Lord Lansley:

Moved by Lord Lansley

235: Clause 94, page 124, line 33, leave out “and” and insert “to” Member's explanatory statementThis Amendment is connected to another amendment in Lord Lansley’s name to clause 94.

My Lords, this group containing, happily, not only my amendments but Amendment 238 in the name of my noble friend Lord Fuller, is about the designation of new towns. The purpose of Amendment 236, which is the substantive one in my name, is to provide for additional parliamentary scrutiny of the designation of new town development corporations—those controlled by the Government. It is particularly about those under Section 1(1) of the New Towns Act, whereas elsewhere in that Act, locally led new towns, for example, were subsequently inserted. This provision would not apply to them; it would apply only to those controlled by the Government.

The point is that there are substantial implications in having a new town controlled by the Government. Designating the area and, for that matter, the powers that are to be given to that development corporation, and therefore by extension taken away from a local planning authority and vested in a development corporation, is a highly significant issue.

The super-affirmative procedure which the proposed new Clause would introduce is, as the parliamentary guide would tell us, intended to be reserved for highly significant statutory instruments. I think this fits that bill. We are talking about the potential transfer of powers, potentially for relatively large areas, away from democratic control for decades.

For example, in the recent report by the New Towns Taskforce we saw a proposal for a dozen new town sites, some of which are pretty substantial. If we look at the area described as Brabazon and West Innovation Arc, it comprises three substantial areas to the north of Bristol. If all the planning control in that area were to be taken out of the hands of local authorities for what might be decades, it would make a very big impact in that area. The scrutiny of that by Parliament at the outset is important.

In short, the super-affirmative procedure allows for a 60-day period that can be used by each House of Parliament to conduct a committee’s scrutiny of the proposal—the draft statutory instrument—and report to the House, which would give rise to a debate before the draft is laid for approval. I therefore hope that it will commend itself.

Perhaps at a better hour and with more opportunity, we will want to talk about the “new towns” designation quite a bit. I hope that, in replying to this short debate, the Minister might say that it will be the Government’s intention to have a substantive debate on the new towns programme in the new year. The Built Environment Committee very recently published a report that contributed to what we have already read in the New Towns Taskforce report and the Government’s interim response.

The Government have established a strategic environmental assessment for the programme as a whole, which, as I understand it, is an essential preliminary to a consultation on the sites that the Government are going to propose, not least because the Environmental Assessment of Plans and Programmes Regulations 2004 make that necessary, or would potentially prejudice the Government’s initial decisions, because they would not necessarily have incorporated the environmental effects. That means that we will probably be looking at the Government’s proposals for consultation in the new year. I hope that the Minister will say that it is the Government’s intention for us in Parliament to be consulted, and that we will have a debate on the new towns programme itself.

Briefly, there are proposals such as that from the Built Environment Committee for the New Towns Taskforce to be turned into a new towns agency—not just a unit in the ministry that works with Homes England but something that has a long-term existence and an identity of its own—to support the new towns programmes. In addition, there are issues that it is important for us to clarify before we get into the detailed question of which new towns will be among the first to get building on the ground. For example, it seems that the question of the relationship between the homes expected to be built in a new town by a new town development corporation and the housing needs and requirements in that area is one that the New Towns Taskforce and the Built Environment Committee have said needed to be clarified, but the Government have not done so yet.

Clearly, the homes being built in a new town should form part of the housing requirement of a relevant local planning authority. As a consequence, that local planning authority must accept that it should not rely simply on the standard method. Instead, there should be an addition to the standard method figure for that local planning authority to take account of the fact that it is contributing additional homes as part of a new towns programme. In each area, a complicated analysis is therefore required to assess how many of the new homes to be built should be added to a local planning authority’s standard method.

Currently, we look at places such as Crews Hill in Enfield and Brabazon, which is north of Bristol, that will potentially be part of a new town designation, but which already have homes that are part of a local plan. It would be an outrage if those homes were taken out of the housing requirement of that local planning authority and exposed to the risk of not having a five-year housing land supply in their area. That is just one example.

Another example—which I will not dwell on, because my noble friend Lord Fuller will want to talk about it—is the upfront funding and financing of development corporations. In Cambridge, which is not part of the new towns programme but will, none the less, be the location of one of the Government’s priority new towns, £400 million of funding for infrastructure was announced, which was extremely welcome. The question is whether other new towns will have upfront funding for infrastructure after the Budget, which, in the view of the New Towns Taskforce, is an essential component of what is required for the new towns programme.

Additionally, the Government have referenced the possibility of loans, to support the provision of early infrastructure in these new towns, and of tax increment financing as a long-term mechanism for funding. I will leave the question of further funding to my noble friend, who I know wants to talk about that when he speaks to his Amendment 238.

Finally, in my experience, the reason we need this important scrutiny is the importance of early engagement—not just local engagement but engagement with what are now quite wide communities. Their parliamentary representation has an opportunity to be heard on the designation of these new towns and the programme with which they should be engaged.

As a Member of Parliament, I was responsible for Cambourne, which had no homes when I started out as an MP but now has, I think—I shall be there on Sunday—approaching 6,000 homes, and for the establishment of Northstowe, which was meant to have 6,000 homes by 2016. In fact, it had none, but it is now having homes built. Both tell us a great deal about the relative importance of early infrastructure and early community engagement. A process by which Parliament is thoroughly consulted about the new towns programme at an early stage, and in detail when the statutory instruments to designate a new town have been drafted, would substantially assist the process of reassuring the communities that will be most affected.

My Lords, I will speak to my Amendment 238. I welcome the broad thrust of empowering and reinvigorating the development corporations contemplated by the Bill. In fact, I think it is the best part of the Bill.

Clause 96 seeks the achievement of sustainable development and the mitigation of and adaptation to climate change. However, there will be no sustainable development without sustainable financing of the proposals that the development corporations bring forward. Since Committee, the New Towns Taskforce has published its report, and only this afternoon at Question Time the noble Lord, Lord Wilson of Sedgefield, gave warm words to the principle of private investment in local infrastructure, perhaps by development corporations.

The magnitude of the task ahead of us is nothing short of generational. The state alone will not be able to build these new settlements; neither will councils, nor, as noble Lords heard in the previous group, will the mayors—not quickly, anyway. Only by harnessing the power of the financial markets and other private sector actors at home and abroad, including perhaps private households, will the promise of building these places become a reality. My amendment, supported by my noble friends on the front bench, recognises this simple truth. Some 50 years since Milton Keynes and 80 years since Stevenage were designated under the first new towns Act, it is time to bring the development corporations up to date.

I approach this subject in the knowledge that local authorities may be reorganised, that mayors may be created, and that the day-to-day financial pressures they both face have never been greater. In a former time, the development corporations would hold out their hand, perhaps to central government or to local councils, for funding. Of course, that route may be still open in some parts, but we know that the PWLB is capped and, at a time when Nestlé can borrow money cheaper than our Government can, the PWLB is not necessarily the cheapest, best value, or most available source of long-term infrastructure finance for the generational opportunities that my noble friend Lord Lansley so ably identified. Building new towns is the work of generations—it goes beyond political cycles—and relying on national and local politicians will not be enough in a world where a new secondary school costs £40 million and a flyover £100 million.

So we must help the development corporations in the single-minded pursuit of sustainable development, and we must help them get the money right. That means giving them the powers to exploit the distinction between funding and financing. Funding is simply writing the cheque, but financing is putting that deal together. It is no surprise that the financiers in the City of London have the most highly paid professions, because they have the hardest task: putting those deals together. It is not easy to finance difficult prospects but, to get Britain building, we will have to grasp that nettle.

I will not dwell too much on the significance of governance in development corporations, but I will make the factual observation that strong governance, established by statute—that is why I tabled this amendment—leads to higher covenant strength, the ability to take a higher credit rating, and the willingness of institutional investors to pony up the cash early on for infrastructure at lower prices. That is why my amendment is so important. We need to make it easy for the development corporations to raise the funds and for the pension funds to put their shoulders to the wheel, helped by the covenant strength that comes from being a statutory body.

The development corporations must be empowered to engage in all manner of financial instruments, including the issue of bonds, shares or similar, and we should contemplate other sources of finance as well. In my view, that extends to entering into joint ventures with landowners on a territory. Their land could be incorporated at the heart of financing as an in-kind contribution, so they would not enjoy the upfront benefit but they would have a return that is sustained over a long-term period. That may be good for them—it is certainly good for the taxpayer—and it enables us to get the infrastructure built up front more cheaply. It should not be the default position that a development corporation just goes for CPO powers and then ponies up a premium price—10% more than the market value—sustaining all the unpleasantness of the process. There must be a better way. My amendment pathfinds that opportunity.

In Committee, the noble Baroness—rather complacently in my view—said that the amendment was unnecessary because corporations could always borrow from the PWLB, and that was that. The bond markets are suggesting that there may be limits to that approach, which is why we need more flexibility. So I want to place finance in the widest possible context and, without central or local government necessarily acting as a banker in the traditional manner, the development corporations can be empowered.

So, although I accept that development corporations can plan for an area and have regard to all manner of desirable outcomes, ultimately those plans or outcomes will stand or fall on whether the money can be raised and the finance deals put together. That is what my amendment seeks to achieve at the best value and the greatest certainty, with the cheapness and value that come from statutory provision.

My Lords, I will speak briefly to my noble friend Lord Lansley’s Amendment 236. This gives me an opportunity to pay tribute to my noble friend and his work in this House. I declare an interest as chairman of the Greater Cheshire Development Forum.

On new towns and the new town of Adlington, I have to say that it was a wee bit of a shock. I am Lord Evans of Rainow, and Rainow is not far away—it is in the Peak District—and as you look out from the Peak District at the Cheshire Plain, Adlington is in the foothills. It is green belt, so it was a bit of a shock for me and the local communities. It is not every day that between 14,000 and 20,000 houses are set to be built in England’s green and pleasant land of east Cheshire. It was also a real shock to the Macclesfield MP, Tim Roca, as he had got married and was on his honeymoon at the time, but he was quick off the mark and put together the inevitable petition to Parliament against this proposal. It really flies in the face of democratic community empowerment—it is a coach and horses through local government. There are three outstanding local parish councils in that area: Poynton Town Council, Bollington Town Council and Pott Shrigley Parish Council. If you go on their website, you can see clearly that a lot of what they say has been articulated here today: a lack of consultation and accountability.

Cheshire East Council is struggling in many ways. One of the things it does not have is a local plan. You would expect the local town councils to point out that there is no town plan, and they would like to help it to do this in an open and transparent way. But there was no engagement with local people whatever—there was no forum—so your Lordships’ House can appreciate the shock. There is no local plan or mayor until 2027, so who will put this new town together and build between 14,000 and 20,000 homes?

There are several issues. There are issues in Cheshire East, like there are in communities throughout the country. Cheshire is a prosperous community, and Cheshire East is particularly prosperous, with pharmaceuticals, good-quality manufacturing and employment, but there is a housing shortage for young people. There is a net export of young people who leave Cheshire East to go to university and do not return. One of the biggest reasons for that is a lack of affordable housing. It is simply unaffordable.

In terms of infrastructure, what sort of energy will there be and how will we get it to 14,000 to 20,000 homes? Water supply is becoming a particular issue in many shire counties in the north-west and north-east of the country, as is drainage and so on. There is a huge number of areas that the local parish councils pick up on, because they have that local knowledge, but they have had no consultation whatever.

This is an opportunity to put some of those things in place and reinvent that part of Cheshire. There are fantastic business opportunities, but there are already large developments. The right reverend Prelate the Bishop of Manchester may be aware of Woodford Garden Village, which is part of the Greater Manchester development area, with approximately 10,000 homes. That is on the site of a former aerodrome, where they used to make Lancaster bombers and be part of the nuclear deterrent—and it is a very good development, but on brownfield. The Adlington new town will all be on greenfield, so there is a marked difference. If we look at that area from the air, we can see the old airfield being developed, and then we look at the green belt of Cheshire and see that it will be an expansion of the urban spread from Greater Manchester into east Cheshire.

To summarise, there has been no local plan, there is no mayor, and there has been no consultation, so for the people of the Cheshire East area—that wonderful and excellent community—the local politicians think that the Government really need to think again. They are not against any development, but they would like some consultation and to rethink this proposal.

My Lords, I noted what the noble Lord, Lord Evans, has just said. Unlike my predecessor, I have no intention of trying to petition for parts of the diocese of Chester to become parts of the diocese of Manchester, just because of the urban sprawl extending—but I rise to speak in favour of the Amendment proposed by the noble Lord, Lord Fuller.

I have served on the boards of a lot of large institutional investors. One of them, the Church commissioners, had a particular interest in one of the major landowners in the country. I can well see how for an institutional investor that wants to invest in something that is a social good, like building towns, and wants to do it for the long term, because it is interested in long-term return and not just what the next quarter’s figures are going to be, being able to invest in these kinds of things would be the right way to go. Should the noble Lord put this to the vote, I would hope to be with him in the Lobby.

My Lords, I am broadly in favour of the amendments in this group. As a general principle, we are in favour of any amendments that are genuinely about devolution and not just decentralisation. As we are all aware, there is a significant difference. However, we are aware that this brings issues of governance and accountability that are new to much of the sector at this level, with the difference in governance arrangements and in geography.

We also support the Government’s ambition and political will to build new towns to meet our challenging housing need. But—and it is a big “but”—we nevertheless feel that something as significant, important and impactful as designating a large amount of land for a new town should be subject to the super-affirmative procedure. Everyone’s voices deserve to be heard—and I understand that there is a difference between being heard and being listened to. However challenging and difficult that might be, the process is important, as the noble Lord, Lord Lansley, outlined. Increased scrutiny and the opportunity for revision are essential. We have to get this right for the people and for Parliament. Thus, we too welcome a debate on the new towns agenda and on the sites already designated.

I turn to Amendment 238. It seems to us an inevitable consequence of the new development corporations’ ambitions, roles and responsibilities. If devolution is to really mean something, it must also mean fiscal devolution. It is very unlikely in the present economic climate that any new major developments are going to be totally government funded, so it makes sense to cast the financial net as wide as possible. But—and, again, it is a big “but”—given some local government history on these and related matters, we assume that the Treasury will be concerned about rising debt and potential poor financial controls. With the discredited PFI funding also in the background, it will be concerned also about potential poor value for money. We are concerned that there should be the necessary protections and processes for good government, transparency and accountability. I wonder whether the Government may envisage a more proactive role in this regard for the National Audit Office before investment decisions are made.

Finally, a key question, which my noble friend Lord Shipley raised in Committee, is who picks up the tab if there is a loss on a project, or on several projects, or if a mayoral development corporation is running generally at a loss. Is it the council tax payer or the Government? There was no answer in Committee. It would seem likely to be the Government but, if so, it would be reasonable for them to be involved at all stages of project delivery, which makes Amendment 238 insufficient without explaining what controls would be in place. However, we would still support Amendment 238, because it gives a sense of the direction that we should go in, even if the detail is not yet in place. I look forward to the Minister’s reply.

My Lords, on Amendments 235 and 236, tabled by my noble friend Lord Lansley, all I can say is that we support all the intentions of these amendments so ably introduced, as always, by my noble friend. I do not think there is anything more that I can add to what he has already said, apart from saying to the Minister that I think these important questions need answers tonight.

Alongside my noble friend Lord Jamieson, I have co-signed Amendment 238, tabled by my noble friend Lord Fuller. Ensuring that development corporations have access to sufficient finance will be critical, as we have heard, if we are truly to deliver the high-quality new towns and new developments that we would all like to see. Having access to a range of finance resources is a key component to this, empowering development corporations to seek finance from the widest possible range of sources. This amendment would allow them to do precisely that—to access funding not only from the Public Works Loan Board but from private capital, sovereign wealth funds and pension funds, and through value-in-kind contributions as part of joint ventures. Crucially, it would also give them the ability to issue bonds, either individually or collectively with other development corporations.

Why does this matter? I suggest three key reasons. First, it enables collaboration. Development corporations could work collectively across areas, pooling capacity and scale to unlock investment in major regeneration and infrastructure projects that would otherwise be out of their reach. Secondly, it opens the door for local pension funds, particularly the Local Government Pension Scheme, to invest directly in their communities. This builds on the Government’s own commitment to mobilise LGPS capital for local growth. It would mean that people’s savings are working to deliver tangible, long-term benefits in the very places where they live and work. Thirdly, it aligns with the Government’s broader ambitions on devolution and local growth. Page 29 of the English Devolution white paper makes clear that strategic authorities will have a duty to deliver on economic development and regeneration. Local authorities will be required to produce local growth plans, and LGPS administrating authorities are expected to identify local investment opportunities and put them forward to their asset pools.

This amendment would therefore help the Government achieve precisely what they have set out to do: to channel more of the nation’s long-term capital into productive place-based investment. It would empower development corporations to be proactive, innovative and financially self-sustaining, drawing on both public and private sources of finance to deliver growth, regeneration and prosperity for local communities.

My Lords, I thank all noble Lords who have taken part in this short but interesting debate. Amendments 235 and 236, tabled by the noble Lord, Lord Lansley, seek to change the parliamentary procedure for designating areas to be developed as a new town by new town development corporations from the affirmative procedure to the super-affirmative. They would also require that the Secretary of State reconsults if a proposal for an area to be developed by a new town development corporation is changed following an earlier consultation.

The Government agree that proposals to establish development corporations should be subject to consultation and proportionate parliamentary scrutiny, but this is already the case. The New Towns Act 1981 already requires that the Secretary of State consults with relevant local authorities prior to designating an area to be developed by a new town development corporation via regulations. Consultations and decisions to designate are also subject to public law principles. Further consultation would therefore already be considered should the proposal fundamentally change.

I will just comment to the noble Lord, Lord Evans, on his points about Adlington. He may have looked at the report of the New Towns Taskforce, which sets out very clearly the principles under which new towns must make provision for infrastructure, including energy, water and all the facilities that make communities work and be successful. As I have said, there is consultation set out in law for those decisions to designate. Designation by regulations is also already subject to the affirmative procedure, ensuring a high degree of parliamentary scrutiny by both Houses. As these regulations neither amend nor repeal an Act of Parliament, which is the usual super-affirmative process, the Government do not believe that they require the high level of scrutiny of that super-affirmative procedure.

The noble Lord’s amendments would also have the unintended consequence of adding significant time to the process of designating areas as new towns. The super-affirmative procedure would add a minimum of two months and the duty to reconsult could add significantly longer, depending on the number of reconsultations required. I was grateful to the Built Environment Select Committee and particularly the noble Lord, Lord Gascoigne, for the thorough way he looked at the subject of new towns. His work has been very helpful. I will give thought to the request for further discussions within your Lordships’ House on all the issues arising from this new generation of new towns. Both the noble Lord, Lord Lansley, and the noble Baroness, Lady Thornhill, have made this helpful suggestion. I will take that back to the team and look at parliamentary schedules to see when a further discussion on that might be possible.

In relation to existing housing targets being taken into consideration for new towns, the Government are working on our full response to the New Towns Taskforce report. I hope that may offer more insight into how housing targets will be taken into account as we move forward with the new towns programme.

In the meantime, I turn to Amendment 238, tabled by the noble Lord, Lord Fuller. At present, most types of development corporation have powers to borrow, including through private finance, subject to the consent of the oversight authority. Mayoral development corporations outside London are the exception. They cannot borrow directly, although the parent mayoral strategic authority can borrow and lend to its mayoral development corporation. Mayoral development corporations within London can borrow as functional bodies of the GLA. The noble Lord’s amendment would change this, giving all mayoral development corporations powers to borrow, by placing a duty on all mayoral development corporations to fund and finance development proposals, with the option of doing so through private finance.

I welcome the intent of the noble Lord’s amendment. It is, we agree, crucial that development corporations are sustainably funded. However, requiring mayoral development corporations to fund and finance development directly would unnecessarily constrain their use. In some cases, mayoral development corporations may not need to directly fund development to achieve their purposes, as has been demonstrated, for example, by the Stockport Mayoral Development Corporation, which has successfully brought forward significant regeneration by primarily playing a strategic and co-ordinating role.

On the issue of borrowing and raising private finance directly, the noble Baroness, Lady Scott, mentioned the Local Government Pension Scheme, and we had a question on that this morning in Question Time. I agree that it is worth exploring how the Local Government Pension Scheme can help with these types of investment. That will all come as part of a wider funding toolkit. It requires careful consideration to make sure that we properly balance the benefits and risks, including the possibility that mayoral development corporations could accrue significant debt and liabilities—an issue raised by the noble Baroness, Lady Thornhill. We must also consider how the proposed borrowing powers would interact with mayoral strategic authority borrowing. We will need more time than is available on this Bill, but I can commit that the department will consider these changes in the future. For the reasons I have given, I kindly ask noble Lords not to press their amendments.

My Lords, I am grateful to all noble Lords who contributed to this short, as the Minister said, but I thought very interesting debate—a preliminary to the further debate that I hope we will have, not least if we can contrive to have an early debate on the Built Environment Committee’s report in the new year at a time when we can incorporate the Government’s full response to the task force report and the Government’s actual proposals for new towns. We learned from my noble friend Lord Evans of Rainow that if there is that range of issues to be considered in relation to one of the new town proposals, we can expect a lot of contributions when we get to a dozen such proposals, not even including Cambridge, from my own point of view, which is beyond the task force’s report.

What the Minister had to say was encouraging from the point of view of getting parliamentary debate to take place without impeding or delaying the programme in any way. I hope that, when we have that debate, we will come back to some of the important issues raised by my noble friend Lord Fuller. He made some important points, in my view, about the capacity for financing this. Tax increment financing and the ability to borrow against the future development value will be a key part of that.

From my part, in relation to parliamentary debate on the new towns programme, I was grateful for the Minister’s response, so I beg leave to withdraw Amendment 235.

Amendment 235 withdrawn.

I gently remind noble Lords that, as stated in the Companion:

“Members … pressing or withdrawing an Amendment should normally be brief and” should not

“respond to all the points made during the debate, nor revisit points made when moving”,

or pressing,

“the amendment”.

Speeches appear to be getting longer at this point. I respectfully urge noble Lords to be brief so that we can continue to make progress and get to the votes.

Amendment 236 not moved.

Amendment 236A had been withdrawn from the Marshalled List.