Planning Bill

Public Bill Committee, 31 January 2008.

Clause 163

Jacqui Lait (Conservative, Beckenham)

On a point of order, Mr. Illsley, may I seek your advice before we start? You will recall that, when we talked about national infrastructure projects previously, we were worried about “mission creep”, as we called it; that is, the inclusion of areas other than those listed in the Bill. How can we return to that part of the Bill? I have come across a letter dated 7 January to my hon. Friend the Member for Runnymede and Weybridge (Mr. Hammond), and signed by the Under-Secretary of State for Communities and Local Government, the hon. Member for Gloucester, the last paragraph of which states:

“The Planning Reform Bill is concerned primarily with nationally significant infrastructure projects such as airports, supermarkets and power stations.”

I think that that is an example of mission creep. Could we return to the relevant part of the Bill to discuss that area? If supermarkets are to be included in nationally important infrastructure projects, we might have a problem.

Eric Illsley (Labour, Barnsley Central)

That is not a point of order for the Chair. That matter can only be revisited, as the hon. Lady probably realises, on Report. I am sure, however, that the Ministers will have listened intently to the contents of the letter, and she might wish to raise the matter privately with the Minister concerned.

John Healey (Labour, Wentworth)

I beg to move amendment No. 536, in clause 163, page 92, line 36, after ‘owners’, insert ‘or developers’.

Eric Illsley (Labour, Barnsley Central)

With this it will be convenient to discuss Government amendment No. 538.

John Healey (Labour, Wentworth)

Supermarkets do not fall within the definition of or criteria for nationally significant infrastructure projects. We have debated at some length the criteria that might be appropriate for such projects under part 3. As you point out, Mr. Illsley, we will no doubt return to the matter at subsequent stages of our deliberations.

We now come to part 10, which is an important part of the Bill, with an important provision: the community infrastructure levy. Its purpose, restated in the discussion paper published on Thursday last week, is essentially to recognise the need to increase investment in vital infrastructure such as health centres, schools, roads, transport, parks and flood defences to support new homes and a growing economy. The private sector, which benefits from such infrastructure, should play an important part in funding it. That is the purpose behind the levy.

I am sure that we will have a wide debate during discussion and scrutiny of part 10. The amendments, however, are narrow in their intent and application. We, and others, think that there might be practical difficulties if it is only the landowner who might ever be liable for the levy. For example, when land is unregistered, it might be difficult to find out who has the freehold or leasehold interest; it might be hard to ensure enforcement against landowners when they are outside the jurisdiction of UK courts; and where there are multiple interests in land being developed, it might be difficult to work out how liability should be apportioned. Enabling developers to be made liable would ensure that levy liability could not be evaded or disputed in such circumstances.

The purpose of the amendment is to allow developers to assume liability, and that, of course, is a well-understood and well-established approach that is supported by a number of interest groups that have been following our development of the policy and contributing to it. The amendments make the necessary changes to clauses 163 and 165, and I commend them to the Committee.

Jacqui Lait (Conservative, Beckenham)

I am grateful to the Minister for bringing the amendments forward because it had certainly occurred to me, unprompted by any other group, that confining the levy only to owners could lead to significant problems. In fact, the evidence from people involved in that area suggests that limiting it to owners could potentially reduce the supply of land. Therefore, it is useful to have that clarification and the further clarification in clause 165 included in the Bill. My only other comment is that I hope that both owners and developers can afford good lawyers to sort out the liability between them when developments come to pass.

Jacqui Lait (Conservative, Beckenham)

I beg to move amendment No. 591, in clause 163, page 92, line 36, after ‘the’, insert ‘capital’.

Eric Illsley (Labour, Barnsley Central)

With this it will be convenient to discuss amendment No. 594, in clause 165, page 94, line 4, leave out ‘whether or not’ and insert ‘where’.

Jacqui Lait (Conservative, Beckenham)

The amendment brings us immediately to one of the major concerns on which we want clarification and attempts to steer the Government away from land value and towards increase in capital value as the basis for the levy. Our major concern is that references to land value imply that the Government still hope to introduce a land-based tax through the levy so that the planning gain supplement would in effect come back into play.

We have tabled a number of amendments that would remove all reference to land value as we go through the Bill. Indeed, we will in due course come to our amendment to repeal the Planning-gain Supplement (Preparations) Act 2007, because having looked at the detail that we have had on the community infrastructure levy in the relatively short time since the consultation paper was published, I remain concerned that the Government are probably setting up the community infrastructure levy to fail so that they can bring back the planning gain supplement.

Amendment No. 594 is on a slightly different point, because by leaving out the words “whether or not” and replacing them with “where”, we are trying to ensure that the levy should not be based on land value again, because we believe that regeneration projects potentially would not go ahead. We will return to that issue when we discuss further amendments.

Where land is to be regenerated, there would be no increase in capital value. By definition, were there an increase in capital value, an area would not require regeneration, but would be regenerated by the market. We all want to see as much regeneration as possible and all of us probably have areas in our constituencies that need to be regenerated. The London borough of Bromley probably does not have such areas to the same extent as some other places, but even in the south-east there are areas that need regeneration.

If the infrastructure levy were to apply to land that is to be regenerated, such projects might not move forward because they would not stack up financially. The amendment would ensure that there is the opportunity to maximise regeneration without penalising it through the levy.

Elfyn Llwyd (Plaid Cymru, Meirionnydd Nant Conwy)

I would like to ask the Minister a question. Under clause 166 the amount of the CIL will be determined and regulations will be brought forward. Will the regulations set a uniform calculation for all charging authorities or will there be discretion for different charging authorities to charge different rates? That question is predicated on the fact that there are some authorities that are determined not to have wind farms in their area and others with particular views on other developments. What would prevent a charging authority from coming up with a huge levy amount that would make a particular development unviable? Will there be a uniform basis of calculation for the CIL?

Clive Betts (Labour, Sheffield, Attercliffe)

This is a very important part of the Bill. I understand that the Opposition will raise several detailed issues of concern, but I hope that there is general support across the Committee for the principle of what the Government are trying to do.

I thank the Minister for the excellent document that was produced last Thursday, which explains what is quite a complicated measure. Whoever wrote it should be congratulated for the clarity with which it was written. It was a very helpful explanatory paper, which also details the issues about further consultation.

We all know the history of this matter. The main issue is that of value, to which the amendment refers. It is right that we find a mechanism that does two things, as the explanatory document explains. It will enable finance to be provided for infrastructure across a wider area than perhaps the 106 arrangements were initially designed for, although they have been expanded by particular authorities. That gets us away from an historical problem with development in this country. Very often, authorities see development as bringing costs rather than benefits. Development coming with the CIL will help to provide the resources for the infrastructure that is needed.

The explanatory document explains this in more detail. The clause recognises that if planning permission is given by an active public policy, private individuals have the value of their assets increased. Planning permission gives the authority to develop, and with that ability to develop, the value of the land is increased. As a result of that increase in value, developers or owners—we just discussed the Government amendment, and it may be owners in certain circumstances and developers in others—may have the financial resources to contribute towards development costs.

David Curry (Conservative, Skipton and Ripon)

Will the hon. Gentleman not forget that if one lives next door to an area that is going to get planning permission, it may cause a significant decline in the value of one’s assets?

Clive Betts (Labour, Sheffield, Attercliffe)

That is entirely possible but looking at the generality, as I am trying to do, the aim is to capture some of that increase in private value for public good, because it is an act of public policy that increases the private value.

On the specific of the amendment, I think that the hon. Lady is wrong. I pursued the issue of value closely in our witness sessions. People in the coalition of groups support the CIL, partly because it is not the PGS. However, they are concerned about value. My hon. Friend the Minister will no doubt have a better view of this, but my understanding is that the clause sets the scene for the CIL. It recognises that it is a general increase in value, brought about by an act of public policy, that we are trying to capture to fund infrastructure.

During the evidence hearings, I pushed my right hon. Friend the Housing Minister, now Chief Secretary to the Treasury, about whether CIL is payable only on land that has increased in value once planning permission has been given. She helpfully explained afterwards that clause 165(3) says that where planning permission is given, it is not necessary for the increase in the value of the land to occur for CIL to be payable. In other words, the clause sets the general scene; it does not say that a particular site has to have increased in value because of planning permission for CIL to be payable.

The one issue that greatly concerned me was whether, on a more practical and detailed level, we were replicating what was going to happen in the PGS. I support that in principle, recognising that there are complications in trying to calculate increases in value to pay PGS, and we get down to the technicalities in clause 166, with a reference to value. That could cause problems. The calculation of CIL for a particular site could be related to value. Government amendment No. 38, which I support, takes out the reference to value in the calculation of CIL for a particular site.

The Government have set the scene by saying that it is the general increase in value that comes about from planning permission that enables the resource to be generated that funds the contribution towards the infrastructure, but they are removing the connection between an increase in value on a particular site and the CIL that is payable on it. In that respect, the Government have got it right and the amendment is not necessary.

Richard Benyon (Conservative, Newbury)

I refer hon. Members to my entry in the Register of Members’ Interests.

I raise a couple of points in support of my hon. Friend the Member for Beckenham. Uplift in land value is taxed under capital gains tax. There are considerable arguments involved. Trying to assess the uplift and the costs that can be set against it is a long drawn-out process. It remains the case that the Government take a large amount of money every year on the uplift in land values which they are entirely entitled to apportion towards infrastructure costs.

Some years ago we had the development land tax, which stifled many regeneration projects in a way that I fear this charge may do in future. We have to be careful. It is so far unclear how we can assess the charge’s impact on such projects. There is a regeneration project in the centre of a major town in my constituency. In itself, it is a marginal project, particularly with retail values dropping as they are, but an added charge of this nature could be the straw that breaks the camel’s back. We have to be extremely careful how we implement it.

I want the Minister to respond to the submissions that we received from several local authorities that have their own scheme, including my local authority, West Berkshire council. In 2004, it introduced a developer’s contribution scheme that works extremely well. What impact will the levy have on wise and thinking authorities such as mine, which have thought ahead and produced a scheme that brings in, for a small unitary authority that looks after the lives of 145,000 people, an income of £8 million to £9 million a year and growing? The fee that is charged to developers is entirely clear, right from the start. Developers know what they will pay because the charge is calculated on the basis of the impact that the development will have on local education provision, the primary care trust, fire services, the highways, libraries and so on, unlike this scheme’s levy, which is calculated on the value of land.

The fee charged by my local authority is completely cost-neutral. The charges are calculated to take into account the work done by the section 106 and the legal departments. The scheme is very successful. It is entirely transparent, and everybody knows where they stand.

Many authorities that are considering introducing their own schemes are beating a path to the door of authorities such as West Berkshire and others that produced submissions. They want to know how much regional money will be sliced off the top for regional government, how many decisions will be made in the centre, how much money the local authority will be allowed to keep and how the scheme will actually work. We need many answers from the Minister.

Elfyn Llwyd (Plaid Cymru, Meirionnydd Nant Conwy)

The hon. Gentleman mentioned capital gains tax. I think that the Minister is uniquely qualified to discuss it, having been some time in the Treasury. Can he possibly explain the interaction between CIL and CGT? In other words, would the payment of CIL be a deduction for the purposes of CGT if an owner-developer were subject to CGT?

Richard Benyon (Conservative, Newbury)

We would all like to hear the Minister’s reply to that question, but I fear that we know the answer. I look forward to his comments.

Alun Michael (Labour, Cardiff South and Penarth)

I wish to raise a point that is appropriate at this stage, as the debate has already gone rather wide. As the Minister is being asked to clarify several matters, it would be helpful if I raise this one now rather than doing so on clause stand part. It is about how the levy will operate in practice.

I raise these questions from a background of having been not only construction Minister for a period but also waterways Minister for several years. British Waterways and the development of canals in this country provide a considerable success story. Hon. Members may be aware that our canal network was in a disastrous state due to long-term neglect, but the backlog of repair and maintenance has been tackled over the past 10 years and the canal network has been modernised. Much of that has been due to links to development alongside canals, sometimes in the centre of cities such as Birmingham, sometimes in rural communities and small towns. Often, projects that have been about construction have also been about regeneration, bringing new employment to an area and generally cleaning up and modernising areas as well as doing the specific work of repairing, maintaining and even expanding the canal network.

The fact is that a great deal of that work has been possible because land that is near or alongside the canals and historic infrastructure that is public realm—inland waterways, docks, parks and other open space—is very much in demand and commands a premium price. New development, therefore, can derive significant benefit from the presence of the existing infrastructure, but in the case of waterways it does not usually contribute to its cost, due to the absence of any local charging mechanism that could in effect tax new developments to pay for improvements or additional burdens on that infrastructure. Occasionally, section 106 agreements have been reached, but that is a haphazard basis on which to deal with investment in the infrastructure.

It is a big issue because new development can impose significant costs on the providers of such infrastructure, as it may lead to much greater local usage by people living in the area, by visitors and by heavy contributions from the entertainment or hospitality industry, all generated by the development. A new development nearby puts the surfacing of footpaths and towpaths, fencing, signage, street furniture and safety issues under considerable pressure and it may require significant upgrading.

The crux of the issue is the phrasing of the clause. There is perceived to be a risk that the word “providing” could be interpreted as referring to new infrastructure only. Furthermore, “support” could be interpreted to imply a direct functional relationship, thus excluding infrastructure from which the development nevertheless obtains benefit at second hand.

We need greater clarification of the proposal, which can be done in one of two ways. First, will my hon. Friend the Minister for Local Government consider amending the clause to refer to “improving” as well as “providing” the infrastructure? Alternatively, can he assure me that the word “providing” includes improving? If it does, can he assure me that that interpretation will not be open to legal challenge? It is important to have clarity. I would not be surprised if he were sympathetic to my concerns and wanted the clause to do the job in the way that I have outlined. If there is any doubt about that, will he look again at the clause to ensure that it is cast iron and will not subsequently be open to legal doubt or challenge?

John Healey (Labour, Wentworth)

I will try to deal with the wide-ranging points. Mr. Illsley, the Committee would welcome your guidance on whether it will be possible to have a wider debate on clause stand part. If you agree, I will deal specifically with the points raised in this debate.

Eric Illsley (Labour, Barnsley Central)

The debate on the amendment ranged rather widely and strayed into clause 166, which relates to the amount of the charge. If the Committee wishes it, we can use the amendment as a clause stand part debate, but the vote on stand part will be taken formally. I am willing for hon. Members to speak to clause stand part in this amendment, given that issues have already been raised.

Jacqui Lait (Conservative, Beckenham)

I seek your guidance, Mr. Illsley. I was going to press for a clause stand part debate because our amendments do not cover all the points that I wish to raise.

Eric Illsley (Labour, Barnsley Central)

In that case, I ask the Minister to restrict his comments to the proposal before us. The issues that he wishes to respond to can be raised again in the clause stand part debate.

John Healey (Labour, Wentworth)

I am grateful for your guidance, Mr. Illsley, which I will try to follow closely.

I was interested in what the hon. Member for Newbury said about the local authority’s approach in West Berkshire. He may be interested to know that it has been invited to sit on the practitioners group, which we will work closely with in the coming months. It has an important contribution to make to the development of our policy and our plans for the regulations, and I hope that that contribution will be made.

With the CIL, we are trying to build on the innovative approaches of some local planning authorities in developing tariffs for development, as the hon. Gentleman described. He is right about the characteristics of those tariffs: they tend to be standard charges; they reduce the negotiation that is necessary; they increase the certainty at an earlier stage; and they allow local planning authorities to secure contributions from developers of smaller developments. That ensures that more developments pay a fair share towards the costs that they impose on a local area. Those contributions mean that the local community will derive a greater benefit from those developments. We are attempting to capture all of those principles in designing the CIL.

To pick up on the hon. Gentleman’s other point, we are trying to learn from some of the lessons of the past. The CIL is a very different mechanism to the land development tax that was repealed by the Conservative Administration in the mid-1980s. As the Barker review said, previous development gain taxes which were specifically designed in that way suffered from two principal problems: first, from their complexity and, secondly, from the unduly punitive level at which they were set. That had a huge impact on the supply of land and the pace of development. We are anxious to avoid both those problems with the CIL.

The other weakness of the development land tax, which the hon. Gentleman did not mention, is that it was designed to supplement central Government expenditure and revenues. The levy will be collected locally and spent specifically on local and regional infrastructure that has been identified as necessary to support the growth of housing, the economy or developments in the local area.

Richard Benyon (Conservative, Newbury)

I feel that some progress is being made. Does the Minister agree that a system of thresholds could be introduced to the levy, through consultation? Developments below a certain size, such as a few houses, will have no regional impact. For developments that fall under such a threshold, the local authority would keep all of the receipts from the levy. Obviously, a larger development might have regional implications, but it seems unduly harsh on local authorities that have developed their own schemes which are working well that those will be trammelled by a Government scheme that will top-slice a large proportion of the levy to be spent regionally or nationally on things that local communities might not benefit from.

John Healey (Labour, Wentworth)

No local authority or local planning authority is obliged to introduce a CIL. Those decisions will properly be taken locally. The lessons that we can draw from the innovations by some councils, such as West Berkshire, will be considered in detail as we develop the policy further.

David Curry (Conservative, Skipton and Ripon)

The Minister said that local authorities will not be obliged to introduce the levy. If a local authority chooses not to introduce it and is therefore unable to make a contribution from it to an infrastructure project that is drawing in other sources of funds, will that jeopardise the availability of those other sources? In other words, if a local authority does not put in its whack, will that threaten the availability of funds from national sources? Will the Government naturally want to direct their money where they have the leverage of a local tax?

In paragraph 24 of the consultation document, the potential of the tax is estimated as being able to raise hundreds of millions of pounds. That seems to be a very small amount in the light of the cost of infrastructure projects. I am surprised at the modesty of that amount. It suggests that we are going to a great deal of trouble for not very much reward at the end of the day.

John Healey (Labour, Wentworth)

In a sense, the right hon. Gentleman answers his own question. All the statements and explanations that we have made on the levy have been clear and consistent that it will be additional to other sources of funding. Depending on the extent to which local planning authorities introduce the levy and whether it is set at a reasonable rate, we think that it will raise hundreds of millions of pounds—perhaps some £500 million. It will potentially be only a contribution. It will be significant, but the comparator set out in paragraph 16 of the consultation document makes it seem modest. That makes clear the scale of the public investment that the Government have allocated over the next few years to support the growth, in particular of housing development, but also of other infrastructure that is necessary for economic growth in local areas. The paragraph states that there will be

“£1.7 billion of targeted funding for growth areas, growth points and eco-towns, including £300 million for the Community Infrastructure Fund.”

The community infrastructure levy is not the full answer, by any means, to the need to raise investment, which is often forward-funding, for infrastructure to support growth. However, it is an important additional potential source and power that we are seeking to put in the hands of local planning authorities, so that they can make those decisions for themselves. The funds and revenues that it might produce are additional to other sources, including public investment funding to support growth.

The leverage may be relevant in creating a more certain forward revenue stream in a local or a wider area which could be used to lever in further investment from the private sector to help develop the infrastructure that is needed. In some circumstances, it could be used to support the use of borrowing powers, which the Government also gave to local authorities in 2004.

David Curry (Conservative, Skipton and Ripon)

But would the decision to raise or not to raise a levy by a charging authority—we will come to which body that will be later—have any impact on the availability of other public funds for projects? We know that everyone wants more development than there is money to finance. It is the eternal truth of government. I am trying to discover whether local authorities will have to take into consideration, if they choose not to apply the levy, that they are jeopardising other possible sources of funds from the public sector. I accept the point about leverages coming out of the private sector.

John Healey (Labour, Wentworth)

No, there is no reason for local authorities to fear that. They may worry that if they choose not to take advantage of the potential for locally raised revenues that a levy could bring, there might be a gap that they could otherwise have helped to meet in the financing of infrastructure to benefit their area, support potential growth and bring benefits to their community. In those circumstances, I can envisage many local people starting to ask questions of their local authority or local planning authority as to why it is not taking advantage of the power

David Curry (Conservative, Skipton and Ripon)

The Minister has been talking about private leverage and we have had some references to flood relief schemes. Will he consider seriously the current problem whereby the contributions that local authorities or regional flood relief bodies make to flood relief schemes might be caught by council tax capping? That is a major disincentive to local authorities to put money into the pot to try to move schemes up the priority ladder, as in Ripon, where we have been flooded twice.

John Healey (Labour, Wentworth)

Mr. Illsley, I am sure that you would not want me to get tempted on to the territory of council tax capping.

Eric Illsley (Labour, Barnsley Central)

You have got it.

John Healey (Labour, Wentworth)

So I will not, but flood defences are precisely the type of infrastructure for which a community infrastructure levy can help to support funds, if it is identified in the preparation of local infrastructure planning as an important element in the investment required to have further growth in the area.

I am failing not to be drawn too widely, but will do my best and return to where I started—the comments made by the hon. Member for Newbury. Essentially, we want it to be clear from the start that developers pay what they see on the charging schedule. I think that that is also what he wants, because it is the case in West Berkshire. That way, we get away from the potential complexity, uncertainty and bartering that tends to go on in back rooms, out of sight of the public and out of reach of strong scrutiny. That is the principal purpose of our approach.

I am glad that my hon. Friend the Member for Sheffield, Attercliffe welcomed the policy document. I would like to claim full credit for it, but cannot. I will, however, ensure that his remarks are passed on to those who were involved in the detailed drafting. He is right that clause 163 sets the general scene, and in the coming debates we will get into some of the specific concerns and details that I know the Committee and others are interested in. We will get to the question of value in more detail later. To be clear, he is right that Government amendment No. 538 removes reference to value, but he might be disappointed that Government amendment No. 546 to clause 166 will reintroduce it. I will explain why when we get to it.

My right hon. Friend the Member for Cardiff, South and Penarth is a great champion of the value and importance of waterways to our country and to regeneration, which he knows from his area. The clearest answer to his concern, and that of British Waterways, that somehow the levy will be used only for brand new infrastructure is contained in paragraph 34 of the policy document that we published on Thursday. I think that he will find everything he needs at that point. If he does not, he can come back to me.

Alun Michael (Labour, Cardiff South and Penarth)

I am grateful to my hon. Friend for pointing the way to the policy document. Part of my concern is that there could be a danger of misinterpretation or a legal challenge that would take us in a different direction from his stated intention. Will he undertake to look at the phrasing of the legislation to ensure, from his point of view and mine, that his intentions could not be undermined in that way at a later stage?

John Healey (Labour, Wentworth)

My right hon. Friend is always reasonable, so of course I will.

With regard to the question asked by the hon. Member for Meirionnydd Nant Conwy, the short answer to whether local authorities will have the discretion to charge different rates is yes. What one local planning authority decides are the infrastructure needs for its area and what appropriate contributions to that could be through a community infrastructure levy will be different to the next.

The process for making charging decisions and the basis on which those decisions might be made are likely to be set out in the framework that we intend to introduce through the regulation-making powers. There will also be safeguards, as the Bill indicates, to stop a levy frustrating or choking development, which I think is a concern shared by all members of the Committee. There will be strong scrutiny in the preparation of the charging schedule, and there will be some reserve powers, which we will deal in clause 172.

The hon. Gentleman asked me about the interaction of the community infrastructure levy and capital gains tax. [Interruption.]

Jacqui Lait (Conservative, Beckenham)

You do not know.

John Healey (Labour, Wentworth)

Well, I suppose the short answer is that it is complex, given the nature of tax legislation. That will not surprise anyone.

In essence, CGT is payable on disposal of assets, so it is generally payable on the sale of land or property. Our starting point is Kate Barker’s report, which, as hon. Members may recall, argued that CGT does not adequately capture the gains that arise from planning permission. Essentially, planning permission is a public administration decision, not an investment, activity or value that is enhanced by, or is the responsibility of, those who happen to own the land. In other words, Kate Barker’s major contention was about the gap in our ability to capture, justifiably, in her view—I would argue that the design of the community infrastructure levy will do this—the many gains that come specifically from a public administration decision, and not by dint of the efforts of anyone who happens to own the land to which the permission applies.

In contrast with the point at which CGT may become payable, the levy as we propose it is payable on commencement of the development. In the end, these are different policies, tools or instruments for very different purposes. The final distinction, separation or difference is that the levy is specifically for the purposes of supporting the development of infrastructure. CGT, of course, is simply a revenue stream that goes to the Exchequer, rather like aspects of the development land tax that I mentioned earlier.

Elfyn Llwyd (Plaid Cymru, Meirionnydd Nant Conwy)

I do not mind if the hon. Gentleman prefers to write to me with the answer in due course. I am not trying to be funny, but I put to him the case of an owner-developer who is, for example, a farmer. He decides to develop an estate of 100 houses. He obviously makes a substantial gain on the land, but, equally, he may have to pay a large amount of CIL. That is the kind of scenario I am looking at. I do not wish to raise complicated matters that may or may not be reasonable, but my question is perfectly reasonable. Will the payment of CIL at the early stage be taken into account in calculating a proper deduction from the capital gain that the farmer has made on the land as an owner-developer?

John Healey (Labour, Wentworth)

The short answer is no. Anybody in that position who is considering whether they want to use their land in any way for development for which they might need planning permission would look at the charging schedule for the CIL, would see in advance what they would be liable to pay if they were to go ahead, would build that into their general financial and business planning case in deciding whether to go ahead, and would make a business decision as a result of that.

Any CGT that may become liable for any disposal that is made later would be an entirely separate calculation and liability. The only connection that I can see between the two is that where the levy may have in the mix some impact on the level of capital gain, it could affect the liability for CGT.

My right hon. Friend the Member for Cardiff, South and Penarth has been very reasonable, and I shall reflect on his concerns. If I do not feel that I have answered him, as I have tried to do immediately for the Committee’s benefit, I shall of course write to him—I do not anticipate that that will be necessary, but if it is I shall.

Dan Rogerson (Liberal Democrat, North Cornwall)

This has been a very useful exchange, prompted by the hon. Member for Meirionnydd Nant Conwy. Clearly there are concerns about somebody being hit twice for effectively the same gain. Does the Minister agree that the distinction might be that the community infrastructure levy is aimed primarily at the increase in land value through planning permission, and that capital gains usually takes into account the general increase in value over time? The CIL is focused on the administrative decision as opposed to the appreciation of land value, as is the case with capital gains.

John Healey (Labour, Wentworth)

I suppose that if there has been no appreciation in the value of an asset being disposed of, a capital gain is less likely. The hon. Gentleman might have a point and I appreciate his attempt to—

David Curry (Conservative, Skipton and Ripon)

To help you.

John Healey (Labour, Wentworth)

Yes, to help me out, although I had not appreciated that I was in a hole and required assistance. Nevertheless, I appreciate the hon. Gentleman’s intervention.

The hon. Lady expressed concerns similar to those of the hon. Member for Newbury about how the levy would choke development, particularly in certain areas such as on brownfield sites. The answer is that the levy will need to be set at a level that reflects the local authority’s priorities and identified infrastructure and growth needs. It must take into account the likely land value, which is one important way to assess the development viability of a particular area.

Bob Neill (Conservative, Bromley and Chislehurst)

I appreciate what the Minister is saying. However, development of the infrastructure of the Thames Gateway, for example, might involve considerable decontamination costs prior to completion. Is a mechanism proposed for deducting those costs or for taking them into account in other ways, so that development on brownfield land, which might be desirable, does not become less economically attractive and competitive than on other land?

John Healey (Labour, Wentworth)

We are discussing that with some of those who have a direct or representative interest. The proposed consultation on the design of aspects of the regulations that we will introduce should ensure that we can deal with all those concerns, and that the levy is set at a level that will provide an incentive and support for development, rather than a disincentive and a barrier. That is what we are aiming at.

On amendment No. 591, as my hon. Friend the Member for Sheffield, Attercliffe said, it is not clear that making reference to capital value is necessary, and nor is it entirely clear what that would add. On amendment No. 594, I and others have made the point that it is important that the levy regime does not choke development. However, we want to move away from case-by-case assessments of the land value uplift and viability—in other words, to put the emphasis on the production and publication of a charging schedule. The site-by-site assessment of land value or viability was one of the main characteristics of the planning gain supplement. Many of those who followed that closely had concerns about it. The clause will enable us to take such action, but it must be done in way that preserves the incentive to develop. The design of the levy, with the requirement to set out a schedule of standard charges in advance, will remove the need for site-by-site evaluations.

Developers have put it to us that while a development creates value, which the levy will tap, there are circumstances in which the permission itself does not result in an increase in land value, or in which the level of increase is uncertain. That is an argument that I remember all too well from many developers against the planning gain supplement. However, we do not want disputes over whether the permission is the particular aspect that has generated a value increase. In other words, we do not want the general purpose of the levy, as set out in subsection (2), to undermine the requirement to pay the amount of the levy set by the charging schedule.

This provision is designed to put it beyond doubt that the levy is still payable in such circumstances. Therefore, the potential developer will be clear from the outset that what they see in the charging schedule is what they will pay. They will therefore be able to factor that into their business and financial planning in determining whether they wish to go ahead with the project. With that and the other safeguards we propose putting in place to ensure that the charging schedule is set at a level that does not choke up an unacceptable amount of development, I hope that hon. Members will accept the Government amendments, rather than those of the Opposition.

Jacqui Lait (Conservative, Beckenham)

As I hope I indicated earlier, the amendments were tabled to signal two main areas of the Government’s proposals that we have concerns about. In that sense, they are probing amendments. However, there are real concerns about the impact that downturns in the market will have on regeneration areas. My hon. Friends the Members for Bromley and Chislehurst and for Newbury and my right hon. Friend the Member for Skipton and Ripon, raised practical issues with the levy that we still have concerns about. I am happy to withdraw the amendment at this stage, but we will return to these issues in greater detail as we go through the Bill. We might press these matters to a vote with later amendments. However, I beg to ask leave to withdraw the amendment.

Jacqui Lait (Conservative, Beckenham)

I am grateful to you for allowing us to have a clause stand part debate, Mr. Illsley, because although we have already signalled two of our concerns with the clause, essentially, it will set up the CIL and there are definite worries about that whole Government proposal.

The hon. Member for Sheffield, Attercliffe congratulated the Government on introducing the consultation document last week. We congratulate them on doing so, at last, but I am not entirely convinced that it is anything other than a rush job, and it does not move forward hugely the available information about the CIL. I wish the Minister good luck in trying to get this matter sorted out, because there is a long way to go. On Second Reading, my hon. Friend the Member for Mole Valley (Sir Paul Beresford) described these proposals as not just skeletal, but osteoporotic. I am not sure that the consultation document has changed our mind.

The hon. Member for Meirionnydd Nant Conwy raised one of the principal concerns expressed by a number of people outside the House: capital gains tax. I can sympathise with the Minister here. His former role in the Treasury has in one sense contributed to his skill and in another led him into deeper waters than he might wish. He has not been at the Treasury while the reform of capital gains tax has been going through. He is, dare I say it, somewhat unsighted.

Were I to throw any thought into the pot, it would be that the current system of capital gains gives taper relief. That might be where CIL and CGT could interact. Subsection (1), however, refers to the fact that the Treasury must approve the regulations. Although it might be pro forma that that should happen, if the Treasury has anything to do with it, it will turn into a tax. That is precisely what the industry does not want, and we certainly do not want it, because the history of any tax on, let us call it, subtly, planning gain, has a poor record.

David Curry (Conservative, Skipton and Ripon)

Would this not break new ground in that it would be one of the first examples of a hypothecated tax, to all intents and purposes, in the United Kingdom?

Jacqui Lait (Conservative, Beckenham)

My right hon. Friend raises a most interesting point. The Minister, with his Treasury experience, will doubtless be able to advise us in due course. A number of Labour Members have, in effect, given the game away. The right hon. Member for Cardiff, South and Penarth referred to it as a tax when he was talking about waterways.

Alun Michael rose—

Jacqui Lait (Conservative, Beckenham)

I am happy to give way, but I am sure that that is what Hansard will record.

Alun Michael (Labour, Cardiff South and Penarth)

I am not sure that it will. I should be grateful if the hon. Lady could explain what she thinks I said.

Jacqui Lait (Conservative, Beckenham)

I wrote down, although sadly these days I no longer take shorthand—

Bob Neill (Conservative, Bromley and Chislehurst)

I cannot employ you as my secretary then.

Jacqui Lait (Conservative, Beckenham)

I am not a member of my hon. Friend’s family either.

Bob Neill (Conservative, Bromley and Chislehurst)

We are close—

Jacqui Lait (Conservative, Beckenham)

We are close neighbours—

Eric Illsley (Labour, Barnsley Central)

Order.

Jacqui Lait (Conservative, Beckenham)

I wrote a note to myself because I was taken aback by what the right hon. Gentleman said. It might have been inadvertent, but he referred to “taxing developments around waterways”. I am quite happy to withdraw that once Hansard is published.

Alun Michael (Labour, Cardiff South and Penarth)

I suspect that the hon. Lady is not perhaps talking to herself but writing notes to herself. She certainly appears to have extrapolated. I have every confidence that Hansard will record accurately what I said. I think that she has gone in a different direction.

Jacqui Lait (Conservative, Beckenham)

I look forward to reading Hansard. We can perhaps check the record together on Tuesday.

David Curry (Conservative, Skipton and Ripon)

Perhaps you could go outside and do it together so that we do not all have to listen.

Jacqui Lait (Conservative, Beckenham)

Yes. I do want to move on, but the mere fact that the word “tax” is used in reference to this levy sends a cold chill down most people’s spines.

John Healey (Labour, Wentworth)

Does the hon. Lady not accept two things? First, this is a levy that builds on the current system of section 106 planning agreements. Secondly, unlike a tax, which by and large is a general revenue stream, this is specifically and only for the purposes, if a local authority wants to use the power, of supporting investment in necessary infrastructure—no more, no less.

Jacqui Lait (Conservative, Beckenham)

I accept what the Minister is trying to achieve. My point is that the mere fact that the Treasury has to approve the regulations means, by definition, that it is approving the standard charges that will be included in the community infrastructure levy, and that concerns people outside the House. Those charges might vary; the consultation document stated that there will be different levies depending on the quality of the land that is being developed, and we will discuss those details later.

Everyone fears the hand of the Treasury in any form of money raising, and the inadvertent use of the word “taxation” in referring to the levy is sufficient to send a cold shiver down our spines.

Clive Betts (Labour, Sheffield, Attercliffe)

It seems almost as if the hon. Lady is trying to find an excuse to distance herself from the concept of the levy. The evidence to the Committee was that the development industry and local authorities were content that it was the best way forward to capture some of the increase in value from planning permission for the public purse. Does the hon. Lady support the principle of it or not?

Jacqui Lait (Conservative, Beckenham)

We made it clear that there is an argument for the levy, but our job as the Opposition is to test to destruction how it will work. Some serious questions need to be asked on behalf of the British public about how the levy will work and, with the best will in the world, this Government have a deplorable record on trying to tax land development. We must ensure that if the levy is going to work, it works properly. As I said about previous parts of the Bill, when a significant group of people approve of something, the downside is not thought through to the extent that it needs to be.

John Healey (Labour, Wentworth)

My hon. Friend the Member for Sheffield, Attercliffe’s question is important. Is the answer that the hon. Lady’s party supports the principle of a community infrastructure levy? Yes or no?

Jacqui Lait (Conservative, Beckenham)

I thought that I had said in words of one syllable—I might have used the occasional two-syllable word—that the levy is acceptable. But the mechanism, the detail of the regulations, leads to me say that the devil is in the detail, although I hate to use that clichÃ(c). We do not have the detail and the amendments were tabled to try to extract it.

John Healey (Labour, Wentworth)

I accept that the hon. Lady might have concerns about the detail and that it is important that the Opposition use amendments to challenge the Government on it. To follow from her commitment in principle to a community infrastructure levy, can she assure us that she will not try to delete the levy from the Bill at a later stage? For example, amendment No. 238, which has not been selected, would strike out the whole of part 10.

Jacqui Lait (Conservative, Beckenham)

I can reassure the Minister that if we had wanted to delete the community infrastructure levy we would have found other ways to do it. I do not have any problem, but we will wait and see how it works because if it does not work, as in the case of the development land tax, we will revisit the issue in due course. There is a long way to go before we find that out.

John Healey (Labour, Wentworth)

The fact that the hon. Lady has confirmed to the Committee that she supports the community infrastructure levy in principle and that her party will wait and see how it works is important. It is important not just to myself, as the Minister responsible for the Bill; it is of much greater importance to the interested groups who are following our discussions closely. It means that the work that we all do together—the work of the hon. Lady, myself and the interested groups—to get the design and terms of the levy to be as effective as possible from the outset and implemented as effectively as possible will not be undermined at the start by a fear that the hon. Lady’s party will simply remove the levy if it proves to be effective. Instead, she will wait and see how it works in practice.

Jacqui Lait (Conservative, Beckenham)

If that means that the Minister will now accept some of our amendments, then I think that we have made some progress.

David Curry (Conservative, Skipton and Ripon)

What it means is that the Minister anticipates that he will not be in office after the next general election.

Jacqui Lait (Conservative, Beckenham)

I am grateful to my right hon. Friend for that comment; in our party, I think that we have all taken that as read.

John Healey (Labour, Wentworth)

I am extremely conscious of the fact—indeed, it is the reason that I asked the question—that, as the hon. Member for Newbury suggested when he urged us to learn lessons from previous land tax regimes, what inevitably undermined previous regimes that were introduced to try to achieve purposes similar to the proposed regime was a commitment from Opposition parties that, if they were to get into power at any stage, one of their first acts would be to repeal those regimes. Inevitably, that commitment caused developers to hold back on the potential supply of land and on development itself.

Therefore the commitment that the hon. Lady has given to this Committee this morning is not so much of great significance to me personally as it is potentially of great significance to other interested groups.

Jacqui Lait (Conservative, Beckenham)

As I said before, although we are prepared to see this levy introduced, we still have serious doubts about how effective it will be. What we do not want to see—this is one of the concerns that I have had all the way through our consideration of the Bill—is a situation in which land will potentially not be brought forward. That is what has always happened before when there has been any form of land taxation. The potential for getting the proposals wrong—it has been difficult even to try and amend them, given how skeletal they are—is still very high. There is a wish to make them work. However, the problem when there is such a wish is that nobody thinks of the downside, how and where they might not work and what might stop them working once the market is affected by them.

Bob Neill (Conservative, Bromley and Chislehurst)

Does my hon. Friend find it surprising, given that she might well have to pick up the pieces after the next general election and make this measure work, that if the Government are so concerned about getting the measure right they seem to have been remarkably cavalier in setting out details about how the various interested groups can be consulted and can respond? To produce this extremely thin document about something that is seen as being of such long-term importance—something which, as the Minister rightly says, we must get right given that the detail is so important—is rather a contradictory attitude for the Government to take.

Jacqui Lait (Conservative, Beckenham)

I would go further and say that this measure should be in a completely separate Bill, with considerably more clarity and detail, so that we all know exactly what the Government are proposing. At the present moment, we are dealing with—well, I will mix my metaphors and say that the measure is a skeleton and we are in a fog. Nobody has the details that they need and that is the problem that we are all trying to grapple with. We are tabling amendments based on the Government’s good intentions. That is the content of the community infrastructure levy in the Bill; it is full of good intentions. It is not full of the sort of detail raised by my hon. Friend the Member for Newbury with regard to the levels of the levy, on which we have tabled amendments.

The document does not make clear what size of development the levy will be levied on. We, the industry and local authorities need clarity on that. For instance, if I had a large house and garden and wished to give my children—not that I have any—the large house, but wanted to build in the garden, is that open to a levy? It would mean extra cars. [Interruption.] Please note that we are not against families building a house in the garden.

Jacqui Lait (Conservative, Beckenham)

Anyone who says that we are against building a retirement home in the garden has not read what we have said. What size of development will be affected? Will it be three houses? Will it be a block of a dozen flats that replaces the big family house, if one cannot get the house in the garden? Until we know that, local authorities will not have a clue as to impact. There is a distinct lack of clarity on some big issues.

I did not want to get into these discussions during the stand part debate, but we are now going down that route because we are discussing the principle of the levy itself. Given that there is such a lack of clarity, I would be grateful if the Minister could assure us that by the time this gets to the Lords, the draft regulations will be available. They are the key to this levy and its success or otherwise. If the Lords do not have the draft regulations to work on, Parliament will not be able to explore in any great detail how the levy will work.

We have had a much longer debate, Mr. Illsley, and I am grateful for it. We are concerned that the Government are still operating on a wing and a prayer, and hope very much that by the time the Bill has gone through this House we will have considerably more clarity as to what will comprise the levy.

Clive Betts (Labour, Sheffield, Attercliffe)

Would my hon. Friend the Minister clarify one point? He said earlier that if a local authority does not want to introduce the levy, it will not have to do so. One issue that has been raised—it is a concern that many of us have expressed over the years—is that while some authorities are very expert and proficient at using section 106 agreements and getting a lot of value out of them, if one looks at other, comparable authorities, one finds that section 106 agreements hardly exist, if they exist at all. They are not something that those authorities deal with, particularly in terms of affordable housing.

I accept the Minister’s point that individual authorities should make their own choice as to whether to introduce the levy. Am I right in assuming that, in making this decision, each local authority will have to look at the infrastructure needs of its area and at likely development as part of the LDF before coming to a positive decision—as opposed to a decision by default—that a levy will not be necessary or appropriate for its area, and that there will have to be a decision made as part of the LDF process that comes to that conclusion?

Dan Rogerson (Liberal Democrat, North Cornwall)

The Minister has been checking where everybody stands on the principle of a levy. We in the Liberal Democrats support anything that hands more cards to the local community and their local authorities in enabling them to achieve their vision for the area and to ensure that adequate facilities and infrastructure are provided. We note, however, the uncharacteristically menacing tone that the former Housing Minister adopted during the evidence session with regard to the fact that the enabling legislation for the planning gain supplement is still on the statute book. The threat that that poses still hangs over us all, which is unfortunate, and we remain opposed to such an approach.

I agree with the hon. Member for Beckenham that we will have great difficulty discussing something that could be crucial to future development if we do not have enough detail to inform our discussion.

Tom Brake (Liberal Democrat, Carshalton and Wallington)

Following on from the hon. Member for Beckenham’s comments, let me add that clarity is key. One issue that needs further investigation concerns the partners with which local authorities will work when identifying how much the levy will cost and what infrastructure it will cover. Those partners will have to ensure that the infrastructure covered is not simply what the local authority wants developed and does not, for example, exclude any health centre facilities that the area might need.

Dan Rogerson (Liberal Democrat, North Cornwall)

Absolutely. My hon. Friend makes a good point. As I was about to say, the document now gives us a few more details, although it is still very much about opening the process. It notes that health centres may be included, although the examples of processes that have been adopted up until now include those dealt with by Reigate and Banstead borough council, and the list of facilities that it has considered clearly does not include health facilities. I do not know the local circumstances in that case, but local authorities might have an incentive to prioritise areas where they have to provide a service and where they, rather than the primary care trust, for example, face pressures. It would be interesting to know what input the primary care trust might have into such decisions.

There is huge scope to work at the sub-regional level. My region—what the Government call the south-west—does not really function as a region, because it is far too big, and, for the most part, there is no sense that people belong to it. However, local authorities have a real opportunity to work together to come up with priorities on issues such as transport infrastructure.

The other key point is that the levy must be additional, rather than a get-out clause in respect of money that is already earmarked for important schemes. It should deliver those things that are not currently prioritised in the programme for delivery through Government or other funding. That is the sort of issue that the right hon. Member for Skipton and Ripon was getting at.

David Curry (Conservative, Skipton and Ripon)

The levy is designed to meet the needs that arise from the development itself, not from a wish list of local authority infrastructure schemes. It would be interesting to know what measures there will be to ensure that when local authorities go through the bottom drawer to see what schemes they would like to carry out, they do in fact confine this money to schemes that flow from the development itself, which is what I understood the purpose of the levy to be.

Dan Rogerson (Liberal Democrat, North Cornwall)

The right hon. Gentleman makes an interesting point, although I would qualify it by saying that the Government’s proposals might worsen certain problems in an area. Potentially, the levy will have an impact not only on new development, but on current residents. I am thinking of things such as road junctions.

Elfyn Llwyd (Plaid Cymru, Meirionnydd Nant Conwy)

In our debate, we have had reference to devils, skeletons, menace and fog. Does the hon. Gentleman agree that we might have had a more enlightened discussion if we had had a copy of the draft regulations?

Dan Rogerson (Liberal Democrat, North Cornwall)

I do indeed. Hon. Members are helping me to jump from one point to another, but that is one to which I was coming. The hon. Member for Beckenham was right to say that the issues before us should be the subject of a Bill, and if the detail is not in this Bill, it should have been included in a separate Bill. As I have outlined, the Liberal Democrats support the general concept, as does the hon. Lady, but there might be problems with particular provisions. We can scrutinise and discuss provisions in secondary legislation, but we can say only “Aye” or “No” to them—we cannot amend them. That is part of the problem; if the people we represent and the organisations that will be part of the consultation process are not happy with the result, that is just tough.

Dan Rogerson (Liberal Democrat, North Cornwall)

I welcome you back to the Chair, Sir John. I am sure that the Minister recalls exactly what I was saying when I had to call a halt to my remarks this morning. To recap briefly, I am in favour of the levy in principle, but we need to know far more about how it will work and how it will be negotiated. The document that was handed to us does not fill in a great deal of detail. I appreciate that there is a lot of negotiation and consultation to come, but there is bound to be some dissatisfaction, given that the provision will not be amendable and will instead be subject to the affirmative resolution procedures for secondary legislation.

We must ensure that we are not jeopardising other calls on planning gain, for want of a better phrase. We will return to that issue in our debates on a later clause. I hope that the threat to impose a planning gain supplement will recede into the background as we move towards a satisfactory principle on which the levy could work. We had a discussion earlier, prompted by the right hon. Member for Skipton and Ripon, on whether it is a hypothecated tax. If one wanted to go further, one could call it a tithe—the taking of a percentage of the increase from which developers benefit.

The key to this issue is that we need more detail on the levy. We have the opportunity to debate what little detail there is in subsequent clauses, and I look forward to doing so. I hope that the process by which the levy is framed will be an open one and that everyone will have an opportunity to comment, so that what comes out the other end is workable and does not have unfortunate consequences regarding communities’ aspirations for their future development.

John Healey (Labour, Wentworth)

Welcome back to the Chair, Sir John. You missed the wide-ranging debate that we had this morning, before we even got to the clause stand part debate, despite Mr. Illsley’s best intentions to keep us in order. Let me deal with the main points that have arisen. I am grateful to the hon. Member for Beckenham for setting out clearly the Conservative party’s position on community infrastructure. The hon. Member for North Cornwall made it clear that the Liberal Democrats support the provision in principle, and I welcome that. Both hon. Members added their general support to the wide range of bodies that are interested in and support a levy, while being anxious that we should get its design and implementation right. I shall return to that point, because it is the reason why we are tackling the legislation, implementation and introduction of the levy as we are.

The hon. Member for North Cornwall stressed the importance of revenue from the levy being additional. We have consistently stressed the importance of that approach, which reflects the Government’s intentions. He also stressed the importance of sub-regions and referred to his experience in Cornwall. He is right to draw the Committee’s attention to that point, which we will come to.

My hon. Friend the Member for Sheffield, Attercliffe queried why we were making the power one that local planning authorities can, rather than should, choose to take advantage of. He also expressed concern about infrastructure planning. It has been established as Government policy, captured first in PPG12 and now in the draft PPS12, that local planning authorities should look systematically at their infrastructure needs. Whatever the extent of the formal incorporation of a community infrastructure levy process in the local development plan framework, it provides a good basis for ensuring that the preparation process and introduction in those areas that want to take advantage of the powers are right.

Clive Betts (Labour, Sheffield, Attercliffe)

I thank my hon. Friend for dealing with that issue. What I was trying to get at was that sometimes, local authorities have not used section 106 powers not because of a definite decision, but because they do not get around to it or have not seen its importance, and have not done what their neighbours have often done effectively. My hon. Friend is right in saying that a local authority may choose not to use CIL powers, but will it have to go through a local development framework process of considering whether those powers would be appropriate in view of the development needs of the area, and come to a view that they would not be—if that is the decision that they eventually come to—in a positive way and through a proper process?

John Healey (Labour, Wentworth)

There will be a proper process for considering the introduction and appropriate charging level of a CIL. Our starting point and intention for when that seems possible and appropriate is to link it into the local development planning process. We are discussing that in detail with the interest groups, because the local development planning process might not be quite flexible or adaptable enough if it were the only route for a CIL. I shall come to that in a moment, and in considering further amendments.

David Curry (Conservative, Skipton and Ripon)

There might be a commercial development in part of a city where a supplementary business rate had been agreed. To be effective, there is likely to be a 10-year programme to raise funds for the sort of projects in mind, which are also infrastructure projects. Would such a new development automatically become eligible for the supplementary business rate, its not having existed, perhaps, when the decision was taken?

John Healey (Labour, Wentworth)

The right hon. Gentleman illustrates why we are approaching the levy’s development as we are. Within the framework set out in the Bill, there will be much detailed examination of how it might work in practice, and we must determine what the regulatory framework should be. That is one question that might be appropriate for that part of the process.

During our discussion this morning, the hon. Member for Beckenham said that the Government seem to be—she may even have said that the Government are—setting up the community infrastructure levy to fail so that they can introduce the planning gain supplement. That is completely ridiculous. Having led the Treasury’s work on the planning gain supplement for at least two years, I am conscious of the concept’s strengths and weaknesses, and of the concerns that exist about that proposal.

I am strongly of the view that the proposal to develop a community infrastructure levy, as we are doing in the Bill, is a better approach. It certainly has sufficiently widespread support to mean that we have a good chance, if we get the details right, of introducing a measure that could make a significant contribution to meeting the costs of some of the infrastructure that we will need in almost all our local areas in the coming years to support housing and economic growth and, therefore, the prospects and prosperity of local people.

Jacqui Lait (Conservative, Beckenham)

I am grateful for that assurance. Does it mean that, in the interest of speedily getting through the remaining stages of the Bill, the Minister will accept all our amendments that refer to land values, and particularly the amendment that asks for repeal of the Planning-gain Supplement (Preparations) Act 2007? If he will accept the spirit of those amendments, I will happily not move them.

John Healey (Labour, Wentworth)

My starting point with all amendments tabled by the hon. Lady, and her arguments, is not necessarily to say no but to see whether they have any merit. Without wanting to raise expectations or hopes too high, the answer is, “Wait and see”—on some of them, at least.

David Curry (Conservative, Skipton and Ripon)

The Minister mentioned housing growth. I believe that I am right in saying that if there were a development of market housing and social housing, the old section 106 agreement would continue to exist in respect of the social housing. After all, that is what has delivered more than 50 per cent. of social housing in this country over the past few years. Presumably, the community infrastructure levy would apply to market housing, and section 106 would apply to social housing, but no properties would be subject to a double imposition. Is that the case?

John Healey (Labour, Wentworth)

Not precisely. We will get on to social housing and the interplay between section 106 agreements and what may be appropriate and allowable infrastructure to be funded through a community infrastructure levy. Suffice it to say that our intention and policy aim is to continue to have sufficient levels of affordable housing, principally negotiated through section 106 agreements. However, it seems sensible to have a provision—we will discuss it on a later amendment—such that, if we saw instead a drop-off in the levels of investment and affordable social housing that we need in almost every part of the country, we could at least make the contribution to the funding of affordable housing an allowable element for expenditure that may come from the levy revenues.

The point that I was making to the hon. Member for Beckenham was that this is not the planning gain supplement by stealth. The community infrastructure levy is different in principle, in design and in the purposes for which it is being raised.

Richard Benyon (Conservative, Newbury)

Further to the point of my hon. Friend the Member for Beckenham, I believe that the hon. Member for North Cornwall referred to the Government’s menacing words about framework legislation for the planning gain supplement remaining on the statute book and being used at some future date. If they are doing something so radically different, what is the point of keeping that measure in the background like a sword of Damocles?

John Healey (Labour, Wentworth)

We are at risk of pre-empting a debate that we will certainly have on one of the hon. Lady’s amendments, but just so the hon. Gentleman is clear, the legislation for planning gain supplement that is on the statute book is not framework legislation. It would not and could not allow the planning gain supplement to be introduced. It is narrowly drawn paving legislation intended specifically to allow Her Majesty’s Revenue and Customs and other specified authorities the power to spend money in preparation for a possible planning gain supplement.

That is the provision that is on the statute book. It has not been used, no expenditure has been made under its provisions, and when I was the Minister responsible for the Bill in question, I gave an undertaking that such things would not happen unless a policy decision was taken to go ahead with a planning gain supplement. I hope that that is helpful. The hon. Gentleman was talking about its being a framework Bill, rather as one might describe this legislation as being a framework Bill for a community infrastructure levy, but, clearly, it is completely different.

The basis on which we proceed with the proposal for a levy is that the industry has stated that it accepts the case and that it is willing to make additional contributions for infrastructure. It supports the levy, which builds, as many urged us to do, on the existing practice through planning obligations under section 106 agreements.

The question is how best to do that; that is the nature of the discussion that we are having about the Bill’s provisions. Industry has strongly backed that, as members of the Committee heard in the evidence sessions. The framework in the Bill is designed to give us the powers to introduce a levy, the detail and design of which, we propose and have always proposed, will be set out in regulations. The hon. Member for Beckenham described that as cavalier, but I would say that, on the contrary, it is cautious and consultative. The British Property Federation and the Home Builders Federation jointly said that they welcomed the fact that the CIL clauses in the Bill are enabling clauses, because that will provide the necessary flexibility to implement the levy through regulations and guidance as its full details are developed.

That is precisely what we are doing and what we intend to do, and I want to make it clear to the Committee that regulations to introduce a levy under the provisions in the Bill will be subject, as clause 171 states, to affirmative resolution. Therefore, the House will have the chance to debate and scrutinise the proposals we intend to lay later, and those regulations will be laid only after detailed, continuing discussions with those with a direct interest and others and consultation on the drafts of the regulations.

Finally, with regard to timing, I say to the hon. Member for Beckenham, who urges that the regulations should somehow be done and dusted and available in draft by the time the Bill goes to the Lords, that we have been consistent and clear from the start. I had hoped that publishing the policy document on Thursday would have given her a chance to read it over the weekend, as paragraph 83 of that document makes it clear that we aim formally to consult on draft regulations this autumn with a view to finalising them in spring 2009. Regulations will need to be explicitly approved by the House of Commons before becoming law. I commend the clause to the Committee.

Clause 164

Clive Betts (Labour, Sheffield, Attercliffe)

I beg to move amendment No. 437, in clause 164, page 93, line 12, leave out ‘which authority’ and insert

‘that the local planning authority (within the meaning of Part 1 of the Town and Country Planning Act 1990)’.

John Butterfill (Conservative, Bournemouth West)

With this it will be convenient to discuss the following: Government amendment No. 537

Amendment No. 592, in clause 164, page 93, leave out lines 15 to 18.

Amendment No. 37, in clause 164, page 93, line 17, leave out from ‘London’ to end of line 18.

Amendment No. 438, in clause 164, page 93, line 19, leave out subsection (3).

Clive Betts (Labour, Sheffield, Attercliffe)

I will not detain the Committee too long, as this is a point of clarification to ensure that the authority that can collect the levy is the planning authority. That is useful with regard to any symmetry that we need to develop between the LDF process and the CIL, notwithstanding the comments that the Minister has just made about the consultation that is going on about how the two relate to each other. However, there are also concerns within local government and the Local Government Association that the primary body must be the accountable and elected local planning authority for the area. When Sir Simon Milton gave evidence to the Committee, he made the point that local government in general was supportive of the collaborative arrangements between local authorities when they would come together to look at the infrastructure needs of a wider area, typically a city region. I have been a long-term supporter of the concept of city regions and welcome the approach that the Government have adopted of allowing the development of city regions to come about organically, with local authorities determining the best way forward for that area on a voluntary and collective basis.

There is still concern that at some point the Government might decide that a city region authority, rather than a local planning authority, could have the power to decide on and collect the levy, which would be against the spirit of city regions developing by collaboration and collective agreement and could lead to some imposed organisation funding itself through the levy.

A further concern is probably that, given a regional development association’s new strategic planning powers, it might be possible at some stage that the Government will consider it as an authority that could collect, or even determine, the levy for its area. My amendment seeks to specify absolutely and clearly that the authority in question is the local planning authority——the local elected body in the area. It should be responsible not merely for planning policy, but also for the determination and collection of the levy.

Jacqui Lait (Conservative, Beckenham)

Welcome back, Sir John. I have great sympathy with the proposal of the hon. Member for Sheffield, Attercliffe. As he succinctly put it at the end, we have always maintained that only democratically accountable bodies that are capable of raising taxes should be charging bodies.

As we see from the Government’s new clause, they are hoping that RDAs will take over responsibility for planning as well as housing and they will need to fund those responsibilities. The concern is that the RDA could insist on a charge that it would levy as part of the community infrastructure levy, but it would not be democratically accountable to the people from whom it is raising the money or to whom things will be done.

Amendment No. 592 would delete any body other than a local authority from the list of charging authorities in the regulations, including the local planning authority, which I think the Government try to define in Government amendment No. 537. I will leave that to the Minister. The list goes on to specify the Secretary of State, the Welsh Ministers, the Mayor of London, and

“any other authority with responsibility for town and country planning.”

As the RDAs are being given responsibility for planning under the Government new clause, it leaves open the opportunity for them to charge. It also leaves open that opportunity for the Mayor of London, who, as we know, notoriously has control over the London Development Agency on housing and planning under the Greater London Authority Act 2007, which we fought all the way through the Commons, will continue to oppose and do so here.

If I may speak on behalf of hon. Members from Wales on this side of the Committee, I do not think that in principle they would wish Welsh Ministers to have control over local authority expenditure in Wales. Empowering the Secretary of State is possibly the most dangerous of all, because it ties in with our concern, which has not been allayed by the Minister’s comment that, as he was responsible for the Planning-gain Supplement (Preparations) Act 2007, he can say that there is no way that it will ever be invoked. My view would be that if it remains on the statute book, it can be invoked. It concerns a wider audience than Opposition Members that the possibility is, as my hon. Friend the Member for Newbury said, hanging like the sword of Damocles over the development industry. The last thing that we want is the Secretary of State being able to get their hands on the community infrastructure levy and dictate what it should be and to whom. Therefore, we strongly wish to see that only local authorities should have the power to charge. That is not to say that they cannot work at sub-regional level, or that they cannot cross local authority boundaries, which more and more local authorities are willing and wishing to do, so that they can develop in a way that suits all their communities, but only the local authority should be the charging body, and no other body should be able to levy the charge.

Dan Rogerson (Liberal Democrat, North Cornwall)

I am grateful to the hon. Lady and the hon. Member for Sheffield, Attercliffe for raising this issue because it will concern a lot of people, particularly with regard to the regional development authorities. Does she think that local authorities will have the power, if they are making the charge, to spend it or to hand it over to other bodies? Earlier, I raised the question of health facilities, which would be provided by the PCT or the strategic health authority. The concern is that there would be a desire in the community for a health facility, but the only people who could charge the money would be the local authorities. Do they have the power to hand over that money?

Jacqui Lait (Conservative, Beckenham)

It is not for me to interpret the non-existent rules and regulations for the community infrastructure levy or even the guidance, sparse as it is. However, as I understand it more and more local authorities are working closely with the health authorities, the police and a range of other bodies to come to a coherent view on what is required within their communities. That is certainly developing in the outer-London suburbs and I hope that it is the same in Cornwall. Provided that that situation remains robust, there is no reason why the local authority cannot be the agreed charging authority on behalf of all those who are looking towards the community infrastructure developments.

That situation would apply for a jointly agreed road. I will cite the example of a road going from Bexhill to Hastings, which involves Rother district council, Hastings borough council, East Sussex county council and even the South East England Development Agency. The local county council will build the road and will be tolling it. That is already working on a property basis and there is no reason why it should not. That should free up the sort of housing that the Minister wishes to see.

On that basis, when we get to it, I would like to press amendment No. 592.

David Curry (Conservative, Skipton and Ripon)

I am still confused about who does what in all of this. There is such a thing as a charging authority. In my constituency, Harrogate council and Craven council are the charging authorities, but there is a whole raft of precepting authorities, of which the county council accounts for the biggest chunk of the council tax bills. There are also the police, fire services and flood defence agencies, so a string of people have the right of precept. What will happen in practice? Even if it is called by another name, will other authorities be able to precept the levy?

Will the levy be an accumulation of the needs of different authorities? After all, if a housing estate is built in some parts of the world, issues such as refuse collection will fall on one tier of local authority and other issues, such as highways and schooling, will fall on a different tier. Will that be worked out by an informal agreement, or is there some mechanism by which costs will be apportioned to permit precepting?

What will be the role of organisations like development corporations? Just as a detail, does the Olympic delivery body have the right to precept or levy the charge? The biggest development in the country is probably the Olympic development in the east end of London. I guess that Hackney is the lead authority on that.

Jacqui Lait (Conservative, Beckenham)

I am grateful to my right hon. Friend for giving me this opportunity. It is the Mayor who precepts on behalf of the Olympic development authority and, until we have a change of Mayor, the current Mayor is threatening to precept the London boroughs to infinity.

David Curry (Conservative, Skipton and Ripon)

That causes two reflections. The first is how glad I am that my constituency is 250 miles north of London. The second is that if the Conservative candidate were to win the mayoral election, it would be regarded as a victory by both sides of the House. I would like the Minister to clarify some of these matters. He says it is a framework Bill, but it is difficult but it is difficult to understand that until we know what is to happen inside it. The detail is everything in this sort of legislation. In the case of a project that makes calls upon infrastructure for which different bodies are currently responsible, is there a precepting mechanism for the allocation of that, or is it done by collaboration? It sounds like a tedious, bureaucratic question, but tedious bureaucracy lies at the heart of many of the things we have to deal with.

David Jones (Conservative, Clwyd West)

I add my voice to the note of concern raised by the hon. Member for Sheffield, Attercliffe and my right hon. and hon. Friends. According to subsection (2), one of the potential charging authorities is the Welsh Ministers. The Welsh Ministers are a very acquisitive bunch of people. They are acquisitive both in terms of legislative competence—we shall shortly debate potential framework powers to give them legislative power in this area— and finance. The Local Transport Bill, which is before Parliament, seeks to give them the right to impose road charges on trunk roads in England and Wales. When I see the Welsh Ministers are a potential charging authority, I immediately react with alarm.

I am also concerned that the clauses relating to the application of the proceeds of any levy are very widely drawn. I am worried that a CIL charge, referable to a project in my constituency of Clwyd, West, could find itself being applied to a project in Cardiff, or even Cardiff, South and Penarth. That is not the sort of result that I would be keen to see but it seems to be a consequence of the very wide terms in which the application powers in the clause are drawn.

I seek reassurance from the Minister that if the Welsh Ministers were indeed to be the charging authority in respect of any CIL charged in Wales, they would be obliged to apply the proceeds of that levy to the local authority area in respect of which it is referable. The Minister said this morning that this was an important power that the Government intend to put in the hands of local planning authorities. I seek reassurance that that power will remain with the relevant local planning authority and not disappear into the coffers of Cardiff bay.

John Healey (Labour, Wentworth)

Perhaps we can start at the starting point. There is wide recognition that the sort of infrastructure that we shall look to this levy to help support and fund can often be outside the local authority’s boundaries. That infrastructure can be just as critical to the potential growth and prosperity as infrastructure within those boundaries and in some cases can relate to the specific development site.

Alun Michael (Labour, Cardiff South and Penarth)

I endorse entirely what my hon. Friend is saying. It makes the reference to Cardiff, South and Penarth a few moments ago quite appropriate. The impact on traffication and access to rail services as a result of the development in the Sport City in Cardiff bay has serious implications for the traffication in the Vale of Glamorgan council area. Indeed, one of the strengths of the recent arrangements is that payments from the Cardiff Bay development were applied to it.

John Butterfill (Conservative, Bournemouth West)

Order. First, this is a long intervention and, secondly, it is going rather wide of our discussion.

John Healey (Labour, Wentworth)

I enjoy these detailed discussions in Committee, which often come up with new, ground-breaking terms. “Traffication”, which my right hon. Friend has just introduced into our debate, is one that I will treasure and savour. I may even find an opportunity to use it at a later stage if I can find an appropriate way of doing so.

The starkest example of the argument was made by the hon. Member for Milton Keynes, South-West (Dr. Starkey), the Chair of the Select Committee on Communities and Local Government, which shadows the work of the Department. On Second Reading, the hon. Lady pointed out the importance of junction 13 on the M1 to Milton Keynes. As she said, the junction is critical to the future success and growth of Milton Keynes, but it is in a different local authority area, a different county and a different region, hence the argument for having a system that is capable, in the right circumstances and in the right way, of delivering a portion of the levy that can support such infrastructure. That is what the provisions in this part of the Bill are designed to do, as our policy document, which was published last week, set out clearly.

Jacqui Lait (Conservative, Beckenham)

The Minister for Local Government and his fellow Ministers regularly say that they want to devolve powers to local authorities. If that junction on the M1 is so important, the local authorities will be well aware of it. Why will the Minister not allow the local authorities to come together across county boundaries and artificial regional boundaries to decide themselves what they want to do and let them get on with it? Why does he not trust them?

John Healey (Labour, Wentworth)

Indeed we do. We are giving them the power to choose to introduce a community infrastructure levy and the potential to collaborate and pool some of the proceeds of it from their areas. That is our starting point and the main basis of the Bill. However, there may be circumstances in which that approach will not work and in which there is a stronger case for having a community infrastructure levy at a regional or sub-regional level, and the amendments provide the means to do so.

It is precisely that tricky territory that we are discussing in detail at the moment. We are consulting on how best to ensure that we have a community infrastructure levy regime that could be used in such circumstances to support the infrastructure. It is important to retain the flexibility that is set out in clause 164(2) to allow that to be done.

Amendment No. 592 seems designed simply to prevent the Mayor of London becoming a charging authority and being able to impose a community infrastructure levy. I am not sure whether the hon. Lady consulted the hon. Member for Henley (Mr. Johnson) about removing that power, and I do not know whether she is aware that, were she to do so, she would create a £300 million black hole in the potential finances of the Crossrail scheme. The consequences of the hon. Lady’s pressing her amendment to a Division could be much wider than she might realise, and it would rule out the possibility of an important element of Crossrail funding.

The hon. Lady gave us the lovely image of the Mayor of London taxing to infinity to support the Olympics. With several of my hon. Friends, I chime, “to infinity and beyond.” The hon. Lady may not have children as young as mine and those of some of my hon. Friends and she may not know that that was a reference to Buzz Lightyear. I thought at the time that perhaps it had gone over her head, just like the jokes that other hon. Members have shared about West Ham.

Jacqui Lait (Conservative, Beckenham)

I understand the jokes, I just do not appreciate them.

John Healey (Labour, Wentworth)

Perhaps I had better move on before you rule me out of order, Sir John.

John Butterfill (Conservative, Bournemouth West)

I would be grateful.

Bob Neill (Conservative, Bromley and Chislehurst)

West Ham always go towards infinity, as we know, and occasionally get a goal.

The Minister referred to the Mayor of London’s plans and to Crossrail. Nothing under our amendment would prevent the London boroughs through which Crossrail will run from levying the community infrastructure levy and entering into an agreement with Transport for London or the Mayor as to any apportionment between them. That works frequently under section 106 agreements. Does he accept that it is a bit of a red herring to raise the loss of Crossrail? Will he also find time to read the very interesting remarks made by the hon. Member for Henley, in which he talks about his determination to work as a partner of the boroughs, rather than in confrontation with them? That approach would fit exactly with the proposition that we make.

John Healey (Labour, Wentworth)

I have not made a habit of studying the remarks of the hon. Member for Henley, and I do not propose to do so.

Amendments Nos. 37 and 592 would prevent other bodies that have town and country planning responsibilities from being empowered to charge the levy. That would remove the flexibility that we think will be important to encompass possible future changes to planning responsibilities. For example, we are consulting with interested parties about whether the IPC should be able to charge the levy for nationally significant infrastructure projects. I stress that clause 164(2)(e) will not permit the Secretary of State to make regulations empowering regional development agencies to become CIL authorities, which the hon. Member for Beckenham was very exercised about. That is because they currently have no responsibilities for town and country planning.

David Curry (Conservative, Skipton and Ripon)

I thought that we had finished discussing the IPC a little while ago. I had not realised that it might be a taxing authority. The Minister has just told us that the IPC might raise the levy. Should we not have been discussing that when dealing with the IPC? It is a rather big afterthought.

John Healey (Labour, Wentworth)

It is not an afterthought at all. I am making the case for the flexibility that we propose in the Bill for decisions that we will take, after the required discussions and consultations, over which authorities should be appropriate planning authorities. Those will be set out in regulations and will be subject to the established scrutiny and debate process through the affirmative resolution procedure of this House.

I want to deal with the question of the regional development agencies and to reassure the hon. Member for Beckenham as far as I can. Because of the amendments that we propose to make to the Bill, it may be that in future an RDA could take on some of the planning functions that are currently carried out by regional assemblies. Subsection (2)(e) gives a discretionary power for the Secretary of State—it is discretionary rather than a requirement—to make

“any other authority with responsibility for town and country planning”

a charging authority. That could not apply to RDAs at present. It could apply to them in a region where there is an agreement between an assembly and an RDA for the RDA to take on some of the planning functions, as we have proposed in a new clause. We have no intention of empowering regional planning bodies, whether in their current form or as regional development agencies, as CIL charging authorities.

Amendment No. 438 would also prevent the regulations from permitting or requiring charging authorities to act jointly. We need the regulations to be able to enable or require authorities to act as a charging authority as if they were one body, without being challenged for acting under the dictation of another, or for fettering their discretion. For instance, if local planning authorities have developed joint core strategies, it may make sense for them to be joint charging authorities for the purpose of the CIL. I would have thought that the hon. Member for Beckenham and her right hon. and hon. Friends would be looking to encourage that sort of thing, rather than prevent it.

Finally, amendment No. 438 appears to remove the possibility that the regulations could allow a different approach to deciding on the charging authority in different cases or circumstances. Given that not all areas are the same, administratively, geographically, or economically, a certain degree of flexibility seems reasonable and justified. That is why Government amendment No. 537 enables regulations to empower certain local authorities that are not local planning authorities to charge the community infrastructure levy. In that instance, we are responding to concerns that have been raised with us by bodies that might come into that category, such as national park authorities.

Dan Rogerson (Liberal Democrat, North Cornwall)

I do not know the answer to the question that I asked the hon. Member for Beckenham earlier on, but the Minister may be able to provide it, as it is a crucial question for me. Under section 106 agreements currently, are the moneys collected by the local authority, then handed over to other service providers, such as those for health? That is only an example; there may be other key areas that it wishes to fund. Or are those side agreements brokered as part of the section 106 process by the local authority?

If it is felt necessary to set down in the Bill exactly which authorities can have a call on that money, and if some authorities that are not planning authorities, such as primary care trusts, are not specified, does the local authority have the power to hand money over to them as opposed to brokering an agreement whereby the developer pays the money straight to the PCT? I appreciate that that may be a technical question. Health facilities are mentioned in the document that has been published so far, so I am assuming that local authorities are able to do that. I would be grateful if the Minister confirmed that that was the case.

John Healey (Labour, Wentworth)

That is a different question, which is connected not with the provisions of the Bill but with the operation of section 106 agreements. I understand that local authorities do have the scope to do as the hon. Gentleman suggests. I will check that matter out and, if I need to, I will contact him further about it.

Clive Betts (Labour, Sheffield, Attercliffe)

I shall raise two matters. My hon. Friend has answered the question about the RDA directly, which I am pleased about.

On the matter of the sub-regional arrangements, along with the LGA, my feeling is that charging authorities should come together as a planning authority collectively and voluntarily to provide appropriate arrangements. I think that I heard my hon. Friend correctly when he said that, essentially, the powers in amendment No. 164 are discretionary for the Secretary of State, and that there will be ongoing discussions with the LGA and other interested parties to find the most appropriate way to achieve those objectives. On the basis of that reassurance, I beg to ask leave to withdraw the amendment.

Clause 165

Dan Rogerson (Liberal Democrat, North Cornwall)

I beg to move amendment No. 573, in clause 165, page 93, line 28, at end insert ‘and’.

John Butterfill (Conservative, Bournemouth West)

With this it will be convenient to discuss amendment No. 574, in clause 165, page 93, line 30, leave out from ‘it’ to end of line 33.

Dan Rogerson (Liberal Democrat, North Cornwall)

We have discussed the issue of rising land values a little so far. Indeed, the hon. Member for Meirionnydd Nant Conwy mentioned the issue of capital gains tax and we explored the fact that there might be issues that increase land value other than the planning permission being granted at that point, such as the gradual increase over time. I am hoping to probe the Minister’s view on that issue.

When one talks to the volume house builders, they all claim that land banking does not occur and that it would not be in their interests because it would be terrible for them to take on land and leave it sitting when they could be building houses on it. However, anecdotally, one hears of areas of land on which builders not only have an option but have bought up and have planning permission for but which has not been built on for some time. The hon. Member for Meirionnydd Nant Conwy mentioned an area in his constituency where planning permission had been granted but that had held back other development because it met the demonstrated need in the area, even though the properties were not built for a number of years.

If the level of CIL and its implications are determined in any way according to the land value at the time when planning permission is granted and the development does not subsequently occur for some time, my concern is that that could be an incentive to get that CIL agreement early, even though costs will rise in the future. There might be a concern that that the costs will be higher later, when builders seek to carry out the development, and smaller developers will not want to incur the cost earlier on, but will want to do so at the time when they are getting the return on the investment. However, that might not be an issue for bigger developers who decide that they can carry the cost as part of their overall financial management and would rather take the cost of the CIL earlier. A later increase in land value would mean that the cost of the CIL could be higher, but they will not have to worry about it because they will have paid it at a lower rate. The purpose of the amendment is to see whether the Minister has considered that possibility and thinks that it should be taken account of.

Jacqui Lait (Conservative, Beckenham)

I seek some information from the Minister. Much of the levy appears to be based on the fact that land values will continue to increase, but they may at least mark time and could go down. If land values go down, I wonder whether the levy will go down, how flexible it is and whether the Minister has done any modelling—I use the word advisedly—to see how effective a levy would be if the land values and the value of the development went down.

John Healey (Labour, Wentworth)

The developers say that they want certainty about how much will be payable. They want that before they start development. They want that as far as possible while they are arranging their financing. That is why they are keen, as we are, to see the CIL set out in a charging schedule rather than calculated on a site-by-site basis as in the previous proposal for a planning gain supplement. So they want certainty about how much is payable. They want the certainty before they commence the development or arrange the financing. That is often only possible after the grant of the permission. We are linking the levy to the planning permission.

To answer the hon. Member for North Cornwall, under town and country planning provisions, planning permission is generally limited to three years, unless the development is then commenced. We are not talking about an infinite period. There is also provision, and we are looking at the appropriate way to do this, for indexing a charging schedule. Were that indexing or some form of buoyancy to be attached to the charging schedule over time, it is certainly conceivable, were the market or inflation to go down, for it to be reflected in that way. As the hon. Lady will appreciate from the provisions in the Bill, these are areas of quite fine detail. We are looking at them closely at the moment. They will develop as we find a sensible way forward when we have had the chance to discuss this in detail with those who have an interest in the provisions.

Dan Rogerson (Liberal Democrat, North Cornwall)

I was interested to hear what the Minister had to say about indexing. We have discovered a little bit more about the proposals that are under discussion so it is all part of the ongoing revelation of how the levy can work. On the question of planning permission being valid for only three years, the case that was brought to our attention by the hon. Member for Meirionnydd Nant Conwy was on the basis that enough development had occurred to allow the planning permission to remain live, even though the rest of the development was halted. I accept that that is a rare case. My concern was that in terms of financial considerations over the levy, it does not provide any form of incentive for that sort of thing to happen further. I am grateful to the Minister for his response. I beg to ask leave to withdraw the amendment.

Clive Betts (Labour, Sheffield, Attercliffe)

I beg to move amendment No. 444, in clause 165, page 93, line 33, at end insert—

‘(d) CIL is not payable by incorporated companies whose primary purpose is the provision and operation of infrastructure and whose profits are applied solely for that purpose.’.

John Butterfill (Conservative, Bournemouth West)

With this it will be convenient to discuss amendment No. 593, in clause 165, page 93, line 33, at end insert—

‘(d) CIL shall not be payable in respect of development carried out by registered charities’.

Clive Betts (Labour, Sheffield, Attercliffe)

This is a probing amendment. I understand that the Minister will be reluctant to agree categories of exemptions from CIL. Indeed, it was interesting that during our hearings into the planning gains supplement, although probably not agreeing with the details and some of the complications of the PGS, a number of organisations were supportive of the idea of some form of charge being levied on those who benefited from planning permission that allowed them to develop a particular piece of land. At the same time, they were very much in favour of exemption for themselves and similar organisations from such charges. That is often the case with such proposals.

I am trying to tease out the possibility of the law of unintended consequences applying to CIL and whether there might be one or two perverse developments as a result. The issue was initially raised with me by Network Rail, which, by definition, is a developer and maintainer of infrastructure. As I understand it, because of the way CIL will be constructed without any exemptions, it is entirely possible that when a new railway is developed or an existing railway expanded, Network Rail could be charged for a CIL that contributes to improving the road system in the area. With the Government policy of encouraging the development of public transport, it would seem a little perverse if the development of railways gave rise to extra funds to build new roads. That is only an extreme example, but it is a possibility.

The issue has also been raised by the National Housing Federation and the Home Builders Federation. They asked whether a development by a housing association, which by its very nature is not seeking to make profit out of the development of land, will be subject to CIL. We are trying to use section 106 to encourage the provision of more affordable housing, but on the site next door there could be a housing association development that has to pay CIL. That would reduce the resources that the housing association has to provide social housing. Is there any scope for Ministers to look at the unintended effects that CIL might have in reducing the resources for the provision of social housing when the general intention is that there should be a greater provision of social housing through funds available from the benefits of development?

My final issue goes a little further than the amendment, but is in the same spirit. In a situation where a house builder wants to build a private development, but negotiates a section 106 arrangement to build a number of social housing units as part of it, will CIL be levied on the social housing as well? In other words, will the developer be asked to pay section 106 money on the social housing as well as the CIL, particularly if CIL is a levy based on the roof tax, as in the Milton Keynes arrangement?

These are interesting issues that probe the consequences, which might not be intended, of what I think is the very good proposal of CIL. However, it is one that we need to get right in detail, as the Minister has said repeatedly.

Jacqui Lait (Conservative, Beckenham)

Amendment No. 593 would go further than the amendment No. 444 and would bring in another category for exemption. We are seeking clarification from the Government on charities. All of us as MPs and as subscribers to charities know how strongly they feel about having to pay VAT, and one has a great deal of sympathy with that view. They are asking whether they will also have to pay CIL, given that many charities wish to make property developments for things such as church halls, school halls, new houses for their vicars and ministers, and community sports facilities. Historically, charities have built many social housing developments, of which there are a number in my constituency.

Charities are rightly asking whether they will be asked to pay CIL when they are using charitable money donated by the public that was not foreseen to be used as a contribution towards infrastructure. Much of what the charities will do in developing property will be to provide social infrastructure out of their own pockets. It will be a double whammy for anyone who contributes to charity fundraising. Again, it is another consequence of sparse detail, and I hope that the Minister can reassure the charities in the wider world, and me.

John Healey (Labour, Wentworth)

For reasons that I will explain in a moment, I cannot give the hon. Lady the reassurance that she thinks she wants. She says that she supports the levy in principle, and I therefore encourage her to reflect on its purpose and the justification for it, which is that the basic goal of a community infrastructure levy is for every development to pay a fair share towards the infrastructure that may be required in the area in which it is located. At this stage of our thinking, we believe it is right that most types of development are liable to pay a levy, subject to what is a low, but important, de minimis threshold, because almost all development has some impact on the need for infrastructure, services and amenities.

The current system of planning obligations does not have any automatic exemptions for a specific type of developer or development. That reflects a planning system that is blind to what developers do with their profits or to whether a developer is also a registered charity, because it is irrelevant to the impact of their development on the local community.

The range of interests and representative organisations that believe they have a special case for an exemption is much wider than Network Rail, housing associations and registered charities. That is not surprising; virtually everyone feels that they have a case for the levy not applying to them. However, at some stage this year, when we have been able to discuss the matter in more detail—it will be the basis for a public consultation—we will set out our approach to exemptions. In doing so, we will ensure that any potential qualification for exemption must be fair and justified and refer to an objective set of criteria or there may, at least, be a risk of falling foul of state aid legislation.

I can reassure the hon. Lady that we will discuss in detail with charities and others—that includes those that have already approached us or those she might wish to point in my direction—whether they could qualify for an exemption from the levy. Our approach is linked to the purpose of CIL and our starting point is that the large majority of developments, irrespective of the developer, should justifiably be liable to pay the levy.

Jacqui Lait (Conservative, Beckenham)

I am slightly concerned and I hope that the Minister takes this on board. Let us suppose that a new faith school is needed, the community recognises that need, the school is built, property prices in the area go up and so do the number of cars that go to that school. If the faith organisation involved in building the school worked with the local authority through the local development framework and was a recipient of the community infrastructure levy, would that organisation also have to pay the levy?

John Healey (Labour, Wentworth)

I hoped that that was clear from what I said earlier. I cannot give the hon. Lady a categorical answer to a “What if?” situation.

Our principal starting point is that almost all developments will have some imposition and impact on the need for associated or related infrastructure in the area, and some call on the services or amenities. Our rationale for the basic goal of the levy is that every development should pay a fair contribution towards those costs. If we are to consider any categories for exemption, we must do so carefully and with sound debate, as they would have to be in keeping with the purposes that we have set out for the levy.

Clive Betts (Labour, Sheffield, Attercliffe)

Again, we have returned to the Minister saying that there are further discussions to be had. I generally accept his premise that the presumption is that everyone will pay a levy unless there is a good reason for a particular type of organisation not to. However, I still think that there is a discussion to be had about the effect on social housing in particular. He has said that concerned organisations that have approached the Department, or which do so in the near future, will be party to the discussions, without any promises as to their outcome. On that basis, I beg to ask leave to withdraw the amendments.

Jacqui Lait (Conservative, Beckenham)

I beg to move amendment No. 595, in clause 165, page 93, line 33, at end insert—

‘(d) CIL is payable only in respect of development which—

(i) generates a significant extra demand for existing infrastructure, or

(ii) requires the provision of significant new infrastructure.’.

This is another probing amendment that, in a sense, follows on from the amendments on charities, because we are again trying to get the Minister to ensure that CIL would not be used by central Government or other bodies to replace their spending, or to replace, repair or create unrelated projects.

We want CIL to be used primarily for local infrastructure that is agreed locally. Some of the Minister’s comments have left me worried that regional and national bodies will be able to charge directly for developments that are outside the locality and do not affect local regions.

John Healey (Labour, Wentworth)

The hon. Lady needs to understand that regional or national bodies could not charge; it is the Secretary of State’s power potentially to charge on their behalf.

Jacqui Lait (Conservative, Beckenham)

That terrifies me even more, because it takes the debate straight back into the field of taxation and the worry of my right hon. Friend the Member for Skipton and Ripon about hypothecated taxation. However, we will probably return to that matter on Report. I am sure that Sir John will be concerned that we do not go down that route now.

The amendment is intended not to tease out from the Government the accuracy of my comments about whether it is the regional development strategy or the Secretary of State who will charge, but to ensure that the infrastructure levy is not used to replace spending that should come legitimately from bodies outside the local region and is not spent on projects that are not local. If he can reassure us on that, I will be happy to withdraw the amendment. It is designed to get an assurance on the record that the Government will not take CIL money for their own objectives.

John Healey (Labour, Wentworth)

I have two short answers for the hon. Lady. First, we have been consistently clear that the purpose, intent and effect of the levy will be to raise funding that is additional to what the Government are already prepared to put forward to support growth, and the document is clear about that. Secondly, it will be done specifically to support infrastructure and is not, as she put it, for the purposes of the Secretary of State.

Jacqui Lait (Conservative, Beckenham)

I remain unconvinced that the money raised by CIL will not be taken away from the local area and community and used for matters outside their control. However, I am prepared at this stage not to press the amendment and will undoubtedly come back to it on another occasion. I beg to ask leave to withdraw the amendment.

John Healey (Labour, Wentworth)

I beg to move amendment No. 539, in clause 165, page 93, line 35, at end insert ‘and’.

John Butterfill (Conservative, Bournemouth West)

With this it will be convenient to discuss Government amendments Nos. 540 to 544.

John Healey (Labour, Wentworth)

Government amendment No. 540 will ensure that CIL regulations can make provision for liability to arise in relation to general consents, such as those granted by local development orders under the Town and Country Planning Act 1990. Essentially, we are seeking for development permitted under such orders also to be able to pay the levy, because such development could clearly give rise to infrastructure but would automatically be exempt without the amendment.

The other amendments will ensure that the regulations can define the point at which planning permission is deemed to first permit the development, which is the time at which the extent of the civil liability is to be determined under the clause. That is necessary to ensure that the amount of CIL to be paid is correctly calculated with reference to the scheme that is permitted. I hope that that is helpful.

Jacqui Lait (Conservative, Beckenham)

I hope that I will not detain the Committee for long. Some questions arise on the clause as a whole. We dealt with it in small pieces, but there is the bigger picture. Could the Minister enlighten us on the question of liability to pay? Precisely what size of development does he think should be liable for the charge? There was some merriment earlier when I referred to building a retirement house in the garden. Would that one house be liable? Would a farmer who has permitted development rights be liable to pay CIL if he wanted to change his buildings and processes?

There was also a reference to Network Rail. Most of the infrastructure developers have put forward very eloquent pleas not to be liable for CIL. I can understand that liability where they are building the actual development, but associated developments might be opened up to it because of the infrastructure development. Would there be a difference between the infrastructure provided and the potential opened up by the fact that a new road needs to go into a port or nuclear power station, or round a generating station or grid provider? If land is opened up that belongs to that infrastructure developer, would they be liable for CIL on that land? Would the developer of the land opened up be liable because, say, a road has gone in? Could the Minister enlighten us on those broader questions?

John Healey (Labour, Wentworth)

Our starting point is that, as I have said before, the liability for CIL should apply widely to almost all developments, unless we become convinced that there is a strong case for exemptions. We are looking at that and we will make decisions and proposals later. But as we stated in paragraph 78 of the document published last week, we do not want complexity for those very small developments, so there will be a de minimis threshold. I said earlier that it would be a low de minimis threshold but as the document states, we do not intend the liability to arise in relation to householder development by homeowners and, subject to further consultation, some further permitted development, such as walls, roof extensions and so on, might also not be liable for CIL.

Jacqui Lait (Conservative, Beckenham)

Is the Minister saying that a householder will not be liable for CIL if they build a room in the roof, but they would be liable if the garden was big enough for them to build their retirement home in?

John Healey (Labour, Wentworth)

The hon. Lady heard me say that that is exactly the sort of thing that we are considering at the moment. We intend to introduce a low de minimis threshold. Nevertheless, it will be a de minimis threshold below which liability for the CIL would not apply.

Jacqui Lait (Conservative, Beckenham)

And the infrastructure point?

John Healey (Labour, Wentworth)

The short answer to the hon. Lady’s point is, were the piece of land that she has talked about to be identified in the charging schedule as attracting a liability for CIL, it would attract such liability.

Clause 166

Jacqui Lait (Conservative, Beckenham)

I beg to move amendment No. 597, in clause 166, page 94, line 10, leave out ‘determining the amount of CIL’ and insert

‘local planning authorities to determine the amount of CIL as part of their local development plan process.’.

John Butterfill (Conservative, Bournemouth West)

With this it will be convenient to discuss the following: Government amendments Nos. 545 to 548.

Amendment No. 588, in clause 166, page 94, line 20, after ‘descriptions’, insert ‘, locality’.

Government amendments Nos. 549, 38 and 551.

Amendment No. 599, in clause 166, page 94, line 27, leave out paragraph (d).

Government amendments Nos. 552 to 554.

Amendment No. 600, in clause 166, page 94, line 30, leave out subsection (5).

Government amendments Nos. 555 and 559.

Jacqui Lait (Conservative, Beckenham)

There is nothing like being defeatist, but we are unlikely to get very far with this issue. However, we believe that local authorities should set the amount for the infrastructure levy, not the Government. We are considerably concerned about how flexible it will be. We have tabled that proposal in the amendment.

I see from Government amendment No. 38 that the Minister and I are of one mind, technically, although I suspect that we are coming at the issue from different angles. I am therefore very interested to hear what his view is. We are looking to take out the references to land value, as part of our continuing campaign to ensure that the planning gain supplement cannot be brought back in any way, shape or form. I cannot imagine that the Minister will use that argument.

Amendment No. 600 would ensure that there is a right of appeal against the CIL. Currently, that can be done through the planning appeals system and we would like to hear whether the Government are prepared to incorporate an appeals system that is part of a well-known process, such as the planning appeals process. This point was put to us quite forcibly by the Home Builders Federation, and I am sure that the Minister has also heard its arguments. That is somewhat ironic because the Home Builders Federation is one of the organisations that succeeded in persuading the Government to go down this route. If the Minister would clarify that point, I would be grateful.

Clive Betts (Labour, Sheffield, Attercliffe)

I want to raise two issues: first, land values, which is of great concern to me. There has rightly been a lot of discussion in Committee of the fact that we have not received the detail of the regulations, which will eventually determine whether, and how well, CIL works.

In our very useful evidence sessions we heard from a range of different organisations that will ultimately be involved in the levy implementation: the British Property Federation, the Home Builders Federation and the CBI, which represent those who will have to pay it; and organisations such as the Royal Town Planning Institute, whose members are likely to be involved in its calculation and collection. One thread of concern that ran throughout those sessions was the issue of valuation.

When the Select Committee considered the planning gain supplement some time ago, there was support for a mechanism to collect some of the private gain that results from planning permission being given. But virtually every organisation that gave evidence expressed concern about how it would operate, especially on the issue of valuation. Both the evidence given to the Select Committee and the Committee’s report reflected genuine concern about how the calculations would be done. The Committee considered the options that had existed on land in the past and how they would affect the calculations, but no one had an answer to how to deal with the issue.

When the proposals were introduced, the Minister said that we would proceed with them, but that if someone had a better idea they could come forward with it. Some organisations got together and suggested a planning charge, which has become the community infrastructure levy. What drove them was the wish to get away from trying to calculate increases in value as a result of planning permission being granted on particular sites.

I am not a valuer and I do not understand some of the complex issues that were raised in the Select Committee, but what clearly emerged from the evidence was that everyone was worried that the levy would become as complicated as the planning gain supplement if the issue of value remained. The intention of all those who proposed an alternative to the planning gain supplement was to get away from the issue of value. Will my hon. Friend the Minister therefore explain why it was essential to include value when so many other variables can be used to determine a levy at local level, although I agree that that can be done differently by different authorities to reflect the needs of their areas in different ways?

My second point is about locality, which may be covered by a Government amendment. Another point that emerged in evidence was that what might be appropriate in trying to raise a levy in one part of a local authority area—for example, an affluent suburb where there is a new housing development—might be a very different matter in, say, a housing market renewal area. The local authority might try to encourage developers into a renewal area with a view to uplifting the general value of housing, and it might be inappropriate to levy such developers at the same level as those in a more affluent area. A local authority needs to be able to vary the levy according to the locality in which the development takes place. Government amendment No. 549, which will

“permit or require charging schedules to operate by reference to the nature or existing use of the place”

would allow that variation between different areas where development might take place. Could my hon. Friend reassure me that that variability between developments in very different areas will be possible under his proposals?

John Healey (Labour, Wentworth)

On the question of value, to which we keep returning, I am clear, as is the industry, that viability is a central concern when setting the community infrastructure levy. It is a central feature in the design of the system and has to be if we are concerned that a levy might choke off development rather than support it. Industry representatives and others, from the British Property Federation to major developers, have told us what we believe to be the case: that it is important to have some reference to value, and therefore viability, in the Bill, and it is hard to see how any assessment of viability can take place without some reference and consideration to land value.

We are in discussion with the industry about whether a more appropriate indicator or a better proxy—my hon. Friend referred to this—could be used for the value that is created by development. As things stand, however, we believe that it needs to be an element of the design of a charging structure. For it to be capable of being taken into account, it needs to be referred to, and that is why I continue to encourage members of the Committee not to accept amendments that would knock it off the face of the Bill.

In addition to infrastructure planning, local authorities will need to produce a draft charging schedule that sets out the rate, and perhaps also the formula, for determining how the levy might be calculated in their area. To answer my hon. Friend’s second point, it is conceivable, in the terms that we intend the levy, that if the infrastructure requirements of different areas within the same local authority boundaries require and justify a different levy charge, that could be incorporated and reflected in the charging schedule.

We have also made it clear that the process of setting charges should ideally be embedded within the development plan process, which is something that we will look to do and that my hon. Friend is keen on. However, the process for setting the community infrastructure levy must at the same time also be flexible enough to respond to changing market conditions. While we are clear that there needs to be a thorough and proper expert testing of the charging schedule, I am keen to avoid a situation in which further delays could be caused to local authorities bringing their development plans up to date.

There is still a question that we need to settle: whether incorporating the development of the charging schedule entirely and solely within the development plan process might be too slow and unresponsive to allow us to design it in the way that we want. We are clear, however, that it has to be plan-led and based on an infrastructure plan, and that devising a charging schedule is the way in which we will avoid one of the principal pitfalls that people saw in the planning gain supplement, which is site-by-site valuations with all the complexities and some of the uncertainties that would come as a result.

I hope that amendment No. 600 is also a probing amendment, as it would remove the requirement for regulations to provide an appeal mechanism on matters of fact against the calculation of the levy in individual cases. We intend the provision that the amendment would otherwise compromise to be a safeguard for resolving factual disputes about the basis of charging CIL in an individual case. For instance, it might be that the charge is calculated by reference to the square meterage of different uses in a development proposal, and there could be a disagreement between the developer and the local authority about the quantum of that square meterage. Otherwis,e judicial review would be the only means to resolve a dispute that was based on facts about the correct level to pay. I hope that those comments are helpful.

Jacqui Lait (Conservative, Beckenham)

The amendment was probing because, frankly, unless there is a little more detail for us to debate, it is difficult to get sufficient information from the Government. The more we can extract from them, the easier it will be. We will consider their response and will probably return to it at a later stage. I beg to ask leave to withdraw the amendment.

Clause 167

John Healey (Labour, Wentworth)

I beg to move amendment No. 556, in clause 167, page 94, line 34, at end insert—

‘(1A) In subsection (1) “infrastructure” includes—

(a) roads and other transport facilities,

(b) flood defences,

(c) schools and other educational facilities,

(d) medical facilities,

(e) sporting and recreational facilities,

(f) open spaces, and

(g) affordable housing (being social housing within the meaning of Part 2 of the Housing and Regeneration Act 2008 and such other housing as CIL regulations may specify).

(1B) The regulations may amend subsection (1A) so as to—

(a) add, remove or vary an entry in the list of matters included within the meaning of “infrastructure”;

(b) list matters excluded from the meaning of “infrastructure”.’.

John Butterfill (Conservative, Bournemouth West)

With this it will be convenient to discuss the following: Amendment No. 443, in clause 167, page 94, line 35, after ‘specify’, insert ‘that charging authorities are to determine’.

Government amendments Nos. 557 and 558.

John Healey (Labour, Wentworth)

The amendment sets out the types of infrastructure for which CIL could be used. The list includes items of infrastructure that are currently commonly secured through planning obligations. The list is intended to be illustrative, rather than exclusive or exhaustive. It includes items over which some doubts have been raised, such as “open spaces”.

Hon. Members will note that the list includes affordable housing. To be clear, our intention and preference is that affordable housing should continue to be delivered on-site through negotiated section 106 agreements, which have proved successful in many areas in ensuring that we secure mixed communities in important developments. However, the Campaign to Protect Rural England and other bodies have expressed the concern—indeed, the CPRE expressed it in its evidence to the Committee—that the community infrastructure levy should not lead to a reduction in the provision of affordable housing. While we do not initially intend to include affordable housing within the scope of what may be funded by CILs, we propose to include it within the definition of infrastructure so that if it is later demonstrated that affordable housing is necessary, it could be included as part of CIL.

We recognise that the priorities for infrastructure may change over time. Several years ago, few of us would have put flood defence as high up the list of infrastructure priorities associated with growth as it is now. The Government amendments provide for the definition of infrastructure in the Bill to be revised to reflect changing needs. Such changes will be subject to the affirmation of this House.

Flexibility is important, but so are safeguards. The Government amendments will enable the creation of regulations that specify what should not be funded by CIL and regulations to require local authorities to publish and make available for public inspection the list of projects to be funded by the levy. Perhaps the converse power to that is the power to create regulations to restrict the ability of local authorities to use the levy for projects that are not included on the list of infrastructure that they draw up.

I hope that hon. Members will see that these provisions are designed to provide greater clarity about the purposes to which the revenue from the levy will be put to deliver the infrastructure that is required for local communities, developments and growth. I am happy to deal with any questions that hon. Members may have and will respond to any points that my hon. Friend wishes to make when he speaks to amendment No. 443.

Clive Betts (Labour, Sheffield, Attercliffe)

I seek reassurance. The Local Government Association is concerned to try to ensure that, fundamentally, it would be for each local authority to come to a view about which infrastructure it wanted to be developed and supported by CIL in its area. The Government amendment includes a wide range of infrastructure that it may be appropriate to fund from CIL. Presumably, as we previously discussed that the process is still to be finally determined, will each local authority look at the needs in its area and be able to select the most appropriate requirements for the development of infrastructure from the list of possibilities that amendment No. 556 indicates will be appropriate?

John Healey (Labour, Wentworth)

Indeed.

Jacqui Lait (Conservative, Beckenham)

I find myself in a bit of a quandary. On the one hand, we have access to very little information, yet the Minister has set out in the Government amendment the list that will be in the Bill of potential projects for which CIL could be used. I thank him for that. The list includes medical facilities—the hon. Member for North Cornwall may wish to raise this point—so the point about the primary care trust is, in a sense, covered. I would like the Minister to clarify whether within “recreational” he includes cultural facilities, so that we can know whether theatres and art galleries will be included if the local community agrees that it would like to have a theatre or art gallery that cannot be paid for in other ways. That would be helpful.

What worries me is that on the one hand we have so little information, and, on the other hand, the information that we are given, particularly in the list, is prefaced by the Minister saying, “We may not need to invoke it now, but we cannot know whether we will need to in the future. Therefore, the widest possible powers are needed.” We could find ourselves agreeing to something that initially sounds reasonable, but, as he himself said about flood defences, who would have thought 10 or 15 years ago that they would be as important as they are now? We could suddenly find ourselves with a piece of legislation that could be distorted, changed or widened in a way that none of us ever thought of or expected. With the best of intentions, the Minister is trying to cover as much as he can, but by so doing he leaves us open to turning something into legislation that might have consequences which none of us can begin to dream of at this stage.

I would be grateful if the Minister could confirm that small point about whether cultural facilities are included in the list under “recreational”, and just be warned about the concerns that I am beginning to feel about the whole approach to this piece of legislation and the fact that we are being asked to put on the statute book the widest possible powers for CIL. That could cause long-term problems.

John Healey (Labour, Wentworth)

At this stage, the answer to the hon. Lady is “possibly”.

Jacqui Lait (Conservative, Beckenham)

On culture?

John Healey (Labour, Wentworth)

On culture. As things stand, if the theatre were used for recreation, it would obviously fall directly within the terms of the amendment. I think that this matter probably requires further discussion and reflection with those with cultural and recreational interests, as well with as local authorities and local planning authorities. Indeed, because we are considering a Bill on the practice of planning obligations, we need to look at the current practice of planning obligations. Should we need to make the list any clearer to deal with any wider concerns, we certainly will.

Jacqui Lait (Conservative, Beckenham)

I beg to move amendment No. 601, in clause 167, page 94, line 40, at end insert—

‘(d) ring-fenced funding for community infrastructure to ensure that it is additional to other infrastructure monies.’.

John Butterfill (Conservative, Bournemouth West)

With this it will be convenient to discuss the following amendments: No. 603, in clause 167, page 94, line 40, at end insert—

‘(d) that such finding should relate to community infrastructure and be in addition to any other infrastructure funding.’.

No. 575, in clause 167, page 94, line 40, at end insert—

‘(2A) The regulations must be consistent with the principle that funding from the CIL should be used to fund projects, or aspects of projects, for which funds have not already been allocated by—

(a) a Government department,

(b) the Scottish Ministers,

(c) a Northern Ireland department,

(d) the National Assembly for Wales,

(e) a local authority, or

(f) a regional development agency.’.

No. 602, in clause 167, page 95, line 3, at end insert—

‘(c) require authorities to use best endeavours to deliver the infrastructure upon which the level of CIL is predicated;

(d) require all other providers of infrastructure involved in the delivery of infrastructure, for which CIL is being levied, to use best endeavours to assist in delivering the infrastructure upon which the level of CIL is predicated.’.

No. 604, in clause 167, page 95, leave out lines 8 to 10.

No. 576, in clause 167, page 95, line 27, at end add—

‘(6) The regulations must require the charging authority to consult—

(a) relevant parish councils,

(b) relevant community councils in Wales, and

(c) relevant community councils in Scotland,

in the areas affected by the development in respect of which CIL is chargeable.’.

Jacqui Lait (Conservative, Beckenham)

The amendments would insert simple wording to ensure that the community infrastructure levy is additional to other streams of infrastructure development funding, and that the organisations providing that other funding do their bit.

It is easy to envisage a situation in which there might be a sudden call on the funds of the relevant governmental body or of an infrastructure developer, so that the funding promised to the community infrastructure levy for the delivery of a project suddenly dries up. That could be because the Chancellor of the Exchequer has decided to reduce that organisation’s budget, or because the financial calculations of the money available for the project were less than robust.

Therefore, we want reassurance that the community infrastructure levy is in addition to the other streams of funding and is not seen to replace it, and that the other funders carry out what they have promised to do, in a timely way. Anyone who has worked with local authorities that are working in partnership with a variety of different bodies will know the difficulty of ensuring that all the money promised to a project is delivered when needed. If the levy is to work, we need to ensure that everyone plays their part at the right time, in the right way, and without penalising the funding of other projects. Our goal is to ensure robust financial management within all the organisations.

Finally, amendment No. 604 excludes administrative expenses. It is easy to see that a project’s funding could be top-heavy on administration, which could absorb a greater share than it should; or that, by sleight of hand, perish the thought, some administrative charges on an area unrelated to the CIL-funded project could suddenly be offloaded on to it. It is important to ensure that the money raised from CIL is not spent on administration when it should be spent on the project.

Dan Rogerson (Liberal Democrat, North Cornwall)

The hon. Lady makes a good case for questioning that potential problem. Amendments Nos. 575 and 576 were tabled by my hon. Friend the Member for Carshalton and Wallington and me. They concern the principle of additionality, to which the Minister referred under an earlier clause. I certainly welcome his comments on that. We are concerned that money that had been identified for a local project might now be funded through CIL—I cannot think why we are using a soft rather than a hard “c”. Making a “cilling” does not sound quite so dangerous as the alternative.

I am pleased to hear what the Minister had to say. We would not like to see funding, which had already been identified and hard won after long campaigning or much prioritisation for a particular project in a local area, being diverted away. Our amendments would look at funding infrastructure which is particular to the changing situation and the grant of planning permission. I suspect that the Minister will tell me that that is already what is intended. If he does, it will be good to have that on the record once again.

John Healey (Labour, Wentworth)

I am sympathetic to the spirit of some of the amendments, but not convinced that they are the right thing to do or that they would help. I shall try to respond to the substance of the points that the hon. Lady and the hon. Gentleman have made. The clause provides that the regulations that we make must require authorities collecting the levy to apply it to infrastructure. It provides that the regulations may specify what does and does not constitute infrastructure. Furthermore, clause 163 makes it clear that infrastructure funded from the levy should support an area’s developments. That is the essence of the levy itself.

Amendment No. 603 appears to seek to establish the principle that CIL spending should be additional to existing infrastructure spending. I am not convinced that it is sensible to legislate for that, but let me say a little bit more about additionality, in addition to the points I have already made which the hon. Gentleman has kindly welcomed.

First, we have said publicly and consistently that it is not our intention for the levy to work in isolation from other revenue streams. It cannot be expected to pay for all the infrastructure required, although as paragraph 47 of the document we published last week indicates, we expect that it could make a significant contribution in some areas to some infrastructure. Secondly, we want to give authorities the flexibility to determine both their infrastructure priorities and how best to allocate their funding streams to ensure that they are properly delivered.

The local authorities will need to assess. They will need to cost the infrastructure they require to support development. In doing that, they should have regard to the level of funding that is likely to be available from other national and regional or local funding sources, including how they use funding sources that are not ring-fenced. It has always been our expectation that the levy will be additional, particularly for larger pieces of infrastructure. In many cases it will provide only a part of the funding required. To underline that I quote directly from our document:

“The Government believes that CIL should not be used for general local authority expenditure, nor to remedy pre-existing deficiencies in infrastructure provision, unless these have been, or will in time be, aggravated by new development.”

Dan Rogerson (Liberal Democrat, North Cornwall)

I understand the point with regard to local authorities. However, we have already debated how it might be appropriate for the money raised to be spent through other agencies. It would be good to have it on the record that it would also cover the Highways Agency or any other Government agency, rather than just picking on local government.

John Healey (Labour, Wentworth)

The hon. Gentleman makes a fair point. The principle that I am seeking to establish is that we want the levy and the revenue raised from the levy to be additional. I hope that a combination of the provisions in the Bill and the consistent declaration of that intent will give the hon. Gentleman the reassurance that he seeks. Also, “additional” would be difficult to define and to put in the Bill.

Amendment No. 604 relates largely to the hon. Lady’s concerns. Subsection (4)(c) permits the application of the levy to administrative expenses related to the infrastructure concerned or to the levy. I understand the hon. Lady’s argument, but the measure will help to give charging authorities the resources that they need to set, collect and enforce the levy, and to plan and deliver the infrastructure that can be funded by the levy. The levy builds on the existing provisions and practice of section 106 and, in a sense, the provisions mirror those under many of the section 106 agreements. They provide, in many cases, for local planning authorities to recoup costs related to negotiations or monitoring of the section 106 agreements, for example. Giving authorities insufficient resources to operate the levy would ensure that the levy is not effective.

The hon. Lady’s concerns about administrative expenditure and efficiency are right, but to preclude levy-related revenues from supporting the sort of work that is necessary to make the levy operate effectively would be a mistake. I hope that her amendment is probing and that she will not press it to a Division. Ensuring that charging authorities have sufficient resources is clearly central to their ability to deliver the levy but, more importantly, to the infrastructure that it is designed to support.

I hope that hon. Members feel that I have given them a sufficient answer and that they do not feel the need to press their amendments to a Division. If they do, I shall ask my hon. Friends to resist.

Jacqui Lait (Conservative, Beckenham)

The Minister was right to say that the amendment is probing and aimed more at getting him to put on record the Government’s approach to the issues. I am grateful to him.

Dan Rogerson (Liberal Democrat, North Cornwall)

I am grateful to the Minister for his comments. I suspected that he would say what he said. If he is happy to take on board the point that agencies other than local government could look at the measure as a way to rejig their spending priorities, I shall not press the amendment to a Division.

Jacqui Lait (Conservative, Beckenham)

I beg to ask leave to withdraw the amendment.

Clause 168

Jacqui Lait (Conservative, Beckenham)

I beg to move amendment No. 605, in clause 168, page 95, line 35, leave out ‘may’ and insert ‘must’.

John Butterfill (Conservative, Bournemouth West)

With this it will be convenient to discuss amendment No. 606, in clause 168, page 95, line 41, at end add—

‘(7) Regulations under this section may make provision concerning the holding and investment of funds raised by way of CIL.’.

Jacqui Lait (Conservative, Beckenham)

It is not often that I wish to be prescriptive in my dealings with local authorities—or anyone else, for that matter. However, I want assurances from the Government that the community infrastructure levy does not necessarily need to be paid in money when there are other ways of reimbursing a community. For example, someone could donate land, or construct a facility that does not involve the community other than to ensure that it is what the community wishes. By tabling an amendment that proposes to replace “may” with “must” and by trying to build flexibility into the community infrastructure levy, it makes the levy more easily deliverable by those who are being asked to pay.

Amendment No. 606 would make the levy payable at the beginning of the development. That then begs the question that if money is paid over, will it be used immediately? If it is not going to be used immediately, who is liable for the funds? If it is a large development and it takes two or three years before the infrastructure is in place, or even begun to be built, who benefits from any investment income or interest? What is the flexibility of being able to invest the money? Those sorts of boring practicalities are possibly more in the Minister’s Treasury remit than in the remit of the Department for Communities and Local Government. If the project goes wrong and a poor investment is made, there could be problems. Will he enlighten us on those two very techie points?

John Healey (Labour, Wentworth)

The hon. Lady puts her points down by describing them as techie. They are both rather important. On amendment No.605, which is designed to probe the issue of payments in money or payments in kind, we are discussing the matter with local authorities and the development industry. We are anxious to get their view on how this might best work. At this point in the process, I believe that the amendment would remove any flexibility for us to draw our conclusions at the appropriate time. I will ensure that she is kept fully informed on any progress that we make.

Amendment No. 606 raises a very important point, which is not just techie but is of significant interest in both senses of the word. We believe that the powers under the provisions for local authority investments cover what the hon. Lady wants. However, I will reflect further on the amendment and if necessary will come back with observations and reflections. We may return to the matter at a later stage if further amendments are required.

Jacqui Lait (Conservative, Beckenham)

As the Minister has been so helpful, I throw in another thought. If the Government are to allow local authorities to issue bonds, will money going into a CIL be useable in local government bonds? That really is techie.

John Healey (Labour, Wentworth)

It is techie; it goes beyond even the long title of the Bill. However, I will look at the matters raised by the hon. Lady on investment and CIL receipts. If necessary, I will table further amendments to ensure that the issue is covered, and I will update her and other members of the Committee at the appropriate stage.

Jacqui Lait (Conservative, Beckenham)

I am grateful to the Minister for his very positive response and look forward to receiving the information he has promised us. I beg to ask leave to withdraw the amendment.

John Healey (Labour, Wentworth)

I beg to move amendment No. 560, in clause 168, page 95, line 38, leave out ‘one’ and insert

‘a charging authority or other public’.

John Butterfill (Conservative, Bournemouth West)

With this it will be convenient to discuss Government amendments Nos. 561 to 565.

John Healey (Labour, Wentworth)

These clarifying amendments make it clear that if circumstances require it, a number of authorities may collect the levy on behalf of a charging authority. They also make it clear that authorities empowered to collect the levy on behalf of a charging authority may be other public authorities and not just charging authorities. The other public authorities would collect but not set the levy; the responsibility for setting would remain with the charging authority. The amendments will permit regulations to give us the flexibility to provide for specific local circumstances.

The purpose of amendments Nos. 562 to 565 is to provide greater detail on possible enforcement measures. They confirm and clarify that surcharges may be imposed, provide for the enforcement of payment through civil proceedings, and allow regulations to empower charging authorities to stop development until a community infrastructure levy liability is assumed.

Finally, in the interests of fairness for all those who pay the levy, acts or omissions may warrant criminal prosecutions in some circumstances. Before there is a sharp intake of breath across the Committee, examples might include persistent evasion of payment or the provision of false information relating to payment, and the obstruction and assault of charging authority officers who may be trying to carry out their duty to investigate non-payment, all of which the Government believe could apply to the levy. They are set out in the amendments.

However, there is a question about the proper limits on the term of imprisonment that could be imposed for criminal offences under the levy, and we shall return to that, probably on Report.

Jacqui Lait (Conservative, Beckenham)

Will the Minister enlighten us on the nature of the discussion he has had with the industry about those proposals and where he has got to on that, because while there are good developers, there are also those who are perhaps less than satisfactory? That question arises from a case in my constituency. We discovered a developer who had run out of money and was unable to finish the development, and there is no effective enforcement against him.

Although we will have a community infrastructure levy, there is no effective way to force a developer who runs out of money to finish a development. There is technical enforcement, but no effective enforcement. If a bust developer has paid the community infrastructure levy and is committed to it but does not complete the development, would the powers that come into play then force him to complete the development, and how can that be done when they have paid the community infrastructure levy?

John Healey (Labour, Wentworth)

I am sorry to hear of the situation in the hon. Lady’s constituency, but those powers are related to the enforcement of the liability to pay the levy. In all probability, were a levy to be part of the system in such a case, the developer would have already paid the levy—

Jacqui Lait (Conservative, Beckenham)

That does not help me.

John Healey (Labour, Wentworth)

The enforcement powers might not help the hon. Lady with regard to getting the development completed in her constituency, but they are not really designed to do that.

Clause 169

Jacqui Lait (Conservative, Beckenham)

I beg to move amendment No. 607, in clause 169, page 96, line 10, at end insert—

‘(2A) Regulations made under this section may may make provision for land owners and developers to reclaim CIL should infrastructure not be delivered in accordance with agreements.’.

The purpose behind the amendment was brought to our attention by the Royal Institution of Chartered Surveyors. It is a very reasonable question to ask and I look forward to the Minister’s answer. There could be instances in which there is a failure to deliver the infrastructure that has been promised. In previous debates I have cited some possible reasons for failure, such as changes in Government priorities and poor financial control. Will the developers be able to claim back CIL if the partners fail to deliver their part of the bargain? Would the developer have to take the other organisations to court, would there be an automatic repayment, would the developers be expected to go ahead and provide the infrastructure or would the levy automatically transfer to another project? I would be interested to hear the Minister enlighten us with his views on this matter.

Dan Rogerson (Liberal Democrat, North Cornwall)

The amendment raises an interesting point. However, I am a little concerned about the way in which it is drafted. The phrase “in accordance with agreements” is a little wide. I can see the point that is being made. An important development might be held up by the lack of infrastructure promised by CIL. However, to say that it must be in accordance with the original agreement implies that it should be in accordance with it to the letter. Issues might arise in the course of delivering a development, for example, through further planning considerations, which mean that it is delivered in a slightly different way. I would hate to see the developer in question being able to take the money back by saying that the result is not exactly to the letter of the agreement.

Jacqui Lait (Conservative, Beckenham)

If I had the resources at my command to get all of my amendments right, I would probably get on a lot better. The same is true for the hon. Gentleman. However, if the Minister is prepared to accept our arguments, we will be very happy to amend the drafting of the amendment.

Dan Rogerson (Liberal Democrat, North Cornwall)

I accept the hon. Lady’s point and I am glad that a fine-toothed comb has not been run over the amendments that stand in my name because I am sure that they are not perfect. I can understand her question, but the CIL provisions must be written in a tight, binding way to ensure that developers cannot slip away from their obligations.

John Healey (Labour, Wentworth)

I, too, am a little concerned about the hon. Lady’s drafting, but I understand the point that she makes in her defence. I am also concerned about the points of substance that the hon. Gentleman mentioned. It is difficult to see how the amendment would work when agreements are not part of the CIL. It will be raised whether or not the owner or developer agrees. As we discussed under the previous clause, an authority might raise and collect the levy liability but then bank it for some time before allocating it to a scheme some way down the track. We would not want the developer to be able to challenge and reclaim the money that they have paid in such circumstances.

To deal with the spirit of the hon. Lady’s point, it is a central element of the design of the levy that it should be raised to support the development of infrastructure. Although we are discussing clause 169, the hon. Lady will see that clause 167(5) provides for regulations to set out requirements on an authority to monitor and report how the levy funds have been raised, how the levy funds have been transferred and how they have been spent. Those requirements to report publicly should help to ensure that authorities charged with delivering planned infrastructure—as a contribution to which they raise the levy—are held to account and can be publicly challenged. I appreciate that that is a different form of accountability from the contractual accountability that the hon. Lady seeks.

Jacqui Lait (Conservative, Beckenham)

Let me give the Minister a “for instance” that might help him. Some years ago, we had bad floods in the south-east after which it was recommended, and agreed by the Environment Agency and the Government, that various flood alleviation works would be carried out. We then had the debacle of the Rural Payments Agency, and the Environment Agency was required to forgo some of its budget so that it could bail out the RPA. That meant that the flood defence works were politely postponed. How would that situation play into what is, I accept, the poorly drafted spirit of the amendment, given that the Environment Agency could not carry out its work? It does not have to be the Environment Agency—it could be any stream of funding—but the Environment Agency could not carry out, for whatever reason, the commitments into which it had entered.

John Healey (Labour, Wentworth)

To put it terribly politely, the hon. Lady totally misrepresents the scale and the impact of the consequences of the Rural Payments Agency’s problems with the Environment Agency and its investments and programme of flood defences.

It is not a comparable position because we have said consistently that the levy could be spent only on infrastructure development, which clearly is not the case in the hon. Lady’s contention in respect of the Rural Payments Agency and the Environment Agency. I continue to believe that clause 167 does the job.

John Butterfill (Conservative, Bournemouth West)

Mr. Healey, you were responding, I think.

John Healey (Labour, Wentworth)

I did not feel that I had anything further to add.

The rest of the debate is in Hansard.