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Planning Bill

My Lords, as always, I am grateful to the noble Lord, Lord Best, for enabling us to have this discussion on the implications for affordable housing. I much appreciate the intention of his Amendments Nos. 134 and 151 to seek to protect the provision of affordable housing secured through developer contributions. I will not repeat what he says so much more powerfully than I can. We are facing a very difficult situation for the reasons given by the noble Lord, Lord Dixon-Smith. The noble Lord, Lord Best, pointed out how it is impacting on the ground. Certainly, the Government are extremely sensitive of the need to protect levels of affordable housing contributions. That is the substance of what I want to say and underlines everything. We have put in place extensive safeguards in the design of CIL to ensure that safeguarding the continued delivery of affordable housing through the use of planning obligations is embedded in the setting and operation of CIL on the ground. These safeguards include ensuring careful consideration of local economic viability and affordable housing needs in the setting of CIL charges, as well as a prudent backstop measure to address any potential shortfall in affordable housing contributions arising from CIL if evidence shows that that is necessary. These are two extremely important safeguards. As we set out in the CIL August policy document in paragraph 3.42, local planning authorities that choose to introduce a CIL will be obliged to set a charging schedule in such a way as to ensure it does not impede development. That exercise will be bound to take into account the costs of meeting affordable housing requirements. CIL is going to be driven by the local vision set out in the local development plan with its ambitions for housing and affordable housing. A draft charging schedule will be tested through public consultation and independent examination. This examination will test whether the levels of CIL set out in a proposed schedule would put at risk development when taken with other costs faced by developers, such as affordable housing obligations. My noble friend Lady Ford explained on the previous amendment something of the background to the way these decisions are made. The recommendations of the independent examiner would be binding on the charging authority. The independent examiner could recommend reducing the level of CIL in a draft charging schedule if, when taken with other affordable housing costs and local economic conditions, it would prevent development proceeding. If there is an unexpected reduction in the level of developer contributions for affordable housing as a result of the introduction of CIL, we can make regulations to ensure that CIL revenue could be used to top up such a shortfall. The amendments seek to provide additional security for affordable housing. Amendment No. 151 would require that affordable housing contributions are calculated without regard to CIL liability. It is difficult to see how Section 106 negotiations between developers and authorities could ignore a clear and known cost in the development’s finances, even if it was illegal to take those costs into account. I fear that this amendment could lead to a lot of legal dispute and confusion. I also think the development industry might be extremely alarmed by this proposal because it makes no provision for CIL charges to be adjusted to take account of Section 106 contributions. That would undermine the existing checks and balances I have already set out which we have provided for in the setting of the charging schedule. So even if it were possible for CIL to be ignored for the purposes of the Section 106 discussion, there would be a real danger that total developer contributions for Section 106 and CIL could be set too high, making development unviable and resulting in no new affordable homes being provided. Amendment No. 134 again seeks to ensure that the introduction of CIL does not adversely affect social housing development. I am sympathetic to the principle of this amendment in that it seeks to shield social housing explicitly from CIL liability. I regret, however, that the amendment as it stands does not look workable and could give rise to unintended consequences. For example, the amendment refers to a definition of social housing that was written for the Housing Act earlier this year and for entirely different purposes. I fear it could be manipulated for the avoidance of CIL payment. For example, shared ownership is included in the definition contemplated by the amendment. That could present a loophole whereby shared ownership accommodation could be exempted from CIL but quickly staircased out to full ownership and lost to the open market. I think the noble Lord recognises that problem. A developer could build shared ownership housing with the sole intention of qualifying for CIL exemption, but on completion the property could quickly convert to full private ownership. We have to ensure that there is no scope for that sort of abuse of definition. Furthermore, the amendment potentially exempts private housing on developments which are mixed and contain both social and private housing because it does not, for example, contain the words ““exclusively”” or ““wholly””. That could lead to a serious avoidance problem. The intention of this amendment is to protect social housing contributions through a total CIL exemption. But social housing in itself creates the need for infrastructure and services in much the same way as other housing does. It could not be otherwise. Reflecting that, there is no general exemption for affordable housing providers from the current planning obligations regime. In its present form, therefore, I do not believe that the intended outcomes of this amendment can be guaranteed, or that unintended consequences could be avoided. I therefore propose that this important issue is better served by more detailed consideration in regulations. We have already taken powers in Clause 203(6)(f) which are necessary to make provision for how social housing developers are to be treated in a more considered way. I want to give the noble Lord and the whole House a firm commitment that we will explore with the social housing sector how a significantly reduced rate of CIL could be specified in regulations for affordable housing development. Indeed, I can tell the House that discussions have already started, focusing initially on the difficult issue of definition that I have mentioned.