Growth and Infrastructure Bill

Public Bill Committee, 27 November 2012.

Ian Murray (Labour, Edinburgh South)

On a point of order, Mr Howarth, can you give the Committee some guidance? We are into our third week of proceedings, but last week we received the consultation on some clauses of the Bill on the morning of our deliberations and we are now getting consultations through on other clauses. Can you, through your offices, give any guidance to the Government or Ministers to ensure that the Committee has all the evidence, so that we are well informed in our deliberations?

George Howarth (Labour, Knowsley)

I am sure that the Ministers have heard the point of order. It is not within my power to ensure that any briefing or consultation papers are in the possession of the Committee. I am sure that Ministers, having heard the point of order, will take due note.

Clause 2 - Planning proceedings: costs etc

Roberta Blackman-Woods (Labour, City of Durham)

I beg to move amendment 28, in clause 2, page 3, line 18, after ‘direct,’, insert

‘subject to criteria set out in regulations’.

George Howarth (Labour, Knowsley)

With this it will be convenient to discuss the following:

Amendment 29, in clause 2, page 3, line 21, after ‘directs,’, insert

‘subject to criteria set out in regulations’.

Amendment 30, in clause 2, page 3, line 33, after ‘direct,’, insert

‘subject to criteria set out in regulations’.

Amendment 31, in clause 2, page 3, line 36, after ‘directs,’, insert

‘subject to criteria set out in regulations’.

Amendment 25, in clause 2, page 4, line 2, after ‘State’, insert

‘subject to mitigating circumstances, to include circumstances beyond the control of the holder of the inquiry or hearing’.

Amendment 32, in clause 2, page 4, line 9, after ‘direct,’, insert

‘subject to criteria set out in regulations’.

Amendment 33, in clause 2, page 4, line 12, after ‘directs,’, insert

‘subject to criteria set out in regulations’.

Amendment 26, in clause 2, page 5, line 2, leave out ‘if he thinks fit’ and insert

‘with the agreement of both parties’.

Amendment 27, in clause 2, page 5, line 5, at end insert—

‘(12) The Secretary of State must publish—

(a) the criteria that are to be applied by the Secretary of State in deciding whether sub-paragraph (11) should be employed; and

(b) the reasons of the Secretary of State for directing that “anything” be done under sub-paragraph (11).’.

Roberta Blackman-Woods (Labour, City of Durham)

It is a pleasure to serve under your chairmanship again, Mr Howarth.

With this group of amendments, we seek to ensure that when the Secretary of State awards costs he does so in keeping with the principles of good consultation and in a way that is beneficial to the planning process. Ensuring that all parties to an appeal act reasonably is essential, but the clause risks overly penalising local authorities and working against localism. If the risk of being designated as “failing” is not a strong enough deterrent for local authorities to turn down inappropriate development, the risk that they might have to pay the cost of appeals certainly will be.

That point, as the Minister knows, has caused great concern among Members. Indeed, the Minister’s hon. Friend the Member for Totnes (Dr Wollaston), said in the House:

“Does the Minister share my concern that councillors are sometimes put off from declining planning permission because of the fear of bearing the full cost of an appeal? Does he agree that that is sometimes acting as a barrier to localism?”—[Official Report, 12 November 2012; Vol. 553, c. 21.]

There are, therefore, already some worries about the clause.

Clearly, concerns exist that the costs of appeal are inhibiting true localism, in which case how can increasing the number of instances in which a local authority would have to pay the other party’s costs be beneficial, especially given shrinking budgets and the huge resources that developers often have at their disposal to undertake appeals? When local authorities consider the risk of having appeal costs awarded against them, alongside the risk that any decision overturned at appeal may contribute to their designation as “failing”, it is, in the words of the chief executive of the Campaign to Protect Rural England,

“obviously making it much more likely that developments, whether good or bad, will be nodded through by a local authority.”––[Official Report, Growth and Infrastructure Public Bill Committee, 20 November 2012; c. 143, Q327.]

The issue was raised to some extent in clause 1, and perhaps the Minister will give further reassurances this morning to guide the Committee as to how local authorities will be able to maintain the primacy of taking decisions in line with their local plan and not because of huge concern about costs that might be awarded against them.

At present, costs are awarded in very few instances. The impact assessment sets out that last year costs were awarded in only 3.7% of cases, but it goes on to predict that under clause 2 the number of cases could rocket, with costs being awarded in as many as 20% or more of all appeal decisions. Worryingly, the Minister’s Department has made no estimate of the amount that would cost local authorities, or any other party. Hence the need for amendments to allow for clear criteria and proper regulation of the procedure.

I shall take the amendments in a slightly odd order, rather than the order in which they are listed on the selection paper. Amendments 28 to 33 specifically target the need for proper criteria to be used when assessing whether costs should be awarded. The impact assessment states that

“this measure will lead to an increase in the number of costs awarded at least in the short term until longer term behaviour changes.”

However, there is no assessment of how long that might take. Unless the Minister hopes that the change in behaviour will mean that local authorities say yes to everything to avoid appeal, published criteria, set out in regulations, would surely speed up the change in behaviour more effectively. Such criteria would allow the Secretary of State to define what would be deemed unreasonable behaviour and therefore encourage—rightly—local authorities to avoid it.

Nicholas Dakin (Labour, Scunthorpe)

My hon. Friend sets out her case very clearly. I hope the Ministers are listening carefully. Does she believe that the proposals in her amendments will give greater transparency and certainty to local communities about how matters might progress?

Roberta Blackman-Woods (Labour, City of Durham)

My hon. Friend makes an important point. Although I have been stressing the impact of the clause on local authorities, because it is they who are likely to have costs awarded against them, we ought to bear it in mind that local communities have a huge stake in the process because of the council tax they pay. They will be very concerned that local authorities might be constrained from representing their true interests because of the threat of having huge costs awarded against them. It certainly appears to me to be yet another anti-localist provision in the Bill.

There is no benefit in giving the Secretary of State discretionary powers to award costs in the hope that it will change behaviour, unless the instances in which costs are to be awarded are plainly set out. Furthermore, as the clause will allow the Secretary of State to award a portion of costs, he will need clear guidance in setting out the formula on which the portion of costs is to be awarded and, perhaps more importantly, how it is to be calculated.

Amendment 26 is key to the whole argument that we are making against the clause. Proposed new sub-paragraph (11) allows the Secretary of State to subsume to himself personally any power in connection to the award of an appeal. Can the Minister explain why the Secretary of State would require individual power to award costs independent of the experts appointed to decide such an award? The amendment seeks to ensure that such power would only be seized when it was to the benefit of all involved. It is difficult to conceive of a set of circumstances in which that might be the case. Nevertheless, it is important that some restraints are put on the Secretary of State’s powers under the sub-paragraph. We need to ensure that the Secretary of State is able to take such power unto himself only if parties to the appeal agree that that is appropriate in the circumstances.

Amendment 27 further constrains the unprecedented power given to the Secretary of State under proposed sub-paragraph (11). It seeks to ensure that the Secretary of State will make any decision under the sub-paragraph in accordance with published criteria. In previous sittings we heard assurances from the Minister that the Secretary of State does not make his decisions on a whim, and I am sure we are all relieved to hear that. However, some local authorities may still struggle to divine his reasoning. Published criteria would be extremely useful to assist them in trying to determine what is in the Secretary of State’s mind.

Nicholas Dakin (Labour, Scunthorpe)

What my hon. Friend has said about the amendments brings to mind the overwhelming evidence brought to us in favour of localism, but also the great concerns about the centrist tendencies of this legislation. Does she believe that the arguments in her amendments will assist in meeting the concerns expressed in those representations?

Roberta Blackman-Woods (Labour, City of Durham)

Again, my hon. Friend makes a good point. Local people and councillors, who will have these costs awarded against them, need a better understanding of what will lead the Secretary of State to exercise these quite extraordinary powers and, if he decides to do so, what informs his decision making because, from the information before us, that is not at all clear.

I hope that the Secretary of State will ask for criteria to be given to him to help him reach a decision under the clause—not that it is exactly my role to make his job easier, but it may help all of us to understand what would be going on in those circumstances. If the Secretary of State has criteria to help him make a decision in an open, transparent and fair way, it should be relatively simple for him to share the criteria publicly.

Ian Murray (Labour, Edinburgh South)

I am grateful to my hon. Friend. For the second week in a row, she is dissecting clauses with great aplomb. The planning system is all about certainty and transparency, and the best way to create that would be to put in place a set of rules and a framework that people can work from so that they know exactly what is happening with a planning application. Indeed, if there were criteria in place, as proposed in the amendments, people would know exactly when the rules and framework would come into effect.

Roberta Blackman-Woods (Labour, City of Durham)

My hon. Friend makes an excellent point, which goes to the root of the amendments. The clause gives extraordinary and unprecedented powers to the Secretary of State in terms of awarding costs, particularly, I suspect, against local authorities. We need, therefore, to be clear about what will inform his decisions, how he will go about making them and what criteria he will use. It would also be useful to know what the time scales will be.

We want the Secretary of State to publish criteria that can be assessed to see whether he is making a fair and even-handed decision about the award of costs, and we want a requirement for him to publish his reasons for his decisions. Not only do we want open and transparent criteria that will inform decisions, we want them to be published. We also want to know, in particular circumstances, how they are being applied. We want the Secretary of State to publish his reasons; we do not think that it should be the role of local authorities, the other agencies involved or, indeed, Parliament itself to try to work out what the reasons might have been in any particular set of circumstances; we want it to be clear and transparent, and we would have thought that is something the Government would wish to do.

We have already seen that the Secretary of State has, some would say unfairly, allocated cuts across local authorities, with councils in northern urban areas and London boroughs—with high levels of deprivation and predominantly run by Labour—seeing their budgets cut by almost 10 times the amount lost by most Tory-administered authorities in southern areas of England during the Government’s first spending round. I raise that issue because it is adding to the fears in the local government community that the award of costs may fall in an equally inegalitarian way. That is why we are pressing the point so strongly: if the Minister and the Secretary of State want to ensure that they are not open to challenges similar to those that cuts are being made unfairly, they should set out clear criteria to make the process of decision making transparent.

Nicholas Dakin (Labour, Scunthorpe)

My hon. Friend makes a good point about the impact of the opaqueness of the clause; together with the challenges faced by planning departments, it could lead to inconsistency across the country. I was struck by the written evidence on the clause from RenewableUK:

“We suggest that any award of costs regimes are transparent and able to be applied consistently across the board.”

Consistency is a key element, as well as transparency and openness.

Roberta Blackman-Woods (Labour, City of Durham)

My hon. Friend makes a very good point indeed, and I will be interested to hear the Minister’s response to it; the whole point of having published criteria and, in particular, publishing the reasons for a decision about award of costs made by the Secretary of State is so that we, along with everyone else, can assess clearly whether decisions relating to similar circumstances have the same broad outcome. My point is that lots of people in local government are concerned that that might not be the case, given the way in which cuts have been allocated so unevenly and so unfairly across local government.

Lastly, amendment 25 addresses a different problem: the circumstances under which the Secretary of State may have costs awarded to him for an inquiry that was not held. It is entirely reasonable that the Secretary of State may ask for costs to be awarded when an appeal does not take place as a result of another party’s doing. However, it is equally unreasonable that any costs should be awarded for reasons beyond the control of the party being pursued for costs. I am sure we can all agree on circumstances that would mitigate a claim for costs; those circumstances should be clearly set out on the face of the Bill.

The explanatory notes state merely that the measure will allow for costs to be recovered where, for instance, a hearing or inquiry is “cancelled at short notice.” However, there is clearly a significant difference between the cancellation of an inquiry due to flooding, for example, and cancellation due to ill preparation. The events of yesterday bring the example of flooding very much to our minds: in my Durham constituency, most of the major roads into the city centre were closed and people had to be sent home early from work. Much as I would like to discuss the problems of flooding and how to alleviate them in Durham and elsewhere, I am sure that I will be ruled out of order, so I will not go there.

My point is that it would have been extremely difficult for anyone to have got to an inquiry had it been held in the town hall or the offices of the county council. We are just checking that there is a degree of reasonableness, and we want to ensure that it will be applied. The amendment asks for that to be spelt out, so that it is clear what sort of mitigating circumstances may be taken into account in trying to decide whether costs should be awarded if an inquiry is not held.

Given that the Bill will take powers away from local authorities and hand them to the Secretary of State, has the Minister considered whether the Secretary of State, or any person he appoints, may also be liable to pay costs? Again, I want a bit of clarity, which we need, on the clause and this group of amendments.

Nicholas Boles (Conservative, Grantham and Stamford)

It is pleasure to serve under your chairmanship again, Mr Howarth. I thank the Committee for the work done last week on clause 1. Our progress was somewhat deliberate, but constructive, and, since you were not there, Mr Howarth, and some members of the Committee were unable to be there for the entirety of our proceedings, it is worth acknowledging two points.

First, I am grateful to the Committee for helping me understand how important it is going to be for the inspectorate to hold hearings locally if contentious decisions come before it because a local authority has been designated, and that it will need to look at the possibility of those hearings in a slightly more generous light than it would on appeal. We have taken that point away, and I will take it up with the inspectorate, so the Committee has been very constructive there.

Secondly, although I was not able to persuade all members of the Committee that clause 1 is genuinely intended as a deterrent, it would, in fact, apply to very few authorities. Indeed, I hope it would apply to no authorities, should they improve their performance. Those were two important steps that we took, and I hope that we will have as constructive a day today.

I want briefly to address the amendments proposed by the hon. Member for City of Durham. I hope that I can reassure her that much of what she seeks already happens, and that any malign intent that she perceives behind these clauses is not actually there. The cost awards under clause 2 will be made only when one party to an appeal behaves unreasonably. Often, appeals are matters of fine judgment. There are different material considerations—they are, slightly, a question of apples and oranges rather than pears—and different people could, perfectly reasonably, reach different conclusions about how to weigh them up. In such cases, there will be no question of the inspectorate’s issuing an award for costs.

The clause’s intention is to look at those relatively few situations where one party or another behaves unreasonably in taking the matter to an appeal, in the case of an applicant, or in having refused the original application, in the case of a planning authority. I hope it reassures the hon. Lady to know that the Planning Inspectorate currently allows only 34% of appeals, and refuses 66%. The implication is that applicants are more likely than local authorities to be affected by the award of costs in the clause, because the current evidence shows that applicants’ cases are normally overturned by the Planning Inspectorate on appeal and local authorities’ decisions are being upheld in the majority of cases. If it is assumed that unreasonableness occurs in more or less a similar proportion of those events, it is at least as likely and probably more likely that developers, rather than local authorities, will be affected by the clause.

Nick Raynsford (Labour, Greenwich and Woolwich)

May I put it to the Minister that, without an evidence base, it is quite difficult to make that assertion? He will know that, in many planning appeals, the merits of the argument are finely balanced, as he said. However, in appeals where there is a clear case of unreasonableness, it is often the case that the local authority has taken its decision with regard to factors that should not have been taken into account, or has acted in a way that is plainly wrong. Therefore, there is a much greater likelihood that costs will be awarded against the local authority.

Nicholas Boles (Conservative, Grantham and Stamford)

I am grateful to the right hon. Gentleman for raising that issue, because that is what we are trying to root out. We have the national planning policy framework, the primacy of local plans and the vastly reduced nature of national policy—there is no excuse for local authorities not knowing what national policy is because there is so much less of it than there used to be. We are trying to persuade all local authorities that they must make decisions in accordance with policy, whether it is their own local policies—the local plan—or national policies. If they do not, they are behaving unreasonably. They might like to make a decision that does not accord with those two sets of policies, but if they do so, they are behaving unreasonably and are liable for costs.

We hope that the clause will underline the point we keep making: local authorities must have a policy and a local plan, or must find a sentence in the national planning policy framework to justify their decision. If they do not and no other part of government policy, such as a national policy statement, supports their position, they are likely to have their decision overturned and, if the decision is particularly unreasonable, have costs awarded against them. I do not believe that that is an unreasonable expectation to lay upon them.

Nick Raynsford (Labour, Greenwich and Woolwich)

I am listening carefully to the Minister’s response. If one accepts that argument, it clearly undermines his previous argument that, statistically, it is more likely that costs will be awarded against applicants.

Nicholas Boles (Conservative, Grantham and Stamford)

Not at all. The right hon. Gentleman suggested that local authorities are more likely to behave unreasonably; I have a more optimistic and benign view of them. Given that most of their decisions are supported by the Planning Inspectorate, it is likely that more often it will be applicants who behave unreasonably. They try it on, basically, and see whether they can have another go at a second court. They have deep pockets—usually deeper pockets than local authorities—and so they think they might have a go. It is more likely that that kind of behaviour will be rooted out, rather than the behaviour that the right hon. Gentleman seems to think local authorities are prone to, which I suggest is relatively rare and will become rarer as a result of the clause.

Nicholas Dakin (Labour, Scunthorpe)

Could the Minister clarify the difference between a reasonable appeal and an unreasonable appeal?

Nicholas Boles (Conservative, Grantham and Stamford)

The hon. Gentleman asks a good question. There is a huge amount of case law on reasonableness, which is one of the reasons why, elsewhere in the Bill, we use the concept of reasonableness. It is a well established concept. There is guidance currently on the award of costs. Of course, the planning inspector currently has the ability to award costs. There is published guidance on that, and there always has been. We will be updating that guidance. It will be published, as guidance always is, well in advance of its being exercised.

I do not think there is any great mystery here. If someone has a policy support for their position, it is probably reasonable. If they do not have a policy support, either in the local plan or in national policy, it is probably unreasonable. I do not want to get into the business of predicting how it will apply to every particular case. That is the planning inspector’s job, not mine.

Roberta Blackman-Woods (Labour, City of Durham)

The Minister is being most generous in giving way. Will he inform the Committee whether the Department has had meetings with developers to explain that a purpose of the clause is to change developers’ behaviour? From our discussions with developers, I am not sure that that is their understanding of the clause or, indeed, a possible outcome. It will be interesting to see how the Minister measures whether the clause is successful.

Nicholas Boles (Conservative, Grantham and Stamford)

The hon. Lady will be aware that we are all prone to focus more on the mote in somebody else’s eye than the beam in our own. Of course, developers are frustrated by perceptions of unreasonable behaviour on the part of local authorities. All I am suggesting is that the clause will apply evenly, and that the inspectorate will be able to award costs against unreasonable behaviour. Given that the inspectorate is already overturning more developers’ appeals than local authority decisions, it does not seem completely outlandish to expect developers to be affected more often than local authorities.

I will move on to a few of the points embedded in the amendments. First, the hon. Lady asked for explicit ability to take account of mitigating circumstances. I assure her that that is already the case. The planning inspector must allow the parties to present evidence on why their case, even if unsuccessful, was reasonable, before any decision about costs. That will be entirely maintained.

The hon. Lady raised the spectre of the Secretary of State in his imperial pomp making decisions about cost awards. While the current Secretary of State has the wisdom of Solomon, and I trust him to make good judgments on almost any question, he is also a busy man with bigger judgments to make. The clause is intended to do simply this: planning inspectors have a particular set of valuable skills that we want applied to difficult planning questions; the question of awarding costs, and whether behaviour has been reasonable, need not be made by a planning inspector and will take up some time. We therefore propose to make it possible for the Secretary of State to create a new category of officials within the inspectorate called specialist cost officers, who will do this task. The clause has to be framed so that the Secretary of State is able to appoint another person, an inspector, because, as hon. Members know, an inspector is individually appointed to adjudicate particular cases. The intention is not that the Secretary of State himself, but officers appointed for the purpose, would take the decisions.

Nicholas Dakin (Labour, Scunthorpe)

Is the Minister saying that there will be another group of officials who apply a test of reasonableness and apply an accommodation of costs, rather than the Planning Inspectorate?

Nicholas Boles (Conservative, Grantham and Stamford)

I am suggesting that we will look to appoint some people to be specialist cost officers within the Planning Inspectorate, who will build a body of work and expertise. Of course, they will work on the basis that the Planning Inspectorate has a long history of making awards of costs. Reasonableness is an issue that comes into those awards as much as it would in this slightly expanded ability. We want to make that a specialist function, rather than take up the time of valuable people who should be focusing on planning decisions. There is nothing more conspiratorial than that lying behind the clause.

Roberta Blackman-Woods (Labour, City of Durham)

That is very interesting information. I have to say that the Minister is full of surprises. Will he tell the Committee how the officers are to be funded, whether they will be on a performance agreement and whether the arrangement will be cost-effective?

Nicholas Boles (Conservative, Grantham and Stamford)

The hon. Lady is nothing if not creative. She can conjure up all sorts of spooky scenarios of the evil things that I propose. Unfortunately, what I propose is far more humdrum than she thinks. We will employ people in the Planning Inspectorate and they will report to the chief planning inspector and the chief executive of the Planning Inspectorate. It is simply that the question of whether behaviour was unreasonable and therefore liable to costs is not the same as the question of whether a planning decision was good or bad. We do not want to distract planning inspectors with that decision, but to build up a small group of people who will be employed within the Planning Inspectorate from its existing budgets to do the work.

Nicholas Dakin (Labour, Scunthorpe)

The Minister was helpful when he said that no additional costs would be related to the additional function and that its costs would be borne by squeezing the rest of the Planning Inspectorate’s funding. All I am hearing is greater bureaucracy and greater complexity, and I hope the Minister can make it clear that that is not the case.

Nicholas Boles (Conservative, Grantham and Stamford)

I do not want to allow the hon. Gentleman to put words into my mouth, although no doubt they will be better words than those I come up with on my own. I am not saying that the existing budgets of the Planning Inspectorate will be frozen in aspic. They may need to be adjusted in different directions as a result of some of the decisions taken under the entire Bill, given the different major infrastructure regimes and the designation of poorly performing authorities. Work will be carried out within the Planning Inspectorate, and it will be funded by the Planning Inspectorate. It is simply a question of how we use valuable, skilled people most effectively to ensure that decisions are made in a timely way that is also fair and proper.

Simon Danczuk (Labour, Rochdale)

Is the Minister not worried that he is putting more staff into the quango and expanding it, and that he will be creating more red tape, not getting rid of it?

Nicholas Boles (Conservative, Grantham and Stamford)

No, I am not worried about either of those points because I am not doing either of those things.

Ian Murray rose—

Nicholas Boles (Conservative, Grantham and Stamford)

I may have reassured the hon. Member for City of Durham, but perhaps I have not reassured the hon. Gentleman.

Ian Murray (Labour, Edinburgh South)

I am grateful to the Minister for accepting an intervention from a Scot. At the bottom of its submission GIB 36, one of the United Kingdom’s biggest house builders, Barratt Developments, clearly stated that there

“is a need for clarity and certainty in respect of fees and costs”

with regard to clause 2. How would the Minister respond to Barratt Developments?

Nicholas Boles (Conservative, Grantham and Stamford)

The hon. Gentleman is unfair. Last week, I said how much we had to learn from the different planning system pursued by the Scots and perhaps—conceivably—even how much the Scottish people and the Scottish Government might want to learn from us. I am therefore always happy to take his interventions.

As I have explained, there is clear guidance on costs awards. It will be updated to reflect the changes that take place, should the two Houses decide to put the Bill into law. That will all be published in advance of the exercise of the new provisions, so everyone will have all the information they need. On that basis, I hope that the hon. Lady will withdraw the amendment.

Roberta Blackman-Woods (Labour, City of Durham)

I have heard what the Minister has said on the group of amendments. Given especially some of the new information that we received this morning about how some of the decisions will be made and the hon. Gentleman’s assurances that the criteria will be updated, we will think about the issue again and check out the additional information that he has presented to us. I beg to ask leave to withdraw the amendment.

Clause 3 - Compulsory purchase inquiries: costs

Roberta Blackman-Woods (Labour, City of Durham)

I beg to move amendment 61, in clause 3, page 5, line 11, after ‘applies’ insert

‘subject to mitigating circumstances to include circumstances beyond the control of the holder of the inquiry or hearing’.

George Howarth (Labour, Knowsley)

With this it will be convenient to discuss amendment

Amendment 62, in clause 3, page 5, line 16, at end add—

‘(c) to the costs of a local authority that is a party to a public local inquiry held in England in pursuance of this Act where one or more other parties does not attend the inquiry.’.

Roberta Blackman-Woods (Labour, City of Durham)

Like amendment 25, these amendments seek to ensure that extenuating and mitigating circumstances are taken into account when awarding costs for public local inquiries that do not go ahead for compulsory purchase orders. It is not clear in the clause or the explanatory notes against whom the Secretary of State would be awarding costs, so perhaps the Minister could help to identify what would happen in such circumstances. The impact assessment states that clause 3 will save the Secretary of State

“the expense of arranging a specific costs inquiry”

and that

“there will be benefit in avoiding the loss of costs,”

but it does not set out who will lose out by having to pay costs that they would otherwise not have paid. As compulsory purchase inquiries are usually held on the Secretary of State’s behalf would he be awarding costs against himself? If not, can the Minister shed some light on which parties will pay and under what circumstances?

However the costs are to be awarded, we know from the short title of the Bill that it is expected that measures such as this will have a spectacular impact upon growth and the economy. I return to that point because the detail and red tape established by the Bill make it easy to lose sight of the fact that it is supposed to be about growth and infrastructure development. We want to know who will be footing the bill and what the resultant leap in GDP will be as a result of the measures in clauses 2 and 3. I hope that the circumstances in which the costs will be awarded exclude those in which a party misses an inquiry, or is forced to cancel due to reasons beyond their control. That would be unfair for anyone, whether landowner, developer, local authority or even the Secretary of State, who is unable to attend an inquiry or has been prevented from doing so by matters outside their control. Amendment 61, like those before it, seeks to ensure that circumstances such as those are taken into account when the clause is applied.

Nicholas Boles (Conservative, Grantham and Stamford)

I hope that I shall be able to reassure the hon. Lady that while the clause may not be the single most important provision in the Bill, it is nevertheless justified and worth while and that we will not need to detain the Committee for too long. The body that would meet any costs awarded in the case of a compulsory purchase order is the acquiring authority—the local authority that is pursuing a compulsory purchase order in order to facilitate some development or other.

The purpose of the clause is simply to clear up a current anomaly that occurs when a party to such an inquiry does not attend the inquiry, because they have actually managed to come to a separate agreement with the acquiring authority. It could be a property owner who did not need to have their property compulsorily acquired, because they had actually reached an agreement with the acquiring authority to develop it alongside the authority. In that case, bizarrely, at present they need to go to the inquiry in order to apply for their costs in going through that process. That seems somewhat strange and crazy, so we want to sort it out.

I am glad to say that the hon. Lady’s concern that it might be somehow unfair on the acquiring authority if an inquiry is cancelled due to an inspector being taken ill is unnecessary, because if an inspector were indisposed for some reason or was precluded because of a conflict or whatever other reason, the inquiry would not be cancelled; it would simply be adjourned or postponed. The only body that can cancel the inquiry is the acquiring authority, so it will not be penalised by its own decision. The clause will clear up the slight anomaly in the position and align it with the way we deal with other kinds of inquiries, to ensure that people can get their costs, having behaved reasonably, without attending the inquiry.

Roberta Blackman-Woods (Labour, City of Durham)

The Minister’s comments are helpful in allowing us to understand why the clause is in the Bill. Will he reassure us further that the clause is not intended in any way to turn local authorities away from using compulsory purchase orders? We know that they are incredibly important to amass land for future development. The Committee would like to hear reassurance on that front as well.

Nicholas Boles (Conservative, Grantham and Stamford)

I am happy to provide that reassurance. CPOs are an important tool in local authorities’ armoury for the exercise of their general power of competence on behalf of local people and to create important benefits for the entire community. There is no intention at all to make CPOs a less attractive route; there is just an intention to sort out an anomaly that is unfair on some parties. It happens on relatively rare occasions, but it does happen.

Roberta Blackman-Woods (Labour, City of Durham)

That clarification was extremely helpful. On the basis of the Minister’s comments, I beg to ask leave to withdraw the amendment.

Clause 4 - Limits on power to require information with planning applications

Roberta Blackman-Woods (Labour, City of Durham)

I beg to move amendment 63, in clause 4, page 5, line 23, leave out ‘reasonable’ and insert ‘appropriate’.

George Howarth (Labour, Knowsley)

With this it will be convenient to discuss amendment 64, in clause 4, page 5, line 25, leave out from ‘if’ to ‘that’ in line 26 and insert

‘the local planning authority considers’.

Roberta Blackman-Woods (Labour, City of Durham)

Contrary to the Minister’s claim that this is the clause that will make the most positive impact on the planning system and the speed of development, the evidence heard by the Committee revealed that it is largely redundant and simply panders to the lobbying of certain major developers, rather than delivering any substantive change.

The Local Government Association branded the clause “legally incoherent,” because local authorities are already restricted to requesting reasonable information. Similarly, the British Property Federation questioned the efficacy of the move, pointing out that there would be no way of enforcing such a change and that the clause is simply tantamount to proclaiming motherhood to be a good thing. The fact that information requests should be reasonable is universally acknowledged, and the inclusion of the clause will not do anything. In an evidence session, Liz Peace asked,

“how do you implement it? What sort of sanctions do you have? Someone standing up and declaring that motherhood is great? What we actually need is the follow-up on that.”––[Official Report, Growth and Enterprise Public Bill Committee, 13 November 2012; c. 41, Q3.]

A number of the points I want to raise are about how the Minister seeks to implement the provisions of the clause.

Amendment 63 would ensure that requests for information are appropriate. It is already in law that requests for information should be reasonable. What we think the Minister is getting at—obviously it is for him to tell the Committee himself—is that the request should be appropriate. As I said, the provision would sit alongside the existing requirement that requests are reasonable and would reinforce rather than simply restate the existing law. It would be more likely to bring about a change than the clause as it stands, as it seems to be a legal tautology.

In the longer run, however, or the next time Downing street and the Treasury panic about the lack of growth and the Minister wants to be seen to be doing something, he should perhaps look elsewhere. In this context I ask him to consider what steps he is taking to deliver the changes set out in the Killian Pretty review commissioned by the Labour Government in 2008. It recommended that information requests be refined—not, may I remind him, defined. Publishing responses to the consultation on streamlining information requirements for planning applications which closed two months ago might also be a good start.

I am nervous about asking the Minister to publish anything, because I usually find that he has done so 10 minutes before I get to my feet. In these circumstances I am reasonably confident that this has not yet been done. I therefore ask him to go away and look at this. Let us be clear. We all want information requests to be reasonable. A number of people who gave evidence to the Committee talked about not being clear, at times, why they were being asked to present information regarding a particular planning application. This measure is already in law and we want it to be appropriate. The Minister cannot achieve it simply by stating that it must be the case.

I have another set of questions about the clause which relate to how it sits alongside the national planning policy framework. As the Committee will know, avid followers of planning as we all are, the NPPF was presented by a previous planning Minister and the Secretary of State as cutting through red tape, getting thousands of pages of planning guidance down to 50 pages. This was an incredible achievement. However, it seems that, rather than the NPPF being allowed to set the framework in which planning decisions are made, it is now being underpinned by legislation of which the Bill is a part, and by guidance underpinning that legislation.

It might help to demonstrate my point if I briefly read out the relevant paragraphs of the NPPF, to which I need to understand how the measures in the Bill relate. Indeed, they call into question what the Minister and his Department think its status is. Paragraph 192 states:

“The right information is crucial to good decision-taking, particularly where formal assessments are required (such as Environmental Impact Assessment, Habitats Regulations Assessment and Flood Risk Assessment). To avoid delay, applicants should discuss what information is needed with the local planning authority and expert bodies as early as possible.

Paragraph 193 states:

Local planning authorities should publish a list of their information requirements for applications, which should be proportionate to the nature and scale of development proposals and reviewed on a frequent basis. Local planning authorities should only request supporting information that is relevant, necessary and material to the application in question.”

The next paragraph states:

“Local authorities should consult the appropriate bodies”

on what is necessary.

Given that the information is already set out in the NPPF and the requirements, which are pretty precise about what local authorities should be doing, it is not clear to us why the clause is necessary. It has added to my nervousness that the Government think the NPPF is not strong enough and needs to be underpinned by legislation and guidance; so everything that we heard about planning guidance being reduced to 50 pages was absolute nonsense, as we suspected at the time.

Nicholas Dakin (Labour, Scunthorpe)

My hon. Friend makes a good point about the centrality of the NPPF and the danger of the clause. Does she agree that one of the concerns that came forward strongly in the evidence is that clause 4 may lead to local authorities not asking for all the information necessary to make good decisions on behalf of local people, which could lead to poor quality planning decisions, to the detriment of localities?

Roberta Blackman-Woods (Labour, City of Durham)

Indeed. My hon. Friend clearly demonstrates the need for this amendment, because a number of people who gave evidence, either written or in the evidence-taking sittings, made it clear that what they really wanted from local authorities was clear guidance about what information was needed to help make the decision, and for it to be made more clearly and easily. There was some concern that it was not always apparent why local authorities needed particular information.

We are asking that any information that is requested should be appropriate. As the NPPF is already suggesting that the information should be proportionate, it is not at all clear to me why the Minister would not approve the amendment. It is simply there to be helpful, and to be as reasonable as the existing law. What the Minister is getting at is that requests should be appropriate. I am sure we do not want to usher in a set of circumstances where local authorities do not have the information they need to take a decision, because that would slow down the development process.

Simon Danczuk (Labour, Rochdale)

Is the problem with the clause that it encapsulates the whole problem with the Bill? As we would describe it in Lancashire—I remind hon. Members that it is Lancashire day today, and we should be celebrating—it is just faffing around the edges of what is required. That is the problem—not just with the clause but the Bill in totality.

George Howarth (Labour, Knowsley)

I am sure there will be no faffing around in this Committee.

Roberta Blackman-Woods (Labour, City of Durham)

Thank you, Mr Howarth, for clarifying that faffing around is parliamentary language. It will be a phrase that we employ from time to time to describe the Bill, I fear. I apologise to my hon. Friend the Member for Rochdale for not acknowledging at the outset that it is Lancashire day today and we should be celebrating some sort of birthday, if that is what it is.

Before moving away from amendment 63, I want to ask the Minister to clarify the role of the NPPF. Amendment 64 deals with the fact that no evidence was presented at earlier stages—or, as far as I can see, in any of the Bill’s accompanying documents—to suggest that local authorities were purposefully requesting superfluous information in order to be vexatious. In fact, the National Housing Federation underlined the point that excess information also works against local planning authorities. According to the NHF chief executive, David Orr, it gets

“completely bombarded by vast amounts of information that do not help to determine whether the planning application is consistent with the plan.”––[Official Report, Growth and Infrastructure Public Bill Committee, 13 November 2012; c. 57, Q40.]

As such, we can clearly see that it is in the local planning authority’s interest as much as anyone else’s for requests to be proportionate. It is therefore understandable that the relevant local authority should determine whether a matter will be a material consideration. That is not what the Government have implied. For instance, the impact assessment says that the intention of clause 4 is to ensure that information requests are of “genuine relevance”. That seems to suggest that local authorities are deliberately requesting information that they consider might not be relevant.

Those of us who have sat on planning committees know that it is really important for members to have clear evidence, the direct relationship of which to the decision that is to be made is absolutely apparent, and background documents, where necessary, that are referenced in a way that makes it easy for members to access the information. The Minister might want to turn his attention to the way in which information is presented. However, we accept that in some ways, the NPPF deals with this matter already, and we are not sure why it has not been allowed to bed in and change behaviour where necessary. Such a change is probably not necessary in as many cases as the Minister thinks, but we are particularly conscious of the need to ensure that councillors get the information they need. We know that it is a balancing act, and that it can be difficult to always get things exactly right in the case of individual applications. As with amendment 63, what is needed is for everyone to sit down in the early stages of the planning process, decide what information is required and ensure that it is appropriate for the sort of decision that needs to be made. The decision needs to lie within the gift of a particular local authority, which needs to be able to look at what is genuinely relevant.

Nicholas Dakin (Labour, Scunthorpe)

Does my hon. Friend recognise that the evidence we have seen is not only from organisations such as the Local Government Association, but from developers such as RenewableUK and Barratt? They are concerned that the ambiguities within the clause might lead to greater litigiousness and greater problems. Her amendments are helpful in putting forward a more positive way.

Roberta Blackman-Woods (Labour, City of Durham)

Indeed. My hon. Friend once again makes an excellent point. Several developers gave evidence. They wanted to be clear about why information was needed, and about the form and time scales it was needed in. They were asking for certainty and clarity, and effectively made the point that I made earlier: if a decision gets to committee and someone finds that a critical bit of information is not present, that will only slow down the decision-making process. That is why it is essential that all the information appropriate to an application be gathered and presented to the committee in a timely manner. That is why we have suggested the amendment.

Amendment 64 would ensure that that is a decision that rests with the local authority, so it is about getting some balance back into the Bill. I am terribly concerned that the Government seem to be using a number of the clauses to hammer local planning authorities and make life much more difficult for them in already challenging circumstances. I hope that the Minister will take on board some of our points in the two amendments. As my hon. Friend the Member for Scunthorpe said, the Opposition are genuinely trying to be helpful at all times. We want to see those important NPPF paragraphs implemented, and we want requests for information to be appropriate and in the determination of the local authority, rather than of the Secretary of State, the Minister or developers, which is what the current wording of the clause implies.

Nicholas Boles (Conservative, Grantham and Stamford)

I thank the hon. Lady for asking questions that, while in the main misplaced, make it clear to me that we might need to explain from the start why the provisions are necessary in addition to the measures in the national planning policy framework.

To go back to where things started, the Killian Pretty review was commissioned by the previous Government in 2008. It identified a need for the Government to tackle the increasing complexity in information requirements, with case study research indicating a variation in the consistency and reasonableness on the part of local authorities in information requests. Case study research carried out as part of the Killian Pretty review found that almost half—48%—of the cases surveyed had a problem with the registration procedure, with 20% reporting substantial problems causing delay and exhibiting poor practice. That is why the review recommended that changes be made, to clarify and tighten the definition of the information that could be requested in advance or alongside a planning application.

The hon. Lady said, “All of us want information requests to be reasonable”, and I am sure that the Committee and most people outside agree. The question is how to achieve that. She is right to say that in paragraph 193 of the NPPF we make it clear that local authorities should indeed be seeking information relevant to the planning decision. The fact remains, however, that the current statute that applies to information requests for planning applications is much less clear and much broader, which has led to some rather difficult judgments, not least the memorably named Poostchi judgment of 2009, which effectively found that the statute gave extraordinarily broad powers to local authorities, basically to ask for any information that they wanted. The problem is that the NPPF on its own is insufficient to overcome the precedent that that judgment created based on existing statutes.

Our intention, both through the Bill and the secondary legislation that will swiftly follow, is effectively to restore what used to exist, which is a right of appeal for applicants where they feel that a local authority’s requests for information, which then form the basis of its refusal to validate a planning application, are unreasonable. We need to start that process by adjusting the statutory framework, which is what clause 4 does. We are moving away from the position of the Planning and Compulsory Purchase Act 2004, which gives local authorities that broad power, and trying to narrow that down to make it consistent with what was set out in the NPPF. That will be accompanied by secondary legislation that allows applicants to appeal where an application has not been validated due to what they consider to be an unreasonable information request.

Simon Danczuk (Labour, Rochdale)

The previous Planning Minister, whom I hold in high regard for doing a good job, sweated blood in pushing forward the national planning policy framework. The current Minister says that elements of it are not strong enough. What are those elements?

Nicholas Boles (Conservative, Grantham and Stamford)

The hon. Gentleman will understand that the NPPF was an incredibly important piece of work and I share his esteem for my predecessor—the Financial Secretary to the Treasury, my right hon. Friend the Member for Tunbridge Wells (Greg Clark)—who created the framework and shepherded it through Parliament with the help of many members of this Committee. However, it is not statute. There is provision for it to exist in statute in the Localism Act 2011, but it is not statute. Where there is statute that is uncorrected and unamended and which directly conflicts with it, that creates a problem that leads to judgments such as the one that I have mentioned. Given that we have the Bill and this opportunity, we are trying to bring the statute in line with the intention contained within the framework that the hon. Member for Rochdale was so complimentary about.

Nicholas Dakin (Labour, Scunthorpe)

The Conservative-led Local Government Association is far from convinced about the need for clause 4. What discussions has the Minister had with the LGA’s leadership about that?

Nicholas Boles (Conservative, Grantham and Stamford)

I have regular discussions with the leadership of the LGA and the leaders of many authorities of many political colours about different aspects of what is proposed. It is of course sometimes hard for local authority leaders who rise to positions of leadership with the LGA or other representative bodies to understand some of the dysfunctional behaviour that a few poorly run authorities can indulge in. Generally, those leaders tend to be running pretty tight ships; otherwise they probably would not have earned the respect of their peers and the elevation to various elected positions in their representative associations. However, the fact remains that the experience on the ground is of some unreasonable behaviour. This measure simply brings the statute into line with the intention of the NPPF, so that we do not find that court cases are being overturned.

I refer the hon. Gentleman to the evidence provided by the CBI and the British Chambers of Commerce. Katja Hall of the CBI said that

“sometimes…the information asked for seems to have little relevance to the application. We would support this clause and the test of reasonableness”.

Mike Spicer of the BCC said that

“the evidence from our members and from Professor Ball about the extent to which companies going through the planning application process have to rely on outside consultancy support is a reflection of the complexity of the system and how much information is required. Businesses are in a situation in which they have to hire outside experts just to understand the requirements.”––[Official Report, Growth and Infrastructure Public Bill Committee, 13 November 2012; c. 27, Q54.]

The hon. Member for City of Durham made the important point that some larger developers have said they do not find the proposal such a problem. We are not just in the business of making the planning system work for very large developers. It is always the case that large companies can cope with regulation, whether of employment, planning or anything else, because they have whole departments that do just that. In truth, it becomes a bit of a competitive protection to them and a barrier to entry by smaller companies that want to do good things.

We have to make the system work fairly for all applicants and that includes the sort of businesses represented by the British Chambers of Commerce and others that do not have specialist departments that probably quite like the idea of getting all their environmental audits and bat reviews done and dusted up front, because they know that, at some point in the process, they will be needed. We need to help those who are not necessarily in that position and make sure that they are not being prevented from developing.

Roberta Blackman-Woods (Labour, City of Durham)

The Minister makes an interesting point about smaller development companies. Nevertheless, even smaller development companies need to provide the information that is appropriate to the development. Fairness does not relate only to the developer, but to the local community and the local community representatives charged with making the decision, and who need to have the correct and appropriate information in front of them so that they can make the decision.

The hon. Gentleman said that regulations will be underpinning the clause. I refer to the consultation on streamlining information requirements for planning applications that, I think, closed several months ago. Will the outcome of that consultation be known before the regulations are drawn up? It is only then that we can assess whether the regulations will tackle the particular issue that the hon. Gentleman raised.

Nicholas Boles (Conservative, Grantham and Stamford)

Before I give way to my hon. Friend the Member for Henley, I want to draw attention to the fact that the hon. Member for City of Durham is in a bit of a logical trap. Is she proposing a distinction without a difference, which is a distinction between appropriate and what is proposed under the clause, which is that, first, an information request should be reasonable and, secondly, that it should be relevant to the planning decision?

If there were something meaningful about the hon. Lady’s alternative, which is “appropriate”, presumably that suggests that something might be unreasonable or might not be relevant to the planning decision, but is somehow appropriate. I cannot believe that she honestly wants to suggest that applicants should be required to provide information that is unreasonable or not relevant to the planning decision.

“Or appropriate” is just another way in which to put “reasonable and relevant to the planning decision,” in which case we will be better off to stick with the current wording because “reasonableness” and “relevance” are strongly tested legal concepts and will therefore not provide the judgments that have caused such a problem in the past. I hope that the hon. Lady will understand why we prefer to stick to our decision.

Ian Murray rose—

Nicholas Boles (Conservative, Grantham and Stamford)

Will the hon. Member for Edinburgh South bear with me? I just want to give way to my hon. Friend the Member for Henley, by which time I hope that I shall be able to answer the hon. Lady’s second question about the regulations.

John Howell (Conservative, Henley)

I am glad to buy my hon. Friend a bit of thinking time so that he can respond to the Opposition. I take him back to the Killian Pretty report which identified such a problem. It identified that one size does not fit all, and that the way in which information requirements had been built up tended towards establishing them as a body of evidence that would be used in each case. That simply did not apply. The Library note makes clear the piecemeal nature of the legislative basis for such matters, and the provision is merely a piece of tidying up.

Nicholas Boles (Conservative, Grantham and Stamford)

I thank my hon. Friend. I might have set a hare running when I said that the clause was one of the most important in the Bill. He is right that it is a tidying-up provision. I happen to think that the tidying up is deeply significant. We have heard evidence, particularly from those representing smaller businesses, that this can be a huge burden on them. Small business representatives —developers and others—in my constituency have talked about being presented with a tick-box list, where a planning officer has ticked all the different audits, reviews and consultancy reports that they will require in the process, without much regard to the stage the decision had reached.

One developer made clear to me that the proposal can often become reasonable at the stage of detailed planning permission, but officers ask for it at the point of outline planning permission, when it is entirely unnecessary. Developers have to incur that cost when they have no outside financing in place; it has to come straight out of their equity reserves. It would be more reasonable to ask them to bear that cost when they have outline permission and therefore have the funding in place. Although such differences might seem small in legal terms they can be crucial for the viability of schemes for small developers.

Andrew Stunell (Liberal Democrat, Hazel Grove)

Does the Minister agree that there is an attitude in some planning departments of protecting their backs? If they do not tick every box they might find themselves at risk. For very small applications and ones where a bit of common sense should apply, it is just not necessary. If a building is on the top of a hill it probably does not need a flood assessment. There are plenty of other examples that we could all give from constituency experience.

Nicholas Boles (Conservative, Grantham and Stamford)

My right hon. Friend is absolutely right. I have some sympathy for the planning officers involved. The Prime Minister referred last week to the bane of judicial review creeping into every aspect of life. It is not entirely unreasonable for some planning officers to ward against any risk of getting into trouble by doing that. However, it has a corrosive effect on the cost of development and that is why we are trying to sort it out.

Ian Murray (Labour, Edinburgh South)

Will the Minister give way?

Nicholas Boles (Conservative, Grantham and Stamford)

I am just going to answer the hon. Lady’s question before I forget and then I will be delighted to come back to the hon. Gentleman.

With regard to the consultation, we are currently considering responses to the consultation on streamlining information requirements. We are looking to bring forward the regulations early next year. There will obviously be a proper process of looking at those. We are not going to start applying this provision until we have the regulatory support in place.

I have just acquired more detail. There will be two sets of regulations: one will be brought forward early next year for consultation in July, and one later, probably at the time of Royal Assent for the Bill. The latter will reintroduce the right of appeal. That package will, I hope, produce a situation that is streamlined, clear and fair.

Before giving way to the hon. Member for Edinburgh South, I want to refer to one more point raised by the hon. Member for City of Durham. She mentioned the importance for communities of being sure that all the necessary information had been provided. She is right, but it is also the case, as anybody who has served on a parish council knows, that sometimes a body can be presented with a yea-high pile of information and reports. Do they, as volunteers with busy lives and kids with homework to do, have the ability to wade through all that and form a judgment? We are trying to restore the balance so that everybody is able to access the decision-making process and give their views based on the relevant information that is reasonably required.

Ian Murray (Labour, Edinburgh South)

I should like to go back to the body of evidence. The LGA said clearly in its response to clause 4 that what the Minister is portraying is very anecdotal. I should have thought the Minister would have come to the Committee and said, “Here are four examples across the country of where this has not worked and where the clause would help.” He has yet to do so; perhaps he could.

I have a second point to make while I am intervening. Local communities are often in the best position to determine what is happening locally. Often they can tell a local authority that they think a bat survey should be done or that there are underground mine shafts that have been there a long time. When I was vice-convenor of a planning authority in Edinburgh, local communities would often come to the planning authorities saying, “We have the local knowledge to try to make these things better,” which helped the developer.

Nicholas Boles (Conservative, Grantham and Stamford)

The hon. Gentleman quotes the LGA at me but then does not accept it when I quote at him two of the major business representative organisations which said, in evidence that he heard, that this is a positive clause. It has won their support and is needed because their members are affected by it. I trust them to have a view and that is why we are bringing forward a clause that directly addresses the recommendations of the Killian Pretty review, which was set up by the Labour Government and published in 2008. We are directly fulfilling those recommendations which in their last two years in office that Government failed to do. I hope that the hon. Gentleman would welcome it.

James Morris (Conservative, Halesowen and Rowley Regis)

I want to come back to the powerful point that my hon. Friend made about the benefits of the clause and the important principle that we should seek to reduce radically the amount of information needed to make a judgment about a planning application so that it is in a form and size that allows communities to properly interrogate it. The principle that underlies this clause and its linkage with the NPPF is powerfully articulated by my hon. Friend when he says it will help communities as well as developers.

Nicholas Boles (Conservative, Grantham and Stamford)

Exactly. It is often the case, as my hon. Friend points out, that these sorts of bureaucratic overload do not help anybody. They do not help the applicants because it costs them a huge amount of money to put it through. They do not help the planning authority because the process of determining a planning application is also extremely expensive. We all know that the fees that authorities get for a planning application do not cover the full costs and they rely on Government grant, which is fixed and not related to the amount of work involved in an individual application. And it does not help the communities who want to comment. It does not help anybody and that is why the role of Government is to clarify, simplify and ensure that the process is reasonable.

Roberta Blackman-Woods (Labour, City of Durham)

The Local Government Association and others are asking for some evidence as to why the clause is necessary. Let me take the Minister back for a moment to the point made by the Prime Minister about judicial review and planning applications. We now know that judicial reviews of planning applications are about 1% of all judicial reviews. So why the Prime Minister highlighted it as an issue is quite beyond me. What it shows is that the evidence base does not necessarily concur with the Minister’s views or with the anecdotal evidence. We are asking the same thing about what underpins the clause.

Where is the evidence base? In particular, has the Department carried out a survey of the local authorities that use planning portals for their information on their websites? A number do, and it enables information to be interrogated without everything having to be downloaded and without there having to be a huge lot of paper available to parish councils or anybody else who might want it. Indeed, the form of the information is important as well. That is not mentioned at all in the clause. Is it intended to put all of this in regulations?

Nicholas Boles (Conservative, Grantham and Stamford)

I confess that I am slightly amazed by the approach the hon. Lady is taking. The Government whom she supported set up a review. The review said, “There is a problem with this. Do something about it.” Yet they did not. We introduced the national planning policy framework, which they now claim to support, although I do not seem to remember them supporting it when my right hon. Friend the Member for Hazel Grove and others were taking it through the House. [ Interruption. ] They certainly had a pretty funny way of showing it. They have admitted that that makes it clear that what we are proposing today is the reasonable position, and they were therefore asking, “Why is it that somehow the framework is not applying?”

The hon. Lady has completely failed to explain how “appropriate” is either meaningless, because it is the same as “reasonable” or “relevant”, or meaningful, in which case something can somehow be appropriate but unreasonable and irrelevant. She is saying that we have no evidence for that when I have already given her quotes from an evidence session in which she sat and asked the witnesses—the CBI and the British Chambers of Commerce—questions; I did not ask them any questions. I have given her an awesome example. If she prefers anecdote to the evidence of the people employed to represent the business community, I have also given her an anecdote from my constituency, and without a doubt, we can all give her more anecdotes.

There is plenty of evidence to show that the provision is long overdue. It was a product of a review set up by the hon. Lady’s Government. I hope that she will withdraw the amendment, which would add nothing and would provide, if anything, obfuscation to the clause. I hope that she will allow us to get on with the job of ensuring that the planning system works for developers large and small, for local authorities that want to help growth happen in their communities, and for local people who want to be able to respond to relevant information, not irrelevant twaddle.

Roberta Blackman-Woods (Labour, City of Durham)

There is a difference between evidence and opinion. We got a lot of opinion; what we did not necessarily get was evidence, hence the nature of my question.

Nicholas Boles (Conservative, Grantham and Stamford)

The hon. Lady is prone to use quotes as evidence when they support her arguments, and suddenly they become opinion when they support mine.

Roberta Blackman-Woods (Labour, City of Durham)

I do not agree with that observation.

What we know from what the LGA has said is that the clause is redundant. From what we have heard from the Minister, it will be useful to see the outcome of the consultation on streamlining information requirements and the regulations in due course. On that basis, I beg to ask leave to withdraw the amendment.

Clause 5 - Modification or discharge of affordable housing requirements

Nick Raynsford (Labour, Greenwich and Woolwich)

I beg to move amendment 50, in clause 5, page 5, line 31, after ‘(1)’, insert ‘Subject to subsection (1A),’.

George Howarth (Labour, Knowsley)

With this it will be convenient to discuss amendment 51, in clause 5, page 5, line 32, at end insert—

‘(1A) This section does not apply to planning obligations relating to article 1(5) land as defined in the Town and Country Planning (General Permitted Development) Order 1995 (S.I. 1995/418).’.

Nick Raynsford (Labour, Greenwich and Woolwich)

Clause 5 is concerned with section 106 agreements. Every member of the Committee will know that the clause has attracted widespread criticism, not least from the witnesses who gave evidence to our Committee. There were three broad grounds for objecting to the clause.

The first is the obvious concern that it would further reduce the supply of affordable housing, which is already woefully inadequate. We heard from a significant number of people with different perspectives, including the Royal Institution of Chartered Surveyors, whose written evidence made it clear that it was concerned; the National Housing Federation; and local authorities, all of whom feared that the outcome would be to reduce further the already inadequate supply of affordable housing.

Secondly, we heard evidence that the Government’s analysis when bringing forward the clause was fatally flawed. The Government saw the affordable housing component as the only factor likely to lead to the stalling of development schemes, or at least their analysis identified the affordable housing component in section 106 agreements as the only part that would be subject to renegotiation as part of the process, whereas we have heard evidence from very many other sources, including in particular the Local Government Association—it ought to know—and the planning community, that a very wide range of factors could result in a scheme being stalled because it was seen to be unviable, and that it was quite wrong to single out affordable housing as the only area subject to renegotiation or change on appeal, as is provided in clause 5.

Anyone on the Government Benches who is defending the clause would do well to remind themselves of the evidence of the Local Government Association—both what its representatives have said to us and also its written evidence. It is a most damning indictment of a Government who claim to be supporting a localist agenda. They really have not got their ducks in a row, if I can put it in that rather crude way. They have managed to alienate almost the entire local government community, including their own supporters in local government, who believe that this is an inappropriate and ill-advised Bill, particularly this clause.

The third objection to clause 5 is that it will have some perverse, and hopefully unintended, consequences, some of which were identified during the evidence sessions. I hope that Ministers will recognise that and be prepared to accept amendments that are intended to avoid some of those perverse consequences. This group of amendments is in exactly that line. The amendments deal not with the overall thrust of the clause—we will debate that later—but with the potential impact on the exception sites policy in rural areas. This is a narrow and specific series of amendments designed to deal with a narrow and specific, but damaging, potential consequence of the clause.

Perhaps I should start by describing what the exception sites policy is. It is defined, helpfully, in the national planning policy framework:

“Rural exception sites: Small sites used for affordable housing in perpetuity where sites would not normally be used for housing. Rural exception sites seek to address the needs of the local community by accommodating households who are either current residents or have an existing family or employment connection. Small numbers of market homes may be allowed at the local authority’s discretion, for example where essential to enable the delivery of affordable units without grant funding.”

There, we begin to get to the nub of the policy. It has been in existence for over 20 years, it has had bipartisan or cross-party support—I know of no political party that has objected to it or found it inappropriate—and it has facilitated the supply of substantial numbers of homes meeting real needs in rural areas, by making exceptions to allow the development of housing where it would otherwise not be permitted.

If I describe how the policy works, that will hopefully make it easy to understand. In particular rural areas there is a presumption against housing, for a variety of reasons—because we are dealing with a national park, an area of outstanding natural beauty or an area where the countryside would be compromised by the commercial development of large numbers of market homes. However, in such areas there may well be a need for a small number of homes to meet the needs of the local community. There may be a need for homes for the sons and daughters of existing residents, for example, to keep a village community alive, or for individuals who need to work in that area because their job, although not well paid, is essential to the economy and community of the area. The exceptions policy emerged as a counter-intuitive but sensible approach to providing for those needs by saying that although there would normally be a presumption against housing development in an area, development would be allowed in exceptional circumstances because it would meet a pressing social, and in some cases economic, need.

We heard from Dr Nigel Stone of the English National Park Authorities Association. In his evidence on the importance of that policy he said, “The majority of us”—his members, the national park authorities—

“have a planning policy based on a rural exceptions approach to planning. For a housing application to be approved, it would have to meet affordable local needs criteria and be occupied by somebody who meets those criteria.”

He went on to express his worry about clause 5. He said:

“Our concern is that because they are exception sites, the potential developer and occupier is able to purchase that land at a relatively low price, because it has little hope value.”

The current scheme works on that basis, but if that hope value were suddenly to become larger because the exception depending on the section 106 agreement were to be modified, it would open up the possibility of other development and entirely undercut the basis of the policy. Dr Stone emphasised how the policy depends on all parties agreeing. He said:

“It works both ways: it enables a landowner selling a piece of land to feel reassured that it will meet a local need, and it enables a purchaser to purchase at a relatively low cost. That is critical to the viability of building on the site. It is by retaining the full section 106—that occupancy—that potentially makes it available in the future for other people who meet the local needs criteria, so that you build up a stock of affordable homes.”––[Official Report, Growth and Infrastructure Public Bill Committee, 20 November 2012; c. 147, Q336.]

Roberta Blackman-Woods (Labour, City of Durham)

Does my right hon. Friend agree that we clearly need to know—this should have been in the impact assessment—the impact that the clause may have on affordable housing in rural areas?

Nick Raynsford (Labour, Greenwich and Woolwich)

I am grateful to my hon. Friend for her question. The impact assessment, I believe, suggests that there could well be an impact on the supply of affordable housing in rural areas. I do not have the numbers immediately to hand, but perhaps the Minister could give a more detailed answer in his response.

Ian Murray (Labour, Edinburgh South)

Let me take my right hon. Friend back to the points he made on viability and land values. Is it not the case that, although removing a section 106 agreement for one particular planning application may make it more viable under legislation, the potential long-term impact on land values, particularly in rural areas, could be an increase that would make future affordable housing requirements less viable and more difficult to achieve?

Nick Raynsford (Labour, Greenwich and Woolwich)

My hon. Friend makes a good point, but there is actually a more fundamental problem, which is that the viability argument could entirely destroy the whole basis of the policy. That basis is confidence on the part of the landowner that when a site is made available below market value, there will not be a windfall gain at some future date to someone who simply happens to be the lucky occupant at that time. The section 106 agreement, which guarantees in perpetuity that the site will remain available only for defined needs, essentially depresses the land value in the long term.

My hon. Friend makes the good point that removing a section 106 agreement would ultimately open up the market to higher values and so be self-defeating, but it would be even more self-defeating in totally destroying the confidence of landowners who currently believe that they can make sites available at less than market value for good social and economic reasons for their area. It may then be that, as a result of a whim at a future date, someone will gain a windfall, but the policy will be destroyed. Of course, the impact of that will inevitably be to take away any confidence whatever on the part of landowners that it is worth their while disposing of sites at below market value in the interests of meeting the needs of their community. Why should they do so if someone else is going to get a windfall gain at some future date, over which they have no control?

Nicholas Dakin (Labour, Scunthorpe)

My right hon. Friend is spelling out these difficulties very clearly. Can he assist me in understanding whether, as currently drafted, the thrust of the clause goes against the power of localism and his amendment will rebalance things back in favour of localities?

Nick Raynsford (Labour, Greenwich and Woolwich)

I certainly can. Of course, I have to qualify that by saying that, in moving the amendment, I made it clear that it only deals with a relatively small, specific issue. It does not deal with the wider attack on localism implicit in the clause, which we will debate in future. Amendments 50 and 51 would restore to the local community the ability to determine that there shall be affordable housing, that it will be protected in perpetuity, that landowners who release land at below market value to make that possible can be reassured that that will continue, and that someone else will not make a windfall gain simply by subverting the section 106 obligation to retain the property in perpetuity for affordable housing or local economic needs.

I would like to explore how the clause would work, because it is dangerous. It would allow a developer, after the grant of planning consent subject to a section 106 obligation, to apply for that obligation to be either modified or lifted. There could be a scenario in which a plot of land has been made available at below market value to provide for the affordable housing needs of a community, and it has all been agreed and everyone is happy with it. However, subsequently, the developer could decide that the site is not viable, and that the way to deal with that is to seek to reverse the section 106 obligation. There is no difficulty whatever in seeing the incentives for a developer, in a situation where he suddenly sees the opportunity for a substantial windfall gain through the property becoming a market property once again, to apply for the section 106 obligation to be varied.

The test, as I understand from reading the Bill, is viability. It is not about social sustainability or meeting the needs of the community; it is purely about viability. We are in some difficulty here, because we do not know what the definition of viability is going to be. This is yet another example of how this hopelessly inadequately prepared Bill has been rushed through without proper preparation. We are told that we will get the definition of viability from the Government when they finally get around to thinking about what it should be. We are, to some extent, in the dark here. I hope that the Minister can cast a bit of light on how the Government are approaching the definition of viability, but at the moment we are having to fly blind, because we do not know what it will be.

Ian Murray (Labour, Edinburgh South)

Would my right hon. Friend be gravely concerned if the test for viability were drawn up in such a way that a developer must make a margin of 25% on any development that they do? Viability would therefore become about profitability, rather than the delivery of homes or affordable homes.

Nick Raynsford (Labour, Greenwich and Woolwich)

My hon. Friend makes a good point. I have no doubt that some developers would like there to be a definition guaranteeing them a return of 25%, but hopefully the Government would resist that. However, we do not know. I have to say that, like my hon. Friend, I am in the dark, because we are told that this is all going to be decided on a test of viability, but we do not know what the definition of viability will be. As I said, it is a further illustration of the rushed preparation of the Bill and the inadequate definition of some of the key concepts in it.

In the absence of clarity on viability, let us at least consider one possible scenario. The Minister can help, if he would like, by telling me if he thinks it is not possible. If he does not do so, I will assume that it is a viable, likely scenario that could happen under the circumstances that would apply if the Bill were to be enacted and clause 5, as currently drafted, put into effect.

The scenario goes roughly like this. In a national park—let us take a national park as an example because it was Dr Stone who gave the evidence to us—someone in modestly paid employment needs housing. Members will be able to think of possible scenarios involving people who are vital to the life of a local community, who need housing in the area but are not well paid. That person is not able to afford market housing, and there is not an adequate supply of social housing in the area. The only way in which that person will find a home is if he can secure the agreement of the landowner to release a plot of land at well below market value to provide, in this case, a self-build home. Dr Stone gave the example of individuals arranging to build their own homes.

The individual decides to do that. The landowner offers to release the land at agricultural value, rather than market housing value, and the applicant puts in the application to the planning authority. The planning authority, which in this case would be the national park, would normally not grant planning consent for new housing. However, in this scenario, the planning authority believes the individual is vital to the local economy—let us say it is an area of forestry and the person performs a useful task in relation to the forest—and so it is minded to agree to the consent. Of course, the one thing it does not want to do under any circumstances is to open the floodgates for a lot of other housing applications, which would change the character of the area and undermine its obligation to support the national park’s natural beauty and protect its special quality. The planning authority accepts the exception, and therefore is minded to agree, but only does so with the section 106 provision that keeps the property available in perpetuity for affordable housing purposes, thereby preventing the individual from releasing the property into the market, realising a substantial capital gain and undermining the policy.

After securing consent, the applicant starts negotiating with developers and builders to get the house built, and discovers that the costs are beyond his means, even with the heavily discounted land values. It would actually require a considerable degree of restraint on the part of an individual in those circumstances, if clause 5 were part of the Bill as enacted, not to see that as an opportunity to get their house built—what a temptation. Clause 5 states that, if a development is stalled because of viability issues, it is open to the individual to go back to the planning authority and to say, “In these circumstances, please either modify or relax entirely the section 106 obligation.”

I do not think that scenario is far from the bounds of possibility, and I note that the Minister did not challenge it. Let us think about what would happen if that individual goes back to the planning authority and says, “Under clause 5, I want you to revise the section 106 obligation because it is making it impossible for me to carry out this development viably.” The authority may say, and I hope they would, “No. We gave you consent on the basis that it is for an affordable home in perpetuity. Those were the terms on which you sought our approval, and we would not otherwise have granted consent for housing in the area, so we are not changing it.” The applicant then has the right to appeal to the Secretary of State, who will refer it to PINS, the Planning Inspectorate.

As I read the Bill, PINS has to consider this on the grounds of viability. That is not on the grounds of whether it is a desirable scheme, or on the grounds of whether it will have an adverse impact on the community if the door is opened to market housing in the area, and not on any other factors that may be relevant to the national park or that particular site, but solely on the grounds of viability. Again, the Minister may challenge me if I am incorrectly interpreting the Bill, but on my reading of it, it appears that the Planning Inspectorate has to consider this solely on the grounds of viability.

If the Planning Inspectorate does that, and the individual plus his builder produce very clear evidence that it is simply not possible to proceed with that house or development currently because of viability, I find it difficult to consider what grounds PINS would have to retain the section 106 obligation in full. It may seek to amend it, or it may agree that the obligation should be dispensed with, but, either way, the decision will utterly compromise the whole rural exceptions policy. That will not just be an issue for that individual case; it will be a dagger in the heart of the whole rural exceptions policy once it becomes clear that the premise on which the policy is based is gone. Once the confidence in the premise that the landowner can be confident in supplying land at below market value that it will be available in perpetuity and that the land will not ultimately leech its way back into the market, which would give windfall gains to other people, has gone, because the Planning Inspectorate has overturned the rural exception section 106 agreement in one case only, the whole policy is holed below the waterline. There will be a total lack of confidence. Landowners will simply stop supplying land and developers in these areas will no longer believe it is viable to produce schemes. The policy will be killed at a stroke.

Ian Murray (Labour, Edinburgh South)

My right hon. Friend is making an incredibly powerful argument with that particular example, but is it not also the case, reflecting on that example, that people could put in these planning applications in good faith to deliver what they seek to deliver, but the economic cycle, as we have seen in recent times, could change overnight? A perfectly viable project that has been put in under the best of circumstances could turn into an unviable project. They would appeal to make it more viable and the policy would unwind just by the nature of the economic cycle and the good faith of that developer.

Nick Raynsford (Labour, Greenwich and Woolwich)

My hon. Friend makes a good point and he will have noticed that in the scenario I painted, I did not depict a wicked developer seeking to exploit loopholes; I painted a picture of someone acting in good faith who was prevented from proceeding on the basis that he had originally intended by economic circumstances. I did not spell them out: it may have been a change in the market or it may have been the difficult of getting a mortgage. There are all sorts of relevant factors.

I depicted a scenario in which someone had in good faith applied for property, but had then found that that was not possible and had used the clause 5 opportunity, which at a stroke had killed the rural exceptions policy. I talked about how landowners will, inevitably, take a different view of releasing land at below market value and how housing associations and others involved in providing housing in rural areas will be wary about coming forward with schemes if they can simply be transformed overnight into market housing at a stroke of the Planning Inspectorate’s decision-making. The third impact must also be considered: why on earth would a local authority in a rural area, or a national park authority, ever consider granting consent for an exceptions policy again? They will obviously draw conclusions and say, “This is not a safe policy. The whole purpose could be subverted and we could end up with this property not being available for a forester who is needed to help the local economy. Instead, it will be a comfortable holiday home for someone who has bought it on the open market and just comes here a few weeks a year.” That is exactly the problem that many such areas fear.

The consequence would not just be to destroy the policy, but also to halt the supply of affordable housing, because there will no longer be an incentive to use the mechanism to provide it. Nothing is less likely to help growth than that message. Although the issue is small and discrete, it illustrates how dangerous the clause is. In microcosm, it reflects how the whole Bill has been put together in a hurry, without provision being made for all sorts of serious long-term consequences that might do immense damage. The Bill also entirely fails to meet its supposed objective of stimulating growth.

I put it to the Minister that unless my scenario is incorrect, on which I await his reply, he has a problem. I hope, in response to the evidence that he heard—he was there when Dr Stone gave evidence—that he will accept amendments 50 and 51 or propose an alternative and possibly more elegant means of achieving the same impact. I am the first to agree that my amendments were put together in a hurry; I do not apologise for that because I am responding to a Bill that was put together in a hurry.

My amendments may not be the most satisfactory and elegant. I will be the first to acknowledge that and not to persist with them, if the Minister assures me that he recognises the problem and will act on it by introducing, on Report, an alternative amendment to close this very dangerous loophole. Otherwise, the clause will destroy a useful and effective planning policy that has delivered many homes in rural areas for people in need over many years, and has achieved cross-party support.

Nicholas Boles (Conservative, Grantham and Stamford)

I thank the right hon. Member for Greenwich and Woolwich for explaining his argument so fully and clearly. His amendments refer to a broader category than just rural exception sites, but he focused on them, so I will start by responding on that point. I very much share his view that such sites are incredibly important. They apply in relatively few places, but for those places they are vital. The Government absolutely do not intend to undermine a policy that provides desperately needed housing for people who live and work in national parks.

I am unclear about the logic of the right hon. Gentleman’s case in relation to whether what he has said would actually happen. The way that affordable housing works under section 106 of the 1990 Act is that, effectively, a section 106 agreement demands a cross-subsidy from developers. Some of the profit they make from developing houses for market sale or rent has to be taken—either in the form of land or of a financial contribution—as a subsidy, so that affordable housing can be made available at affordable rents. In the case of a rural exception site, the whole site, by definition, is 100% affordable. No subsidy is therefore being offered by the market element in a development, because there is no market element.

Mr Raynsford rose—

Nicholas Boles (Conservative, Grantham and Stamford)

May I finish? The right hon. Gentleman explained his point of view, and I am genuinely trying to tease this out.

There is no market element to the development, so there is no cross-subsidy towards the affordable part of the scheme. I therefore fail to see how a change in market circumstances could have any effect on the viability of that affordable element. In the more normal cases that we will come on to—no doubt, we will debate them thoroughly—in which a commercial element provides a cross-subsidy to an affordable one, one can at least understand the logic of the argument that if the commercial element is no longer as valuable and does not make the expected profit, the subsidy is no longer affordable. However, in this case, there is no cross-subsidy or market element, so how can the change in market circumstances affect the viability of the scheme?

Nick Raynsford (Labour, Greenwich and Woolwich)

I quoted early in my speech the definition in the national planning policy framework of rural exception sites. I remind the Minister of the final sentence of that definition in the Government’s own document:

“Small numbers of market homes may be allowed at the local authority’s discretion, for example where essential to enable the delivery of affordable units without grant funding.”

Nicholas Boles (Conservative, Grantham and Stamford)

But I am not sure whether the right hon. Gentleman can have it both ways. Either there is a commercial element, in which case our broad argument about the Bill applies—that it is more important to get some housing built than to fetishise some target in an agreement—or it is 100% affordable housing, as some rural exception schemes are, in which case there is no market element that could have been made less valuable by market developments, so there will be no viability question and the inspector will have no basis on which to suggest that there should be a reduction in the affordable component.

Nick Raynsford (Labour, Greenwich and Woolwich)

The Minister accuses me of trying to have it both ways, but that is what he is trying to do. A moment ago, he said that my argument did not stand because there was no market housing. I have pointed out to him that under his Government’s definition, market housing can be agreed. It says so in the NPPF:

“Small numbers of market homes may be allowed at the local authority’s discretion, for example where essential to enable the delivery of affordable units without grant funding.”

The Minister’s first line of argument has fallen. I am happy to discuss my scenario. I do not want offend you, Mr Howarth, by going on too long in an intervention, but I painted a picture where, having got consent, the developer or individual found that it was not possible to produce the home viably. I used two examples: first, that the builder came in with costs that were higher than anticipated; secondly, that it was difficult to get a mortgage in current circumstances. Those are equally plausible examples where it is not possible to proceed viably with a scheme that has been agreed with a section 106 exception.

Nicholas Boles (Conservative, Grantham and Stamford)

I am genuinely not trying to pick a fight with the right hon. Gentleman; I am trying to tease out what he is saying. It certainly seemed that he was focusing on those schemes that are 100% affordable housing. If he was, in fact, focusing on schemes with an element of market housing that provides a cross-subsidy towards a large element of affordable housing, the broad argument that we will be making for the clause over the course of the debate applies: is it not better actually to have some affordable houses that the person he described so well can move into and bring up a family in? Is it not better to get those built now, rather than to wait for some theoretical day, when the stars realign such that all the values underpinning the agreement that was reached a few years ago can be in place again?

Our view—which I accept is not his view or that of his hon. Friends—is simply that we are not in the business of fetishising agreements, targets or percentages. We want homes built. We want them built now, and if that means fewer of them can be affordable, because more of them have to be market, because market values have decreased and the potential for cross-subsidy has therefore declined, so be it. Let us get them built. We can always go back to those higher percentages and higher targets when values return in a few years’ time.

Nick Raynsford (Labour, Greenwich and Woolwich)

On a point of clarification, I argued my case on the basis of the individual pursuing an individual scheme without any other element of housing, but I quoted the national planning policy framework to make it clear that there would also be scenarios where a cross-subsidy between market housing and other housing could exist. Both are affected and both would be undermined by appeals that took away the section 106 protection. If that were to happen, the realignment of the stars that the Minister described will not generate any housing at all. It will put a total end to the very successful rural exceptions policy, because it will destroy confidence that those homes will be kept in perpetuity for affordable use.

Nicholas Boles (Conservative, Grantham and Stamford)

I do not accept the right hon. Gentleman’s cataclysmic argument. He now has admitted that there are two possibilities, only one of which he addressed in his rather long speech. There is the 100% affordable eventuality. In that case, there is absolutely no reason to believe that changes in market circumstances will have altered the viability, because there is no market element in those schemes, so they are not at risk from the clause.

There is another element—a market element—that is providing a cross-subsidy towards an affordable element. Where that market element is no longer so valuable, it cannot provide the same level of cross-subsidy. We are, without any regret, suggesting that we would prefer some houses to be built now to satisfy the needs of the person he described, rather than wait until some future day when market values will possibly return to a point where they can support the same level of commitment.

In either case, I do not believe that the clause will have the pernicious effect the right hon. Gentleman suggests. If it did, why are not he and his colleagues criticising all the authorities, including many progressive Labour-run authorities, renegotiating section 106 agreements in just the way we are encouraging those few who are not doing so to do?

Nick Raynsford (Labour, Greenwich and Woolwich)

I am sorry; this will be the last intervention. I put it to the Minister that I know of no example of a national park authority agreeing to renegotiate a section 106 agreement that guarantees in perpetuity the survival of affordable housing. If the Minister can give me a single example of one prepared to renegotiate now, I would be pleased to hear it, but I do not think he can.

Nicholas Boles (Conservative, Grantham and Stamford)

To be clear, I was talking about the general argument. Many authorities, Labour-controlled and others, are renegotiating section 106 agreements to reduce the affordable element, because the potential for cross-subsidy has been reduced.

Nick Raynsford (Labour, Greenwich and Woolwich)

It is a different question.

Nicholas Boles (Conservative, Grantham and Stamford)

No, the right hon. Gentleman is suggesting that that will somehow completely destroy the whole basis of section 106 agreements and push up land values. He painted a cataclysmic picture, of which, I accept, rural exception sites are a small, but important part. He painted a generally bleak picture. I note no criticism from him of his authority, which has put in place such a renegotiation, or the authorities of the hon. Member for Rochdale and others that have done this. They are acting in the interests of their communities.

Simon Danczuk (Labour, Rochdale)

Will the Minister give way?

Nicholas Boles (Conservative, Grantham and Stamford)

No, I will not. [Hon. Members: “You mentioned his constituency!”] I will finish my sentence if I may, and then I will give way. All the clause does is try to ensure that all authorities behave reasonably and pragmatically, like most authorities, including those of the right hon. Gentleman and the hon. Gentleman to whom I am about to give way.

Simon Danczuk (Labour, Rochdale)

I thank the Minister for giving way. On four occasions, he has mentioned my constituency, and specifically a site in my constituency—once in the Communities and Local Government Committee. On three occasions, he has referred to the Akzo Nobel site in Littleborough, where the council renegotiated the section 106 agreement to enable housing to be built there. Local constituents of mine in Littleborough have grave concerns about the site and the development. Given that he has taken such a keen interest in that particular site and development that he has mentioned it on four occasions, I urge him to meet my constituents and speak to them about their concerns over the site.

Nicholas Boles (Conservative, Grantham and Stamford)

The hon. Gentleman does me a disservice; I am sure that I have mentioned it more than four times. No doubt, by the end of the proceedings, it will be many more times than that.

George Howarth (Labour, Knowsley)

I hope not.

Nicholas Boles (Conservative, Grantham and Stamford)

I accept your reproof, Mr Howarth. I will of course be delighted to meet the hon. Gentleman’s constituents to try to understand their concerns.

To return to the right hon. Gentleman’s amendment, I want to be clear that the rural exception sites policy is extremely important, but he has framed his amendment in a rather broader sense and it does not have merit with regard to the conservation areas and other sites. We are about to have that broader debate. I accept however that there are particular circumstances with rural exception sites. I will not be able to encourage my hon. Friends to accept his amendment now, but I am absolutely open to hearing further arguments and to having further discussions to see whether I can understand why I am wrong and the right hon. Gentleman is right about how it will operate within the particular circumstances of national parks. We want to protect such communities and their ability to provide housing for local people. I encourage him to have that discussion with me and with officials, and I hope that, on that basis, he will withdraw his amendment.

Nicholas Dakin (Labour, Scunthorpe)

I very much welcome the Minister’s comments towards the end of his speech. I think we were all surprised by Dr Stone’s evidence: the issue had not occurred to us, and my right hon. Friend the Member for Greenwich and Woolwich was as surprised as everybody else. When we interrogated Dr Stone, it became clear that this is a genuine issue, so if the Minister is saying that he recognises there is a genuine issue and that he is willing to work cross party to find a resolution that would meet the concerns of the likes of Dr Stone, who is probably one of the few people who know what they are talking about on this issue, I would welcome that.

Nicholas Boles (Conservative, Grantham and Stamford)

Let me be very clear: I am not necessarily saying I recognise there is a genuine issue, but I certainly recognise that rural exception sites are exceptional, that they matter a great deal and that the people who have given evidence are genuinely sincere, so I want to go through a process of understanding whether there are, indeed, issues that we need to deal with. I am not yet persuaded that there are; I am just leaving open the possibility that I may be persuaded that there are, and I recognise the importance of this.

Roberta Blackman-Woods (Labour, City of Durham)

It is always dangerous to go into the territory of fetishes, and I hope we will not do that again. That aside, I know there is something in the impact assessment about the clause, but could the Minister give us more information about it? Could he give us projections of the impact on rural communities in the longer term, should the scenarios that my right hon. Friend suggests come to fruition? I think the impact on the number of affordable houses available could be huge.

Nicholas Boles (Conservative, Grantham and Stamford)

I have asked officials for more information about the number of rural exception sites, as well as for a bit of an understanding of the extent to which they are 100% affordable and the extent to which they have the cross-subsidy element we were talking about. I had not actually understood until right now that there are rural exception sites outside national parks; I thought they were all in national parks. It is because this is quite a complicated, but tightly defined, area that we are not trying to reach a settled position now. I am not yet persuaded of the right hon. Gentleman’s case, although I absolutely accept that he makes it in all sincerity. I suspect we will not reach agreement on the clause in its broad application, but there may be some room for agreement on this specific application, and I would like to explore that with him after we have finished today.

Ian Murray (Labour, Edinburgh South)

The Minister is being generous in not only taking interventions, but dealing with our points fairly. Will he reflect on the issues around land values, specifically with regard to my right hon. Friend’s amendments, because that is key to unlocking some of the most significant affordable housing sites in rural areas? That should be looked at as part of our considerations.

Nicholas Boles (Conservative, Grantham and Stamford)

I am happy to look into all the questions the right hon. Gentleman and the hon. Gentleman have raised. In assessing viability, we absolutely do not want, on the one hand, to set a thousand hares running by charging the Planning Inspectorate with looking at a huge range of issues; by definition, we do not want to reopen the entire negotiation that has led to a planning application that we are all trying to see brought forward. On the other hand, in the case of a rural exception site, which the right hon. Gentleman discussed, it is legitimate to ask whether exactly the same criteria can be applied as will be applied under the clause to, shall we say, normal, more run-of-the-mill developments. That is the kind of issue I hope we can discuss and try to reach agreement on.

Nick Raynsford (Labour, Greenwich and Woolwich)

I was initially rather disappointed that the Minister’s view was that I had not managed to explain the case sufficiently clearly, so he was not in a position to reach a judgment on it. However, I hear what he said about listening to further views and evidence. I was particularly struck by his thought that different criteria might be adopted in rural areas, national parks and areas of outstanding natural beauty and his willingness to listen to further representations. If I can take it from him that he would be happy for me to bring a delegation of experts in the field from the rural communities to see him on this subject—he is nodding so I accept that as assent—I beg to ask leave to withdraw the amendment.

Roberta Blackman-Woods (Labour, City of Durham)

I beg to move amendment 65, in clause 5, page 5, line 34, after ‘may’, insert

‘after the expiry of the relevant period’.

George Howarth (Labour, Knowsley)

With this it will be convenient to discuss the following: Amendment 6, in clause 5, page 5, line 42, at end insert—

‘(2A) An application made to an authority under subsection (2) shall be subject to a fee, which must cover costs incurred in determining whether paragraphs (a) or (b) of subsection (3) apply, including the costs of any specialist advice.’.

Amendment 8, in clause 5, page 6, line 15, at end insert—

‘(4A) Second or subsequent applications made to an authority under subsection (2) shall be subject to a fee.’.

Amendment 66, in clause 5, page 7, line 21, at end insert—

‘“relevant period” means—

(a) such period as may be prescribed; or

(b) if no period is prescribed, the period of two years beginning with the date of the planning permission for the development.’.

Roberta Blackman-Woods (Labour, City of Durham)

I am indeed glad to serve under your chairmanship again, Mr Howarth, and to have got here through what I think was a fire, or at least a fire alarm, in Portcullis House. I have some real issues to raise about the inclusion of the clause at all, but I will save those remarks until the clause stand part debate. At the outset, I want to make it clear that our amendments aim to limit the damage and curtail aspects of this clause that could have huge consequences for the delivery of affordable housing, and could hinder the creation of mixed communities in our society.

Amendment 65 acknowledges that, during tough economic times, there may be a need in some instances to review planning obligations to ensure that developments can continue. Indeed, in earlier deliberations, we pointed out that several local authorities are already voluntarily undertaking renegotiation and that this is a helpful way forward. We are trying to prevent a set of circumstances from emerging and that is why amendments 65 and 66 relate to the period of time that planning permission must be in place before a request can go forward for renegotiation. That is important because, if a period of time has not elapsed, we have to question why viability would have changed. We think it is rather odd not to specify a particular time period. We do not want a developer to get planning permission and then a month later decide for whatever reason that viability is no longer what it was and bring forward a request for renegotiation.

The National Housing Federation suggests that the clause should allow the Secretary of State to prescribe a period before which an application to modify can be made. That would bring the measure into line with the existing power to vary planning agreements. The amendments seek a default period of two years before the power of the Secretary of State to amend an application according to economic conditions can be applied. That seems a sensible and straightforward measure. We want to hear why the Minister feels that it would be appropriate for an application to be granted by a local authority one week and then in the subsequent week for an application to be made to the Secretary of State to renegotiate the planning application. That does not seem a very sensible approach. I look forward to hearing what the Minister has to say.

Nick Raynsford (Labour, Greenwich and Woolwich)

I rise to speak briefly about amendments 6 and 8, which are about costs. As I think everyone understands, this is not a cost-free process and there is a question about how those costs are to be met. The amendments would make it clear beyond doubt that there must be a fee associated with an application under the clause, and that that fee should be so structured as to allow for cost recovery, including the cost of the expert advice that may be necessary to carry out the assessment.

Just to remind the Committee, the assessment that is prompted by an application under the clause is of whether the development that has already been approved is economically viable, and specifically whether that viability or non-viability reflects the affordable housing component in the section 106 agreement. I suspect that most local authorities would be reluctant to form a judgment on that without obtaining expert advice. They will almost certainly want to put this question to consultants, and there will probably be a need to consider the views expressed by the applicant and the applicant’s consultants, who will almost certainly have a view on this matter.

As I highlighted in our earlier debates, we do not yet know what the definition of viability—a definition that all the parties will have to work to—is going to be, but I will not go into that territory for fear of incurring your wrath, Mr Howarth. I will simply say that this is an area of uncertainty, but there could be a significant cost attached to the process of assessing economic viability, and it seems quite wrong in a time of constrained resources for local authorities to have to incur that cost without any contribution from the developer. So the purpose of the amendments is to say that, where an application is made, there should be a fee, and indeed if there are further applications—the clause allows for second and further applications—fees should also apply in those cases.

I have left aside fees for referral to the Planning Inspectorate on appeal. I am sure that the Minister will also want to reflect on whether that is a sensible element to incorporate in the Bill, but that is outwith the remit of my amendments, so I will say no more about it.

I hope that the Minister will provide clarification even if he cannot accept my amendments, because it seems reasonable that the costs should be met, and met by the body that has the potential advantage in applying for a reconsideration, which is the developer.

Nicholas Boles (Conservative, Grantham and Stamford)

I hope, Mr Howarth, that unlike me you were able to enjoy the feast that was on offer celebrating Lancashire. Unfortunately, the hon. Member for Rochdale, who represents a constituency in the fair county of Lancashire, is not here with us, as he was this morning. However, today is Lancashire day and I know that there was a great feast downstairs.

Let me address the amendments. The difficulty that I have is that, if Opposition Members had made any pretence of supporting the clause, I might be more open-minded about viewing the amendments as helpful suggestions on how to improve what is a very good measure. However, since I know—they have made it very clear—that they think that the clause is an abomination, and that they will argue ferociously against it, I am slightly inclined to look at all suggestions from the hon. Member for City of Durham and the right hon. Member for Greenwich and Woolwich as spanners that they are trying to chuck into the works, or as sand that they are trying to chuck into the engine. Nevertheless, I will try to deal with the substance of the amendments, even though I start out with a little cynicism about the underlying motives.

Roberta Blackman-Woods (Labour, City of Durham)

I hope that the Minister accepts that it is entirely possible for us to disapprove totally of the clause, but nevertheless seek to make it better.

Nicholas Boles (Conservative, Grantham and Stamford)

What is possible in the mind of a Labour politician never ceases to amaze me, so I am delighted to admit that that, too, might be possible.

The right hon. Member for Greenwich and Woolwich moved amendments 6 and 8, which are about fees. As a very experienced former Minister in the Department, he will be well aware that the general power to provide for fees in relation to any local planning authority function exists under section 303 of the Town and Country Planning Act 1996, so there is no need to include such a provision in primary legislation in the way in which he proposes. That power exists, and it is something for which we could provide if we were persuaded of the merits of doing so. I shall not deny that the process of undertaking a review of the viability of the 106 agreement and the affordable housing component thereof will have some cost. It will take up some people’s time and, as the right hon. Gentleman said, it might even take up some of the consultant’s time.

I am very much aware of the fact that the process of reaching agreement in the first place tends to be expensive. It is fully charged to the developer and is often quite significant. I have even been told of a case when a section 106 agreement on the change of use of a single unit incurred a cost to the developer of £1,500 to cover the council’s legal fees. When developers have already paid all the costs in full, I am a little nervous about adding to their burden because the whole point of the Bill is to free up the system.

The Bill’s overall intention is for those few local authorities that do not do sensible things of their own accord to do them for fear of others doing those things for them. I would much prefer not one section 106 affordable housing scheme to be referred to PINS. That is my first best outcome from the Bill. I want to encourage local authorities to reach negotiated agreements and, in any such negotiated agreement of a 106 affordable housing scheme, to be absolutely at liberty to say to developers, “Yes, we are willing to look at it. We are willing to revise the affordable housing component but, as part of that, you have to pick up our cost in doing so” in cases when those developers had said, “This is difficult for us. We can’t build it. We can’t afford it.” That would be completely open to local authorities under the negotiation. I want to make the negotiated route more attractive to them than the route for which we are providing in the Bill, hence my reluctance to accede to the right hon. Gentleman’s suggestion.

Nick Raynsford (Labour, Greenwich and Woolwich)

The Minister justified his position by saying that the costs were fully covered by the fee. However, I remind him that when we debated clause 1, he said that the costs were not fully covered by the fee so local authorities should have no objection if cases were routed away from them to the Planning Inspectorate. Will he be consistent and argue either that the fees are fully satisfactory in all cases or that they are not? He cannot have it both ways.

Nicholas Boles (Conservative, Grantham and Stamford)

I will have to get further advice from officials just to make sure that I am not saying something that is not absolutely true. However, my understanding—which might be corrected—is that I was referring to the formal fee for a planning application of a different scale or whatever, and that further fees can then be charged for the negotiation of specific 106 agreements. Often, obviously by agreement, that will cover the full costs that are phased by the authority plus its external costs of consultants and legal fees. I shall receive confirmation of that response. I am still not entirely persuaded by the amendments at this stage.

I emphasise to members of the Committee that the general power exists and it would be something that we would look at again—which I do not want to happen—if many such reviews were being carried out and there was evidence that local authorities were suffering unfairly as a result.

As for amendments 65 and 66 on timing, the hon. Member for City of Durham made a good argument when she asked, if a local authority had reached an agreement one week, why it should be possible the following week to have that agreement reviewed and potentially revised. It would be pretty foolish of developers who thought of making an application to the local authority to have the agreement reviewed and revised. The local authority almost certainly would not agree to that process because it had reached an agreement about it only a week before and there had been no demonstrable change in circumstances to undermine the viability of that agreement.

If the developers then appealed to PINS and went through an expensive and laborious process, they would almost certainly end up with a flea in their ear, possibly plus an award of costs by PINS for having acted unreasonably. I do not believe it is necessary—this may be a philosophical difference between our two sides—to legislate for every aspect of foolish behaviour. So long as foolish behaviour carries its own cost to the people who are being foolish, we can, broadly speaking, allow them to draw the relevant conclusions without legislating for it.

Roberta Blackman-Woods (Labour, City of Durham)

I am trying to follow the Minister’s logic. He is prepared to legislate, with all that that entails and with all the time that we are all putting into it, to address the behaviour, as he sees it, of a handful of local authorities that are perhaps not acting in the best or wisest way possible, but he will not accept even the tiniest amendment to address what could be foolish behaviour by a handful of developers.

Nicholas Boles (Conservative, Grantham and Stamford)

My argument is that there are other ways to prevent such foolish behaviour. Using this legislation will not be painless for developers; they will not bounce out of bed in the morning and think, “Yippee! We are now going to go and re-appeal all of our section 106 agreements.” Those agreements were laboriously negotiated, which is an expensive and time-consuming process for developers. Remember that they make money from building houses and selling or renting them. Sometimes, they might sell on the site with permission, but generally speaking that is how they make money. Their interest is in doing things that make that happen more quickly, not in doing things that just take up time and frustrate everyone. I do not entirely accept the argument.

Nicholas Dakin (Labour, Scunthorpe)

I share the confusion of my hon. Friend the Member for City of Durham that needs must in the larger scale, but that needs must not in the smaller scale. I accept the Minister’s scepticism about proposals from the Opposition, but the National Housing Federation has welcomed the two amendments. Surely the Minister should listen to such knowledgeable people.

Nicholas Boles (Conservative, Grantham and Stamford)

The hon. Gentleman knows a lot more about this than I do, but there is almost no one in the field for whom I have greater respect than I do for the chairman of the National Housing Federation. Even with the greatest minds, every now and then I have to agree to disagree. On this, I am not yet persuaded.

This is a point of clarification, and it may not be complete, in which case I will come back to the right hon. Member for Greenwich and Woolwich. I confirm that local authorities have the discretionary power to charge costs both for drawing up a section 106 agreement and for renegotiating such an agreement, but that is not prescribed. They are able to do that only if they renegotiate on a voluntary basis. It is reasonable that they are able to secure proper compensation for the work they have to do if they enter a voluntary process. That is an incentive that I want to keep in place for doing it through a voluntary, negotiated route.

Nick Raynsford (Labour, Greenwich and Woolwich)

I am grateful to the Minister for that clarification. What incentive will there be for developers to agree to a voluntary fee being payable in such circumstances? As I read it, the clause, as drafted, contains no downside risk. It is not possible for the outcome to be a more burdensome obligation, so the developer has absolutely everything to gain and nothing to lose. Why should they enter an agreement to pay the fee?

Nicholas Boles (Conservative, Grantham and Stamford)

This may enrage Labour Members, but I find that one concept they sometimes find difficult is the idea that time is money. Delay has a real cost for people in business, because of the cost of capital and the way it works. If business sits around, capital burns a hole in its pocket. That is the reason why, broadly speaking, we heard in evidence that, in relation to other clauses and other changes the Government are making, there are many developers who, even when we create an opportunity to take an application direct to PINS, either under the clause 1 registration of poorly performing authorities process or under the broader definition of “major infrastructure,” will not choose to do so. That is because they know that if they have a good relationship with a good authority where they know the people, and it is all conducted very commercially and sensibly, it is in their direct financial interest to stick with that route, because time costs money. Again, I believe that the incentive is clear—a voluntarily negotiated agreement will always be preferable for a developer if the authority is willing to provide it, as so many are. On that basis, I urge both hon. Members to withdraw their amendment.

Roberta Blackman-Woods (Labour, City of Durham)

I have heard what the Minister has to say, and I will go away and look at the disincentives that he claims are already in place for developers wishing to bring forward very quickly an application to modify when a planning application has recently been agreed. On that basis, I beg to ask leave to withdraw the amendment.

Roberta Blackman-Woods (Labour, City of Durham)

I beg to move amendment 67, in clause 5, page 5, line 38, leave out from ‘(c)’ to ‘in’ in line 40.

George Howarth (Labour, Knowsley)

With this it will be convenient to discuss the following:

Amendment 68, in clause 5, page 6, line 3, leave out ‘means’ and insert

‘is assessed by the local authority to be the foremost reason’.

Amendment 7, in clause 5, page 6, line 9, at end insert—

‘(3A) The Secretary of State shall make an order by Statutory Instrument setting out the criteria by which viability is to be assessed.

(3B) An order shall not be made under subsection (3A) unless he has consulted those persons or organisations he considers to be appropriate and a draft of the Order has been laid before, and approved by resolution of, both Houses of Parliament.’.

Amendment 69, in clause 5, page 6, line 9, at end insert—

‘(3A) An authority can only make a determination in accordance with subsection (3)(a) if it is satisfied that—

(a) it would not result in the development being in material conflict with the strategic policies of the development plan, and

(b) an alternative form of development in accordance with the development plan would not be economically viable.’.

Amendment 9, in clause 5, page 6, line 35, at end insert—

‘(6A) Subsections (6)(b) and (c) shall not prevent the planning obligation being modified so as to change the timing of payments.’.

Amendment 71, in clause 5, page 6, line 39, at end insert—

‘(7A) Where the local authority has reasonable grounds to believe that the value of the land, on which planning consent with a planning obligation that contains an affordable housing requirement is placed, has risen and the original obligation has not been reasonably met at the end of one year they may—

(a) determine that requirement is to have effect subject to modifications,

(b) determine that the requirement is to be replaced with a different affordable housing requirement, or

(c) determine that the requirement will be subject to review within a given time period.’.

Amendment 72, in clause 5, page 6, line 41, leave out

‘guidance issued by the Secretary of State;’

and insert

‘regulations, subject to consultation, setting out the criteria upon which viability, for the purposes of this section, is to be assessed.

‘(8A) Regulations under subsection (8) shall be in the form of a statutory instrument and shall not be made unless a draft of them has been laid before and approved by both Houses of Parliament.’.

Amendment 76, in clause 5, page 7, leave out lines 46 and 47 and insert—

‘(6) Sections 106BA(5)(c) (removal of requirement) and 106BA(5)(d) (discharge or affordable housing requirement) do not apply under this section.’.

Roberta Blackman-Woods (Labour, City of Durham)

This is a large group of amendments, but they are all very important, so I hope the Committee will bear with me as I go through them as quickly as I can.

Amendment 67 allows the affordable housing requirement to be modified during the renegotiation, but not removed. It will already be clear to the Committee that I do not wish to support in any way the modification under the circumstances laid out in the clause. However, the part of the clause that will allow an affordable housing planning obligation under section 106 to be removed altogether is particularly pernicious. The amendment would remove paragraph (c) of clause 5(2), which would be really important because it would prevent all the affordable housing being removed from a particular development. That is wrong for two very big reasons, which do not necessarily pertain to simply modifying the obligation under section 106.

First is a subject that I suspect the Committee will talk about again: it would lead to less mix in our communities. To date, the Minister has not engaged in that topic or given a rationale as to why he is bringing forward a measure that will lead to less mix and balance in our communities. Secondly, it reduces the land available for affordable housing. I will come back to the subject, because it is the basis of another amendment in the group, but I am flagging it up here because it is relevant.

A number of organisations, most notably the Town and Country Planning Association, the Campaign to Protect Rural England and Friends of the Earth, note the need for communities to be socially cohesive—the evidence has been provided to the Minister and all members of the Committee. That is why we want, in a sense, to limit the ability of developers to negotiate away all their affordable housing obligations under section 106. We simply do not agree that that should be possible, and we would certainly want to see how any test for viability would allow that to happen.

Moving on to amendment 68, almost everyone who has given evidence to the Committee has pointed to the fact that the Government have provided no evidence whatsoever to confirm that developments are being held up by the application of section 106 agreements for affordable housing. The House of Commons briefing makes it clear that the National Housing Federation and others agree that

“there are usually other, more significant issues holding up development. In many cases, constraints and costs of development finance and mortgage availability, as well as the sales risk, are more fundamental stumbling blocks.”

We want to know why those wider issues are not being addressed. Much has been said about viability, and the lack of a definition and clear criteria. Clearly, we cannot have section 106 agreements for affordable housing negotiated out of existence without any evidence that it is their inclusion in the development approval that is holding up house building.

Ian Murray (Labour, Edinburgh South)

My hon. Friend is getting to the crux of the problem with the clause. A development could be unviable and renegotiation could happen on a section 106 agreement for affordable housing and, although it might not be the affordable housing part that makes the development unviable, the legislation restricts the conversation to that aspect. We could, therefore, lose affordable housing for the sake of a traffic management plan that might be holding up the viability of a scheme.

Roberta Blackman-Woods (Labour, City of Durham)

My hon. Friend makes an excellent point. What we heard in a lot of the evidence to the Committee was that it is often highways issues that are responsible for holding up development. We are not sure how viability will be assessed, but we certainly do not believe that the Government have made their case that section 106 agreements for affordable housing are the main factor stalling sites.

The amendment sensibly places a requirement on the local authority to establish that it is the section 106 agreement for affordable housing that makes the development unviable. Only if that is shown to be the case should the developer be able to ask for a renegotiation. I appreciate that the Minister does not always follow my common-sense approach, but it seems to be basic common sense not to ask for renegotiation of section 106 unless it has been established that that is the primary cause of the hold-up with a development site. At the moment, we do not know that, and I am not sure whether local authorities have even been asked to provide such information. Perhaps the Minister would like to respond to that when he gets to his feet.

The amendment would allow for the identification of other types of obligation, such as highways contributions, to be put forward to the local authority, under existing arrangements, as part of a renegotiation of section 106. Developers are already able to ask the local authority for a renegotiation of section 106 agreements, so we simply cannot understand why the Government would not want to accept that absolutely basic common-sense amendment. It follows what already happens in practice and would prevent a renegotiation of section 106 agreements that would ultimately lead to a site being brought forward for development in any case.

Moving on to amendment 69, during Parliament’s discussions on the national planning policy framework, the Government were at significant pains and went to significant effort to highlight their localism credentials. Those credentials were somewhat tarnished some months later by the existence of the Bill and other measures brought forward by the Government to take powers away from local government and local communities.

Central to the Government’s claim on localism, however, was the primacy given in planning to the local plan. It is strange, then, that no mention is made of the importance of adhering to the local plan requirements in clause 5. Amendment 69 would require that a local authority can agree to a renegotiation of section 106 agreements for affordable housing only where doing so would not materially conflict with the local plan provisions. That could mean sites that have been identified as being available for affordable houses, the number of affordable houses needed in the area, or the fact that consideration should be given to other forms of development that could deliver for the local community before section 106 agreements for the removal of affordable housing are made. The rationale for the amendment is that economic issues should not be the only test of viability. Some consideration needs to be given to development plan policy, such as the need for a range of homes at a range of prices, so that the entire local community may access adequate housing. As my right hon. Friend the Member for Greenwich and Woolwich said earlier, rural exception sites have been identified to do just that, and we are concerned, as the Committee heard, that enough consideration may not have been given to the importance of such sites in particular communities.

Consideration should also be given to whether an alternative scheme could be brought forward, rather than section 106 agreements being renegotiated. We see that as happening in clearly defined circumstances. For example, a redesign of a scheme to include more housing could mean that it could go ahead, rather than having to completely get rid of all the affordable housing that had been negotiated with the developer under section 106 agreements. Why has the Minister homed in on one particular measure for testing viability and why is he not considering any other measure, particularly any measure that could continue to deliver affordable housing for the local community? I do not think that that case has been made so far.

I accept that amendment 71 allows for a set of economic circumstances that the Government seem not to consider at all. That is deeply worrying as all the panic measures introduced since 6 September are supposed to bring forward growth. The Government clearly do not have much faith in a positive outcome to their approach, because the whole Bill allows only for a situation where land values are falling. One can only assume that the Government expect us to be in a dire economic situation for some time to come. Otherwise, presuming that the Government expect this legislation to be in place for some time, I would have thought that they might have considered a scenario where—although it is likely to be under another Government—growth gets back into the economy.

The amendment would allow for a situation in which a section 106 agreement for affordable housing has been negotiated downwards or out of existence, but the site has stalled after one year. In the meantime, if the land value has risen, the local authority could determine a new requirement, modify the requirement or agree to review it after a given period. It would mean that where developers benefit from a renegotiation downwards of a section 106 agreement for affordable housing, they should move to develop as soon as possible. Otherwise, they might face the possibility that a higher contribution would be applied sometime in future if land values increase and they have not yet developed the site.

The amendment would not only assist developers in bringing forward timely developments; it would mean that should there be an uplift in land values, the community would benefit too, which is exactly what section 106 agreements are supposed to achieve. Somewhere along the line in the legislation, we forgot that. They are meant to negate some of the downsides of particular developments for the community and allow the community to share in a portion of the uplift in land values. We heard lots of evidence making that case in the early stages of the Committee, but I have yet to hear from the Minister what he thinks the purpose of section 106 agreements should be and why he considers it necessary to alter the existing legislation as he proposes. The amendment also introduces a test of reasonableness, from which numerous clauses would benefit.

On amendment 72, the National Organisation of Residents Associations, in its evidence to the Committee, asked what the definition of non-viability is, saying:

“Who decides what is an appropriate profit margin?”

NORA speaks for all Opposition Members. It points, rightly, to the lack of buyers as the problem in some areas, and castigates the Government for the lack of an evidence base. That seems to be particularly important. The whole premise of the clause is that developers cannot develop sites because they are not viable due to the application of section 106 agreements on affordable housing. We have no evidence that that is actually the case; interestingly, neither have the Government presented evidence about what profits developers are making in the current environment.

We know that Taylor Wimpey profits have increased by £33.7 million over the past year. I accept that that might be an exception, but surely it is up to the Government to demonstrate that it is and, at least, to show the Committee evidence of the number of developers who might have to stop or stall developments because they do not have the money to proceed. I notice that the hon. Gentleman opposite is shaking his head. I do not know whether it is because he does not agree with what I am asking for or because he does not think that the Committee should have such evidence to assist our deliberations.

Therese Coffey (Conservative, Suffolk Coastal)

During our public evidence sessions, I gave the example of an NHS trust absolutely refusing to include any affordable housing in a development. There are people out there. It is not necessarily just the developers; it is also the clients.

Roberta Blackman-Woods (Labour, City of Durham)

My point was not that sites are not stalled—we all know of the existence of stalled sites—but that the Government have not to date provided evidence that those sites stalled because of the existence of section 106 agreements for affordable housing only. That is the measure that is before us today.

Therese Coffey (Conservative, Suffolk Coastal)

That is one example.

Roberta Blackman-Woods (Labour, City of Durham)

One example is not evidence. We are trying to assist the Committee’s deliberations by getting a sensible evidence base to underpin the legislation —if one exists, which I doubt very much.

Secondly, it would be helpful for the Committee to have some information about the number of developers whose profits have been slashed to the extent that they cannot undertake any developments because of the existence of section 106 agreements on affordable housing. That is important. The clause will have a huge impact on how developments are carried out in this country and we should not make decisions in Parliament without a proper evidence base.

Amendment 72 has much in common with amendment 7, which was tabled by my right hon. Friend the Member for Greenwich and Woolwich. It proposes that the Secretary of State sets out in regulations that have been consulted on the criteria for assessing economic viability. The determination of economic viability and the ability of developers to use non-viability as a means of renegotiating section 106 agreements for affordable housing is central to the clause, yet at no stage has the Secretary of State thought it necessary or reasonable to set out clearly for members of the Committee, or for relevant organisations or agencies, how viability is to be determined. That is simply not acceptable. There is certainly a need for greater transparency on this matter.

Many organisations that have given evidence to the Committee have pointed to the lack of evidence about non-viability, but a number have said that we do not have before us the criteria to determine the whole approach. That is somewhat strange, especially as it would appear from evidence given to the Committee that the Royal Institute of Chartered Surveyors has already produced some of that guidance.

Interestingly, in its evidence to the Committee on clause 5, the RICS said:

“Those renegotiating S106 agreements must have the right skills to assess viability.”

I am slightly nervous about raising this issue, because I suspect that over lunchtime a new unit was probably created in the Department for Communities and Local Government precisely to assess viability. I look forward to hearing from the Minister how many members of staff will be allocated to it, how much they will be paid, what training they will be given and so on, but perhaps he will take on board the point raised by the RICS. How will he ensure that people have the right skills to assess viability?

The RICS also said:

“Access to an independent, impartial adviser during the negotiation process would efficiently deliver robust renegotiations.”

It suggests that there are expert advisers already available in the planning service established by the RICS, Royal Town Planning Institute and the Planning Officers Society and that that could be developed as an alternative to setting up a new unit in the Department. Critically, that expertise would be accessible to all parties. It would not simply be the case that a unit would be set up in the DCLG that would give advice to one party; it would be an independent collection of professionals who would be able to give expertise to all parties involved.

The RICS says that there should be

“clear guidance which has broad industry agreement”.

It says that that is essential if there is to be a correct and robust assessment of viability, and it makes the very helpful point that, without that guidance, the Government risk

“introducing greater uncertainty and an even more cautious approach from developers concerned about appeals.”

Interestingly, in its submission, the RICS points out that it

“has produced Financial Viability in Planning Guidance, consulting widely with the public and private sectors, to provide an objective test of the ability of development to meet its costs including the cost of planning obligations”,

and is asking for Government endorsement of that guidance. Even if the Government are not prepared to endorse that particular guidance, they might at least tell us what they think about it. That would be a step forward for the Committee, because at this point in time we have absolutely no idea whatever about how the Government, or anybody else, are going to provide assistance relating to this clause, or how they are going to measure viability.

Finally, I turn to amendment 76, which would ensure that where a local authority has determined that no negotiation is desirable and the developer has appealed to the Secretary of State, the Secretary of State cannot decide to revoke or discharge an obligation entirely; the amendment therefore follows on from amendment 67. Basically, our argument is that although it might be possible for the Secretary of State in that set of circumstances to ask for a renegotiation of the planning obligation, he should not be able to suggest that the obligation is disposed of entirely. Our intention is to highlight the need for thorough negotiation and the importance of the delivery of some affordable housing. Furthermore, removing the possibility that the requirement will be removed would make it likely that fewer developments would be stalled in the hope that appeals could be made to the Secretary of State for a complete withdrawal of obligations. We hope that the amendment would lead to more reasonable and sensible negotiations between the local authority and the developer, as well as keeping in mind the need to deliver affordable housing on sites under consideration.

Nick Raynsford (Labour, Greenwich and Woolwich)

I tabled amendments 7 and 9, which deal with different issues, including one that is very close to an issue that my hon. Friend outlined, so I will not spend very much time on it. I want to devote rather more time to amendment 9, which covers an entirely new area that has not been addressed.

Amendment 7 would require a proper definition of viability. My hon. Friend has made the case for that very strongly. The mechanism proposed in my amendment is very similar to that proposed in hers, as we both believe that there is a need for a proper process, to consult relevant parties, then approve a definition of viability that would have the backing of a statutory instrument; that would seem a sensible way of achieving some kind of consistency about the approach towards definitions of viability. My hon. Friend has spelt out the reasons why that is important; I would like to add one additional factor.

I do not believe the Bill does very much about growth. Most Opposition Members believe that the Bill is a fig leaf to cover the Government’s embarrassment about the lack of growth in the economy. Most of the measures proposed will not actually stimulate growth. However, there is one area where there will be growth if the clause is introduced without the addition of amendments 7 and 72. There will be growth among valuers.

There will be a gravy train for valuers. First, developers will say, “We want to demonstrate the section 106 agreement that we previously entered into is not viable. Will you please give us some consultancy on that subject and give us a case that we can mount to get the section 106 agreement revised?” The local authority will need similar advice, so it will go to another firm of valuers and say, “Please give us advice to prove that the section 106 agreement is reasonable and viable, and should not be revised.” Two groups of valuers will beaver away to produce evidence to support their respective clients. If, after all that, the local authority declines to revise the section 106 agreement, the developer may use the appeal procedure and go to the Planning Inspectorate. Bingo, there will be a third valuer involved because the Planning Inspectorate does not have the expertise to carry out assessments of viability. It too will be looking for valuation advice.

If I were a Government Member, I would be buying shares in valuers. That is the one group of people who can look at the Bill and say, “This is unqualified good news for us. There is going to be more business.” If you work for Savills, Jones Lang LaSalle, Cluttons or whoever, this is a wonderful piece of legislation. However, in the public interest, I do not agree with it at all. All that it will create is a lot of speculation—people arguing the toss with one another. It will not help to get developments under way. It is entirely false growth, not growth that will bring real benefits to the British economy.

Ian Murray (Labour, Edinburgh South)

Has my right hon. Friend thought about circumstances in which developers who are sitting on patches of land, or have developments that have been marginal in the past, might actually promote schemes that are marginal or unviable from the start, on the basis that they will be able to promote them as unviable when the permission is granted and then get the exemption from affordable housing under the Bill?

Nick Raynsford (Labour, Greenwich and Woolwich)

My hon. Friend raises another rather interesting and troubling scenario. When this process began and the Government first announced their intention to look at this issue, the assumption was that the measure would deal only with projects that had stalled as a result of the recession, and where the revision of a section 106 agreement made perhaps two or three years ago was a possible way to unblock the jam. Now, we are clearly in territory where this could become an ongoing part of the scenario. Without a sunset clause—I do not see any provision to bring the clause to an end after one or two years, or in changed economic circumstances—there is exactly the risk that my hon. Friend highlighted, of this being used cynically to secure developments without affordable housing that could not otherwise be approved.

Amendment 9 raises a different issue, and focuses on the provisions of subsection (6), which says that when a planning obligation is modified, a determination may not have the effect of making the obligation more onerous than it was originally. It might be a sensible concept that the outcome should not impose a more onerous obligation, but unfortunately, as always with legislation, there can be difficult problems of interpretation. In the evidence sessions, we heard about a couple of instances where problems could arise.

One of the ways in which local authorities are renegotiating section 106 obligations—the LGA has given us strong evidence that many of them are doing this—is by changing the phasing of the payment of the obligation, possibly by reducing the initial payments and allowing for greater payments at a later phase when the market has recovered. Another option is to commute an element of what previously would have been a payment as part of a section 106 obligation into a profit share between the local authority and the developer, assuming that market circumstances improve in due course and the scheme becomes more profitable than envisaged when the section 106 obligation was negotiated or revised.

In both those cases—a change to the timing, or a change involving a reduction in the upfront contribution, but with a profit share envisaged at a future date—clever valuers could demonstrate that this will be more onerous than the original deal. A discounted cash flow could prove more or less anything if it is prepared by clever experts in the field who attach particular estimates to the likely inflation over the period or other variables. There is a risk that a perfectly sensible deal to make a scheme that is not currently viable but could be made viable, perhaps by a change of timing of contributions or by the introduction of a profit share in place of part of the upfront contribution originally envisaged, could result in the scheme falling foul of subsection (6) as currently worded.

The purpose of amendment 9 is to say that this will not prevent the planning obligation from being modified so as to change the timing of payments. That is eminently sensible. I hope that the Minister recognises that this is not a wrecking amendment. It is there to avoid a potential hole in the architecture of the scheme that could prevent a sensible conclusion to the revision of section 106 agreements. I hope that the Minister will accept the amendment. If he thinks the wording is not right and that it should be taken away and redone, I would be perfectly happy to withdraw it to enable that to happen. However, the principle of the amendment that there ought to be clarification so that a change in timing and substitution of a profit share for an upfront payment should not fall foul in any way of the provisions of subsection (6) makes sense. I hope the Minister will agree to amend the Bill accordingly.

Nicholas Boles (Conservative, Grantham and Stamford)

We are presented with a veritable blizzard of amendments and the Government are about to present the Committee with a blizzard of our own. The hon. Lady has made sure-footed progress through the blizzard, so I hope she will understand if I follow in her footsteps. She started with amendment 67 and I should just like to respond to the point that she made on that. I completely understand the concern. Whatever the Opposition might sometimes seem to believe, we genuinely believe in affordable housing and affordable housing on site, so not just delivered elsewhere through grant or through financial contributions. One reason why we all want to retain the rather clumsy 106 system is that there does not seem to be another way of achieving mixed communities whereby new developments of private housing also include affordable housing. We are genuinely trying to make this work.

I can completely understand, given the normal meaning of the English language, why the hon. Lady is worried that a suggestion that an affordable housing requirement could be removed seems to imply that it could be lost altogether and in perpetuity. We have drafted the Bill in such a way as to prevent that from happening. I hope that the hon. Lady is aware that, in a later group of amendments, the Government propose that, three years after a new agreement is applied, if the development has not been fully built, we will revert to the old section 106 agreement, which was originally negotiated and prevailed before this process got under way, with its more onerous affordable housing provisions. If the developer has not taken advantage of the new agreement fully to build the development, the developer will be faced with a reversion to the old affordable housing agreement.

Andrew Stunell (Liberal Democrat, Hazel Grove)

Will my hon. Friend give way?

Nicholas Boles (Conservative, Grantham and Stamford)

My right hon. Friend probably understands the proposal better than I.

Andrew Stunell (Liberal Democrat, Hazel Grove)

I would not say such a thing, but does the Minister agree that that is a complete rebuttal of the view of the right hon. Member for Greenwich and Woolwich that there is no sunset clause? In fact, it is more of a dawn clause.

Nicholas Boles (Conservative, Grantham and Stamford)

The right hon. Gentleman is absolutely right and he anticipates a response that I was going to give. There is very much a sunset on this measure, which is that if developers do not get a move on, after three years they will be dealing with the old agreement that was originally negotiated, and I thank the right hon. Gentleman for his point.

On that point, if an affordable housing obligation is discharged, it is impossible to reinstate it at the end of that three-year period. That is why we are providing for the Planning Inspectorate to be able to determine that a requirement should be temporarily removed from a planning obligation, because that would enable it to reapply that original affordable housing component at the end of the three years. What sounds very final—I completely understand why it sounds final—is actually therefore the way to ensure that we revert to the original commitment on affordable housing at the end of the three years.

Nick Raynsford (Labour, Greenwich and Woolwich)

May I draw attention to subsection (2)(c) of proposed new section 106BA of the Town and Country Planning Act 1990, as introduced in clause 5? It makes no mention of the obligation or requirement being temporarily removed. It states,

“for the requirement to be removed from the planning obligation”.

If the Minister can confirm that he would be happy to add the world “temporarily”, I think that would give a great deal more comfort to the Opposition.

Nicholas Boles (Conservative, Grantham and Stamford)

In spirit, I would be very happy, because that is what I believe we are doing. I would obviously need to consult with lawyers about exactly how to arrive at that. I would not want to advise that we will insert a word, because it may have completely the contrary effect to the one that I am trying to achieve. However, the intention is that such a removal would cease at the end of three years if the development had not been fully built out.

Roberta Blackman-Woods (Labour, City of Durham)

Does the Minister agree that if the development had been completely built within the three-year period, all of the affordable housing requirement would be lost?

Nicholas Boles (Conservative, Grantham and Stamford)

I am certainly not expecting that the whole of the affordable housing agreement will be lost as a matter of generality. It may be that there are certain extreme cases where the original affordable housing agreement was pretty small but nevertheless is threatening the viability of the site because of other complications in that particular development. Therefore, the new deal that is reached may be one that does not include affordable housing. It is then built out and, at the end of three years, that affordable housing agreement would no longer be returned to. However, that would be very much the exception. The normality will be that there will be a revision to the affordable housing provision and that that will pertain for three years. If the developer has not managed to build it out, it will revert to the original agreement.

On temporary removal versus permanent removal, I am advised that the local planning authority, which in most cases is just reaching an agreement, can permanently remove the requirement. The local planning authority may choose to remove voluntarily the affordable housing component as part of renegotiation. That can be permanent. It is the PINS decisions on appeal that will be subject to this three-year limit. If PINS gets involved because the developer has not been satisfied by the local authority’s proposal, the PINS-imposed agreement will be subject to a three-year limit, which will revert once it expires. I hope that that answers the question. If it does not, I shall be happy to come back to the subject.

Now I want to follow in the footsteps of the hon. Member for City of Durham and go to amendment 68, which is a curious amendment. The hon. Lady is effectively asking for a process that is gone through to demonstrate that it is the affordable housing that is preventing a scheme from being viable, when the whole point of the clause is to get the local authority to go through a process of assessing whether the developer has a good case—good evidence—that it is the affordable housing that is making the scheme unviable. If the local authority is not persuaded and the developer nevertheless insists that that is the case, PINS must go through that process. So she is effectively asking us to put in place a process in order to start down what is effectively the same process. Of course, her process might then lead to an appeal process, at which point the developer would appeal to PINS and say, “Yes, it was affordable housing, wasn’t it?” We would be effectively doubling up on the entire provision by accepting the amendment that she proposes.

I hope to be able to persuade the hon. Lady that the whole point of the exercise is that the developer will need to demonstrate to the local authority that the viability is threatened by the affordable housing component. If they cannot reach agreement or the developer is not satisfied with the local authority’s determination, they will have to demonstrate to PINS that it is the affordable housing component that is the problem. If they cannot, frankly they are going through an expensive and laborious process for nothing, because neither the authority nor PINS will vary the affordable housing component if the threat to viability is not demonstrated. The clause as drafted provides the assurance that only if affordable housing is the problem will there be any alteration in the requirement.

Paul Blomfield (Labour, Sheffield Central)

Does the Minister recognise that the amendment reflects a concern that was widely expressed in the evidence sessions? Indeed, strong concern was expressed by the Conservative-led Local Government Association that there is widespread uncertainty as to why the Government have chosen specifically to isolate affordable housing from within the range of section 106 issues. Perhaps he will share with us, because he has failed to do so up until now, the reasoning for isolating such housing. If he himself has no evidence, perhaps he will share the evidence given to him by developers that that uniquely is the problem.

Nicholas Boles (Conservative, Grantham and Stamford)

I am happy to do that. I had been expecting—I believe it is the case—that the hon. Member for City of Durham would like to have a clause stand part debate, so we will probably get to the arguments about the broad justifications for the clause then. Suffice it to say that the way in which section 106 works is this: in general, section 106, as the hon. Lady put it very well, is to compensate local communities for the impact of a development on infrastructure. It might be that a primary school will have its rolls overloaded or that a road will not be able to cope with the additional traffic that will be put on it, and that section 106 is therefore—in generality—in place to ensure that various developments can take place or financial contributions are made to alleviate the impact on the broader community of a particular development.

The one other element that we have introduced—I called it perhaps clumsy, even though we all support it—is the idea of affordable housing. There is no necessary, logical impact on the community. It does not follow that when someone builds a development, it therefore, as a matter of logical conclusion, has a greater need for affordable housing than it had previously. We all respect and believe that communities have a need for affordable housing, and one of the best ways to provide and ensure that we have mixed communities, not ghettos, is to do so through section 106 agreements on sites. It is, however, in a different category because it is a commitment—an obligation—that we ask developers to make that is not directly, logically linked to the impact of the development that they propose. Therefore, it is perhaps easier to separate that out.

This is a purely financial commitment. It may be done through land, but its impact on the developer is financial. The road may be needed whatever happens if that development is built, and the affordable housing may be strongly desirable—we may all wish to see it—but not absolutely necessary to alleviate the impact of that particular development. Hence, it is logical to treat those cases slightly differently when trying to unblock stalled sites.

John Howell (Conservative, Henley)

As I understand it, the viability of section 106 agreements is currently being discussed and renegotiated by individual councils. These agreements are being renegotiated without any of the fuss and palaver that the Opposition described, and they are being dealt with in a simple, common-sense way.

Nicholas Boles (Conservative, Grantham and Stamford)

I am glad to hear that the hon. Member for Rochdale agrees. The whole point is that it is being done. He has just come back from the celebration of the delightful Lancashire food—I am glad to see him back and regret not having been able to join him there—so I am seized by the desire to mention Rochdale again. In Rochdale, Greenwich and other local authorities that hon. Members represent, negotiations are indeed taking place. We heard him say also that that is not always popular with some local residents, and I hope that he will introduce me to some of his constituents who feel strongly about a particular case. As my hon. Friend the Member for Henley said, many local authorities are doing this voluntarily, but the entire purpose of the clause is to persuade those few who stubbornly insist on a target in a document rather than being pragmatic and getting some houses built, including some affordable houses. That is all we are trying to achieve here and, frankly, if this clause works, nobody will end up having an affordable housing agreement renegotiated or redesigned by the Department.

Simon Danczuk (Labour, Rochdale)

rose—

George Howarth (Labour, Knowsley)

Order. I remind the hon. Gentleman that neither the amendment nor the clause is specific to Lancashire.

Simon Danczuk (Labour, Rochdale)

I am grateful for the advice, Mr Howarth. I just want to correct the record. I have come from the Association of Convenience Stores annual conference, where I was discussing the postponement of the revaluation of business rates. It is appalled by that.

Nicholas Boles (Conservative, Grantham and Stamford)

I am happy to be corrected by the hon. Gentleman.

Ian Murray (Labour, Edinburgh South)

The Minister almost seems to be arguing against his own point, because if a scheme is unviable, then it is unviable. Therefore, if a developer goes to the local authority or, in this particular instance, to the Secretary of State and says that a scheme is unviable but they would like to get it unblocked, the Minister is saying that that would be rejected because it is unviable for reasons other than affordable housing. In that case, why are not all the section 106 specifications in this clause? If the key for the Government is to unlock stalled sites, and if it is other things that are causing the stalling of those sites, why does the clause not include the whole list of section 106 agreement specifications?

Nicholas Boles (Conservative, Grantham and Stamford)

As the hon. Gentleman will be aware, we are also, separately, looking at provisions for all the section 106 obligations for applications that were concluded before a certain date in 2010. We accept that there is a case—particularly, as the hon. Gentleman said, in the recession—for looking at the whole agreement. Nevertheless, there is a conceptual distinction; section 106 obligations that relate to alleviations of specific and direct impacts of a development and are hence inescapable—such as those where primary schools or a road that connects the development to a community must be built—are in a different category from a commitment to affordable housing, whether though land or financial contribution. We all support and desire that, and want to see that maintained, but it is not essential to enable the development to happen. Hence, I think there is logic to consider them in a slightly different category.

Paul Blomfield (Labour, Sheffield Central)

I want to press this point, because although it is enjoyable to watch the Minister dance on the head of a pin describing differences, and I appreciate the differences he describes, the Bill is supposed to be about promoting growth. He has failed to address the point made by the Conservative-led Local Government Association that there is no evidence that it is the affordable housing element of section 106 that is stalling growth. Will he address that now?

Nicholas Boles (Conservative, Grantham and Stamford)

I do not want to go down a wormhole. As the hon. Member for City of Durham proved this morning, whenever I present some evidence she says it is an anecdote or just a quote, whereas when she presents it, it is, of course, copper-bottomed evidence. I have in front of me some examples, given to us by developers, of schemes that were stalled because local authorities refused to renegotiate. I have the LGA’s own surveys on which authorities have negotiated, which percentage have not, and which percentage said that they would absolutely refuse to.

Of course, I myself, in my job, have not had the chance to go out and list every single scheme that has stalled because of refusal to negotiate. All I would say is that, if the hon. Member for Sheffield Central is right and there is not in fact a single site that is stalled because of the refusal of a local authority to negotiate sensibly on the section 106 agreement and the affordable element therein, there is nothing to worry about. This will have exercised you and me, and taken up some of our time, but we are all paid for by the taxpayer to do this work, and it is not unreasonable that we should try to.

George Howarth (Labour, Knowsley)

Order. I can assure the Minister that it will not exercise me.

Nicholas Boles (Conservative, Grantham and Stamford)

I am sorry, Mr Chairman. I certainly do not want to detain you on a fruitless quest. All I am trying to argue is that, should the hon. Member for Sheffield Central be right, and I do not think he is, there will be no adverse consequences from the clause not being used. We believe very firmly that there are cases where local authorities are holding back the building of houses that actual people could live in because of a stubborn insistence on numbers in documents, targets and aspirations. We believe that very firmly, which is why we are bringing in this clause—we want to encourage them to be a bit more pragmatic.

If I may move on to—I cannot quite believe it—the hon. Lady’s third footstep in this journey, amendment 69, which suggests that we should bring into place a broader consideration of the strategic policies of the development plan. It is a troubling amendment, because I believe that it would actually make the problem worse, not better. As we have all agreed, many local authorities are currently sensibly renegotiating, where necessary, in order to unblock stalled sites. Were we to accept the amendment, we would actually make it harder for local authorities to do that, because they would have to go through some ghastly box-ticking exercise whereby they demonstrated that in conducting the negotiation they had given due consideration to every single one of their policies. Of course, we should trust that local authorities that are willing to enter into negotiations are trying to achieve all the objectives they want to achieve, and if they have to take a shortcut to get stuff working, I do not want to make their lives harder. I hope that that will persuade the hon. Lady that amendment 69 is not going to help her achieve her goals.

Similarly, on amendment 71, we share the strong desire that these measures are understood by the development community as a time-limited source of alleviation; if developers do not take advantage of them in a reasonable time frame, the agreement that they originally reached will be restored. Hence we have the proposal for a reversion to the old affordable housing agreement after three years. However, one year is simply not realistic. All that that would be likely to produce is another merry-go-round of the bureaucratic process. A developer, having taken advantage of a one-year agreement—if it thought it was worth even trying for one in the first place—would run into the buffers, because a year is not a very long time in either politics or development. It would then have to go back to the local authority and back to PINS to make another agreement. I hope that we can persuade the hon. Lady that three years is a reasonable period, given how quickly developers, particularly on substantial sites, can move.

The hon. Lady’s next step was amendment 72, regarding viability assessments. If I may, I would like to address amendment 7 also—as the Opposition did—tabled by the right hon. Member for Greenwich and Woolwich. I do not know what position the right hon. Gentleman held in the Government when they legislated for something that we support: the community infrastructure levy. However, he and the hon. Lady will know that the CIL depends, just as much as the clause does, on the proper assessment by local authorities and, in turn, the Planning Inspectorate, of the viability of sites. The CIL is a tax, and if a tax is set too high, it could choke off all development.

Affordable housing contributions under section 106 are another form of tax. While benign and positive, they are nevertheless a tax. Viability has to be assessed in the same way. When the legislation for CILs was tabled, no doubt supported by Opposition Members on the Committee who were in the House at the time, it made provision for guidance to clarify exactly how viability should be assessed. We are finding that it is important to have the flexibility of it being guidance, not regulations or anything legislative, because the first few authorities that had been grappling with the matter were perhaps not giving proper weight to some of the concerns, and the development community and the local authorities were a bit concerned. We are currently going through a process to try to refine the guidance to ensure that local authorities take into account the right things. Those things may change over time. Opposition Members have mentioned the change in the banking industry, the lack of finance available and the difference in the terms that sources of finance are willing to offer. That was not true four years ago; it is true now; and it might not be true in four years’ time.

Of course it is important that local authorities understand how viability will be measured and what criteria will be used. The guidance will be published in due course. Requiring regulations, which would need to be changed through a parliamentary process, would be to do something that the Opposition themselves did not do for their own proposals on the CIL.

Nick Raynsford (Labour, Greenwich and Woolwich)

I assure the Minister that I was not a Minister when the community infrastructure levy was introduced. I had argued against its predecessor proposal, the planning gain supplement, which was suggested by the Government and then withdrawn in favour of the CIL, which seemed to have a better structure. However, there is a fundamental difference between that and the current proposal.

The CIL was a tariff to be set by the local authority to cover all development circumstances. The proposal in the clause is concerned with the assessment of viability on individual sites. There is a great deal more at stake, including the risk that I highlighted: the proliferation of consultants and experts charging fees to advise on interpretations of viability. That would not happen with the CIL, where the developer would have the option simply to pay or not pay the tariff, but could not negotiate on whether it made an individual site viable.

George Howarth (Labour, Knowsley)

Order. The right hon. Gentleman has a habit of skilfully turning an intervention into a short speech. It is a habit that I have begun to notice is being picked up by other members of the Committee. I have tolerated the problem until now, but I will be watching with an eagle-like glare as to whether that tendency continues.

Nicholas Boles (Conservative, Grantham and Stamford)

I must say that I am rather grateful to the right hon. Gentleman for that trick, but I entirely accept the Chair’s ruling; it has nothing to do me.

The right hon. Gentleman has made the argument brilliantly against himself. The fact that the viability that applies to the community infrastructure levy affects all potential and future developments in an area surely means that it was even more important that the viability criteria were set out clearly. If, as the Opposition are arguing, that means that it should have been in regulations, then it should have been in regulations. With the proposed measure, which will hopefully not be in place for long if the recession ends as quickly, as we all hope it will, and which is specifically related to sites, surely the argument is that, if the CIL viability test was dealt with appropriately under guidance, this measure can be dealt with appropriately under guidance, too.

I want to reassure members of the Committee that the guidance is being drafted. We are consulting a range of professional bodies, including no doubt some of the valuers whom the right hon. Gentleman portrays as rubbing their hands in glee about the technical content that will be published when Bill is enacted. There will, of course, be an opportunity for people to comment on it and, as is happening with the CIL guidance, to suggest if some part of it were not accurate, but I resist including such a process in regulations.

I come finally to amendment 9. When the right hon. Gentleman first raised the issue at our evidence session, I said that I understood that we would not want a clause that prevented some mutually beneficial moving around of payments in order to make the scheme more viable and perhaps unlock the same level of commitment, but at a later date, which would therefore be less onerous to the developer. Having looked into the matter, it is clear that the concept of onerousness will not prevent that from happening.

As the right hon. Gentleman said, to do a net present value of the discounted cash flow is relatively straightforward. Lots of arguments can be made about discount rates and so on, nevertheless that is exactly what PINS, if necessary, or the local authority, if not necessary, will be doing when looking at the viability issue. They will know that one way in which to make the year one contribution easier to bear will be to reduce it, and that another way will be to delay it. That flexibility is contained entirely within the concept of onerousness. The judgment will simply be that, in totality with all of the relevant discount rates attached, over which no doubt there will be debate in the process, the entire thing should not be more onerous. I am persuaded, and I hope that we will find a way to persuade the right hon. Gentleman, that the flexibility of the timing of commitments that he seeks is possible under the Bill, as drafted. It might not be possible for me to persuade him of that here and now but, given that we are meeting on another subject, perhaps we can explain it then to his satisfaction.

I, too, want to incorporate maximum flexibility, but he will understand that the development community and, indeed, the social landlords who were parts of the agreements will want to know that the agreement can move only in one direction: either stay the same or become less onerous rather than possibly become more onerous. As the right hon. Gentleman knows, on the second application, there is the explicit possibility that it might become more onerous, given that we want to use that as an incentive for the developers not to return and have a second bite at the cherry.

Roberta Blackman-Woods (Labour, City of Durham)

The last time I checked our roles, the Minister introduced provisions and had to defend them, and it was my role to scrutinise them and ask questions about them. If he wants to change roles and change the Government, we shall happily oblige. I will take away what the hon. Gentleman said about time limits and have another look at them to see whether our proposal is reasonable. I request that the guidance on viability is brought forward sooner rather than later so it can inform our deliberations because that would be helpful. On that basis, I beg to ask leave to withdraw the amendment.

George Howarth (Labour, Knowsley)

Order. I am suspending the sitting until 3.55 pm to allow members of the Committee to take part in the proceedings of the Chamber. The sitting will resume at 3.55 pm.

Ian Murray (Labour, Edinburgh South)

I beg to move amendment 70, in clause 5, page 6, line 25, at end insert ‘or

‘(e) request that the requirement is to be met in part, or in full, by central government funding allocated for the delivery of affordable homes’.

Unfortunately, my hon. Friend the Member for City of Durham, as everyone has realised, is still in the Chamber, waiting to speak on a Ways and Means motion, so the Committee has the glamorous assistant instead. Anything that happens to be remotely humorous is my work, and anything that is not is the work of my hon. Friend. Committee members should change all the feminine references to masculine; I have not read through the speech, so if there are any references to somebody wandering down Durham high street to buy a dress, they are certainly not mine. We will see how we get on.

The amendment proposes to include in the Bill a clear mechanism for securing funding for the affordable housing that will be lost as a result of this damaging and ill- thought-through clause. It would include an option for a local authority to request a share of relevant central Government funding as the fifth option facing them when asked to renegotiate an affordable housing requirement under the provisions. Earlier this year, the Government announced £300 million of funding for 15,000 affordable homes. That funding, part of a drastically reduced and overly fragmented pot of money for both affordable housing and housing more generally, may go some way towards reducing the chasm in affordable housing provision that the clause is likely to produce if introduced without amendment. That, however, will be the case only if the funding can be accessed and properly used.

If the amendment is agreed, a local authority would have option of allowing the developer not to meet the affordable housing requirement while still ensuring that affordable housing is delivered. The Government would be well advised to accept the amendment, as it would ensure that both market rate and affordable housing can be delivered without compromise. Given the extent of housing need in the country, at both affordable and market rates, the amendment is key to bringing about the growth that the Bill wants to achieve. Figures from the Department for Communities and Local Government show that the number of households in England is set to rise by almost 5 million, from 22.8 million to 27.5 million over the next two decades, signifying a need for at least 233,000 new homes a year.

Despite that pressing need, the Government continue to depress house building. Under the current Government, only 98,670 homes were started in the 12 months to June 2012, a 10% decrease on the previous 12 months, during which period they still failed to build less than half the number of homes required under their own figures. I am pleased that the Minister recognises their failure in this area, but his policies will not help. Despite the hugely important role that construction will play in our eventual economic recovery, Government funding for new homes has been slashed and spread out over a number of pots. The Get Britain Building fund, the fund for aspiring self-builders, and the fund for local enterprise partnerships, to name but a few of the initiatives that have been announced, have all been set up to unblock housing and economic growth. The lack of funding has been particularly severe for affordable housing.

It will not surprise the Committee to hear that affordable housing has been hit the hardest. After the May 2010 election, the Government cut the budget for new affordable homes by 60%. Labour invested £8.4 billion in the three years between 2008 and 2011, while the Government will invest just about half of that in the four years between 2011 and 2015.

At the same time, funding for existing affordable homes has also fallen. As a result, a staggering 37% of affordable homes do not meet the decent homes standard. At the same time, rents are soaring, hitting a record high of £725 a month over the summer. The new Minister for Housing admits that that problem is due to the fact that

“hundreds of thousands of people”

have

“been unable to buy or move, and that has seen private sector rents climb.”

It is probably worth considering the effect on housing benefit, given that private sector rents increased to an average of £725 a month in the summer.

It is little wonder then that homelessness is rising. There were 12,860 statutory homelessness acceptances between April and June 2012—a 9% increase compared with the same quarter in 2011. Over the past year, July 2011 to June 2012, there were 51,470 statutory homeless acceptances, and rough sleeping rose by 23% in the past year.

It should not be forgotten that a failure to build affordable housing not only means that we abandon those at the bottom of the pile but it makes life much more difficult for everyone else. We are all familiar with the housing ladder and know that a millionaire cannot sell his mansion unless he has a buyer. That buyer also needs a buyer, all the way down the chain. That is why I do not understand the consistent refusal by the Minister and his Department to consider steps recommended by the Opposition to support first-time buyers by, for example, giving a stamp duty holiday to all first-time buyers buying properties costing less than £250,000.

Unless the Minister wants to suggest that we prop up the housing market by bringing in millionaires from across the world, no doubt attracted by the tax cuts the Government give them, we need to think about the families at the bottom of the ladder, who cannot afford their first home. The clause is yet another blow to those people. When the Government fail to build homes for those families, that destroys the housing market for everyone above those families in the ladder, including those in bigger houses, whom I am sure the Government do not want to forget.

I do not understand why, in dealing with renegotiation, the clause focuses solely on affordable housing requirements. Despite the Minister’s valiant attempt to explain that proposal, there are many other aspects that could be taken into account when considering sites made unviable for development. However, someone somewhere in the Government has not forgotten that more affordable housing is necessary and desirable. Piecemeal funding announcements keep coming through Government initiatives.

On 6 September, the Prime Minister announced £300 million of capital funding and an infrastructure guarantee to build 15,000 new affordable homes and bring 5,000 homes back into use. In fact, the Government are so keen on that policy that it was re-announced yesterday when bidding for a share of the £300 million opened to people hoping to bring empty homes back into use. However, three months and two identical announcements later, we are still none the wiser as to how this £300 million will be used to deliver affordable homes. As we all agree, we want growth and we want it as soon as possible. It seems shrewd to include that funding in the Bill and enable local authorities to bid for a share of the pot, where the affordable housing requirement has stalled development or made it unviable.

The amendment would allow local authorities that are forced to scale down or remove affordable housing requirements to ask the Government, through the provision of that pot, to build the housing with the money that was put aside expressly for that purpose. If the Minister does not accept the amendment, I hope that he will at least set out how that funding is going to be used to deliver the affordable homes that the Government have promised. We need certainty and action on this issue, not more dither and delay. The sooner building gets under way, the sooner we can begin to get millions of desperate families off housing waiting lists and into safe, decent homes.

Nicholas Boles (Conservative, Grantham and Stamford)

I welcome the hon. Gentleman to his Front-Bench position. Even if he did not draft his speech, he delivered it with great vigour and force. I was slightly amused by his criticism of the Government for reannouncing the £300 million subsidy for new, affordable homes. I accept the criticism that we do not yet approach the consummate skill of the previous Government, who did not announce things just twice, but 23 times, and each time managed to get a different headline out of it. I accept that, compared with the previous Administration, we are woefully inadequate as communication managers.

Rather than enter into the broader discussion that we will have in the stand part debate, I will address the amendment. I have a lot of sympathy for the Opposition’s underlying concern, but not for the method proposed in the amendment. I have a lot of sympathy for the suggestion that, because the Government introduced the Bill in a package with a further investment of £300 million in subsidy and £10 billion of guarantees, it is entirely understandable that people and communities might seek to replace some of the affordable homes that might not remain within a section 106 agreement as a result of the Bill. They might seek to secure those affordable homes through another route, such as this funding.

The difficulty we have is simply this: it is not local authorities or local authority areas that apply for this subsidy funding and for a share of the £300 million or the £10 billion of guarantee; it is the registered social landlords themselves. Of course, most landlords have schemes, and some are very regionally focused, but many are across a wide area. It would therefore be contrary to the approach we are taking to somehow channel a portion of the £300 million to those local authority areas and specific sites affected by the Bill.

I am sure that the hon. Gentleman and other hon. Members will understand that the most important thing in these straitened times, given that we have inherited a situation in which there simply is not the money there once was to invest in affordable housing, is to use what money we do have as effectively as possible. We might face a situation where one particular scheme had seen the affordable housing element reduced through a renegotiation or through the intervention of the Planning Inspectorate on appeal, but where the affordable housing that had been in the scheme previously had required a lot more subsidy than affordable housing elsewhere in the country. I do not believe that the hon. Gentleman would want the Government to invest the public’s money in securing less affordable housing in one place than we could secure somewhere else. That is why we are very much taking the approach that, while we are open to proposals from any social landlord, we nevertheless want to apply a strict value-for-money test in allocating the money.

Ian Murray (Labour, Edinburgh South)

I appreciate the Minister’s explanation of the distinction between a stalled unviable site and a registered social landlord bidding into the fund, but developments, particularly those on a certain scale, often have a registered social landlord attached, because that is how they deal with designing the scheme or with who will take over the affordable properties when the scheme is concluded. In that case, could the social landlord bid into the fund and say, “Actually, having this pot of money available to us would allow this project to become more viable?”

Nicholas Boles (Conservative, Grantham and Stamford)

If I can come part way towards what the hon. Gentleman is suggesting, it would be absolutely open to any social landlord to tell the Homes and Communities Agency that they wanted to unlock some affordable housing on a site that might otherwise be lost by using a package of subsidies and, potentially, these guarantees. All I am saying is that the decision would nevertheless be taken on the basis of whether that provided the maximum bang for buck. If it did, there would be every willingness to look at the proposals favourably, but we would not want to pre-allocate a portion of the funding for sites that are affected by the clause. On that basis, I hope that the hon. Gentleman will withdraw the amendment.

Ian Murray (Labour, Edinburgh South)

I am encouraged that there may be a mechanism to let registered social landlords bid for this £300 million through the Government’s desire to build more affordable homes. However, we will have a stand part debate on the more general terms, so, on that basis, I beg to ask leave to withdraw the amendment.

Nicholas Boles (Conservative, Grantham and Stamford)

I beg to move amendment 34, in clause 5, page 6, line 42, at end insert ‘—(a)’.

George Howarth (Labour, Knowsley)

With this it will be convenient to discuss Government amendments 35 and 46.

Nicholas Boles (Conservative, Grantham and Stamford)

This is an unfamiliar position for me. Normally, I get a little time to work out what on earth we are talking about, as the hon. Member for City of Durham or, on the previous amendment, the hon. Member for Edinburgh South sets out their case. This time, however, I will have to explain the amendments.

Amendments 34, 35 and 46 are intended to provide greater certainty to the House and interested parties on procedural matters and to enable the swift implementation of measures. Amendments 34 and 35 introduce a default period for the determination of applications under the clause. The default period for the relevant authority to make a decision will be 28 days.

Such applications will focus on only one issue: the affordable housing requirement and its economic viability. Of course, the very same authority will have considered that issue previously in reaching the agreement in the first place. There will be no opportunity to review the planning policy context or to assess the costs involved in other aspects of the section 106 agreement. Therefore, a fast-track decision-making process is justified and necessary. To ensure flexibility, there is also a provision to allow for the time period to be increased, by agreement of both parties, as is commonly the case with all sorts of applications on planning matters to local authorities. Amendment 46 makes a necessary consequential amendment.

Ian Murray (Labour, Edinburgh South)

I beg to move amendment 74, in clause 5, page 6, line 47, at end insert—

‘(10A) If, at the end of one year from the date set according to subsection (10) the obligation as modified has not been met, the modification ceases to have effect and the original obligation is reverted to.’.

George Howarth (Labour, Knowsley)

With this it will be convenient to discuss the following:

Government amendment 37.

Amendment 73, in clause 5, page 7, line 38, after ‘Secretary of State’, insert ‘subject to published criteria’.

Government amendments 38 to 44.

Amendment 77, in clause 5, page 8, line 18, leave out ‘three years’ and insert ‘one year’.

Government amendments 45, 48 and 49.

Ian Murray (Labour, Edinburgh South)

We are cantering through the amendments and frantically finding the pieces of paper that refer to them. Having done so, I find that reading someone else’s handwriting is a challenge, but I will try my best.

Amendment 74 would add a subsection to new section 106BA introduced by clause 5, setting a date at which modifications would cease to have effect—after one year—and thereby allowing a degree of flexibility and possibility in relation to a renegotiation of a section 106 agreement. Developers would have the opportunity to build those developments that had become more viable through moving affordable housing, but the requirement would be removed after 12 months.

The amendment is intended to address a situation where a developer has received an amendment to a section 106 obligation, or has had his or her responsibilities removed entirely under the section, so that they would not delay the development further. Under the amendment, the developer would be required to start the development within one year. Having regard to the renegotiated section 106 arrangement that would mean that the development could go ahead without— possibly, under better economic circumstances—reverting back to the original requirements. Although clause 5 is not desirable in itself, if the aim of the Bill is to promote growth it should enable as much affordable housing as possible to be delivered in the short term.

The Minister, in one of his many “support the developers at any cost” scenarios, will no doubt argue that what the amendment is intended to achieve will be very difficult. All sorts of matters might hold up a development within a 12-month period, so perhaps he will give examples of those. However, even if that were to happen, there are important things to remember.

First, the Minister pointed out that planning permission is a licence to develop, not an obligation. I am not sure how the Government, with regard to section 106, will do anything to promote development beyond a renegotiated 106 obligation if, under English planning legislation, there is just a licence to develop over a period of three years.

Secondly, putting a short provision into the new section, to the effect that the development must be done under a negotiated 106 agreement, might give impetus to get the planning application—or planning licence—up and running. Under the affordable housing provisions, a developer who made an application for an unviable scheme would be told that unless it could be done within a year, the original section 106 agreement would be reverted to. That would, I hope, do two things. It would allow the developer to analyse the entire unviable development and say, “Can we get this done if 106 is removed within that time scale? If we can’t, we won’t make an application to the Secretary of State under section 5 to be able to do so.”

On amendment 77, you will be pleased to hear, Mr Howarth, that the handwriting gets progressively worse, so rather than my wasting the Committee’s time, I shall sit down.

Nicholas Boles (Conservative, Grantham and Stamford)

I have enormous sympathy for the hon. Gentleman, who did a lot better job of sounding like he knew what he was talking about than I am about to.

Let me briefly respond to amendments 74 and 77 before moving on to the Government amendments in the same group. We discussed fairly fully in relation to a previous group of amendments whether a one-year period or, as the Government propose, a three-year period is a reasonable one in which to expect developers to act on the basis of a new agreement on affordable housing, and to build the development out. Although in the case of very small developments it might well be reasonable to expect movement within a year, we will obviously not be able to distinguish different time limits for different scales of development. The whole purpose of the clause—I accept that the Opposition do not share this analysis—is to get builders building as much as possible in the next few years. I believe that a year’s grace period within which to fulfil this agreement would simply be likely to lead to developers not taking advantage of this route at all, or to their having another go and causing everybody an unnecessary layer of effort and cost. On that basis, we have decided to propose a three-year time frame, and I hope I will be able to persuade the hon. Member for Edinburgh South to live with it and therefore withdraw amendments 74 and 77.

Turning to the Government amendments in the same group, amendments 37 to 39 insert default provisions regarding the time limits for making appeals. Amendment 38 inserts a default provision that an appeal must be made within six months of the relevant determination or expiry of the determination period. The six-month limit for appeals is in line with other appeal procedures and is necessary to ensure that viability evidence is up to date and relevant at the time of appeal. Amendment 39 disapplies the 28-day period for PINS decisions to allow PINS to undertake any necessary procedures. Amendments 48 and 49 ensure that appeals under section 106BB can be determined by the Planning Inspectorate on behalf of the Secretary of State from the day the clause comes into force.

Under clause 5 as currently drafted, decisions made by the Planning Inspectorate on appeals are valid for three years only, by which point a new agreement has to be reached for development of the scheme to continue. The three-year period provides an incentive for developers to get on and build, as we have just discussed. To avoid uncertainty at the end of the three-year period, amendments 43 to 45 bring in a default position so that after three years, development can continue in the absence of an agreement between the developer and the local planning authority. Here, as an incentive to the developer to take advantage of the new agreement, the default is that the affordable housing requirement revert to what it was before the first application was made under the new provision.

Amendment 43 also allows necessary modifications to be made by the Planning Inspectorate as part of the default provision when it considers an appeal. The inspectorate can make two kinds of modifications: first, those necessary to ensure that the requirement does not relate to development already commenced, as this could make it impossible to fulfil the obligation—for instance, where 95% of the development was already complete and the agreement required 40% affordable housing on site; and secondly, those necessary or expedient to ensure the effectiveness of the default provision at the end of the three-year period. This allows the Planning Inspectorate to apply common sense in providing for changing circumstances, while maintaining the intent of the default provision, which is to return to the affordable housing provision of the original agreement.

I should make it clear that this default does not apply to local authority decisions, so if local authorities willingly reach agreement with developers to vary affordable housing obligations within a 106 agreement, that will not be subject to the three-year cut-off and the default proposed in the amendments.

Amendments 40, 41 and 42 are technical amendments that affect the operation of the clause, and confirm that the three-year decision period does not apply where the Planning Inspectorate has upheld the local planning authority’s determination. Where a developer loses an appeal to PINS, and the local authority’s position is upheld, there is no three-year limit on the decision and no default provision.

Nick Raynsford (Labour, Greenwich and Woolwich)

I may not have heard the Minister correctly, but I thought that he said that one of the amendments will allow the Planning Inspectorate greater time to consider issues of viability than would otherwise be available to it. He will recall the debate we had last week on common standards of performance, in which I moved an amendment that asked for the same performance standards to apply to the Planning Inspectorate as would apply to local authorities. His reply, in rejecting that amendment, was that the greatest safeguard we could have would be his embarrassment at a failure to perform to the same standard as was expected of local authorities. Would he now please explain himself?

Nicholas Boles (Conservative, Grantham and Stamford)

The right hon. Gentleman has demonstrated to the whole Committee why he had such an illustrious career in Government. Even though I read through that pretty quickly—it was certainly a blizzard to me—he nevertheless picked out the one point that I thought that he might, so I pay due credit to him for doing so. It would clearly be shocking if the Planning Inspectorate ends up requiring a great deal more time than we as a Government expect local authorities to take.

We want to disapply the 28-day limit because there is a key difference between the inspectorate and the local authority: the local authority, of course, negotiated the agreement in the first place, so it is entirely familiar with all the considerations that went into producing that agreement because it is the planning authority with which the agreement was concluded, the site is in their area and it is familiar with all the issues that need to be dealt with in the process of assessing the viability, or otherwise, of the affordable housing component.

The Planning Inspectorate, while well-resourced and staffed by highly skilled people, does not have that advantage. Therefore, while I am keen to be extremely demanding of the Planning Inspectorate in terms of its performance, I do not want to place a wholly unfair expectation on it. Although it may well be entirely fair for me to be embarrassed, I do not want the Planning Inspectorate to be subject to an unreasonable demand.

I absolutely do not want the provision to become a licence for the Planning Inspectorate to put something at the back of the pile as a low priority and to sit on it, because the Government’s intention in the clause is to accelerate the process of building out of stalled sites. However, we feel that it is unreasonable to expect the Planning Inspectorate to meet the 28-day limit in every case, given that this will be the first time that it has seen the proposal. On that basis, I hope that the right hon. Gentleman is, at least, moderately reassured.

Ian Murray (Labour, Edinburgh South)

The Minister uses the term “moderately reassured”, and in that spirit I beg to ask leave to withdraw the amendment.

Ian Murray (Labour, Edinburgh South)

I beg to move amendment 75, in clause 5, page 7, line 10, after ‘market’ insert—

‘but not including requirements for land on the site to be reserved and transferred at nil cost to a local planning authority or registered provider of social housing’.

George Howarth (Labour, Knowsley)

With this it will be convenient to discuss the following:

Government amendments 36 and 47.

New clause 2—Requirement for local development documents to contribute to social cohesion and inclusion—

‘In section 19 of the Planning and Compulsory Purchase Act 2004 (preparation of local development documents) after subsection (1A) insert—

‘(1B) Local development documents must (taken as a whole) include policies designed to secure that the development and use of land in the local planning authority’s area contribute to social cohesion and inclusion by addressing the needs of all sections of the community and in particular requirements relating to age, sex, ethnic background, religion, disability and income.”’.

Ian Murray (Labour, Edinburgh South)

Perhaps the next private Member’s Bill that goes through the House could suggest that all elected Members, when producing speeches, should have them fully typed and not in their mother handwriting.

Our amendment and new clause both highlight the importance of building balanced, sustainable and mixed communities. Unamended, the clause looks set to undermine that aim, and where affordable housing is still delivered, it may not be on the same land as the original development.

Amendment 75 would alter proposed new subsection (12) to remove land from the section 106 affordable housing change, and is connected to amendment 70, which we have just debated. When a developer seeks to persuade the Secretary of State that their development is unviable and that an affordable housing element should be removed from it, the amendment would protect any land put aside for the development, to ensure that it stays as part of the development and is available to a registered social landlord or the local authority to utilise if possible. That would link to amendment 70, if the registered social landlord had access to the £300 million that the Government have announced twice—perhaps not 23 times. Although a developer might have already submitted a planning application that qualifies the number of affordable houses—perhaps even where on the site they would be built or whether they were to be incorporated into blocks that are not stand alone—a land allocation for affordable housing is specifically excluded.

New clause 2 should be considered alongside clause 5. It would put in the Bill the need to ensure that development contributes to the goals of “social cohesion and inclusion.” It is vital that the health and well-being of any community, rather than simply developer profits, are used to inform planning. The Town and Country Planning Association has warned that the measure could lead to “socially polarised communities.”

We are promoting the amendment and the new clause to ensure that if the developer is able to persuade the Secretary of State that the development is unviable on the basis of the social housing element, the land is protected. That is not only to provide affordable homes, but to ensure that developments are properly mixed in terms of their development and social cohesion, which the Minister has alluded to several times today and which we all wish to see in new developments across the country.

Nicholas Boles (Conservative, Grantham and Stamford)

The entire Committee will have great sympathy with the concern that underlies the amendment. Land is the most precious contribution that a 106 affordable housing agreement can make, particularly in areas of high land value. If one talks to any social housing landlord, land is often the thing they find hardest to come by, particularly land in a larger development, which is necessary to create a mixed community.

The difficulty with the amendment is that there will obviously be cases where land is the financial burden—the cross-subsidy—that the developer is asked to take from the market end of the development. If one were therefore to exclude such land entirely, some schemes would be simply impossible to renegotiate at all, because land is the entire contribution, or the vast bulk of the value of the contribution, that the developer was asked to make under the original agreement. There would therefore be no way to renegotiate, because there was nothing to play with except the land.

We will resist the amendment, but I am happy to make it plain in the guidance given to local authorities—although they will of course do what is best for their communities—and particularly to PINS that they should always be willing to look at negotiating other elements and forms of contribution in an affordable housing agreement. They should be willing to look at those before looking at the land, particularly in high-value areas. I do not want to bind their hands entirely, because that may mean that they end up with nothing to negotiate. It is absolutely clear that the whole House feels that the land should, in a sense, be a last resort in the renegotiation. I hope that, with that reassurance, the hon. Gentleman will feel able to withdraw the amendment.

New clause 2 obviously seeks to place social inclusion and cohesion on a statutory footing for local development documents. The Government are clear about the important role played by planning in contributing to inclusive communities and as a result, robust measures are already in place in primary legislation and national planning policy. Sustainable development is at the heart of the planning system, which is recognised in section 39 of the Planning and Compulsory Purchase Act 2004.

Contributing to a strong, healthy and just society is an important element of sustainable development. That means meeting the diverse needs of all people in existing and future communities, promoting personal well-being, social cohesion and inclusion, and creating equal opportunity. The national planning policy framework also makes it clear that the purpose of the planning system is to contribute to the achievement of sustainable development. It reaffirms that planning has an economic, social and environmental role in contributing to sustainable development, and that those roles are interdependent.

By law, local planning authorities must have regard to national planning policy when preparing development plan documents. They are also required by law to submit those documents for an examination carried out by an independent inspector in public. As part of that examination, the inspector must determine whether the plan is sound, which includes its being consistent with all the national policies to which I have referred. Such documents are also subject to the sustainability appraisal under section 19(5) of the Planning and Compulsory Purchase Act.

Planning bodies are already subject to the public sector equality duty under section 149 of the Equality Act 2010, which requires authorities to consider the needs of people who share protected characteristics, and to have due regard to the need to eliminate unlawful discrimination and to promote equality of opportunity and good relations between people of different groups.

I hope that it is clear to the hon. Gentleman and other hon. Members that the protection they seek in new clause 2 already exists in statute and the guidance that planning authorities have to follow in making decisions. Therefore, although the new clause is entirely admirable in intent, it is not necessary to include it in the Bill.

Ian Murray (Labour, Edinburgh South)

I appreciate what the Minister has said. When we discussed the affordable housing element, Opposition Members were very unhappy at its removal from developments in relation to what the clause is meant to achieve. Where land is involved, it is important that it should be reserved for such purposes. I take the Minister’s assurances that mechanisms are in place for a whole host of options, of which land would be the last to be looked at.

Nick Raynsford (Labour, Greenwich and Woolwich)

We have not heard from the Minister an explanation of the two Government amendments. If I had not intervened, we could perhaps have simply killed them, because they might not have been moved, but I want to hear the Minister’s explanation.

George Howarth (Labour, Knowsley)

I think Mr Raynsford was making an intervention. Mr Murray, have you concluded?

Ian Murray (Labour, Edinburgh South)

Given the procedural difficulties, it might be best if I conclude to allow the Minister to talk about the Government amendments. Otherwise, we might have an even worse Bill than we do now.

Nicholas Boles (Conservative, Grantham and Stamford)

I am grateful to the hon. Gentleman and to the right hon. Member for Greenwich and Woolwich for allowing me to correct that mistake. I pulled out a section of my speaking notes, and so omitted to speak about the Government amendments, which I am now happy to do. It will be their fault, shall we say, if the amendments do not produce the desired result.

For the purpose of the provision, the definition of the affordable housing requirement relates to

“the provision of housing that is or is to be made available for people whose needs are not adequately served by the commercial housing market (and it is immaterial for this purpose where or by whom the housing is to be provided)”.

The reason why we are proposing such a broad definition to cover the variation in section 106 agreements is because an overly precise definition of the term could mean that some obligations may fall out of scope, if not now then in the future as affordable housing agreements change.

I stress that the definition will only apply in the context of the clause. Importantly, it does not seek to alter the definition of affordable housing in other contexts, and therefore is not in any way an attempt to somehow dilute the commitments and the obligations placed on developers and authorities to bring forward housing that is truly affordable.

Amendment 36 allows the Secretary of State to amend the definition by order, simply and exclusively for the purposes of the clause. That will ensure that the definition can keep up with new forms of affordable housing and new ways of providing that housing, set out in section 106 agreements. It serves to future-proof the legislation without it having to return to Parliament for minor adjustments to be made.

Amendment 47 ensures that any changes to the definition have to be made by order, subject to affirmative procedure. I assure Members that that only applies to the definition of affordable housing for the purposes of this clause. I hope, therefore, that the Committee will be willing to support the amendment.

Nick Raynsford (Labour, Greenwich and Woolwich)

I have to say that I am rather troubled by the Minister’s defence of the amendment, which I thought he was going to allow to lapse by not announcing it. As he says, the amendment allows the Secretary of State to amend a definition, which applies only to this clause, but I am afraid it is not just a matter of future-proofing. If the Minister looks at the amendment, he will see that proposed subsection (12B) allows an order from the Secretary of State to

“have effect for the purposes of planning obligations entered into before (as well as after) its coming into force.”

That seems to me like past-proofing, rather than future-proofing, so I would welcome an explanation as to why the Secretary of State is to be given a power to apply retrospectively to a definition of affordable housing that could be the subject of litigation—an issue we will come to later when we deal with schedule 2—and could be very controversial indeed. I am extremely uncomfortable with this retrospection. Given the concerns voiced in the House and the other place about retrospection in legislation, I hope we will have a full explanation of why the Minister believes it is necessary.

George Howarth (Labour, Knowsley)

I call the Minister.

Nicholas Boles (Conservative, Grantham and Stamford)

The Minister is just trying to formulate in his mind that full explanation of why the clause is drafted as it is. Would the right hon. Member for Greenwich and Woolwich like me to talk about other issues while I receive further advice, or would he be satisfied—

James Morris (Conservative, Halesowen and Rowley Regis)

Will my hon. Friend give way?

Nicholas Boles (Conservative, Grantham and Stamford)

I am delighted to give way.

James Morris (Conservative, Halesowen and Rowley Regis)

I am very grateful to the Minister for giving way. I feel reassured by what he was saying about the consistency of the definition of affordable housing and how it will apply in the provision. It is important that we have a consistent definition, which only applies to this part of the Bill and this clause, and does not lead to the kind of concerns that were raised by the right hon. Member for Greenwich and Woolwich in relation to a definition of affordable housing that might be wider and may cause more difficulties than it is designed to solve.

Nicholas Boles (Conservative, Grantham and Stamford)

I am grateful to my hon. Friend for his intervention, which was helpful—if not quite helpful enough. Would it be—

Mr Raynsford rose—

Nicholas Boles (Conservative, Grantham and Stamford)

I am happy to give way.

The rest of the debate is in Hansard.