I thank the noble Lord for that. As I said, large developments can take a decade or more to build out and we do not want to build infrastructure, only for it to stand idle for a long time. This would increase costs for developers, reducing the amount of money that can therefore be put towards other infrastructure and affordable housing, without generating additional benefits for the communities. I agree that infrastructure must be delivered in a timely way, but that means neither too early nor too late. I will turn in a moment to the powers in the Bill that will allow this.
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Turning to my noble friend Lord Greenhalgh’s Amendment 346, I clarify for the Committee that new Section 204O in Schedule 11 allows for regulations to be made that require local planning authorities to pass levy receipts to specified bodies. These are the powers that enable a proportion of levy receipts to be passed to bodies such as parish councils, thus retaining the ability for a neighbourhood share to be set up under the levy, rather than the spending of funds more generally. I believe that my noble friend raises a wider point here, making sure that levy payments are made in a way that allows infrastructure to be in place before a development is occupied and begins to impact on the capacity of services such as emergency services.
In relation to both amendments, I can reassure the Committee that we already have powers in the Bill that can be used to deliver important infrastructure at the right time. This includes powers in new Section 204R(2), in Schedule 11, to allow levy regulations to require early levy payments, or payments by instalment, if this is considered appropriate by the local authority. We are currently consulting on how these powers should be used.
Furthermore, it will be possible for local authorities to build up a reserve of funds from multiple sites to deliver infrastructure when it is needed, or to borrow against future levy receipts. For the largest, most strategic sites, Section 106 agreements will continue to be used to secure the delivery of infrastructure at an appropriate time, in line with the agreement. On all other sites, infrastructure integral to the design and function of the site will continue to be delivered by the developers.
Moreover, if a local authority requires an additional sum to be held in bond for remedial works, there are powers for it to do so in existing legislation through Section 278 of the Highways Act 1980 or, if necessary,
through Section 106 of the Town and Country Planning Act. Local authorities will continue to be able to use these powers under the levy, in circumstances allowed by regulations, so no new legislation is required to achieve this. I hope I have provided noble Lords with the reassurance that the issues raised can be addressed through the current drafting of the Bill and through the levy regulations.
I move now to Amendments 336, 337, 338, 339, 354 and 355. This group of amendments, tabled by the noble Lord, Lord Best, and the noble Baroness, Lady Taylor, relate to the preparation, examination and monitoring of infrastructure levy charging schedules. I will begin with Amendment 336, which would require the consideration of the viability of different types of development, including older people’s housing, when setting rates. Delivering housing for older people is important. Both the Department for Levelling Up, Housing and Communities and the Department of Health and Social Care provide capital funding to incentivise the supply of housing options available to older people. Our planning rules already mean local authorities must consider the needs of older people when planning for new homes.
However, we recognise that there may be many different types of development undertaken in an area, and that the economics of these developments are different. The Bill already makes provision which enables charging authorities to set different levy rates for different types of development in their infrastructure levy charging schedules, and requires that they have regard to the viability of development when setting rates. When the levy is introduced, local authorities will need to ensure that all types of development remain capable of being delivered. We also have the ability to prescribe what evidence must be taken into account when setting rates. Therefore, viability is already central to the local authority’s considerations on rate setting. It is up to local authorities to find the right balance when setting rates to capture as much value as they can while ensuring that development still comes forward because it is viable.
Furthermore, infrastructure levy charging schedules will be subject to an examination in public to ensure that appropriate care has been taken in setting rates. Amendments 337, 338, 339 and 354 seek to remove this protection. Having an examination in public is an important procedural mechanism. This ensures that people impacted by the rates have the right to be heard when rates are set, that local authorities pay due regard to their stakeholders and that they take all relevant considerations into account when setting rates. The existing community infrastructure levy has the same process for independent scrutiny of proposed rates, and this works well.
The noble Lord, Lord Best, asked what the point of costly charging schedules was. The independent examination should reduce the risk of JR, rather than increase it. We want the procedural system to be fair, transparent, consistent and robust. The examination process will deliver this and will also reduce the likelihood of legal challenges being brought on procedural grounds, as I said.
Lastly, new Section 204Y(1) to be inserted into the Planning Act sets out the instances where the Secretary of State may require a charging authority to review its
levy charging schedule. Amendment 355 would limit the circumstances in which the Secretary of State could direct such a review. Reviews are important to provide confidence that the charging schedule remains appropriate or alternatively identifies the need to start a process of revision if the rates are not considered to be effective for securing value. This will be important for both local communities and developers, so that the rates and minimum thresholds that have been set remain appropriate and up to date. Historically, we know that local planning authorities have not always reviewed and updated key documents, such as local plans, in a timely fashion. We also consider it important to retain flexibility to be able to regulate for other future circumstances when it may be necessary to direct a review of a charging schedule to be undertaken.
The levy is a long-term transformation programme, which needs to be able to deal with not just the markets of today but the markets of tomorrow. New development models may come forward, new methods of construction may impact on costs, and new sectors of the economy may appear, which have their own unique challenges. I hope I have persuaded the noble Baroness of why the power to direct reviews is valuable, and how important it is to have this flexibility.
I turn now to Amendments 342, 347, 348, 351 and 352, tabled by my noble friend Lord Greenhalgh and the noble Baroness, Lady Scott of Needham Market, which relate to how levy funds can be spent. I am sure all noble Lords will agree that the emergency and rescue services are fundamental to the safety and security of our country, as we have heard today. To support appropriate provision alongside new development, the infrastructure levy will be able to be spent on facilities and equipment for emergency and rescue services.
New Section 204Q(11) requires levy regulations to determine the consultation process and procedures that must be followed when a local authority is preparing its infrastructure delivery strategy. This can include which bodies must be consulted in order for charging authorities to determine their infrastructure priorities for the spending of the levy. These matters of detail will be determined through regulations. I agree with noble Lords that it is entirely appropriate that emergency and rescue services should be among the bodies consulted on the infrastructure delivery strategies and should be listed in regulations for that purpose.
An important question is the weight that must be given to representations made by particular bodies, such as the emergency and rescue services, when spending or passing infrastructure levy receipts to another body. Specifying a particular infrastructure body whose representations must be given significant weight in the Bill would suggest that this body should be given preferential treatment over other bodies, such as healthcare, education and highways, which are also fundamental to creating sustainable developments. It is important that the planning authority must ultimately make its own decisions about the allocation of limited resources, taking into account all local needs and preferences, in the round. I hope I can persuade noble Lords that it is better for local authorities to make these decisions themselves than for central government to single out certain interests.
New Section 204Q(6) requires that regulations must make provision for the independent examination of infrastructure delivery strategies, and new Section 204Q(8) allows regulations to determine what the examiner must, may or may not consider, and the procedure that must be followed. This examination will ensure that the charging authority has fulfilled its obligation to consult, and properly taken account of the consultation responses and any national policy or guidance.
Requiring the final strategy to be approved by the infrastructure bodies would add an unnecessary burden to the process and, most critically, would take the decision-making powers away from the local authority. If such a power were granted to the emergency services, it would also be sought by all other infrastructure providers, all of which would be seeking funding. If participants had, in effect, a veto, it would be unlikely that any infrastructure delivery strategy could be agreed and produced in a timely fashion, if at all.
I recognise the importance of a fair process. The development of an infrastructure delivery strategy, combined with its examination to ensure that it has been properly undertaken, is our means of delivering it. I hope I have persuaded noble Lords that this strikes the right balance between empowering a local authority to make appropriate decisions, while ensuring that they are transparent and subject to oversight.
The list of kinds of infrastructure at new Section 204N(3) is intended to be a non-exhaustive list of what is considered to be infrastructure. It is indicative of some of the things that local authorities may like to consider but it is not intended as a checklist or mandatory list. It is far more important that local planning authorities engage with relevant infrastructure-providing bodies about what is needed in their local area.
With regards to passing funds to parish councils, the Government are committed to empowering communities through the planning system. Under the community infrastructure levy, where all or part of a chargeable development is within an area of a parish council, the charging authority must pass 15% of the receipts to the parish council, and this increases to 25% where there is a neighbourhood development plan in place. The levelling up White Paper commits the Government to continuing the neighbourhood portion of CIL as it introduces the new infrastructure levy. This commitment will be achieved under new Section 204O, inserted by Schedule 11, which provides powers for regulations to be made that may require charging authorities to pass levy receipts on to other specified persons. This replicates the existing framework for CIL, set out in Section 216A of the Planning Act 2008, as amended.
It is important that parish councils do not lose out through the introduction of the new infrastructure levy. However, the amendment tabled by the noble Baroness, Lady Scott, would represent a significant increase of levy funds compared with the existing system. It is important to emphasise that, in the existing system, Section 106 agreements, for which there is currently no neighbourhood share, secure about 85% of all developer contributions, while CIL secures about 15%. The new infrastructure levy will capture much of what is currently secured through the Section 106 agreements. This means that the total revenue collected through the new infra- structure levy will be much greater than CIL. If we
were to set the neighbourhood share of the infrastructure levy at a percentage equal to or higher than that of CIL, funding currently secured through Section 106 would be diverted to parish councils. Such an approach would inevitably result in a decrease in affordable housing and revenue for local authorities’ infrastructure needs.
We are consulting on what proportion of levy proceeds parish councils should expect to receive under the new system when chargeable development takes place in their area, and that will be provided for in regulations. Our position, however, is that the value collected as neighbourhood share should not result in less money being allocated for neighbourhoods than in the existing system.
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The noble Baroness is also concerned with the level of flexibility that is afforded to parish councils in how they spend levy receipts. In the Bill, we already have powers which would give more flexibility to parish councils in the levy context, in terms of their spending choices—this is set down in the existing provisions in new Section 204O(3). We can provide in regulations for councils to spend specified amounts of money on other things that are not related to infrastructure and not related to supporting development.
Through regulations, we will ensure that parish councils have flexibility in how the neighbourhood share of the infrastructure levy can be spent. This will enable parish councils to focus on priorities that matter most to communities at the hyper-local scale.
For the reasons I have set out I hope I have provided noble Lords with reassurances on how the levy will be spent.
Before I go on to the government amendments, I will make a couple of points. The noble Earl, Lord Lytton, brought up the issue of bus shelter problems in 106 being lost—Section 106 obligations usually have to be used in line with the original intentions as set out in the obligation itself. This can mean that local authorities must return funds if the original purpose is no longer relevant. The levy will answer this—local authorities will have flexibility over how they spend funds when circumstances change and will not have to return the charge.
The noble Baroness, Lady Taylor of Stevenage, asked how we are going to stop the Secretary of State top-slicing the infrastructure levy. There is a new requirement for local authorities to publish an infra- structure levy strategy—as we have already been saying—setting out their approach to spending the levy. I can assure the noble Baroness that spending will be led by local authorities, with decisions only shaped by national policy—so no top-slicing.
Moving on to the government amendments, the Government recognise that the new infrastructure levy represents a significant change. Amendments 335A and 357A are minor clarifying amendments to the Bill to support this transition. These amendments will allow local authorities currently charging the community infrastructure levy to use those receipts to fund preparation and admin costs for the new levy. Similarly, they will make provision to enable sums obtained from developers via the 106 agreements to be used in connection with the new levy. These amendments therefore make it clear
that local planning authorities can use cash collected under the existing developer contributions system to support the administration and set-up costs related to the new levy.
Amendment 335A makes a clarifying amendment to new Section 204Z(1) in Schedule 11 to enable the levy regulations to make provision treating CIL as if it were the infrastructure levy. This can be relied on, for example, to make provision for CIL to be applied to fund the administration costs and set-up costs of the new levy, such as work to develop new charging schedules.
In a similar vein, Amendment 357A amends new Section 204Z1(1)(c) in Schedule 11 of the Bill to make it clear that local authorities will be able to use sums obtained through Section 106 agreements to support the set-up and administrative costs of the new infra- structure levy.
Both these amendments are minor clarifying amendments, as they may express what is arguably implied within existing powers. Together, these amendments are an important part of the Government’s plans to introduce the new infrastructure levy in an effective, transparent and coherent way.