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Localism Bill

My Lords, your Lordships will recall our helpful debate in Committee on this clause, when we dealt with an array of issues. I shall give a brief reminder of the key points before moving on to the amendments now tabled and the issues that I understand still worry some noble Lords. I start by reiterating the Government’s purpose here. As my noble friend Lady Hamwee noted in Committee, the issue of local finance incentives and planning decisions was made topical by the new homes bonus, or NHB. When we consulted on that scheme, uncertainty was expressed about its relationship with planning. The CPRE was concerned enough to seek a legal opinion, which implied that the scheme might taint the planning decision-making process. The supposition was that the scheme might encourage local planning authorities to take non-material considerations into account when determining planning applications for new homes. The CPRE is right to keep a keen eye on this issue but in some instances its press releases and briefings have unnecessarily added to the sector’s confusion and alarm. It has raised fears that that NHB will undermine the planning system and result in, "““hugely damaging consequences for local communities and the environment””," and result in any local decision in which a local finance consideration were taken into account being, "““legally ‘tainted’ and open to question””." The clause itself which the Government prepared in an attempt to ensure that local finance consideration would not be taken into account in inappropriate circumstances—in other words, to address the CPRE’s core concern—has been branded as, "““a brazen attempt to legalise cash for sprawl””" and as a temptation for local planning authorities to, "““fill shrinking coffers by permitting any development, regardless of its environmental impact or the views of local communities””." All such claims, though doubtless borne of genuine concern, are based on a false premise about the effect of the clause. As such they are rather misleading. To be clear, the clause simply restates the existing legal position, confirming for the avoidance of doubt that, like any other consideration, a matter such as the NHB or CIL must be taken into account if they are material to the planning application under consideration. Inevitably, the CPRE activity on this issue has not helped the confusion already apparent in the sector, evidenced, for example, by the London Borough of Islington which, in its response to the NHB consultation, said: "““The government should make it clear whether NHB can be taken into account as a material consideration when determining planning applications””." It was precisely to address this confusion and to give a clear and lasting reminder that local finance considerations should be taken into account only where they are material in the long-understood sense—in line with case law—that Clause 130 was prepared. It is clearly untenable to allow confusion to linger, particularly within the bodies responsible for making planning decisions. As I said in Committee, this would undermine the planning system’s integrity and affect public confidence. Making the legal position more clear should reduce the risk of local planning authorities being accused of letting financial incentives improperly influence their decisions and so facing legal challenges to their decisions. In Committee, my noble friend Lady Hamwee asked why the necessary clarification could not be given in guidance. As I indicated at the time, we thought carefully about the option. However, the Government concluded that with confusion on this legal and technical issue so prevalent, the only responsible option was to bring the desperately needed clarity to the fore by using the Localism Bill. Given the significant accusations the CPRE was asserting, the consequent confusion that local planning authorities were faced with, and the grave risk which that confusion posed to the proper operation of the planning system, we felt it essential to clarify the position and clear up the confusion in law. Using the Localism Bill presented the most immediate and visible way to set the record straight on this important message. As the confusion concerned the legal position it made sense to use legislation to clarify the point and provide councils with reassurance on what they should and should not legitimately do. It may be helpful if I remind the House of the tests for a material consideration. I know some noble Lords remain uncertain as to the circumstances in which the NHB or the community infrastructure levy might be material to a particular planning decision. Current statute confirms that in determining planning applications regard must be had to the development plan so far as it is material to the application and to any other material considerations. Statute does not define what a material consideration is but clear tests for materiality have been developed through case law. The classic statement is to be found in Stringer v Minister of Housing and Local Government. It states: "““Any consideration which relates to the use and development of land is capable of being a planning consideration. Whether a particular consideration falling within that broad class is material in any given case will depend upon the circumstances””." In order to be material, therefore, a consideration must relate to the use and development of land and to the planning merits of the development in question. These tests apply to all considerations, financial or otherwise, and are not altered by the clause. Clause 130 clarifies that regard should be had to, "““any local finance considerations, so far as material to the application””." What this means in practice is that regard should be had where, and only where, the case law tests on materiality are satisfied; that is, where the local finance consideration in question relates to the use and development of land and relates to the planning merits of the development in question. I am conscious that concerns were expressed in Committee that the clause as drafted might do more than this. There were suggestions that it might elevate the status of financial considerations above others; threaten the probity of planning; send a message that under the new system planning permissions can be bought and sold; allow financial inducements that are irrelevant to the merits of a particular development proposal to be material, and similar horrors. We took these concerns very seriously. We have taken all possible steps to ensure that the clause absolutely does not have the potential to result in such unintended consequences, and we have been consistently reassured on these points. Although it is not customary for Government to share their legal advice, perhaps it is opportune and helpful to do so on this occasion. I can categorically confirm that the Government are in no doubt that the clause as drafted does not represent any change in the current law whatever. It is declaratory of the current law, which is that where local financial considerations are material to a planning application they should be taken into account in the determination of that planning application. Furthermore—this is of direct relevance to the concerns raised previously by noble Lords—the Government are absolutely certain that the clause does not require greater consideration to be given to local finance considerations than to any other material consideration. The decision-maker retains the discretion to determine the weight to be attached, subject ultimately to the supervision of the court. To reiterate: the Government are confident on these points. However, we do not wish to dismiss the understandable and well-meaning concerns of noble Lords. We have not just blithely continued on our way without reflecting very carefully on the issues raised. Instead, we made a genuine commitment to consider further the wording of the clause to ensure that it is absolutely clear that apportioning weight remains a matter for the decision-maker. As noble Lords can see, we have now fully honoured that commitment and have brought forward an amendment which should put noble Lords’ concerns completely beyond doubt. As noble Lords will see, Amendment 223CA makes it absolutely explicit that the new reference to local finance considerations does not affect the weight to be given to any particular consideration. We have provided even greater reassurance by additionally confirming that the clause does not alter whether regard is to be had to any consideration. Apportioning weight remains a matter for the decision-maker. It may assist your Lordships if I give some simple examples to illustrate when matters relating to the NHB or CIL are likely to be material or not. In Committee, I used examples relating to new housing developments and the funding of improvements to commuter links. In the interests of variety, I shall use a different scenario. Take a situation where NHB and/or CIL moneys pooled by an authority will help fund new flood defence measures. In determining an application for a major housing development within the area to be protected, the fact that the scheme would generate funds to support the provision of the necessary defences would be material: it is clearly relevant to a planning issue arising from the proposal at hand. What, though, if the new proposed development would take place elsewhere, on land not at risk of flooding? The development would still result in moneys which would help fund the flood defences and this would still be a reasonable use of the funds. However, the provision of flood defences would not be material to the determination of the planning application. Put simply, the crucial issue is not the nature of the policy instrument that results in funds being accrued, whether or not the Government require authorities to ring-fence funds for a particular use; it is whether at the local level there is a commitment to spend those funds on something that relates to the development and use of land and the planning merits of the planning application that is being considered. In practice it is likely that CIL will be more material in more instances than NHB. This is a natural consequence of the fact that authorities are free to spend NHB funds as they see fit while CIL must be spent on infrastructure needed to support the development of the area. Of course, where regard is to be had to NHB or CIL, the local planning authority will need to be confident at the planning decision stage that the funds will be used to deliver the infrastructure anticipated. It will be for the charging authorities concerned to put adequate safeguards in place to ensure that the funds are spent appropriately and for the local planning authorities to be satisfied that the developments will be acceptable in planning terms, having regard to any relevant infrastructure that they can legitimately expect to be provided by the charging authority. Of course, none of this fetters the ability of an authority to choose not to spend its NHB moneys on matters relating to specific developments. The funds could, for example, be distributed as funds to local communities to spend as they wish. This would be a legitimate use of the funds, but in such circumstances the funds will not be a material consideration in planning decisions. I now turn to Amendment 223D. This amendment, tabled by my noble friend Lady Parminter, proposes that Clause 130 be withdrawn from the Bill. We have been clear that the clause does not alter the law but merely clarifies a topical point of confusion. Noble Lords may well ask, therefore, why the clause needs to remain in place. The simple answer is that having come so far in clarifying the question of when a local finance consideration should and should not be taken into account, it would be regrettable indeed to throw this matter back into doubt. Withdrawing the clause would not change the law. It would remain the case that decision-makers must have regard to any local finance considerations that are material to the planning applications that they determine, but there would be no clear reference in statute to this point. I hope that I have left your Lordships in no doubt that, irrespective or whether we are all in agreement that the clause is essential, we can at least be clear that it does no harm. I beg to move.