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LURB in the Lords: An end of term report. The Infrastructure Levy, Hillside hope and no news on nitrates

The last few days of a Parliamentary term are always marked by deck-clearing, decision-making and high drama. The run-up to this summer recess has been no exception.

This post is not, however, about the M&S Appeal Decision, nor indeed, about what the results of the three by-elections might mean. No, instead, I am focussed solely and entirely on the Levelling-Up & Regeneration Bill's Report Stage.... and, let me tell you, there has been a lot going on.

Rebukes, apologies and cross words

It is probably safe to say that things did not get off to the smoothest start for the government. At the opening session on 11 July 2023, Baroness Hayman of Ullock and Baroness Pinnock started proceedings by issuing a rather stinging set of rebukes about the sheer number of late government amendments that had been tabled. 

Baroness Pinnock even went so far as to say:

"The Levelling-up and Regeneration Bill, which is very important legislation to be considered by this House, is already being brought into a bit of disrepute by the addition of chapters, a new section altogether and amendments. I am sure the Minister feels as uncomfortable as we do about the way that this has been dealt with, but I wish to express my concern, as did the noble Baroness, Lady Hayman of Ullock."

If recent newspaper reports are to be believed, the issue of substantive late amendments may well end up being revisited after the summer holidays.  It is, however, probably safe to say that they are already a bone of contention. 

Major Amendments to the Proposed Infrastructure Levy

On 18th July, there was a spirited debate on the Infrastructure Levy provisions in the LURB, which is well worth reading in full. It is both informative and, in parts, highly entertaining!  

Baroness Pinnock and Lord Stunell both proposed deleting the provisions in their entirety. Indeed Lord Stunell stated that:

"We have completely lost confidence in the infrastructure levy as a vehicle for positive change on the delivery of affordable homes or indeed decent infrastructure associated with new development. The infrastructure levy is beyond repair. This duck is dead."

Whilst the amendment to scrap the provisions entirely was defeated, significant changes have been made to the way the Infrastructure Levy has been designed. 

A series of government amendments to the Levy have been adopted, including changes that:

  • Allow councils to opt out of charging the Infrastructure Levy if they "consider that complying with it would make development of the authority’s area economically unviable". 
  • Clarify that the references to the funding of affordable housing in the duty to introduce the Infrastructure Levy include funding by means other than infrastructure levy (i.e. grant funding or s.106 contributions).
  • Change the duty on charging authorities from "having regard to the desirability of ensuring" that the level of affordable housing funding provided by developers is maintained to having to "seek to ensure" that level can be maintained. 
  • Allow councils to require payment of the infrastructure levy through the provision of on-site affordable housing (provided that affordable housing is “infrastructure” for the purposes of the levy).
  • Require the Secretary of State to report on the impact that the Infrastructure Levy is having on provision of Affordable Housing five years after the Levy is first charged and then require him to bring forward regulations to disapply or modify the Levy in areas where it is being found to have a negative impact; and
  • Introduce new sentencing limits in relation to criminal offences relating to council's enforcement powers for the levy.

The first of these is particularly significant. Whilst it does not go so far as to make the levy entirely optional, it does give local planning authorities significantly greater leeway not to adopt it than  was previously the case. 

The majority of the changes appear designed to bolster and protect the provision of affordable housing. Whilst this is to be welcomed, it does raise question marks over how much money will be left over for other infrastructure.

 There is only so much money that can be extracted from any development in developer contributions before it becomes unviable. The actual amount of money will vary wildly between developments, meaning that any tariff or 'standard rate' approach will inevitably need to take a cautious approach, if it isn't to prevent a large number of sites coming forward. As a result, there is a risk that the infrastructure levy could result in less money for infrastructure than the current system.

If the Levy is designed so that a large proportion of levy receipts are ringfenced for affordable housing, this will reduce the proportion available for everything else. Given the state of public funding at the moment, I am not sure that an infrastructure levy that reduces the level of available funds for education, transport or sangs would be considered much of an improvement on the current system.

Interestingly, it also looks as if the government has recognised the need for significantly more consultation on, and indeed fine-tuning of, the Infrastructure Levy before it is bought into effect. In her response to the debate Baroness Scott of Bybrook stated (on behalf of the government) that:

"That is why I can commit to the House today that the Government will undertake a further consultation on fundamental design choices before developing infrastructure levy regulations. Through further consultation and engagement, and the test-and-learn approach, which we discussed in detail in Committee, we will seek to ensure that the levy achieves its aims and that it is implemented carefully....

My noble friend Lord Lansley has tabled Amendments 311 and 312, which seek to prevent the introduction of the infrastructure levy until the Government have published proposals for its implementation. I know that my noble friend has formally responded to the recently concluded technical consultation, which we are carefully reviewing. I can confirm that we will not commence the levy provisions in Part 4 until we have responded to that further round of consultation. The regulations themselves will be consulted on in future as well. I hope my noble friend Lord Lansley is therefore content not to press his Amendments 311 and 312. I assure him that he is correct: there is scope in the Bill for us to vary the approach set out in the technical consultation, and I reiterate that, if we do that, we will be consulting further."

In short, it looks as if there may be many more Infrastructure Levy consultations to come..... 

More Hope on Hillside  

We also have a new proposed amendment from Lord Lansley, which is designed to overcome some of the problems created by the Supreme Court's Decision in Hillside towards the end of 2022. 

This is the second amendment from Lord Lansley that attempts to deal with the matter. The first did not survive the committee debate. 

The second attempt at a legislative solution reads as follows:

"217_ After Clause 104, insert the following new Clause— 

“Drop-in Permissions

 (1) The Secretary of State may, by regulations, make provision in relation to applications for planning permission in respect of land in England which is already the subject of an existing planning permission. 

(2) Regulations made under subsection (1) may enable a subsequent planning permission to vary an existing permission without rendering the existing planning permission void, if the local planning authority is satisfied that the existing planning permission is able to be completed as amended. 

(3) The power to make regulations under subsection (1) includes power to make— (a) consequential, supplementary, incidental, transitional or saving provision; (b) different provision for different purposes.” 

Whilst this amendment has made it onto the 'marshalled list', it has not yet been considered. 

If it is adopted, however, it will not be a complete solution. This iteration of the amendment simply creates a mechanism by which the Secretary of State could resolve Hillside conflicts through secondary legislation, if he wished to do so. It will not have any effect if that secondary legislation does not come forward.

Nonetheless, an amendment that provides a potential route to a statutory solution is probably better than no amendment at all....

No Nitrate Neutrality Amendments..... as yet.. 

The one set of anticipated amendments that have not yet materialised relate to the rumoured changes to override nitrate and water neutrality requirements in some parts of the country.

This is probably not all that surprising. The proposed amendments, if and when they come forward, are likely to be both complex and controversial. Not really the sort of thing you would expect to be tabled on the last day of term, and in the run-up to three separate  by-elections.

This will definitely be one to watch when we all get back in September.....

This amendment disapplies the duty in new section 204G(2) of the Planning Act 2008 where the charging authority considers that complying with it would make development of the authority’s area economically unviable. It also makes it clear that the references to the funding of affordable housing in that duty include funding by means other than infrastructure levy.

Amendments 72 to 76 agreed.”