The right hon. Gentleman makes an interesting point, and I hope that he will persuade Ministers to accept our amendment 44, on how viability is measured. It would require more precise guidance to be given to local authorities of whatever political shade so that they know how they should assess viability. Voluntary agreements, which usually mean negotiating section 106 requirements downwards, are occurring across the country, so we and local councils need a better understanding of what is meant by viability in that context.
We know from the evidence provided by the LGA that on average councils are willing to accept a level of affordable housing about a third lower than the amount set in their local plan. We also know that all but 2% of councils have said that they would be willing to renegotiate section 106 agreements. There is therefore a big question about the need to include clause 6 at all.
It may help the House to understand the full nature of what is wrong with the clause if I briefly go through each amendment and its purpose. Amendment 45 would require a local authority to establish first of all that it is the application of a section 106 housing agreement that is making a development unviable. As we pointed out in Committee, such an amendment would place a sensible requirement on local authorities to establish that it is the section 106 agreement for affordable housing that means that a development cannot go ahead as planned. It would also allow other types of obligation, such as highways contributions, to be put forward to the local authority for renegotiation as part of current section 106 arrangements. Developers can already ask a local authority for a renegotiation of section 106 agreements, so we simply cannot understand why the Government would not want to accept such a basic, common-sense amendment.
The LGA has continued to press on that point, stating that it does not understand why the clause addresses only affordable housing when section 106 agreements also fund other forms of infrastructure. It has asked why social housing is deemed dispensable, especially since the current lack of funding has had a particular impact on the delivery of affordable housing, which is greatly needed.
After the May 2010 election, the Government cut the budget for new affordable homes by 60%. Labour invested £8.4 billion in the three years between 2008 and 2011, whereas the current Government will invest just over half of that amount in the four years between 2011 and 2015. At the same time, funding for existing affordable homes has fallen. As a consequence, shockingly, 37% of affordable homes do not meet the decent homes standard. I say to Ministers in passing that when we discussed the matter in Committee, no mention was made of the huge amount of money that went into upholding that standard under the previous Government. Of course, that kept a number of affordable houses in occupation.
We know that private rents are soaring. They hit a record high over the summer and are even higher at the moment. The number of homelessness acceptances is increasing, and over the past year rough sleeping has risen by about 23%. Affordable housing is therefore more necessary than ever, which is why the clause is so dangerous.
The Minister should note that the Local Government Association supports amendment 44. It asks the Minister to set out in regulations the criteria by which viability is to be assessed, and to consult relevant organisations before doing so—the issue raised by the right hon. Member for Bermondsey and Old Southwark (Simon Hughes). The LGA states that the clause encourages have-a-go behaviour for developers, because it offers no reason for them not to try to seek a reduction in their affordable housing obligations from the Planning Inspectorate. The LGA has said that the clause could delay house building and economic recovery as developers wait for the new regime to be put in place, while placing additional resources centrally with the inspectorate, rather than properly resourcing local planning authorities.
6.30 pm
Amendment 44 proposes that the Secretary of State sets out in regulations, on which there has been consultation, the criteria for assessing economic viability. The determination of economic viability and the ability
of developers to use non-viability as a means of renegotiating section 106 agreements for affordable housing is central to the clause, yet at no stage has the Secretary of State thought it necessary or reasonable to set out clearly to the members of the Committee, the House, relevant organisations and agencies or developers how viability is to be determined. That is simply not acceptable; greater transparency is necessary. Indeed, on this amendment the National Organisation of Residents Associations asked the Minister what I think is a fair question: who decides what is an appropriate profit margin and how will it be assessed? The association made the relevant point that it could be a moving feast.
In Committee, the Minister said:
“Of course it is important that local authorities understand how viability will be measured and what criteria will be used. The guidance will be published in due course.”––[Official Report, Growth and Infrastructure Public Bill Committee, 27 November 2012; c. 295.]
More guidance! I thought the Government said that they were seeking to reduce guidance, yet we find, again and again during consideration of the Bill, that not only do we have consultation papers coming out of our ears, but we will have a lot more guidance to deal with too. We need to know when the guidance will be published and whether the Minister is discussing the matter with the Royal Institution of Chartered Surveyors, which, I understand, has already produced some draft guidance.
Amendment 46 would require the Government to use the £300 million they say they have allocated for affordable housing—I am concerned it may have been allocated a number of times already—to be used to pay developers to make sites viable. Labour Members are desperately concerned that the removal of affordable housing from development sites will lead to a lack of balance and a lack of mix in our communities. That is why we think it is better for the Government’s money to be used for mixed schemes, which are already planned and deliverable, rather than to stop them and put the money somewhere else. We feel strongly about this and at the appropriate time will press the amendment to a Division.
What the Minister said in Committee is interesting, because he seemed to acknowledge my point about the need to develop balanced communities:
“One reason why we all want to retain the rather clumsy 106 system is that there does not seem to be another way of achieving mixed communities whereby new developments of private housing also include affordable housing. We are genuinely trying to make this work.”––[Official Report, Growth and Infrastructure Public Bill Committee, 27 November 2012; c. 289.]
It therefore seems strange that, having acknowledged the problem in Committee, the Government have come forward with no proposals to address it on Report. The Town and Country Planning Association highlighted the issue, drawing attention to the fact that
“The effect of the reforms to Section 106 agreements will be to reduce the quantum of land for affordable housing and risks increased social polarisation on particular sites.”
How will the Minister ensure that mixed sites will continue if a developer asks for the section l06 agreements on affordable housing to be removed?
Amendment 47 was also the subject of some discussion in Committee, not least because the structure of clause 6 allows only for a situation in which land values are falling. The amendment addresses the situation where development has been stalled for more than one year
and land value has risen. It allows for the local authority to determine a new requirement, modify a requirement, or agree to review it after a given period.
The Government do not seem to have contemplated a situation in which land values are rising. As the Bill is supposed to contain measures that support growth, that is extremely worrying. Clearly, the Government have no more faith in the ability of the Bill to deliver growth than we do. The amendment would allow for the renegotiation of section 106 agreements for housing to be made where land values have increased and development on a renegotiated agreement downwards has not been delivered within one year. The Minister considered the one-year period to be too short. Perhaps he will be able to tell the House today what sort of time frame he would consider.
Amendment 48 is extremely important. If a developer sought to persuade the Secretary of State that a development was not viable because of the application of a 106 agreement for affordable housing and that it should therefore be removed, the amendment would ensure that the land remains protected for use by social landlords, or by the local authority if possible. That would protect the development of mixed communities and ensure that social landlords are not denied building opportunities through of the absence of land—a point made to the Minister by a number of housing associations. The Minister said that for social housing landlords
“land is often the thing they find hardest to come by, particularly land in a larger development, which is necessary to create a mixed community.”––[Official Report, Growth and Infrastructure Public Bill Committee, 27 November 2012; c. 306.]
He also said that more guidance will be published. I finish on this point and ask him again: when will this new guidance be published?