My Lords, this is the second group of amendments today on the new infrastructure levy. While there is clear scope to reform and improve the existing system for developer contributions, it is none the less responsible for a huge proportion of new affordable and social homes. As its proposed replacement, the infrastructure levy represents, as I said in the earlier debate, a radical shift in how such housing will be funded and delivered.
There are 4.2 million people currently in need of social housing in England—I do not think that fact can be repeated too often. Our efforts to house them have so far been abysmal. Against this backdrop of acute housing need, changes to the planning system must at a minimum protect current levels of new affordable housing. In the earlier debate, the Minister emphasised that the Government aim to do just that but also said that these were decisions for local authorities and offered little confidence that this aim could be guaranteed.
The Daily Express on 29 April had a startling statistic that nine in 10 local authorities failed to build a single council house last year and no region in England saw an increase from 2021. As many as five locations in England did not complete a single social home last year, including the City of London. My noble friend Lady Taylor cited the evidence from Homes for the North, which provided us with an excellent briefing. Through its research with Liverpool University, it has shown that those most in need of levelling up, based on the Government’s own definition, are likely to have the least capacity to generate investment for affordable housing through the infrastructure levy, and it goes on to offer more data on that. The Minister expressed hope that more social housing would be built, but as targets are to be dispensed with and as local authorities and housing associations are clearly struggling to deliver any social housing at all, there is a singular lack of ambition to help the 4.2 million people in real need.
I have three amendments in this group—Amendments 326, 327 and 334. Each of them seeks to strengthen protections for affordable housing in this legislation and ensure that the infrastructure levy does not lead to a net loss of affordable housing. I am pleased to have received support for the amendments from the Labour and Lib Dem Front Benches, the right reverend Prelate the Bishop of Chelmsford and the noble Baroness, Lady Watkins of Tavistock.
I move to my first amendment, Amendment 326. One of the main concerns with the infrastructure levy, raised by stakeholders from across the housing sector, is the risk to on-site delivery of affordable and social housing. While imperfect, Section 106 has facilitated a well-integrated mix of housing tenures to support households of different sizes, ages and incomes. We have a proud history in this country of people living side by side. These mixed communities are a rare success story in housing and planning policy and must be retained if we move from Section 106 to the levy. But by moving us away from an in-kind system of affordable and social housing, as with Section 106, towards a financed-based system, the infrastructure levy risks undoing important progress in this area.
It is welcome that the Government have acknowledged this risk. In a policy paper published alongside the Levelling-up and Regeneration Bill on 11 May 2022, the Government committed to:
“Introduce a new ‘right to require’ to remove the role of negotiation in determining levels of onsite affordable housing. This rebalances the inequality between developers and local authorities by allowing local authorities to determine the portion of the levy they receive in-kind as on-site affordable homes”.
This was a very welcome commitment. In their recently published technical consultation on the infrastructure levy, the Government again confirmed their intention to bring forward a mechanism for on-site delivery. However, it is disappointing that not a single mention of the right to require mechanism is made in this Bill. Ministers have said it will instead be introduced via secondary legislation. This mechanism for on-site delivery is a highly significant aspect of the new levy and should not be left out of the Bill altogether. It should be subject to proper parliamentary scrutiny and a rigorous consultation and piloting process. I hope the Minister will comment on that.
My Amendment 326 would place a duty on the Government to bring forward infrastructure levy regulations which would introduce a mechanism for the delivery of on-site affordable housing as an in-kind levy payment. Put simply, my amendment would ensure that the Government abide by their own stated policy intentions and hold Ministers to their commitment to safeguard the future of mixed communities.
Again, this amendment does not seek to transform radically the design of the levy; it would simply put stated government policy in the Bill. It does not bind the Government to an onerous or cumbersome interpretation of the right to require; it merely ensures that such a mechanism is introduced. For these reasons, I hope that the Government will consider supporting this amendment.
Amendment 327, coupled with Amendment 328 in the name of my noble friend Lady Hayman of Ullock, seeks to place in primary legislation clear exemptions from payment of the infrastructure levy for registered providers of social housing. My amendment would provide for an exemption from liability to pay IL in respect of a development which contains 100% affordable housing. I support also the amendment tabled by my noble friend Lady Hayman which would exempt developments containing 75% affordable housing. Charging levy rates against such developments would clearly disincentivise new affordable housing and undermine the levy’s stated purpose. There are already such exemptions in place in the current system for developer contributions, most notably in the community infrastructure levy.
The Government have indicated that they will introduce such an exemption. It would be preferable to see this commitment included in primary legislation. At Commons Committee stage, the Housing Minister confirmed that the Government
“do not expect to charge the levy on exclusively affordable housing developments; we will explore that matter further in consultation”.—[Official Report, Commons, Levelling-up and Regeneration Bill Committee, 6/9/22; col. 638.]
It would be preferable to see this commitment in the Bill.
No argument has been forthcoming about why it is preferable to introduce such an exemption via regulation. This is particularly concerning as an exemption is provided for charities in new Section 204F, to be inserted by Schedule 11, which could encompass most registered providers of social housing. Further clarification is required as there is a risk of overlapping exemptions and confusion about criteria for housing associations.
I hope the Minister can provide more clarity and certainty about the Government’s intention to bring forward exemptions from the levy for affordable housing.
My Amendment 334 would strengthen the requirement for local planning authorities to set infrastructure levy rates at a level which would not result in a loss of affordable housing. It would ensure that the infrastructure levy delivers baseline levels of affordable housing, thus removing the risk of a net loss of affordable housing under the new system.
In a public letter to the Secretary of State in February, 19 leading organisations from across the housing sector set out significant concerns about the impact that the proposals for a new infrastructure levy will have on the supply of new affordable housing. Signatories included Shelter, Crisis, the Church of England, the National Housing Federation and the Greater London Authority.
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Each of these organisations believes that in its current form, this legislation provides no meaningful protection for affordable housing in the new levy. The only attempt at providing such safeguards is in new Section 204G, which contains vague wording about how charging authorities “must have regard” to “the desirability of” affordable housing when setting rates of the infrastructure levy.
The “desirability” of affordable housing is vague and unclear, placing no real duty on local charging authorities to deliver appropriate levels of affordable housing. My amendment seeks to strengthen the wording so that local planning authorities must ensure that there is no net loss of affordable housing when setting levy rates. This is in line with the Government’s stated commitment to deliver
“at least as much—if not more”
affordable housing as the present system.
In its current form, new Section 204G also places a heavily qualified requirement on charging authorities to deliver a level of affordable housing which is “equal to or exceeds” levels of delivery over an unspecified period of time. Charging authorities will have to exceed current levels of affordable housing delivery if they are not currently meeting affordable housing need. There is a risk that in some areas, this new section would bake current levels of under-delivery into the new system, which would be a clear step in the wrong direction.
Proposed new subsection (b) in my amendment ties levy-setting to affordable housing need identified in the local development plan and infrastructure delivery strategy, ensuring that the levy works in tandem with a plan-based system based on clearly identified housing need, not an arbitrary metric of “current levels”.
Of the four amendments I have tabled to Schedule 11, this is the most consequential. The Government must revisit the wording of new Section 204G. At present, it is inadequate and risks a significant reduction in the delivery of affordable housing and homes for social rent through the planning system.
Finally, I also support Amendment 350 in the name of the noble Lord, Lord Best, which seeks to tie the application of the infrastructure levy to the level of affordable housing requirement identified in the local
development plan. This would support a plan-led system which is based upon a rigorous assessment of housing need, rather than the vaguely defined criteria presently in the Bill.
I believe that my amendments will significantly improve the design and implementation of the infrastructure levy, and I hope the Minister can accept them.