My Lords, I will speak to Amendments 96 and 98 in my name and that of my noble friend Lord Lansley.
In answering a question last week, the Minister, my noble friend Lady Scott, said that the levelling-up Bill was a large one; she gave that as a reason for dropping the repeal of the Vagrancy Act. My amendment directly addresses that concern by deleting eight pages from the Bill: those introducing the untested concept of community land auctions, parachuted into the Bill at a late stage in the other place, hot from the bubbling vat of a think tank, without the normal process of cooling and maturing.
I say again how grateful I am to Ministers for their patience in discussions on CLAs and for the very comprehensive six-page letter received yesterday, addressing some of the concerns that I have spoken about.
One would have thought that a novel concept such as this one would have been subjected to some consultation before it appeared in the Bill: first, with those who have to operate it—namely, the planning authorities—and, secondly, with those who represent the landowners, who have expressed deep reservations about the proposal. So we were surprised to hear the Minister say, in winding up the debate in Committee:
“We will consult on community land auctions shortly”.—[Official Report, 18/5/23; col. 430.]
Over the weekend, I was reading the guidance issued in April last year for civil servants who are charged with developing policies such as this one. It says:
“Engaging with stakeholders as soon as possible gives them the opportunity to understand what’s being asked of the service team and why. It’s also a chance to build trust and understanding of each other’s needs and ways of working and lets them plan their time and involvement with the project”.
Clearly, that engagement with the stakeholders simply has not happened here. I am not blaming the civil servants; Ministers clearly insisted on this clause going in. The guidance then adds a warning to civil servants to
“think about what your users need, not what government thinks they want”.
6.15 pm
It is not as if this was a well-developed policy operating anywhere else. The only territory that has anything like community land auctions is, apparently, Hong Kong, where all land is in public ownership and so is not a great comparator. Some 12 years ago, in his 2011 Budget, George Osborne announced that he would pilot a land auction model. However, no progress was made, possibly because the proposition did not withstand critical scrutiny.
Writing in Property Week on 19 January this year, Nick Fell said that community land auctions
“have no place in a bill that needs practicality, commitment and delivery while there is still time to get it off the ground … Community Land Auctions are not a practical solution and we doubt they will have legs”.
The problem with this policy lies in the name: community land auctions. We all know what an auction is—the winner is the person who makes the highest bid—so there is a risk that planning decisions will be contaminated by financial inducements. Local authorities will have a financial incentive to designate for planning land over which they have an option, in preference to land over which they have no option, even if that land might be more suitable for development. The proposal works only if there is a proper market and the majority of landowners in an area are prepared to go through the hassle of putting in an option. There is a risk that those with the best sites for development sit on their hands, while those with speculative sites on the margin are the only ones who put in the options. My inquiries with land agents indicate that this is exactly what will happen.
At the moment, land is promoted by a landowner, promoter or developer at a significant cost, with a corresponding risk to financial capital, in order to establish that a site is deliverable. That process involves consideration of the land’s constraints—flood risk, archaeology, heritage, ecology, highways, topography, drainage, servicing, et cetera—as well as consideration of the ability of the land to remain viable after applying all the various policy requirements from the planning authority. If the most appropriate sites are to be allocated in local plans, CLAs will have only a limited impact, as landowners are unlikely to sell at any price other than the market price for the land. That is because most sustainably located suitable sites are already likely to be under contract—by way of an option or promotion agreement—to a developer, with a requirement to abide by the conditions set by those legal agreements until the point at which they expire. I have been told that the only take-up will be from
landowners with sites that are neither logical nor unconstrained, and which are most likely to be undeliverable or unsustainable as a result.
If a landowner thinks that his land is suitable for housing development, why should he not just wait and pocket all the windfall, rather than sharing it with the local authority? Most of them are able to take a long-term view, and that is the Achilles heel of the proposal. The chair of the local authority body, the Planning Officers Society, Mike Kiely, said:
“In many urban areas, there’s a real shortage of development sites so those landowners with good sites are unlikely to opt for the CLA process”.
He went on to point out that there is a danger that landowners with poorly located sites, or those on the edge of urban areas, may choose to go for a CLA to improve their chances of getting an allocation in the local plan and offering a generous incentive to the LPA, while the sites that have the better chances do not enter. Of course, local authorities are under enormous financial pressure at the moment.
Then there is the issue of the local planning authorities having the skills and human resources, and indeed the financial resources, to undertake the whole CLA process. The representative bodies of the planning authorities have highlighted the issue of increased financial risk in their responses to the recently proposed infrastructure levy. Concerns have also been expressed that the CLA process could slow up plan-making and housebuilding. The amendments to the Bill do not set out any timetable for the CLA process, but it would have to be very swift if preparation of the local plan is not to be delayed, as one commentator has remarked.
As we heard in an earlier debate, this is a levelling-up Bill but the most valuable sites are in the better resourced local authorities. Unless receipts from the options are shared, or there is some clawback, which is not proposed, the policy, if it works, will not level up. So this is not just an auction; this is a gamble. We want to make progress with the Bill, so unless I am provoked by an insensitive reply from my noble friend the Minister—which of itself would be a first—I do not propose to test the opinion of the House on this. However, I did not want to let the debate on the clause pass without putting on the record the very real reservations that have been expressed by those who will have to operate it.