a flat from the underground workings for Crossrail, which is likely to cause certain problems to me and to lots of other people?

My Lords, I join the noble Lord opposite in congratulating the noble Lord, Lord Dubs, on his tenacity last night; not leaving until, I think, gone midnight. My heart sank when I realised that he would not get on to have his say.

The noble Lord was one of the first people I met when I came into this House and we share a common interest. I have great sympathy for anyone who suffers some of the things he talks about. We have discussed the Death Star basement in this House, and the collapsing mansion, so I am not in any way denying that these issues exist and I thank the noble Lord for bringing them to the House’s attention. But of course I am going to disappoint him because I am going to tell him that the powers that he has described already exist. In fact, in some cases they are being implemented.

Local authorities are already able to prepare codes of practice for subterranean works in their area, and many prepare area-specific guidance to help owners ensure that they carry out the works legally and safely with a minimum impact on neighbours. As this amendment replicates powers that already exist, it is unnecessary to include it in the Bill.

I turn to Amendment 101BC. Local planning authorities are able to bring forward specific local plan policies limiting the scope of basement development if they consider that such developments are a particular issue in their area. In such cases, any planning application should then be determined in accordance with that policy. Basement development is not an issue in most local authorities, although I accept what the noble Lord said—that it is coming to an authority near him. But we know that local authorities in areas which are particularly affected by basement developments, such as Kensington and Chelsea and Westminster, are already in the process of introducing appropriate local plan policies to mitigate the impacts of such developments.

We have looked at a graph of how the trend appears to be going. What we are seeing now—to put it in context—is the hangover from previous permissions that are nevertheless causing distress in the area. I would be very interested to see how things look in, say, six months to a year from now. The amendment is therefore not necessary for the same reasons that I have explained for Amendment 101BB.

With regard to Amendment 101BD, the Party Wall etc. Act provides legal protections to owners of adjoining properties, but it is not in place to protect owners beyond next door, as there is unlikely to be damage to properties beyond the current distances set out in the Act. Similarly, introducing a new offence, as this amendment proposes, would not provide any greater protection to adjoining owners. In any case, there is no evidence of significant numbers of cases where notices required under the Act are not being given in respect of subterranean developments.

In addition, the amendment before us would introduce a new liability that goes beyond those currently imposed under the Limitation Act 1980. It would be difficult to justify singling out subterranean development over other forms of development for this enhanced liability. The Party Wall etc. Act applies to most subterranean development work and already provides for security for expenses to be covered by the award between the parties. Therefore, Amendment 101BE is also not necessary.

The noble Lord made the point that noise is not usually dealt with in planning permission. However, local authorities can consider local impacts, including noise pollution, when granting planning permission. The NPPF deals with noise, stating that, where relevant, it should be considered by the local authority in its planning decision. The noble Lord made the point that the GPDO allows basement development, but it is for individual local planning authorities to determine if development is within the scope of national permitted development rights.

The noble Lord also made the point that the Article 4 process is too burdensome and bureaucratic, and so local authorities are unlikely to follow that approach. It can take six to 12 months, but it is not particularly burdensome or bureaucratic—if I had eyes in the back of my head, I would probably see my noble friend behind me shaking his head—although I accept that this is a particular problem in particular parts of the country.

I turn now to Amendments 101BF, 101BG and 101BH. As I have already set out in response to the noble Lord’s previous, related amendments, and as I have just said, basement developments are not an issue in all local authority areas. Existing powers are in place which enable local authorities to adopt an appropriate local approach to mitigate the impacts of such developments where necessary. Similarly, existing legislation protects adjoining property owners from the potential impact of such developments. I therefore ask the noble Lord to withdraw his amendment.

My Lords, I am grateful to all noble Lords who took part in this debate. I know that there are others who, because of the timing this morning, were probably not aware we were doing this now and would otherwise have been here. I am grateful to the noble Baroness, Lady Gardner, for what she said and I very much agree with her. Amendment 101BH suggests a schedule of provisions for a local authority code of practice, in which one of the issues is,

“the hours of construction and excavation, and ... particularly noisy types of construction and excavation”.

That could deal with both the time of starting and weekend working, although it may need strengthening. I agree entirely with the principles that she put forward about weekends and the starting time. I think she had a third point, but I am not quite sure what it was. I am sorry.

Presumption.

Yes, presumption. Frankly, if the Minister were to accept the principle, I would be happy to drop the word “presumption”. I put it in because of the sheer frustration felt by people who approached me saying, “For heaven’s sake, just stop all these things”. Most people would like that presumption, but if it made for better law, the word would not have to be there. I think local authorities would understand what they could do.

I am grateful to the noble Lord, Lord Horam, for the examples that he has given me, and to the noble Lord, Lord True, with whom I have had a discussion on this. He speaks with the authority of being leader of an important London borough. If he feels that his powers are insufficient to deal with the problem, I have to say, with due respect to what the Minister said, that we have to listen to local authority leaders. They are the ones in the firing line and who want to do best for the people in their community. That is what they are elected for. I mentioned earlier that I bumped into the leader of Camden Council, who said the same thing. She said that, despite the powers that the Minister said local authorities have, there are not enough: they need more powers to deal with these things. I asked whether I could quote her and she said yes. That conversation took place at about 10 am this morning, so it is hot off the press.

To deal with the comments that the Minister made, clearly her view is that powers already exist. Frankly, they do not. She said that local authorities could prepare codes. Yes, they can, but they are not enforceable. The point of the codes in my amendment is that they are enforceable. Local authorities can have these codes, but they cannot make them happen. I do not want to get into a long debate on the Party Wall etc. Act. All the advice that I have had is that it is insufficient for this purpose. It does some good things, but it does not deal with all the problems I described. I have to act on the advice that I have been given from people who know more about it.

The noble Lord is quite right about the code. We have a code, but the question is enforcing it. I should have made clear on Article 4, which he has not mentioned, that using Article 4 directions, in any case, is chasing the game, in football parlance, and takes time. You then cannot charge a fee, so in many cases you immediately lose the ability even to charge a fee for processing the planning application, which is then necessary under an Article 4 direction.

I am most grateful. That deals with most of the other arguments.

I hate to put it this way but I think that the Minister has been trapped by her civil servants. I have been a Minister; I know what happens. Sometimes you just have to say, “No, I’m not happy, you’re pushing me into a position that I don’t want to be in, because in my heart of hearts I believe in a modification of policy”. That is what I said. I cannot help thinking that, if the Minister were to reflect, she would say that the weight of opinion is entirely against her and against the advice that she has been given. These are not things that I have invented. Local authority leaders are individuals of substance. They are elected to represent their areas and they want to do what is best for them, so this is not some political fantasy. It goes across the party divide. It is not something that the Labour Party has invented. In fact, far more Conservatives have approached me than Labour people. So I am not being at all partisan on this.

I would just like the Minister to think again, otherwise we will have to have this debate again on Report. I would much rather we debated a proposal from the Government. Then I would be happy to say, “Fine, that’s good”. I am happy to give way.

No, I was just moving in my seat.

I am so sorry. We are all a bit tired after yesterday evening. I misunderstood that.

I am not happy about this. The weight of opinion is against the Minister. I deeply regret the line that she is taking. I hope that she will pause to reflect over Easter, otherwise I will have to bring this back. In the mean time, I beg leave to withdraw the amendment.

My Lords, I rise to move Amendment 101BGB. We are moving on to Clause 142, which is about planning obligations—Section 106 and so on.

This clause sets up a new procedure for resolution of disputes and there is a new schedule in the Bill which forms new Schedule 9A of the Town and Country Planning Act 1990. It sets up a new and quite complicated procedure for resolving disputes on Section 106 obligations when the local planning authority and the applicants are having difficulty coming to a conclusion. My amendment simply applies this to Section 106 agreements in relation to housing, rather than Section 106 agreements as a whole.

It is generally true that there are two types of Section 106 agreements. The first relate to housing and affordable housing. They are often very controversial and difficult to reach conclusions on; indeed, consideration has recently been given to ways in which they can be lifted, or their alleged burden reduced. These are in a wholly different category from normal Section 106 agreements, which simply provide necessary local infrastructure, nowadays closely related to the actual site of the application. This procedure seems long, convoluted and complex compared with ordinary, simple Section 106 agreements, and may result in applicants dragging out discussions longer than is necessary in the hope that they can get away with paying a bit less.

There are perhaps more important amendments in this group; however, it seems to me that the Government want to use a sledgehammer to crack what are in fact quite small nuts. I beg to move.

My Lords, my name is attached to Amendments 101C and 101D. I can be brief because we discussed the issues from which these two amendments derive during our consideration of the housing elements of the Bill earlier in Committee. Amendment 101C makes it clear that the Bill should be about all tenures of housing, not just owner-occupation. Amendment 101D would leave out lines 6 and 7, which give the Secretary of State the power to define affordable housing however he wants to define it. That power is a problem and those words should be removed from the Bill. I hope the Minister will concur.

We discussed in some detail the definitions of affordable housing and affordability. I am concerned that the Government muddle the two terms. We have a statement right at the beginning of the Bill that starter homes are to be defined as affordable homes, but for many people they are not affordable at all. Given all the evidence we have had from organisations such as Shelter, it seems to me wrong to use terms that cannot be justified. It seems even more wrong to give the Secretary of State the power to redefine terms which are already wrong. “Affordable” and “affordability” have clear dictionary definitions, and whichever dictionary the Minister cares to consult in the Library, the definitions are always the same: they relate to people having the resources to pay the bills. Given that many people cannot pay the cost of a starter home, it is wrong to define a starter home as affordable.

I hope the Minister will be able to respond, but these amendments will probably be brought back on Report in a form that joins them to other concerns about the nature of affordability.

I take the noble Lord’s point, and I think many of us would agree that the Government’s notion of affordability is far removed from that of most other people, but the thrust of the amendment is surely right. What alternative is in the noble Lord’s mind to ensure that there is a definition that he, I and many others would regard as being related more to the circumstances and means of those who wish to occupy these properties?

My Lords, I agree with the noble Lord. We discussed this at a much earlier stage in Committee, in the context of the fact that affordability ought to be defined in relation to people’s incomes and median incomes, and that is the point with which I entirely concur.

My Lords, I intervene briefly to raise an issue that I touched on at Second Reading and again in the debates we had on the right to buy for housing associations and the impact of Section 106 agreements on the voluntary agreement with the National Housing Federation, which says:

“Every housing association tenant would have the right to purchase a home at Right to Buy level discounts, subject to the overall availability of funding”.

A large number of housing association properties have been built under Section 106 agreements. In the pilot scheme currently under way, properties built under Section 106 are excluded from the right to buy. The question I pose to the Minister—she may not be able to answer it today—is whether the powers given to the Secretary of State by Clause 143(2) to make regulations concerning Section 106 could be used to lift any restrictions that may exist on Section 106 developments, which would then enable the right to buy to be exercised by tenants, which at the moment may be precluded by the agreement between the housing association or the developer and the local authority.

Unless something is done about the current restrictions on Section 106, a very large number of housing association tenants, who may be looking forward to exercising the right to buy, may find that it is denied by Section 106. So the question is whether Clause 143(2) can be used to lift those restrictions and enable the expectations of the housing association tenants to be realised.

My Lords, the noble Lord, Lord Young, has given me yet another argument for why we should reject Clause 143. Amendment 102B is in my name and those of the noble Baroness, Lady Parminter, the noble Lord, Lord Best, and the right reverend Prelate the Bishop of St Albans. It also has the support of my noble friend Lady Warwick, chair of the National Housing Federation, who cannot be in her place today. I also declare my intention to oppose the Question that Clause 143 stand part of the Bill.

In rural areas, housing associations build good-quality small-scale developments in partnership with local communities, providing much-needed affordable homes. Of the 281 homes built in four years by Two Rivers Housing in Herefordshire and the Forest of Dean, 109 were delivered through Section 106 agreements, many on small sites of fewer than 10 units. For Two Rivers, as for so many housing associations, Section 106 is critical to the delivery of affordable homes.

Yet in 2014, the Government attempted to exempt developments of 10 homes or fewer from having affordable housing contributions levied on them. The Rural Housing Policy Review recommended that the Government’s policy on small sites should be reversed and:

“Local Planning Authorities should require all sites, whatever their size, to make an affordable housing contribution”.

It was, of course, absolutely right. There is clear evidence —for example, from the Gloucestershire Rural Housing Partnership—that when the Government removed the threshold, opportunities to deliver much-needed affordable homes in small communities were lost.

Several councils took the Government to court and won, overturning the policy change. There was a huge sigh of relief, but the Government now appear to be giving themselves the power to make this change through Clause 143 of this Bill. Clause 143 gives the Secretary of State the power to impose restrictions,

“on the enforceability of planning obligations entered into with regard to … affordable housing”.

It gives the Secretary of State the legal power to make the change in relation to small sites and affordable housing contributions. The clause should be deleted.

Indeed, Clause 143 is simply not needed because the NPPF already requires that LPAs meet their objectively assessed needs for a range of housing and set contributions which mean that schemes are viable and deliverable. The policies already respond to local circumstances, such as the land supply and the local housing market, which the Secretary of State is simply not in a position to second-guess. Overruling these local policies would have a devastating impact on the delivery of affordable homes in rural areas, where sites of fewer than 10 units are the main source of development land. Last year, these small sites provided well over 50% of new affordable homes in communities with a population of less than 3,000.

My Lords, I support Amendment 102B, in the names of the noble Baronesses, Lady Royall of Blaisdon and Lady Parminter, and the right reverend Prelate the Bishop of St Albans. This amendment aims to ensure a continuing, even if very modest, supply of affordable homes in rural areas.

I chaired the Rural Housing Policy Review, which reported a year ago. We engaged with the full range of rural housing practitioners and our report set out a number of recommendations for easing the severe housing shortages that face the younger generation in rural areas. Top of our list of 12 recommendations was the reversal of the policy announced by the Government at that time aimed at the removal from local authorities of the power to require affordable housing on sites of 10 homes or fewer.

Why did so many of those making representations to our review make this issue their number one priority? The reason is that removing the Section 106 affordable housing requirements on small sites would be likely to reduce annual rural affordable housebuilding by some 50%. It is through this medium of placing a requirement on housebuilders to include affordable homes in their developments that councils have been able to make sure that developments in villages include homes for local families and do not just comprise “executive homes” or housing for commuters, second-home owners, retirees to the country and so on.

Our review heard the arguments for lifting the requirement on housebuilders to provide a percentage of new homes for those on lower incomes. It was said that although affordable homes for rent or shared ownership would be lost, more homes would be built overall. This would happen, it was argued, because it would be easier for developers to get planning consent, the development would be more profitable, and smaller builders—such as those that the noble Baroness, Lady Royall, has mentioned—would be encouraged to return to development, after leaving the field in the wake of the banking crisis.

We did not buy those arguments. Removal of a planning obligation to provide some affordable housing would raise the price of the land and the extra value would go not to the small builder but to the owner of the land. SME builders would still miss out to larger housebuilders, which might well phase their developments with a series of several developments of 10 homes in place of one of, say, 30 homes. We were doubtful whether small and medium-sized builders would be enabled to do any more than they could before and, very significantly, we thought that without the inclusion of homes for local families, housebuilders of whatever size would face much more intense opposition to any development in the village.

The reason why new housing is acceptable to the community around it, as demonstrated in the neighbourhood plans that are gaining public support in different parts of the country, is that there is a growing understanding of and sympathy for the housing problems facing younger households who were brought up and/or who work in the village. Take away any obligation to include housing for those less affluent local people and intense opposition—which is likely to mean fewer homes built—seems inevitable.

Our review highlighted the likely loss of new homes overall, as well as the obvious loss of affordable rented accommodation in rural areas which would follow from the Secretary of State deciding to overrule local authorities and remove their power to require affordable homes on smaller sites. After the courts rejected the Government’s previous attempt to make it impossible for councils to require some affordable homes, as explained by the noble Baroness, Lady Royall, the fear is that Clause 143 would present the opportunity for this unfortunate policy to be reinstated. Amendment 102B would insert the necessary protection against this eventuality.

Statistics from Jo Lavis, who advised the Rural Housing Policy Review, make it clear that 55% of new affordable homes in communities with a population of fewer than 3,000 were on sites of fewer than 10 homes last year. In Shropshire, the figure was 80%; for Hambleton in Yorkshire, it was 89%; and for rural district councils in Derbyshire it was 85%. In some of these cases, the local authority accepts a cash payment—a commuted sum from the builder—in lieu of payment in kind, and this funds rural housing on another site. This technique has raised £2 million in Derbyshire Dales, £1 million in the New Forest National Park and so on. The money cross-subsidises rural housing which would not otherwise be viable, making up for the reductions in social housing grants, which have seen grant rates fall from about £40,000 per house in 2011 to just £22,000 four years later. In a survey of 39 rural local authorities, Jo Lavis discovered that two-thirds of those councils used commuted sums from builders to fund affordable rural housing at no cost to the taxpayer, so current arrangements are working.

A number of us have expressed concern about the Government’s plans for rural exception sites, where planning consent would not normally be available but development is permitted because it comprises affordable homes for local people. Now the plan is for the new starter homes to be built on these special sites, replacing affordable rented or shared ownership homes. We have been concerned that the starter homes will not be within the reach of those with relatively low earnings in rural areas—attention was drawn to this by the noble Lord, Lord Shipley. In any case, starter homes can be sold after five years on the open market to quite different people. At the same time, we have expressed our considerable anxiety that sales of high-value council houses, which would be required to raise the money for discounts to housing association right-to-buy purchasers, will be disproportionately damaging in rural areas because council homes there are particularly valuable.

Amendment 102B is an urgent attempt to prevent yet further deterioration in the position for those who genuinely need affordable housing in rural communities. It would allow the local authority to continue to obtain a quota of affordable homes on smaller sites, where the council believes that this is needed. It represents a vital protection for rural communities that could otherwise lose over half the supply of affordable housing that they currently insist upon. It is important for government, too, because only with an element of affordable homes for local families will parish councils, neighbourhood forums and local communities at large accept new development in their villages. I strongly support the amendment.

My Lords, I support Amendment 102B which has been tabled by the noble Baroness, Lady Royall. I also wish to speak on the removal of Clause 143 from the Bill.

As has often been noted during the passage of the Bill, the House is being asked to vote on clauses that are essentially empty, their content to be defined in regulations by the Secretary of State at some future date. I appreciate the effort that the Minister has made in the last week to put more information before the Committee, but I think we can all agree that there are still some gaping holes.

Clause 143 is a prime example of an empty clause, handing as it does sweeping new powers to the Secretary of State with regard to the control of Section 106 requirements but providing no detail of what these regulations would look like. Without the content of these draft regulations being made available, the Committee can only speculate as to what the Government intend to do with the new powers handed to the Secretary of State in Clause 143. Luckily, as other noble Lords have already made clear, we have good grounds from which to speculate, given the Government’s attempt last year to remove Section 106 planning obligations on developments providing fewer than 10 new houses. It was overturned, of course, on judicial review.

With this in mind, I want to make two brief points about the proposed legislative changes. First, there is the long-established principle that local authorities are best placed to decide planning obligations to ensure the provision of affordable housing in their areas. Such a principle is directly in accordance with the Government’s stated localism agenda. We have been told repeatedly by this Government that devolution of power, not centralisation, is the way forward. Indeed, only yesterday, in response to a supplementary question I asked on the Floor of this House, the noble Viscount, Lord Younger, batted back a reply, saying:

“The entire point of our devolution revolution is that all authorities will have the power to set their own policy agendas and target their spending priorities to match. Local leaders know best what is right for them”.—[Official Report, 22/3/16; col. 2227.]

But here we are presented with a clause that would allow the Secretary of State to ride roughshod over the needs and concerns of local planning authorities. I recognise that there is a legitimate concern that the burden of Section 106 requirements can make small developments unviable for some developers. Where this is the case, central government needs to work with the local planning authority to facilitate an equitable compromise. Blanket exemptions cannot be the way forward.

Provisions for independent dispute resolution in Clause 142 will, I hope, be a good example of how government can better facilitate local authority needs with regard to affordable housing. Clause 143, however, removes the discretion of local authorities to judge how best to serve local needs and places the power in central government hands.

More important than a point of principle is the fact that any future removal of Section 106 requirements from smaller developments is likely further to imperil the provision of affordable housing in many parts of the country. This was made clear by the Government’s previous attempt at policy change. The needs of local authorities regarding Section 106 requirements on small developments can vary immensely from one local authority to another. The noble Lord, Lord Best, has already helpfully quoted the examples in Shropshire, where 80% of new housing developments are built on sites of fewer than five units, and Hambleton, where 89% are on developments of fewer than 10. There can be no doubt that the removal of these developments from Section 106 requirements would drastically undermine the provision of new, affordable housing, particularly in rural areas where there is already a critical undersupply.

I hope the Government will think very carefully about this before they decide to proceed. More important is for the Minister to provide us with further details about the proposed content of these regulations before Report. It would seem a gross dereliction of duty for this House to approve sweeping new powers for the Secretary of State without some sort of idea about how the Government are hoping to use these new statutory powers.

My Lords, I, too, wish to speak briefly in support of Amendment 102B. As always, I draw attention to my interests, in particular that I am president of the National Association of Local Councils. There is no question but that parish councils are deeply concerned about the removal of the ability to require some affordable homes, when viable, to meet local needs—and we should remember that Section 106 can be contested on viability grounds. The reasons for that have been well expressed, but I shall add a couple of points at least.

First, I strongly believe that it is in the Government’s interest to recognise the particular issues that there will be in smaller rural communities if there is a blanket policy removing affordable home requirements on sites of under 10 units, for the reasons that the noble Lord, Lord Best, spelled out. In many communities that would be a typical site—in fact, in some it would be quite a large site. But even where there are sites of maybe 20 or 30 units that could be brought forward, this policy will encourage them to be brought forward only in small fractions of less than 10, to achieve the higher number of market-value homes and the profitability that will go with that, which alone will slow down the delivery of homes that are much needed in these communities.

Secondly, there is no question but that small villages were the first to come alive to the severity of the housing problems that we have in this country around affordability for people on working wages in those communities. Rural incomes for those who live and work in rural communities average 20% below the national average right across the country. Commuters may bring up the wage levels in some villages, but rural wages are typically low. People are needed to live in those communities, who will work in the shops and do the work of the land and in schools, on those relatively low wages, and they desperately need a home. In the nature of villages, those communities came alive very quickly to the unaffordability issue, because it is much more obvious there.

The response has been for those communities to be very often surprisingly positive about bringing forward appropriate small-scale development, provided that it provides at least some homes with a clear tie to local need and affordability in perpetuity. To remove that would be immediately to remove a lot of that neighbourhood support for the delivery of homes. As somebody who currently chairs a neighbourhood plan, I have to say that the community is very much alive to its own particular needs. I happen to be in a very poor community, where some of those affordability issues are not as great as some of the needing to improve the community in other ways. We happen to be a community in which the affordability pressures are not there, but we know exactly what the community needs. There is a desire for self-build, for example, which we are building into the neighbourhood plan. To remove the ability of communities at local authority and neighbourhood plan level to respond to that on sites that may be brought forward makes no sense to me.

Finally, I think the Government are seeking to help smaller building companies to access land for development. I do not know what the situation is in some parts of the urban environment—I know it less well than the rural one—but I know that in the kind of rural communities and housing schemes right across the country that I visit regularly, through work and in my former role as chairman of the National Housing Federation, the simple fact is that these sites are relatively valuable. A small site for eight or nine units in a well-off village with high house values should be immensely profitable to bring forward, and landowners will get very substantial money if they can bring those forward, compared to the agricultural values that those sites might otherwise be worth. So there is no lack of incentive for the landowner.

The problem is that they are highly desirable for quite large housebuilders as well. There are good profits to be made, there is easy delivery, there is certainty on sales and the numbers are not so large that they could in any sense depress prices, so the sites are highly appetising. If the affordable home requirement is removed, it will be easy for national and regional players to look for the 20% to 25% profit margins that they would come in on with high house prices. The requirement for affordable housing helps depress those prices but, perhaps more importantly, it depresses the ability to get those very high margins. Local small builders will work to builders’ margins, which may be as little as 10%. In my part of mid-Cornwall, Restormel Borough Council pioneered releasing sites for affordable housing in the form of housing where the sale price was related to local earnings levels in perpetuity. Those houses were not built by the big regional and national players, but by local builders who were more than happy because they could make their margin within that price cap and get sites at low cost because the landowner knew that the price would be low, the community knew it would be affordable for the community in perpetuity and the builders were still able to make the margin they needed and knew that the community would support the development going forward.

I do not think the Government will achieve their objectives in rural areas this way. They will lose, not gain, numbers. They will lose, rather than gain, opportunities for smaller builders. They will lose community support for the housing that is desperately needed in those communities precisely by the people who allow them to be living and working communities but who cannot otherwise afford a home on local wages.

I shall not follow on Clause 143 in particular, although it is an extraordinarily important debate. In a sense it reflects the tension that runs through the Bill. The Government have a clear commitment to provide 1 million homes—starter homes—and to get the country building. On the other hand, in doing that, they want to remove what they perceive, sometimes rightly, sometimes wrongly, as obstacles. That tension runs right through the Bill and underlies this clause because one is naturally suspicious that some of the things that have been said here might have the effect of letting this clause go forward without understanding what precisely it means. The Explanatory Notes say that an example of what the Secretary of State might do would be to place conditions relating to sites of certain size, which is the point just discussed.

I hope the Government will be sensitive about affordable housing. It is extraordinarily difficult to do, not just in rural areas. I do not want to repeat something I said in an earlier debate, but in high land-value areas, it is very difficult to deliver affordable housing. It is really on the margins. Often in those areas, sadly one is dealing with communities that do not really want what they call social housing. The council has to take those people on and look them in the eye. It also has to take on developers and say, “We need to do this”. We need a few tools in our hands to be able to do that. In going forward and, I hope, giving us a lot more information about the regulations, I hope the Government will be sensitive to that side of the argument. I understand all the suspicions that have been expressed, although the Committee has to understand the imperative for the Government to deliver building.

Clause 142, which was raised by the noble Lord, Lord Greaves, who unerringly draws our attention to every clause, is a massive clause with a massive schedule underlying it. It looks well intentioned. The right reverend Prelate said that if it helps resolve disputes, that would be good. I am all for arbitration. If the sense is that two sensible people come together and resolve the matter, of course, we would all want that to happen. But we do not have here soft arbitration, we have hard statute. This hard statute is backed up in Schedule 13 by a very lengthy set of things that will happen when this person, whoever it is, could be called in by the Secretary of State without even waiting for either the applicant or the local authority to call them in. He or she might be called in under new Schedule 9A(1)(4) in Schedule 13 to the Bill, when

“a person of a prescribed description, requests the Secretary of State to make an appointment”,

of a person, and,

“any prescribed requirements as to the consent of the … authority are satisfied”.

Then there is a whole set of Russian dolls—clause after clause providing what this process might do. So this is not soft arbitration; it is almost like creating a new inspectorate—it seems to be separate from the inspectorate at Bristol—to arbitrate in cases of Section 106. It may be the same as the inspectorate at Bristol—I know not. Then a whole lot of things have to happen. It looks a bit like quasi-justice. Quasi-justice is not necessarily always quick and it is certainly not cheap.

The interesting thing about planning—as anyone who deals with it knows—is that planning creates its own precedent. Planners have to take note of what inspectors have said in the past. They have to take note of past decisions as well as the law. These unknown persons are going to be dealing with cases, perhaps at the request of the Secretary of State, according to the Explanatory Notes taking into account,

“any template or model terms published by the Secretary of State”.

We do not know whether they will be in regulations or what they might be. They will then give judgments on the Section 106 negotiations. It even says in the Explanatory Notes that they can,

“consider two or more planning applications at the same time if the same or similar issues arise”.

So we have what is effectively a hard, quasi-statutory system of making assessments. These judgments will lie on the record. It may well become, in my judgment, a bit like the decisions of the inspector, something which the next arbitrator will then take notice of in a similar case—not the same case, as they can consider similar cases. The freedom of negotiation between local authorities and applicants is potentially trenched into by this process.

The clause looks well intentioned, but a little too elaborate. It is a classic way in which Governments go about making law. They say, “Wouldn’t it be a good idea to bring discussions quickly to an end”, because they want to get things done quickly. They think local authorities are always holding them up so they want to force them to go this unknown person to impose a decision. Once that report is issued, the local authority must comply—that is what is written in the regulations.

I would like to think a lot more about this going forward as a statute. It is good practice to consider arbitration, but it is very tough. We have just had a debate about basement development in which we were told it was not necessary to put stuff on the statute book as we have codes of practice and everything can be done in a soft way. Here this arbitration has to be legalistic and hard—it has to be on the statute book. I worry about that.

Section 106 negotiations are tough—they are meant to be. I went to a topping-out ceremony in my borough a few weeks ago with some people from one of the hardest-negotiating developers in the country. We had a good old time and they said, “My goodness your authority was tough in negotiations”. I said, “Yes, and so was your business, but look what we’ve got: 300 new houses, affordable housing, community theatre and a community place in this town, which we got as a result of that negotiation”. If that had gone to the person in Bristol, Peterborough or wherever who might be appointed under this system, I wonder whether any of that would have happened.

I asked my noble friend to reflect on this very elaborate, albeit well-intentioned, system. The Government are absolutely right to call on local authorities to try to cut negotiations short and do them as fast as possible, but we have far too much rigmarole of regulation, law and diddle-daddle in this country already, and this looks like more of that on the way.

My Lords, I have a good deal of sympathy with the remarks of the noble Lord, Lord True, about that provision. I entirely endorse what my noble friend Lady Royall and others have said about Amendment 102B.

Frankly, I am puzzled by Amendment 101D. I had an exchange before with the noble Lord, Lord Shipley, about this, but it still does not seem to make much sense. If one is concerned about the definition of affordability—and I think many of us are concerned about what is currently described as affordable— then to take out from the Bill a provision that as it currently stands would allow the Secretary of State to modify the definition would be puzzling. If the amendment had suggested that, for example, the Secretary of State should by regulation determine what is affordable in relation to household income, for example, that would have been a more positive way of dealing with the issue. At the moment, there is no apparent connection between affordability as it is currently treated by the Government and what ordinary people would understand as being affordable—that is to say, within their means.

Perhaps I can explain what the issue is, although I thought I had done so previously. The amendment relates to the planning part of the Bill. At the very beginning there was a debate, and amendments that I think the noble Lord himself moved, about the definition of affordability. We had a long discussion about that. The context of the amendment that the noble Lord is criticising simply relates to whether the Secretary of State should have the power to define a word that is clearly expressed in any dictionary that the Secretary of State may wish to consult. On “affordable” and “affordability”, the Government are muddling their terms, and I believe that that is happening deliberately to make it appear as though housing is affordable when it is not. The Government define the words “affordable” and affordability” differently, but in the dictionary they are the same thing. They relate to the ability of people to pay. All I said when I spoke to the amendment was that I thought we had to go back to amend the Bill at the beginning of its housing element so that the definition of “affordability” was better stated, but then not to allow a Secretary of State to make a change by regulation to the meaning of a word that had a clear meaning in the Oxford English Dictionary.

My Lords, I do not want to prolong this dialogue, but surely it would be better to tie the Secretary of State down to making regulations related to, for example, an indexed figure in connection with household income. That would be a more sensible way to do it than simply taking out the clause.

To avoid any doubt, I am very happy to do that, as I said 15 or 20 minutes ago. The question is whether the Secretary of State, having defined what “affordable” and “affordability” are, should then be allowed by regulation to alter them, which I think he or she should not be.

The point would be to circumscribe the Secretary of State’s ability to regulate it by linking it to an index. However, we are not voting on that amendment and I will not take matters any further.

My Lords, the Government are committed to increasing housing supply. More homes are now started every year than at any time since 2007. The total stock of housing in England is now almost 800,000 higher than it was in 2009. In the spending review we announced investment of £8 billion to deliver 400,000 affordable housing starts by 2020-21. This includes £4.1 billion for 135,000 shared ownership homes, £1.6 billion to deliver 100,000 affordable homes for rent and £2.3 billion towards delivering our starter homes manifesto commitment.

In order to further support housing delivery, we need measures to avoid Section 106 planning obligations preventing or delaying new homes being built. Clause 142 inserts new Schedule 9A into the Town and County Planning Act 1990. The new schedule sets out a dispute resolution process to speed up Section 106 negotiations in order to help housing starts to proceed more quickly. Dispute resolution will be available on a broad range of cases, including where affordable housing is in dispute or particular infrastructure is needed to make development acceptable in planning terms. However, as with any effective dispute resolution process, we anticipate that it would be used only as a last resort. The speeding up of Section 106 negotiations is part of a wider package of measures that the Government are introducing to make the planning system simpler and more streamlined. We anticipate that its existence will encourage all parties to work constructively together and agree planning obligations earlier in the planning process.

We are also working with stakeholders to understand the particular issues caused by negotiating affordable housing provision. So far, we know that problems include the time and expense of viability negotiations, the lack of clarity over affordable housing requirements and the difficulty of getting housing associations to take only one or two units on a site. These effects can be felt more acutely by smaller developers, which are more likely to focus on building on small sites. We are consulting on some of the detail of the process and we will bring forward regulations in due course. Clause 143 allows us to address some of these issues by providing a power for the Secretary of State to make regulations relating to the enforcement of planning obligations for affordable housing. The clause provides flexibility depending on the size, scale or nature of the site or of the proposed development so that we can target regulations appropriately.

The right reverend Prelate the Bishop of St Albans asked when we were going to consult on the powers. We are already engaging with key partners to identify those measures that would best support the delivery of new housing, and we will consult on our proposals in due course. Restrictions or conditions will be introduced through affirmative regulation, so Members of both Houses will have a chance to scrutinise any measures that we introduce. That means we can bring about a more consistent approach to how Section 106 agreements can be used in relation to affordable housing provision. It will reduce a key element of uncertainty for developers and, in doing so, support housebuilding.

The noble Lords, Lord Young and Lord Best, and the noble Baroness, Lady Royall, asked how we anticipate using the power in Clause 143(2)—would it be used to restrict right to buy, and what about the rural aspect? The broad power proposed allows for a distinction to be made depending on the size and nature of the proposed development, such as rural sites, where restrictions may not be appropriate, and the distinction in relation to the types of affordable housing that may be restricted. This is intended to focus any restrictions where they would have the most likely benefits in encouraging housing development more broadly, rather than, as the noble Lord says, restricting it. For example, we could use this power to address the particular problems faced on small sites, as I have said, and we are working with stakeholders to identify how we can best use the power to address the issues and support the delivery of new houses. I should also say that the restriction provision would not apply to existing Section 106 agreements.

The noble Lord, Lord Taylor of Goss Moor, is concerned about the Government not supporting rural areas. As I say, this provision gives us the flexibility to target our regulations in a way that would best benefit overall housing delivery. For example, as I said, restrictions or conditions could apply differently depending on the type of sites, such as rural areas.

Amendment 101BGB limits the use of Section 106 dispute resolution, to be introduced through this clause, to affordable housing disputes only. It is not necessary for Amendment 101BGB to be introduced to implement this change. Schedule 13 of the Bill allows the scope of dispute resolution to be restricted through regulations, which could include limiting dispute resolution to cases involving affordable housing. We are presently seeking views on the scope of dispute resolution through our planning technical consultation, but dispute resolution would be a very useful tool for resolving disputes on applications without affordable housing as well as on those with.

Moving on to Amendments 101C and 101D, I do not think that they are necessary to address the concerns of the noble Lord, Lord Shipley, because they would hinder our ability to address the issues that local planning authorities and developers tell us are caused by negotiating affordable housing obligations. This clause allows the Secretary of State to restrict the use of Section 106 planning obligations for affordable housing. The clause, therefore, goes on to define what is meant by affordable housing in this context.

The definition of affordable housing included in this clause focuses on housing that meets a particular need: for example, people whose needs are not adequately served by the commercial housing market. It also specifically includes starter homes, which are defined in Chapter 1 of the Bill. It does not restrict provision to meet the needs of any specific tenures. Indeed, we consider that the definition is broad enough to encompass all forms of tenure. Restricting the use of planning obligations for affordable housing across all tenures would not support the objective of addressing the specific issues caused by negotiations on particular types of site.

The clause also provides the Secretary of State with the power to amend the definition of affordable housing through regulations. Removing the power would affect the Government’s ability to take account of new forms of affordable housing provision that are being developed. This would limit the effectiveness of how Government can use this clause to support housing development. The power to amend the definition of affordable housing under this clause is subject to the affirmative resolution procedure and noble Lords will have the opportunity to scrutinise any amendment of the definition.

Amendment 102B, in the names of the noble Baronesses, Lady Royall and Lady Parminter, inserts a new clause that would enable the Secretary of State to empower local planning authorities to require affordable housing contributions, in cash or kind, from small-scale developments and in rural areas. However, I do not think that it is necessary. Local authorities can set affordable housing policies in their local plans, which will take account of local housing need. Section 106 agreements can then be used to secure affordable housing delivery. They can also be used to agree financial contributions in lieu of on-site affordable housing contributions. Indeed, there is evidence of local planning authorities making very good use of this, including seeking contributions from small-scale developments and in rural areas.

The use of this power will allow us to bring about a more consistent approach to how Section 106 agreements can be used in relation to affordable housing provision. This could include conditions on how planning obligations are sought for affordable housing on particular types of sites. Such conditions could help address the problems that affordable housing negotiations can cause for particular types of sites, such as those identified in this amendment.

I will finish by saying that the Government will consult on the approach to any restrictions or conditions brought forward. Measures implementing this power will be set out in regulations. These, including any amendments to the definition of affordable housing, will be subject to the affirmative resolution procedure and noble Lords will have ample opportunity to scrutinise any amendment to the definition. I hope that, with those words, the noble Lord will feel happy to withdraw his amendment.

My Lords, this has been a very interesting debate and I thank everybody who has taken part in it. Most of the debate was about issues that I was not personally raising, but I want to thank the noble Lord, Lord True, who made a speech similar to one I thought of making. It is clear that the noble Lord is less intimidated by the Government Chief Whip on these matters than I am and feels able to make such a speech at length, putting forward the localist view which he has done so well so many times in this Committee.

My Lords, this amendment in my name and that of my noble friend Lord Kennedy deals with an issue which is close to home for the Minister, whose daughter—she told me the other day—lives in a student house just opposite friends of mine in a residential part of Newcastle. It is a fact that in Newcastle and many other cities there are very large numbers of students. In Newcastle, I believe that the two universities have between them some 45,000 students. Some of them of course will be local and others will not necessarily be living in the city. Nevertheless, substantial areas of the city are now given over to rented-out student accommodation, which not infrequently is jammed full of students living in not particularly attractive conditions and also somewhat changes the character of the area. Increasingly, we find areas virtually totally dominated by students. Recently I had the misfortune to canvass not far from where the Minister’s daughter lives, and I encountered house after house occupied by students, many of whom, I am sorry to say, expressed the intention of voting Conservative, because on the whole Newcastle attracts large numbers of better-off students. They are not quite mature enough to realise that they are taking the wrong course politically, although they may come to realise that in due course.

However, what we are now seeing in the city—and, I suspect, elsewhere—is rather different and in some ways rather better: large purpose-built places for students to live in, not in residential streets but in purpose-built complexes. That is a good thing in a way because, one hopes, it will free up family-sized accommodation and perhaps bring back more permanent occupation of residential areas, which is desirable. On the other hand, sometimes these buildings are thrown up in close proximity to residential areas and the behaviour of those in the residential blocks is not always appealing to the local community. However, perhaps that is another issue that needs to be looked at.

Amendment 102A simply raises the issue and seeks to get the Secretary of State involved in ensuring that the National Planning Forum takes an interest in what is a growing concern in many areas. The amendment would ensure that it offered some guidance and, in collaboration with local authorities and indeed with universities and student bodies, sought a way of balancing the needs of universities and their population with the local population. On the whole, this works tolerably well. In the area where the noble Baroness’s daughter lives—not necessarily in the same street, although there have been some difficulties there—things are not always satisfactory. There is a good deal of late-night carousing and the like, which some noble Lords may be young enough to recall from their earlier days but is not at all appealing to local communities.

This is a matter that has not really played much of a part so far in national policy formulation, and I hope the amendment will begin a process through which it can be properly developed. I beg to move.

My Lords, I shall speak to Amendment 102C. With the emphasis on affordable housing, there is a danger that the infrastructure and support to make developments into communities will be sidelined. Many people have talked about what constitutes affordable housing. A £450,000 home after discount in London may be a good buy but you have to be able to afford the deposit and the mortgage payments. Putting aside my concerns about what constitutes affordable housing, this amendment makes the assumption that we can have a building bonanza but we need to ensure—this is my reason for tabling the amendment—that the funds are not diverted from libraries, schools, community culture, public transport and indeed the multiplicity of activities that make a community. This has historically been effected by Section 106 planning gain money, to which many noble Lords have referred, but the position has been further complicated by the new community infrastructure levy, which no one seems to have mentioned. This levy, which has not been welcomed by some local authorities, can be imposed by local authorities on new developments in their area.

The levy is said to be designed to be fairer, faster and more transparent than the well-tried Section 106 system of agreeing planning obligations between local councils and developers—that is what it says. I therefore ask the Minister, when responding to this amendment, to report on how she sees the community infrastructure levy and/or the Section 106 planning gain funds being protected and enhanced. Can she reassure the Committee that the other provisions in this complicated and convoluted Bill will not militate against the local services that maintain housing developments as communities and not purely, as my old favourite Pete Seeger said in 1963, little boxes of different colours which are all made out of ticky-tacky and all look just the same?

Does my noble friend agree that Pete Seeger did not say that at all? He sang it.

I would be happy to do that, but I have tried to let the Committee off that treat.

My Lords, I think the main concern that many of us had was that the noble Lord was going to sing it.

I want to intervene briefly on this group because quite an important set of principles is involved here. Making communities work in the context of new developments is quite a skill, which local authorities develop over time. For example, there is a difference in nature between student accommodation and other types of what would no doubt be considered to be affordable accommodation. You are usually talking about one-bedroomed units designed for young people. It is a very different sort of accommodation. However, planning for that and for all the other facilities and so on in the local area can be determined only at a local level by people who know the areas concerned and know how it is going to work.

It is right that there is recognition of the importance of student accommodation and that it is taken into account, but it has to be acknowledged that often those in the local area will be best able to determine how to make it work so that the different communities in a particular area will be able to co-exist and complement each other. I am conscious of a number of developments where the arrival of student accommodation has been very important for the regeneration of that area and has benefited other communities. As opposed to hostility to the noisy nocturnal dwellers that students often are, these developments have been a catalyst for enabling other things to be placed in that area, to be viable, and to work extremely well.

Having listened to the exchange between my noble friend and the Minister about her daughter, I recall a discussion I once had with somebody about my son. He was strip-searched in the airport, which was news to me—as a parent you do not hear about that—and I was worried that, in terms of what goes on in the back streets of a no doubt very comfortable part of Newcastle, my noble friend was going to stray into that territory.

It is important to understand the value of student accommodation in many local communities and the fact that what will work is best planned locally. At the same time the different nature of student accommodation should be recognised in the planning process.

My Lords, I am pleased to be discussing these amendments today, particularly in the light of the conversation that the noble Lord, Lord Beecham, and I had yesterday. For a horrible moment I thought that my daughter actually lived next door to his friends. Thank God that she lives across the road. Nevertheless, it was a very weird conversation. The noble Lord’s wife and I went to the same school, and we found out yesterday that in so many things, in terms of our background, we were far closer than we thought. My daughter is indeed one of those pesky individuals who votes Conservative.

I also get the broader point about the changing face of communities. Jesmond has over the years changed remarkably as the community has become fuller of student properties. The local authority and the university are making huge moves to create more purpose-built accommodation for students and to ensure that Jesmond starts to restore to itself the very nice community feel that it once had. The Government recognise this need as well, encouraging local authorities to provide much more purpose-built student accommodation.

While I fully support the intention of the amendment I do not think it is necessary, because we already have in place the mechanisms to deliver it. Our NPPF is clear that local planning authorities should have a clear understanding of housing needs in their area. It encourages local authorities to identify the accommodation needs of different groups within the community and to plan proactively to support them. This includes recognising the needs of students. This is supported by planning guidance. In March 2015 we strengthened our guidance to re-emphasise to local planning authorities their duty to plan for sufficient student accommodation, whether it consists of communal halls of residence or self-contained dwellings, and whether it is on campus.

The amendment would also require local planning authorities to give higher priority for student housing than other groups in society. There is no need to adopt quite such an approach. It is important that local planning authorities plan for a mix of accommodation, including for the student population as well as for the needs of all residents and different groups in the community. That is what the NPPF expects. If they do not make adequate provision, they risk having an unsound local plan.

Amendment 102C on planning and community development seeks to ensure that local authority funding is available for community developments and is taken into account when carrying out its duty to promote starter homes. The noble Lords, Lord Palmer and Lord Shipley, and the noble Baroness, Lady Bakewell, drew attention to the need for funding to be made available for community developments and I thank them for doing so. I do not disagree that local authority funding should be used for new community developments.

As a key objective of national planning policy, local planning authorities need to plan positively for the infrastructure needs of their area, which would include community development projects. I reiterate what I said earlier in Committee that nothing that we are doing to promote starter homes will fundamentally change the importance of having good infrastructure in place to support new development. Planning decisions for all developments, including those that contain starter homes, will still need to be made in accordance with local planning policy, subject to the starter homes requirement and other material considerations. Infrastructure considerations that can be taken into account as part of the decision-making process will clearly need to be issued.

The noble Lord, Lord Palmer, mentioned the community infrastructure levy. The Section 106 agreements and the community infrastructure levy provide mechanisms for local authorities to secure funding for infrastructure, including community developments. As I have mentioned, we intend to exempt all starter homes from the community infrastructure levy. However, for the starter home element of any new development, local planning authorities will still be able to secure Section 106 for site-specific infrastructure improvements that might be required. Where there is a proposed development involving market housing and starter homes, the local planning authority is still able to use the sale on the market homes element to help fund the infrastructure required to support the development, assuming of course that it has a charging schedule in place.

With those comments, I hope that the noble Lord will withdraw his amendment.

Briefly, I welcome what my noble friend and others have said about student accommodation. It is not easy. We have expanding universities and noble Lords are right to say that there is usually strong opposition from local people when they hear “student housing”. However, a friend of my daughter’s is still at university and is rather more concerned that her local launderette might be turned into a house.

I thank the noble Baroness for her remarks. I hope that the matter can be taken forward. I beg leave to withdraw the amendment.

I beg to move that the House be now resumed. In so doing, I encourage noble Lords interested in the Housing and Planning Bill to keep an eye on the annunciators to see when the Committee will resume.

That the draft order laid before the House on 1 February be approved.

Relevant document: 25th Report from the Secondary Legislation Scrutiny Committee

My Lords, I shall speak also to the draft Tees Valley Combined Authority Order 2016, which was laid before this House on 11 February. We will also be considering today the amendments to the Motions in the name of the noble Lord, Lord Beecham. I would simply say for now that the various wider local-government funding matters that these amendments touch on are wholly separate from what these orders and the devolution deals are all about. These deals are about promoting economic growth and prosperity for the area, providing investment and giving local places the powers to decide what to invest in and where. That is quite different from how local services are funded.

If these orders are approved and made, they will deliver significant milestones in fulfilling our manifesto commitments to implement the historic devolution deal between the Government and Greater Manchester and to devolve far-reaching powers over economic development, transport and social care to places that choose to have elected mayors. We want a shift in power from central government to local government, with decentralisation bringing power closer to local communities. We are committed to devolving powers and budgets to Tees Valley, to Greater Manchester and to other areas. We are committed to this so that places can achieve their potential and take control of their own growth, and so they can play their part in rebalancing our economy, including building the northern powerhouse: a powerhouse which has massive potential to add an extra £37 billion to our national economy by the next decade.

If approved and made, the Tees Valley order will establish a combined authority with functions in relation to economic development, regeneration and transport across the Tees Valley. It provides for there to be rigorous scrutiny arrangements, with the chairman of any scrutiny committee required not to be a member of the majority political party. This puts on a statutory basis the close working which already exists between the five constituent authorities and their partners, including the Tees Valley Unlimited local enterprise partnership. This close working will enable the Tees Valley to work together even more efficiently and effectively to promote economic growth, to secure investment and to create jobs.

The order is laid under the Local Democracy, Economic Development and Construction Act 2009, as amended by the Cities and Local Government Devolution Act 2016. As the statute requires, before laying the order, the Secretary of State has considered whether the proposal for a combined authority satisfies the statutory tests. I can confirm that they have been unambiguously met. The Secretary of State considers that establishing this combined authority is likely to improve the exercise of the statutory functions, and in reaching the decision to lay the draft order, he has had regard to the impact on local government and communities.

This order is the first step towards devolution in Tees Valley. Further orders will be laid later this year to create the position of mayor—to be elected in May 2017—and to confer on the combined authority and the mayor the additional responsibilities set out in the devolution deal, including powers for a mayoral development corporation.

I turn now to the order for Greater Manchester, where there has been a combined authority since 2011. This order takes further steps in the devolution journey by creating the position of a directly elected mayor for Greater Manchester, with the first election to be held in May 2017, and specifying that the first mayoral term will be for three years, with the next election in May 2020, with four-year terms subsequently.

The order also specifies that the Greater Manchester mayor will exercise the functions of a police and crime commissioner, cancels the May 2016 elections for a Greater Manchester police and crime commissioner and extends the current police and crime commissioner’s term of office until May 2017, when the mayor will be elected. To hold an election for a police and crime commissioner who would hold office for just one year would make no sense, either democratically or in terms of value for money.

Both orders are laid before Parliament following the statutory process specified in the 2009 Act, as amended. As required, all of the constituent councils have consented to these orders being made, and the Government have laid the draft order having considered the statutory requirements. As required, we are now seeking Parliament’s approval before making the orders.

The other place has approved each of these orders, and the noble Lord, Lord Beecham, has indicated publicly his support for devolution, for devolution agreements with Greater Manchester and the Tees Valley and, indeed, for the orders, which the regret Motions before the House in his name welcome.

I turn to the amendments. In essence, they focus on—regret—two matters. First, they assert that the devolution agreements were conditional on there being an elected mayor and that that is to be regretted, and that resources for these deals are inadequate. Secondly, they regret the Government’s policies on the broader issue of local government funding—that is, regret the measures that this Government have had to take to put right the economic chaos that the coalition faced, with a deficit of more than 10% of GDP.

As to mayors and the devolution agreements, there are simply two points which have been made on many occasions in this House. First, nobody has been required to have a mayor. Secondly, it would be irresponsible of any Government to put in place devolution of the scale and ambition as in Tees Valley and Greater Manchester without the clear, single point of accountability that an elected mayor can bring. As for resources for these deals, the devolution agreements provide funds for investment which the Government are absolutely committed to deliver. Devolution is an ongoing and iterative process, and we are committed to continue to discuss with places such as Tees Valley and Greater Manchester what else would help meet the needs of the place.

As for the funding of local government, when local authorities account for a quarter of public spending, they must carry their share of reducing the remaining deficit. To date, I must say that they have played their part in deficit reduction with great responsibility, so that public satisfaction with their services has been maintained or even improved.

The Government are clear that we have delivered a fair settlement to every part of the country, while giving councils greater financial independence so that they can deliver sensible savings while protecting front-line services.

The settlement, including the transitional grant, means that no council receives less than we announced in the provisional settlement. The settlement is broadly flat in cash terms between now and 2020. Resources are distributed fairly, taking into account the main resources available to councils. The gap in spending power between urban and rural authorities continues to reduce. We have given councils the multi-year budgets they have asked for and helped to transition from the old, centrally funded world to the new one of localised income. We have responded to their request for support for the elderly by providing £3.5 billion through the social care precept and the better care fund.

However, as I said, this is all a separate matter from what the orders are about. They are about delivering devolution, about giving local authorities the power to set their own policy agendas, the power to target their spending priorities to match, the power to drive growth, and power supported by investment funds, to which we are committed in the deals. I commend the orders to the House. They are a milestone on the devolution journey leading to greater prosperity, a more balanced economy, and economic success across the country. I beg to move.

As an amendment to the above motion, at end insert “and that this House welcomes the principle of devolution, the Greater Manchester Combined Authority Devolution agreement, and the draft Order; but regrets the lack of adequate resources allocated to the Greater Manchester Combined Authority; is concerned that funding is being cut whilst essential services are being devolved; notes that a transitional grant is available to local authorities to ease the pace of funding reductions but that out of the ten constituent member local authorities of the Greater Manchester Combined Authority only three member local authorities will receive this funding; and regrets that the Agreement was conditional on having an elected Mayor”.

My Lords, the concept of devolving power to cities and regions is admirable. The councils in Greater Manchester and Teesside are to be congratulated on the way that they have worked together to negotiate a deal with the Government with the object of assuming greater control over the services, policies and destinies of their respective areas. My amendments welcome the principle of devolution, but draw attention to two aspects of the situation which are far from satisfactory: both deals were conditional on having an elected mayor, and large questions remain over funding.

Astonishingly, the Minister claims that there has been no requirement, no compulsion, to have an elected mayor. That is perfectly true, but of course, if you do not have an elected mayor, you do not have a deal. That is a strange position. We continue to oppose that requirement. There have, of course, been referendums in several authorities on the mayoral issue under the present system, several of them ordained by the Government. My city rejected the concept, despite the best efforts of the noble Lord, Lord Shipley, to persuade the electors of Newcastle to support it, while I am happy to say that his successor as leader joined me in the campaign against it, as did Manchester. As to the latter, I remind the House of the claim by Nick Boles that the only route back for the Conservatives in Manchester was to have an elected mayor. Naturally, no such motives could possibly have influenced the Government in imposing this requirement on the deals for greater Manchester, Teesside, and, indeed, anywhere else that opts to take them up.

Of course, there have also been referendums to dispense with elected mayors, as in Stoke and, interestingly and more relevantly for the purpose of this debate, in Hartlepool, which is part of the Teesside authority. They had an elected mayor, but disposed of him—well, not of him, but of the post. A referendum to do likewise is in progress in North Tyneside, which is a member of the proposed north-east combined authority currently in the throes of deciding whether to sign up to a deal.

However, I suspect that for most people, the key factor will be what benefits devolution might bring. These will depend on two factors: the nature and extent of the power to take local decisions on key areas of public policy, and the extent to which adequate funding is available. The two geographical areas that we are considering today have, as is proper, taken different approaches to the first of those questions. Greater Manchester has opted for an ambitious range of responsibility extending from the local economy to transport and police to health and social care. Recently, a further significant area has been added to the original deal: involvement with the criminal justice system including, as I understand it, probation. Teesside has taken a different approach, concentrating, as well it might in the aftermath of the disastrous closure of the Redcar steelworks, on the local economy, with transport and skills at the heart of its programme. In some ways, of course, this represents a return to the former Teesside county borough.

However, there are big questions about the extent to which enthusiasm for devolution extends beyond the Treasury and perhaps the DCLG, not least in the light of recent events. There is nothing new in this. Under the Labour Government, regarding the Local Government Association’s concept of total place—under which local councils and a range of government departments were to work together on a range of policies and programmes affecting individual localities, not least in regard to their financing—there proved in effect to be no real buy-in other than from the Treasury and the DCLG itself. What is different this time? During the passage of the cities Bill, the Minister convened a meeting with the noble Lord, Lord Prior, the Department of Health and interested Peers. It was attended by the Minister for the Northern Powerhouse —or poorhouse—who left after 25 minutes without uttering a word. More importantly, it was apparent that the Department of Health, certainly at that time, had had little if any engagement with the process.

Can the Minister tell us how much involvement other departments from the Treasury down have had in the agreements which today’s orders enshrine? More especially, can she say what structures are in place, or will be in place, to secure their continuing engagement so that a cross-departmental perspective is included in the work of the new authorities? There are precedents of a kind, including the inner-city partnerships of the 1980s, in which I recall serving alongside a number of Ministers at what was then the Department of the Environment, several of whom are or have been Members of this House. This is all the more necessary given, for example, the parlous financial state in which all the member councils involved in today’s orders find themselves. Their cumulative loss since 2010 occasioned by funding cuts and unfunded cost pressures amount, on an annual basis, to no less than £180 million in Teesside and over £700 million in Greater Manchester, with Manchester’s loss alone amounting to just under £197 million to date. That is the annual loss that it will have to carry from now on, and it is, of course, rising. The current round of budgets will push those figures to an even higher level, with more to come over the next few years.

Strikingly, only one of the councils in the two areas—Stockport—received any transition grant under the recent government announcement. I suppose it should have considered itself lucky to have received anything, as it is not a Conservative council but one with no overall control. Even so, the £2 million it received is only 5% of its annual loss so far.

Here is the key issue. How much certainty will there be about the level of funding for the key areas where responsibility is being devolved, let alone the services which remain with the individual councils, and whence will it come? The Government are committed to pouring vast amounts of money into Crossrail and HS2, about which many of us north of Birmingham have considerable doubts, and a modicum into what they misleadingly call HS3, which will improve the appalling rail link between Manchester and Leeds—though not, incidentally, extend to Teesside—but this is capital expenditure. What guarantees are there about the revenue budgets of the combined authorities and separately of their several numbers and of the capital funding for other programmes which will be necessary to make a reality of the claims to be promoting a northern powerhouse or any other substantial economic improvement elsewhere?

What will be the impact of the Chancellor’s £6.7 billion cut in business rates recently announced? Can the Minister inform us how and to what extent councils will be protected from this loss of revenue on which, given the demise of revenue support grant, they were supposed to rely? I assume that the Treasury has now briefed her following her understandable inability to answer questions about this matter last week—I do not blame her at all for that. I understand that whereas hitherto the DCLG has used its share of business rates to ensure a modicum of redistribution to authorities with a low business tax base, it is now scrabbling round to find a method of securing some equalisation when they will not be receiving any business rates. Can the Minister tell us what they are looking into, how far they have got and when we might expect an announcement? Is it true that, in future, increases in the business rate will be based on CPI rather than on RPI as hitherto? That would represent a further erosion of the value to local government of the business rate.

Moreover, how does the Government’s effective removal of democratically elected councils from the provision of education—which the councils have supported though not controlled, as the Government and media constantly assert, for many years—fit with the concept of devolution? If one is looking—as certainly Teesside and I suspect Manchester and other authorities are—to enhancing skills, extending links with further education and opening up employment opportunities to the next generation of young people, because the current generation has not had those opportunities, how can that possibly be reconciled with what is in effect a nationalisation of the education service and the exclusion of local government from it?

What other incursions on local council responsibilities are being considered in the Treasury or other government departments which might extend to the new authorities and their members? Can the Government give any assurance that the new authorities will not go the way of metropolitan counties, which in many ways foreshadowed these new structures? Those were invented by a Conservative Government in 1973 and abolished, along with the GLA, by a Conservative Government 12 years later.

Finally, may I mount again a hobbyhorse that I confess to having ridden in a number of debates? Will the Government abandon remote control and engage effectively with the new combined authorities and other councils through the well-tried and successful mechanism of regional offices, engaging relevant departments and agencies at the local level? In fairness, this was a product of a previous Conservative Government. It worked very well, providing an invaluable two-way conduit between Whitehall and the locality. If that was good enough for Margaret Thatcher, it should surely be good enough for her successor.

Perhaps I may raise one other question, not directly in relation to Greater Manchester or Teesside but possibly to other areas which are considering a deal. There seems to be the opportunity, or temptation, for a backdoor reorganisation of local government to take place in areas where counties with shire district components may find themselves in a difficult position in relation to adjoining former metropolitan county areas. I cite for example the position in South Yorkshire, Nottinghamshire and Derbyshire, where for some purposes those district councils may become part of the combined authority, but not for others. However, once they start getting into the health and social care combination that is going to pose extreme difficulties, because social care is provided by the current shire counties. There is a suggestion in the air that the Government may be looking in this way to promulgate a further reorganisation of local government, creating more unitary authorities and changing the map completely. I do not know whether the Minister is in a position to comment about that today. If not, perhaps she can write to me. I beg to move the amendment.

My Lords, first, I welcome the two orders, each at a different stage of the devolution process. I understand there will be a further order in respect of the Tees Valley later this year about a mayoral election next year.

I listened carefully to the comments of the noble Lord, Lord Beecham, and to his amendment to the Motion. It is true that the financial context is important. I also subscribe to his view that having some system of government offices linked particularly to combined authorities would be a hugely helpful conduit or communication channel.

However, I noticed three things that the noble Lord, Lord Beecham, missed out of his amendment. The first was the opportunities for councils through a combined authority structure to share services and thereby cut costs. Secondly, there are the opportunities for public service reform across all public services, which can be delivered only by closer co-operation across council boundaries. Thirdly, there are the opportunities to create strategic policy in areas such as transport and regeneration which transcend council boundaries and would give the combined authorities a role in devising what policy should be rather than waiting for Whitehall to start a process and attempt to define that policy.

I also accept the noble Lord’s comments on business rates, which need to be examined very closely. However, the implications of business rate devolution suggest that councils must come together geographically to make the best use of the powers that they will have, particularly to encourage business rate growth.

Greater Manchester has the benefit of having all three major parties involved in the Greater Manchester Combined Authority, and I pay tribute to its leadership, cross-party working and clear sense of what devolution could mean in terms of benefits for Greater Manchester as a whole. However, first, I have doubts about the following assertion, at the very end of the order:

“A full regulatory impact assessment has not been prepared as this instrument will have no impact on the costs of business and the voluntary sector”.

In fact it will have an impact because this order is about transferring police and crime commissioner functions to the elected mayor model, and there would be powers of precept and so on. If business rates are then to be set locally, there is a clear implication that there will be an impact.

My Lords, I make a short intervention to welcome the Tees Valley order. I first went to work in Stockton-on-Tees over 60 years ago and have lived in the north-east of England ever since. I noted that the noble Lord, Lord Beecham, constantly referred to Teesside. He is absolutely right to do so, and I hope none of your Lordships who go to the north-east and visit the area from Darlington down to Middlesbrough expects to be in a valley. It is not a valley: the Tees falls under 200 feet from Darlington, which is about 20 miles inland, to the mouth at Middlesbrough and Hartlepool. I very much hope that one day the mayor, whose creation I fully support, will promote a change back to the name of Teesside instead of the mistaken appellation of “Valley”.

I have one other regret, which is that County Durham has gone north instead of staying where it should be. My 60-something years there tells me that the three places named in the order—Darlington, Hartlepool and Stockton-on-Tees—always look towards the city of Durham. Indeed, Durham University is now split because there is a college in Stockton which is part of the university. This is a matter of regret because there is a big problem with identities in what I call Teesside. The history and the identities of Darlington, Hartlepool, Middlesbrough and Stockton particularly are very different. Middlesbrough was, in 1820, a hermit’s chapel on the banks of the Tees: there was nothing else there at all at that time other than a ring of villages down to the south. Beyond Stockton-on-Tees, the tidal river goes up to Yarm, the heart of the wool trade, and so on. I will not go on about this, but the historic identities of these five places are very different from each other. That will present a huge challenge to the mayor in terms of how to provide the leadership to bring this combined authority together.

Ab initio, I worked in Hartlepool, Middlesbrough and Stockton, to name but three places. I remember somebody called Darlington Jack, who was a very good worker and worked in Stockton-on-Tees at the same place as me. The Stockton-on-Tees lads came to me one day and said, “I think it’s time you got rid of Darlington Jack, he doesn’t come from here”. I hope that this authority is a great success, but it will be a tremendous challenge to the mayor and his staff to create the identity that means it will really pull together.

My Lords, I, too, intervene mainly on the Tees Valley order. I have great sympathy with what the noble Viscount, Lord Eccles, said. I note that he talked about coming from the north-east. A real problem in all of this is that the previous Secretary of State did not want to hear the words “regions” and banned it for a while. Nobody was allowed to mention a region. In doing so, he broke up the north-east.

That leaves us with significant problems. One problem in the Tees Valley area is that there is one police authority and one fire authority for some of the Tees Valley, but Darlington comes within the Durham and Darlington fire authority and the Durham and Darlington police authority. This will present Tees Valley—and, I suggest, the Government—with a little bit of trouble, because there will be one mayor and one police commissioner not covering the whole of the area. There is a split there that I do not think the Government have worked through. They have brought it upon themselves by the daft things that were done in getting rid of the regional development agency in the north-east. But there you go—history often comes back to bite us.

The Tees Valley order is essentially about how to get a greater economic drive in that area. Of course, we and the local authorities in that area fully support that. There is huge ambition, but there are huge challenges. On its own the closure of the steelworks means that there will be at least £10 million less per year coming into the local authority from business rates, let alone all the other economic challenges from the closure of the steelworks. The financial settlement that goes with the combined authority deal simply does not address the enormous challenges.

Another challenge that is not mentioned in the order, but certainly if Tees Valley goes the way of Greater Manchester it will become an issue, is that there is a large workforce in the Tees Valley area involved in social care. I confess that I have not yet been around all the authorities, but in either the north-east or the Tees Valley area I have not yet come across a local authority for which the amount it will be allowed to raise through the 2% additional levy on council tax will even cover the increase in the minimum/living wage. The amount that those authorities will be able to take in will be much less than in other authorities, such as Surrey, because they have more houses in the lowest council tax bands. They will be able to raise less, but the north-east and the Tees Valley also have the highest proportion of people needing social care who are entitled to public funding. When you put those two things together, there is a catastrophe waiting to happen. I have been asking the Department of Health what the way forward is on this, because the authorities will not be able to raise the money to meet the costs. As a very quick example, Surrey, which will be able to raise a lot through the 2%, has 1% of its elderly care population dependent on public funding. In Newcastle, more than 80% is dependent on public funding; as I said, it is unable to raise even what the rise in the minimum wage will cost this year.

These are incredible challenges. The Government have not addressed them and just keep saying, “It’s up to local authorities”. Local authorities are not miracle workers. The people in the north-east deserve better. The Government need to put their attention to this—I think their collective attention, because when I have talked to different people in government they do not know that this is going on and that this is likely to be an effect. They have not thought about it. I plead with the Minister: we are all in favour of more devolution and of the combined authority concept, but that has to be done in a way that does not disadvantage the people of these areas even more. At the moment, government policy—I am quite prepared to accept by mistake—will make their task virtually impossible. That is not fair. When the Minister talks about fair funding, she needs to think of these other things, which will really have an impact on Tees Valley’s ability to get the economic drive that it is working so hard to see.

My Lords, I join my noble friend Lord Shipley in welcoming the Tees Valley order. I sympathise with those who prefer to call it Teesside as well. I note in particular that Liberal Democrat councillors and party chairmen in the Tees area have firmly and publicly stated how much they want to work together with others to make a success of the combined authority and associated arrangements.

I also say in passing that I share the view expressed in several quarters that making an elected mayor a condition of deals of this kind is a very unreasonable position for the Government to adopt. I say that when I look at what would happen if we had to have an elected mayor covering an area from Berwick to Sunderland—an area of very diverse differences. It would be a very inappropriate governance arrangement.

I turn to the Greater Manchester order because of a little-mentioned positive aspect of it, but I am not clear how far it goes. It is what was referred to at paragraph 1.279 of the Budget statement, on criminal justice:

“The government has also agreed a further devolution deal with Greater Manchester, including a commitment to work towards the devolution of criminal justice powers”.

That is rather weak wording: “to work towards” is what Governments sometimes say when they are making concessions and are in difficulty. I do not think that that is the origin in this case. As far as I am aware, there is a genuine government commitment to achieve some devolution of criminal justice powers. Will the Minister, in responding to the debate, say just a little more? It was barely mentioned at the opening. It is a new development and unique to the Greater Manchester deal.

There is tremendous scope to be had from developments of this kind because at the moment we have a distortion in our system that means that, whereas the prison system is funded nationally, all other disposals arising from sentences tend to depend on local funding and extremely variable local provision of services for alcohol addiction, drug addiction and so forth. Greater Manchester is one of the areas that has tried to grapple with some of this. When, in my former capacity as chairman of the Justice Committee, we visited Stockport, we found there determined co-operation between magistrates, the local authority and the probation service, the development of something more like the problem-solving court, and the bringing together of various public bodies to deal with the problems that a case identifies that could lead to the ending of a pattern of offending behaviour. That requires a lot of co-operation between different bodies. Similarly, making logical use of alternatives to custody in sentencing depends on having a financial structure in which the commissioning is not done by completely different bodies.

There is a lot of scope here, and there will be even more scope if national spending on criminal justice is increasingly devolved to local areas. If that is done, we have a much better chance of ending up spending money on preventing crime, rather than on keeping people in prison for crimes that should never have happened. I see this as potentially important, and not something that we should allow to be forgotten in the Greater Manchester deal.

My Lords, I agree with pretty well everyone who has spoken, particularly my noble friend Lady Armstrong. Everyone was in favour of devolution and of decisions being made as locally as possible. I wish there was a bit more of that thinking in the Government as far as education is concerned, but I suppose there are inconsistencies in all government policies. I still feel a sense of foreboding about these orders and they are not entirely removed by my noble friend’s amendments, although I think it is infinitely desirable for the amendments to be carried.

The foreboding comes, at least in part, from the sense that we are developing in an almost ad-hoc way. I do not want to use the word “hotchpotch”, but it is the nearest thing to the truth. We will have different forms of local government in different parts of what is still, certainly geographically, quite a small and homogeneous country. We will soon reach the stage when a member of the public will need a doctorate in public administration to know what kind of system they live in, who does what, where and how, when to vote and all the rest. That will particularly be the case when people move around the country, as they do, of course, from one part to another. I do not think that it is the only principle governing constitutional change, but I think that intelligibility should be one of the principles.

We are in increasing danger, as these orders come through, of forgetting that principle and making a very complicated system of local and regional government public administration. I say that despite the fact— I am very conscious of the fact—that some people I admire enormously in local government, friends of mine, have been involved in the various negotiations and the conclusions that have been reached. It is something that should cause us concern. We should at least keep a watchful eye on how these things are developing.

I confess to a prejudice in all this, in that I think one should always be a little wary of Chancellors who say they are here to help. Chancellors of the Exchequer have a fair bit of power and a fair bit of money at their disposal. It is never quite an equal discussion when they come and negotiate with local leaders, who have tremendous knowledge of their area but nothing like the same capacity to implement decisions for their area that people in national government quite rightly have.

However, my main concern with these changes remains, as it was when we were taking the Bill through, about this business of directly elected mayors being compulsory. Let us not throw weasel words around any more. I do not like using language like that, but it is using weasel words to say that this is an optional addition to devolution agreements—that it is optional as to whether you have a mayor or not. It is not. It is quite clearly an absolute requirement for the Chancellor. It is something that should not just pass in an order without us at least registering our concerns, as others have.

I will not repeat things I said during the passage of the parent legislation, but I did not expect that on the leader page of the Daily Telegraph I would find an article by a Conservative writer with whom I found myself agreeing wholeheartedly. The headline in last Friday’s Daily Telegraph was: “Voters don’t want them, but the march of the mayors is now unstoppable”. It is not me saying this, though I find a great affinity with it. The article says that four years ago:

“George Osborne … asked 10 cities, in a referendum, if they’d like a directly-elected mayor. Nine said “no”. It was the wrong answer … It’s hard not to admire his audacity. Soon, all nine of the cities which rejected the offer of a mayor in a referendum will have one anyway”.

We know the history of this. It was introduced by a Labour Government, I acknowledge that, but then the impetus for an elected mayor had to come from below. Then the Conservative Government said, “Well, this isn’t moving fast enough, so we are going to force these 10 local authorities to consult the people”. They did consult the people and the people said, “No, thank you very much, we do not want one”. So what do the Government do? In the finest traditions of the European Union, I have to say, if you do not like the first result you have another go until the electorate come to their senses. That is essentially what has happened. Fraser Nelson goes on to say:

“Since 2001, there have been 50 mayoral referendums, of which just 15 agreed to mayors. Many have come to regret it”.

We know two, of course, where there has been a vote to get rid of it.

I know that it is whistling in the wind now to say this, but we are setting up a quasi-presidential system as a model across the country. This is not yet at a national level, thankfully—because I think that a parliamentary system is infinitely preferable—but that is what is going to happen. It will inevitably mean different systems in different parts of the country. We are still in the very unfortunate situation, as far as I can see, unless the Minister can correct me on this, where unlike in any quasi-presidential system anywhere in the world there is no limit on the number of terms a mayor can serve. That is a great fault in the system. Parliamentary systems get rid of leaders when they are not keen on them, but mayoral systems do not have that mechanism. I should have thought that eight years—two terms—should be a maximum, but that safeguard does not exist.

I have no sense of joy and exhilaration at a wonderful new experiment. I do not think that that was detected in any of the three Front-Bench speeches; I may be misinterpreting them. I hope that as this process continues—it now seems inexorable—care will be exercised to ensure that we do not develop a system of devolution across our relatively small country which no one without a double doctorate can understand.

My Lords, I thank all noble Lords who have taken part in this debate. I shall open my remarks by reflecting the words of the noble Lord, Lord Shipley, about the process of devolution being iterative and evolutionary over time. Those were very sensible words. I shall address some of the issues that were brought up that I did not address in my opening remarks.

Several points were made about referendums for different types of mayors being held under different processes. It is probably quite important to distinguish between the different provisions at different times. It is quite misleading to link referendums about whether there should be an elected mayor for a local authority area and the proposed combined authority mayors. The latter mayors are very different from local authority mayors—that is probably one reason Greater Manchester saw fit to have one. They have wholly different and novel roles and are closely interconnected with the devolution of new, wide-ranging powers for areas.

The noble Lord, Lord Beecham, asked how much agreement there was from other departments in doing these deals and implementing them. The departments concerned have all signed off the deals, which have been collectively agreed by Ministers. The implementation process is both local and across Whitehall, led by a director-general and a cross-Whitehall group involving all departments involved in the specific deals.

The noble Lord, Lord Shipley, asked about impact assessments. I hope it comforts him that when we confer functions on the combined authority to be exercised by the mayor, there will be, where appropriate, a regulatory impact assessment. This will be done in future orders that will be considered by this House.

The noble Viscount, Lord Eccles, talked about Durham moving north, which was interesting, and the identity in Teesside. The naming of the combined authority was a matter for the local area. The Government have recognised the historic boundaries but this combined authority is about strengthened, joined-up working and building on strong relationships across boundaries, recognising local identities.

The noble Lord, Lord Beecham, talked about the certainty of funding, particularly in relation to HS3. The Government have committed to HS3 and the Chancellor announced in last week’s Budget that £60 million will be available to bring forward HS3 between Leeds and Manchester, reducing journey times towards 30 minutes, which will increase the jobs market for people in both Leeds and Manchester and improve links between the north’s other major cities. The Government are absolutely committed to this.

My Lords, I do not propose to test the opinion of the House. We have had an interesting debate, which will continue for some time. I will look very carefully at what the Minister said about the business rate element, and other matters as well. No doubt we shall return to these issues because presumably there will be a string of orders over the next few months. I beg leave to withdraw the amendment to the Motion.

That the draft order laid before the House on 11 February be approved.

Relevant document: 27th Report from the Secondary Legislation Scrutiny Committee

Amendment to the Motion

As an amendment to the above motion, at end insert “and that this House welcomes the principle of devolution, the Tees Valley Combined Authority agreement, and the draft Order; but regrets the lack of adequate resources allocated to the Tees Valley Combined Authority; is concerned that funding is being cut whilst essential services are being devolved; notes that a transitional grant is available to local authorities to ease the pace of funding reductions but that out of the five constituent member local authorities of the Tees Valley Combined Authority no local authorities will receive this funding; and regrets that the Agreement was conditional on having an elected Mayor”.

My Lords, with permission, I will repeat a Statement made earlier today by my right honourable friend the Home Secretary in the House of Commons. The Statement is as follows:

“Mr Speaker, I would like to make a Statement about the terrorist attacks in Brussels, our response, and the threat we face from terrorism in the United Kingdom.

The cold-blooded attacks in Brussels yesterday morning have shocked and sickened people around the world; 14 people were murdered and 106 wounded when two bombs exploded at Brussels Airport. A further attack at Maalbeek metro station an hour later killed 20 people and wounded more than 100 others. Four British nationals are among the injured and we are concerned about one missing British national. Their families have been informed and they are receiving regular consular assistance. We are working urgently to confirm if any other British nationals have been caught up in these attacks. The investigation into the attacks is still ongoing. These figures may change and it will take some time for a fuller picture to emerge. But we know that Daesh has claimed responsibility.

These were ordinary people simply going about their daily lives: families going on holiday, tourists visiting the city and workers making their way to their offices. They have been attacked in the most brutal and cowardly way. I am sure the whole House will want to join me in sending our thoughts and prayers to the victims, their families and those who have been affected by these events.

In Belgium the authorities have increased the country’s terrorist threat level to four, the highest level available, meaning that the threat is serious and imminent. Yesterday I spoke to my Belgian counterpart, Jan Jambon, to offer my condolences and to make it clear that the UK stands ready to provide any support that is needed. Belgium is a friend and an ally, and we work closely together on security matters. Following the attacks in Paris last November, we deployed police and intelligence services resources to Belgium to support the ensuing investigation, which last week resulted in the arrest of Salah Abdeslam.

This is the 14th attack in Europe since the start of 2015. In January last year, gunmen killed 17 people at the office of Charlie Hebdo and a Jewish supermarket in Paris. In February, two people were shot dead at a synagogue and café in Copenhagen. In August, an attack was prevented on a Thalys train en route to Paris. In November, 130 people were killed and many more injured in a series of co-ordinated attacks in Paris. There have been further attacks in other parts of the world, including Bangladesh, Saudi Arabia, Lebanon, Kuwait, Egypt and Tunisia—where 30 British holidaymakers were murdered. More recently, a suicide bomber killed at least five people and injured more than 30 in an attack in the heart of Istanbul.

There continues to be a threat from Northern Ireland-related terrorism. The murder of prison officer Adrian Ismay on 15 March was a stark reminder of the many forms of terrorism we face.

In the UK the threat from international terrorism, which is determined by the independent Joint Terrorism Analysis Centre, remains at severe, meaning that an attack is highly likely. In the past 18 months, the police and the security services have disrupted seven terrorist plots to attack the UK. All were either linked to or inspired by Daesh and its propaganda. We know also that Daesh has a dedicated external operations structure in Syria which is planning mass-casualty attacks around the world.

Following yesterday’s attacks in Belgium, the Government took precautionary steps to maintain the security of people in this country. This morning the Prime Minister chaired a second meeting of COBRA, where we reviewed those measures and the support we are offering to our partners in Europe.

Border Force has intensified checks at our border controls in Belgium and France, increased the number of officers present at ports and introduced enhanced searching of inbound tourist vehicles. Further measures include security checks on some flights and specialist search dogs at certain ports. The police also took the decision to increase their presence at specific locations, including transport hubs, to protect the public and provide reassurance. In London, the Metropolitan Police has deployed additional officers on the transport network. I can, however, tell the House that neither deployment is in response to specific intelligence.

As I have informed the House on previous occasions, since 2010 the Government have undertaken significant work to bolster our response to the threats we face from terrorism. Last year the Counter-Terrorism and Security Act provided new powers to deal specifically with the problem of foreign fighters and prevent radicalisation. We extended our ability to refuse airlines the authority to carry people to the UK who pose a risk. We also introduced a new power temporarily to seize the passports of those suspected of travelling to engage in terrorism. This power has now been used more than 20 times, and in some cases has led to longer-term disruptive action, such as use of the royal prerogative to permanently cancel a British passport. A week ago this House debated the Second Reading of the Investigatory Powers Bill, which will ensure that the police and the security and intelligence agencies have the powers they need to keep people safe in a digital age.

Through our Prevent and intervention programmes we are working to safeguard people at risk and challenge the twisted narratives that support terrorism. This includes working with community groups to provide support to vulnerable groups and deliver counternarrative campaigns. Our Channel programme works with vulnerable people and provides them with support, to lead them away from radicalisation. Furthermore, as we announced as part of the strategic defence and security review in November last year, this year we will be updating our counterterrorism strategy, Contest.

In addition, we have protected the counterterrorism policing budget. Over the next five years we will invest £2.5 billion in a bigger, more capable global security and intelligence network. This will include employing over 1,900 additional staff at MI5, MI6 and GCHQ, and strengthening our network of counterterrorism experts in the Middle East, north Africa, south Asia and sub-Saharan Africa.

Together, these measures amount to a significant strengthening of our domestic response. But as the threat continues to adapt and morph, we must build on our joint work with our international partners. As this House is aware, the UK enjoys the longest-lasting security relationship in the world, through the “Five Eyes” partnership with our allies the United States, Australia, Canada and New Zealand. That relationship allows us to share information, best practice and vital intelligence to disrupt terrorist activity, prevent the movement of foreign fighters and stop messages of hate spreading.

Following the attacks in Paris last November, our security and intelligence agencies have strengthened co-operation with their counterparts across Europe, including through the Counter-Terrorism Group, which brings together the heads of all domestic intelligence agencies of EU member states, Norway and Switzerland. Through this forum, the UK has been working to improve co-operation and co-ordination in response to the terrorist threat, and to exchange operational intelligence.

We are also working bilaterally to increase aviation security in third countries, because, as I told the five-country ministerial meeting in February, defeating terrorism requires a global response and we will not succeed by acting in isolation. The United Kingdom has intelligence and security services that are the envy of the world, and some of the most enduring international security relationships. Together with our allies around the world, we must act with greater urgency and resolve than ever before. We must continue, as we already do, to share intelligence with our partners, to be proactive in offering our expertise to help others, and to encourage them to do likewise. We must organise our own efforts more effectively to support vulnerable states and improve their ability to respond to the threat from terrorism. We must also do more to counter the poisonous and repugnant narrative peddled by Daesh and expose it for what it is—a perversion of Islam built on fear and lies.

This is the third Statement to the House that I have given following a terrorist attack in just over a year. Each horrendous attack brings pain and suffering to the victims and their loved ones. Each time the terrorists attack, they mean to divide us. But each time they fail”.

I thank the Minister for repeating the Statement made in the House of Commons earlier today. We share fully the abhorrence and condemnation expressed in the Statement about the attacks in Brussels yesterday, which were in reality yet another attack on all Europe. We support the Government in confronting this threat. Our thoughts are very much with the families of those killed and of the missing British person, with those injured and their families, and with the people of Brussels and Belgium—and indeed the people of Ankara and Istanbul, who have also been the subject of attacks in recent days.

I have a few questions and points to raise. Can the Minister say what guidance is being offered to our citizens who were intending to travel to or through Brussels over the holiday period in particular? Can he say more about the collaboration that is taking place with Belgium and other European partners, including the support or expertise that had already been given or offered to Belgium prior to this attack? If ever the case still needed to be made for closer working and collaboration and sharing of intelligence to combat these acts of terrorism, this is it.

On the issue of border security, we welcome the steps that have been taken to step up checks at our air, sea and rail borders with Belgium and France, and security on our own transport network. Are all passports now being checked on exit from the UK, as the Government said they would be by the end of last year, and were 100% passport checks in place between the UK and Belgium in advance of yesterday’s attacks?

Border Force operates juxtaposed controls at, I believe, six locations in France, covering ferry services, the Channel Tunnel and Eurostar. As I understand it, however, in respect of Belgium juxtaposed controls cover only Eurostar foot passengers and not ferry terminals. Is that the case and if so, will there be a review of our borders with Belgium with a view to strengthening them?

Further cuts are coming following the spending review. The Border Force has faced years of cuts and is already stretched. Are further cuts to the force going to be made in 2016-17? Surely now is the time to strengthen our borders, not to go in the reverse direction.

We know that a number of terror plots have been foiled in the past year and we take this opportunity to express our gratitude to all those in the police and security services who work so determinedly to keep us safe. The public, however, will want reassurance about our ability to thwart a Paris or Brussels-style attack. We know about plans to improve firearms capability in London but there is concern about the ability of cities outside London to cope. Last year a Home Office report on police firearms capability found that the number of armed officers had fallen by 15% since 2008, including a fall of 27% in Greater Manchester and 25% in Merseyside. Have the Government reviewed the ability of all major cities to respond, and can they provide reassurance that, if there were a Paris or Brussels-style attack outside London, our police and fire services would have the necessary capability to respond?

In his statement on the strategic defence and security review, the Prime Minister promised a new contingency plan to deal with major terrorist attacks, with up to 10,000 military personnel available to support the police. Can the Minister update the House on those plans and say when the full 10,000 military personnel will be trained and in place?

We know that at moments like this, great anxiety will be felt in the British Muslim community over fears of reprisal attacks and hate crime as a result of the acts of terrorism in Brussels—which are simply that, and a perversion of Islam. Do the Government recognise that concern, and will they send an unequivocal message that anyone who seeks to promote division or hate on the back of these attacks will be dealt with severely?

Will the Government also condemn the ill-informed comments from Donald Trump on UK television today and take this opportunity to distance the Government from them? Mr Trump appears to have suggested that Muslims do not come forward to report concerns in order to assist our security authorities in combating potential acts of terrorism. Generalised slurs, from whatever source, on all Muslim people, who have the same revulsion over what happened yesterday as everyone else, serve only to drive a wedge between the Muslim community and the rest of our diverse country. This is a time for maximum unity among people of all faiths—and none—in rejecting those who preach extremism. We stand together as a united country, and we stand with our neighbour Belgium in its time of need, determined that whatever it takes, and however long it takes, we will face and defeat this threat to our way of life together.

My Lords, if I may start on a personal note, while watching the television report on the Istanbul attack I noticed that it took place only a few days after I had walked down that street between meetings in Istanbul. To see the pictures of Brussels, where my wife was walking through the site the day before this happened, is to make one feel that we are not cut off from all this. This is part of our world. I find it despicable that the Brexit campaign should have tried to suggest that we could cut ourselves off from the world and that what happens 100 miles away from London, in Brussels, is no concern of ours. This was, after all, an attack by Belgian citizens in Belgium. We should recall from the IRA campaign in Britain that what was in many ways a domestic terrorist campaign also included cells and co-operation in Spain, Gibraltar, France, Belgium and Libya and that, in dealing with a series of global terrorist threats, we are forced to co-operate with others as closely as we can.

Perhaps the Minister would care to confirm this: if we were to try to secure our borders completely, we would have to return to the sort of controls that we had in the 1960s. I first began to travel between Britain and France then; all bags were opened and it often took 10 to 15 minutes for each person to go through passport control. Given the enormous increase in cross-border travel between Britain and the continent, it would be a severe disincentive to all our citizens—and, incidentally, an intense inconvenience to the noble Lord, Lord Lawson, in travelling each week between his home in France and the House of Lords. It would also be very difficult given the large Middle Eastern presence we now have, particularly in London. There are not just people from the Middle East working here and living as refugees but rich Arabs from countries from which money flows, unfortunately, to mosques and madrassahs in Britain to support a radical version of Islam. We all have to be deeply concerned about that.

I second everything that the noble Lord, Lord Rosser, said about visible co-operation and contact with our Muslim community. I was extremely proud to take part in a service in Westminster Abbey some months ago in which an Imam read from the Koran, as a representative of one of Britain’s faiths in one of our national Christian institutions. I suggest to the Government that they need to do more in demonstrating how far we accept British Muslims as part of the British community, and the moderate version of Islam as the appropriate representation of their faith.

Can the Minister say a little about the importance of the Prüm convention and British participation in it, in terms of the rapid exchange of information among different services across Europe on suspected terrorists and others? I noted the reference to the counterterrorism group in the Statement which, as the Statement recognises, brings Britain together with other EU members and with Norway and Switzerland, as all are concerned with this. Can he say a little about further moves that we think may be necessary towards the closer exchange of intelligence, information and co-operation among national police and security agencies with our neighbours, all of whom are also members of the European Union?

I thank both noble Lords for their remarks and I agree very much with their points and observations. Let me start with that point about the Muslim community. Following the experience of previous attacks, we have sadly seen an increase in Islamophobic-style attacks around our country. One of the things which we put in place to retain confidence, as part of the counterextremism strategy, was to ensure that the police are visible in those areas and offering some protection and reassurance, particularly at sensitive spots within those communities.

I also make it clear to those overseas in the United States who wish to intervene in our affairs that in this area, as in many others, a little knowledge would be helpful because the police have gone straight on the record to point out that in so many of the cases which we have had success in disrupting, the intelligence and information has very much come from within that community. It is an absolute partnership—an essential partnership—that we have with that community and anything which drives a wedge between it and the wider community in the UK will serve only to weaken our security. We do not want that to happen. I know that my noble friend and ministerial colleague Lord Ahmad, who leads on the counterextremism area and sits in the Home Office and in the Department for Transport, is working on a daily basis in that respect.

Let me go through some of the points which were raised, in order if I can. The noble Lord, Lord Rosser, asked about the travel advice. It has already been updated for Belgium and while it does not advise against travel, it is stressing the importance of maintaining vigilance in that area. We will continue to keep that under review and change it if necessary.

On broadening the number of locations, these special juxtaposed controls which we have are of course a tremendous part of our defence. The Channel is an important part of our defence but the juxtaposed controls are a crucial part of our security at our borders. The Immigration Minister, James Brokenshire, has had meetings with his Belgian and Dutch counterparts about the possibility of strengthening relationships, particularly at some of the ferry terminals, in the light of intelligence. We hope to have more to say on that in future.

In relation to the Border Force, I know that the story is in a sense running because we have not yet announced the final budget for that. We will need to come forward with that very quickly indeed. But I hope that all noble Lords will be reassured that when we have talked about putting an extra £2.5 billion into the intelligence and security apparatus and recruiting another 1,900 people to the security services, and when we have protected in real terms the police and security budgets and announced uplifts for firearms, we are not going to do anything which would do other than strengthen these crucial front-line capabilities in the face of the threats that we receive.

The noble Lord, Lord Wallace, asked about Prüm. We did opt in to Prüm, which again is an important part of our co-operation with our European colleagues in this area. We have so many areas in which we co-operate with them, such as on criminal information networks and in Schengen information sharing. Prüm was very important because it has those elements of sharing data on DNA, on vehicle licensing and on fingerprints. We have signed up to those elements and they will be ready in 2017-18. Without tempting members of the Home Affairs Sub-Committee of the European Union Select Committee, if it is represented here, to leap to their feet the committee wrote a strong report saying that we need to go further and faster on that. In fact we organised a meeting with the very people who are introducing this at the Home Office, from a technological point of view. They have promised to come back with regular updates for the House on how we are doing.

I was asked what more could be done through counterterrorism. There are some items on the agenda. The Home Secretary has said that it is very important that we have passenger name records, not just for flights from outside the EU area but within it. It is vital that that happens; it was supposed to be on the agenda of the Justice and Home Affairs Council, which was to meet this week. Understandably, it has either been pushed back or, potentially, postponed. I thank noble Lords for the concerns in their questions.

My Lords, I welcome the Statement, particularly its emphasis on the fact that this is a global threat that we are all facing, which requires a global response—not least in the form of intelligence sharing. In that context, I was glad that the Statement explicitly referred to the vitally important and long-standing Five Eyes agreement with the United States and three other non-European countries, and to the European counterterrorism group, which again includes countries which are members of the European Union and countries which are not. Bearing all this in mind, does my noble friend not agree that for anybody to suggest that our security and co-operation would be at risk were the British people to choose to leave the European Union is baseless scaremongering and to be deplored?

My noble friend is absolutely right to point out that the United Kingdom has a unique set of international relationships, whether through its position on the Security Council, in the Commonwealth or in the “Five Eyes” that I have talked about. A crucial part of these relationships is of course with Europe. The sharing of information within Europe must go on. It is absolutely integral to our ongoing security. We are not, for example, part of the Schengen area, but that does not stop our signing up for the Schengen information system and these are crucial data for us. It is important that we maintain the strongest possible links because this is a global problem and it requires us all to work together internationally and within this country.

My Lords, first, I express my condolences to the families of those who have lost their lives and to those who have been injured. Would the Minister reconfirm that the threat to this country remains at the severe level and it is highly likely that there will be a terrorist attack at some stage? In that context, is it not the case that our support and assistance to Belgium—or others who find themselves the victims of these tragedies—is not just a moral and political obligation but self-interest, since we may wish to see it reciprocated at some stage?

Secondly, on information sharing, can the Minister comment on Europol? Only two months ago, the head of Europol suggested that, although there were 5,000 returnees from Syria to Europe, they had received details on only 2,000 from individual EU members. This leaves a very large percentage. What are we doing to encourage people to supply information there?

Finally, can the Minister give an estimate of the number of Syrian would-be jihadists who have returned to this country? How many of them are under surveillance and how many are on deradicalisation programmes? I understand that he may be constrained on the last point, but it would be helpful if he could give some indication.

I think the noble Lord was Home Secretary at the time of the 7/7 attacks and therefore knows absolutely what must be going on and the vital part played by our international networks in tracking people down and keeping others safe. He is right to ask about what specific help has been given. The noble Lord, Lord Rosser, also asked about that. The type of help we have given the Belgians includes CCTV analysis, forensic device investigation, bomb scene management, exploiting social media and body recovery.

On the Europol counterterrorism point, I do not know specific numbers. I know there are some 800 foreign fighters who have returned to the UK. We have made it clear that anyone returning can expect to be the subject of interest to the authorities and to be contacted by them. Where it can be shown that they have been engaging in criminal acts abroad, they will be—and have been—prosecuted and that will continue to be the case.

My Lords, does the Minister agree with me that those who blame the EU and Schengen for terrorism are completely and outrageously wrong? Indeed, since the apparent perpetrators lived in Brussels, where the attacks were committed, Schengen is irrelevant. Does he also agree—as I think he does—that it was evidently right to opt back into the 30-odd EU police co-operation measures, including the Schengen information system and now the Prüm regulations? That would not have happened without contributions from a lot of people, including the Liberal Democrats. If the Eurosceptics—including those in the Conservative Party—had had their way, we would not now be taking part in these essential European co-operation measures. Although Norway is in Prüm, it has no right to contribute to its further evolution. It is essentially an observer.

First and foremost, and particularly at times such as this, the prime responsibility of any Government is the safety and security of their citizens and their borders. This has to be our top priority. It transcends and takes over from any other factor of domestic debate. It just does not counter it. As I have outlined, there are some major international relationships that are very important to us in sharing information. Among these are those we enjoy with our European partners. We believe these ought to be strengthened and deepened at every opportunity.

My Lords, I welcome the Statement. As it says, there is a twisted narrative here. We have to remember that this twisted narrative is a many-headed monster. If it does not spring from Daesh, it will spring up wherever law and order have broken down. That must be combated.

I was particularly encouraged, therefore, to hear what the Minister said about keeping increasingly close relationships with the Muslim community in this country, from where so many sources of our information come. In response to the recent report from the Commission on Religion and Belief in British Public Life, chaired by the noble and learned Baroness, Lady Butler-Sloss, the Government have called a meeting of major officials across all departments to discuss its implications. There is a whole range of issues—in particular, the sensitivity of language. The Government have become increasingly sensitive to the proper use of language on these security issues and I commend them for it. The Minister sets a wonderful example. I encourage the Government to continue to have these meetings with leading organisations from the Muslim community, to receive advice on a whole range of security issues.

The noble and right reverend Lord is absolutely right. Of course, these meetings will be ongoing. I know, from having an office next door to the noble Lord, Lord Ahmad, that he has a constant flow of visitors and meetings and a very full diary of engagements. This needs to continue and be developed. It is not something that just comes down from government; it also needs to come up from within the faith communities themselves. Some of the most effective means of countering these ideologies are ones that do not have a government fingerprint anywhere on them but come from within communities. We must all encourage more of this going forward.

My Lords, my noble friend said that the Prime Minister attended a meeting of COBRA this morning. Bearing in mind the tremendous importance of sharing information, is there not a case for a European equivalent? Nobody should attempt to bring these desperately serious issues into the European referendum debate. However, should we not recognise that, if there is a change on 23 June, although it is crucial that co-operation should continue, its context would be altered?

That may be so. What I said in repeating the Statement was that we have the counterterrorism group, which is a very important part of sharing intelligence across EU member states. The headquarters of NATO are also in Belgium. NATO plays an important part in our security because it includes Turkey, which is crucial in the fight against Daesh.

My Lords, I thank the Minister for repeating the Statement and the noble Lords, Lord Rosser and Lord Wallace, for their comments. My heart goes out to all those who lost their lives in Brussels and Ankara; the list given by the Minister is endless. I welcome his comments, particularly on building and developing a greater relationship with the Muslim community in particular, but also on having wider interfaith networks. I declare my interest as an adviser for the Tell Mama organisation, which will concur with the Minister about the increasing rise of attacks against women in particular. I am keen to ensure that the Minister takes on board the discussion with a wider network of men and women within the Muslim community, not just those to whom government approvals are available. Please can the Minister respond and tell us what plans the Government have to ensure that the numbers of organisations and individuals to which they are talking are widened to accept even the most marginalised voices in the community?

We have the Prevent and the Channel programmes, but we also have them in the very helpful context of the counterextremism strategy, which was published at the end of last year. That will probably lead fairly shortly to some legislation coming through this House, which will flesh out some of the points that the noble Baroness raised. But I return to the point that some of the most effective means of combating this distortion and perversion of a great faith in this country come from within the communities themselves.

Does the Minister agree that it is a disappointment that the same group which killed over 100 people in Paris on 13 November was able to kill more than 30 people in Brussels yesterday? If that is right, does he agree that the welcome co-operation that has taken place between the intelligence agencies of the Five Eyes and the European countries other than the United Kingdom should be re-examined so that we have the technical abilities, including surveillance capacity, required to ensure that this is not repeated in yet another European capital, which might be our own?

That is absolutely correct. Of course, that is one of the prime drivers behind the investigatory powers legislation—but the noble Lord will notice that, when we talk about the global fight against terror, the sophistication of the Daesh communications, with the use of social media as a way of communicating, is a completely new challenge for the security services. That is why we are putting the resources into GCHQ. Because Daesh is based in Syria, we need to make sure that we take the fight to it and destroy its capabilities there before it has the opportunity to destroy our way of life here.

My Lords, we have to admit that our island—land, sea and air—is rather sieve-like, and those who really want to get into this country do so. In the front line that the Minister so ably talks about, the noble Lord, Lord Rosser, put his finger on an empty space at the moment. I refer to the Border Force, which I support very strongly. It is a matter of better tasking; better direction, command and control; better selection and recruiting of its members; training; and a rapid reaction force available day and night. We have 200-plus airfields unattended at night. We have coves north, south and east where it is quite easy to arrive at night undetected. People are a bit forgetful of the west coast; people are entering more from Ireland at the moment. I would class our Border Force as just average at the moment. I do not believe that the Government are giving it proper support, and the sooner it is got up to a high operational level to take part in the front line the better. The Government are missing a trick here.

There is one little suggestion that I might make. The Government have kicked out 25,000 military—good recruiting ground. They know how to work at night in the darkness, and that sort of thing. With immigration, so many people say that we are not taking enough and that we ought to be swamped a bit. The sleeper, the activist and the bomb-maker can all come in that way, and are coming, and we have to be very careful. We need a Border Force worthy of the front line, and the Government must do something about it.

The noble Viscount is right to refer to the Border Force. I can speak only for the people whom I meet, who have the highest professionalism and resolve. It has changed over the past few years. The National Security Strategy and Strategic Defence and Security Review 2015 referred to that, saying that there was a case for better intelligence-led security. That is where we need to strengthen up—on the connections between the National Crime Agency and between the police and Special Branch and the security agencies. Receiving that signal and human intelligence is also very important. We cannot hope to have border posts in every cove and field across the country, as the noble Viscount suggested. Therefore, we have to rely on intelligence and on partnership with the communities as well.

My Lords, I am glad that the Government are tightening up passport control and are seizing and cancelling British passports under royal prerogative when appropriate. But does the Minister remember that last week in a Written Answer he said to me:

“Records are not held centrally of persons holding both a UK passport and foreign passport”.?

Surely it is now urgent that Border Force officials should be able to scan a British passport and know what other passports that person may hold. Otherwise, they may be able to skip out of the country. Recently, somebody actually on bail for a terrorist offence did exactly that.

Of course, that is also one of the reasons why we have in the Counter-Terrorism and Security Act the ability to seize passports, which are the property not of the individual but of the state that issues them. So we can seize those passports. We need more information on identity. On the point that the noble Lord makes about having two passports, we have changed the passport form to make sure that people can declare when that is the case. We have in place exit checks. All that is working in the general direction in which the noble Lord wants us to go.

My Lords, for how much longer are the British Government going to resist the introduction of national identity cards with full biometric data, on the same basis that other—indeed, nearly all—European countries have introduced such a system? I understand that in recent weeks even the Japanese are doing the same. They all justify it on the basis that it improves their national security arrangements. Why do we not just do it and stop dithering over it?

Brussels has a compulsory ID system, and that is not something that guarantees security. From our point of view, we say that intelligence and working with communities is what has disrupted the seven attacks planned in this country in the past 18 months. Of course, we need to tighten security at every level, but we do not believe that compulsory ID cards are the way forward.

My Lords, this is a small issue, in a sense. It is a kite-flying amendment not directly related to what is in the Bill, like many other amendments we have been discussing. However, it is an important issue for local authorities that are affected by it. Regulation 123 of the Community Infrastructure Levy Regulations refers to Section 106 agreements. When the CIL regulations were brought in, it was tagged on to them, almost without anybody noticing—although I complained about the regulation when it came to be approved by this House.

I am challenging not the regulation as such but the bit of Regulation 123(3)(b) that restricts the number of Section 106 agreements within the area of one local planning authority to five,

“which provide for the funding or provision of that … type of infrastructure”.

That means that a local planning authority can have only five Section 106 agreements in place anywhere within its area for one particular type of infrastructure. I hope that the Minister will understand the very specific point I am making. I will come to it in a minute.

I want to be clear that I am not objecting to the requirements of Section 106, which nowadays have to be site specific. It used to be that you could have a planning application at one end of an authority and get some money for a playground miles away at the other end of the authority. That was quite rightly stopped. Agreements have to be site specific—in other words, related to the particular planning application or piece of land, as the Minister said earlier. I am not objecting to the restrictions on pooling Section 106 contributions to build up a pot for large schemes, and there is a limit to how far that can be done. It is just ordinary, small Section 106 contributions that are typically connected to retail developments, housing developments and so on. Again, I am not talking about the affordable housing things that we were talking about this morning.

The limit to five schemes is not logical for four reasons. First, there may well be more than five separate schemes that are relevant or appropriate to particular developments, even though they are of the same type. For example, it may be that Section 106 contributions are being used to support a local bus service—the kind of bus service which is subsidised or supported by the local highways authority under the Transport Act—and a contribution may be made in order to extend the route to serve a particular housing estate or so that it serves the supermarket or whatever. I have had a lot of experience in past decades of helping to support local bus services through this means, at the same time providing public transport to new housing developments or new supermarkets.

It may well be that a Section 106 agreement is required for a public open space, and it is silly to say that you can have only five open spaces if you have seven developments that would benefit from this provision. So there is no logic to it. It came in as part of the restrictions on making Section 106 agreements site specific and stopping people building up big pots, but it is not now necessary.

The second reason is that, because Section 106 agreements are now site specific, there is no reason to limit the number. Logic says that the number should be determined by the number of appropriate developments and appropriate schemes. Thirdly—and here I am talking to some extent against a small authority such as my own—the limit applies per local planning authority, however big or small. So it is five for a huge area such as Northumberland or Cornwall, five for a little authority such as Rutland, five for small district councils and five for big cities. It is an arbitrary number and there is no sense to it.

Finally, it causes particular problems where a local authority has no CIL contributions. Where the level of CIL has been assessed as zero, it cannot be levied. The kinds of councils I keep talking about during this Bill, including my own in Lancashire and lots of other councils in Lancashire and the north of England, cannot levy a CIL because if you levy a CIL, it takes developments completely over the border into being unviable. In areas where developments are only marginally viable on the best greenfield sites, you cannot levy a CIL.

Therefore, the contributions for local infrastructure that come from a CIL are not available in areas of that kind, and those areas are by their very nature probably poorer in different ways than the more prosperous parts of the country that can levy a CIL. So poorer areas do not get the infrastructure levy. Therefore we have to rely on what we can get from Section 106, and this restriction on Section 106 is arbitrary and illogical. I hope that the Government will take it away and have a look at it. They do not have to bring it back in this Bill; they can simply make a minor change to the CIL regulations. I beg to move.

My Lords, I thank the noble Lord, Lord Greaves, for his amendment. The Government introduced the pooling restriction in Regulation 123 of the Community Infrastructure Levy Regulations 2010 in order to ensure that planning obligations are used appropriately. The regulations have encouraged 107 charging authorities to bring forward the levy, which provides greater certainty for developers about the cost of developments and helps those authorities provide certainty to their communities about how their infrastructure needs can be met.

Pooling restrictions limit the use of Section 106 to no more than five for a specific infrastructure levy type or project, as the noble Lord said, but this has helped to incentive the adoption of the levy. Adoption nearly trebled in the year prior to the pooling restriction taking effect in April 2015, and it has continued to grow since. While acknowledging that Section 106 still has a role to play in site-specific infrastructure, the Government launched a review of the levy last year to ensure that it provides an effective mechanism for funding infrastructure. The review is considering, among other matters, the relationship between the levy and Section 106 planning obligations. I shall be happy to ensure that the panel is aware of the noble Lord’s thoughts on the repeal of the regulation. With that in mind, I hope that he will withdraw his amendment.

I am grateful for the last sentence of that reply. I am talking not about pooling Section 106 contributions for bigger projects but about the limit on the number of small projects that can be funded directly linked in a site-specific way to particular developments. The perfectly justifiable intentions of the Government to stop Section106 being an alternative to CIL has caught the small schemes and small contributions in a way that was not intended. That specific point ought to be looked at.

Having said that, the other point is that it is okay having lots of incentives to levy CIL—but not if the consequence of levying CIL is that no development at all takes place. Remember, I come from an authority where getting into three figures of new starts or completions a year is proving very difficult indeed. In one recent year it was in single figures and that is not for the lack of trying to build as far as the authority is concerned. Indeed, in one recent year when 50 or 60 completions took place, they were almost all built by the authority. The private market hardly exists—or has hardly existed in the last few years.

My Lords, we now move on to the part of the Bill that is about housing development linked to applications for development control under the 2008 Act for nationally significant infrastructure projects. This series of amendments probes the provisions which will take the housing element of such projects—where they are linked to infrastructure projects—out of the hands of local authorities and allow people to make the application for development consent under the infrastructure system and to include the housing provision within that application.

The purpose of tabling these amendments is to ask some related questions. A very useful briefing note from the Department for Communities and Local Government, called the Housing and Planning Bill: Nationally Significant Infrastructure Projects and Housing, does answer some of the questions I had in my mind when I tabled these amendments. Nevertheless, some questions remain, and one fundamental issue has a big question mark against it.

Amendment 102CA would name the housing projects which are linked with the infrastructure projects “subsidiary”, which seems to me an appropriate word. It is important that they be seen to be subsidiary or ancillary and not a major part—even if they are 30% or 40% of the reason for the development. Housing ought not to be the reason for the development. Infrastructure projects are the reason for the development.

Amendment 102CC, to new subsection (4B) of Section 115 of the Planning Act 2008, states:

“‘Related housing development’ means development which … (a) consists of or includes the construction or extension of one or more”,

new dwellings. I take it that “consists of” is okay—it “consists of” housing or “includes” housing. What else is there? That is the question. I take it that the “what else” is not the infrastructure, but something else. Therefore, why do things other than housing need to be included?

Amendments 102CF and 102CG challenge the geographical reason for allowing people to include housing in an application for development consent. The briefing note on page five sets out clearly that the Government intend that there will be two reasons for allowing housing development. The functional need ought to be allowed. Paragraph 17 states that:

“Where housing is being provided on the basis of a functional need”,

the limit for the number of houses can be up to 500, which seems rather a lot, even for a functional need. Perhaps the Government can tell us under what circumstances an infrastructure development might also require 500 houses. But paragraph 16 states:

“Where housing is being provided on the basis of geographic proximity to an infrastructure project, the maximum amount of permanent housing that could be granted consent”,

is also 500 houses. I do not understand why the Government are going to allow a national infrastructure project to be put forward with up to 500 houses when the only connection between those houses and the project is geographical proximity: either adjacent or, as my Amendment 102CD puts it, “close to”—the briefing note says up to a mile away.

It seems that the planning permission for new housing estates of up to 500 houses—perhaps most are smaller—is being taken out of the hands of local planning authorities just because the estate in question is next to, or within a mile or so of, a new infrastructure project. I cannot understand the logic of this. I can understand why landowners might want to link them together and perhaps fund one out of the other. Five hundred houses, by any standards, is a big new housing development. It ought to be in the hands of the local planning authority. The guidance sets out that the Secretary of State, in making his decision on the application for development consent, will have to take account of the local plan and the national planning policy framework, and whether it is in a national park or ecologically significant, for example. All these things will need to be taken account of. Local planning authorities do that all the time. However, issues such as design, the relationship between the new development and the existing communities, local highways issues, access, or even Section 106 agreements for new bus services ought to be in the hands of the democratically elected local planning authorities, not put into the hands of the Secretary of State.

There are very good reasons why the national infrastructure planning system exists for national infrastructure projects. There are reasons that I can understand for housing being part of the project—when it is directly related to those projects because it is for people who are going to work there—and it is sensible to put in a planning application for development consent. However, I see no reason at all why local authorities should have this decision seized from them by the Secretary of State simply because a project is next to a new national infrastructure project, even if none of the people living in those houses is going to be associated with, connected with or working at the new development. It seems to be a step too far in the centralisation of the local planning functions of local authorities, and yet another move away from localism to centralism. I beg to move.

My Lords, my name is associated with Clause 144 stand part, and I agree entirely with what my noble friend Lord Greaves has said. I regard this as a very important issue because it effectively cuts out local authorities from the planning process on a nationally important infrastructure decision. Simply permitting an applicant to go straight to the Secretary of State to secure approval seems to me to be the wrong approach. What my noble friend said helps us to solve the problem.

I am very grateful to the noble Lord for setting out the basis of his amendment. This clause will allow the Secretary of State to grant development consent for housing that is related to a nationally significant infrastructure project. I hope I can reassure noble Lords about the Government’s intentions and the protections that are in place to ensure that this provision is appropriately restricted.

Clause 144 allows consent to be granted for housing where the housing is functionally linked to an infrastructure project—for example, housing needed for employees at the project. It also allows housing to be consented if it is close to the infrastructure. Any housing that is granted consent within the nationally significant infrastructure regime must be secondary to the infrastructure by satisfying the requirements of being appropriately linked by function or location. The clause will not allow projects that are housing-led.

The noble Lord, Lord Greaves, indicated that he felt that responsibility for granting consent for such housing should lie with local authorities, not the Secretary of State. We believe that this would inhibit developers from realising some significant benefits. For example, a key aim of the Planning Act 2008 was to provide for a single consenting regime. This clause will mean that developers do not have to make a further separate application to the local authority for housing as well as their application to the Secretary of State for consent for the infrastructure. We believe that this strikes the right balance between the two.

It is very important that we recognise that the development of infrastructure projects may well bring important new opportunities to develop housing that were not previously available. A new road or a rail project, or improvements to existing projects, can make land available for housing development that might not previously have been suitable. Although there are only a limited number of nationally significant infrastructure projects that seek consent each year—49 projects have been consented since 2010—the clause offers an opportunity to provide a small but important contribution to the provision of new housing.

The Government have ensured that safeguards will be in place so that existing local and national planning policies will not be undermined. For example, as the noble Lord said, we have made clear in draft guidance that the amount of housing that is likely to be consented will be limited to 500 dwellings. As I have said, we believe that that may be appropriate if some infrastructure projects create new opportunities for housing. Existing planning policies set out in the National Planning Policy Framework—for example, those that may limit development in designated areas, and policies set out in local plans—are likely to be important and relevant considerations that will be taken into account by the Secretary of State when decisions are taken.

I hope I can reassure noble Lords that local authorities and interested parties can play a full role in the process leading up to any decision by the Secretary of State under the Planning Act regime for deciding nationally significant infrastructure. In particular, local authorities can produce what are known as local impact reports, which set out the impacts of the development in their area. Such reports are specifically identified as something the Secretary of State must have regard to when taking a decision.

The noble Lord asked why we say “includes housing”. “Includes” means that related development can include local infrastructure. The nationally significant infrastructure planning regime already requires significant local engagement in consultation, as I said. Applicants are required to engage with and consult local communities and local authorities from the outset, and developers will be expected to engage with local authorities on the housing element of their scheme in the same rigorous manner.

I hope that my responses have provided reassurances to the noble Lord, and I ask him to withdraw his amendment.

I am grateful to the Minister for explaining the Government’s position in great detail. Having heard it again, I am even more sure that it is wrong. Sorry about that, but when you find out what things actually mean, sometimes you think they are okay but sometimes it confirms your view that they are wrong. The idea that 500 houses are a minor part of a development, in any area, is nonsense. In terms of their impact on a community and how it operates, 500 houses anywhere are a lot of houses. I accept that if such a development is directly associated with the infrastructure scheme and required for it in a functional way, it is reasonable for one application to take place. However, the only real argument that has been put forward is that it is a good idea to build next to a new infrastructure because new roads and access will be put in. In planning terms, it might be a good idea, or it might not be. In planning terms, it might be a very bad idea because of the disadvantages of living next to whatever the new infrastructure is. Or it might be a very good idea. That is a decision that ought to be taken by the local planning authority. It just seems unnecessary to say that 500 houses that are not related to the infrastructure scheme at all, but are simply next to it, ought to be taken away from the decision-making of the local authority. The only argument that I can think of is that it is again just more convenient and easy for the developers. That is the second time today that I have said that too much of this Bill seems to be about making life easier for developers and blow the consequences for everybody else. I am unhappy as I think it is the wrong decision. We might bring it back on Report; but for now, I beg leave to withdraw the amendment.

My Lords, I will also speak to the other amendments in this group. I do so on behalf of my noble friends Lord Cameron of Dillington and Lord Lytton, who are unable to be here today. We have had suggestions for some of these amendments from the CLA, of which I declare my membership.

For a long time, compulsory purchase in this country has been a messy compilation of many pieces of legislation and is well overdue for reform. As time has gone on, it has become ever more unbalanced in favour of the acquiring authorities and the agents of the state. Indeed, many privatised utility operators have gained compulsory purchase powers—and apparently, at the last count, there are 172 of them.

I turn to the amendment. I mentioned in our Second Reading debate my concern that it was unfair for an acquiring authority to be able to purchase land for housing as part of an NSIP at current use values. Last week, the Minister made a strong case in resisting an amendment from the noble Lord, Lord Campbell-Savours, who wanted an agricultural use valuation for local authority compulsory purchases. He spoke of land being valued by the “no-scheme world” and said that market value took into account the effect of planning permission already granted and thus “hope value”. I therefore feel that it must follow that once an NSIP has been granted planning permission, then the value of adjoining land for housing is substantially enhanced by the very existence of the scheme. Thus, development value is established and should be applied where the proposed land for housing within one mile of such a scheme is valued. It is the same as if the land had been purchased on the open market. Will the Minister explain to the House why an NSIP should make the principle of fairness so different? It is still confiscatory. Is it the Government’s intention that the retail purchasers of the new houses should benefit from this largesse, or is it for the benefit of the acquiring authority? I find Clause 144 rather offensive.

I turn now to Amendments 103BC and 103BD. There are normally two imperative concerns for farmers and landowners faced with compulsory purchase. The first is the effect on the smooth continuation of their businesses: perhaps the splitting of the land, for example. Their second concern is how much and when they will be paid. In the past, payment has routinely been late and after entry. This is unfair and needs to be changed. Farmers already have to cope with supermarkets’ delayed payment exploitation. Moves are afoot to improve this, so why should we not legislate properly now—and in the same spirit—to establish the principle of payment in advance of entry for compulsory purchase? In these circumstances, owners face extra costs and need promptly to replace assets lost in order to continue in business. Why should they have to delay or borrow—through no fault of their own—to continue their businesses?

The Government have proposed to improve the interest rates applicable, but I do not believe that they are realistic or raised to the commercial rates of lending. The CLA has suggested rates in line with late commercial payments, and those are similar to those set out in Amendment 103BD, which I support. I believe that the Government are consulting on this, and I await the outcome. Nevertheless, the principle must be payment in advance or no possession, with proper interest rates applicable for failure to follow that. At any rate, it should be cheaper to do this, as landowners will be disinclined to fight the order knowing that they will get a fairer price for their assets. Of course, if the primary principle is adhered to, there should be no need to invoke the 8% penalty rate that is mentioned in the amendment, as the standard 4% rate should encourage the authority to pay promptly.

Acquiring authorities are in a strong position while negotiating, so Amendment 103BF in this group is consequential. It would help to prevent bullying by introducing a new duty of care to ensure fairness between the parties by setting out guidelines on behaviour. This is in effect a good-practice clause, which is needed as acquiring authorities usually have the upper hand in negotiations against the landowner, who is thus in a weaker position.

Other amendments in this group in the name of my noble Earl, Lord Lytton, are intended to tidy up a series of procedural anomalies and have been suggested by the Compulsory Purchase Association, of which I am not a member. Amendment 103BAA is necessary to safeguard the acquiring authority’s position where—even though it exercised due diligence in seeking to identify those interested in the land and entitled to a notice to treat—after serving notice of entry it becomes aware of a previously unknown person with a relevant interest in the land to be acquired.

Under the current provisions of the 1965 Act, if new interests come to light between serving a notice to treat or notice of entry and taking entry, a new notice needs to be served, resulting in 14 days’ delay. This does not give rise to serious problems at present with only 14 days’ notice of entry but it would become a significant problem with the longer notice period of three months proposed in the Bill.

Acquiring authorities rely on information provided by claimants as to who has a relevant interest in land. I am told that it is quite common to be provided with incorrect information, such as trading names rather than company names or the names of individuals. If an acquiring authority has acted in good faith in serving the notices, such as relying on information provided under Section 5A of the Acquisition of Land Act 1981—the questionnaire requiring information on legal interests—it should still be entitled to proceed, which is what this amendment would facilitate.

Another material adverse side-effect of the Bill’s provisions as drafted is that those served with notices could effectively ransom a promoter by creating a new interest every time a new notice was served. Controversial projects could simply be prevented from ever acquiring land by opponents to the scheme using such a device. This amendment would therefore also prevent acquiring authorities potentially being ransomed by the creation of a new interest in land after service of a notice of entry.

Amendment 103BG relates to circumstances where a claimant considers that the land proposed to be compulsorily acquired cannot be taken without material detriment to the remainder. This is sometimes referred to as the “all or nothing” provision and it is already contained in the compulsory purchase rules under Section 8 of the Compulsory Purchase Act. The amendment is necessary to ensure that, subject to adequate notice, the acquiring authority is able to take possession of the land originally proposed to be acquired, even where the owner has served a counter-notice requiring additional land to be taken. This is the same as the current position and it works quite effectively without any prejudice to landowners who contend that the acquiring authority should also be obliged to acquire more land than that initially proposed to be acquired. However, paragraph 5(a) of new Schedule 2A in Schedule 17 to the Bill provides that on service of a counter-notice, all notices of entry relating to any interests in the land proposed to be acquired would cease to have any effect. As such, this would have a seriously deleterious effect on the timing and costs involved in compulsory purchase and on implementing a project. This would not arise if the Bill were amended as proposed.

Finally, Amendment 103BH is necessary to give effect to paragraph 5 as amended in the way that I have just proposed. I beg to move.

My Lords, I do not want to exhaust the patience of the Committee but once again I draw attention to the fact that the problem of high housing prices in this country stems from the cost of land. These amendments, clearly promoted by the Country Land and Business Association, which represents the interests of landowners—the people who will benefit from the exorbitant and inflated prices being paid for land in the United Kingdom—should be opposed by the Committee. I oppose them, and anyone with any sense will oppose them, as will the great majority of the British people.

One day we are going to have to deal with the problem of inflated land prices in the United Kingdom, which are almost unique in the world outside of the great capital cities, and we are simply ignoring it. This situation cannot carry on as it is. We are removing the right of millions of people—whole generations—to own their own home, unless they are prepared to take on huge mortgages, simply to fill the pockets of people who own land. I object, as no doubt do the great majority of the British people.

My Lords, Amendment 103BB deals with a minor but to some people significant point, which is the compensation to be payable when land is acquired by a development corporation. The amendment simply provides that the Secretary of State may by order set out a formula for determining fair compensation to the landowner in those circumstances. That seems a reasonable proposition.

My Lords, I turn to the detail of the compensation amendments, Amendments 102CK and 103BB, tabled by the noble Lord, Lord Cameron, and the noble Earl, Lord Lytton, but spoken to today by the noble Duke, the Duke of Somerset.

I will outline briefly the principles of compensation for land taken by compulsion. These points have arisen in an earlier amendment in Committee. The compensation code is underpinned by the principle of equivalence. This means that the owner should be paid neither less nor more than his loss. The code provides that land shall be purchased at its open-market value, disregarding the effect of the scheme underlying the compulsory purchase.

The land is valued in a construct called the no-scheme world, whereby any increase or decrease in value that is due to the scheme is disregarded. Land will always have its existing-use value but market value also takes into account the effect of any planning permissions that have already been granted and of the prospect of future planning permissions. This is generally known as hope value, as the noble Duke eloquently pointed out. In the context of compensation for compulsory purchase, this is assessed according to the planning assumptions in the Land Compensation Act 1961, which require the valuer to assume that the scheme underlying the acquisition is cancelled. I remind the House that these were extensively revised and debated in the Localism Act 2011.

In some situations, there will be no hope value, because the individual claimant could not have obtained planning permission for some more valuable use. For instance, the land might be in an isolated rural location where permission for development would have been unlikely to be granted in the absence of a comprehensive scheme requiring compulsory purchase powers. In other situations, perhaps where land is acquired near an existing settlement, there will be pre-existing prospects for development on the land. In lay man’s language, that is development potential that existed prior to the scheme. The strength of those prospects will be reflected in the market value of the land.

On Amendment 102CK, it has been said that land acquired for housing by means of a development consent order should always attract development value. If the land had development potential in the absence of the scheme underlying the development consent order, that hope value would be reflected in the market value and the compensation to be paid. But an increase in the value of the land that is solely attributable to the scheme would be disregarded under the compensation code.

I turn to Amendment 103BB. The noble Lord, Lord Beecham, and the noble Baroness, Lady Andrews, have suggested that there is something unique about the land taken for new towns that requires the Secretary of State to provide a formula for compensation. New towns may well fall into the class of case 1 mentioned earlier, where there is no pre-existing hope value, as there is no reasonable prospect of development in the absence of a comprehensive scheme requiring compulsory purchase powers. In this situation, compensation in the no-scheme world is likely to be at or close to agricultural values. Schedule 1 to the Land Compensation Act 1961 makes it very clear that for new towns any increase in value that is attributable to the development of other land in the new town must be disregarded, where that development would not have been likely to be carried out had the area not been designated as a new town.

I thank the noble Earl, Lord Lytton, for the amendments spoken to by the noble Duke, the Duke of Somerset. I suspect that your Lordships will not be very keen to be further enlightened this afternoon by a technical debate on these particular matters. However, we shall look carefully at what the noble Duke said, and I shall write further to him and the noble Earl before Report about these matters.

The Minister said that he will write to the noble Duke. Can we all see a copy of that letter, and can we have an assurance that there will be no movement, no concession made to the CLA, in this area?

I am not in a position to make any guarantees this afternoon, but I will certainly include all noble Lords who have taken part in this debate, and copies will be placed in the Library of the House.

I turn to the compulsory purchase policy elements and Amendments 103BC to 103BF. I am very grateful to the noble Lord, Lord Cameron, and the noble Earl for raising these important matters, again spoken to by the noble Duke, the Duke of Somerset. They concern the matter of ensuring that advance payments of compensation are not only paid, but paid on time. This links to the equally important question of the way that acquiring authorities should treat claimants when land is being purchased by compulsion.

Starting with Amendment 103BC, having considered the responses to the spring 2015 consultation, the Government think that penal rates of interest on outstanding advance payments are the most appropriate sanction, and we are providing for this in Clause 174. Taken together with the new arrangements for making claims and obtaining further information in Clauses 172 and 173, we think that the prospect of a penal rate of interest will sufficiently concentrate the minds of acquiring authorities, so that advance payments will be made on time.

I now turn to Amendments 103BD and 103BE. The Government think that setting interest rates in a Bill is too restrictive. Provision to set both rates is available in secondary legislation. Coming to the detail of the amendments, the Government think that it is premature to decide on the punitive rate of interest for late payments of advance payments of compensation—as proposed in new subsection (1A) of new Section 52B in Amendment 103BD. The noble Lord, Lord Cameron, and the noble Earl, Lord Lytton, will know that the Government published our consultation paper on phase 2 of our compulsory purchase reform programme on 21 March. The good news is that the paper proposes that 8% above the base rate should be the punitive rate for late payments of advance payments.

The second part of Amendment 103BD—proposed new subsection (1B)—would overtake the existing provisions in Section 32 of the Land Compensation Act 1961 to set the rate of interest for compensation unpaid at the date of entry. This rate is not punitive, as there are often legitimate reasons for some compensation to be unpaid at that date. The final claim for many businesses, for example, cannot be finalised until their relocation has been completed.

Noble Lords will recall from the spring 2015 consultation that the Government consulted on increasing this rate of interest from 0.5% below the base rate. The Government confirmed in their response to consultation that the rate would be increased to 2% above the base rate. The Committee will be interested to hear that new regulations are in preparation by the Treasury and will be published in due course.

The new rate of 2% above base is intended to achieve an equitable and fair settlement between the claimant and the acquiring authority. The interest on unpaid compensation from the date of entry is not the same as the interest on commercial lending. It may be helpful if I say that it is more likely that it will be based on a formula which will compensate the claimant for interest which he or she would otherwise reasonably be receiving, had the money been otherwise invested. We can have a separate debate on that, I am sure.

I now turn to Amendment 103BF, which focuses on introducing a statutory duty of care to be owed by acquiring authorities to claimants. There is no doubt that claimants should be treated with fairness and courtesy and kept up to date with developments. This is best practice, and all competent professionals should be advising their clients to act in this way. The Government believe that a new statutory duty of care for compulsory purchase is not necessary and would not help relations between acquiring authorities and claimants. The kind of assistance which should be provided by an acquiring authority may differ depending on the circumstances. A broad duty of care may be imprecise in nature and difficult to enforce. The professionals working in compulsory purchase suggest that clear guidance on good practice would be a better way forward.

The recently updated compulsory purchase guidance, published on 29 October 2015, makes it clear that acquiring authorities should make reasonable offers of compensation in the context of overall project costs. Acquiring authorities should also be prepared to engage constructively with claimants about relocation issues and mitigation and accommodation works where relevant. The guidance also urges acquiring authorities to offer those with concerns about a compulsory purchase order full access to alternative dispute resolution techniques, from the planning and preparation stage to agreeing the compensation payable for the acquired properties. With these explanations, I ask the noble Duke to withdraw the amendment.

My Lords, I cannot see what attitude the Minister is taking towards the CLA amendments, as was raised by my noble friend Lord Campbell-Savours. Will he please set it out very simply ?

Of course, I believe it will be best for me to include the technical details in the letter that I am already writing and will place in the Library of the House.