Planning Bill

I have two amendments in this group, Amendments Nos. 437AA and 444A, which were most helpfully prepared by the National Housing Federation, Shelter and the Chartered Institute of Housing. Both these amendments concern the relationship between CIL and affordable, so-called social, housing. It would be a disastrous unintended consequence of the provisions for CIL if this levy led to a sharp reduction in the number of homes built for those unable to buy or rent on the open market. We are now discussing the levy against a backdrop of very little new house-building of any kind. Ambitious targets for affordable housing now look painfully vulnerable. The Government have set their target as 70,000 extra affordable homes annually and, if CIL was levied at the kind of level that we think it might be, say, £20,000 per home, CIL would require payment of something like £1.4 billion per annum from the affordable housing sector. At a time when numbers of repossessions are rising, and waiting lists for housing association and council homes are growing rapidly, surely CIL must help, not hinder, the flow of more affordable housing. Housing associations struggle to make the sums add up and the books balance at present. Adding extra expense is bound to push many projects over the line of viability and affordability. Perhaps the Government will be willing to reimburse any extra cost attributable to producing a housing development to which CIL is added. Unless the Government are prepared to increase the scale of funding overall for social housing, higher grants per home would simply mean fewer homes from the total available. Can it be argued that the imposition of CIL will not lead to a much higher cost of production for each home, because planning conditions already require payments for comparable purposes which, in the future, will simply be absorbed in the CIL? The hope must be that CIL will raise more for infrastructure and related costs than do the current arrangements. Some of the extra will come from the levy being charged on commercial developments and on smaller scale developments that currently escape planning, but the housing associations would still be affected by CIL being imposed on some of the smaller developments that they currently pay nothing on, because they are below the level at which obligations kick in. Indeed, on their larger developments, it seems certain that schemes will have to pay a major contribution towards increasing the resources available overall towards infrastructure costs. I hugely welcome the idea of exemptions from CIL for charities and for developments for charitable purposes. I look forward to hearing more about those plans from the Minister. There may be improvements to the Minister’s proposals, as my colleagues are suggesting today, but it is clear that once again the noble Baroness is prepared to bring forward amendments to the Committee that will greatly improve the legislation that we are scrutinising. Nevertheless, even if those exemptions prove to cover charitable activities adequately, they may not reach much of the affordable social housing created by the housing associations, the local authority arm’s-length management organisations—ALMOs—and the new local housing companies envisaged in the Housing and Regeneration Act. Many housing associations are charities, from the older trusts such as Peabody and Joseph Rowntree, to the newer organisations of the 1960s, such as the Notting Hill Housing Trust, and the one in which I declare an interest as its chair, the Hanover Housing Association. In order to obtain funding from the GLC in the 1970s, when I was secretary to the London Housing Association’s council, it was necessary for a housing association to be registered as a charity, to provide greater reassurance to the GLC as supplier of funds. That rule did not apply in other parts of the UK. Many of the housing associations, for example, most of the bigger ones in the north of England, have never been charitable bodies, even though they are non-profit social enterprises. Could the work of all these organisations be regarded as—I quote the amendment tabled by the noble Baroness, Lady Andrews—““development for charitable purposes””? Will this be the basis of the description to be specified by regulations? Is it the Government's intention that all affordable housing will be exempt from CIL? As these are murky waters surrounded by uncertainty, my Amendment No. 437AA seeks to put that exemption beyond doubt by ensuring that CIL is not levied on any development of social housing, as clearly defined by Section 68 of the Housing and Regeneration Act 2008. My amendment is clearer and more straightforward than the new charity exemption clause. My second amendment, Amendment No. 444A, comes at the problem from a different angle. Nowadays, as your Lordships will know, affordable housing is often secured through the planning system. In order to obtain planning consent for what is hoped to be profitable housing for sale, housebuilders and developers are required through a Section 106 agreement to produce a percentage of the homes as affordable social housing. This arrangement counts for some three-quarters of all new affordable housing. Usually, these homes are sold immediately, at a pre-agreed price, to a housing association which will own and manage those homes. To pay the developer’s price, the housing association may need to draw down some social housing grant from the Housing Corporation or, in future, from the Homes and Communities Agency. The developer must also contribute towards the cost at the very least by foregoing some of the profit that it could have made if the homes had been sold on the open market, rather than as affordable housing. Negotiations on just how much affordable housing can be extracted from a development are often tortuous. The local authority will usually have set a target—say, 35 per cent of all new homes, or 50 per cent in some high-demand areas. Site-by-site reductions will be subject of negotiation. A brownfield site with heavy remediation costs may be unable to absorb the same level of affordable housing as is feasible for a straightforward greenfield site. The local authorities need to have considerable sophistication when dealing with the negotiations. Housing associations are sometimes innocent bystanders when these arguments are raging between councils and housebuilders. Sometimes associations are responsible for the whole development, including sales and affordable housing, and they are the ones who negotiate directly. I have been in this position at the Joseph Rowntree Housing Trust, and I know how delicate the balancing act must be handled between the viability of the whole project and the percentage of social housing that can be including within the scheme. Amendment No. 444A seeks to ensure that those negotiations are not thrown out of kilter by the arrival of CIL. If the levy increases the cost of the scheme and reduces its profitability for a developer, or its viability for a housing association, it is very likely that affordable housing will take the first hit. My amendment avoids this hazard by ensuring that CIL is not the first call upon the developer’s resources, but affordable housing is. CIL might, therefore, have to take the strain, but not the quantum of affordable housing, if there is not enough in the kitty for both. I hope that the Minister will once again help us to improve the Bill and protect the affordable homes that will be desperately needed in years to come.