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Housing and Planning Bill

Volume 771: debated on Monday 25 April 2016

Report (5th Day)

Relevant documents: 20th, 21st, 26th, 27th and 28th Reports from the Delegated Powers Committee

Amendment 118

Moved by

118: After Clause 143, insert the following new Clause—

“Carbon compliance standard for new homes

(1) The Secretary of State must within one year of the passing of this Act make regulations under section 1(1) of the Building Act 1984 (power to make building regulations) for the purpose of ensuring that all new homes in England built from 1 April 2018 achieve the carbon compliance standard.(2) For the purpose of subsection (1), “carbon compliance standard” means an improvement on the target carbon dioxide emission rate, as set out in the Building Regulations 2006, of—(a) 60% in the case of detached houses;(b) 56% in the case of attached houses; and(c) 44% in the case of flats.”

My Lords, the aim of this amendment is for new homes to contribute to meeting our greenhouse gas targets and to help lower fuel bills. In Committee the Minister argued that homes had to be financially viable to build, yet conceded that the extra build costs to meet carbon compliance standards are under £3,000 for a three-bedroom, semi-detached house. That figure comes from a Zero Carbon Hub report published in 2014, which forecasts a continuing reduction in those costs until 2020. Indeed, the managing director of Zero Carbon Hub said last month that today’s costs are dramatically lower than in 2014 due to the industry’s greater proficiency at building energy-efficient low-carbon homes.

The Government also argued that the amendment imposed a regulatory burden, but these standards, withdrawn by the Chancellor last year, had industry-wide support. If the Government’s priority is to support small housebuilders, it should be noted that they themselves cite that the major constraints on their building more homes are land prices and access to finance. This was the evidence given last October to the House of Lords Committee on National Policy on the Built Environment by representatives from both the Home Builders Federation and the Federation of Master Builders. The committee concluded:

“We disagree with the Government’s decision to remove the zero carbon homes policy and the Code for Sustainable Homes. These decisions are likely to add to long-term housing costs through a reduction in energy efficiency, and we have heard no clear evidence that they will lead to an increase in housebuilding”.

Since the Committee stage, the House of Commons Energy and Climate Change Committee has added its voice to the call for a reinstatement of the zero carbon homes policy.

Let us not forget home owners in all of this. The annual energy bill for a family living in a zero carbon three-bedroom, semi-detached house will be £1,220 less than that for a Victorian home and £330 less than for a home built to existing building regulations. The amendment would also avoid retrofit costs, given that the Government are not ruling out raising energy standards in the future. It is a long-term saving not just to the home owner but to the environment.

Higher regulatory standards should be considered not as burdensome red tape but as a requirement that is essential to reduce both energy costs and to tackle the threat of climate change. As Mike Roberts, the MD of small housebuilder HAB Housing, said, there should be no exemptions: volume housebuilders have the scale and resource, whilst smaller companies are light on their feet and more able to react quickly. We urge the Government to back up the commitment that the UK made at COP21 in Paris and make higher carbon standards mandatory as soon as possible. I beg to move.

My Lords, I thank the noble Baroness, Lady Parminter, for introducing this amendment, and I thank the Minister for meeting us last Thursday to discuss this and other amendments.

As the noble Baroness, Lady Parminter, has already mentioned, the UK has signed up to the Paris agreement on climate change and, importantly, we have our own national legislation—I declare an interest as a member of the Committee on Climate Change, established under that legislation—which commits us to reducing greenhouse gas emissions. In a few weeks’ time the Government are due to accept the fifth carbon budget proposed by the committee, which will commit us to reducing greenhouse gas emissions to 57% below 1990 levels by 2030—on the cost-effective path to our ultimate target in 2050.

At the end of June, the committee will publish its annual report on progress towards this target. The analyses are still going on, so I cannot leak the final results, but I can inform noble Lords of one fact that is highly relevant to this amendment. Last year—2015—emissions from buildings actually increased by 4% and, even adjusting for annual variation in temperature, the decrease was only about 1%. This is not a one-off. There has been very little reduction in emissions from buildings over the past 10 years. If we are to meet our legally binding obligation, emissions from buildings will have to decrease substantially, and at a much higher rate in the years ahead.

Part of the problem is that we have old building stock and many poorly built houses that are energy inefficient. This underlines the importance of not adding to the problem with new homes, when we do not need to. That is why this amendment is so important, not just for the short term but for the long term. If we do not require the zero carbon homes standard today, we will have to introduce it at some point in the future.

As we discussed in Committee, there are differences between what the Government are proposing and the standard in this amendment. For example, in the 2006 Part L requirements, the Government’s proposal amounts to a 44% reduction in greenhouse gas emissions, while this amendment suggests a 52% reduction for attached homes and a 60% reduction for detached homes. How would these greater reductions be achieved? An important element is on-site renewable energy generation—for example, by solar panels or other renewable sources.

As the noble Baroness, Lady Parminter, mentioned, there was considerable discussion of costs in Committee. We know now that from October this year in London all new homes will have to meet the zero carbon home standard and the GLA has calculated that for a three-bedroom semi the extra build cost will be between £978 and £2,702. For this additional investment to be cost optimal, the savings, discounted at an appropriate rate, should exceed the initial investment through the life cycle of the building. The calculations show that even with modest savings on energy bills of £100 a year, the investment would be cost optimal, and if the price of carbon is included—as it should be, according to the Treasury Green Book—the balance shifts even further in favour of zero carbon homes. The cost argument simply does not stack up if we take a life cycle view.

There was also a suggestion in Committee that making homes zero carbon would introduce an additional problem: if we make our buildings too energy efficient, they may be prone to overheating. It is true that one consequence of future climate change is that we probably will have to make our buildings more resilient to hot weather. However, this is not incompatible with zero carbon home standards. Professor Philip Eames of Loughborough University, an expert in renewable energy and building physics, says:

“The problem of overheating in new build can be an issue if the design is not appropriate ... we can quite easily improve the energy efficiency of new build significantly without suffering from this problem. It just needs attention to detail in terms of design”.

Finally, we have heard—as indeed the noble Baroness, Lady Parminter, has mentioned—that the requirement would be too onerous for small builders. Here, I would make the following observations. As has already been said, at least some small builders do not see it as a problem. Furthermore, given that one of the simple measures to achieve the zero carbon home standard is the installation of rooftop solar panels, it is hard to see why this is a regulatory burden, since it is a routine procedure. Even if the amendment would pose a challenge to some small builders, we should be asking them to up their game.

There are compelling reasons to accept this amendment, in terms of both our climate change commitments and cost effectiveness. The objections raised in Committee seem to me to not stand up to scrutiny. I very much hope that noble Lords will agree that this amendment should be accepted.

My Lords, it is a pleasure to follow the noble Lord, Lord Krebs, who speaks with authority on climate change. I support the amendment in the name of my friend, the noble Baroness, Lady Parminter. We were both members of the Select Committee on the built environment, and we heard a weight of evidence that supports the amendment.

In July 2015, when the Government announced that they were scrapping a proposed regulation to require all new homes to be carbon neutral, they justified their action on the grounds that they sought to continue to reduce the overall burden on housebuilders. That has always been the argument used, and it is where the debate takes a wider turn. Reducing the burden on private sector housebuilders has also been the justification: for the mantra of deregulation that led, in March 2015, to the Government removing the code for sustainable homes; for the failure to implement national standards for lifetime homes; and for a complete failure to plan for the future and the mitigation of climate change, and to plan for longevity—the two most transformational impacts on our society.

The pursuit of deregulation at the expense of foresight and, frankly, simple common sense marks a certain opportunism in the Government that is, basically, dangerous. As we have heard already, there is no evidence from the industry to suggest that deregulation in this form leads to faster or better building, or to lower profits. In fact, intelligent builders, large and small—we heard about the London example—find that there is a market for sustainable homes that reflects the starting price and is reflected in lower bills. There is a driver for improvement that we should recognise in policy.

The Government’s Foresight unit warned a year or two ago, with total conviction:

“The potential role of land and land use in both climate change mitigation and adaptation will be profound. The move to a low-carbon economy will increasingly influence land use decisions, settlement patterns, the design of urban environments, and choices on transport infrastructure”.

That is the reality, but I fear we have a Government who reject the obligation to think ahead, who ignore the evidence, and who seem to be in denial of the reality of the significant emissions, as we have heard—I think 25% of our emissions come from the built environment—and of a potential increase in our population of 9.7 million homes over the next 25 years, with all the imperatives that creates for sustainable housing and infrastructure.

Taking just the code for sustainable homes, elements of it are now incorporated into building regulations and defined as new national technical standards. They are designed to reduce burdens, but in evidence to the Select Committee, Worcestershire County Council—hardly a pusher for a socialist agenda—said:

“Withdrawing the Code for Sustainable Homes appears to have sent a signal to developers that sustainability measures are less important than before, meaning that councils wishing to promote better environmental performance in new development will struggle to deliver higher standards.”

The UK Green Building Council put it equally bluntly:

“In the last 10 years we have had this very clear trajectory and everyone has known where they are going and have had a lot of time to put in place the strategies. Now we do not know where we are going”.

The Select Committee’s judgment has already been quoted. It was absolutely certain that the decisions would add to long-term costs and that there was no evidence that they would have any impact on the Government’s stated primary objectives to speed up housebuilding. It also said that it did not have,

“a clear explanation as to how new homes will be energy efficient and environmentally sustainable”.

I urge the Government to reverse their decision on this extremely important matter. This is the opportunity for the Minister, who has listened so closely throughout the debate, to show foresight and, frankly, common sense, and accept the amendment.

My Lords, I support the amendment proposed by my noble friend, which has been supported also by the noble Lord, Lord Krebs, and my Labour colleague. There is absolutely no inconsistency with Conservative policy, or the Conservative Government’s policy, in supporting this amendment. I remind the Minister that although the genesis of this measure lay with the preceding outgoing Labour Government, it was strongly supported by both parties in the coalition agreement. Indeed, last year the Prime Minister said at the conclusion of COP 21:

“The talks at the COP21 conference in Paris have culminated in a global deal, with the whole world now signed up to play its part in halting climate change. In other words, this generation has taken vital steps to ensure that our children and grandchildren will see that we did our duty in securing the future of our planet”.

Therefore, I say to noble Lords on all sides of the House that this is absolutely a mainstream and necessary policy move to take. Of all the things that can be done to improve the UK’s performance on reducing climate change and the impact of CO2 emissions, tackling the built environment is right at the top of the list. Buildings account for 34% of our carbon emissions and within that homes account for two-thirds—that is, 22% of carbon emissions—significantly more than the whole of the transport sector. Governments devote many brain cells trying to find ways of reducing vehicle emissions and CO2 emissions but contribute nothing like the same level of policy input or intensity to reducing the much bigger output of carbon dioxide emitted from homes.

That brings me to the reasons given by the Minister when we discussed this in Committee. I do not want to rehearse all the arguments deployed then, but one which came across very strongly was that the Government were placing a lot of reliance on the additional cost that this measure would impose on the construction of an average house. Connected to that was their understanding that if there was such an additional cost, it would automatically lead to a reduction in the volume of homes that would be built. As my noble friend said, at the time the Minister relied on a Zero Carbon Hub estimate that the extra cost would be £2,885 per home. Unfortunately, the Minister did not complete the quotation from the Zero Carbon Hub report, which said that the cost would fall very substantially over subsequent time. The noble Lord, Lord Krebs, mentioned a range of values. It is highly likely that at this stage, two years after that estimate was made, the likely cost, given existing technology and building experience, would be about half that figure—perhaps, say, £1,500. If the cost was £1,500, the annual saving mentioned by the Minister in Committee would be repaid in five years. In other words, the additional cost would be repaid in five years given the reduced energy costs for the inhabitants of those homes. Given that the typical house built today will still be standing and occupied in 60 years, I would have thought a payback period of five years suggests that there is not too much of a problem on that score.

A second leg of that argument was that the increased cost of construction would result in fewer homes being built. I have put some questions to the Minister which I hope she will be able to answer when she responds to this debate. I thank her for the very constructive meeting with her that she arranged for a number of us who support this amendment. The reality is that building costs go up each year in any case for lots of reasons, such as shortage of labour, increased pay rates, shortage of materials and higher costs. For instance, the average cost of building a three-bedroom home in Hertfordshire has been slightly higher in each of the last five years. It has been increasing. I hope the Minister will be able to give us those figures later on. It is even more true that the cost of the land on which that home is built has been increasing as well, by a very much larger amount. I hope the Minister will be able to tell us what that increase is.

It ought to follow, from the theory deployed in Committee by the Government Front Bench, that as those costs rise the number of homes should fall and, presumably, so would their price. It is interesting that the sale price of a typical three-bedroom house in Hertfordshire has been rising faster than any increase in construction costs. It is also the case that this has not led to a reduction in the volume of housebuilding. It seems that neither leg of the argument stands up in regard to the link between the cost of providing high quality and the impact on volume or quantity. I hope the Minister will provide the House with some additional information on that and, perhaps, tell noble Lords which leg of the argument the Government will now use to advance the view that this amendment should be rejected.

It has also been said, and was mentioned in Committee, that the Federation of Master Builders is against this proposal and is very important. I do not think anybody in this House would deny its importance, but its members are responsible for only some 20% of the new homes built each year. As has been reported, the overwhelming concerns of builders large and small are access to finance and land and shortage of labour. Right down at the bottom, at only 4%, are concerns relating to regulation and red tape. I do not know what other arguments the Minister may rely on. There is certainly a need for more consultation, but all the consultation on this proposal has already been carried out and the Government had already reached the conclusion that it was appropriate to go ahead. Any consultation which may still be necessary will easily fit into the 12-month period allowed for in this proposed new clause.

I guess that the final argument will be that such a provision should not be so precisely and explicitly stated in the Bill: it ought to be in regulations. The Government have brought this upon themselves. The regulations already exist; they have been printed and published. However, the Government have announced that the next triennial uplift in building regulations has been cancelled. They could reinstate it and give an undertaking to proceed with the stalled regulations. They have not done so and that means that the only way forward, the only way to demonstrate that Britain is sincere in its signature on COP 21 and the only way of helping the Prime Minister to demonstrate that this Government, like the preceding one, intend to be the greenest ever is for this clause to receive the support of your Lordships today.

My Lords, I refer to my declaration of interests. I am an elected councillor in the London Borough of Lewisham. Although the government amendments which we will be looking at later on today may, in some cases, be responding to points raised by noble Lords in Committee and on Report, the fact that they are there highlights how unprepared the Bill was when it arrived in your Lordships’ House. The Government should reflect on that when bringing legislation to this House in future. Even when we do not like legislation, we at least expect it to be fit for purpose. That has not been the case here and I hope we see no legislation in that state in the next Session of Parliament.

Amendment 118, in the name of the noble Baroness, Lady Parminter, has the full support of these Benches and if she wishes to test the opinion of the House today we will support her. The issues raised in the amendment were debated in Committee, as we have heard.

We all agree there is a housing crisis, but any attempt by the Government to deal with it must ensure that homes are built to a high-quality standard and meet the challenges that we are all aware of rather than ignore or fail to address them. The zero-carbon homes standard is important to deliver on our climate change commitments, and the cost of building to standards that will achieve this and provide homes that will drive down energy bills and reduce carbon emissions could now be much less than the £3,500 we heard about in Committee; we have heard today that it could be as low as £1,500. The cost is initially borne by the homeowner but over the long term it will reduce fuel bills and getting it right in the first place will be much cheaper than having retrofit measures at a later date. This is good and we support it.

When the noble Viscount, Lord Younger of Leckie, responded to this debate in Committee, he told us that the measures were well intentioned but “a step too far” at this stage. I hope we are not going to hear the same from the Government Front Bench today. I suggest that failure to make progress as the amendment seeks to do is plain daft. Any additional costs of building a new home required by the amendment would be borne by the purchaser, who would recoup that outlay very quickly and make additional savings every year. This seems a win-win situation and I cannot see who the loser would be here.

It is also puzzling why the Government would want to build homes that are not as energy efficient as possible in order to meet the zero-carbon standard and help reduce carbon emissions. Surely on matters of public policy the Government should be striving for the best possible outcome. Wherever you are coming from, building to a standard that leaves the home owner or tenant in a property that, having been built to a poorer standard, is less energy efficient and they have to pay more on their fuel bills cannot be right. It is particularly wrong when you are talking about the relatively modest sums involved here. If this amendment is not accepted, people will be left paying a greater proportion of their income than they need to on fuel when moving to a new home. It will have the greatest effect on people on poor incomes. For me, that is just not right and the Government really should accept this amendment today.

My Lords, I thank the noble Baroness, Lady Parminter, and the noble Lords, Lord Stunell, Lord Krebs and Lord Kennedy, for speaking to this amendment. We share a common goal of wanting all new homes to be very energy efficient. I wrote to the House last week setting out the Government’s intentions on this matter.

Over the previous Parliament, we significantly strengthened the energy performance standards for new homes—a 30% improvement on the requirements before 2010. I thank the noble Lords, Lord Stunell OBE and Lord Foster of Bath, for their excellent work as Building Regulations Ministers in the coalition Government in delivering significant improvements in standards for new homes. New homes built to this standard are very energy efficient. They have A-rated condensing boilers, double-glazed windows with low-energy glass, and high levels of insulation and airtightness in their construction. These standards are reducing energy bills by an average of £200 annually for a new home and saving carbon, compared to standards before 2010.

The most recent changes to the standards came only in April 2014, and we think it is right to give the housebuilding industry breathing space to build these highly energy-efficient homes before making further changes. There are also concerns that making homes even more energy efficient and airtight could contribute to the risk of overheating in new homes. The Committee on Climate Change, which the noble Baroness, Lady Andrews, referred to, raised this in a report published in June last year. This is another reason to let the recent changes bed in and to allow time for a better understanding of the overheating issues raised in the report.

It is also recognised that the latest standards have pushed the fabric energy performance of homes to the point where further increases may result only in marginal energy efficiency returns. To meet the higher standards, housebuilders would need to consider further costly technical solutions for providing heat and power to the home—for example, photovoltaic panels, solar hot water systems, and air or ground source heat pumps.

However, we are not ruling out further improvements to standards. We know that they need to be kept under regular review, and we are committed to doing this and to introducing any cost-effective improvements to the standards. This review will include meeting our obligation in the energy performance of buildings directive to undertake a cost-optimal assessment of our energy efficiency standards. It will involve seeking evidence on the costs of energy efficiency measures and the benefits in terms of fuel bill savings and carbon savings. Current standards will be assessed against these to see whether they are cost optimal. If there is room to go further, the directive requires member states to take action to strengthen these standards.

As part of the process, we will seek the expert views of the Building Regulations Advisory Committee. We would also welcome evidence from the industry and others. In particular, we would like to receive evidence from the Committee on Climate Change, as well as from noble Lords in this House. We expect work to conclude in the autumn, to give time to reflect on the conclusions, to report to the Commission next year and to consider what needs to be done in any future Building Regulations. We would be happy to keep noble Lords apprised of the progress with the review and its conclusions.

The directive also requires us to introduce nearly zero energy building standards for new public buildings from the end of 2018 and for all new buildings from the end of 2020. We have already transposed the aims and timings of this requirement into the Building Regulations. I hope this reassures your Lordships that we are committed to a review and to introduce nearly zero energy building standards by the end of this Parliament, and therefore that the proposed clause is not needed.

In addition, the proposal does not cover a significant proportion of new homes—flats in high-rise blocks, of which we see so many in London. The carbon compliance level for flats in the proposed clause is based on work undertaken by Zero Carbon Hub for flats in blocks of up to four storeys only. The hub recognised that more work would be needed to develop levels appropriate for high-rise blocks. For instance, the use of photovoltaic panels, which the hub considers the most cost-effective means of meeting the levels proposed in the new clause, is more limited on high-rise blocks because there is proportionately less roof space available per apartment in the block. Any changes to the Building Regulations flowing from the upcoming review will require a full consultation, which will include draft technical guidance on how to meet the changes—guidance that will cover all homes, from detached houses to high-rise flats.

As well as being unsuitable for high-rise flats, it is not prudent to set requirements such as this in primary legislation. If in the light of consultation there needed to be any slight adjustments to requirements, we would not be able to do that without further primary legislation. We also do not need new powers to set energy performance standards in the Building Regulations, as the Building Act 1984 already allows us to do this. We must also remember that the Building Regulations set minimum standards for all homes—big and small—and cover all of England, including areas where homes are much needed but where there might be viability issues.

The Federation of Master Builders has pointed out that increased construction costs to meet higher standards have a greater impact on smaller builders. Higher regulatory standards may also make housing development unviable in some areas. The federation, which represents more than 13,000 small and medium-sized builders, was supportive of last July’s productivity plan announcement on zero-carbon homes, saying at the time:

“Small local builders typically build more bespoke homes, with a strong focus on quality and high standards of energy efficiency. Yet over recent years it has been these smaller firms which have been hit disproportionately hard by the rapid pace of change. This burdensome regulation came at a time when SME house builders were beginning to recover and build more new homes which is crucial if we want to keep pace with the demand for new housing. The Government is therefore right to remove the unnecessary zero carbon standards which threatened to perpetuate the housing crisis … There has been an increasing feeling that the standards were in danger of running ahead of the industry’s understanding and ability to deliver”.

We therefore need to consider whether it is realistic for the majority of builders to deliver even higher standards without unduly affecting site viability or housing delivery.

The noble Lord, Lord Stunell, asked about costs and prices in Hertfordshire. I cannot provide those figures at this point, but I have some more general information, which is that construction costs nationally for new homes have increased by just over 2% a year over the past five years. Land prices have risen by about 7%, including inflation. Those increases in land prices and construction costs, which fall on housebuilders, have not been converted by increased house prices, which have risen by only 4%, so there is a potential viability gap. Where land prices have not risen or land values are very low to begin with, landowners are less likely to be willing to release land if housebuilders have to reduce the price that they can pay for land in order to offset costs.

Volatility is another factor. There is significant regional variation in land costs for residential development, and prices can be volatile at local level, as we know. That volatility can increase the risk to housebuilders.

Therefore, although I appreciate the intention behind the new clause, I hope that I have reassured noble Lords that it is unnecessary, given that the Government are absolutely committed to completing a review of standards. I therefore ask the noble Baroness to withdraw the amendment.

I thank the Minister for her reply, and thank noble Lords who have spoken in support of the amendment: my noble friend Lord Stunell, the noble Lords, Lord Kennedy and Lord Krebs, and the noble Baroness, Lady Andrews.

The Minister seems to be repeating some of the objections raised in Committee. I say that most respectfully, because I have been most grateful for the way that she has engaged with us one to one to listen to our arguments, as other noble Lords mentioned.

I have not heard anything this afternoon to change my view of why the amendment is needed. The Minister again makes the case for a breathing space being required, but these standards were agreed by the industry before the Chancellor took them out of the process last year. She talks about not ruling out a review, but why do we need to wait for a review? She has been unable to provide any evidence that the amendment would stop what we all want, which is for more homes to be built. She has not countered the evidence we have provided that it will lower energy bills, which is so important to countering fuel poverty. She has given us no answer as to how the Government will meet their greenhouse gas emissions targets if they do not take up the opportunity that we are providing in the Bill, given that buildings are the most cost-effective means to make reductions to meet our greenhouse gas targets.

On that basis, with regret, I wish to test the opinion of the House.

Amendment 119

Moved by

119: After Clause 143, insert the following new Clause—

“Affordable housing contributions in small scale development

(1) Local planning authorities may require sites falling within subsection (2) to make an affordable housing contribution, in cash or kind, determined by the requirements of the housing market of that area.(2) Authorities may require contributions from—(a) developments of 10 units or less, and developments which have a maximum combined gross floorspace of no more than 1000sqm (gross internal area), and(b) developments in a rural area or an area where—(i) planning permission for the site was granted wholly or partly on the basis of a policy for the provision of housing on rural exception sites;(ii) the site is in a national park or an area with equal protection to that of a national park; or(iii) the site is in an area designated under section 82 of the Countryside and Rights of Way Act 2000 (designation of areas) as an area of outstanding natural beauty.(3) In subsection (2) a rural area is defined as—(a) any settlement with a population of fewer than 3,000 people at the most recent national census, or(b) any settlement with a population of between 3,000 and 10,000 people at the most recent national census, and designated as a rural area by the Secretary of State following representations from the relevant local authority.”

My Lords, I rise to speak to Amendment 119. I am grateful to the noble Lord, Lord Best, the right reverend Prelate the Bishop of St Albans and the noble Baroness, Lady Parminter, for their support. I start with huge thanks to the noble Lord, Lord Best, and the noble Lord, Lord Cameron of Dillington, for the tremendous work that they have done on this Bill on behalf of rural areas. The negotiations with the Government have been assiduous, and the Minister has been in listening mode.

I am delighted that the Government have agreed to exclude rural exception sites from the requirement to build starter homes and that they have agreed in principle to enable councils to retain their remaining housing stock in rural areas with an exemption from high-value sales requirements. Of course, we wait to see the fine print of the government amendments but, despite the fact that the Bill was regrettably not rural-proofed when drafted, there now appears to be a real understanding that rural areas have very specific challenges if they are to remain as vital and vibrant communities.

The Government recognise that social housing in rural areas needs protection, but much more is also needed. The economic and social viability of our rural communities is dependent on there being a mix of housing, including affordable homes. With an acute shortage of affordable housing in rural communities, I simply do not understand why the Government are trying in Clause 143 to reintroduce the restrictions, already overturned by judicial review, that would mean that local planning authorities should not seek affordable housing for sites of fewer than 10 units.

As most residential development in rural areas is on sites of 10 units or fewer, the ability to seek affordable housing contributions on site, or as a commuted sum from these sites, is critical. In Shropshire, for example, 92% of its development is on sites of fewer than 10 units, and 86% on sites of fewer than five units. For Derbyshire’s rural local authorities between 2011 and 2014, 85% of their committed and completed development was on sites of 10 units or fewer. In 2014-15, 55% of affordable homes in villages were through Section 106 contributions on market sites. Much of this delivery is on sites of fewer than 10 units. In Shropshire, for example, 89% of its rural Section 106 affordable homes were on sites of fewer than 10 units. Because these market sites include homes to meet local affordable housing needs, they are much more likely to gain community support and avoid the delays and costs that result from opposition to development, so it is a win-win situation for the developer and for the mixed housing needs of the community.

In the same period, 44% of rural affordable homes were provided through rural exception sites, whose principal purpose is to meet local affordable housing needs. In seven areas, more than 50% of their rural exception site schemes were of 10 units or fewer, and in four of these more than 70% of their rural exception site schemes were of 10 units or fewer. As we heard in Committee, these sites are a critical source of commuted sums. As the availability of the government grant has declined, these are a vital source of capital funding, particularly for rural exception sites. Shropshire Council has raised £2.5 million from commuted sums, which it has used to help housing associations build 250 new affordable homes, and in the last three years Cornwall Council has raised more than £790,000 from its rural developments, all of it from sites of 10 units or fewer.

I fear that once an affordable housing requirement is removed, the cost to rural exception sites will rise to a point where it is no longer viable to build affordable housing, but others, such as the noble Lord, Lord Cameron of Dillington, will be more aware of the realities. A national threshold is neither necessary nor appropriate. In a survey for the rural housing policy review, 79% of rural local authorities said that they had adopted policies that sought an affordable housing contribution from sites of fewer than 10 units. All had a rural exception site policy.

There is clear evidence from the short period last year when the NPPG changed to prevent affordable housing being sought from small sites that, without this amendment, there would be a huge and adverse impact on the amount of affordable housing built in rural areas. During the time the policy was in place Harrogate lost 64 affordable homes that would otherwise have been provided on schemes of fewer than 10 units. Shropshire has calculated that it would lose £2.65 million annually if it was unable to raise commuted sums from sites of 10 units or fewer. Within three days of the announcement, Derbyshire Dales had already lost £225,000 of commuted sums, as developers withdrew sites on which planning negotiations were well advanced.

In Committee, the noble Lord, Lord Best, spoke of the housing policy review, which he chaired. Its top recommendation was to reverse the Government’s policy at that time, which aimed at the removal from local authorities of the power to require affordable housing on sites of 10 homes or fewer. Everyone involved in rural housing to whom I have spoken during the passage of the Bill endorses that position.

The Minister may well say that removing the need for affordable housing from small units will help SME builders, but many with far greater knowledge than me would say that that was wrong. To manage their cash flow, small builders are heavily dependent on the guaranteed income from the sale of these homes to housing associations. I know of several sites on which the houses on the open market languish, causing a headache for the small local builder, but they are able to get by thanks to the sale of homes to housing associations.

One of the many tensions that runs through the Bill is between the reality of increased centralism that the Government believe is necessary to get the country building and their rhetoric of localism. Yet the Minister has acknowledged on many occasions that devolution of power, not centralisation, should be the way forward, and that is the rationale for this amendment. Noble Lords on all Benches understand that sites of under 10 units are vital to ensuring the appropriate mix of housing in rural communities and that the funding of these sites is critical. They also appreciate that the decisions about the mix should be taken at local level, where the needs of citizens and the communities are best understood and where there is most likely to be support for the building of new homes.

This amendment does not in any way seek to undermine the Government’s plans to increase the number of homes built on small sites. We need more homes in rural areas. It merely seeks to ensure that local authorities will still be able to meet the affordable housing needs of their rural communities in ways appropriate to their circumstances. Without this amendment there will be fewer homes in rural areas for those unable to buy, which could result in the loss of another young family, a worker in a local business or a teacher or carer, and a greater vulnerability of an older resident without the support of family.

I know that the Minister is in listening mode and that there have been discussions about a consensus, but I wait to hear the details. My strong preference would of course be for her to accept this amendment, but I am looking for something in the Bill, because that is what rural communities want and would demand. I beg to move.

My Lords, I support the noble Baroness, Lady Royall. I do not wish to prolong this debate too much, having already spoken on this matter in Committee.

We all know the issue: we need more affordable homes for local people in rural areas. There are various ways of trying to secure these. We used to get grants and build housing association homes and council housing but we do not do that any more: it accounts for about only 3% of the output. We have rural exception sites, where you get planning consent only if you are going to build housing for local people—and I am very pleased to note that such sites get special treatment in the Bill.

The third and largest way in which we have secured affordable housing for local people in rural areas has been by requiring housebuilders to make a proportion of all the homes they build affordable housing, either for rent or for shared ownership. This has produced about 55% of all the rural housing that we are now churning out. I say “churning out” but we are still producing a trickle—we ought to be producing about twice as much in rural areas—and we do not want to see any measures that diminish what we are already doing. It is a small enough contribution as it is, and the Government’s idea that in any development of less than 10 homes there will be no requirement for affordable housing, either for rent or for shared ownership, will cut out a very big chunk of that 55% of the affordable homes that we are building.

Why on earth would the Government do that? The answer is that small builders complain that there is too much red tape if they have to provide affordable homes instead of just building executive homes, homes for commuters or retirees, or second homes and the rest. They say, “This slows us down. We can’t get back into business after the big crash. We smaller builders need this extra help”. However, those of us who have looked at this in some depth do not believe it to be the case. There are several reasons why we do not feel that this provision will unleash a lot more housebuilding in rural areas.

First, the housebuilder will be able to pay more for the site because they will have no obligation to produce affordable homes. The landowner, who will know that, will put up the price, and the value will be not in the affordable housing but in the higher value that can be paid to the landowner. While we are all delighted to see the landowner do well out of this, it is not really the point, and it will not help the housebuilder to buy land more cheaply.

Secondly, big housebuilders will phase developments that were going to be of 25 or 30 homes into two or three chunks that come just within the limits. That is the way housebuilders will work it so that they do not have to provide any affordable housing, even though in the end there will be 25 homes on the site—so that will not work, either.

Thirdly, it will be more difficult to prevent the opposition that the nimbys—the local opponents—are bound to bring against developments in villages if none of the homes that are to be provided on a site is for local people. It will antagonise local residents rather than securing support for development in rural areas. So we do not think that letting small builders—and indeed bigger builders, who, as I say, will develop in phases—off the hook will produce more homes overall, let alone more homes for local people. So this amendment is about dropping this requirement.

We have had productive meetings with Ministers. I am grateful to the noble Baroness, as always, for listening intently to what we have attempted to achieve, and there has been a good deal of sympathy for the line we are taking. I just urge Ministers to recognise that this way of producing affordable housing would cost the Government nothing. Ultimately, it would come out of the land value through the housebuilder. We would be providing affordable housing on the back of the development that was going to happen in those villages. There is no requirement for a government subsidy, so it is thoroughly commendable. Starter homes are going to cost something like £8.6 billion, and right to buy for housing association tenants will cost a little over £8 billion, and possibly £9 billion, over four years. Those are big numbers, but in this case it is affordable housing for free. So I strongly recommend that the Government think of backing off from their proposal, which will diminish the output of rural housing.

Where I think we have got to in our discussions with the Government, if I can put this out in the open for your Lordships, is that they are keen to see an exclusion from the rule that if there are fewer than 10 homes, no affordable housing is required, to cover national parks and areas of outstanding beauty. Although I fear it may be done through regulations, whereas we would wish it to be in the Bill, I think that the Government may be willing to say that they would enter into a discussion with each local authority and allow, where the case can be made, for the rule that 10 units means no affordable housing to be dropped in other rural areas as well. It would not be too tightly defined but would be across the piece in rural areas. However, we will wait to hear what the Minister says on this. There is still Third Reading to go, but I am now slightly nervous that we will not be able to reach an accommodation, as we had hoped, before then. But I will leave that to the noble Baroness, Lady Royall, to determine.

My Lords, the housing situation in the villages of rural Northumberland leads me to want to support any amendment and any mechanism that will encourage and not discourage the continued provision of houses to rent in villages. The atmosphere here today, when Members in all parts of the House are showing a genuine concern for the problem of rural housing, reminds me of my early days as a councillor on a rural district council in Northumberland, at a time when members in all parties were absolutely convinced of the need to provide rented housing in villages. It was not a political issue.

Unfortunately, in the intervening years, many of the council houses that were built in those villages have, because of right to buy, gone into either the second home or the retirement market—because they are in beautiful places, by the seaside or among the hills of Northumberland. Therefore, I encourage Ministers to continue the discussions in which they have engaged and offer us some assurance before the Bill goes much further that we will not see the loss of one of the mechanisms by which we can get some rented housing into villages: a mechanism that brings housing associations into the management of these properties, and therefore protects them for future rented use in a way that local authority housing no longer does.

It is my fervent hope that this House will ensure that Parliament makes provision for the future of rural housing by understanding that it requires different mechanisms from what may be appropriate in urban areas where we are dealing with larger estates and more housebuilding. Rural areas are different and their needs are very serious.

My Lords, I have not spoken on this Bill before. However, I would like to add a practical point from the part of the West Country where I live, where there is both very large building going on—5,000-plus houses, some on a flood plain—together with very small building on small sites. What we are being told locally is that the various builders, particularly those on the larger sites, are now going back to the council to ask not to have to provide as much affordable housing as they were originally asked to do. It really is a very serious matter down in our part of the West Country. As everyone knows, affordable housing is so important that every step that can be taken to support it, I would hope that this House would support.

My Lords, first, I draw attention to my interests on the register; in particular, I am president of the National Association of Local Councils. Although not in the register of interests, I chair a neighbourhood plan in a rural village.

I spoke on this in Committee to support the noble Lord, Lord Best—I was a member of the rural housing review that he conducted. I speak today in support of the amendment from the noble Baroness, Lady Royall. However, primarily, I want to urge the Minister to address the very real issue that is being raised here. I will not repeat all of the comments that I made before about the importance in small, rural communities of making sure that there are homes that the people who work in the shop, the pub, on the farm and with the children in the local school can afford to live in. I believe that that is something that unites the House. I simply say that in a world in which we want to protect many rural villages and communities from overdevelopment, one solution to affordable housing—simply to build enough houses so that prices come down—is not available. That means that if we are to provide homes for the people who do the work of the countryside, we have to do it in the form of affordable housing, whether it is to rent or through part ownership. As the noble Lord, Lord Best, said, the rural housing review made it clear—I believe that the Government know this—that the majority of such homes are provided on small sites as a result of affordable housing requirements. These are not sites which are unviable for development. There may be small urban sites where the costs of development are such that providing affordable housing is genuinely difficult to do viably, but in these cases, typically, the land has enormous value when given permission for market housing. While landowners in some cases may seek to maximise their returns, I think that it is legitimate, right and indeed part of neighbourhood planning that we say that the returns they make should be shared with the community by providing some affordable homes. Some landowners will do so voluntarily, but too often that will not be the case.

I took part in a meeting with Ministers just after the rural housing review was published. I believe that they understood the issues raised. I simply say that this is not just about the AONBs and the national parks but is about giving assurance to communities or villages that may go through the neighbourhood plan route, or may simply have a parish plan, working with landowners and their local planning authority, to allow them to take that decision about those housing needs and to address them. I believe that Ministers understand that. I believe that it unites the House, and I hope that the Minister will be able to give some reassurance now.

My Lords, I support this amendment in the name of the noble Baroness, Lady Royall, and others. The arguments have all been very well made, particularly by the noble Lord, Lord Best, with his great experience, so I want merely to emphasise a few facts.

First, as we all know, the need for affordable homes is as great in the countryside as anywhere, because on average houses are more expensive and average wages are lower. The largest long-term black cloud hovering over nearly all less well-off rural families is the issue of, “Where on earth are our children going to live?”. Secondly, rural areas currently have less than half the number of affordable homes per population than urban areas. I say “currently” because without this amendment, or something like it, the situation is about to get very much worse. The third fact—and this is really important and has been raised by all speakers— is that Section 106 homes on sites of fewer than 10 houses provide more than 50% of all affordable homes in the countryside.

I know that the Government have blundered into this now legal cul-de-sac and left themselves with few means of a U-turn, but I hope that they will somehow find a way out of this most unfortunate and ill-considered situation and turn it into something that is at least tolerable.

I believe that during the passage of this Bill the Government have grasped the seriousness of rural housing problems and genuinely tried to help—I thank the Minister and the Secretary of State for their parts in that—but in many ways this amendment covers the most important issue that we have dealt with because of the high percentage of affordable rural houses at stake here. There are not many opportunities to build houses in the countryside because of the lack of sites available; but when and where it is possible, it is crucial that we grasp the opportunity to add to the number of affordable houses available for locals.

I will spare your Lordships my thoughts on how all Governments, without exception, seem to drift from their early ideals of localism to ever-stronger central government controls, but it should be up to local councils to decide whether they need to support their local small builders, which is the case being made here by the Government, or, alternatively, the numerous young families living in crowded accommodation housing sometimes two or even three generations. I hope the Government will find a way of accommodating the very important intentions behind this amendment and genuinely satisfying us all that they will change their current approach.

My Lords, I support this amendment. My diocese covers vast and diverse rural areas. The issue that is constantly raised by those who live there is affordable housing for their children. We too often use the language of protection or preservation when we should be talking about development and creating the future. If we end up with small rural communities without young people in them, which in some cases is what is happening, we will have a problem 20, 30, 40 or 50 years down the line. I support the amendment and trust that we will give due attention to it.

My noble friend Lady Royall of Blaisdon and other noble Lords have made a compelling case for contributions to affordable housing from small-scale developments. As my noble friend said, rural communities are not just small-scale versions of urban areas; they are quite different. They have their own strengths and challenges that have to be met. We have to understand that and enable outcomes to be delivered that help rural areas to prosper.

Housing that is affordable is one of the greatest challenges we face. The proportion of homes used only at weekends or as holiday accommodation risks making our villages and small communities unsustainable. Housing has to be available in various tenures for people who want to live and work locally and keep communities alive: for teachers to run the village school; for people to run rural post offices, shops and pubs; for health workers to keep community health facilities open and for farmworkers to sustain the rural economy. Not all such people will be able to afford to buy their own home, so the provision of social housing is a must to keep communities alive. We have heard that only 8% of housing in rural areas is owned by housing associations and local authorities. My noble friend’s amendment would give a power to local authorities to require, where they decide they want to, an affordable housing contribution in cash or in kind, determined by the requirements of the local area. That is an excellent idea. It has localism at its heart and the Government should support it.

The amendment defines what is meant by a “rural area” and the parameters of the policy. I hope the Minister will have some positive words to say, as alluded to by the noble Lord, Lord Best. However, if my noble friend is not satisfied, I hope she will test the opinion of the House, and I am sure that she will have support on these and other Benches. I hope that that will not be necessary today, that discussions can continue and that we can come back to this matter at Third Reading.

My Lords, I thank the noble Baroness, Lady Royall, for raising an issue that I think is seen as important on all sides of this House. Her amendment would enable local planning authorities to require affordable housing contributions, in cash or kind, from small-scale developments and from developments in rural areas. I hope I can provide assurances of how we propose to use the power to support housing delivery and the fact that we recognise the issues faced by rural areas in particular.

During debate in Committee I explained that local authorities currently can set affordable housing policies in their local plans and use Section 106 agreements to secure affordable housing delivery and agree financial contributions in lieu of on-site affordable housing contributions.

We all agree on the importance of affordable housing, which is why the Government announced in the spending review investment of £8 billion to deliver 400,000 affordable housing starts by 2020-21. However, we know that, on particular types of site, the way in which affordable housing contributions are determined can delay development and affect housing delivery. Clause 143 will enable us to bring about a more consistent approach to how Section 106 agreements can be used in relation to affordable housing provision. This could include conditions on how planning obligations are sought for affordable housing. These can be varied by the type of site to which they apply.

We know that the details of any restrictions will require careful consideration to deliver benefits in enabling overall housing delivery while taking careful account of the need to deliver affordable housing. Measures implementing this power will be set out in regulations which will be subject to the affirmative resolution procedure, so noble Lords will have further opportunity for scrutiny.

It has been made clear in previous debates on this clause and others, including the debates on starter homes and high-value assets, that rural areas face distinct challenges. Concerns have been raised about the impact that the Bill could have on rural areas and we are committed to considering how rural exception sites are given discretion in any compulsory starter home requirement and how we can consider excluding them from high-value asset payments.

The power to make regulations in Clause 143 is a broad one and allows us to take into account the concerns raised. I am happy and willing to continue to work with the noble Baroness, Lady Royall, and the noble Lords, Lord Cameron and Lord Best, on what these regulations will contain. However, I cannot commit to bringing forward an amendment by Third Reading.

We recently heard from the Communities and Local Government Select Committee about the importance of monitoring the effect of this policy. By bringing forward any restrictions or conditions through regulations we can also ensure that they can be more easily reviewed so that they maximise the benefits for housing delivery more broadly.

I hope my reassurance and recognition of the particular issues faced by rural areas will enable the noble Baroness to withdraw her amendment.

My goodness, my Lords, this is a difficult one, is it not? Many vital points have been raised in this short debate, and I am grateful for the support that my amendment has received.

Everyone has made the point that 50% of affordable housing comes from Section 106 agreements, which is a huge amount for housing in rural areas. As the right reverend Prelate said, we should be talking about development and creating the future and not only about protection. The Government have already recognised that protection is needed, but we are looking to the future so that we can develop our communities in the countryside and ensure that they are vital. As the noble Lord, Lord Taylor, said, local authorities in all rural areas, not only those in AONB areas and in national parks, are looking for consideration and assurance that they will be able to continue to have affordable homes on Section 106 sites.

I know that the Minister wants to help, and she has been very generous with her time in discussions. We had a discussion about an hour and a half ago, when it was hoped that something could be put in the Bill—we need something in the Bill—and she said that she is not only content but happy to continue discussions with your Lordships about regulations and what should be in them. However, she has said that she could not come back with anything firm before Third Reading. I am tempted to continue discussions with the noble Baroness about how we might take this forward. However, I would do so only if she can give me permission to bring this back at Third Reading—in only two days’ time—if I feel that our negotiations are not getting anywhere. If she cannot give me permission to bring this back in the form of a similar amendment at Third Reading, I am afraid that I shall have to seek the view of the House. I ask the noble Baroness to give me permission to bring this back at Third Reading so that we can continue discussions in the next two days.

My Lords, regrettably, I cannot. I therefore leave it in the hands of the noble Baroness as to what she would like to do.

In that case, with great regret—I believe the noble Baroness is doing everything she can—I have to seek the opinion of the House, because this is such an important issue for housing in rural areas.

Amendment 119A

Moved by

119A: After Clause 143, insert the following new Clause—

“Sustainable drainage systems

(1) The Water Industry Act 1991 is amended as follows.(2) After section 106(1B) (right to communicate with public sewers) insert—“(1C) The right under subsection (1) is subject to section 106AB.” (3) After section 106A insert—“106AB Sustainable drainage systems (1) A person may only exercise the right under section 106(1) in respect of surface water if the relevant drainage system is designed and constructed according to—(a) the non-statutory technical standards for sustainable drainage systems or any replacement standards as may be published by the Minister from time to time; and(b) the planning permission or development consent order for the development drained by the drainage system in question.(2) In this section “drainage system” has the same meaning as in paragraph 1 of Schedule 3 to the Flood and Water Management Act 2010.””

My Lords, this amendment would ensure that 1 million new homes are built with sustainable drainage systems, or SuDS, helping to protect homeowners against flooding and delivering wider environmental benefits. The ministerial response in Committee was that we need to allow time to see presumption in planning working, given that it was introduced a year ago. However, having spoken with a number of stakeholders, they confirmed that the Government are not putting in place any comprehensive monitoring, such as of how often SuDS are included or not included in new developments or how often viability is cited by developers as a reason for not including them. Nor are they monitoring the quality of the SuDS being introduced, with developers’ proposals tending to be engineering based, like a tank in the ground, which rarely deliver the amenity, water quality or biodiversity benefits of soakaways such as swales and ponds.

The evidence we have is that the system is not working, and I look forward to the comments of the noble Lord, Lord Krebs, who I am sure will have more to say on this matter. Paul Cobbing, the chief executive of the National Flood Forum, has confirmed since Committee that there are significant problems with the delivery of SuDS. The National Flood Forum works with a great many local authorities and communities around the country, and he says that these views are being echoed fairly consistently.

The Minister said in Committee said that the introduction of our amendment could delay housing developments because of the complication of the consenting regime being separate from that for planning applications. We have reflected on that, and this amendment takes the core of the proposal put forward in Committee—that of ending the automatic right to connect to conventional drainage—while avoiding the extra bureaucratic steps. Our amendment means that connection will be the last resort when all other sustainable drainage options have been excluded. Crucially, it will apply to all sites, unlike the existing provisions, which exclude small sites, of which there are around 100,000 approved applications a year and which impact significantly on the flood risk to others.

We believe it is important not to lose sight of future homeowners and the need to protect them from the misery of flooding. I welcome the launch this month of Flood Re, the government-backed scheme to provide affordable insurance to those at the highest risk of flooding, but homes built after 2009 are excluded. Implementing quality SuDS schemes in all new homes would be a low-cost measure—the Government accept that they are low-cost—towards flood protection. Support for delivering flood-resilient homes has come from the Institute of Civil Engineers, the Chartered Institution of Environmental and Water Management, the Royal Institute of British Architects, the Wildfowl and Wetlands Trust, every water company and many others. I shall quote from just one of the bodies that has written in support of the amendment, the National Flood Forum: “Your proposed amendment is the single thing that would make the greatest immediate difference”. I beg to move.

My Lords, I am grateful to the noble Baroness, Lady Parminter, for introducing this amendment so eloquently. We discussed it at some length in Committee and therefore at this point I will be brief. As the noble Baroness has said, the Government’s position is that the changes introduced in April 2015 need time to bed down so that their impact can be assessed further. The noble Baroness has already referred to exactly how this assessment will take place, but it is important to note that while we wait for the review, many more new homes are being built, and some of them will be at risk of flooding if we do not have proper and sustainable urban drainage to deal with surface water flooding.

As I said in Committee, as long as developers have an automatic right to connect to existing sewerage pipes, there is no real incentive or need for them to implement SuDS. I referred then to the survey undertaken by the Adaptation Sub-Committee of the Committee on Climate Change, of which I am the chairman and thus declare an interest. We surveyed about 100 planning applications in flood-prone areas and found that only 15% of them had installed SuDS. Barratt Homes has subsequently reported that in 2014-15, a third of its developments contained no SuDS provision. At the moment the policy is simply not being taken up in the way it should be. Moreover, when SuDS are installed, it is not clear who is responsible for maintaining them. The amendment seeks to ensure that SuDS are the default option in new developments. It achieves this by removing the automatic right to connect to existing sewerage systems, which would become the absolute exception once all other options have been explored.

As has been said by the noble Baroness, Lady Parminter, this amendment has the support of many industry, professional and environmental bodies, including most importantly Water UK, which represents the industry that has to deal with drainage problems when they occur. I should like to quote the Construction Industry Council which has said that,

“the Ministerial Statement that now guides planning was not rooted in all the research and development that had been undertaken by Defra over the last 10 to12 years”.

This has left,

“voids in policy as aspects of Schedule 3 are now unresolved”.

It is worth pointing out that, in this regard, England is lagging behind the devolved Administrations. Northern Ireland has ended the automatic right to connect; Scotland has a general requirement for SuDS in new development; and Wales has much more extensive SuDS standards than those in England. We have heard the debates in Committee. We know that Parliament has already legislated for the requirement for SuDS in Schedule 3 to the Flood and Water Management Act 2010, but the Government have chosen not to implement it. We know that Sir Michael Pitt, in his review after the 2007 floods, recommended that SuDS should be incorporated in all new developments, so now is the time for the Government to respond to this amendment by saying, “Yes, we agree”. This is a very simple and straightforward way of ensuring that SuDS are implemented and that new developments—the very large number of new homes that will be built—are properly protected from the risks of surface water flooding.

My Lords, my noble friend Lady Young of Old Scone has signed the amendment but is unable to speak to it. She has given me the grave responsibility of supporting it in her name. She is such an expert on the environment, including sustainable drainage, that I would be taking a risk if I went into the technical detail, so I shall confine myself to a few more general statements.

We have 5.2 million homes at risk of flooding, according to the commission of inquiry into flood resilience, published in March last year. Clearly, policy needs to shift the focus away from flood defence towards flood resilience. That is the case for sustainable drainage.

We heard evidence in the Select Committee on the Built Environment on flood risk. The committee was sitting just at the point when there was so much flood damage across the UK. All the evidence emphasised the fact that the provision of sustainable drainage systems was of key importance to future urban water management. Essentially, SuDS are designed to mimic natural drainage systems, such as green roofs, ponds, wetlands and underground storage. They provide an alternative to drainage of surface water through pipes to watercourses, which increases flood risk.

The Government’s decision not to implement Schedule 3 to the Flood and Water Management Act 2010, which would have established a separate approval regime, is rather perverse and was strongly criticised. The construction industry, no less, told the committee that the decision had created voids in policy, uncertainty in planning policy interpretation, the abandonment of the concept of draining as critical infrastructure, no structure for the adoption and maintenance of SuDS, as we have already heard, and no measures to address flood resilience at a local scale. This is very strong language from a responsible, professional body.

Amendment 119A comes with a whole raft of professional and expert support. A range of authoritative environmental bodies have supported the intention of the amendment. Those bodies have pointed out, for example, that SuDS can be installed and maintained at a low cost and are cheaper than maintaining conventional drainage. We have good ecological and economic arguments for SuDS.

The problem is that those same bodies have emphasised that the presumption in planning that SuDS should be included in new developments is not working. Those bodies agree, too, that the decision not to implement Schedule 3 has created uncertainty of interpretation over what is acceptable. It has made drainage simply a factor in the planning mix rather than critical infrastructure, partially implemented in places and of variable quality. It is that distinction between the status and guarantee of SuDS as infrastructure and a planning choice that is weakening and debilitating the policy. That seems to be what is happening. In short, the Government have designed a system through using the planning guidelines adopted instead of the legislation, which is almost bound to lead to low take-up and low quality, so increasing flood risks. There is collateral damage as well in terms of habitats and human life.

This also gives the developers an upper hand. If they suggest that there are practical or economic barriers, few local authorities can answer back. There is not the same level of expertise to challenge this. As we have heard, only England is being so short-sighted. The devolved Administrations have indeed taken more proactive steps to implement sustainable drainage. So, we have an opportunity for catch-up. I do not believe that it is enough at this point to say that it is good enough to wait and see. Many more homes and developments could benefit if we act now, and that is what we should do. I hope that the Minister will feel able to accept Amendment 119A.

My Lords, I thank the noble Baroness, Lady Parminter, for raising this very important issue, and the noble Baroness, Lady Andrews, for pointing out the feeling of the House on the matter. I share it; I know, following the devastation of this winter’s floods, that we are all keen to ensure that new housing development is brought forward only when it is safe from flooding and without increasing flood risk everywhere.

Following the floods in December, the Government are taking action but we can go further. I am keen to listen to the House and consider how we can respond to the proposals. I recognise that there is unease about the ability of the planning system to deliver sustainable drainage. The new, strengthened policy came into effect in April last year and it will take some time for developments affected by that policy to reach completion before it is possible to reach a clear view on its effectiveness. To date, the vast majority of the available evidence on take-up of sustainable drainage systems predates the introduction of the policy change.

However, following helpful conversations with noble Lords last week, I can confirm that, in response to the amendment, we commit to undertaking a full review on the strengthened planning policy on sustainable drainage systems by April 2017. I can also confirm that we will take action to make changes, including closely examining the need for any legislative measures, if evidence shows that the strengthened policy is failing to deliver. I am keen that the review is informed by a wide range of experiences and hope that noble friends and members of the Adaptation Sub-Committee will play an active part in taking it and any recommendations forward. Officials are developing a plan to identify what further work is needed to improve our evidence on the effectiveness of the policy, including the take-up of sustainable drainage systems in new development. They will welcome the opportunity to work with stakeholders on this.

As well as these commitments, we have established the national flood resilience review, led by Oliver Letwin, to assess how the country can be better protected from future flooding and increasingly extreme weather events. This review will identify any gaps in our approach and pinpoint where our defences and modelling need strengthening, allowing us to take prompt action. The review is due to report in the summer.

The Government are committed to ensuring that development is safe from flooding and the delivery of SuDS is part of our planning policy. We also recognise the importance and benefits of sustainable drainage systems in our planning guidance, for not only reducing the impacts of flooding, but removing pollutants from urban run-off and the added benefits for amenity, recreation and wildlife. I hope, with this reassurance, that the noble Baroness will feel free to withdraw her amendment.

I thank the Minister for her remarks and colleagues around the House for their support. The Minister made the point that some of the evidence we used predates the introduction of the presumption in planning. Some of it does; some of it does not. It would have been a lot easier for this House to hear the arguments more clearly if the Government had done any serious monitoring in the last year since this presumption was introduced. When, in Committee, the noble Baroness, Lady Young, asked the Minister what monitoring had been undertaken, the response we received, although I am grateful for the clarification, was that the Government had spoken to eight stakeholders. On an issue of such significance, I am afraid that conversations with stakeholders do not constitute significant monitoring of the problems, such as why developers can use the opt-out of viability so that they do not include sustainable urban drainage systems; the quality of the SuDS being introduced; and the other problems we referred to this afternoon.

There is quite clear evidence from the National Flood Forum and others, as has been articulated, of a problem now. Let us not forget that this presumption in planning excludes all small sites of under 10 houses. Particularly in rural areas, this is causing a major problem of flood risk. A review of the existing policy would not even look at that issue.

I welcome the initiatives that the Minister has made. She has gone above and beyond in trying to take seriously the issues we raise. We accept the passion that she has for this issue. She has articulated on several occasions in this House how serious the flooding issue is. We of course welcome the flood review that Oliver Letwin will introduce in the summer, but that is nothing new; it has been on the cards for some time. Our concern is that the Bill will introduce a significant number of new homes. The review that the Minister mentioned, which would conclude next April, might bring forward legislation, but, looking to my right to the noble Baroness, Lady Royall, there are issues such as forestry, which are the subject of government commitments. We know that the Minister takes forestry seriously, but we are still waiting for legislation on forestry.

On the evidence we have of the lack of monitoring of this issue over the last year, I do not feel, although I appreciate the steps that the Minister has made, that the option of a possibility of legislation, following a review that we knew was going to happen anyway, is enough for an issue considered so serious by this House. Therefore, I, again reluctantly, wish to test the opinion of the House.

Amendment 119AA

Moved by

119AA: After Clause 143, insert the following new Clause—

“Minimum space standards for new dwellings

In Part M of Schedule 1 to the Building Regulations 2010 (access to and use of buildings), after requirement M4 insert—“Internal space standardsM5 New dwellings shall meet the minimum standards for internal space set out in the nationally described space standard, March 2015.””

My Lords, I am short but tonight I shall be uncharacteristically brief in dealing with this amendment. We have heard already by implication tonight, and indeed on previous occasions, that we are concerned with not just the number of homes being built but what is being built. Earlier, we debated carbon compliance. This amendment deals with space.

I think it is generally recognised that the space standards of construction in this country are considerably less than those in Europe. Most of our counterparts there are building larger dwellings of all kinds, whether apartments or houses. In fairness, the Government produced some space standards last year, although it might be thought they are not particularly generous. For example, they provide that two-bedroom homes must have at least one double bedroom of 11.5 square metres, and that single bedrooms should have a minimum floor area of 7.5 square metres. Those are not exactly vast spaces. The standards also provide for a minimum floor to ceiling height of 2.3 metres, which is modest compared with that of dwellings which used to be built in this country. They also provide, helpfully, that any area with less than 1.5 metres of headroom,

“is not counted within the Gross Internal Area unless used solely for storage”.

This makes for pretty modest-sized accommodation.

In addition, an article in the Architects’ Journal, in explaining the provisions that came into force last year, pointed out:

“The government has also failed to make changes to a ‘loophole’ which would allow local councils to opt-out of the standards”.

The journal asserted:

“The requirements can only be applied where there is a local plan in place and where the viability of the development would not be compromised by adopting the standards”.

It was suggested that this may give rise to,

“concern that the changes would not be taken up”,

and implemented. Therefore, the purpose of this amendment is to ensure that all new dwellings will meet the minimum standards set out. Perhaps the Government will also consider when they will review these standards, and in particular whether they are satisfied that, compared with what applies in the rest of the European Union—whether we remain a part of it or not—they are adequate for the middle of the 21st century, which we are approaching. I beg to move.

My Lords, I will speak briefly on this issue, which I feel very strongly about. We are in a terrible place: because people believe there is insufficient land in our island to build, we cram homes on to the smallest possible areas. Through not releasing enough land, its value is bid up and it goes to those who will squeeze the smallest possible boxes into the tiniest possible area with the least possible facilities. We should have more generous minimum space standards. After the war, we built council homes with very generous room sizes and with gardens with space to grow food. We could learn from this.

We need to understand that only some 9% of our country is built on; half of that is parks and gardens. To build the homes we need adds a fraction of 1% to the built area. Even the south-east would still be 87% green fields, even if we built all the homes we need on such land, in that area, which we do not need to do. The argument that we cannot afford decent sized homes does not add up. It comes out of making too little land available. I will give three facts to the House. First, we build the smallest homes anywhere in the European Union outside Romania and Italy. That is because they build almost entirely apartments. They have a tradition of apartment living which we do not have here. An Englishman’s garden used to be important, but people rarely get that now. Around 40% of all homes built are flats, yet only 2% of the population say they want to live in them. We have got something immensely wrong there.

Secondly, we actually build smaller houses than we did in the 1920s, even including the workmen’s cottages which were very small even by today’s standards. Thirdly, we build homes half the size of those the Danes build, on average. It is a myth that we cannot afford the space to give an Englishman a decent home and garden, and it is high time that we changed that view.

My name is on this amendment and I support what my noble friend has said. The contribution we have just heard from the noble Lord, Lord Taylor of Goss Moor, gives us very important context in our understanding of the possibilities. We all need space as much as we need light. That was what Parker Morris recognised when the first space standards were set down, and so many people have benefited from those. We now face the opposite situation. Government policy decrees that it is optional for local authorities to adopt national standards. There will be many good ones that will want to do that because they recognise the health benefits of having proper space and light, but many more will be inhibited by the requirements that are attached, which are going to add more burdens and complications.

It is interesting how often this Government generate more bureaucracy while constantly railing against it on every occasion. There will, therefore, be another dimension to the postcode lottery: local authorities which recognise that space is essential to good health and family and social harmony and provide for it, knowing that the converse means greater family and social stress; and local authorities which will not do that. It will mean less room for children to do homework; for teenagers to have necessary privacy; for parents to have room to move. All those things make for well-being.

Nowhere is this more crucial than in areas where there are no planning standards at all. I raised this issue in last week’s debate on the conversion of offices into dwelling spaces. It was very late in the evening and I did not want to test the patience of the House, but the other issues we have discussed, such as the impact on the viability of town centres and the general viability of enterprise, make it timely to raise it again. In 2013, when the Government amended permitted development rights without planning permission, this was at first for only three years. In October last year it was made permanent. This has given rise to grave concerns, in addition to the very serious ones raised last week by noble Lords such as the noble Lord, Lord True. There is a great deal more to be said about this aspect of policy and its impact in evidence from local authorities as diverse as Bath and Camden. For example, the London Borough of Barnet told our Select Committee that because there are no planning standards for converting offices to domestic dwellings, local authorities have no control over important details such as space standards, dwelling mix and tenure. The London Borough of Barnet told us that:

“There are no planning standards, so you could theoretically build rabbit hutches, as people sometimes refer to them, if you wanted to, whereas planning standards that define a good-quality size of units are almost set in stone”.

I refer noble Lords to a recent report by RIBA, which pointed out that, of the 170,000 homes built last year, 20,000 were converted offices. As such, under the regulations, there are no planning standards which give safeguards for the new home owners. The conversions need not meet space standards or any other planning-based quality standards such as energy efficiency. Some of these apartments are no more than 14 square metres, which is about one-third of the national average. If noble Lords are sceptical, I invite them to look at the RIBA report: it is on the web.

Overall, this is serious. It weakens the ability of local authorities to secure good quality housing, and it will lead to a new generation of home owners who will be expected to manage in conditions which are neither ethical nor healthy. Given the number of homes that may well be coming forth through these conversions, I hope the Minister appreciates that these are inadequate and, frankly, unsafe conditions and that she will undertake to review the need for full planning conditions to apply to them.

I have some sympathy with the arguments behind it, but the amendment seems entirely the wrong one. The noble Lord, Lord Taylor, is absolutely right about the release of land. If one has a criticism of government, it is the very strong one that we have not made people release land. There is enough land in London to provide the homes we need if it were released. We have not done it; nor did the previous Government; nor the one before; nor the one before that. Yet all the way along we have known that the land is there.

However, it is not very helpful to bring forward an amendment which simply tells every local authority that it must do the same thing. I deeply disagree with the noble Baroness, Lady Andrews. You cannot just talk about localism and the postcode lottery. Local authorities have got to be able to make up their minds. The other day, I had a rather sharp disagreement with my noble friend Lord True because I happened to suggest that local authorities were not entirely without guilt in the provision of houses. He immediately jumped up to defend them. I happen to think that local authorities can be good and bad. We have to believe in them and give them the right to make decisions. The noble Baroness, Lady Andrews, is just wrong to say that we have to impose from the centre these particular requirements. It is acceptable to choose to have them or not.

I want local authorities to have that choice but I do not want the Government to get off the hook on the fundamental thing, which is that action is required to make land available. It is not being made available because local government, national government and quasi-governmental bodies all say, “Well, we might need it. Probably better not to do it now. We would get a bit more money if we hold it back and put it in penny parcels”. We need a serious battle to release the land, particularly in London. If we did that, I think the price would plummet because I would make it compulsory to get rid of the whole lot together and insist it was developed within a short period of time, not just hoarded by housebuilders. There is a great deal to be done but we need some radical change on that front.

If I may dare say so, this is not a sensible amendment because it does not make radical change. It merely says, once again, that every local authority has to do what the Government say. I am not in favour of that but I am in favour of some radical change.

My Lords, I thank the noble Lord, Lord Beecham, and the noble Baroness, Lady Andrews, for tabling this amendment. The issue of space standards in new homes is worthy of detailed consideration and I am grateful for the opportunity to discuss it.

We are all committed to building the new homes that are needed to meet the needs of our population, both today and in the future, but increased supply must be allied with high-quality, well-designed homes suited to the needs of 21st-century households. I am aware of concerns that increased housebuilding should not be allowed to result in pressure to decrease the size of new homes. The Government have already taken some steps to help ensure that these pressures can be managed.

In March last year the Government published for the first time a national space standard, setting out requirements for the internal size of new homes. This was a significant step forward which built upon work by many local authorities, most notably the GLA. At the same time, the introduction of the nationally described space standard has simplified compliance for homebuilders by consolidating the many and varied standards that were being used by different planning authorities across England.

As my noble friend Lord Deben said, currently it is a decision for individual planning authorities as to whether the national space standard should be required of new housing. This is sensible, as he said, given the differences that exist between local authority areas and the need to balance competing demands for housing development. This provides flexibility of application at a local level, and there is a sound argument that this remains the right approach.

Ensuring that new homes have sufficient internal space is an important element of achieving the good design that we all want. This is a matter of concern not just for the Government or this House but for home owners and communities across the country, who are determined that new housing built in their local area should be flexible, functional and of a size suited to household needs. That is why the NPPF and the nationally described space standard continue to support local communities that wish to influence the type of development coming forward in their local area.

The importance of space standards was reflected in the Lyons Housing Review, which looked at a wide range of housing issues and recommended that consideration be given to making minimum space standards mandatory. The Labour Party committed to taking forward that recommendation in its manifesto, and I recognise that this is the approach that the noble Lord, Lord Beecham, and the noble Baroness, Lady Andrews, probably wish to see taken forward.

However, the Lyons review also recognised that further work was needed to avoid unintended consequences that might impact on supply in some areas. In particular, the Lyons review recognised that space standards could impact more on the market for flats than on the market for houses, could create barriers for smaller builders, and would have the greatest effect on the affordable end of the housing market. These are sensible considerations. While we must avoid any race to the bottom, we must also be mindful of how other aspects of housing supply might be affected by introducing the requirements suggested in the amendment. I would now like to propose a way forward.

Now that the national space standard has been in place for more than a year, we agree that the time is right to assess how it is being used by local authorities. We therefore propose to undertake a review to see how the space standard is operating in practice. This will be completed by next spring and we will be happy to report back to the House on its findings and recommendations. We propose that this review should involve the Building Regulations Advisory Committee—BRAC. BRAC brings together a wide range of expertise from the construction sector to provide independent advice to Ministers on matters relating to building regulations. I hope that engaging its services as part of this review provides suitable reassurance that the Government respect and understand the intent behind the amendment. As part of this process we would want to involve representatives of organisations with a particular interest, such as the Royal Institute of British Architects, which has long campaigned on this issue. I would be very happy to receive suggestions from the noble Lord, Lord Beecham, and the noble Baroness, Lady Andrews, about the groups they might wish to see involved.

Lastly, I assure the House that powers already exist in the Building Act 1984 to put a requirement for minimum space standards in the building regulations if it is deemed necessary to do so. As a result, there is no need for an amendment to put it in the Bill. I hope that with those words the noble Lord will feel able to withdraw his amendment.

My Lords, I am grateful to all noble Lords who spoke in the debate, particularly my noble friend Lady Andrews and the noble Lord, Lord Taylor. It is a pity that the noble Lord, Lord True, was not in his place to hear my noble friend refer to the problem that he raised on another amendment the other evening about the conversion of commercial premises.

I beg the noble Lord’s pardon. My mind was obviously elsewhere. I should have been conscious of the noble Lord’s presence. He is certainly to himself true and no doubt he will have been encouraged by the references made by my noble friend. The enthusiasm of the noble Lord, Lord Deben, for local councils to take decisions is very welcome. I do not quite recall it being as forcefully expressed in his days as Secretary of State, but my memory may be playing me false on that front.

The reality is that this amendment calls for local authorities to do no more than meet minimum standards. That seems a perfectly sensible provision. Indeed, as the Minister has already indicated, the 1984 legislation was based on a similar concept. Of course, as has already been mentioned, the Parker Morris standards operated for decades very successfully—and, frankly, should never have been abandoned.

The Minister’s offer of a review and so on is helpful. I hope that that might be taken forward productively. But I think it would be desirable for the House to give an indication of its feelings here and I therefore wish to test the opinion of the House.

Clause 144: Development consent for projects that involve housing

Amendment 119B

Moved by

119B: Clause 144, page 74, line 20, at end insert—

“(7A) Guidance referred to in subsection (7) must include a requirement for the developer to pay development value for land that is compulsorily purchased for housing as part of any nationally significant infrastructure project.”

My Lords, I will speak to both amendments in this group. Amendment 119B was first tabled in Committee by my noble friend Lord Cameron of Dillington. It was then adopted by me, but in the event was moved by my noble friend the Duke of Somerset—it has been passed round like the parcel to some extent. Having read the Government’s response in Committee, I felt that it was important to retable these two amendments. I express my thanks to the Minister for the fact that her department has been kind enough to talk with the Compulsory Purchase Association, at whose suggestion I tabled a large number of other amendments, which it now feels it is unnecessary to pursue further. The association explained to me that it felt things had gone about as far as it could reasonably expect. That accounts for some of the other amendments that were put down in my name recently, which I withdrew before the end of last week.

My first amendment, Amendment 119B, arises because of the proposal in this part to facilitate construction of up to 500 dwellings as part of a “nationally significant infrastructure project”—which I take to mean linear schemes such as railways, roads and pipelines, as well as more locally contained schemes, such as airports or perhaps offshore wind farms. The significant common factor about those is that they all attract the use of compulsory purchase powers as the main way in which they can be facilitated. To that extent, what are proposed to be the powers of the Secretary of State in planning terms here are closely intertwined with the process of compulsory acquisition.

This amendment touches on the manner in which the Secretary of State may make orders—on which I understand that there is consultation, but we do not know the outcome of that, and the Bill merely makes paving provision.

It is, however, a trifle hard to see what intrinsic functional or planning component of an airport, a railway, a major road or a wind farm scheme would be furnished or somehow augmented by the erection of up to 500 houses, either nearby or, perhaps even more suspiciously, some way off. I am tempted to point to the slightly absurd situation of a wind farm seven miles out to sea and the 500-house enabling development somewhere onshore. However, one can envisage situations where certain types of national infrastructure might be entirely inimical to housing amenity—such as airports.

On the question of compulsory powers—I am treating the question of the Secretary of State’s prerogative here and compulsory powers as part of the same algorithm— standard compulsory purchase and compensation practice suggests that, of the effects of a scheme facilitated by compulsory purchase, an addition in value to the claimant’s land solely as a result of the scheme of works and not capable of being otherwise achieved should be disregarded in the compensation calculation. The point is settled law under what is known as the Pointe Gourd principle.

Furthermore, any element of value that could and would be reflected in the general market properly forms part of the compensation package, including what the noble Viscount described as hope value in answer to a similar amendment in Committee. However, it is one of the defences of a property owner faced with compulsory acquisition that the land to be taken is, objectively measured, in excess of what is operationally required for the scheme itself—this being a protection against what I might slightly crudely referred to as cutpurse activity in the name of the state. I should like the Minister to say whether this important safeguard is to be retained.

In Committee, my noble friend the Duke of Somerset explained that there are more than 170 bodies, mainly privatised utility companies, with compulsory powers. Those are in addition to the traditional acquiring authorities in the form of government agencies, county, borough and district councils. This is of increasing relevance. Many of these are straightforward commercial enterprises conducted for and making large profits. The amendment is designed to invite the Minister to disclose the intention behind the proposition in the Bill.

By way of further explanation, I mention that many linear features—motorways would be a common category—are achieved by a series of staged compulsory purchase orders, each one a separate order. One might imagine a situation where several lots of 500 houses might spring up along the way. The important further question I have to ask is whether the term “nationally significant infrastructure projects” is synonymous with what one might refer to as “scheme”, as opposed to something else, because if it is something else, all sorts of things follow. If the purpose in the Bill is not to cross-subsidise a scheme of infrastructure works by gaining potentially profitable acres, whether on the cheap or otherwise, then what? I invite the Minister to tell us that, too.

If such a cross-subsidy is the intention, it is hardly small. Five hundred dwellings at an average plot value of £90,000 equates to £45 million in land value. Clearly, physical access to land providing this bounty is unlikely to be facilitated by the national infrastructure project itself. It will at best be tangential to it—perhaps a piece of land severed from it or in some other way altering its character. The potential for stretching the construct of “scheme” and what may usefully be swept under its coat-tails is in point here.

Even without a compulsory purchase scheme attached, what of the effect of 500 houses on local communities and their planning objectives? Several consequences might flow from a cross-subsidy scenario. We can be clear on what some of them would be. We can be fairly certain that a cross-subsidy, if that is what it is, will not provide any affordable housing, because the very nature of the cross-subsidy is to maximise the offsetting gain. It will respect neither local nor neighbourhood plans because, intrinsically, these schemes will override them. The housing will not necessarily be in the same location nor have any functional connection with the infrastructure project itself—that is, unless we get a better definition of “project” and “scheme” as terms of art. It certainly will not be transparent, because of the complicated and often opaque characteristics of infrastructure scheme accounting and development finance.

In effect, this provision in the Bill is capable of providing not only for the bypassing of congestion and constraints on progress by freeing up provision of infrastructure but bypassing elements of local democracy and principles of fair value for the compulsory giving up of land. In Committee, the Minister mentioned the philosophy of equivalence in compensation, and I agree with him to a degree, although fair market value is not necessarily the same as equivalence as interpreted by such bodies as HM Revenue and Customs.

There is another custom that I should like to raise with him, which arose long ago in the context of land acquired under wartime powers but which the Government of the day subsequently sold for high value at a later stage when it was no longer needed for its original purpose. It caused a furore about government profiteering, and the ministerial commitment that followed became known as the Crichel Down code. My family benefited from that code, having had land taken from it for the construction of a military airfield. It is—potentially, at any rate—disreputable practice for any Government to set about profiteering by dint of compulsory powers. It also sends a very undesirable message about attitudes, which will simply embed resentment, non-co-operation and mistrust.

The compulsory code and the facility of compulsory purchase are important and valuable tools for public authorities in procuring the assembly of land and the delivery of essential infrastructure. I want to make that very clear. For many years, I practised as a surveyor in the Inland Revenue valuation office, dealing with a lot of compulsory purchasing for something that was then referred to as the A27 Folkestone to Honiton trunk road. It is sad to recall that it reached neither Folkestone nor Honiton and has various gaps in the middle which continue to cause problems to this day, but that is an aside. My association with this area of activity goes back some way. I referred to the doughty Compulsory Purchase Association. I am not a member but I certainly applaud its persistence in trying to make sure that we have sensible solutions to all those points.

If we are to have a system that is not mired in uncertainty, acrimony and adversarial position-taking, that is workable in terms of freeing land and creating infrastructure and that local authorities are not frightened to contemplate using, as well as something that is not wide open to abuse at the hands of some privatised utility whose pay-and-profit structure may come before the needs of society, this part of the Bill needs clarification. That is what I seek in the first of these amendments.

Amendment 128YAR—I paused when I saw that acronym and wondered whether this was a reference to my West Country roots, where “yar” seems to be one of the expletives that one hears very commonly—provides an overarching duty of care. The need for this arises because of the manner in which the current compulsory purchase process can be manipulated to the detriment of the claimant. There are many examples of this across the country. It looks as though the Government have, at last, realised there is an issue with late payment as they have agreed to take certain steps. I am very grateful to the Minister for that. However, I still feel that this marker of fair dealing and honest measures should be in a Bill of this sort. The amendment does no more than go some small way to redressing an abiding perception of unfairness and imbalance when claimants are faced with an acquiring authority seeking to acquire land. I beg to move.

My Lords, I rise to support the second amendment in this group, Amendment 128YAR, on the duty of care where compulsory purchase powers are involved. I do so from personal experience. Some 25 or 30 years ago, I had the Ilminster bypass through my farm. It was part of the improvements to the A303, which I strongly supported. I still strongly support more improvements to the A303 and hope we shall get them. As a supporter, I expected to be an equal partner in the process, the scheme and the negotiations, but I was left in no doubt that, it being a compulsory purchase, I had little or no say in the way the project was developed over my land. I am talking not about engineering schemes, although I disagreed with it being downgraded from a dual carriageway to a very dangerous three-lane single carriageway, but about things such as on-site planting and off-site planting, where, as a fairly knowledgeable forester, I was definitely considered inferior to their expert and largely ignored. There needs to be rebalancing with an obligation on the purchasing agents and the acquiring authority to treat their customers with care. There is a very real danger of property owners, who include householders, businessmen, farmers and others, being bullied and bulldozed by the acquiring authority. It is not necessarily always an agent of the state; it can be a privatised authority. In essence, as an owner, you are over a barrel. Everyone knows it and that whatever the acquiring authority wants, it can pretty well get, whatever the views of the owner or householder involved. To avoid the acquiring authority riding roughshod over those it should be treating as customers, we need this duty of care to be introduced.

My Lords, I, too, support these amendments in the name of my noble friend. I thank the Minister for making some good progress with the arguments I put forward in Committee. We are going to see that in the amendments that are about to be moved. On interest rates for late payments, it would be good if the Government could commit to monitoring the success of the penal rates of interest for securing payment of compensation before entry. That would be very helpful.

These concessions still leave two topics unresolved from the group that I spoke to in Committee. First, on NSIPs, which are covered by the first amendment in this group, the Government are arguing that the landowner will get only current use value rather than development value for up to 500 homes with no functional link to the project but situated within one mile of it. This is confiscatory. I again ask the Government: who will benefit from this largesse? Is it the house purchaser or, probably more likely, the infrastructure provider? If it is the latter, this surely demonstrates the unfairness of the idea. The principle of equivalence loses coherence when applied as I have just mentioned. A farmer or landowner may have several tens of acres removed from his holding by this means, leaving his business unsustainable as a result. Existing use values would be unlikely to allow him to purchase elsewhere to rebuild his business, especially after the considerable costs he is bound to incur. In effect, the acquirer is giving himself planning permission to take land at lower value, develop it and gain a large financial uplift at the expense of the original owner. At the same time, it would ignore local plans and local neighbourhood plans.

I turn to the second amendment in this group, relating to a duty of care. In Committee, the noble Viscount, Lord Younger, on behalf of the Government, said that,

“claimants should be treated with fairness … and kept up to date”,

and that,

“competent professionals should be advising their clients to act in this way”.—[Official Report, 23/3/16; col. 2451.]

The word “should” appears again and again. This is not the same as “must” or “shall”. Similarly, to my mind the word “urges” in this context is not strong enough.

I do not really understand why the Government should wish to deny Amendment 128YAR, which would merely strengthen and make mandatory the points that the Minister advocated in Committee. Clear guidance would not give those people subject to compulsory purchase orders the comfort that a compulsory duty of care, as incorporated in this amendment, would deliver. It would also provide a benchmark by which to judge whether an acquiring authority was behaving fairly and reasonably. I ask the Government to consider carefully accepting both these useful amendments.

My Lords, I totally oppose Amendment 119B. I made a long contribution in Committee —I think it was 18 or 20 minutes—on the whole question of the compulsory purchase of land.

I want to ask the mover of this amendment and his supporters a very simple question. In Committee I drew attention to the value of agricultural land, and the value of that land when it is given full planning permission. If I go by memory, I quoted figures of £880,000 in west Cumberland, where my former constituency was; £4 million per hectare in Watford; and £7 million per hectare somewhere on the southern outskirts of London, although I cannot remember the place exactly. Why should a landowner have the value of his or her land transformed from between £15,000 and £20,000 a hectare to between £4 million and £7 million a hectare simply on the stroke of a pen designating a national infrastructure scheme somewhere in the UK? What right does he or she have to that increased value on land to which they have done absolutely nothing to secure that additional value apart from own it?

When our fathers went to war in the Second World War, they did not fight for a country where people could make vast fortunes simply by holding land. The cost of that land falls upon people all over the UK who now cannot afford to buy a home, particularly in our major cities. The price that they are paying for all that is to feed the landowners who own the land, who should be readily giving up that land to help to deal with the national housing crisis at the price of its worth to them in its existing use, but of course they do not want to do that.

If people outside reading Hansard think the amendment is complicated, it is actually quite simple: it would protect landowners and their wealth, and the people who would pay for that are the people who cannot afford to do so—young people throughout the country who cannot afford to buy a home.

My Lords, the noble Earl, Lord Lytton, has helpfully expressed concerns about landowners losing out from any uplift in land values when the compulsory acquisition of land is sought for housing as part of an application for nationally significant infrastructure. He has also raised the important issue of how claimants are treated by acquiring authorities. I recognise that these are also issues of concern for members of the Country Land and Business Association, who met the Minister for Housing and Planning last week to discuss these matters and our proposals for further compulsory purchase reforms, which are now out to consultation, which the noble Earl alluded to. We welcome these discussions with the CLA and look forward to receiving its further thoughts in response to the current consultation.

I turn first to Amendment 119B. We had quite an interesting short debate, particularly with the intervention just now from the noble Lord, Lord Campbell-Savours. In response to the noble Earl, and taking account of the comments from the noble Duke, the Duke of Somerset, I can only reiterate the main points of the response to the amendment made in Committee. A key principle under the Land Compensation Act 1961 is that compensation is offered at the open market value of the land. The open market value will take into account the effect of any existing planning permissions, and any that might be given in future in accordance with the planning assumptions in the 1961 Act. Any increase or decrease in value that is due solely to the scheme that will acquire the land—for example, a nationally significant infrastructure project including related housing development—is disregarded. The same principles apply irrespective of the powers under which compulsory acquisition is granted.

Amendment 128YAR would introduce a statutory duty of care to be owed by acquiring authorities to claimants. I agree completely with the noble Earl, Lord Lytton, that those whose land is being taken by compulsion should be treated fairly and with respect. I also listened carefully to the comments from the noble Lord, Lord Cameron, and I know that stretch of the A303 reasonably well. I also respected the comments made by the noble Duke, the Duke of Somerset. However, I do not think that imposing a statutory duty is necessary to achieve that fairness and respect. Instead, the way forward is to set out clear expectations for acquiring authorities’ behaviour in dealing with claimants in guidance, and to ensure that the system itself is fair to claimants. We have done the former already: updated guidance was published in October 2015. The latter is being addressed through measures in the Bill; provisions on lengthening the notice before entry and earlier advance payments will make the system fairer for claimants. We are also consulting on further proposals to ensure that claimants receive fair compensation, to further encourage the prompt payment of advance payments and to ensure that claimants in areas with high rateable values are not systematically excluded from issuing blight notices.

As I am sure the noble Earl will appreciate, Amendment 119B would require a fundamental change to the provisions for assessing compensation for land compulsorily acquired in the Land Compensation Act 1961. For that reason, we will be unable to support this amendment. On Amendment 128YAR, as I have explained, the Government do not consider that a statutory duty of care is necessary. I know the noble Earl will be disappointed by this, but none the less I ask him not to move his amendment.

However, I emphasise that we will of course be happy to continue our engagement with the noble Earl and other interested parties, should they wish to discuss these matters further, particularly in relation to Amendment 128YAR, as it may be possible that more can be done through changes to guidance.

My Lords, I thank the Minister for that, particularly for his comments on the second of the two amendments, which seems to be a profitable suggestion and an appropriate way forward. I very much appreciate the opportunity of taking him up on that as matters proceed. In a sense, it is one of those “motherhood and apple pie” amendments. I make no apology for that because the overarching purpose and geometry of how these things are dealt with is important, as indeed corporate social responsibility might be in any other walk of life.

I am entirely unsurprised that the Minister does not go with the first of my amendments, Amendment 119B. I am equally entirely unsurprised that the noble Lord, Lord Campbell-Savours, disagrees in forthright terms with what I have suggested. The reality is that all sorts of businesses and individuals profit in one form or another from windfall gains, and it is a truism that those windfall gains do not coincide with the circumstances in which they could feed into the support of the needy and the underprivileged, particularly in housing terms, other than through the intervention of the state. That is a perfectly proper way of doing it.

The intervention of the state comes in the form of various types of taxation, such as on capital gains, and to some extent on the aspects built into the grant of a planning consent which gives rise to what the noble Lord, Lord Campbell-Savours, described as a huge increase in value. I refer of course to Section 106 of the Town and Country Planning Act and its clawback provisions; increasingly, a community infrastructure levy does the same in different ways. There are ways in which society benefits from this, but I go back to a point that I made during earlier stages of the Bill. If the process of compulsory acquisition is seen as expropriatory then nothing will come of that. Everybody goes to earth, to use an old country term. There is no collaboration and the thing is seen as unfair.

Can the noble Earl answer the simple question that I asked? Why should a landowner whose land is worth between £15,000 and £20,000 a hectare suddenly, at the stroke of a pen designating one of these areas, find that his land can be worth anything from £1 million to £7 million per hectare? How can that possibly be justified?

My Lords, I am not sure that I know the answer to that. The point that I was trying to get at in the process of this amendment was the question of who profited from the 500 houses. The short answer is that very large gains are made by dint of the market. The noble Lord may wish to take the view that the market should be overridden—a view that I feel certain many would share on his Benches. It does not happen to be my view and we will have to agree to differ on how this is to be dealt with. I entirely respect his view and I can see the social pinch point here, but I am trying to look at this as an economic model rather than in terms of who gains out of it.

I have gone on long enough about this and it is certainly not my intention to divide the House on it. I therefore beg leave to withdraw the amendment.

Amendment 119B withdrawn.

Amendment 120 had been withdrawn from the Marshalled List.

Consideration on Report adjourned.