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Baroness Hamwee: I support this amendment with regard to housing provided under a Section 106 agreement. It is too late to spend too long discussing this matter; but I believe that people who have seen the limited benefits of Section 106 feel strongly about it. Planning cannot achieve projects if the resources are not

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there, and affordable housing is more an issue of resources than it is of planning. But nevertheless limited assistance can be given by the use of the section. Local plans and unitary development plans are for the medium and long term. They are subject to local consultation, local discussion and to inquiries. If the Government do not accept an amendment such as this, they will be breaking faith with local people who have contributed to the making of local plans which allow for agreements of this type.

I shall take 30 seconds to share with the Committee a recent experience of a proposal for a development by a housing association where the neighbours were concerned about certain environmental matters, principally parking, and the implications for them as neighbours. The matter was fairly marginal but what swung it and what enabled the neighbours to support the development--it was important that they supported it--was that it fulfilled a socially useful function. It was not just another piece of infill development; it was important, and they saw it as such. They were part of it. These things need to be understood. It is the experience of seeing the reaction of individuals who may not often get involved in this process that is quite telling.

We have talked tonight about the disincentive for future investment in affordable housing. If there is no amendment such as this, it will be impossible to negotiate Section 106 agreements. I cannot see that a developer would be enthusiastic seeing that he might be scuppered by the effects of the Bill.

I now turn to what is quite a long amendment, Amendment No. 68. It proposes the introduction of what I have called a protected area. In a simplified form, it follows a similar amendment proposed in another place by my honourable friend the Member for Christchurch. It proposes local discretion. It is a large topic for this late hour. However, the experience of a local housing authority which sees the effects of a specific policy in its area enables it to have direct involvement and to contribute to the protection of affordable housing. The local authority sees that it is needed because,

    "there is substantial unmet demand for affordable housing",
and difficulties in providing replacement dwellings.

The amendment attempts to balance consultation and local input against excessive administration. That was a criticism made in another place. However, the important point concerns local flexibility and the opportunity for local assessment of local needs.

Baroness Gardner of Parkes: The noble Lord, Lord Williams, said that we all know what a 106 agreement is. I am not clear. When my noble friend replies, perhaps he will clarify that point. Does such an agreement permit the building of social housing in a green belt area? My noble friend Lord Hamilton referred to a gift of land. Is a gift of land provided at a reduced price covered by a 106 agreement? I should like to be clear exactly what we are referring to.

Lord Mackay of Ardbrecknish: I have explained this point a few times in the past few moments. I do so again because I believe that it is the basis of the policy that the Government put forward. In this way it differs

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from the traditional right to buy which the Government put on to the statute books in the early 1980s and which has proved to be so successful.

As regards social landlords, when a tenant buys he has to pay the full market value less the discount. Therefore, the social landlord receives from the tenant the full market value less the discount. He then receives that discount from the government grant. The landlord association, therefore, receives the full market value. After any private loans are settled--we shall discuss this, I believe, next week--the balance will be set aside and used to buy or build other property for social renting. These replacements can be used to help other families in housing need.

Hence I do not accept the need for Amendment No. 74 in the name of the noble Lord, Lord Williams, which would allow a power to designate "other" areas as well as rural ones where the new right would not apply. I think that this amendment seeks to address concerns about areas where it would be more expensive to acquire replacement properties such as inner city areas. But in such areas the market value received by the landlord, and the funds therefore available for replacement property will also be correspondingly higher.

The exclusion proposed in Amendments Nos. 67 and 76 could apply widely in both non-exempt rural areas and urban areas. We have agreed--we shall debate the issue at the beginning of the next Committee day--to exclude small rural villages because of the particular difficulties there could be in replacing properties. The supply of land is limited, and there is little scope to buy an existing property in a small village. I have no doubt that we shall discuss that issue on the next Committee day.

However, I do not agree that in larger rural towns and villages the new right needs to be constrained in the way suggested in the two amendments. By using recycled sale proceeds, associations can build or buy replacements on the open market. The social stock therefore should not be reduced over time. The Government endorse the use of planning mechanisms and Section 106 planning agreements to assist in the provision of affordable housing. To try to help my noble friend Lady Gardner, perhaps I may explain that local authorities have wide powers to impose Section 106 agreements in both rural and urban areas. An exclusion could apply widely to the detriment of many tenants who would be deprived of the right to buy their own homes.

An exclusion would be difficult to define in law because a wide range of conditions can be secured using a Section 106 agreement relating to many other factors than affordable housing criteria. Planning guidance states that a Section 106 agreement should not normally be used to control tenure. It may commonly limit occupancy to people with a local connection. But tenure is not normally a concern of the planning process.

To return to the concern that I understand, I believe that our endorsement of the use of Section 106 planning agreements to assist in the provision of affordable

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housing is fully consistent with extending home ownership through this new right to buy and with landlords recycling the sale proceeds for the continued benefit of the local community.

Amendment No. 68 in the name of the noble Baroness would give local authorities the power to designate protected areas. Exclusions from this new right need to be as clear, straightforward and simple as possible. Tenants, landlords and landowners need to understand them clearly. Exclusions need to be fair and they need to be straightforward to administer. The amendment proposed by the noble Baroness would be a bureaucratic nightmare. As local authorities would have the power to decide on designations, there is every likelihood that designations would be applied very inconsistently across the country by different authorities. This cannot be fair to tenants. The designations will need to be continually revisited. They might be reviewed as frequently as every two years and must be reviewed at least every seven years.

We have heard much about the degree of certainty that landowners and others wish to see in exclusions. How can they be reassured by a measure which would introduce so much uncertainty? Our proposed rural designations, which we will come to, will clearly identify the areas where building or buying replacement homes can be particularly difficult. A simple guideline criterion of a population threshold is applied, with provision for special cases. It will not need continual revision. That is the best way to deal with the problem so that a uniform test is applied throughout England and a slightly different uniform test is applied in Wales. With those assurances and explanations of how we see the system operating, I hope that noble Lords and the noble Baroness will feel able to withdraw their amendments.

Baroness Hamwee: Without wanting to go through my proposed Amendment No. 68 line by line, I understand the need for certainty and to some extent for uniformity, but the problem is not uniform. I dare say we will come back to mechanisms for assessing where there should be exclusions. As I said earlier, it is not to do with excluding the right to buy so much as assuring the supply of affordable housing.

In defence of local planning authorities which negotiate Section 106 agreements, without going into the detail of how they operate, perhaps the Minister will allow me to put on record his agreement, if only by a nod, that a Section 106 agreement is an agreement. It is not something which is imposed. I am looking hopefully at him.

Lord Mackay of Ardbrecknish: A Section 106 agreement is a planning agreement. It is what it says.

Baroness Hamwee: The Minister used the term "imposed". I should not like the world to think that we were talking about impositions of such sensitive matters.

Lord Williams of Elvel: I confess that I find the Minister's response rather disappointing. I thought that the Government were open to using the planning system in order to increase the supply of affordable housing.

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That is done at the moment through the procedure of Section 106 agreements by which the use or development of land requiring a certain number of spaces for this, that or the other is authorised for building so long as there is a certain section for affordable housing.

If the Government have now decided that they do not wish to use the planning procedure in order to increase the supply of affordable housing, they ought to come up front and say so. At this hour of the night it is too late for this sort of argument. We shall return to the matter at a later stage. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

On Question, Whether Clause 16, as amended, shall stand part of the Bill?

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