Planning Bill

I have ceased to count the number of questions that I was asked in this debate. I suspect that I will not be able to answer them all and will have to write, but I will do my best. First, I should like to give a general statement. It is understandable that now we are talking about how CIL operates we have moved away from the high objectives and politics and have got into the serious and difficult technical issues of a complex set of possibilities. I understand it when the noble Baroness, Lady Hamwee, says that she is less certain than when we had our big debate. It is precisely for those reasons—when we come to talk about the charitable clauses that we have put forward, the exemptions and so on—that we are wrestling with genuine complexities. We are genuinely trying to do our best, in conversation with those who understand the impact on the ground, to determine how we can best manage this so that it is a benefit and not a disbenefit for the people we are trying to help. It is no matter whether they are developers, people who need affordable housing or the charitable sector. At this level of detail, one begins to realise that it is difficult. Basically, we are trying to do something that will raise money to invest in the things our communities need, whether they are hospitals, playgrounds or railway stations. Those needs are not going to go away, they will become more intense. Yes, noble Lords may feel that what we have concocted is something that will cause local authorities to take a deep breath and think again, and some may well be right to do so because of their local circumstances, but this is designed to help meet the needs of the community. That is what it is all about, and I do not apologise for the fact that it is complicated. It is also why we said at Second Reading that so much had to be left to regulation because it will be dealt with through discourse and understanding between us and the people who have deliver this on the ground. Those are my general comments about why we are at this point in the debate. I shall go fairly quickly. I understand the point about the groupings, but all these amendments are about different forms of exemption, so it is right to group them together. They cover the question of which developments should be liable to pay CIL, and we have heard much in the debate about exemptions for specific types of development. I shall turn, first, to Amendments Nos. 436C and 437D tabled by the noble Earl, Lord Caithness. These seek to ensure that CIL would be payable only when the necessary infrastructure had been completed as opposed to on commencement of the development in question, as currently provided for in Clause 200(2)(a). It does not make sense for CIL to be payable only once an item of infrastructure has been completed, because it may well be something required to support the development plan as a whole. Essentially it is a work in progress and not fixed in time. CIL is a source of revenue for local authorities to use in a flexible way based on local infrastructure needs and planning. As I have said before, the link between development and infrastructure is strategic rather than specific, so it is difficult to say which developments would have to pay on completion of a particular item of infrastructure, or which pieces of infrastructure a specific development had to contribute to. It also raises difficulties about the concept of completion. ““Commencement of development”” has a legal definition set out in the Town and Country Planning Act 1990, but the concept of completion has less legal precedent and raises issues around monitoring, checking, verification and so forth. Amendment No. 437D appears to require that CIL may be paid only where the value arising from planning permission is wholly realised at the point of sale or be under a contract of sale for a development or some wider area within the charging authority’s area. I am afraid that the amendment is not clear on that point. It is different from the provision currently set out in Clause 200(2)(a) which requires regulations to make CIL payable on commencement under subsection (5) which allows regulations to be made to, "““require CIL to be paid in respect of land developed in reliance on planning permission””." The Government do not believe that payment on point of sale is appropriate for a number of reasons. First, as we have debated, it is often the case that land prices after the introduction of CIL will reflect potential CIL liabilities faced by parties interested in the land. In this way, such parties should have the means to pay for CIL on commencement of development by paying less for the land beforehand. Secondly, while Clause 200(2)(a) requires that CIL be payable on commencement, the Government envisage that the liable parties will have 28 days from commencement to pay CIL liabilities, as set out in paragraph 4.33 of the August document. Clause 203(2)(b) provides for regulations to allow payment in instalments. In this way, we are offering some release from pressure on developer cash-flows, and I think we are right to do so. In the case of some development, sale may occur decades later if the developers are, for example, demolishing and rebuilding on investment land they already own, and may be looking to rental from it rather than selling outright. As this is a very regular occurrence, crystallising liability at the point of sale will undermine CIL very seriously and could also distort developer decisions as to whether to sell or hold completed developments. Delaying payment of CIL until the land in question has been sold risks delaying the charging authority’s receipt of CIL. Many noble Lords around the Chamber have asked for certainty in the context of our debate. What we have here is the possibility of a lot more uncertainty, imposing additional borrowing costs on the charging authority in order to fund the infrastructure or perhaps delaying its construction. A further consequence of providing that regulations may require that CIL be paid only where the value of the land in question has increased as a result of planning permission is the risk of costly disputes between liable parties claiming that the value has or has not increased. That may dissuade some charging authorities from attempting to collect CIL at all.