My Lords, we have a couple of amendments in this group, but perhaps I might make a few upfront comments now following our early discussions. Our concern about this clause generally is that it will lead to a reduction in the supply of affordable housing. Specifically on that point, I do not think that we have seen the equalities impact assessment for this clause; if we have, doubtless the Minister will let us know, but it would be very helpful if we saw that before we got much further into our deliberations.
The Government’s rationale for this clause is that there are sites where planning permission exists but where development has not started because the affordable housing obligation makes the development not economically viable. This obviously begs the question of how you define and calibrate viability and the extent to which it is the affordable housing obligation that is the cause of the project having stalled. We have received some data about estimates of the number of sites stalled and the housing that might be held up by this, but no real evidence of the extent—if at all—to which this is caused by affordable housing obligations, and our amendments seek to probe this. Can the Minister provide any further information? Will she provide us with a full report with a list of the sites involved and the numbers of affordable housing involved—that is, those sites where it is the affordable housing that is making them unviable?
We think that the clause is unnecessary because local authorities already have the power to renegotiate all aspects of Section 106 and they are using that power, as the Minister has previously accepted. Moreover, the Government have consulted on existing powers and the prospect of reducing the time—I think that it is currently five years—after which an appeal to amend the obligation can be made to the Secretary of State. What is happening with the Government’s response on that consultation?
This clause undermines and potentially discredits the local plan, a process that will have undergone public scrutiny and will have set affordable housing policies. In essence, judgments that have been made about meeting
a locality’s housing need may be set aside for the economics of the here and now—set aside, indeed, for generations.
The Government have made play about providing additional funding—£300 million, I think—to support affordable housing. How is that to be applied? Could it not be used in whole or in part to move forward those sites that the Government claim are stored? Is that not a better way forward?
Amendment 55A in the name of the noble Lord, Lord Best, is one that we can support and to which, as the Committee have heard, we have added our name. It restricts the application of the clause to obligations that were entered into prior to Royal Assent. This would act as some restraint on developers overbidding for land and shutting out more responsible bidders that would adhere to local policies, with the prospect of being able to scale back commitments in future.
There is a wider point which we might pursue on Report if this clause remains. As I have said, the Government have been pursuing what they call a separate proposal to allow renegotiation of wider Section 106 planning obligations but only those agreed prior to April 2010. So far as I am aware, we have not seen the response to that. The consultation says:
“We consider that 6 April 2010 is an appropriate cut–off date for this change. New statutory tests were introduced for most planning obligations on 6 April 2010 which ensure that obligations agreed after that date must only cover what is necessary to make the development acceptable, must be directly related to the development and reasonable in scale and kind. It is also clear that a high proportion of stalled developments are dated prior to April 2010 when market conditions were different”.
It is surely the case that this logic applies to affordable homes obligations as to any other Section 106 obligations, so the Government should have no difficulty in accepting the cut-off proposed by the noble Lord, Lord Best, which is apparently less restrictive than the Government’s own thinking.
Amendments 55AA and 55CC provide that an application to modify an affordable housing obligation cannot be made within a certain time of its being entered into. The amendment sets this at two years from the beginning of the grant of planning permission or as may otherwise be prescribed. The purpose of the amendment is obvious. Clause 6 should not run when the Section 106 agreement is reasonably fresh. Consideration of economic viability is not without cost, time and expense and there should be encouragement on applicants and local planning authorities to get it right first time. Knowing that the affordable housing obligation cannot be unpicked for a period of time will at least help to concentrate the mind. It will also strengthen the role of the local planning authority in clearly establishing that its deliberations cannot be immediately brushed aside.
We have added our names to the sunset clause; it has not formally been moved but I will add my comments as I am on my feet. Our preference is for this clause to be removed in its entirety. Failing that, limited by the type of amendments that we have just discussed, time limit in the application of the clause would serve as a backstop to other amendments, giving it a limited life of three years. The rationale for a limited life for this
clause was—I think—going to be set out by the noble Lord who was due to move it and follows the analysis in particular of the National Housing Federation. Over the next three years the NPPF should have bedded down and its focus on taking account of the viability of affordable housing should be well established. We are told that the clause is necessary in the first place because of the economic downturn. I presume—despite current GDP figures—that the Government would not argue that this will continue indefinitely. In any event, commitments made in better economic times are washing through the system.
The Government clearly see the clause as having some time limit as Clause 6(4) enables the Secretary of State to repeal by order Section 106BA and 106BB. Perhaps the Minister can say what the Government had in mind for the application of these provisions. What criteria will the Secretary of State have in mind when looking to activate this power and to repeal the clause?