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Housing and Planning Bill

Volume 771: debated on Wednesday 20 April 2016

Report (4th Day) (Continued)

Clause 137: Local planning authority to keep register of particular kinds of land

Amendment 107ZE

Moved by

107ZE: Clause 137, page 70, line 8, at end insert “, and in particular the achievement of sustainable development and good design”

My Lords, we are a dwindling band but the issues are no less important. This amendment repeats the amendment which I laid as Amendment 98 in Committee to stress the need for brownfield sites to achieve both sustainable development and good design.

We brought the amendment back not only because we continued to see the need to reinforce and make clear on the record that the NPPF applies to brownfield sites on the register and that any developing local authority must therefore ensure that those sites exemplify all the positive and best aspects of place-making. We also brought it back to reiterate common concerns, inside and outside this House, that these new developments may fall prey to being a short cut to throwing up the sorts of housing estates that we hoped we had seen the last of that are identikit and, frankly, alienating. We want to ensure that developers who are under the cosh get the clear message that it is possible to build quickly but beautifully. There is nothing utopian about that—it can be done.

Sustainability means, of course, to build to sustainable environmental, social and economic conditions, and with regard to social sustainability it also means building in that which reflects, incorporates and makes a working feature of the heritage of the site, to give new inhabitants of an old and much-worked site a sense that they too belong there in a new age. We often underestimate the importance of reflecting that sense of identity and belonging, yet it makes an enormous difference to how people feel about where they live.

That means that the second reason I have for bringing back the amendment is even more important. When we discussed it in Committee we had some exchanges about new town development corporations which led me to reflect that the NPPF might not apply to these new planning authorities and that, if they were to develop to their very best—in terms of the rare opportunity these developments offer to master plan to the highest standards—they most certainly should be under the same planning law. I am very grateful for the help of the TCPA in establishing this point. Again, I thank the Minister for the help she has given and thank her very helpful officials in this respect. They have confirmed that I was right to raise this as an issue. The duty to work towards sustainable development as set out in Section 39 of the Planning and Compulsory Purchase Act 2004 does not apply to new town development corporations. However, I am assured that in practice, as the Minister said in a letter to me,

“the Government does have the means to ensure that they have regard to the NPPF in drawing up its plan for a new settlement”.

She has suggested that this could be done, for example, through provisions set out in Section 7 of the New Towns Act 1981.

I will quote the rest of the Minister’s letter, because it is very important for the record. She says that she is,

“aware that there is a strong case to ensure that there are explicit statutory obligations on”,

new town development corporations,

“to work towards achieving sustainable development, in the same way as they are currently on a local planning authority. I am pleased to say that we will be bringing forward such proposals shortly”.

There will be amendments later on, possibly on Monday, on the same point, but it is apposite now to raise this issue on the amendment and to say again that I would be very grateful if the Government were able to say a little more about how this other loophole in the law might also be closed. I beg to move.

My Lords, my noble friend Lady Andrews has showed the House her expertise in these matters and I fully support her amendment. I do not have any more to say than that.

My Lords, again I pay tribute to the noble Baroness, Lady Andrews, not only for eloquently outlining her amendment but for how she has contributed to this part of the Bill thus far. She outlined why she considers that this is an important opportunity to place a high-level obligation in the Bill to ensure that the brownfield register contributes to sustainable places. I fully agree that local authority decisions should consider sustainable development and good design but I hope I can outline why the amendment is not needed.

This clause will already require local planning authorities to have regard to the NPPF when, for example, making decisions about sites to include in local registers. As we discussed in Committee, the framework makes clear that sustainable development should be at the heart of both plan-making and decision-taking. I emphasise that placing a site on a register is not a permission to build—but I am sure that the noble Baroness knows that. The consideration of detailed issues, such as design, will not be feasible at the point that sites are entered on to the brownfield registers. That will come later. Applicants will be responsible for providing detailed information when they submit their applications for technical details consent. This will ensure that design is also considered before consent is granted in the same way as it would be for a planning application.

The noble Baroness raised the applicability of sustainable development objectives and the NPPF to new town development corporations. As she will be aware, we announced in the Budget our intention to legislate to better support the delivery of new locally led garden towns and villages. We want to ensure that they exemplify high design and sustainability standards. It is absolutely our intention that when we legislate we will ensure that sustainable development objectives and the outcomes set out in the NPPF apply with no less force to new town development corporations than they do to local planning authorities in general.

I also point out that it is the applicant and not local authorities who should bear the cost of providing detailed information in support of their application. Placing a stronger emphasis in the Bill could result in unnecessary burdens being transferred to local authorities. I emphasise that our proposals for the brownfield register or permission in principle do not change the protections in the NPPF in respect of sustainability or design.

I hope that I have been able to articulate our position and that the noble Baroness feels able to withdraw her amendment.

I am very grateful to the noble Baroness. Having read the contents of her letter, with its commitment to provisions set out in Section 7 of the New Towns Act 1981 and how they can be brought forward, I take that as a commitment—even if she cannot say so at this moment—that something will reflect that in forthcoming legislation. She is nodding and I put that on the record. With that assurance, I am happy to beg leave to withdraw the amendment.

Amendment 107ZE withdrawn.

Amendment 107A not moved.

Amendment 107B

Moved by

107B: After Clause 139, insert the following new Clause—

“Planning freedoms: right for local areas to request alterations to planning system

(1) If the following conditions are met, the Secretary of State may by regulations make a planning freedoms scheme, having effect for a specified period, in relation to a specified planning area. A “planning freedoms scheme” is a scheme that disapplies or modifies specified planning provisions in order to facilitate an increase in the amount of housing in the planning area concerned(2) The first condition is that the relevant planning authority or authorities have requested the Secretary of State to make a planning freedoms scheme for their area.(3) The second condition is that the Secretary of State is satisfied—(a) that there is a need for a significant increase in the amount of housing in the planning area concerned,(b) that the planning freedoms scheme will contribute to such an increase, and(c) that adequate consultation has been carried out.(4) The third condition is that—(a) the relevant planning authority or authorities have prepared a summary of the views expressed in the consultation referred to at subsection (3)(c), and(b) the Secretary of State has considered that summary.(5) For the purposes of subsection (3)(c) consultation is “adequate” only if—(a) the relevant authority or authorities publish an explanation of what the proposed planning freedoms scheme is expected to involve, and(b) persons in the planning area concerned, and other persons likely to be affected, have a reasonable opportunity to communicate their views about the proposed scheme.(6) The Secretary of State may decide to restrict the number of planning freedoms schemes in force at any one time (and accordingly is not required to make a scheme merely because the conditions in this section are met).(7) The Secretary of State may by regulations bring a planning freedoms scheme to an end, and must do so if the relevant planning authority or, as the case may be, any of the relevant planning authorities so request.(8) In this section—“planning area” means the area of a local planning authority, or an area comprising two or more adjoining areas of local planning authorities;“planning provision” means a provision to do with planning that is contained in or made under any Act;“relevant planning authority” means the local planning authority for an area that is or forms part of a planning area;“specified” means specified in regulations under subsection (1).”

My Lords, I wish to claim a record. I have just seen the first clothes-moth of the spring so, now that the weather is warming and clearly the Minister is warming to the amendments being presented, I very much hope that I shall be on a run here following the success of the noble Baroness, Lady Andrews.

I apologise for the introduction of a manuscript amendment at a late stage but this is due to constructive conversations with the Minister’s colleagues as to how we can put something in the Bill that enables local initiative to be given more scope than it is at the moment. My inspiration for this was the Wolfson Economics Prize in 2014. The winner was Oxford—a well-known Labour council—and the runner-up was Shelter, which is also not listed as a government supporter. So this is not a partisan amendment but is based on a thoroughgoing belief that local decisions, local plans, local ideas and local wishes as to how an area can best develop and contribute substantially to providing more housing are things that we should encourage. I think that the amendment provides a good way of doing that.

There is a supplementary amendment to come on Monday which will make this subject to the affirmative resolution, and another one to make sure that hybridity is dealt with. At this late time of night, I shall leave it at that, other than to very much thank the noble Lord, Lord Taylor of Goss Moor, who stepped in to move my amendment in Committee when I was laid low with a bad back, and the noble Lord, Lord Kerslake, for his consistent support. I beg to move.

My Lords, I support the amendment. Indeed, I added my name to the previous version of this amendment but was not quick enough on the draw to add it to this latest version. Among the very many amendments that we have seen, this is a genuinely original and, I think, positive proposal. It is in every sense localist.

Before I move on, I should declare my interests as chair of Peabody, president of the Local Government Association and chair of the London Housing Commission.

I have felt for some time that we make progress on these issues through local initiative and through learning from different models in different parts of the country. Indeed, I think that that is exactly how we developed the model for city deals through the Localism Act. Proposals came forward for permissive powers to enable local authorities to make proposals for the Secretary of State’s approval. That set of amendments, sponsored by the Core Cities Group, paved the way for what I think has been an entirely positive process of city deals and devolution of powers according to local need.

This proposal opens up the opportunity to try new models at local level and to give local places, whether it is an individual local authority or a set of combined authorities, the chance to take the initiative. There are safeguards which have been strengthened: first, it would be through affirmative regulations, as we have already heard; secondly, there would need to be consultation; and thirdly, of course, the Secretary of State would need to give approval to any proposal. The test here is whether in a situation where there is high need for housing, and where the proposal envisages more housing being possible through the alternative, we should give the freedom to try it out. In my view, very clearly we should.

There is an added reason why I am very strongly in support of this amendment, and that is to do with the issues in London. Noble Lords will be aware that I chaired a commission on the housing crisis—I think it is a crisis—in London, which looked at issues of how supply in London might be doubled over five years and then held there. Nothing less than that will address the issues in London. The overwhelming conclusion of our panel was that it was simply not possible to deliver this scale of change without a new, significant package of devolution to the London mayor and the London boroughs. One part of that devolved model is greater powers on planning. This amendment would open up the opportunity for a new devolution package in London and the opportunity, I think, to tackle a growing and desperate crisis. I hope that this proposal is sympathetically considered by the Government.

My Lords, I note that this amendment has been supplied to us only today in the form of Amendment 107B, having previously been Amendment 107A. The basic thrust behind the amendment is broadly the same but the wording has altered. I had some doubts about Amendment 107A, and I still have those doubts. Perhaps, in replying, the Minister or the noble Lord, Lord Lucas, could explain the position. I do not want to see one of the cornerstones of British democracy, which is the town and country planning system, upended by this amendment. Certainly the previous version, particularly subsections (1) and (3), was very worrying. Those subsections have been altered in Amendment 107B, but a number of questions still arise.

The first question is around how neighbourhood planning fits with this structure. A great deal of emphasis has been placed on the importance of neighbourhood planning. However, I am looking at subsection (3)(c), subsection (4)(a) and subsection (5), and although they refer to consultation that is deemed to be adequate, there is no indication of what “adequate” consultation is. Nor is it clear what would happen if the local reaction of a neighbourhood is very negative to a proposal. It is also not clear how the summary views expressed—let us suppose that 90% are against—will be considered by the Minister. That is one aspect of this that causes me concern. I do not really understand how we can have a system of neighbourhood planning and then alterations to a planning system, as proposed in this amendment.

Secondly, there is the issue of sustainability. I do not understand to what extent planning freedoms would mean that a local area could disregard issues of sustainability. I am thinking of issues around drainage and water supply, but there are other examples. I feel uncertain about exactly what is being proposed here and why it is deemed to be so important, with an assumption that the current planning system cannot deliver the answer that is required: to build more houses. We already heard earlier, in the debate about the neighbourhood right of appeal to a planning approval on neighbourhood planning, that 10% more homes are being built in areas with neighbourhood plans than would otherwise have been the case.

I am struggling to understand what problem the mover of this amendment is attempting to solve. It would help enormously to have some concrete examples to work with. When I hear about combined authorities, which are huge structures that do not have much connectivity with electors, I wonder how this will build public confidence in the current planning system.

My Lords, I also come to this without a full appreciation of the implications. In particular, I wonder whether schemes would be able to depart from what might become requirements elsewhere; for example, in relation to energy efficiency or other aspects that one would expect to be part of planning consent for new schemes.

I do not quite understand what the decision-making mechanism would be. Once the scheme had been floated, would it still involve applications having to be approved within the new framework by something equivalent to a development control committee or sub-committee of the kind that most councils now have, or is it to be a sort of executive process without member involvement at the level of individual local authorities or perhaps a combination of authorities when one is looking at a wider area? It is not quite clear how the practical side would be handled.

I share the doubts of the noble Lord, Lord Shipley—if not doubts, then questions—about the nature of public involvement and how that would be fed into the process. Can the noble Lord identify any experience in another jurisdiction—one which is somewhat analogous to ours—of this kind of approach? Is there experience of this way of dealing with applications that we might learn from in terms of how it might develop here? I would certainly be interested in seeing the matter progressed, but I do not think that we have enough information positively to affirm that it should go forward as part of the Bill—it is a bit early for that without knowing a good deal more about how it might work. It may be that some further indications can be given and the Minister wants to take the matter back, although not necessarily with a view to dealing with it in a week’s time at Third Reading—we are pretty late in the process to bring something as potentially radical as this into the Bill. Even if it does not go very far on this occasion, it is certainly a concept that is worth exploring, but if I were the Minister, I do not think that I would be jumping at incorporation into the Bill quite at this stage. However, she may have a different view.

My Lords, I thank my noble friend Lord Lucas for his amendment and the noble Lord, Lord Taylor of Goss Moor, who moved it in his absence just before the Easter Recess. The noble Lord, Lord Lucas, had a bad back at that stage and half the noble Lords who are interested in this Bill were somewhat indisposed, but I am glad that everybody is now feeling much better. We may well, of course, be ill before Prorogation. I also thank the noble Lord, Lord Kerslake, who spoke as well.

My noble friend made some interesting arguments about the benefits of this model. He made a compelling case for the leadership role of local authorities and their ability to innovate in a way that reflects the needs and voices of their local communities. There is also a pressing need to build new homes, and I am strongly convinced of the importance of the role that local authorities play in that. I am therefore open to new approaches such as this which might achieve our dual obligations of housing growth and localism. I want also to reflect further on how a model such as this might be used in practice—both the noble Lord, Lord Shipley, and the noble Lord, Lord Beecham, raised some questions which are worthy of consideration.

My noble friend has made it clear that his amendment is simply enabling. If a clear case could be made for the circumstances where these measures might apply, such circumstances would need to be set out in regulations which would have to be debated in both Houses. On that basis, and with those checks and balances in place, I am willing to accept the amendment at this stage, but subject to considering further whether any technical adjustments are needed for the remaining stage of the Bill.

My Lords, I am very grateful to my noble friend for her response. I thoroughly appreciate what noble Lords opposite have said. The winners of the Wolfson Economics Prize in 2014 were big schemes, but they were very much supported locally. They clearly did not go through the processes that are envisaged in my amendment, but the Oxfordshire scheme was 150,000 houses. It was supported by Oxford City Council in its generation, and the Shelter scheme in the Medway was of a similar size. These are transformative schemes and it is quite difficult, I am told by those who supported them, to see how one fits them within existing planning law.

At the same time, we do not want, as the noble Lord, Lord Shipley, says, to completely reconstruct planning law bit by bit. I do not lay claim personally to deep expertise in this area, but my intention is that we should not be doing that. We should allow local areas to operate as standard bearers to look at something that really makes sense to them and has strong support locally, to take that forward and see how it goes. If they get it right then we will all learn from it and have a process that helps us advance planning law. If they do not get it quite right then it is what they wanted and they did their best but the planning arrangements for the rest of us remain as they were. I am for innovation and encouraging, above all, localism and letting local communities really have a say in what is happening to them and an ability to tackle things on a large scale where that is needed. That is something we should encourage.

I am depressed that it looks like my children will live in smaller houses than I did, and I live in a smaller house than my parents did. I think that that is pretty standard across the country. We ought, as we get richer, to have better and nicer places to live in. We need more innovation and more understanding to work out how all the conflicting demands of the environment and us as a society and individual people can best be met. I am a great fan in that context of local innovation. I am comforted by what my noble friend said. I do not pretend that this does not require further thought and consideration and I am certainly open to all suggestions on this.

Amendment 107B agreed.

Amendment 108

Moved by

108: Clause 141, page 72, line 20, at end insert—

“(1) Local planning authorities may make provision for the payment of fees or charges to them in respect of the performance of their functions and anything done by them which is calculated to facilitate or is conducive or incidental to the performance of their functions, and may vary such fees or charges according to the value of the project concerned or any other material concerns.(2) Fees or charges under subsection (1) may exceed the costs incurred by the local planning authority in performing functions relating to the relevant project.(3) Local planning authorities shall retain any fees or charges paid in accordance with subsection (1), and use them as they see fit.”

In moving this amendment I will also speak to Amendment 116. Although they are on different subjects, they are very similar in that they are setting right something that is very wrong at the moment. The amendments would give local authorities more control over how they deal with the costs involved in handling planning applications. There is no doubt that handling a very large and expensive operation that may involve hundreds of millions of pounds is rather different in terms of cost to the council than handling a little room or basement extension that someone wants to add on to their house. At the moment, local authorities do not have that choice. It is wrong for people to pay the same amount. The council should be entitled to charge fees according to the work involved and the cost of the development envisaged.

The other point which I think will appeal to every council is that Amendment 108 provides that councils should have the right to retain the fees. At the moment councils are being burdened with more and more expense, and if something goes to appeal and they have to defend a case, it can be very costly. These discretions would be good.

Amendment 116 concerns retrospective planning permission. It is a different issue but again, the payment of fees arises. I have consulted a number of planning officers who say that the only way to discourage retrospective planning permissions is for people to have to pay more for them than for planning at the right time. They say that the reasoning is that if someone just goes ahead and does something, they may get away with it and not have to pay anything at all because it is not picked up. If it is found, it means that someone has had to go to more trouble to find the problem, so it is right that someone should be charged more. It should not be a question of a standard fee that people pay when they do things the right way; it should be a punitive fee to indicate that it was wrong not to have applied in the first instance.

Recently I have come across various expensive developments in London, sometimes involving historic homes, where the problems are even more serious. People have been given planning permission to do a certain number of things, but they have gone right ahead and done everything else. Local residents are up in arms about what has been an attack on a special listed property. Although they could tolerate a modern extension which had been allowed, they think that it is going too far when certain historic parts of a building are attacked. I know that special provision already applies to historic properties.

The amendments are related in that they will both give councils the right to charge according to what they believe is right, with an additional charge in the case of retrospective planning permissions. Equally important in respect of retrospective planning permission is the question of why someone should just go ahead and do something. In the last house I lived in, it was agreed that the houses behind could have a certain angle of light and have an extra floor put on them. That happened with the first development—these were listed buildings—but then I saw the second one was being built straight up. I phoned the council and told them that the development was not being built in accordance with the planning permission. “Nonsense”, they said, “of course it is”. Some 18 months later when people had moved into that house, the chairman of the planning committee called me to apologise. He said that now that people had moved into the property and had gone to so much trouble, the council did not feel that it could do anything about it. That is pretty unsatisfactory for the people who have lost their light—someone just got away with it; that is what it boiled down to. I have had that happen to me several times in my life. It is more that someone feels that they can get away with something, so it is important that local people should be consulted because it is often those who live close to these developments who notice that something has been done that is not in accordance with planning. I beg to move.

My Lords, I am very happy indeed to have my name associated with Amendment 108. The noble Baroness, Lady Gardner of Parkes, has eloquently set out the case. The current fee levels are determined centrally by government and they do not enable council planning departments to achieve full cost recovery. London Councils claims a shortfall of around £40 million a year, while we have heard from the noble Lord, Lord Porter, that the LGA estimates that the shortfall across the country is some £150 million a year. The fees were last reviewed in 2012 and the future is very uncertain. The Government consultation finished only at the end of last week, and we have no idea what the outcome will be.

I am sure many noble Lords were as pleased as I was to receive what has now become the almost ritual letter from the Minister just a few hours before each of our sessions debating the Bill. But I note that in today’s letter we are told that, because of the high response rate to the consultation, she is unable to share with us any information about what respondents have said or, indeed, how the Government will react. But the Minister has already admitted in answer to my questions in Committee—and it is repeated in the letter we received today—that it is likely that councils will get an inflation-based rise, with those deemed to be poorly performing getting even less. So the shortfall will continue, and many hard-pressed planning departments will be unable to give the quality of service they would like and that developers need and deserve.

The Minister offers in today’s letter one small glimmer of hope, where she refers to,

“greater fee flexibility for the truly radical”.

I hope she will be able to offer some insights into what she has in mind. I genuinely believe that councils are capable of radical approaches to service delivery—indeed, there are many examples that demonstrate this—but the ability to set fees at a reasonable level must surely form part of any package. I simply cannot see any of the external agencies that the Government want to involve in planning process work being willing to undertake it if their fees are to be equally constrained. Yet, where planning departments have been allowed to charge realistic fees, such as for pre-planning applications, many have developed an efficient, speedy and high-quality service. Were councils able to charge realistic fees that at least recover their full costs for their main planning functions, I am confident that the quality and speed of work would improve, to the enormous benefit of developers. It should be noted that such fee increases would in the vast majority of cases be very small in comparison with the other very much larger costs incurred in any development of any size, and that the negative impact would be more than outweighed by the benefits of the improved service offered.

I know that some noble Lords will have concerns about subsection (2) of Amendment 108, which would enable councils to set fees or charges that,

“may exceed the costs incurred … in performing the functions relating to the relevant project”,

but there will be cases where planning fee costs, if at full cost recovery for a small development, may well deter that development. If the overall costs of the planning department can be spread so that larger developments take a little extra of the share and thus enable the fees for smaller developments to go ahead, we can have the best of both worlds. I say to the Minister that this would in no way be contrary to the requirements imposed on local councils in the Local Government Act 2003, which makes it clear that councils are under a duty to ensure that, taking one year with another, charges do not exceed the cost of provision. Therefore, taking a little less from some developers and putting a little more on others is perfectly legitimate in existing legislation.

The Government continue to claim that they support localism. They can demonstrate that by supporting the amendment. Should they fail to do so, I hope there will be an opportunity to test the opinion of the House, but I hope that will not be necessary.

My Lords, I speak very briefly in support of the spirit behind the amendment and what is sought to be achieved. I will not repeat the arguments that have already been made, but I will refer to the experience I had during the London Housing Commission, where I consulted extensively with developers across every type and scale. The consistent and unanimous view of all those developers was that they were willing to pay more to get a better service.

What they described to me was a service that was truly struggling to do the job, where major and important applications were held up through the absence of good-quality staff and where they often experienced dealing with temporary staff who were learning on the job and did not have the authority to make decisions. This is, in any description you care to think of, a false economy. The improvement by way of inflation will be helpful but it does not go to the heart of the core problem, which is that, in the situation of severe funding challenges in local government, authorities are unable to resource, in the way that is required, the level of planning services that we need to deliver the increase in housing supply.

I am absolutely of the view that there should be a link to performance here, but I also believe very passionately that we should give local authorities the local initiative and flexibility to set their own fees. Over time the consequence of this will be that they will be able to plan for increased resources and, crucially, recruit new, skilled staff and rebuild a profession which, in the public sector, has been severely reduced in its capacity.

My Lords, strangely, I am going to speak against the amendment, because of the second part. I am not sure why this amendment is not linked to the one about the private sector being able to compete against local government to do planning. In my mind they should go together. There is no way that the private sector will pick up any planning applications if it is only allowed to charge the current fee structure that we as councils are allowed to charge. That is because in the last three years the taxpayer subsidy to planning has been £450 million. The private sector will not engage on that.

Without the second part being in there, it would allow local government to be put in the right place to prevent the private sector being able to take the work at a subsidised rate for itself. The risk seems to be that, when we get to that part of the Bill, private sector firms will be allowed to charge excessive fees and make money, safe in the knowledge that there will be an expectation that they will be more sympathetic to the applicant. I think a true level playing field would be one in which we charge full cost recovery and for those applications that are minor, where that would not be possible, there needs be a different mechanism. That is why I cannot support the amendment as written.

On the next amendment, on the retrospective planning application, again, we need some way to penalise serial offenders who wilfully abuse the planning system by not seeking planning permission in the right way when they first set out on their projects. Again, I am not sure how that should be worded in a way that will deliver it to best effect for everybody, because there will be genuine cases where some people simply were not aware that they needed to make a planning application. So any amendment must recognise that for me to be able to support it. As I have said before about any amendment that has “local government must” in it, there is no way I can support the third part of that amendment, where it says that we “must consult”. I do not think that local government ever “must” do anything. I think we should always “may” do something.

My Lords, I have considerable sympathy for the amendment moved by the noble Baroness, Lady Gardner of Parkes. I regret that we were not able to get Amendment 116BA into the same group, as it covers the same issues. It makes clear that local authorities may recover their full costs in respect of the work they are doing on planning applications, which is the intention behind this amendment as well.

I think it is important that councils are able to set fees that enable them to recover their costs, or at least a larger part of their costs, in undertaking the work they need to do to ensure that applications are processed efficiently. This would, of course, mean that for larger developments developers would pay more, or more realistic costs, than someone who wants to build an extension to their home.

I agreed with the noble Lords, Lord True and Lord Porter of Spalding, when they said in Committee that it is probably going too far to allow councils to make money out of the planning application process, but it is right that they should be able to recover up to all their costs, which is the intention of my Amendment 116BA, which we will come to later. I am disposed to test the opinion of the House on that if the Minister does not make a reasonable offer in that regard before Third Reading.

The noble Baroness, Lady Gardner, made a compelling point on Amendment 116, to which the noble Lord, Lord Porter, referred. At my last planning committee meeting, I recall that a public house in Blackheath was seeking retrospective approval for the substantial changes it had made to the fabric of its building without planning permission. It obtained the approval. We made it very clear to the applicants how unhappy we were that they were there in front of us, but that was all we could do. They got their permission and paid the nominal fees. It would be good if such applicants could be made to pay a little more, given the work that we had to do.

My Lords, I thank the noble Lords and my noble friend Lady Gardner of Parkes for speaking to this amendment, which would allow local authorities to go beyond cost recovery. We currently work with the Town and Country Planning Act and the Local Government Act 2003, which places a duty on authorities, requiring them to ensure that, taking one year with another, any income derived from planning fees or fees from discretionary services does not exceed the cost of providing the service. However, what cost recovery means in practice in terms of fee levels and increases could vary widely. I am deeply concerned that this amendment, and another we will debate later, have no protections or safeguards to prevent local authorities setting excessive and unreasonable fees, leaving the potential for substantial increases in fees for applicants. My noble friend Lord Porter outlined some of the snags in this approach. Although noble Lords might argue about recovering costs, where is the protection for applicants so that they are not simply funding a highly inefficient service, as he said? Without safeguards for applicants, this amendment, and the one we will debate later, are flawed. There are real technical challenges with the amendments we are debating. That said, it has been interesting to hear noble Lords’ comments, so I shall go into further detail about some of the issues raised.

I appreciate the strength of feeling on this issue, particularly from my noble friend Lady Gardner. It is easy to be seduced into thinking that resource and performance challenges in planning departments can be resolved by localising fee setting. The arguments for and against local fee setting are more complex and nuanced than has been suggested. However, to give carte blanche to local authorities to recoup whatever their costs, whether or not they are efficient, cannot be right. This is why we want to test and learn from different approaches to fee setting to better understand how we can secure well-resourced and top-performing planning departments.

I shall set out why I am not convinced that allowing local planning authorities to set their own planning fee levels at this time is the answer to resourcing challenges. Local authorities have told us, supported by some evidence from the NAO, that there have been disproportionate cuts to planning services since 2010. Such local decisions suggest that additional income from local fee setting may not necessarily make its way into planning services, particularly against the backdrop of local government arguing for, and gaining, reductions in ring-fenced budgets and income. Local planning authorities are monopoly providers of planning services in their area, which does not provide much incentive to innovate, reduce costs and provide the most efficient and effective service. Local fee setting could compound this because it enables planning authorities to pass on their costs to applicants, despite any inefficiencies in their planning service. Fees could rise in a way that dissuades small or medium-sized developers from undertaking developments. Local authorities tell us that resource pressures are most acute in small development schemes, and fees for this type of development could rise proportionately the most significantly. While local authorities have transformed many of their services, they have been slower to transform their planning services. Those that have introduced new ways of delivering planning services have shown that performance can be improved and costs reduced.

We have set out three proposals for tackling resource pressures in planning departments. First, we have consulted on increasing national fees in line with inflation since the last fee increase in 2012 for those authorities that are performing well, with annual increases thereafter also linked to inflation and performance. We have also proposed testing the provision of greater flexibility in fee setting, on top of our proposals for national increases in fees linked to inflation, where local areas come forward with ambitious plans for reforms and improved performance. This could mean some limited, localised fee setting in a few areas or small additional increases in fees above inflation. This approach will allow us to test and better understand whether fee flexibility directly linked to service reform and performance can secure better planning services for communities and developers alike. We want to introduce pilots to test competition in the processing of planning applications. We think that the market might work best where service providers are free to set their own fees so we are minded, subject to consultation, to enable authorities in pilot areas to set their own fee levels.

Section 303 of the Town and Country Planning Act 1990 allows the Secretary of State to provide, in regulations, that local planning authorities can set their own level of fees up to cost recovery. We already have the powers to enable local fee setting, but handing local planning authorities a blank cheque in this way does not guarantee a better-resourced planning department or incentivise authorities to drive down their costs. This is why we want to test the approaches that we are developing to tackle resourcing pressures in local planning authorities.

I have already set out that there are legislative provisions that prevent authorities from going beyond cost recovery. Additionally, the Government’s guidance on handling public funds, entitled Managing Public Money, states that charges and fees, such as those for planning applications, should be set at cost recovery so that the Government do not profit at the expense of applicants. The proposed amendment also does not have any safeguards—for example, to prevent local planning authorities from profiting from fees set at excessive levels that could dissuade applicants, particularly smaller ones, from bringing forward development—or any requirement on authorities to consult on fee proposals. I feel very strongly that it is up to local authorities to determine how fees are used and that the income generated from planning fees remains with the council.

My Lords, before the Minister sits down, I just want to say that we will be returning to this issue next Monday, as the issue of pilots and testing is in a later set of amendments. There is one under my name to be debated then. Does the Minister accept that local planning authorities are not recovering their costs now and does she believe, in principle, that they should be entitled to do so?

My Lords, although there has been the ability for fees to go up in line with inflation, there is a general acceptance of the anecdotal evidence from local planning authorities that their costs are not being met, but we have to marry that up with performance and efficiency.

I know that we are going to come back to this next week but, before the noble Baroness sits down, can she confirm that, when we have all these reviews, she does not envisage a situation where we end up with the local authority being able to charge one set of fees for a planning application, while a lot more could be paid to another provider who could also do it but at a more expensive cost? I think that it would be totally wrong to allow there to be two levels of fees—you could have the council charging a fee but allow some other provider to do the same job for a larger fee.

Before the noble Lord sits down—that is actually the subject of the amendment that I shall be moving next Monday.

My Lords, what we are discussing at the moment are fees that go beyond cost recovery. I am talking about efficient and effective local planning—

I apologise but can the Minister explain why she keeps referring to us discussing fees that go beyond full cost recovery? She has acknowledged that a local authority will clearly want development to take place, so there will be constraints on that authority not to set unrealistic fees that prevent the development going forward. But she has repeated what I said in repeating what she said during Committee: that the Local Government Act clearly states that a council cannot make a profit year on year from its services. There is a clear constraint in the existing legislation and I think that we all acknowledge that.

My Lords, I am slightly confused now because Amendment 108 says that all local authorities may increase fees beyond cost recovery.

My Lords, this debate has been very interesting and it has certainly ranged widely. I still think it very important that fees should be related to the cost of the project. I cannot reconcile the small, individual application for something in your own home as compared to that for a multimillion pound development. There must be variation in that; there is certainly a big variation in the amount of work involved on the part of the council in considering the other type of application.

I was interested to hear from the noble Lord, Lord Kerslake, that people had said to him that in general they would like a better service. They were not so worried about the cost of it—that is, the person who has the big development. The small development person is very worried about their one little bit and would rather wait longer and pay less. But I can understand that if you are doing big business and hoping for a huge profit at the end of your project, speed is of the essence in getting it on and sold. The papers today tell us how this year will be a terribly bad one for London at the top of the property market yet last year—or it might have been the year before—was fabulous. Whenever it was, the people developing for a big profit are out to catch the market at the right time, so time is very important to them. If you are doing your own small building, you would rather be sure that you can afford to do it than suddenly pay an extra fee to get permission quicker.

The Minister referred to pilots. I would like to think that she really does have pilots under way and that we are going to learn something from them. I understand from what has been said that that will be discussed next week. I am therefore encouraged by her saying that these pilots are being worked on. I will reserve my views and not press this amendment tonight because it is late. A lot of interesting points have been raised and I would like the opportunity to discuss this matter with the Minister. I would also like to see the result of the debate on pilots next week but, as there are not enough Members left in the House to give us a true vote tonight, I beg leave to withdraw the amendment.

Some Lords objected to the request for leave to withdraw the amendment, so it was not granted.

Amendment 109

Moved by

109: After Clause 141, insert the following new Clause—

“Code of practice for subterranean development works

(1) A local planning authority may promulgate a code of practice on the excavation and construction of a subterranean development with a view to lessening the adverse impact of the excavation and construction on adjacent properties and their owners and occupiers and on the wider neighbourhood.(2) The code may include, but need not be limited to, the provisions listed in Schedule (Provisions in local authority code of practice for subterranean development).(3) Local planning authorities shall take account of any guidance issued by the Secretary of State in drawing up such a code of practice.(4) If a local planning authority has promulgated such a code, it may make the granting of planning consent for a subterranean development conditional on the developer undertaking to abide by the code or specified elements of it.”

My Lords, I hope to be brief, despite the length of the amendments down on the Order Paper. The more I look at this issue—and it is called “subterranean development”, which most people would call “basements”—the more I realise that planning law is incredibly complicated. I spent some time as a councillor in Westminster and, in fact, I was a Minister for Northern Ireland, and I had direct responsibility for planning decisions. Nevertheless, despite all that experience, my knowledge was still pretty thin; I have learned quite a lot, but not as much as I ought to.

Basements are a real problem. Anybody who lives in an area where basements are spreading will accept that they are a problem. If you talk to people who live next door to where a basement is being dug out, they will tell you, “For heaven’s sake, we have no peace, we cannot sleep”. If they are shift workers, they cannot do their work in the daytime. They will say, “For heaven’s sake, stop it”. Addressing this issue has all-party support in both Houses, so it is not a partisan matter at all. Local council leaders are keen on a change in the law. I spoke to the leader of one London council, who said, “We can’t stop these basements unless you change the law to enable us to do so”. That is the purpose of these amendments.

Even if your Lordships live in an area where there are no basements, they are coming your way—even in Northern Ireland, they will happen sooner or later. But certainly they will happen all over London and in other cities. So it is no good saying, “This does not affect my area”, because it certainly does, or certainly will. One only has to look at the coverage in the Evening Standard. Week after week, there are stories of horrific basements being built. There are different types of basements; nevertheless, the stories are there, and they are pretty awful. My noble friend Lord McKenzie of Luton wanted to be here, but I said I would do a little piece for him. He said that one has to be careful when digging basements. The construction industry is a dangerous industry, and there can be accidents in digging basements and there are important health and safety considerations that ought not to be forgotten. Not long ago, a basement was being excavated under a house in Barnes which simply collapsed, so it is not straightforward. There are quite horrific examples.

I have met with the Minister a couple of times. We have had good discussions, and I found her extremely helpful. I am hoping she will be even more helpful on this occasion and give me some encouragement. If she is, we can move on quickly. I beg to move.

I thank the noble Lord for the manner in which he has engaged with me and Members of your Lordships’ House in addressing not just the basement development issue, but the associated problems and the misery of people’s lives being disrupted by such developments. He has certainly enlightened me as to some of the problems in London, in particular. The Government are very aware of them now, if they were not previously.

I take this opportunity to tell the noble Lord and your Lordships’ House that in the light of the concerns he has raised on this and many previous occasions, we will commit to carrying out a review of the planning law and regulations relating to basement developments. The noble Lord promised me that I would be splashed all over the Evening Standard for this, so I await his side of the deal—that is a metaphor.

We will publish a call for evidence for the review by the summer this year, and we hope we will receive responses from a range of authorities and stakeholders and, of course, from the noble Lord, Lord Dubs, so we can take on his views and expertise.

My Lords, I welcome the Minister’s statement and congratulate my noble friend Lord Dubs, who has been doggedly pursuing this issue for some time now. He produced a Private Member’s Bill and pursued this matter here, and we have a very good conclusion.

This is a very happy occasion when we are all in such agreement. I am most grateful to the Minister for what she said and for the commitment she entered into, which I think is pretty good. Everybody I have spoken to says it is pretty good and that we can move forward with it. I cannot guarantee that the Minister will be a headline in the Evening Standard, but she jolly well ought to be. I beg leave to withdraw the amendment.

Amendment 109 withdrawn.

Amendments 110 to 115 not moved.

Amendment 116 not moved.

Amendment 116A

Moved by

116A: After Clause 141, insert the following new Clause—

“Compensation to businesses expelled from premises to enable conversion from office to residential use

Any property owner, developer, or agent, who gives notice to a solvent and active business in order to enable the conversion of office premises to residential use, shall be required to—(a) meet the full costs of the planning authority in advising on and determining such an application;(b) make a contribution to the local planning authority of not less than 20% of the net profit gained from the difference between the office and residential value of the property concerned; and(c) share not less than 50% of the net profit gained from the difference between the office and residential value of the property concerned with any business or businesses expelled from the premises to enable the change of use.”

My Lords, at this hour I will seek to be as brief as possible. It was very good to hear another concession from the Front Bench; the gracious way in which our Government have listened to Opposition representations has been striking in the course of the Bill’s proceedings, and I welcome it.

I made a speech in Committee, and there is a good rule in this House that we do not repeat at length arguments made there. I considered that speech to be clear and, without being arrogant, I thought that it was quite compelling. It was Conservative; it was, in my submission, common sense; and it spoke for itself. I am not certain that it has been read as widely in government as I would have liked, but I still have hopes that it might be. It was also, if I may say so, a compassionate speech in terms of conservatism.

The issue I wish to highlight, which does not affect the whole country, is what is happening to small businesses as a result of the order as it is operating. In my borough, we have recently seen a local estate agent ousted by landlords operating under a nominee company which wished to develop the property; the estate agent could not find a suitable high street replacement and is now renting in less suitable premises at more than double the cost. Asset and flood risk management consultants employing 10 in a town centre have been ousted, forced to move to a less favourable site, again with a far higher rent. The winner of our local Best Business award, employing six, has been ousted from premises that were found after three years of searching—it was an ideal site—by a £180 million West End property company which is pushing out a number of businesses in the mews concerned.

There is a problem and I cannot understand why a Government who believe in small business, endeavour and hard work cannot see that there needs to be a tweak at the edges of the current regime to make sure that we can safeguard these hard-working people. That is all I am hoping to achieve in the context of this debate.

I am grateful for the opportunity to speak, and I understand that there are difficulties with my amendment as it stands. There are understandable fears on the part of the Government that if the amendment were accepted it might apply halfway across the country where it was not justified as it is, I submit, in my area. I am very willing to find a compromise; if that takes time over the next few days, I would be willing to do that and withdraw the amendment. That would be the preferred course. With a will, it should be possible to find a way to preserve the policy which the Government rightly think has been a success in using disused and unwanted offices, and allow it to continue in areas where it is appropriate, while finding a way to stop active businesses being forced out on to the streets.

I have every hope that we can find a way forward. I will not prolong my remarks because, as I say, I spoke on this issue at some length in Committee. Circumstances have not improved since then; they have got worse. I beg to move.

My Lords, I have added my name to this amendment, as indeed I did in Committee. The noble Lord, Lord True, is quite right: he made an excellent speech then, at some length and with some passion. I know this is an issue about which he rightly feels very strongly.

I am no longer a south London councillor, but I was until two years ago and I know the effect that this policy, which came in under the coalition Government in 2013, has had in my borough, which I think is similar to that in much of London. Like the noble Lord, Lord True, I am not going to repeat everything that I said in Committee. One thing startled me, though: in my borough, the London Borough of Sutton, 62% of the conversions permitted in the two-year period under the permitted development right have happened to offices that were occupied, and the occupiers have been removed. That is serious and damaging for the local economy. I ask why the Government are so keen to pursue this, and I am told that it is because of the drive to provide more homes. That is an ambition that we all support strongly.

I therefore asked my borough—I repeat that I am not a councillor now—for the housing figures. They showed me the figures for housing in the borough for each of the last 10 years, long before the policy came in as well as since. Sadly I do not have the figures with me, but in all of those 10 years, and overall, for permissions granted the borough is, from memory, 132% above the target in the London Plan—in other words, the target set for the council. Possibly more importantly, on housing completions it is still very nearly 130% above target. So this is an authority that is more than meeting its housing targets—whether or not that is enough is a different debate—and cannot be said to be, nor has it been said to be, failing in that regard. Yet the borough, particularly its employment prospects and the whole nature of its town centre and other district centres, is hit hard by this policy.

The other aspect is the housing being permitted under the permitted development rights. We all want to see more homes being provided, but not just anything. None of the properties provided could be designated as an affordable property. Demands are different in different areas, and the demand in an area like mine is very much for two-bedroom and three-bedroom properties, but virtually all those provided are one-bedroom and not affordable, so not what is actually needed in the area but, frankly, what developers can turn a quick profit on. They are permitted to do that; they are not breaking the law. So I question whether the policy is actually meeting housing demand either.

We all want to see more homes built but not any old homes anywhere; we want the right quality and design of homes, and the homes that people actually need. I suggest that this policy is failing on that front as well. It is not failing everywhere; I know that in some authorities—the Minister said that her former authority was one of them—it is very welcome. That is fine and I have no problem with that. Our issue is that having had this policy in practice for a couple of years now, we can see in reality the effect it is having in large parts of London—and, I expect, in other parts of the country too, although I know less about that.

It really is time for the Government to review and relax this provision. In my view, the amendment from the noble Lord, Lord True, meets that requirement. It is fully in keeping with a localist policy. I am not competent to discuss whatever technical flaws there may or may not be in it, but the amendment’s intent is very clear and it is absolutely right. I am pleased to support it.

My Lords, I have added my name to the other amendment in this group for the simple reason that the intended effect of the policy has not been how it has worked out in practice. If we cast our minds back to when this policy was developed, the economy was still struggling to recover from the impact of the financial crisis and the intention, therefore, was to unlock animal spirits and let the market take its course. There is no doubt that permitted rights has unlocked a series of new developments of housing. However, the intention was for it to address industrial sites or office sites where the prospect of new economic development was unlikely ever to happen but, for whatever reason, the local authority was not recognising that reality and moving on. In that sense, it had its effect. Where it has not done what we anticipated was that there was a policy of exemptions which would prevent particular areas being unduly affected. The City and Westminster formed part of those exemptions, but the area was not drawn widely enough.

Let us move forward to the present. The values that can be achieved through the development of residential housing, particularly in London—and I believe that this is predominantly a London issue—far exceed the values that can be achieved through economic use such as offices, retail space and so on. Instead of taking sites that will never be used for economic development, we are taking perfectly viable business sites and then forcing them into residential use, often at high values, which is not helping with the immediate housing need, as the noble Lord, Lord Tope, has just described. There are plenty of different ways that this issue can be addressed, but I urge the Minister to look constructively at how this issue can be tackled. It is likely to carry on growing in areas where these values are so different. Its consequence will be to damage the character of those areas and permanently lose economic activity.

My Lords, I support Amendment 116B, in the names of the noble Lord, Lord True, my noble friend Lord Kennedy and the noble Lords, Lord Kerslake and Lord Tope. They made a powerful case for dealing with what is potentially a damaging development in many town and city centres and some of the suburban areas as well. I am not so keen on Amendment 116A but I think that the Minister should go back to Amendment 116B. I would urge her to give serious consideration to the suggestion it contains. To adapt an old phrase, I would advise her, “to her own True, be helpful”. It would be wise not to ignore the experience of significant change—and change not for the better—particularly as identified by the noble Lord, Lord Tope, as a result of allowing this kind of development to take place and, indeed, under the legislation, actually facilitating it. So I hope there will be some second thoughts on this.

My Lords, I support in principle the Government’s view on this change of use from offices to housing and do so because over the last three years, more than 7,500 much-needed houses have been delivered for this country. However, I have sympathy for my noble friend Lord True’s amendment, not for the same reason as he and many other speakers gave, and certainly not from a London-centric view, because I come from a rural part of the country, but because there needs to be further guidance about this.

The change of use of large office blocks in business parks, which is an issue that is hitting many other local authorities, is unacceptable. To put housing in the middle of a business park does two things. First, it is not suitable for the people who live in those houses; and secondly, it does not help the businesses that are there at the time or help to market any further units for businesses in the future. It just does not work. Quite honestly, local communities, local authorities and anyone else who has anything to do with this think it is crazy that we would even think of people living in a business park or an economic development park.

So, although we have Article 4, it would be useful if the Government made stronger recommendations or produced guidance saying that these are areas where we would not accept a change of use. That would then stop all the bureaucracy and the cost of fighting these things, and it would make it clear to developers that there are places that we will talk to them about and consider a change of use, but there are certain places that are just not suitable and therefore they should not try to speculate on them. Therefore, I would welcome it if the Minister would look at this matter again and give local authorities stronger guidance so that they could say no and stop speculation.

My Lords, unfortunately I want to express my concern about these amendments and, in doing so, for the second day in a row on Report will no doubt fail to ingratiate myself with a local authority leader who is a noble friend.

I declare an interest in that I was one of the architects of this policy when I was director of policy for David Cameron in my time at No. 10, so noble Lords will understand that I might be a bit defensive about it.

We had presaged the permitted development policy in the 2010 manifesto, explaining that we would amend the use class orders as part of our plan to deliver more housing. That policy, like so many ideas in the manifesto, was based on the principle of devolution, but a richer view of devolution than is assumed by some, who think that this means only pushing power down to local authorities. To quote directly from the manifesto:

“So we want to pass power down to people—to individuals where we can”.

The permitted development rights brought in initially by the coalition Government are, to me, a classic example of that principle in practice: devolving power to individuals and organisations—in this case, building owners—to use their private property as they see fit and in response to changing market conditions. This kind of transfer of power, which the former Labour Cabinet Minister, David Miliband, once called “double devolution”, is what these amendments would curtail.

Therefore, the underlying principle at stake here is devolution, but it was put to work to solve a very pressing problem, which the noble Lord, Lord Tope, has recognised and which everyone in this House recognises—a chronic shortfall in new-build homes. In 2010, as the coalition Government came to power, there were just over 100,000 housing completions, compared with an annual household formation rate of around 250,000. The housing vacancy rate was around 3%, and much of that was tied up in moves, probate and so on. At the same time, the high-street vacancy rate was 16.5% in 2010, and in the south-east—obviously one of the strongest regional economies—the office vacancy rate was 17%. I repeat: 17% against 3%. In 2010, over 260,000 offices of all shapes and sizes were vacant.

So there was, and indeed had been for many years, a clear imbalance between demand for residential versus office and retail uses. There were many causes for this: population growth and demographic change; changing working habits, such as increased home working; changing demands for office space, including different designs required for computer cabling and air conditioning; and changing shopping patterns, such as the rise of internet shopping. Whatever the reasons, it was clear that the old approach was not working and that change was required, and that was brought in by this policy.

The next question is: has this policy worked? Again, the unequivocal answer is yes. JLL Residential Research estimates that 8,000 prior approvals were secured in the first two years of the policy and that, if implemented, they would have created 60,000 homes. New homes created by change of use rose from 12,500 in 2013-14 to 20,650 in 2014-15. Critically, this has not impacted office development. Much of the talk in this debate has been about London, but in London construction levels for commercial reached a seven-year high in 2015. Therefore, it is not having the negative effect that some people have said.

Moreover, important protections are in place. They are being used and provide local flexibility. There are 33 exempt areas. Local authorities can use Article 4 directions—indeed more than 500 are in place—and any other enlargements or changes would clearly be subject to planning permission.

So it seems to me that the current policy, which would be made permanent in the Bill, provides the right balance between higher levels of development, more homes and more office space, and exemptions where necessary. Unfortunately, what these amendments would do is take us back to the status quo ante, when that imbalance was allowed to emerge. That would be a step backwards that would hinder a necessary and effective new part of the planning system. It would hinder the rights of landowners to respond to market conditions to provide the housing that we need. On that basis, I cannot support these amendments.

My Lords, I thank the noble Lords who have spoken on both sides of the argument. My noble friend Lord True and the noble Lord, Lord Tope, spoke about safeguarding some of the economic well-being of their areas. My noble friend Lord O’Shaughnessy demonstrated that this has been deeply beneficial to areas such as mine in Trafford, revitalising our local high streets and bringing office buildings back into use where once they stood empty. My noble friend Lady Scott talked about inappropriate use of permitted development rights for things such as building houses in industrial estates. As my noble friend Lord O’Shaughnessy said, we have Article 4 to implement in places where it is simply not appropriate to move from office to residential use.

As I outlined in Committee, the office to residential PDR is making a very important contribution to delivering the 1 million homes that we want by 2021, while making the best use of brownfield sites and reducing the pressure to build on greenfield land. Take-up of the temporary permitted development right has been very high, with more than 6,500 applications since April 2014, demonstrating the demand for such conversions. This has led to over 5,300 permissions for office to residential conversions.

Our data show that in 2014-15 we saw a 65% increase in the number of new homes created through change of use, and the office to residential permitted development right will have helped to deliver around 8,000 new homes. Data from the sector also indicate that the temporary right has delivered much-needed new homes to buy or rent, including in London and the south-east, where we continue to face a housing shortage. The British Council for Offices has estimated that, nationally, 7,600 dwellings have been delivered since May 2013. Evidence to date shows that the light-touch planning process has resulted in new homes being brought forward. The British Council for Offices notes that some of the developments would be unlikely to have come forward via a planning application and are therefore additional to the number of homes that would otherwise have been delivered.

I will now address the new clause proposed in my noble friend Lord True’s Amendment 116A, and speak first to subsection (c). I understand that the aim behind it is to compensate business tenants where property owners exercise their permitted development rights to change use from office to residential. However, this is not a planning issue.

The amendment is unnecessary as there are already adequate protections for business tenants under the Landlord and Tenant Act 1954. Under the general law, business tenants have security of tenure until their lease expires. On expiration, the tenant has important rights under Part II of the Landlord and Tenant Act 1954 to have a new lease at the market rent, unless he has explicitly opted out of these rights at the beginning of the tenancy. Section 30 of the Act specifies certain circumstances in which the tenant is not entitled to a new tenancy. These include where the landlord is able to demonstrate an intention to undertake substantial works at the premises, which could be where approval is secured under the permitted development right. Under these circumstances, the tenant would be entitled to compensation from the landlord under Section 37 of the Act. The compensation is set at the rate of one times the rateable value of the premises, or twice the rateable value if the same business has been in occupation for more than 14 years.

I now turn to subsections (a) and (b). We consider that the introduction of the PDR for change of use from office to residential has resulted in new homes that would not have been brought forward under a planning permission. We consider that imposing such additional requirements on developers is likely to undermine the contribution the right makes to the delivery of new homes which are so badly needed.

In relation to subsection (a) of the proposed new clause, local authorities are already able to charge a fee for prior approval applications for change of use. The fee is set at a level which reflects the light-touch approach for processing these applications, as only certain specific issues require approval. I hope that this provides reassurance that appropriate safeguards are already in place and I invite my noble friend to withdraw the amendment.

On Amendment 116B, as I agreed in Committee, I have since met my noble friend Lord True and the noble Lord, Lord Tope, to discuss their concerns about the impact of the office-to-residential right. I have also listened carefully to the debates both in Committee and on Report on this issue and recognise the concerns expressed by my noble friend and the noble Lords, Lord Kennedy and Lord Kerslake, about the loss of office space in some areas and the impact that it can have on local businesses.

I appreciate the strength of feeling in certain areas on this matter, but I cannot accept the amendment that would introduce this new clause into the Bill. The issues raised relate to specific areas, as I have already outlined. The amendment would apply nationally and would create uncertainty within the market. It would undermine the important role that the right plays in the supply of new homes. It would also have a negative effect on the growth of the development industry. The amendment is also unnecessary, as appropriate protections are already in place to meet local conditions.

The office market continues to evolve to meet the business community’s needs and respond to the right. Where it is necessary to protect the economic well-being of a specific area, local authorities can bring forward an Article 4 direction to remove the right and allow for consideration of a planning application. That is a fair and proportionate approach. But I recognise that my noble friend Lord True also has concerns about Article 4 directions. However, the process is straightforward and provides robust safeguards by allowing for local consultation on the scope of the direction before it comes into force.

I hope that this reassures noble Lords that while we understand their concerns about the impact of the right in specific parts of the country, there are appropriate existing safeguards. But while the Government’s position on this issue will not change and while I urge my noble friend not to press his amendment, I will undertake if he wishes to have further discussions on this matter. As always, I am very happy to meet him.

On Amendment 116A, we see these developments all around here in Westminster, with offices now being converted into very expensive homes. Why would it not be right for a planning authority to get somewhere near its full costs on this?

On Amendment 116A(a), we can see all around here many developments where offices have been converted into very expensive properties. Why would it not be reasonable for a local authority—in this case, Westminster—to cover a larger proportion of its costs in fees, considering what these properties are now selling for very close to this Palace?

My Lords, I think that it is because it is not a planning consideration, so the tenant would be entitled to compensation from the landlord rather than the local authority.

My Lords, I am grateful to those who have spoken, including my noble friend. It is important to understand—perhaps I should say this twice, because it needs to be understood—that I am not seeking to defeat the whole order; that is a separate matter. My amendment refers to a small part of the order relating to office to residential. I am not seeking an untrammelled power; I am seeking an audience in Parliament for people who are suffering adversely from the way in which the policy operates. My amendment states that the local authority can seek to opt out only if it demonstrates,

“that active businesses within its area are being expelled from office space”—

businesses thrown out under this Administration—

“to enable conversion to residential use”;

that is to say, “When the lease terminates, go: we are turning this into a home”; or the local authority must show that there is economic damage.

I am extremely grateful for what my noble friend said. I am not ideological about this. I am seeking a practical solution for local needs, not an overall position. Of course, I am prepared to have further discussions to see if we can find a way. It need not be my way and this amendment. I am not arrogant enough to demand that. I can see the defects. I understand the Government’s concerns about the order. But I ask for a degree of compassion and understanding.

I mentioned some examples and I will not go on with the list, but there is a fast-expanding consultancy with six employees that was ousted from central Twickenham to a fringe location with a higher rent; there were relocation costs of almost £1,000 and a loss of parking. That should not be happening. In an intelligent country and with the wisdom there is in the Government—exemplified by my noble friend—we must be able to find a way between now and Third Reading to take both tricks. That would allow the Government to keep the overall order and enable it to operate, and find a way of protecting these small businesses that are suffering. I am grateful for the offer from my noble friend to meet.

I was obviously disappointed by my noble friend Lord O’Shaughnessy. I understand that he is the author of the policy. I had not realised that, but it does not affect my estimation of him. It is too late at night to be bitchy and I did not intend to be; but for good policy-making you sometimes have to trim your sail after a bit of time. You do not always have to cling to the ideological principle you had at the start. It is a good principle and I agree with him on the principle of getting homes that way, but can we not just trim the sail? Ideology and policy must at times meet real life. In parts of London, as we have heard this evening, it is clashing with real life and we must find a way forward. Given what my noble friend said, I still travel in hope that we might find a way of squaring the circle. Therefore, I beg leave to withdraw the amendment.

Amendment 116A withdrawn.

Amendment 116B not moved.

Amendment 116BA

Moved by

116BA: After Clause 141, insert the following new Clause—

“Local authorities and development control services

(1) A local planning authority may set a charging regime in relation to their development control services to allow for the cost of providing the development control service to be recouped.(2) Any such charging regime must be subject to consultation prior to implementation.”

My Lords, this amendment covers the issues previously discussed under Amendment 108. It enables local authorities to recover up to the full costs and no more in determining planning applications. Noble Lords who were not persuaded by Amendment 108 could give this amendment some further consideration, as it proposes not to go beyond full cost recovery.

My amendment would allow a more realistic fee level to be recovered from large-scale developments and differentiates between that and someone who wants to build an extension to their home, for example. I grew up in Southwark and in the north of the borough we have seen a boom in large-scale developments in recent years. A more realistic fee level would have made no difference to those developments. I now live in Lewisham and, again, we are seeing a large number of residential developments in Lewisham, Deptford, Catford and elsewhere in the borough. Again, I do not believe that a more realistic fee level would have made any difference whatever to the viability of those developments.

In responding to this short debate, I ask the Minister to address the point made during the debate on Amendment 108. I know we will come to this issue when we discuss further amendments on Monday, but I am worried that we could get a two-tier system whereby other providers are able to provide planning advice. I do not want a private provider to be able to charge a much larger fee, and a local authority to be limited as to what it can charge to do the same work. That would be totally wrong, and it would be very helpful if the noble Baroness assured us that that is not the case. It would be a very unfair situation for local authorities and completely wrong. With that, I beg to move.

My Lords, we had a very good and thorough discussion on the recovery of full-cost fees on a previous amendment. I want to draw attention to a few statistics to reinforce the case that my noble friend made and to point out that the flaw in the present system is that you cannot get speedy, authoritative and consistent decision-making at local planning level if the expert workforce is being run down and starved of resources. I have just a few statistics that pick that up.

The audit committee reported in 2014 that planning departments were taking the brunt of funding cuts—a reduction, in real terms, of 46% across the planning and development budget between 2010 and 2014. These are horrendous figures in the context of cuts of 37% in local authorities as a whole. How much deeper have these cuts been since 2014? In expert areas such as archaeology and conservation officers, there has been a drop of a third in local authority staff. In Lancashire the entire archaeological team has disappeared. How the Government expect local authorities to deliver a speedy, efficient and good planning service with this level of cuts is absolutely beyond me. Therefore, the only answer to building the capacity of local authorities to do what the Government so desperately want them to do, and to deliver a speedier, more efficient planning system, is to build the capacity of local authorities themselves, because development control is the fundamental business of planning authorities. There is an urgent need to reinvest in local authority planning services. Full-cost fee recovery can contribute to that.

I have one question for the Minister. In the previous exchange, I was not quite sure whether she believed the figure published by the Local Government Association—that there is a shortfall of £450 million to local authorities because of the difference between the cost they have to pay and the fees they receive. She talked at great length about the vitality needed to enable local authorities to do their job, but she did not address the question of the reality of what is happening on the ground. There is an absolute, logical and fair case for recovering full-cost fees, and I hope she will respond positively to it.

My Lords, I speak in favour of the spirit of what the amendment is trying to achieve, but against it because of the way it is worded. No one from a local government background would believe that it is right that we are unable to collect enough fees to cover the cost of the service, and it is not right that local taxpayers are subsidising the development industry to the tune of about £150 million a year—£450 million over the last three years. But the amendment as worded could have a quite negative impact on some areas. If a fully staffed planning team received only 10 planning applications in a year, the brunt of those costs would fall on those 10 applicants. That cannot be right. There needs to be a way for central government to get away from setting fees at an inflationary uplift. As welcome as that will be, it will be insufficient to get anywhere near cost recovery.

Given that the Government propose to put private sector competition into the space of a public sector monopoly, there must be a way to increase fees that works for local government, the local taxpayer and the private sector. I still do not understand why we are dealing with these amendments separately from the amendment that opens the door for the private sector to compete. At that point the Government will be sure that the fees local government charge are proportionate for the service being delivered in their area, because if local government charges too much, clearly, the private sector will take all the work. We need to find a way of getting that done but, from my end of the telescope, this amendment still does not deliver what needs to be done. I would love to able to support somebody who is clever at writing an amendment in a way that I am not.

Again, the word “must” has been used for local government. People should not put “must” in anything. Local government likes “may”, not “must”.

Before the noble Lord sits down, I did put “may” in for the main part and then “must” for the consultation. I thought I was getting somewhere with the noble Lord. I think we should talk outside the Chamber—he may well be the right person to write this.

I thank noble Lords for their comments and contributions. To respond to the noble Lord, I can confirm absolutely, for the avoidance of doubt, that planning authorities will not be able to charge one fee and private providers another. We do not intend to create two tiers within the planning system—it would be most undemocratic and unfair, generally.

The noble Baroness, Lady Andrews, asked about the £450 million disparity that the LGA found between costs and fees. I need to make the point that there will be differences between the efficiency and effectiveness of local authorities in delivering planning services. Some show that performance can be improved and costs reduced, and more should follow their lead. Authorities have done a phenomenal job in sharing services for many of their functions but have not moved quickly enough in doing so for planning services. I said that to the noble Baroness either earlier today or on Monday—the days have merged into one.

Amendment 116BA, as I said on a previous amendment, allows local authorities to go beyond cost recovery. We are absolutely clear that these services and other discretionary services should not exceed the cost of providing the service. I have been through the argument previously that what cost recovery means in practice, in terms of fee levels, varies from local authority to local authority. We want a highly efficient service, and there are real challenges up-front in doing this for some local authorities, but we want better-performing planning departments for better performance in terms of planning outcomes. I talked earlier about our proposals for tackling resource pressures in planning departments. I hope that noble Lords will not mind that I do not go through these again, and that with those words the noble Lord will feel able to withdraw the amendment.

My Lords, I thank all noble Lords for speaking in this short debate. My noble friend Lady Andrews highlighted the cuts that have fallen on local authority planning departments in recent years. I was pleased that the Minister was able to give us some reassurance on the issues. I am sure we will be discussing again on Monday the fees that can be charged by a local planning authority and those that can be charged by a private provider. That will be very welcome news for local government.

I thought I had written my amendment in such a way that it would not allow people to charge more than the costs involved, so clearly I am no better than the noble Lord, Lord Porter, at writing these amendments. Maybe we need to get together and we will get one right at some point. I certainly do not see my amendment as doing what the Minister says it does, so I am a bit disappointed in her response. I know it is late but I am going to test the opinion of the House.

Clause 142: Resolution of disputes about planning obligations

Amendment 116C

Moved by

116C: Clause 142, leave out Clause 142

My Lords, the hour is late and I should make it clear that I have never had any intention of pushing this amendment to a Division. The reason that I bring it before your Lordships is that this clause is effectively a proposal to set up a new quango. I welcomed the meeting that I had with officials earlier, and I was grateful to Ministers for facilitating it. I was told that it will probably not be formally a quango but a new, independent body to be served by people as yet unspecified. It will have a series of functions as set out in part over several pages of Schedule 13, which might have been drafted—it is a bit late, so I am perhaps a bit free with my words—as in that famous scene with Groucho Marx and the contract and “the party of the first part”. There is a whole mass of regulatory powers, with prescribed persons not defined and circumstances which the Secretary of State will determine later.

This clause was introduced to Parliament in the other place on Report, after midnight and with a 185-word introduction by the Minister. There was no debate on the subject and the technical consultation that went out really answered no questions at all. Theoretically, I believe in arbitration, but to set up a statutory process of compulsory arbitration without defining particularly what you are about is risky. I would much prefer to have seen this properly scoped and perhaps included in subsequent legislation, if there were some. What is this new body? Who will staff it? Where will it be based and what will its budget be? Quangos and their functions are never cheap.

Statutory arbitrators will be sent in at the request of unspecified third persons—in some circumstances, not even the two parties to the dispute. We do not really know who those third persons are yet, although the Government are asking who they might be. Will they be interested local people? The new body can charge fees. Well, any government body likes to charge fees and we can be sure that the fees will not be cheap—and it will probably expand.

I do not want to labour the issue but I did raise it in Committee. While I do not criticise my noble friend on the Front Bench—she has done an absolutely fantastic job on the Bill in my submission—it was in a large group so there was no real response on what it was all about. As I said, 185 words were spoken in the Commons, and there was no response.

What is the calculated impact on affordable home provision? What local knowledge will these statutory arbitrators require? What will be their qualifications? How will they relate to the existing inspectorate, which is supposed to resolve difficulties between local authorities and developers? Will their decisions be judicially reviewable? Any statutory body lets the lawyers loose.

If she can, I should like my noble friend to say at what stage those questions will be answered for Parliament, because I am concerned that, well-intentioned though this might be, we risk creating a statutory body that will run out of control, cost more and lead to more delay in the system rather than less. Will the public be able to make representations to these arbitrators? Will they meet in open session? If so, what role is there for the planning committee? Where do we go with appeal afterwards? We could have a three-stage process.

I beseech my noble friend and her colleagues to think about what this new statutory body might be. They might even know what it might be called.

My Lords, I speak in support of the amendment of the noble Lord, Lord True, who asked a set of important questions. I shall not repeat them, and I am pleased that a large number of Members of the House are here to hear him ask them. This is an example of the creation of a bureaucracy that may not solve a significant set of problems. In other words, because there may have been some difficulties in a limited number of cases in some places, we may set up a large bureaucratic structure to solve them.

I have read the impact assessment and the Bill very carefully, but I am still at a loss to understand what problem the Government are trying to solve. It may in some cases speed up some Section 106 negotiations but, in the main, I am not sure that it will. It may create a set of unintended consequences. When I read line 1 of the impact assessment—

“The Government wishes to provide for someone to be appointed to help resolve, within a set timescale, outstanding issues about planning obligations relating to individual planning applications”—

I immediately wonder who the “someone” will be. How will you ensure that they do not have some kind of interest? How will you know that there is a firewall between that person and their conclusions? For example, the impact assessment does not answer the question asked by the noble Lord, Lord True: what might the impact be on starter homes? That is a very important question, because the funding of starter homes comes from reductions in the amount of Section 106 money received by local authorities.

On page 167, at lines 10 to 12, the Bill states:

“The local planning authority must not refuse the application on a ground that relates to the appropriateness of the terms of the section 106 instrument”.

I understand that statement in one sense, but at the heart of our debate about starter homes is the fact that Section 106 provision will be reduced to help to provide the developer subsidy for those starter homes. There are major implications in this, and I see more potential problems over Section 106 negotiations. I am not convinced that setting up the kind of bureaucratic structure that the noble Lord, Lord True, described, will actually help us to solve that problem. It will be solved if local planning authorities are properly resourced, have the proper powers and there is a proper context within which they are to work to build the homes that the country needs.

My Lords, I wholeheartedly endorse the critiques of the proposal by the noble Lords, Lord True and Lord Shipley. Several real problems have already been identified, but it is worth reminding ourselves that this is yet another incursion on the rights and roles of local authorities, imposing an external component on to the resolution of what ought to be determined locally between the local authority and the applicant. Moreover, the whole thing is another bureaucratic nightmare. There are five pages of the schedule. The Explanatory Notes make it clear that there are also to be regulations—surprise, surprise, once again made by the Secretary of State. They say:

“The Secretary of State can also make regulations setting out … who, other than the local planning authority and applicant, could make a request for the appointment of a person”.

So it need not even be the planning authority or the applicant who makes that application. Who else might make it is presumably at large—anybody could. The regulations can also deal with,

“the timing and form of requests”,


“that a person can be appointed if outstanding issues have not been resolved within set timeframes”,

as well as,

“further detail about appointments … what qualifications or experience the appointed person must have”,

and “fees payable”. Those will all be determined by regulations.

The Explanatory Notes say:

“The appointed person must take into account any template or model terms published by the Secretary of State. Regulations can also set out other details … Regulations can also set out restrictions on the local planning authority’s ability to ask for additional obligations”,

as well as,

“periods for determining planning applications after a report is issued;

circumstances or cases where the consequences in this Schedule don’t apply; and

any further steps required to be taken by the appointed person”.

Once again, we are going to have myriad regulations, the sight of which is withheld from us, presumably because they have not yet been drafted. They will be produced at a later date, again without any prior consideration by Parliament at the time when the Bill has gone through. There is also the possible perverse effect that, given that applicants may have, as they perceive it, difficulties with the local authority, why should they not seek the involvement of the appointed person—not so much by way of an appeal but in the initial part of the process? They could delay things even more. If they thought that they were not going to get entirely what they wanted from their application, why not go through this process? That unintended effect seems to me a ridiculous proposition, and I very much hope that the noble Lord will test the opinion of the House—and, if he does not, I will.

My Lords, I thank noble Lords for contributing to the debate and raising some very valid questions about how the process will work. Dispute resolution is part of the wider measures that the Government are introducing to make the planning system simpler and encourage housebuilding. We anticipate that it would be used only for a small number of applications, as a last resort, and that its existence will encourage all parties to work constructively together and agree planning obligations earlier in the planning process. Only 7% of major and 1% of minor planning applications both include a Section 106 agreement and are decided outside the statutory time frameworks or agreed extension. The objective of dispute resolution is to avoid protracted Section 106 negotiation, not to add unnecessary steps.

I have listened to the debate in Committee and this evening, and recognise that several noble Lords have valid concerns about how it will all work while, I think, supporting the general principle of arbitration. A key concern of my noble friend Lord True is not only the bureaucracy but the complexity of negotiations. However, the schedule has been drafted this way to encourage the parties to agree matters between themselves wherever possible. For example, taking out the cooling-off period would detract from the objective of speeding up negotiations. This process would be used only in cases where the local planning authority would be likely to grant planning permission were it not for unresolved issues relating to Section 106 obligations.

The legislation is also intended to be flexible enough to respond to feedback from the Government’s technical consultation, which has recently closed.

In this consultation we sought views from the sector on, among other things, the cost of the process, the matters that should be taken into account in dispute resolution and the necessary qualifications of the person to resolve the disputes. These matters will be set out in regulations, as the noble Lord said, and I acknowledge the expertise of my noble friend Lord True as leader of the London Borough of Richmond upon Thames. I would therefore welcome ongoing dialogue as we develop the regulations.

I reiterate that dispute resolution is intended to be activated by parties to the Section 106 agreement. It therefore should be seen as a tool to aid negotiations where necessary rather than as placing an additional burden. The Government are committed to doing whatever they can to unlock stalled sites and to increase the delivery of housing. We have just concluded a wide-ranging consultation which will inform the detail of how it will be applied through regulations. I hope—although I doubt—that I have been able to provide additional reassurance, and that noble Lords will not divide the House on this.

My Lords, I thank my noble friend for that answer. I repeat what I said at the outset: that I have no intention of dividing the House, although I cannot speak for others or for the reasons that they might wish to do so.

There is a danger of legislation drafted by bureaucrats about bureaucracy for bureaucratic solutions. Sometimes Ministers have a very useful word in their vocabulary, which is “no”. I hope that, as the deliberations on this very cumbersome-looking new body go forward, Ministers will whip out that word quite often. I am grateful for what my noble friend said. It is the first time that a Minister at the Dispatch Box in the course of the Bill has really set out some of the details—although my honourable friend Mr Lewis said 185 words on them—and I thank her for that. I beg leave to withdraw the amendment and I hope that, on reflection, the noble Lord, Lord Beecham, will not press the House to divide at this hour.

Amendment 117 not moved.

Schedule 13: Resolution of disputes about planning obligations: Schedule to be inserted in the Town and Country Planning Act 1990

Amendment 117A not moved.

Consideration on Report adjourned.