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House of Lords

Wednesday 23 March 2016

11 am

The House observed a one-minute silence for the victims of the Brussels attacks.

Prayers—read by the Lord Bishop of Chelmsford.

Companies: Remuneration


11.08 am

Asked by Lord Brooke of Alverthorpe

To ask Her Majesty’s Government whether they have plans to legislate to introduce secret ballots for all employees to ratify decisions made at a company’s annual general meeting on the remuneration of that company’s directors and its five most highly paid employees.

The Earl of Courtown (Con): My Lords, the Government have no such plans. The remuneration of company directors is primarily a matter for the company and its shareholders. Comprehensive reforms to the reporting and governance of directors’ pay in 2013 have boosted transparency for shareholders and given them a binding vote on companies’ remuneration policies. All company directors must have regard to the interests of employees in discharging their legal duty to promote the success of the company.

Lord Brooke of Alverthorpe (Lab): My Lords, my question starts, “Does the noble Baroness know?”. However, does the noble Earl know that the UK now has very high income inequality compared with most other developed countries? Further, does he know that, even with the coming living wage increases planned over the next few years, it is possible that the wage gap will still be the same by 2020 as it is now and as it was in 2010? Is it not time, after a decade of stagnation, that we had some thoughts about how we can try to bring about a narrowing of that gap? Will the Minister please go back—or at least give an indication that he will go back—and come forward with some ideas about how we will narrow it?

The Earl of Courtown: I thank the noble Lord for his question. He raised a number of points, including the national living wage, which is about to come into force. We must also remember that the national minimum wage has had one of the biggest increases in its history. We take into account all the matters that he raised. He referred also to employee engagement and how important that is in the workplace.

Lord Lea of Crondall (Lab): My Lords, is the Minister aware that, at a time of fast economic growth for several decades, the ratio of remuneration from the top to the bottom in companies—as a member of

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the Royal Commission on the Distribution of Income and Wealth I remember the numbers going back to the start of the 20th century—came down from 100:1, to 90:1, to 80:1, to 70:1, winding up at 15:1 or something like that? Would he not agree with the Labour Party’s manifesto that there should at least be workers’ representatives on boards’ remuneration committees?

The Earl of Courtown: At least the noble Lord, Lord Lea of Crondall, has asked me a question that I can answer. The answer is, of course, no. My right honourable friend the Chancellor of Exchequer has been working throughout his period as Chancellor to reduce inequality.

Noble Lords: Oh!

The Earl of Courtown: My Lords, there is always more that can be done and we hope that, with the policies we have introduced, inequality will reduce.

Lord Robathan (Con): My Lords, does my noble friend think that many people in the country agreed with that proposal in the Labour Party manifesto last May?

The Earl of Courtown: We all remember what happened at the general election in May. I, by the way, was in Kuala Lumpur at the time. I will not bore noble Lords with what I was doing there, but I do, of course, agree with my noble friend.

Lord Stevenson of Balmacara (Lab): Let us get back to the Question. This raises important issues about transparency and equity. In 1980, to back up what my noble friend was saying, the median pay of directors of FTSE companies was £63,000 and the ratio to the average wage was 11:1. In 2013 that ratio had risen to 130:1 and median board pay is now £513,000. You have tried transparency, it does not work. What plans have the Government really got to regulate those who abuse their position by taking excessive pay and whose warped judgments prioritise short-term gains instead of long-term growth?

The Earl of Courtown: My Lords, regulation of pay throughout the banking sector, the high pay and the differences between all these subjects—I am sorry, I have lost track. Basically, it is important that there is equality in pay, and regulation of various sectors is so important in this area. I will write to the noble Lord. I apologise for that answer.

Lord Tyler (LD): My Lords, in the interest of the transparency and effective democracy to which the Government constantly refer, will the noble Earl ensure that, in all private organisations, when it comes to the forthcoming discussions about party funding, no individuals will find themselves contributing to the funds of a political party they do not support?

The Earl of Courtown: The noble Lord is quite right. I agree.

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Baroness McIntosh of Hudnall (Lab): My Lords, in an earlier answer the Minister made a somewhat surprising statement to the effect that his right honourable friend the Chancellor had been working throughout his tenure to reduce inequality. Can he tell the House how things would have been different if he had not?

The Earl of Courtown: Inequality is reducing, my Lords. As I said earlier, we are working hard on the national minimum wage increases, which are the highest ever, and we have the national living wage coming in in April.

Lord Roberts of Llandudno (LD):What conversations do the Government have with the Welsh Assembly? GDP in Wales is only 67% of that throughout the rest of the United Kingdom.

The Earl of Courtown: My Lords, I am glad that the noble Lord, Lord Roberts, mentioned the situation relating to Wales. There are always continuing relationships between the Assembly in Wales and the department here in London.

Lord Wallace of Saltaire (LD): My Lords, given that fewer than one in four eligible voters voted for the Conservatives in the election, does the noble Earl have much confidence that the majority of voters also approved of the Conservative manifesto’s proposals?

The Earl of Courtown: My Lords, I did not quite catch the last bit but I caught the first bit. An awful lot more voted for the Conservatives than they did for the Liberal Democrats.

Property: Shared Ownership


11.16 am

Asked by Baroness Watkins of Tavistock

To ask Her Majesty’s Government whether, under their shared ownership scheme, a property owner can let out a room to another person, and if not, why not.

Viscount Younger of Leckie (Con): My Lords, shared ownership has an important role to play in helping those who aspire to home ownership but may be otherwise unable to afford it. Grant-funded shared-ownership leases do not allow subletting, other than in exceptional circumstances, to prevent any use for commercial gain and to ensure that affordable homes are there for those who genuinely need them. However, individual shared owners are still able to take in a paying guest or lodger.

Baroness Watkins of Tavistock (CB): My Lords, I thank the Minister for his Answer but would like some further clarification on why the subletting cannot be done up to a maximum of £7,000 a year. We have young people in London working in the public sector

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who are totally unable to afford the overheads of facility costs and council tax but who are keen to get into shared ownership.

Viscount Younger of Leckie: Shared-ownership leases prohibit subletting by the leaseholder, as mentioned earlier, to protect public funds and to ensure that applicants are not entering shared ownership for commercial gain. Landlords can make an exception in exceptional circumstances and they have to consider such requests on a case-by-case basis.

Baroness Maddock (LD): My Lords, can the Minister tell us what proportion of homes in Great Britain today are under shared ownership? I wonder if the Government are doing any research to find out how successful this sector is. I know, for example, that when you want to move it is no simple matter. The legal attitudes to this are really quite difficult. Can the Minister inform us what research the Government are doing into this?

Viscount Younger of Leckie: Yes, indeed. I will have to write to the noble Baroness with the actual statistics but we are looking at this as one of several serious options for ensuring that young people get a hand on the housing ladder. The noble Baroness may know that a shared owner can come in and purchase a share of between 25% and 75%. We are following up on the current statistics but this is a future policy that we are working on.

Baroness Farrington of Ribbleton (Lab): My Lords, if the Minister cannot tell me now, will he write to me with information about the current rate of shared ownership in London and the south-east and the Government’s prediction of what it will be in the light of their housing policy? Is the Minister aware that many people, such as nurses and police officers—lots of people working in the public sector—despair of being able to take jobs that are available in London, and that staff recruitment is very weak?

Viscount Younger of Leckie: Indeed, this is the very thinking behind our policy, which is to enable those who do not earn too much to get a hand on the housing ladder by buying a share. This would include the very people who the noble Baroness has mentioned, such as teachers and particularly those who work in the very important healthcare and NHS sector. It is exactly what the policy is about. It is obviously more expensive in London—we have had many discussions on that in the housing Bill—but we believe that it is possible. If someone bought a 25% share of a two-bedroom house in London the deposit they would put down would be £3,800, which I understand could still be quite high, but is possible.

Baroness Gardner of Parkes (Con): Will the Minister clarify the position with regard to the actual term “lodger”? Even the Revenue now has a special provision and has increased the amount you can have if you have a lodger. I would have thought it logical that everyone would want people to be able to afford these

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properties. Can he therefore explain the position, and whether the point to which he has just referred will be amendable in the housing Bill?

Viscount Younger of Leckie: I mentioned that people who take a share in a house in a shared ownership scheme can take in a lodger, but I will answer the noble Baroness’s question by saying that there is no statutory definition of a lodger. The term is known in case law, where the test as to whether someone is a lodger or a subtenant is determined by the degree of control retained by the householder over let rooms.

Lord Davies of Oldham (Lab): My Lords, does the Minister appreciate the House’s understanding of the care with which he has approached this issue of home ownership and the question of shared space, and how it contrasts with the way in which the Government introduced the bedroom tax?

Viscount Younger of Leckie: I think the noble Lord will know that the Government’s main aim is to increase the supply of houses across all tenures. We are focusing today on one of many aspects of our policy, which is to ensure that more people, particularly young people, are able to get on to the housing ladder. It is an urgent and important part of what we are doing.

Lord Campbell-Savours (Lab): My Lords, in the rent-a-room scheme, to which the Minister referred earlier, there is a cap. Is that cap costing the Revenue very much; and if so, how much is it actually costing?

Viscount Younger of Leckie: I do not have a figure for the cost, but the noble Lord might like to be reminded that the income cap for this shared ownership policy has gone up from £60,000 to £80,000 in England, and I am pleased to say that it has gone up to £90,000 in London. That means that we are allowing 175,000 more households to have access to shared ownership.

Lord Bird (CB): My Lords, is the fact that London houses are going up in price by £500 a day, according to the January figures, likely to have an effect on how many people can afford even a shared home?

Viscount Younger of Leckie: Obviously when prices go up it has an effect. However, we have put a lot of thought and research into this particular policy, in conjunction with other policies, and we believe that it is affordable. In London, for example, we look at a two-bed house costing £275,000, and we believe that the figures show this to be affordable.

Palestinian Authority Television


11.23 am

Asked by Lord Polak

To ask Her Majesty’s Government what representations they have made to the Palestinian Authority following the broadcast of programmes on official Palestinian Authority television encouraging violence against Israeli citizens.

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Lord Polak (Con): I beg leave to ask the Question standing in my name on the Order Paper and give notice to the House of my non-financial registered interest as president of CFI.

The Minister of State, Foreign and Commonwealth Office (Baroness Anelay of St Johns) (Con): My Lords, we regularly raise incitement with the Palestinian Authority. The Minister for the Middle East, Tobias Ellwood, did so during his visit to the region in February. The UK’s consul-general to Jerusalem last discussed incitement with President Abbas on 17 March, including our concerns about television broadcasts. We also raise incitement with Israel. We encourage the revival of a tripartite committee on incitement to address precisely these issues.

Lord Polak: I thank the Minister for her Answer. Since September 2015, ironically, 34 Israelis have been killed in terror attacks and there have been 206 stabbings, 83 shootings and 42 car rammings. Is the Minister aware that only three weeks ago—on 1 March—on a programme on the official PATV called “Children’s Talk”, a young girl recited a poem which included the line: “To war, that will smash the oppressor and destroy the Zionist soul”? Can the Minister be certain that this sort of appalling incitement is not supported directly or indirectly by the British taxpayer? On the day after the atrocities and shocking acts in Brussels, where another 34 innocent lives were snuffed out, will the Minister join me in condemning incitement and terror, wherever it occurs?

Baroness Anelay of St Johns: My Lords, I do indeed join my noble friend in condemning incitement and terrorism wherever it occurs. It was a mark of respect from this House that at 11 am today we had one minute’s silence in memory of the appalling events with the murder of those in Brussels. I know the Prime Minister has said that we will do all we can to help there. I also note that both President Abbas and Prime Minister Netanyahu expressed their opposition to the terrorism that had taken place in Brussels.

Lord Winston (Lab): My Lords—

Baroness Anelay of St Johns: My Lords, if I may just answer the mainstay of my noble friend’s question, he asked about expenditure by the British taxpayer. No expenditure by the British taxpayer supports any form of incitement or terrorism, either in Israel or in the Occupied Palestinian Territories. We support projects that support peace, such as the project by the NGO Kids Creating Peace, which brings together young Israelis and Palestinians to learn why peace works.

Lord Winston: My Lords—

Lord Wright of Richmond (CB): My Lords—

Lord Palmer of Childs Hill (LD): My Lords—

Lord Davies of Stamford (Lab): My Lords—

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Lord Anderson of Swansea (Lab): My Lords—

The Lord Privy Seal (Baroness Stowell of Beeston) (Con): My Lords, we have plenty of time to go around the House. The House was not indicating who it wanted to hear from next but I suggest that we go to the Labour Benches, if among them they could decide who they would like to go first.

Lord Winston: My Lords, is the Minister aware that I have a film clip on my computer—I am happy to show it to her—which shows a little girl aged three-and-a-half saying on Saudi television that she hates Jews because they are apes and monkeys, and this is what is repeated in the Koran? Then, straight to camera, the announcer says, “Is Allah to be praised that, Bismillah, this little girl, has such supporters after her?”. This was broadcast across a whole range of Arab countries. Will the Minister perhaps join me in condemning this kind of broadcast quite publicly? I am happy to send her the film.

Baroness Anelay of St Johns: My Lords, noble Lords around the House have made me aware of matters of incitement that have been broadcast, not only on television and media outside the Occupied Territories and Israel but within both. We give no equivalence to incitement, whether it is against those who are Israelis or those who are in the Occupied Palestinian Territories. What we say is that incitement is wrong.

Lord Wright of Richmond: My Lords, I am reluctant to enter into a tit-for-tat argument but is the Minister aware of a devastating report by two Israeli organisations into the recent abuse and torture of Palestinian prisoners at the Shikma interrogation facility in Ashkelon? If so, will the Government consider joining our European partners in making appropriate representations to the Israeli Government?

Baroness Anelay of St Johns: My Lords, our diplomats in Israel make regular representations of concern about events there. As I have already said, we draw no equivalence with regard to incitement and activity. We say that it is important for those who want to achieve peace to ensure that they work together. It is only by negotiating a peace that we can achieve it; incitement is an enemy of peace.

Lord Palmer of Childs Hill: My Lords, the Minister has mentioned the consul-general in east Jerusalem and our diplomats there. Can she tell the House what representations have been or will be made to the consul-general following the International Women’s Day message on the official Palestinian Authority TV channel on 7 March this year, which urged Palestinian women to remember the terrorist Dalal Mughrabi who led the lethal coastal massacre which killed 38 Israelis, including 13 children?

Baroness Anelay of St Johns: My Lords, I am able to give a little detail about the most recent contacts, which might help the noble Lord. In January, Her Majesty’s consul-general in Jerusalem met Fatah Central Committee member Jibril Rajoub, who had called the

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recent attacks there “heroic”. Our consul-general also met the Minister of Health, Jawad Awwad. The ministry had issued a statement praising the Tel Aviv New Year’s Day shooter, Nashat Melhem.

As for television, the director of pro-Israeli NGO Palestinian Media Watch describes decades-long propaganda campaigns on PA-sponsored children’s programmes which depict Jews and Israelis as enemies of God. Her Majesty’s consul-general in Jerusalem has raised this with the Palestinian Authority as part of broader lobbying on incitement since this Question was tabled. I thought it would be helpful to update the noble Lord on that.

Lord Davies of Stamford (Lab): My Lords, raising the matter of incitement, to use the noble Baroness’s word, does not seem to have had much effect. Will she remind the House of the amount of aid that we give the Palestinian Authority, both directly and via EU projects? Will she consider saying clearly to the Palestinian Authority that it is quite unacceptable for it to be taking British public money on the one hand and, on the other, using its own resources to subsidise networks that produce the propaganda in favour of terrorism that we have heard quoted in the House today?

Baroness Anelay of St Johns: My Lords, the noble Lord is correct to point out that, through DfID, we provide significant humanitarian aid to the people who are suffering in Gaza. It is conditional on the basis that it only goes to people in need. The Palestinian Authority should make best efforts to resume control of Gaza and re-engage in discussions with Israel about how peace may be achieved.

Lord Collins of Highbury (Lab): My Lords, there is no justification for terrorism or for the actions that we saw yesterday. We unequivocally condemn them. The Minister is absolutely right. Our focus is on keeping the two-state solution and hopes for peace alive. We need to invest in interfaith, intercommunity activity. Will she commit to doing more of this because, at the moment, it is extremely limited?

Baroness Anelay of St Johns: My Lords, I whole- heartedly agree with the noble Lord. During the early part of this year, we reopened bids for the Magna Carta Fund for Human Rights and Democracy, which is FCO-based. It has been doubled this year to its highest ever level. We will welcome bids if they qualify for support. The noble Lord is right; we need to do more to help.

Army: Helicopter Pilots


11.32 am

Asked by Lord Trefgarne

To ask Her Majesty’s Government how many army helicopter pilots are being required to repay wages apparently paid in error; and how many have resigned as a result.

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The Minister of State, Ministry of Defence (Earl Howe) (Con): My Lords, in 2012, the MoD discovered that a number of Army pilots were being overpaid as the result of an inconsistent interpretation of policy over a prolonged period. That resulted in 146 personnel receiving incorrect pay. In accordance with standard government practice, arrangements have been made to ensure personnel now receive the correct pay and recovery action for overpayments has been initiated. Since notification of the recovery action, we are unaware of any linked resignations.

Lord Trefgarne (Con): My Lords, I am grateful to my noble friend for that reply. In view of the fact that, in public at least, some 200 personnel have apparently been involved in this matter, what steps are being taken to maintain the operational effectiveness of the Army Air Corps, both for the present and in the future?

Earl Howe: My Lords, the Army has done several things. Most importantly, it has implemented a comprehensive manning strategy for building and sustaining the Army Air Corps. There is also now a financial retention incentive for Army Air Corps pilots which has resulted in an 81% take-up rate, including from personnel affected by the recovery of previous overpayments. In addition, a more flexible—and therefore more attractive—career as an aviation specialist will be available, including recruiting some direct entry, senior other ranks aircrew and improving the return on initial training investment.

Lord West of Spithead (Lab): First, and less importantly, is the noble Earl aware that admirals have been overpaid? That is an interesting point. More importantly, will this impact at all on the increased number of naval pilots that we need to recruit and train for the new Sea Lightning aircraft that are coming in? We have been promised that they will be ordered, and we will need those pilots, so this must not impact on recruiting and training.

Earl Howe: Let me first make it clear that the overpayment referred to in the Question has not affected Royal Navy air crew, nor indeed RAF pilots. I can give the noble Lord the reassurance that he seeks, because the action now being taken is in the wake of mistakes made in the past. The system is now working correctly.

Lord Dannatt (CB): My Lords, I served as Colonel Commandant of the Army Air Corps from 2004 to 2009, and many of the pilots involved came under my control and command. Will the Minister accept that, although remedial measures are being taken, stories such as the one that has given rise to the Question asked by the noble Lord, Lord Trefgarne, are enormously damaging to morale? Will the Minister commit to publicly refuting these stories and getting a much better message out there? In the context of the regular Army having been reduced from 102,000 to 82,000 in the lifetime of the coalition and Conservative Governments, and now having fallen to a strength of

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around 79,000, such damaging stories are extraordinarily destructive of morale and do not help the safety and security of our country.

Earl Howe: I can only agree with my noble friend—these stories are damaging. At the same time, the Army is very aware of the need to retain and, indeed, recruit skilled personnel of this level. It has been careful to adopt a case-by-case approach when overpayments have occurred, taking account of people’s individual circumstances when they are brought to its attention; certainly, that includes hardship where necessary. What we are now hearing in general from Army pilots is that they like what they see in the package available to them, in terms not only of pay but how their skills are being used. Many are signing up now for five years.

Lord Touhig (Lab): My Lords, when I served as a Wales Office Minister, officials came in to tell me that a Harrier jet had crashed into the sea off west Wales— a very expensive piece of kit was lost but a more expensive pilot was saved. The point is that we invested more in the pilot than in the plane. I cannot for the life of me understand why the Government would be prepared to lose some of our most experienced and expensively trained Army helicopter pilots over this overpayment issue. I hear what the Minister has said and hope that the Government will use some common sense and, if necessary, write off this debt rather than lose these very skilled servicemen—or perhaps the Government will prove that my late mother’s advice to me when I was young was correct. She told me that in life, I would find that sense was not that common.

Earl Howe: My Lords, I take the noble Lord’s point about common sense. At the same time, he will realise that this is public money; it cannot simply be written off in bulk. Having said that, each debt will be dealt with individually and recovered over a long period. Recovery from serving personnel commenced in January, less those that have submitted an objection to recovery, and we have not seen anyone cite this issue as the reason for leaving the Army Air Corps since that recovery process started.

Baroness Jolly (LD): My Lords, we are where we are as a result of human error. In just over a week, the new employment model commences for the Armed Forces. Why should we be confident that the transfer will be error free?

Earl Howe: My Lords, the pay system that is now in place is mature, and people have got used to using it. There is far less scope for error, although I cannot obviously give a guarantee that no errors will ever occur. More generally, running in parallel to this is a five-year tri-service review of flying retention pay, which is currently being staffed and should put in place a sustainable and more retention-positive remunerative package for the air crew of all three armed services.

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Enterprise and Regulatory Reform Act 2013 (Consequential Amendments) (Bankruptcy) and the Small Business, Enterprise and Employment Act 2015 (Consequential Amendments) Regulations 2016

Conduct of Employment Agencies and Employment Businesses (Amendment) Regulations 2016

Motions to Approve

11.40 am

Moved by Baroness Neville-Rolfe

That the draft regulations laid before the House on 22 and 25 February be approved. Considered in Grand Committee on 22 March.

The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills and Department for Culture, Media and Sport (Baroness Neville-Rolfe) (Con): My Lords, I take this opportunity to apologise profoundly to the House for missing the Question asked by the noble Lord, Lord Brooke of Alverthorpe, and to thank my noble friend Lord Courtown for answering in my stead. I would be very happy to meet the noble Lord, Lord Brooke, to discuss the issues, if that would be helpful. I beg to move.

Motions agreed.

Environmental Permitting (England and Wales) (Amendment) (No. 2) Regulations 2016

Motion to Approve

11.40 am

Moved by Lord Gardiner of Kimble

That the draft regulations laid before the House on 2 February be approved. Considered in Grand Committee on 22 March.

Motion agreed.

Third Parties (Rights against Insurers) Regulations 2016

Motion to Approve

11.40 am

Moved by Baroness Evans of Bowes Park

That the draft regulations laid before the House on 25 February be approved. Considered in Grand Committee on 22 March.

Motion agreed.

NHS (Charitable Trusts Etc) Bill

Third Reading

11.40 am

Bill passed.

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Housing and Planning Bill

Housing and Planning Bill

Committee (9th Day)

11.41 am

Relevant document: 20thand 21st Reports from the Delegated Powers Committee

Amendment 101BB

Moved by Lord Dubs

101BB: After Clause 141, insert the following new Clause —

“Code of practice for subterranean development works

(1) A local planning authority may promulgate a code of practice on the excavation and construction of a subterranean development with a view to lessening the adverse impact of the excavation and construction on adjacent properties and their owners and occupiers and on the wider neighbourhood.

(2) The code may include, but need not be limited to, the provisions listed in Schedule (provisions in local authority code of practice for subterranean development).

(3) Local planning authorities shall take account of any guidance issued by the Secretary of State in drawing up such a code of practice.

(4) If a local planning authority has promulgated such a code, it may make the granting of planning consent for a subterranean development conditional on the developer undertaking to abide by the code or specified elements of it.”

Lord Dubs (Lab): My Lords, I shall speak also to the other amendments in this group. If I can make a slightly irrelevant comment, if the EU working time directive were to apply to Ministers in this House, the two Ministers who are dealing with this Bill might be better treated than they are now. That is a dig at the Chief Whip.

There cannot be many occasions when an amendment commands the support of all parties in this House and of most Members of Parliament, would command widespread support from many parts of London and possibly other parts of the country where people are affected and which, were the Minister to agree to the amendment or something like it, would mean that she would be serenaded in the headlines of the Evening Standard. That is a pretty good win-win, and there cannot be many of those around, so later on I will give the Minister a chance to say that she accepts this amendment.

If I were a Minister, I would not understand why officials were advising me not to accept the amendment because there is nothing wrong with it. It is absolutely right in terms of local democracy for local people to have a say and right in terms of good governance in the benefits to London and other parts of the country. It is a total win-win for the Government. I should have kept this amendment until there was a Labour Government, and they could have benefited from it, but I have generously given it to the Minister today.

Given the widespread support, outside people have got on to me. I pay particular tribute to the Ladbroke Association and its chair Sophia Lambert who has been extremely helpful and has given me and other people a lot of advice. The amendments in this group

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are actually a complete Bill. If the Minister were to adopt them, or much of them, her officials would have been saved a great of work in drafting something. Not only has there been widespread support, but there have been many previous instances in this House when Members have put forward legislation with similar proposals. I am thinking of the noble Baroness, Lady Gardner of Parkes, Lord Jenkin of Roding, the noble Lord, Lord Selsdon and the noble Lord, Lord Berkeley, who have all tabled amendments to Bills. The noble Lord, Lord Selsdon, has also tabled an excellent Bill himself with the help of surveyors from the Pyramus and Thisbe Club. In the Commons, several MPs have put this forward as well, including Karen Buck, MP for Westminster North. Essentially, this proposal goes across parties; I hope that the Government will feel able to support it.

11.45 am

The public are very much concerned. One has only to indicate that one is interested in this issue to be given an avalanche of comments of experiences, certainly in many parts of London. People have told me that they have suffered years of noise and distress; people working at night cannot sleep in the day if a basement is being excavated; there is dust and vibration, and people who work from home say that they cannot carry on and have to find somewhere else to work. We are talking not just about Kensington, Chelsea and Westminster but about Wandsworth, Southwark, Camden and Richmond. If these basements have not come to the local area where any of your Lordships live, they are coming. I guarantee it, so noble Lords should not just say, “This is not for me; this is for those people in Kensington”—not at all.

I have learned a great deal about planning law in recent weeks, because I have a Private Member’s Bill on a similar topic, which is sitting somewhere waiting to be debated. I am conscious that I have a lot to learn, and there are in this House many real experts. I will make some brief introductory comments. There are two sorts of developments in basements. Where they extend beyond the footprint of the house, planning permission is required; if the basement is within the footprint of the house, it is classed as permitted development and planning permission is not necessary. By complete coincidence as I was coming in, I bumped into the leader of Camden Council and asked her what her council thought. She said that it would welcome a change in the law because it cannot do what it wants to do, as it is not permitted by the present legislative framework.

Under the Town and Country Planning Act 1990, all development needs planning permission. However, Section 59 of the Act allows the Secretary of State to make an order exempting certain categories of development from the requirement of planning permission. The Secretary of State at the time duly made an order called the general permitted development order. One of the categories of development covered by the order at present is certain types of extensions to residential properties. Although we think that it was never intended, the definition of “extension” in the order has been interpreted as including basement developments under the footprint of the house. There

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are legal doubts about this interpretation and I have talked to one resident of an inner London borough— a QC, so not a person to be trifled with—who is contemplating testing this point through judicial review, something that has not been done before. On previous occasions, inspectors have been asked to comment, but he has said to me that he was thinking of taking this to judicial review because there were serious doubts as to whether the interpretation was correct.

The right course, and the easiest one, would be for the Minister to amend the GPDO to exclude all basements. It could be done at the stroke of a ministerial pen. It would save the cost of the alternative that the Minister keeps suggesting, which is to use something called the Article 4 procedure. That procedure is cumbersome, slow and costly and would have to be done local authority by local authority. It requires 12 months’ notice, meaning that people can then appeal and claim damages if they are caught with a development in train before the Article 4 procedure had its 12 months to come into effect. Amending the GPDO, however, would be simple. It would save bureaucracy, time and money and achieve part of the end. If the Minister were to take the GPDO route, there would still be a need for this Bill, because, as things stand, local authorities are reluctant to refuse planning permission because of the cost to them of appeals. Time and time again, we hear of local authorities saying, “Well, we’re not challenging this because we can’t afford the cost of the appeal”, and I understand that. This is one reason why local authorities are still granting planning permission, where logic would suggest otherwise. One has only to read the Evening Standard or Metro to see, week after week, examples of horrific large developments. They are fine for the owner but horrific for anyone who lives not too far away. I believe that my amendments would give local authorities the powers that they need.

If the Minister were to hint to me now that she is prepared to accept the principle of my amendments, I will not bore or take up the time of the Committee by going through them in detail. If she were to say that she agrees in principle and that something will be brought forward on Report, I shall sit down. I know that I have bounced her into this but it seems the sensible thing to do. There is no reason on earth why the Minister should not accept a change in the planning laws, and she would be very popular if she did. However, this is not about popularity; it is about good local government. Residents in many parts of London are entitled to peace and quiet and to not suffer disturbance. I shall go on but if at some point the Minister gets a note saying “Accept this”, I shall of course sit down.

The first amendment sets out a code of practice for subterranean development works. It would introduce some enforceable rules so that local authorities could ensure that developers digging basements did so in a way least likely to cause damage and annoyance to neighbours—that annoyance can be pretty awful. In the past, the Minister has claimed that local authorities already have adequate powers. She said that in an earlier debate and she said it to me in a letter. She said that they could, for instance, impose planning conditions to control construction noise. I differ from that view following advice that I have had. Planning conditions are normally used only to deal with matters that

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cannot be dealt with under other legislation. Because noise is normally dealt with under control of pollution legislation, many authorities fear that such a condition would be struck down. So it is not easy to enforce noise standards through existing legislation that requires local authorities to prosecute alleged offenders. A code of practice would be much simpler, and what is required is something that developers would automatically be bound by.

My next amendment says that there should be a presumption against subterranean development. Very few basements built in London bring any benefits to the local community. They may be fine for the owners, who will have pool rooms, swimming pools, banqueting halls and all that sort of stuff, but they do not provide any housing benefit. They provide recreational facilities for the occupants—we have heard of gyms, temperature-controlled wine cellars and so on—and they bring enormous disbenefits to the local community, especially during the construction period, which can be up to three years, but often for much longer.

We need to argue that the disadvantages are noise, disturbance, disposing of spoil, and damage to neighbouring houses when a basement is built under a terraced property—something that can take years to manifest, long after the party wall Act has ceased to provide any remedy. Sometimes there is a need for pumps to pump water from basements; there is increased energy consumption from having air-conditioned basements; and there is the possibility that 10 or 20 years down the line the underground structures will be degraded to such an extent that they will need to be rebuilt, which I understand is extremely difficult to do. Those are the arguments.

Then there is a need to give notice to adjoining owners. The party wall Act is not really designed to deal with this phenomenon; it deals only with neighbouring properties that are a short distance away, whereas there can be damage to properties that are further away. The Act deals only with properties within six metres of the excavation and I think that the distance should be greater.

I am covering these points very briefly. I do not want to go through all the details or the Committee will be fed up with me.

There is also a need to deal with expenses and losses. Developers can go bankrupt, which can leave neighbouring owners out of pocket. They can sometimes be difficult to pursue through the courts, and sometimes in the case of subterranean developments the developer is a shadowy company based in the Cayman Islands or wherever. It is essential to ensure that funds for paying for loss and damage, which in the worst case can amount to many hundreds of thousands of pounds, are secured in advance. The party wall Act provides some security but only for the expense of completing work on a building, not for repaying damage to neighbours’ premises or compensating them for the loss.

Then there are the problems that affect people who are living in a property close to a basement that is being excavated. These days many people work from home. People have written to me to say that they have had to leave their homes because they could not go on working while the work was happening; we are talking

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about a period of two years. People involved in music have found that the noise that affects their ability. Some people have had to rent offices elsewhere simply because they could not go on working at home.

At the moment surveyors are unwilling to award such costs because basement developments are sometimes or frequently combined with other works on the site, outside the scope of the party wall Act. People may be building extensions, and these are not the subject of my amendments. It is then very difficult to determine how much disturbance is caused by other works and how much by basement works. The result is that neighbours end up with no compensation at all, although they have been deprived of a working environment. There are also medical issues for vulnerable people.

Finally, Amendment 101BH contains a new schedule that has provisions for a local authority code of practice for subterranean development. In the interests of time I have left out a lot of the points that I was ready to make, but I repeat that the Minister’s suggestion on Article 4 is just not good enough. It does not deal with the need, and there are other and better ways of doing this. If the Minister is happy to say that she accepts the principle here, I will withdraw the amendment. We have time on Report to do something positive, so I urge the Minister to accept the principle of the amendment. I beg to move.

Baroness Gardner of Parkes (Con): My Lords, as the noble Lord, Lord Dubs, said, I discussed this at Second Reading and his amendments here are a great improvement on what I have commented on before, but there are still one or two things that certainly need to be ironed out before Report.

In his first amendment, Amendment 101BB, there is no mention anywhere—unless he is planning to put in a code of practice—that there should be no weekend work in these places. Without doubt people require a weekend to recover from a heavy week’s work. Many areas allow work only from 7 am to 1 pm on a Saturday, but even that should not be permitted, as it will really cut into your one quiet time of the week.

On another important point—and having looked at every detail of these words I am not sure whether I have missed the point—there should be no work permitted before the granting of permission. Often, neighbours where I lived told me that they woke up to find someone breaking through their wall. That is not something that you would want or expect.

I have one real objection to the noble Lord’s second amendment, Amendment 101BC. That is to the word “presumption” against subterranean development. I do not like a presumption about anything. Earlier the noble Lord, Lord Dubs, commented on whether a family felt that it needed something more, which was a very subjective assessment. Fortunately he has now removed this and made it much more objective. That is good. But I do not like “presumption” and do not want to see it. It is far better for things to be either in law or not in law, but just to be presuming that something is there worries me.

“Notice to adjoining owners” in Amendment 101BD is interesting, but I move on to Amendment 101BE. That is about the surveyors holding a sum. I thoroughly approve of that. When work went on behind me before

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I moved house that is exactly what happened. In fact, there was no need whatever to draw on the amount, because the work all went quite well, but it is important that it does go well; the security of having a deposit held is important.

I recall cases, one in Montpelier Square and another in St John’s Wood, where people went bankrupt, leaving a giant hole in the ground, which filled with water and turned into a disastrous pool under the house. Because the people had gone bankrupt, no one ended up with any liability for it at all. It is very important to determine a sum to be held. I was surprised at the amount required to be held, for what was only a single basement going in near me, but it was right that it was a large amount, because it should relate to the area and the cost of the works that would have to be done to make the place liveable again.

I do not know whether more could be done to deal with bankruptcy cases, to help people to get out of that hole, but that could be looked at.


Lord Horam (Con): My Lords, the noble Lord, Lord Dubs, is definitely on to something here. What one reads about in the Evening Standardand elsewhere being done to basements is amazing. I do not know whether anyone else here watches the “Grand Designs” programme, but being an addict of property porn I watch it from time to time. Recently, there was an example of a small, typical mews house in a mews area of London, where the owner decided that he wanted to have a ballroom in the basement and, underneath that, it could be collapsed into a swimming pool. This was constructed, after immense difficulty affecting the local inhabitants. Unfortunately, a subterranean stream was discovered when they dug down into the basement, which flooded the whole area. That is the sort of thing can happen as a result of the megalomania, frankly, of some people. One billionaire in London wanted to show all his 24 Jaguars in an exhibition space in his basement. This is absurd and should not be allowed; it will have consequences.

Secondly, the noble Lord is absolutely right: party wall agreements do not protect people at present. I live in Hammersmith and Fulham, and I know from personal example that the noise is horrendous. My noble friend Lady Gardner is quite right: you want some relief at weekends from the noise. A friend of mine has had to vacate her property in Piccadilly, where someone is constructing a huge bar and God knows what in the basement, to live somewhere else at her own expense, because she cannot live with the noise at night: it is horrendous. That is all-night work, never mind at weekends.

So London is experiencing a real problem at the moment, and not just in rich areas. As a former MP for Orpington, I could give examples of what is happening there. Although I understand that the amendments may not be perfect, as my noble friend Lady Gardner said, I hope that the Government will be sympathetic. It is a widespread problem in London, and the Government should look at it with great care.

Lord True (Con): My Lords, I apologise to the House, and in particular to the noble Lord, Lord Dubs, with whom I have had the pleasure of discussing

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the issue, for arriving slightly late. I was actually delayed on the District line; I hope that it was not by some underground development in South Kensington, where we were held.

I was at one point tempted to sign the noble Lord’s amendment because, like my noble friend, I think that he is very much on to something. Before my noble friend on the Front Bench was a Minister, and over several years, there have been talks between local authorities, particularly in London, and the department. There have been various efforts—my noble friend Lord Selsdon was trying to get something moving for a time—to propel a response from the Government. Time and again, we are told that Article 4 directions are the answer. We spoke a little about Article 4 directions last night. I marvel to see my noble friend here on the Front Bench after her efforts after midnight last night. Article 4 directions are not the whole answer here. It is the strong view of local authority leaders in London, across party, that there needs to be a statutory response here. The fact is that in many cases one is dealing with extremely wealthy people who will stop at nothing to push through. It is nothing to them to spend thousands of hours and tens and hundreds and millions of pounds in pushing these things. Frankly, communities need defence here and I think some statutory response is needed at the end of the day. I look forward to hearing what my noble friend has to say and I congratulate the noble Lord, Lord Dubs, on and thank him for bringing this issue before Parliament.

Lord Beecham (Lab): My Lords, I endorse what the noble Lord said about my noble friend, who managed to survive yesterday’s long sitting. He hoped to get on before midnight, but unfortunately that was not possible, or perhaps fortunately because otherwise we might have been there until 2 am instead of something like a quarter to one. My noble friend has devoted a lot of time and energy to what is clearly a pressing issue.

There seems to have been an outbreak of megalomania in certain circles in London, in particular. From a distance, one is not as involved with the process, but every so often, just reading the Standard, one hears of case after case of absurd would-be developments. I have friends living in north London where similar idiotic adaptations are made to buildings. We warmly support the amendments and I hope the Government will acknowledge the real problem here and agree to deal with it. While they are doing that, could they protect the block of flats in Balham where I have a flat from the underground workings for Crossrail, which is likely to cause certain problems to me and to lots of other people?

The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Williams of Trafford) (Con): My Lords, I join the noble Lord opposite in congratulating the noble Lord, Lord Dubs, on his tenacity last night; not leaving until, I think, gone midnight. My heart sank when I realised that he would not get on to have his say.

The noble Lord was one of the first people I met when I came into this House and we share a common interest. I have great sympathy for anyone who suffers

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some of the things he talks about. We have discussed the Death Star basement in this House, and the collapsing mansion, so I am not in any way denying that these issues exist and I thank the noble Lord for bringing them to the House’s attention. But of course I am going to disappoint him because I am going to tell him that the powers that he has described already exist. In fact, in some cases they are being implemented.

Local authorities are already able to prepare codes of practice for subterranean works in their area, and many prepare area-specific guidance to help owners ensure that they carry out the works legally and safely with a minimum impact on neighbours. As this amendment replicates powers that already exist, it is unnecessary to include it in the Bill.

I turn to Amendment 101BC. Local planning authorities are able to bring forward specific local plan policies limiting the scope of basement development if they consider that such developments are a particular issue in their area. In such cases, any planning application should then be determined in accordance with that policy. Basement development is not an issue in most local authorities, although I accept what the noble Lord said—that it is coming to an authority near him. But we know that local authorities in areas which are particularly affected by basement developments, such as the Kensington and Chelsea and Westminster, are already in the process of introducing appropriate local plan policies to mitigate the impacts of such developments.

We have looked at a graph of how the trend appears to be going. What we are seeing now—to put it in context—is the hangover from previous permissions that are nevertheless causing distress in the area. I would be very interested to see how things look in, say, six months to a year from now. The amendment is therefore not necessary for the same reasons that I have explained for Amendment 101BB.

With regard to Amendment 101BD, the Party Wall etc. Act provides legal protections to owners of adjoining properties, but it is not in place to protect owners beyond next door, as there is unlikely to be damage to properties beyond the current distances set out in the Act. Similarly, introducing a new offence, as this amendment proposes, would not provide any greater protection to adjoining owners. In any case, there is no evidence of significant numbers of cases where notices required under the Act are not being given in respect of subterranean developments.

In addition, the amendment before us would introduce a new liability that goes beyond those currently imposed under the Limitation Act 1980. It would be difficult to justify singling out subterranean development over other forms of development for this enhanced liability. The Party Wall etc. Act applies to most subterranean development work and already provides for security for expenses to be covered by the award between the parties. Therefore, Amendment 101BE is also not necessary.

The noble Lord made the point that noise is not usually dealt with in planning permission. However, local authorities can consider local impacts, including noise pollution, when granting planning permission. The NPPF deals with noise, stating that, where relevant,

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it should be considered by the local authority in its planning decision. The noble Lord made the point that the GPDO allows basement development, but it is for individual local planning authorities to determine if development is within the scope of national permitted development rights.

The noble Lord also made the point that the Article 4 process is too burdensome and bureaucratic, and so local authorities are unlikely to follow that approach. It can take six to 12 months, but it is not particularly burdensome or bureaucratic—if I had eyes in the back of my head, I would probably see my noble friend behind me shaking his head—although I accept that this is a particular problem in particular parts of the country.

I turn now to Amendments 101BF, 101BG and 101BH. As I have already set out in response to the noble Lord’s previous, related amendments, and as have just said, basement developments are not an issue in all local authority areas. Existing powers are in place which enable local authorities to adopt an appropriate local approach to mitigate the impacts of such developments where necessary. Similarly, existing legislation protects adjoining property owners from the potential impact of such developments. I therefore ask the noble Lord to withdraw his amendment.

Lord Dubs: My Lords, I am grateful to all noble Lords who took part in this debate. I know that there are others who, because of the timing this morning, were probably not aware we were doing this now and would otherwise have been here. I am grateful to the noble Baroness, Lady Gardner, for what she said and I very much agree with her. Amendment 101BH suggests a schedule of provisions for a local authority code of practice, in which one of the issues is,

“the hours of construction and excavation, and ... particularly noisy types of construction and excavation”.

That could deal with both the time of starting and weekend working, although it may need strengthening. I agree entirely with the principles that she put forward about weekends and the starting time. I think she had a third point, but I am not quite sure what it was. I am sorry.

Baroness Gardner of Parkes: Presumption.

Lord Dubs: Yes, presumption. Frankly, if the Minister were to accept the principle, I would be happy to drop the word “presumption”. I put it in because of the sheer frustration felt by people who approached me saying, “For heaven’s sake, just stop all these things”. Most people would like that presumption, but if it made for better law, the word would not have to be there. I think local authorities would understand what they could do.

I am grateful to the noble Lord, Lord Horam, for the examples that he has given me, and to the noble Lord, Lord True, with whom I have had a discussion on this. He speaks with the authority of being leader of an important London borough. If he feels that his powers are insufficient to deal with the problem, I have to say, with due respect to what the Minister said, that we have to listen to local authority leaders. They are the ones in the firing line and who want to do best

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for the people in their community. That is what they are elected for. I mentioned earlier that I bumped into the leader of Camden Council, who said the same thing. She said that, despite the powers that the Minister said local authorities have, there are not enough: they need more powers to deal with these things. I asked whether I could quote her and she said yes. That conversation took place at about 10 am this morning, so it is hot off the press.

To deal with the comments that the Minister made, clearly her view is that powers already exist. Frankly, they do not. She said that local authorities could prepare codes. Yes, they can, but they are not enforceable. The point of the codes in my amendment is that they are enforceable. Local authorities can have these codes, but they cannot make them happen. I do not want to get into a long debate on the Party Wall etc. Act. All the advice that I have had is that it is insufficient for this purpose. It does some good things, but it does not deal with all the problems I described. I have to act on the advice that I have been given from people who know more about it.

12.15 pm

Lord True: The noble Lord is quite right about the code. We have a code, but the question is enforcing it. I should have made clear on Article 4, which he has not mentioned, that using Article 4 directions, in any case, is chasing the game, in football parlance, and takes time. You then cannot charge a fee, so in many cases you immediately lose the ability even to charge a fee for processing the planning application, which is then necessary under an Article 4 direction.

Lord Dubs: I am most grateful. That deals with most of the other arguments.

I hate to put it this way but I think that the Minister has been trapped by her civil servants. I have been a Minister; I know what happens. Sometimes you just have to say, “No, I’m not happy, you’re pushing me into a position that I don’t want to be in, because in my heart of hearts I believe in a modification of policy”. That is what I said. I cannot help thinking that, if the Minister were to reflect, she would say that the weight of opinion is entirely against her and against the advice that she has been given. These are not things that I have invented. Local authority leaders are individuals of substance. They are elected to represent their areas and they want to do what is best for them, so this is not some political fantasy. It goes across the party divide. It is not something that the Labour Party has invented. In fact, far more Conservatives have approached me than Labour people. So I am not being at all partisan on this.

I would just like the Minister to think again, otherwise we will have to have this debate again on Report. I would much rather we debated a proposal from the Government. Then I would be happy to say, “Fine, that’s good”. I am happy to give way.

Baroness Williams of Trafford: No, I was just moving in my seat.

Lord Dubs: I am so sorry. We are all a bit tired after yesterday evening. I misunderstood that.

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I am not happy about this. The weight of opinion is against the Minister. I deeply regret the line that she is taking. I hope that she will pause to reflect over Easter, otherwise I will have to bring this back. In the mean time, I beg leave to withdraw the amendment.

Amendment 101BB withdrawn.

Amendments 101BC to 101BGA not moved.

Clause 142: Resolution of disputes about planning obligations

Amendment 101BGB

Moved by Lord Greaves

101BGB: Clause 142, page 72, line 14, after “effect” insert “in relation to the provision of affordable housing”

Lord Greaves (LD): My Lords, I rise to move Amendment 101BGB. We are moving on to Clause 142, which is about planning obligations—Section 106 and so on.

This clause sets up a new procedure for resolution of disputes and there is a new schedule in the Bill which forms new Schedule 9A of the Town and Country Planning Act 1990. It sets up a new and quite complicated procedure for resolving disputes on Section 106 obligations when the local planning authority and the applicants are having difficulty coming to a conclusion. My amendment simply applies this to Section 106 agreements in relation to housing, rather than Section 106 agreements as a whole.

It is generally true that there are two types of Section 106 agreements. The first relate to housing and affordable housing. They are often very controversial and difficult to reach conclusions on; indeed, consideration has recently been given to ways in which they can be lifted, or their alleged burden reduced. These are in a wholly different category from normal Section 106 agreements, which simply provide necessary local infrastructure, nowadays closely related to the actual site of the application. This procedure seems long, convoluted and complex compared with ordinary, simple Section 106 agreements, and may result in applicants dragging out discussions longer than is necessary in the hope that they can get away with paying a bit less.

There are perhaps more important amendments in this group; however, it seems to me that the Government want to use a sledgehammer to crack what are in fact quite small nuts. I beg to move.

Lord Shipley (LD): My Lords, my name is attached to Amendments 101C and 101D. I can be brief because we discussed the issues from which these two amendments derive during our consideration of the housing elements of the Bill earlier in Committee. Amendment 101C makes it clear that the Bill should be about all tenures of housing, not just owner-occupation. Amendment 101D would leave out lines 6 and 7, which give the Secretary of State the power to define affordable housing however

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he wants to define it. That power is a problem and those words should be removed from the Bill. I hope the Minister will concur.

We discussed in some detail the definitions of affordable housing and affordability. I am concerned that the Government muddle the two terms. We have a statement right at the beginning of the Bill that starter homes are to be defined as affordable homes, but for many people they are not affordable at all. Given all the evidence we have had from organisations such as Shelter, it seems to me wrong to use terms that cannot be justified. It seems even more wrong to give the Secretary of State the power to redefine terms which are already wrong. “Affordable” and “affordability” have clear dictionary definitions, and whichever dictionary the Minister cares to consult in the Library, the definitions are always the same: they relate to people having the resources to pay the bills. Given that many people cannot pay the cost of a starter home, it is wrong to define a starter home as affordable.

I hope the Minister will be able to respond, but these amendments will probably be brought back on Report in a form that joins them to other concerns about the nature of affordability.

Lord Beecham: I take the noble Lord’s point, and I think many of us would agree that the Government’s notion of affordability is far removed from that of most other people, but the thrust of the amendment is surely right. What alternative is in the noble Lord’s mind to ensure that there is a definition that he, I and many others would regard as being related more to the circumstances and means of those who wish to occupy these properties?

Lord Shipley: My Lords, I agree with the noble Lord. We discussed this at a much earlier stage in Committee, in the context of the fact that affordability ought to be defined in relation to people’s incomes and median incomes, and that is the point with which I entirely concur.

Lord Young of Cookham (Con): My Lords, I intervene briefly to raise an issue that I touched on at Second Reading and again in the debates we had on the right to buy for housing associations and the impact of Section 106 agreements on the voluntary agreement with the National Housing Federation, which says:

“Every housing association tenant would have the right to purchase a home at Right to Buy level discounts, subject to the overall availability of funding”.

A large number of housing association properties have been built under Section 106 agreements. In the pilot scheme currently under way, properties built under Section 106 are excluded from the right to buy. The question I pose to the Minister—she may not be able to answer it today—is whether the powers given to the Secretary of State by Clause 143(2) to make regulations concerning Section 106 could be used to lift any restrictions that may exist on Section 106 developments, which would then enable the right to buy to be exercised by tenants, which at the moment may be precluded by the agreement between the housing association or the developer and the local authority.

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Unless something is done about the current restrictions on Section 106, a very large number of housing association tenants, who may be looking forward to exercising the right to buy, may find that it is denied by Section 106. So the question is whether Clause 143(2) can be used to lift those restrictions and enable the expectations of the housing association tenants to be realised.

Baroness Royall of Blaisdon (Lab): My Lords, the noble Lord, Lord Young, has given me yet another argument for why we should reject Clause 143. Amendment 102B is in my name and those of the noble Baroness, Lady Parminter, the noble Lord, Lord Best, and the right reverend Prelate the Bishop of St Albans. It also has the support of my noble friend Lady Warwick, chair of the National Housing Federation, who cannot be in her place today. I also declare my intention to oppose the Question that Clause 143 stand part of the Bill.

In rural areas, housing associations build good-quality small-scale developments in partnership with local communities, providing much-needed affordable homes. Of the 281 homes built in four years by Two Rivers Housing in Herefordshire and the Forest of Dean, 109 were delivered through Section 106 agreements, many on small sites of fewer than 10 units. For Two Rivers, as for so many housing associations, Section 106 is critical to the delivery of affordable homes.

Yet in 2014, the Government attempted to exempt developments of 10 homes or fewer from having affordable housing contributions levied on them. The Rural Housing Policy Review recommended that the Government’s policy on small sites should be reversed and:

“Local Planning Authorities should require all sites, whatever their size, to make an affordable housing contribution”.

It was, of course, absolutely right. There is clear evidence —for example, from the Gloucestershire Rural Housing Partnership—that when the Government removed the threshold, opportunities to deliver much-needed affordable homes in small communities were lost.

Several councils took the Government to court and won, overturning the policy change. There was a huge sigh of relief, but the Government now appear to be giving themselves the power to make this change through Clause 143 of this Bill. Clause 143 gives the Secretary of State the power to impose restrictions,

“on the enforceability of planning obligations entered into with regard to … affordable housing”.

It gives the Secretary of State the legal power to make the change in relation to small sites and affordable housing contributions. The clause should be deleted.

Indeed, Clause 143 is simply not needed because the NPPF already requires that LPAs meet their objectively assessed needs for a range of housing and set contributions which mean that schemes are viable and deliverable. The policies already respond to local circumstances, such as the land supply and the local housing market, which the Secretary of State is simply not in a position to second-guess. Overruling these local policies would have a devastating impact on the delivery of affordable homes in rural areas, where sites of fewer than 10 units are the main source of development land. Last year, these small sites provided well over 50% of new affordable homes in communities with a population of less than 3,000.

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12.30 pm

The Government sometimes say that their action is necessary to support SME builders. My Lords, we all support these small builders, who provide jobs and homes in rural communities, but the main challenges they face are access to land and finance, not the need to provide affordable housing.

Clause 143 would also have an impact on the provision of homes on rural exception sites. On very small sites, LPAs will often take a commuted sum in place of affordable homes. This is a critical source of capital funding for affordable homes on rural exception sites where income does not meet building costs. Commuted sums fill this funding gap and without them many of the schemes would not be built.

Amendment 102B would enable local authorities to require developments of sites of 10 homes or fewer in rural areas to make a contribution to affordable housing. The resulting protection is necessary for the sustainability of rural communities. It would also put localism back at the heart of housing policy in these communities. I firmly believe that local authorities should be able to set and negotiate the level of affordable housing contribution on individual sites to reflect local need. Without the amendment there is a real danger that action by the Secretary of State would result in the loss of all the routes by which rural homes are built.

Lord Best (CB): My Lords, I support Amendment 102B, in the names of the noble Baronesses, Lady Royall of Blaisdon and Lady Parminter, and the right reverend Prelate the Bishop of St Albans. This amendment aims to ensure a continuing, even if very modest, supply of affordable homes in rural areas.

I chaired the Rural Housing Policy Review, which reported a year ago. We engaged with the full range of rural housing practitioners and our report set out a number of recommendations for easing the severe housing shortages that face the younger generation in rural areas. Top of our list of 12 recommendations was the reversal of the policy announced by the Government at that time aimed at the removal from local authorities of the power to require affordable housing on sites of 10 homes or fewer.

Why did so many of those making representations to our review make this issue their number one priority? The reason is that removing the Section 106 affordable housing requirements on small sites would be likely to reduce annual rural affordable housebuilding by some 50%. It is through this medium of placing a requirement on housebuilders to include affordable homes in their developments that councils have been able to make sure that developments in villages include homes for local families and do not just comprise “executive homes” or housing for commuters, second-home owners, retirees to the country and so on.

Our review heard the arguments for lifting the requirement on housebuilders to provide a percentage of new homes for those on lower incomes. It was said that although affordable homes for rent or shared ownership would be lost, more homes would be built overall. This would happen, it was argued, because it would be easier for developers to get planning consent, the development would be more profitable, and smaller

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builders—such as those that the noble Baroness, Lady Royall, has mentioned—would be encouraged to return to development, after leaving the field in the wake of the banking crisis.

We did not buy those arguments. Removal of a planning obligation to provide some affordable housing would raise the price of the land and the extra value would go not to the small builder but to the owner of the land. SME builders would still miss out to larger housebuilders, who might well phase their developments with a series of several developments of 10 homes in place of one of, say, 30 homes. We were doubtful whether small and medium-sized builders would be enabled to do any more than they could before and, very significantly, we thought that without the inclusion of homes for local families, housebuilders of whatever size would face much more intense opposition to any development in the village.

The reason why new housing is acceptable to the community around, as demonstrated in the neighbourhood plans that are gaining public support in different parts of the country, is that there is a growing understanding of and sympathy for the housing problems facing younger households who were brought up and/or who work in the village. Take away any obligation to include housing for those less affluent local people and intense opposition—which is likely to mean fewer homes built—seems inevitable.

Our review highlighted the likely loss of new homes overall, as well as the obvious loss of affordable rented accommodation in rural areas which would follow from the Secretary of State deciding to overrule local authorities and remove their power to require affordable homes on smaller sites. After the courts rejected the Government’s previous attempt to make it impossible for councils to require some affordable homes, as explained by the noble Baroness, Lady Royall, the fear is that Clause 143 would present the opportunity for this unfortunate policy to be reinstated. Amendment 102B would insert the necessary protection against this eventuality.

Statistics from Jo Lavis, who advised the Rural Housing Policy Review, make it clear that 55% of new affordable homes in communities with a population of less than 3,000 were on sites of fewer than 10 homes last year. In Shropshire, the figure was 80%; for Hambleton in Yorkshire, it was 89%; and for rural district councils in Derbyshire it was 85%. In some of these cases, the local authority accepts a cash payment—a commuted sum from the builder—in lieu of payment in kind, and this funds rural housing on another site. This technique has raised £2 million in Derbyshire Dales, £1 million in the New Forest National Park and so on. The money cross-subsidises rural housing which would not otherwise be viable, making up for the reductions in social housing grants, which have seen grant rates fall from about £40,000 per house in 2011 to just £22,000 four years later. In a survey of 39 rural local authorities, Jo Lavis discovered that two-thirds of those councils used commuted sums from builders to fund affordable rural housing at no cost to the taxpayer, so current arrangements are working.

A number of us have expressed concern about the Government’s plans for rural exception sites, where planning consent would not normally be available but

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development is permitted because it comprises affordable homes for local people. Now the plan is for the new starter homes to be built on these special sites, replacing affordable rented or shared ownership homes. We have been concerned that the starter homes will not be within the reach of those with relatively low earnings in rural areas—attention was drawn to this by the noble Lord, Lord Shipley. In any case, starter homes can be sold after five years on the open market to quite different people. At the same time, we have expressed our considerable anxiety that sales of high-value council houses, which would be required to raise the money for discounts to housing association right-to-buy purchasers, will be disproportionately damaging in rural areas because council homes there are particularly valuable.

Amendment 102B is an urgent attempt to prevent a yet further deterioration in the position for those who genuinely need affordable housing in rural communities. It would allow the local authority to continue to obtain a quota of affordable homes on smaller sites, where the council believes that this is needed. It represents a vital protection for rural communities that could otherwise lose over half the supply of affordable housing that they currently insist upon. It is important for government, too, because only with an element of affordable homes for local families will parish councils, neighbourhood forums and local communities at large accept new development in their villages. I strongly support the amendment.

The Lord Bishop of St Albans: My Lords, I support Amendment 102B which has been tabled by the noble Baroness, Lady Royall. I also wish to speak on the removal of Clause 143 from the Bill.

As has often been noted during the passage of the Bill, the House is being asked to vote on clauses that are essentially empty, their content to be defined in regulations by the Secretary of State at some future date. I appreciate the effort that the Minister has made in the last week to put more information before the Committee, but I think we can all agree that there are still some gaping holes.

Clause 143 is a prime example of an empty clause, handing as it does sweeping new powers to the Secretary of State with regard to the control of Section 106 requirements but providing no detail of what these regulations would look like. Without the content of these draft regulations being made available, the Committee can only speculate as to what the Government intend to do with the new powers handed to the Secretary of State in Clause 143. Luckily, as other noble Lords have already made clear, we have good grounds from which to speculate, given the Government’s attempt last year to remove Section 106 planning obligations on developments providing fewer than 10 new houses. It was overturned, of course, on judicial review.

With this in mind, I want to make two brief points about the proposed legislative changes. First, there is the long-established principle that local authorities are best placed to decide planning obligations to ensure the provision of affordable housing in their areas. Such a principle is directly in accordance with the

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Government’s stated localism agenda. We have been told repeatedly by this Government that devolution of power, not centralisation, is the way forward. Indeed, only yesterday, in response to a supplementary question I asked on the Floor of this House, the noble Viscount, Lord Younger, batted back a reply, saying:

“The entire point of our devolution revolution is that all authorities will have the power to set their own policy agendas and target their spending priorities to match. Local leaders know best what is right for them”.—[Official Report, 22/3/16; col. 2227.]

But here we are presented with a clause that would allow the Secretary of State to ride roughshod over the needs and concerns of local planning authorities. I recognise that there is a legitimate concern that the burden of Section 106 requirements can make small developments unviable for some developers. Where this is the case, central government needs to work with the local planning authority to facilitate an equitable compromise. Blanket exemptions cannot be the way forward.

Provisions for independent dispute resolution in Clause 142 will, I hope, be a good example of how government can better facilitate local authority needs with regard to affordable housing. Clause 143, however, removes the discretion of local authorities to judge how best to serve local needs and places the power in central government hands.

More important than a point of principle is the fact that any future removal of Section 106 requirements from smaller developments is likely further to imperil the provision of affordable housing in many parts of the country. This was made clear by the Government’s previous attempt at policy change. The needs of local authorities regarding Section 106 requirements on small developments can vary immensely from one local authority to another. The noble Lord, Lord Best, has already helpfully quoted the examples in Shropshire, where 80% of new housing developments are built on sites of fewer than five units, and Hambleton, where 89% are on developments of fewer than 10. There can be no doubt that the removal of these developments from Section 106 requirements would drastically undermine the provision of new, affordable housing, particularly in rural areas where there is already a critical undersupply.

I hope the Government will think very carefully about this before they decide to proceed. More important is for the Minister to provide us with further details about the proposed content of these regulations before Report. It would seem a gross dereliction of duty for this House to approve sweeping new powers for the Secretary of State without some sort of idea about how the Government are hoping to use these new statutory powers.

12.45 pm

Lord Taylor of Goss Moor (LD): My Lords, I, too, wish to speak briefly in support of Amendment 102B. As always, I draw attention to my interests, in particular that I am president of the National Association of Local Councils. There is no question that parish councils are deeply concerned about the removal of the ability to require some affordable homes, when viable, to meet local needs—and we should remember that

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Section 106 can be contested on viability grounds. The reasons for that have been well expressed, but I shall add a couple of points at least.

First, I strongly believe that it is in the Government’s interest to recognise the particular issues that there will be in smaller rural communities if there is a blanket policy removing affordable home requirements on sites of under 10 units, for the reasons that the noble Lord, Lord Best, spelled out. In many communities that would be a typical site—in fact, in some it would be quite a large site. But even where there are sites of maybe 20 or 30 units that could be brought forward, this policy will encourage them to be brought forward only in small fractions of less than 10, to achieve the higher number of market-value homes and the profitability that will go with that, which alone will slow down the delivery of homes that are much needed in these communities.

Secondly, there is no question that small villages were the first to come alive to the severity of the housing problems that we have in this country around affordability for people on working wages in those communities. Rural incomes for those who live and work in rural communities average 20% below the national average right across the country. Commuters may bring up the wage levels in some villages, but rural wages are typically low. People are needed to live in those communities, who will work in the shops and do the work of the land and in schools, on those relatively low wages, and they desperately need a home. In the nature of villages, those communities came alive very quickly to the unaffordability issue, because it is much more obvious there.

The response has been for those communities to be very often surprisingly positive about bringing forward appropriate small-scale development, provided that it provides at least some homes with a clear tie to local need and affordability in perpetuity. To remove that would be immediately to remove a lot of that neighbourhood support for the delivery of homes. As somebody who currently chairs a neighbourhood plan, I have to say that the community is very much alive to its own particular needs. I happen to be in a very poor community, where some of those affordability issues are not as great as some of the needs to improve the community in other ways. We happen to be a community in which the affordability pressures are not there, but we know exactly what the community needs. There is a desire for self-build, for example, which we are building into the neighbourhood plan. To remove the ability of communities at local authority and neighbourhood plan level to respond to that on sites that may be brought forward makes no sense to me.

Finally, I think the Government are seeking to help smaller building companies to access land for development. I do not know what the situation is in some parts of the urban environment—I know it less well than the rural one—but I know that in the kind of rural communities and housing schemes right across the country that I visit regularly, through work and in my former role as chairman of the National Housing Federation, the simple fact is that these sites are relatively valuable. A small site for eight or nine units in a well-off village with high house values should be immensely profitable to bring forward, and landowners

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will get very substantial money if they can bring those forward, compared to the agricultural values that those sites might otherwise be worth. So there is no lack of incentive for the landowner.

The problem is that they are highly desirable for quite large housebuilders as well. There are good profits to be made, there is easy delivery, there is certainty on sales and the numbers are not so large that they could in any sense depress prices, so the sites are highly appetising. If the affordable home requirement is removed, it will be easy for national and regional players to look for the 20% to 25% profit margins that they would come in on with high house prices. The requirement for affordable housing helps depress those prices but, perhaps more importantly, it depresses the ability to get those very high margins. Local small builders will work to builders’ margins, which may be as little as 10%. In my part of mid-Cornwall, Restormel Borough Council pioneered releasing sites for affordable housing in the form of housing where the sale price was related to local earnings levels in perpetuity. Those houses were not built by the big regional and national players, but by local builders who were more than happy because they could make their margin within that price cap and get sites at low cost because the landowner knew that the price would be low, the community knew it would be affordable for the community in perpetuity and the builders were still able to make the margin they needed and knew that the community would support the development going forward.

I do not think the Government will achieve their objectives in rural areas this way. They will lose, not gain, numbers. They will lose, rather than gain, opportunities for smaller builders. They will lose community support for the housing that is desperately needed in those communities precisely by the people who allow them to be living and working communities but who cannot otherwise afford a home on local wages.

Lord True: I shall not follow on Clause 143 in particular, although it is an extraordinarily important debate. In a sense it reflects the tension that runs through the Bill. The Government have a clear commitment to provide 1 million homes—starter homes—and to get the country building. On the other hand, in doing that, they want to remove what they perceive, sometimes rightly, sometimes wrongly, as obstacles. That tension runs right through the Bill and underlies this clause because one is naturally suspicious that some of the things that have been said here might have the effect of letting this clause go forward without understanding what precisely it means. The Explanatory Notes say that an example of what the Secretary of State might do would be to place conditions relating to sites of certain size, which is the point just discussed.

I hope the Government will be sensitive about affordable housing. It is extraordinarily difficult to do, not just in rural areas. I do not want to repeat something I said in an earlier debate, but in high land-value areas, it is very difficult to deliver affordable housing. It is really on the margins. Often in those areas, sadly one is dealing with communities that do not really want what they call social housing. The council has to take those people on and look them in the eye. It also has to take on developers and say, “We need to do this”. We need

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a few tools in our hands to be able to do that. In going forward and, I hope, giving us a lot more information about the regulations, I hope the Government will be sensitive to that side of the argument. I understand all the suspicions that have been expressed, although the Committee has to understand the imperative for the Government to deliver building.

I want to return to Clause 142, which was raised by the noble Lord, Lord Greaves, who unerringly draws our attention to every clause. It is a massive clause with a massive schedule underlying it. It looks well intentioned. The right reverend Prelate said that if it helps resolve disputes, that would be good. I am all for arbitration. If the sense is that two sensible people come together and resolve the matter, of course, we would all want that to happen. But we do not have here soft arbitration, we have hard statute. This hard statute is backed up in Schedule 13 by a very lengthy set of things that will happen when this person, whoever it is, could be called in by the Secretary of State without even waiting for either the applicant or the local authority to call them in. He or she might be called in by Schedule 9A(1)(4)(a) in Schedule 13 to the Bill,

“a person of a prescribed description”,


“requests the Secretary of State to make an appointment”,

of a person, and

“any prescribed requirements as to the consent of the … authority are satisfied”.

Then there is a whole set of Russian dolls—clause after clause providing what this process might do. So this is not soft arbitration; it is almost like creating a new inspectorate—it seems to be separate from the inspectorate at Bristol—to arbitrate in cases of Section 106. It may be the same as the inspectorate at Bristol—I know not. Then a whole lot of things have to happen. It looks a bit like quasi-justice. Quasi-justice is not necessarily always quick and it is certainly not cheap.

The interesting thing about planning—as anyone who deals with it knows—is that planning creates its own precedent. Planners have to take note of what inspectors have said in the past. They have to take note of past decisions as well as the law. These unknown persons are going to be dealing with cases, perhaps at the request of the Secretary of State, according to the Explanatory Notes taking into account,

“any template or model terms published by the Secretary of State”.

We do not know whether they will be in regulations or what they might be. They will then give judgments on the Section 106 negotiations. It even says in the Explanatory Notes that they can,

“consider two or more planning applications at the same time if the same or similar issues arise”.

So we have what is effectively a hard, quasi-statutory system of making assessments. These judgements will lie on the record. It may well become, in my judgement, a bit like the decisions of the inspector, something which the next arbitrator will then take notice of in a similar case—not the same case, as they can consider similar cases. The freedom of negotiation between local authorities and applicants is potentially trenched into by this process.

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The clause looks well intentioned, but a little too elaborate. It is a classic way in which governments go about making law. They say, “Wouldn’t it be a good idea to bring discussions quickly to an end”, because they want to get things done quickly. They think local authorities are always holding them up so they want to force them to go this unknown person to impose a decision. Once that report is issued, the local authority must comply—that is what is written in the regulations.

I would like to think a lot more about this going forward as a statute. It is good practice to consider arbitration, but it is very tough. We have just had a debate about basement development in which we were told it was not necessary to put stuff on the statute book as we have codes of practice and everything can be done in a soft way. Here this arbitration has to be legalistic and hard—it has to be on the statute book. I worry about that.

Section 106 negotiations are tough—they are meant to be. I went to a topping-out ceremony in my borough a few weeks, ago with some people from one of the hardest negotiating developers in the country. We had a good old time and they said, “My goodness your authority was tough in negotiations”. I said, “Yes, and so was your business, but look what we’ve got: 300 new houses, affordable housing, community theatre and a community place in this town, which we got as a result of that negotiation”. If that had gone to the person in Bristol, Peterborough or wherever who might be appointed under this system, I wonder whether any of that would have happened.

I asked my noble friend to reflect on this very elaborate, albeit well-intentioned, system. The Government are absolutely right to call on local authorities to try to cut negotiations short and do them as fast as possible, but we have far too much rigmarole of regulation, law and diddle-daddle in this country already, and this looks like more of that on the way.

1 pm

Lord Beecham: My Lords, I have a good deal of sympathy with the remarks of the noble Lord, Lord True, about that provision. I entirely endorse what my noble friend Lady Royall and others have said about Amendment 102B.

Frankly, I am puzzled by Amendment 101D. I had an exchange before with the noble Lord, Lord Shipley, about this, but it still does not seem to make much sense. If one is concerned about the definition of affordability—and I think many of us are concerned about what is currently described as affordable— then to take out from the Bill a provision that as it currently stands would allow the Secretary of State to modify the definition would be puzzling. If the amendment had suggested that, for example, the Secretary of State should by regulation determine what is affordable in relation to household income, for example, that would have been a more positive way of dealing with the issue. At the moment, there is no apparent connection between affordability as it is currently treated by the Government and what ordinary people would understand as being affordable—that is to say, within their means.

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Lord Shipley: Perhaps I can explain what the issue is, although I thought I had done so previously. The amendment relates to the planning part of the Bill. At the very beginning there was a debate, and amendments that I think the noble Lord himself moved, about the definition of affordability. We had a long discussion about that. The context of the amendment that the noble Lord is criticising simply relates to whether the Secretary of State should have the power to define a word that is clearly expressed in any dictionary that the Secretary of State may wish to consult. On “affordable” and “affordability”, the Government are muddling their terms, and I believe that that is happening deliberately to make it appear as though housing is affordable when it is not. The Government define the words “affordable” and affordability” differently, but in the dictionary they are the same thing. They relate to the ability of people to pay. All I said when I spoke to the amendment was that I thought we had to go back to amend the Bill at the beginning of its housing element so that the definition of “affordability” was better stated, but then not to allow a Secretary of State to make a change by regulation to the meaning of a word that had a clear meaning in the Oxford English Dictionary.

Lord Beecham: My Lords, I do not want to prolong this dialogue, but surely it would be better to tie the Secretary of State down to making regulations related to, for example, an indexed figure in connection with household income. That would be a more sensible way to do it than simply taking out the clause.

Lord Shipley: To avoid any doubt, I am very happy to do that, as I said 15 or 20 minutes ago. The question is whether the Secretary of State, having defined what “affordable” and “affordability” are, should then be allowed by regulation to alter them, which I think he or she should not be.

Lord Beecham: The point would be to circumscribe the Secretary of State’s ability to regulate it by linking it to an index. However, we are not voting on that amendment and I will not take matters any further.

Baroness Williams of Trafford: My Lords, the Government are committed to increasing housing supply. More homes are now started every year than at any time since 2007. The total stock of housing in England is now almost 800,000 higher than it was in 2009. In the spending review we announced investment of £8 billion to deliver 400,000 affordable housing starts by 2020-21. This includes £4.1 billion for 135,000 shared ownership homes, £1.6 billion to deliver 100,000 affordable homes for rent and £2.3 billion towards delivering our starter homes manifesto commitment.

In order to further support housing delivery, we need measures to avoid Section 106 planning obligations preventing or delaying new homes being built. Clause 142 inserts new Schedule 9A into the Town and County Planning Act 1990. The new schedule sets out a dispute resolution process to speed up Section 106 negotiations in order to help housing starts to proceed more quickly. Dispute resolution will be available on a broad range of cases, including where affordable housing is in dispute or particular infrastructure is needed to make

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development acceptable in planning terms. However, as with any effective dispute resolution process, we anticipate that it would be used only as a last resort. The speeding up of Section 106 negotiations is part of a wider package of measures that the Government are introducing to make the planning system simpler and more streamlined. We anticipate that its existence will encourage all parties to work constructively together and agree planning obligations earlier in the planning process.

We are also working with stakeholders to understand the particular issues caused by negotiating affordable housing provision. So far, we know that problems include the time and expense of viability negotiations, the lack of clarity over affordable housing requirements and the difficulty of getting housing associations to take only one or two units on a site. These effects can be felt more acutely by smaller developers, which are more likely to focus on building on small sites. We are consulting on some of the detail of the process and we will bring forward regulations in due course. Clause 143 allows us to address some of these issues by providing a power for the Secretary of State to make regulations relating to the enforcement of planning obligations for affordable housing. The clause provides flexibility depending on the size, scale or nature of the site or of the proposed development so that we can target regulations appropriately.

The right reverend Prelate the Bishop of St Albans asked when we were going to consult on the powers. We are already engaging with key partners to identify those measures that would best support the delivery of new housing, and we will consult on our proposals in due course. Restrictions or conditions will be introduced through affirmative regulation, so Members of both Houses will have a chance to scrutinise any measures that we introduce. That means we can bring about a more consistent approach to how Section 106 agreements can be used in relation to affordable housing provision. It will reduce a key element of uncertainty for developers and, in doing so, support housebuilding.

The noble Lords, Lord Young and Lord Best, and the noble Baroness, Lady Royall, asked how we anticipate using the power in Clause 143(2)—would it be used to restrict right to buy, and what about the rural aspect? The broad power proposed allows for a distinction to be made depending on the size and nature of the proposed development, such as rural sites, where restrictions may not be appropriate, and the distinction in relation to the types of affordable housing that may be restricted. This is intended to focus any restrictions where they would have the most likely benefits in encouraging housing development more broadly, rather than, as the noble Lord says, restricting it. For example, we could use this power to address the particular problems faced on small sites, as I have said, and we are working with stakeholders to identify how we can best use the power to address the issues and support the delivery of new houses. I should also say that the restriction provision would not apply to existing Section 106 agreements.

The noble Lord, Lord Taylor of Goss Moor, is concerned about the Government not supporting rural areas. As I say, this provision gives us the flexibility to target our regulations in a way that would best benefit

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overall housing delivery. For example, as I said, restrictions or conditions could apply differently depending on the type of sites, such as rural areas.

Amendment 101BGB limits the use of Section 106 dispute resolution, to be introduced through this clause, to affordable housing disputes only. It is not necessary for Amendment 101BGB to be introduced to implement this change. Schedule 13 of the Bill allows the scope of dispute resolution to be restricted through regulations, which could include limiting dispute resolution to cases involving affordable housing. We are presently seeking views on the scope of dispute resolution through our planning technical consultation, but dispute resolution would be a very useful tool for resolving disputes on applications without affordable housing as well as on those with.

Moving on to Amendments 101C and 101D, I do not think that they are necessary to address the concerns of the noble Lord, Lord Shipley, because they would hinder our ability to address the issues that local planning authorities and developers tell us are caused by negotiating affordable housing obligations. This clause allows the Secretary of State to restrict the use of Section 106 planning obligations for affordable housing. The clause, therefore, goes on to define what is meant by affordable housing in this context.

The definition of affordable housing included in this clause focuses on housing that meets a particular need: for example, people whose needs are not adequately served by the commercial housing market. It also specifically includes starter homes, which are defined in Chapter 1 of the Bill. It does not restrict provision to meet the needs of any specific tenures. Indeed, we consider that the definition is broad enough to encompass all forms of tenure. Restricting the use of planning obligations for affordable housing across all tenures would not support the objective of addressing the specific issues caused by negotiations on particular types of site.

The clause also provides the Secretary of State with the power to amend the definition of affordable housing through regulations. Removing the power would affect the Government’s ability to take account of new forms of affordable housing provision that are being developed. This would limit the effectiveness of how Government can use this clause to support housing development. The power to amend the definition of affordable housing under this clause is subject to the affirmative resolution procedure and noble Lords will have the opportunity to scrutinise any amendment of the definition.

Amendment 102B, in the names of the noble Baronesses, Lady Royall and Lady Parminter, inserts a new clause that would enable the Secretary of State to empower local planning authorities to require affordable housing contributions, in cash or kind, from small-scale developments and in rural areas. However, I do not think that it is necessary. Local authorities can set affordable housing policies in their local plans, which will take account of local housing need. Section 106 agreements can then be used to secure affordable housing delivery. They can also be used to agree financial contributions in lieu of on-site affordable housing contributions. Indeed, there is evidence of

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local planning authorities making very good use of this, including seeking contributions from small-scale developments and in rural areas.

The use of this power will allow us to bring about a more consistent approach to how Section 106 agreements can be used in relation to affordable housing provision. This could include conditions on how planning obligations are sought for affordable housing on particular types of sites. Such conditions could help address the problems that affordable housing negotiations can cause for particular types of sites, such as those identified in this amendment.

I will finish by saying that the Government will consult on the approach to any restrictions or conditions brought forward. Measures implementing this power will be set out in regulations. These, including any amendments to the definition of affordable housing, will be subject to the affirmative resolution procedure and noble Lords will have ample opportunity to scrutinise any amendment to the definition. I hope that, with those words, the noble Lord will feel happy to withdraw his amendment.

Lord Greaves: My Lords, this has been a very interesting debate and I thank everybody who has taken part in it. Most of the debate was about issues that I was not personally raising, but I want to thank the noble Lord, Lord True, who made a speech similar to one I thought of making. It is clear that the noble Lord is less intimidated by the Government Chief Whip on these matters than I am and feels able to make such a speech at length, putting forward the localist view which he has done so well so many times in this Committee.

1.15 pm

The noble Lord, Lord True, said that what was being proposed was not soft arbitration but hard statute. This is yet another example of this Government, like previous Governments, not trusting local authorities or local people. I particularly noted the noble Lord’s description of this measure as possibly a new inspectorate. The Government are very good at setting up policing mechanisms to police everybody else in the world. I do not know when they are going to stop: we thought it was coming to a halt with the Localism Act, but it seems that that Act did not do that at all, or only in small measure.

The Minister said that she wanted to agree planning obligations “earlier in the process”. I am not quite sure which process she is talking about or what stage of it. Affordable housing obligations are often the central part of the application from the very beginning, when the application is put in; certainly for larger sites, the question of how much and what kind of affordable housing is there from the very beginning and is part of the pre-application negotiations and discussions that take place between the applicants and local planners, and that is as it should be. A lot of the smaller Section 106 obligations that end up with an application, however, actually emerge during the process that people think is necessary and reasonable for the development to go ahead. They might even emerge at the decision-making time: if the application goes to a committee, there will

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be discussions and small Section 106 additions might take place at that late stage. If the Minister is saying that the problem then is that it takes time for the negotiations to take place between the applicants and the planning authority after a decision has been made that an obligation is required, that is true; but if there are bureaucratic, legalistic or just administrative reasons why that process is slowing down, it is not always necessarily the fault of the local planning authority. It can often be the fault of the applicants who delegate to somebody working on their behalf; it can take months and months for them to deal with it.

The whole tenor and ethos of this Bill seems to be about making things easier for developers. I am in favour of the whole planning system being made easier, more efficient and simpler, as the Minister knows. At the moment, it is too complicated; there is no doubt about that. It is too bureaucratic and too difficult for people to understand. However, there has to be a balance, and the danger of making things easier for developers, which lies behind a lot of the discussion that has taken place in this Committee, is that, if we are not careful, development could become more harmful and less good than it otherwise would be. Often, it is the things that are beneficial to the local community and that make for a much better development—better designed and laid out, with better provisions—that the developers complain about. They will go to the Government and say, “These planning authorities are making us do all these things”. But if you build a housing estate it is there for 100 or 200 years, or however long, and taking a bit longer is not necessarily always a bad thing.

Most of the debate on this group was about rural housing, small developments and affordable housing. Again, I was bowled over by the level of expertise on these issues around the Chamber. The noble Lord, Lord True, was right again: this is the tension that runs right through the Bill and it is a fundamental issue throughout it. My observation is that the Government have to come up with some fairly important improvements to the Bill in these areas—perhaps one would call them concessions—if they are not to get into serious trouble on Report. Having said that, I beg leave to withdraw the amendment.

Amendment 101BGB withdrawn.

Clause 142 agreed.

Amendment 101BH not moved.

Schedule 13 agreed.

Clause 143: Planning obligations and affordable housing

Amendments 101C and 101D not moved.

Clause 143 agreed.

Amendment 102 not moved.

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Amendment 102A

Moved by Lord Beecham

102A: After Clause 143, insert the following new Clause—

“Planning obligations for student housing

Upon commencement of this Part, the Secretary of State must incorporate planning for student accommodation into the National Planning Policy Framework so that it is planned for and included in local and neighbourhood plans and taken into consideration in planning decisions where appropriate.”

Lord Beecham: My Lords, this amendment in my name and that of my noble friend Lord Kennedy deals with an issue which is close to home for the Minister, whose daughter—she told me the other day—lives in a student house just opposite friends of mine in a residential part of Newcastle. It is a fact that in Newcastle and many other cities there are very large numbers of students. In Newcastle, I believe that the two universities have between them some 45,000 students. Some of them of course will be local and others will not necessarily be living in the city. Nevertheless, substantial areas of the city are now given over to rented-out student accommodation, which not infrequently is jammed full of students living in not particularly attractive conditions and also somewhat changes the character of the area. Increasingly, we find areas virtually totally dominated by students. Recently I had the misfortune to canvass not far from where the Minister’s daughter lives, and I encountered house after house occupied by students, many of whom, I am sorry to say, expressed the intention of voting Conservative, because on the whole Newcastle attracts large numbers of better-off students. They are not quite mature enough to realise that they are taking the wrong course politically, although they may come to realise that in due course.

However, what we are now seeing in the city—and, I suspect, elsewhere—is rather different and in some ways rather better: large purpose-built places for students to live in, not in residential streets but in purpose-built complexes. That is a good thing in a way because, one hopes, it will free up family-sized accommodation and perhaps bring back more permanent occupation of residential areas, which is desirable. On the other hand, sometimes these buildings are thrown up in close proximity to residential areas and the behaviour of those in the residential blocks is not always appealing to the local community. However, perhaps that is another issue that needs to be looked at.

Amendment 102A simply raises the issue and seeks to get the Secretary of State involved in ensuring that the National Planning Forum takes an interest in what is a growing concern in many areas. The amendment would ensure that it offered some guidance and, in collaboration with local authorities and indeed with universities and student bodies, sought a way of balancing the needs of universities and their population with the local population. On the whole, this works tolerably well. In the area where the noble Baroness’s daughter lives—not necessarily in the same street, although there have been some difficulties there—things are not always satisfactory. There is a good deal of late-night

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carousing and the like, which some noble Lords may be young enough to recall from their earlier days but is not at all appealing to local communities.

This is a matter that has not really played much of a part so far in national policy formulation, and I hope the amendment will begin a process through which it can be properly developed. I beg to move.

Lord Palmer of Childs Hill (LD): My Lords, I shall speak to Amendment 102C. With the emphasis on affordable housing, there is a danger that the infrastructure and support to make developments into communities will be sidelined. Many people have talked about what constitutes affordable housing. A £450,000 home after discount in London may be a good buy but you have to be able to afford the deposit and the mortgage payments. Putting aside my concerns about what constitutes affordable housing, this amendment makes the assumption that we can have a building bonanza but we need to ensure—this is my reason for tabling the amendment—that the funds are not diverted from libraries, schools, community culture, public transport and indeed the multiplicity of activities that make a community. This has historically been effected by Section 106 planning gain money, to which many noble Lords have referred, but the position has been further complicated by the new community infrastructure levy, which no one seems to have mentioned. This levy, which has not been welcomed by some local authorities, can be imposed by local authorities on new developments in their area.

The levy is said to be designed to be fairer, faster and more transparent than the well-tried Section 106 system of agreeing planning obligations between local councils and developers—that is what it says. I therefore ask the Minister, when responding to this amendment, to report on how she sees the community infrastructure levy and/or the Section 106 planning gain funds being protected and enhanced. Can she reassure the Committee that the other provisions in this complicated and convoluted Bill will not militate against the local services that maintain housing developments as communities and lead purely, as my old favourite Pete Seeger said in 1963, to little boxes of different colours which are all made out of ticky-tacky and all look just the same?

Lord Greaves: Does my noble friend agree that Pete Seeger did not say that at all? He sang it.

Lord Palmer of Childs Hill: I would be happy to that, but I have tried to let the Committee off that treat.

Lord Harris of Haringey (Lab): My Lords, I think the main concern that many of us had was that the noble Lord was going to sing it.

I want to intervene briefly on this group because quite an important set of principles is involved here. Making communities work in the context of new developments is quite a skill, which local authorities develop over time. For example, there is a difference in nature between student accommodation and other types of what would no doubt be considered to be

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affordable accommodation. You are usually talking about one-bedroomed units designed for young people. It is a very different sort of accommodation. However, planning for that and for all the other facilities and so on in the local area can be determined only at a local level by people who know the areas concerned and know how it is going to work.

It is right that there is recognition of the importance of student accommodation and that it is taken into account, but it has to be acknowledged that often those in the local area will be best able to determine how to make it work so that the different communities in a particular area will be able to co-exist and complement each other. I am conscious of a number of developments where the arrival of student accommodation has been very important for the regeneration of that area and has benefited other communities. As opposed to hostility to the noisy nocturnal dwellers that students often are, these developments have been a catalyst for enabling other things to be placed in that area, to be viable, and to work extremely well.

Having listened to the exchange between my noble friend and the Minister about her daughter, I recall a discussion I once had with somebody about my son. He was strip-searched in the airport, which was news to me—as a parent you do not hear about that—and I was worried that, in terms of what goes on in the back streets of a no doubt very comfortable part of Newcastle, my noble friend was going to stray into that territory.

It is important to understand the value of student accommodation in many local communities and the fact that what will work is best planned locally. At the same time the different nature of student accommodation should be recognised in the planning process.

1.30 pm

Baroness Williams of Trafford: My Lords, I am pleased to be discussing these amendments today, particularly in the light of the conversation that the noble Lord, Lord Beecham, and I had yesterday. For a horrible moment I thought that my daughter actually lived next door to his friends. Thank God that she lives across the road. Nevertheless, it was a very weird conversation. The noble Lord’s wife and I went to the same school, and we found out yesterday that in so many things, in terms of our background, we were far closer than we thought. My daughter is indeed one of those pesky individuals who votes Conservative.

I also get the broader point about the changing face of communities. Jesmond has over the years changed remarkably as the community has become fuller of student properties. The local authority and the university are making huge moves to create more purpose-built accommodation for students and to ensure that Jesmond starts to restore to itself the very nice community feel that it once had. The Government recognise this need as well, encouraging local authorities to provide much more purpose-built student accommodation.

While I fully support the intention of the amendment I do not think it is necessary, because we already have in place the mechanisms to deliver it. Our NPPF is clear that local planning authorities should have a clear understanding of housing needs in their area.

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It encourages local authorities to identify the accommodation needs of different groups within the community and to plan proactively to support them. This includes recognising the needs of students. This is supported by planning guidance. In March 2015 we strengthened our guidance to re-emphasise to local planning authorities their duty to plan for sufficient student accommodation, whether it consists of communal halls of residence or self-contained dwellings, and whether it is on campus.

The amendment would also require local planning authorities to give higher priority for student housing than other groups in society. There is no need to adopt quite such an approach. It is important that local planning authorities plan for a mix of accommodation, including for the student population as well as for the needs of all residents and different groups in the community. That is what the NPPF expects. If they do not make adequate provision, they risk having an unsound local plan.

Amendment 102C on planning and community development seeks to ensure that local authority funding is available for community developments and is taken into account when carrying out its duty to promote starter homes. The noble Lords, Lord Palmer and Lord Shipley, and the noble Baroness, Lady Bakewell, drew attention to the need for funding to be made available for community developments and I thank them for doing so. I do not disagree that local authority funding should be used for new community developments.

As a key objective of national planning policy, local planning authorities need to plan positively for the infrastructure needs of their area, which would include community development projects. I reiterate what I said earlier in Committee that nothing that we are doing to promote starter homes will fundamentally change the importance of having good infrastructure in place to support new development. Planning decisions for all developments, including those that contain starter homes, will still need to be made in accordance with local planning policy, subject to the starter homes requirement and other material considerations. Infrastructure considerations that can be taken into account as part of the decision-making process will clearly need to be issued.

The noble Lord, Lord Palmer, mentioned the community infrastructure levy. The Section 106 agreements and the community infrastructure levy provide mechanisms for local authorities to secure funding for infrastructure, including community developments. As I have mentioned, we intend to exempt all starter homes from the community infrastructure levy. However, for the starter home element of any new development, local planning authorities will still be able to secure Section 106 for site-specific infrastructure improvements that might be required. Where there is a proposed development involving market housing and starter homes, the local planning authority is still able to use the sale on the market homes element to help fund the infrastructure required to support the development, assuming of course that it has a charging schedule in place.

With those comments, I hope that the noble Lord will withdraw his amendment.

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Lord True: Briefly, I welcome what my noble friend and others have said about student accommodation. It is not easy. We have expanding universities and noble Lords are right to say that there is usually strong opposition from local people when they hear “student housing”. However, a friend of my daughter’s is still at university and is rather more concerned that her local launderette might be turned into a house.

Lord Beecham: I thank the noble Baroness for her remarks. I hope that the matter can be taken forward. I beg leave to withdraw the amendment.

Amendment 102A withdrawn.

Amendments 102B and 102C not moved.

Baroness Evans of Bowes Park: I beg to move that the House be now resumed. In so doing, I encourage noble Lords interested in the Housing and Planning Bill to keep an eye on the annunciators to see when the Committee will resume.

House resumed.

Greater Manchester Combined Authority (Election of Mayor with Police and Crime Commissioner Functions) Order 2016

Motion to Approve

1.37 pm

Moved by Baroness Williams of Trafford

That the draft order laid before the House on 1 February be approved.

Relevant document: 25th Report from the Secondary Legislation Scrutiny Committee

The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Williams of Trafford) (Con): My Lords, I shall speak also to the draft Tees Valley Combined Authority Order 2016, which was laid before this House on 11 February. We will also be considering today the amendments to the Motions in the name of the noble Lord, Lord Beecham. I would simply say for now that the various wider local-government funding matters that these amendments touch on are wholly separate from what these orders and the devolution deals are all about. These deals are about promoting economic growth and prosperity for the area, providing investment and giving local places the powers to decide what to invest in and where. That is quite different from how local services are funded.

If these orders are approved and made, they will deliver significant milestones in fulfilling our manifesto commitments to implement the historic devolution deal between the Government and Greater Manchester and to devolve far-reaching powers over economic development, transport and social care to places that choose to have elected mayors. We want a shift in power from central government to local government, with decentralisation bringing power closer to local

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communities. We are committed to devolving powers and budgets to Tees Valley, to Greater Manchester and to other areas. We are committed to this so that places can achieve their potential and take control of their own growth, and so they can play their part in rebalancing our economy, including building the northern powerhouse: a powerhouse which has massive potential to add an extra £37 billion to our national economy by the next decade.

If approved and made, the Tees Valley order will establish a combined authority with functions in relation to economic development, regeneration and transport across the Tees Valley. It provides for there to be rigorous scrutiny arrangements, with the chairman of any scrutiny committee required not to be a member of the majority political party. This puts on a statutory basis the close working which already exists between the five constituent authorities and their partners, including the Tees Valley Unlimited local enterprise partnership. This close working will enable the Tees Valley to work together even more efficiently and effectively to promote economic growth, to secure investment and to create jobs.

The order is laid under the Local Democracy, Economic Development and Construction Act 2009, as amended by the Cities and Local Government Devolution Act 2016. As the statute requires, before laying the order, the Secretary of State has considered whether the proposal for a combined authority satisfies the statutory tests. I can confirm that they have been unambiguously met. The Secretary of State considers that establishing this combined authority is likely to improve the exercise of the statutory functions, and in reaching the decision to lay the draft order, he has had regard to the impact on local government and communities.

This order is the first step towards devolution in Tees Valley. Further orders will be laid later this year to create the position of mayor—to be elected in May 2017—and to confer on the combined authority and the mayor the additional responsibilities set out in the devolution deal, including powers for a mayoral development corporation.

I turn now to the order for Greater Manchester, where there has been a combined authority since 2011. This order takes further steps in the devolution journey by creating the position of a directly elected mayor for Greater Manchester, with the first election to be held in May 2017, and specifying that the first mayoral term will be for three years, with the next election in May 2020, with four-year terms subsequently.

The order also specifies that the Greater Manchester mayor will exercise the functions of a police and crime commissioner, cancels the May 2016 elections for a Greater Manchester police and crime commissioner and extends the current police and crime commissioner’s term of office until May 2017, when the mayor will be elected. To hold an election for a police and crime commissioner who would hold office for just one year would make no sense, either democratically or in terms of value for money.

Both orders are laid before Parliament following the statutory process specified in the 2009 Act, as amended. As required, all of the constituent councils

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have consented to these orders being made, and the Government have laid the draft order having considered the statutory requirements. As required, we are now seeking Parliament’s approval before making the orders.

The other place has approved each of these orders, and the noble Lord, Lord Beecham, has indicated publicly his support for devolution, for devolution agreements with Greater Manchester and the Tees Valley and, indeed, for the orders, which the regret Motions before the House in his name welcome.

I turn to the amendments. In essence, they focus on—regret—two matters. First, they assert that the devolution agreements were conditional on there being an elected mayor and that that is to be regretted, and that resources for these deals are inadequate. Secondly, they regret the Government’s policies on the broader issue of local government funding—that is, regret the measures that this Government have had to take to put right the economic chaos that the coalition faced, with a deficit of more than 10% of GDP.

As to mayors and the devolution agreements, there are simply two points which have been made on many occasions in this House. First, nobody has been required to have a mayor. Secondly, it would be irresponsible of any Government to put in place devolution of the scale and ambition as in Tees Valley and Greater Manchester without the clear, single point of accountability that an elected mayor can bring. As for resources for these deals, the devolution agreements provide funds for investment which the Government are absolutely committed to deliver. Devolution is an ongoing and iterative process, and we are committed to continue to discuss with places such as Tees Valley and Greater Manchester what else would help meet the needs of the place.

As for the funding of local government, when local authorities account for a quarter of public spending, they must carry their share of reducing the remaining deficit. To date, I must say that they have played their part in deficit reduction with great responsibility, so that public satisfaction with their services has been maintained or even improved.

The Government are clear that we have delivered a fair settlement to every part of the country, while giving councils greater financial independence so that they can deliver sensible savings while protecting front-line services.

The settlement, including the transitional grant, means that no council receives less than we announced in the provisional settlement. The settlement is broadly flat in cash terms between now and 2020. Resources are distributed fairly, taking into account the main resources available to councils. The gap in spending power between urban and rural authorities continues to reduce. We have given councils the multi-year budgets they have asked for and helped to transition from the old, centrally funded world to the new one of localised income. We have responded to their request for support for the elderly by providing £3.5 billion through the social care precept and the better care fund.

However, as I said, this is all a separate matter from what the orders are about. They are about delivering devolution, about giving local authorities the power to set their own policy agendas, the power to target their

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spending priorities to match, the power to drive growth, and power supported by investment funds, to which we are committed in the deals. I commend the orders to the House. They are a milestone on the devolution journey leading to greater prosperity, a more balanced economy, and economic success across the country. I beg to move.

1.45 pm

Amendment to the Motion

Moved by Lord Beecham

As an amendment to the above motion, at end insert “and that this House welcomes the principle of devolution, the Greater Manchester Combined Authority Devolution agreement, and the draft Order; but regrets the lack of adequate resources allocated to the Greater Manchester Combined Authority; is concerned that funding is being cut whilst essential services are being devolved; notes that a transitional grant is available to local authorities to ease the pace of funding reductions but that out of the ten constituent member local authorities of the Greater Manchester Combined Authority only three member local authorities will receive this funding; and regrets that the Agreement was conditional on having an elected Mayor”.

Lord Beecham (Lab): My Lords, the concept of devolving power to cities and regions is admirable. The councils in Greater Manchester and Teesside are to be congratulated on the way that they have worked together to negotiate a deal with the Government with the object of assuming greater control over the services, policies and destinies of their respective areas. My amendments welcome the principle of devolution, but draw attention to two aspects of the situation which are far from satisfactory: both deals were conditional on having an elected mayor, and large questions remain over funding.

Astonishingly, the Minister claims that there has been no requirement, no compulsion, to have an elected mayor. That is perfectly true, but of course, if you do not have an elected mayor, you do not have a deal. That is a strange position. We continue to oppose that requirement. There have, of course, been referendums in several authorities on the mayoral issue under the present system, several of them ordained by the Government. My city rejected the concept, despite the best efforts of the noble Lord, Lord Shipley, to persuade the electors of Newcastle to support it, while I am happy to say that his successor as leader joined me in the campaign against it, as did Manchester. As to the latter, I remind the House of the claim by Nick Boles that the only route back for the Conservatives in Manchester was to have an elected mayor. Naturally, no such motives could possibly have influenced the Government in imposing this requirement on the deals for greater Manchester, Teesside, and, indeed, anywhere else that opts to take them up.

Of course, there have also been referendums to dispense with elected mayors, as in Stoke and, interestingly and more relevantly for the purpose of this debate, in

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Hartlepool, which is part of the Teesside authority. They had an elected mayor, but disposed of him—well, not of him, but of the post. A referendum to do likewise is in progress in North Tyneside, which is a member of the proposed north-east combined authority currently in the throes of deciding whether to sign up to a deal.

However, I suspect that for most people, the key factor will be what benefits devolution might bring. These will depend on two factors: the nature and extent of the power to take local decisions on key areas of public policy, and the extent to which adequate funding is available. The two geographical areas that we are considering today have, as is proper, taken different approaches to the first of those questions. Greater Manchester has opted for an ambitious range of responsibility extending from the local economy to transport and police to health and social care. Recently, a further significant area has been added to the original deal: involvement with the criminal justice system including, as I understand it, probation. Teesside has taken a different approach, concentrating, as well it might in the aftermath of the disastrous closure of the Redcar steelworks, on the local economy, with transport and skills at the heart of its programme. In some ways, of course, this represents a return to the former Teesside county borough.

However, there are big questions about the extent to which enthusiasm for devolution extends beyond the Treasury and perhaps the DCLG, not least in the light of recent events. There is nothing new in this. Under the Labour Government, regarding the Local Government Association’s concept of total place—under which local councils and a range of government departments were to work together on a range of policies and programmes affecting individual localities, not least in regard to their financing—there proved in effect to be no real buy-in other than from the Treasury and the DCLG itself. What is different this time? During the passage of the cities Bill, the Minister convened a meeting with the noble Lord, Lord Prior, the Department of Health and interested Peers. It was attended by the Minister for the Northern Powerhouse —or poorhouse—who left after 25 minutes without uttering a word. More importantly, it was apparent that the Department of Health, certainly at that time, had had little if any engagement with the process.

Can the Minister tell us how much involvement other departments from the Treasury down have had in the agreements which today’s orders enshrine? More especially, can she say what structures are in place, or will be in place, to secure their continuing engagement so that a cross-departmental perspective is included in the work of the new authorities? There are precedents of a kind, including the inner-city partnerships of the 1980s, in which I recall serving alongside a number of Ministers at what was then the Department of the Environment, several of whom are or have been Members of this House. This is all the more necessary given, for example, the parlous financial state in which all the member councils involved in today’s orders find themselves. Their cumulative loss since 2010 occasioned by funding cuts and unfunded cost pressures amount, on an annual basis, to no less than £180 million in Teesside and over £700 million in Greater Manchester,

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with Manchester’s loss alone amounting to just under £197 million to date. That is the annual loss that it will have to carry from now on, and it is, of course, rising. The current round of budgets will push those figures to an even higher level, with more to come over the next few years.

Strikingly, only one of the councils in the two areas—Stockport—received any transition grant under the recent government announcement. I suppose it should have considered itself lucky to have received anything, as it is not a Conservative council but one with no overall control. Even so, the £2 million it received is only 5% of its annual loss so far.

Here is the key issue. How much certainty will there be about the level of funding for the key areas where responsibility is being devolved, let alone the services which remain with the individual councils, and whence will it come? The Government are committed to pouring vast amounts of money into Crossrail and HS2, about which many of us north of Birmingham have considerable doubts, and a modicum into what they misleadingly call HS3, which will improve the appalling rail link between Manchester and Leeds—though not, incidentally, extend to Teesside—but this is capital expenditure. What guarantees are there about the revenue budgets of the combined authorities and separately of their several numbers and of the capital funding for other programmes which will be necessary to make a reality of the claims to be promoting a northern powerhouse or any other substantial economic improvement elsewhere?

What will be the impact of the Chancellor’s £6.7 billion cut in business rates recently announced? Can the Minister inform us how and to what extent councils will be protected from this loss of revenue on which, given the demise of revenue support grant, they were supposed to rely? I assume that the Treasury has now briefed her following her understandable inability to answer questions about this matter last week—I do not blame her at all for that. I understand that whereas hitherto the DCLG has used its share of business rates to ensure a modicum of redistribution to authorities with a low business tax base, it is now scrabbling round to find a method of securing some equalisation when they will not be receiving any business rates. Can the Minister tell us what they are looking into, how far they have got and when we might expect an announcement? Is it true that, in future, increases in the business rate will be based on CPI rather than on RPI as hitherto? That would represent a further erosion of the value to local government of the business rate.