Planning obligations

Neighbourhood Planning Bill – in a Public Bill Committee am 4:00 pm ar 27 Hydref 2016.

Danfonwch hysbysiad imi am ddadleuon fel hyn

(1) The Town and Country Planning Act 1990 is amended as follows.

(2) In subsection (1) of section 106 (planning obligations) paragraph (d) at end insert—

“(e) requiring that information submitted as part of, and in support of, a viability assessment be made available to the public.”—

This new clause would ensure that viability assessments are public documents with no commercial confidentiality restrictions, except in cases where disclosure would not be in the public interest.

Brought up, and read the First time.

Photo of Roberta Blackman-Woods Roberta Blackman-Woods Shadow Minister (Housing)

I beg to move, That the clause be read a Second time.

I am not sure that the Minister and I will be in such agreement on new clause 12, but we shall see. The new clause would ensure that viability assessments are put into the public domain so that they are available for public scrutiny. The Minister will know that the Opposition have long raised this issue. Labour’s view is that for the public to accept new development, they have to be absolutely certain that viability arrangements for a site—particularly safety integrity level requirements and section 106 requirements—are all that they should be.

I know from my own experience the kind of situation that can make local people sceptical about development or turn the public against a new housing development: for example, when they do not get the amount of affordable housing they think they should get; or when a contribution to a local primary school is suddenly no longer applied by the local authority because of viability issues. Although I am happy to take on trust a lot of what local authorities do, we would all accept that, as a general principle, local authorities need to be as transparent as possible in all their decisions. I am entirely uncertain as to why the Government are of the view that viability assessments should not be in the public domain.

The new clause would also help the public by giving us all a better view of any uplift in the value of land across the country. In some areas developers can provide more of a payback to the local community than in others because of the price of land. It does not always vary depending on the value of land—there will be other local circumstances. However, it would be good to have a more detailed understanding of what is being delivered, in terms of a planning gain, and why that particular level has been arrived at, than we currently have from the information that is in the public domain.

Viability assessments are used by developers to argue their planning obligations under section 106 of the Town and Country Planning Act 1990. Of course, we find that a lot of viability assessments are used to reduce payments, although not always—that would be completely unfair. The Royal Institute of British Architects has commented:

“Despite the Planning Practice Guidance encouraging transparency, developers may opt not to disclose their viability assessments to the public on grounds of commercial confidentiality. It is widely accepted that this is sometimes done in order that they can negotiate down their S106 obligations without public scrutiny. As a consequence, affordable housing may be reduced and the quality of the built environment may suffer.”

We know that there is a huge lack of affordable housing across the UK, so it is absolutely vital that developers are not allowed to deliberately dodge their obligations to contribute to affordable housing through viability assessments. It is equally important that they can be held accountable by local people.

National planning policy guidance states that when it comes to viability, plans should

“present visions for an area in the context of an understanding of local economic conditions and market realities.”

In many places, local economic conditions mean that some affordable housing is required. In fact, that is the case in most areas; I was trying to think of some areas where it might not be required, and it is really hard to do so because there is such a desperate need for genuinely affordable housing. I am talking about genuinely affordable housing, not the starter homes that the Government have put into this category, because £250,000 is certainly not affordable for many people in my constituency.

Photo of Roberta Blackman-Woods Roberta Blackman-Woods Shadow Minister (Housing)

In Durham city, which has a very different level of average house prices than in the county, the average house price is probably about £200,000 to £220,000.

Photo of Gavin Barwell Gavin Barwell Minister of State (Department for Communities and Local Government) (Housing, Planning and London)

In that case, I put it to the hon. Lady that constantly quoting the maximum level for starter homes across the whole of England is not a particularly accurate rendering of what the policy will mean in her area. The average house price in the city is £200,000, so the average starter home in the city will be about £160,000. That certainly would not be affordable to everybody living in the city, but it would clearly bring home ownership within the reach of a greater proportion of her constituents than currently have it.

Photo of Roberta Blackman-Woods Roberta Blackman-Woods Shadow Minister (Housing) 4:15, 27 Hydref 2016

I am not sure that that is how the policy will work in practice. I spoke to the developer of a new development in Durham where really quite attractive family homes are being built. The prices range from £220,000 or £230,000 up to £310,000. Without the developer having to change anything at all that it does to roll out the development, it will meet its requirement under the starter homes initiative and will not have to deliver any affordable housing. That is the effect of the policy in an area such as mine. Those homes would have been delivered anyway. I am not sure that the policy is adding to the quantity of genuinely affordable homes locally, which is what we really need.

The point I was making was that greater transparency about viability arrangements would help us to understand how planning gain is arrived at and give the local community, which is at times concerned about how section 106 obligations get watered down, more confidence in the planning system overall. It would help communities to accept development more readily if they understood what the costs were and how they stacked up. Sometimes, such transparency would lead to more sympathy for developers than they currently get. The public often assume that the developers are making thousands and thousands of pounds from each development, but in some areas of the country where land prices are more difficult for developers, that might not be the case at all.

The new clause could help developers by making it clear how their obligations were arrived at. It would also help the public to understand how the finances and the housing market in this country stack up. On top of that, it might create circumstances in which, when the public are concerned about a particular development, better negotiation can take place between the developer and the local community about what can be delivered and in what way. At the moment, those conversations simply do not happen because viability assessments are kept confidential.

Photo of Gavin Barwell Gavin Barwell Minister of State (Department for Communities and Local Government) (Housing, Planning and London)

As the hon. Lady said, new clause 12 relates to section 106 planning obligations and viability assessments. Planning obligations are normally agreements negotiated between the applicant and the local planning authority. They usually relate to developer contributions to infrastructure and affordable housing, and reflect policy in local plans.

The purpose of a section 106 planning obligation is to mitigate the impact of otherwise unacceptable development, to make it acceptable in planning terms. Local planning authorities may seek viability assessments in some circumstances, but Government guidance is clear that decision taking on individual applications does not normally require an assessment of viability. Developers may submit a viability assessment in support of their negotiations, if they consider that their proposed development would be rendered unviable by the extent of planning obligations sought by the local planning authority. Some authorities make such assessments publicly available, which I suggest shows the hon. Lady that there is no need to introduce legislation. Local authorities are currently perfectly free under the law to do what she wants them to do.

It is important that local authorities act in a transparent way in their decision-making processes. My main point of assurance to the hon. Lady is that there is already legislation—principally the Freedom of Information Act, but also the Environmental Information Regulations 2004—that governs the release of information. If necessary, that legislation enables people to seek a review if they are not satisfied by the response of the local authority and, ultimately, to appeal to the Information Commissioner if they remain unsatisfied.

Photo of Jim McMahon Jim McMahon Shadow Minister (Communities and Local Government) (Devolution)

If a developer does not want that information to be made public because of the commercial confidentiality of the scheme, surely it would be exempt from release under the Freedom of Information Act.

Photo of Gavin Barwell Gavin Barwell Minister of State (Department for Communities and Local Government) (Housing, Planning and London)

That is my understanding. I am not an expert on that legislation, but I understand that that would be a judgment for the Information Commissioner to make. The hon. Gentleman has put his finger on the problem.

Sometimes developers will argue that the information they provide in order to give the authority a proper insight into the viability of a development is highly commercially sensitive. Therefore, they would not want to see that released in the public domain. If we were to change the law requiring all viability assessments to become public, there is a danger that the quality of information that local authorities would receive as a result would be significantly diminished.

I hope I have provided some reassurance. I will end with two other quick thoughts. There is a read-across from the amendment to the review of the community infrastructure levy, which is currently sitting on my desk, which looks at both CIL and the interaction with section 106. There are some powerful arguments to look at reform in this area so that we are more dependent on a nationally set charge that is locally collected and spent locally and less dependent on individual section 106 contributions, where there is much more scope for the kind of long-running argument that does not necessarily work in the public interest.

Although it is slightly tangential to the amendment, because the hon. Lady was principally concerned with affordable housing I want to set her straight on the starter homes policy. We are very clear on what the policy is, which is to require developers to provide a proportion of homes—we have yet to set out what that will be—at a 20% discount to what the market price would otherwise be. The figures bandied around in London are different because the limit is different in London—this is frustrating to me—so I regularly hear from people who have had colleagues from the Labour party contact them, who say, “Who says £450,000 is affordable?” but that is the maximum limit in London. In New Addington in my constituency, homes sell at well below that, and starter homes will sell at a 20% discount to what they would otherwise sell at in New Addington.

I will not claim for one moment that starter homes will ensure that home ownership is affordable for everyone who currently cannot afford it, but there is compelling evidence—if the hon. Lady is interested, I can write to her with the figures—that it will allow a significant proportion of people who currently privately rent to access home ownership who would not otherwise do so.

Photo of Rupa Huq Rupa Huq Shadow Minister (Home Office) (Crime and Prevention)

Will the Minister update us on the Help to Buy programme? I understand that that has collapsed.

Photo of Gavin Barwell Gavin Barwell Minister of State (Department for Communities and Local Government) (Housing, Planning and London)

The hon. Lady is wrong. It has not collapsed; it continues to help large numbers of people own their own homes. There were two different Help to Buy schemes: the mortgage guarantee scheme and the equity loan scheme. The mortgage guarantee scheme, which applied to all homes, was basically a market intervention because after the great depression of 2008-09 there was a point in time when people with low deposits were not able to access mortgages. The scheme was an intervention to deal with that. The market has now adjusted and it is possible to access those kinds of mortgages.

The equity loan scheme applies when people are looking to buy a new build property. That scheme is still running because there is a strong public policy benefit. Research evidence shows that something like 40% of those purchases are homes that otherwise would not have been built. The scheme is therefore helping to drive up the supply of new housing, which ultimately is the critical issue we are debating. The publicity the hon. Lady has read—to reassure her, she is not the only person to have got the wrong end of the stick—was about a particular part of the Help to Buy scheme that is coming to an end at the end of this year. The equity loan scheme is continuing, and it will continue through to at least 2021.

I will not go much further, because this is slightly tangential to the main issue, but I want to reinforce strongly and publicly that the starter homes policy will bring home ownership within the reach of a significant number of people who would not otherwise find it affordable. It is not the only answer—other things are required, and I am happy to accept that affordable housing should be about not just helping people to afford to buy, but shared ownership and affordable homes for people to rent. We should not say that the starter homes initiative is not making a contribution to helping people afford a home of their own.

Photo of Roberta Blackman-Woods Roberta Blackman-Woods Shadow Minister (Housing)

Let me give the Minister a bit of reassurance in terms of our understanding of the starter homes initiative. Opposition Members understand what the words “up to £250,000” mean. We were not suggesting that every single home will be £250,000 under this initiative or £450,000 in London, nor were we suggesting for a minute that the initiative does not reduce the cost of home ownership for a number of people. I do not recall mentioning that.

I was making the point that in lots of our constituencies, reducing a home from £250,000 to £200,000 does not make it affordable housing for many people. Enabling developers to discharge their affordable housing obligations through this mechanism means that money might not be available for other obligations under section 106 of the 1990 Act. Because of the viability of a particular site, we would not know that, because we were not seeing the viability assessment.

Photo of Gavin Barwell Gavin Barwell Minister of State (Department for Communities and Local Government) (Housing, Planning and London)

It is important to get this on the record. The hon. Lady is quite right that if we set the requirement for starter homes too high, it could squeeze out some other important forms of housing. However, one difference that is worth teasing out is what we understand by the term “affordable housing”. It has been used traditionally in housing policy to mean council and housing association housing. When most of our constituents hear the term, they are interested in how they can be helped to afford a home of their own. To me, policy that makes home ownership affordable for people who otherwise would not have been able to afford it is not the only important type of affordable housing but is absolutely affordable housing.

Photo of Roberta Blackman-Woods Roberta Blackman-Woods Shadow Minister (Housing)

International uses of affordable housing are usually something like three times average income. In my constituency, that would make a home affordable at about £75,000 or £80,000 if it was one person, and for a couple, double that. That is by international standards. For a lot of people on average incomes, that puts starter homes out of their reach, but that was not the point I was raising.

Now it is my turn to tell the Minister that we are doing a piece of work on what affordability means in the current housing environment. When we have completed that, I will be happy to share it with him. New clause 12 seeks to make viability a bit more transparent. The Government’s own review of the NPPF and guidance came forward with the suggestion of guidance being stronger on the transparency of viability assessments. I direct the Minister to Lord Taylor’s work and ask him to ponder on it. That was, as far as I understand it, an independent review of the Government’s guidance. There is general agreement that it would be really helpful to our whole development system if viability was more transparent. On that basis, I beg to ask leave to withdraw the motion.

Clause, by leave, withdrawn.

New Clause 14