My Lords, Amendments 313 and 317 propose to make the levy voluntary for local authorities or to introduce it through a pilot system. I acknowledge that the reforms we are proposing will need to be implemented in a sensible manner. There are problems with the existing system, but it is important that we do not introduce new issues. We want to ensure that the new levy delivers at least as much affordable housing as the existing system, and that is why we are currently consulting on the levy and intend to consult again on the draft regulations. We want input from across the private and public sectors, and we will consider the feedback carefully as we proceed. As I mentioned previously, the new levy will be introduced through a process of test and learn and a phased-out programme. I hope that this will provide the noble Baroness, Lady Taylor, the reassurance that further piloting powers are not needed.
In terms of introducing the levy as a voluntary system, we are seeking to create more certainty across the whole system of developer contributions. We recognise that the levy must be introduced carefully to ensure that it will deliver the intended results. That is the purpose of the test and learn. However, if we do not aim for a unified system, we will dilute the potential benefits. I hope this provides the noble Baroness, Lady Hayman, with sufficient reassurances to withdraw Amendment 313.
Amendments 364 and 364A are concerned with how the Government will assess the delivery of affordable homes under the new infrastructure levy. Given the length of time of the proposed rollout, requiring an assessment of the levy 120 days after the Bill is passed, as proposed in Amendment 364, provides an insufficient amount of time meaningfully to assess the impacts of the levy, but I reassure the Committee that during the rollout the Government will work closely with stakeholders to monitor the impacts of the levy. That includes monitoring our commitment to deliver at least as much, if not more, affordable housing.
In addition, the department has commissioned a scoping study to develop an approach to the evaluation of the planning elements of the Levelling-Up and Regeneration Bill, which we expect to report following Royal Assent, and the full evaluation informed by the findings of the scoping study will then be commissioned. I hope this gives reassurance to the noble Baroness, Lady Taylor, and that she will feel able not to move her amendment.
On Amendment 364A, first homes were a 2019 manifesto commitment and are already successfully established in the market through a grant-funded early delivery programme. Outside that programme, the first homes discount is funded by developers as part of their contribution through planning obligations. The Government currently publish information about the delivery of first homes through both the early delivery programme and planning obligations in our annual affordable housing supply statistical release, and I reassure the noble Baroness, Lady Hayman, that we will continue to do so. We will work closely with local authorities throughout the phased test-and-learn implementation programme to monitor the Government’s key objective to maintain affordable housing supply. This will include but will not be limited to first homes. I hope I have provided the noble Baroness with sufficient reassurance not to press that amendment.
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Turning to Amendments 327, 328 and 330, Amendments 327 and 328 concern exemptions for sites that are entirely or majority affordable housing. I reassure noble Lords that the intent behind these amendments reflects the Government’s intent, and we are testing this approach through the current consultation. It is our intention that through the new right to require, a local authority will be able to stipulate that a developer delivers a certain proportion of its levy liability as an in-kind, onsite contribution. The more affordable housing that is delivered, the more of the levy liability will be offset, and for sites with a high proportion of affordable housing the levy will be entirely offset. In any event, new Section 204D(5)(h) in Schedule 11 to the Bill already contains a power for levy regulations to make provision about specific levy exemptions or reductions.
It should be noted that all development, including development that is exclusively affordable housing, will be required to deliver the infrastructure that is integral to the functioning of the site. We propose to retain the use of planning conditions and a restricted use of Section 106 agreements to secure such matters. The agreed approach will be set out in levy regulations, and we will further consult on the detail of the regulations in due course. It is also important that the new infrastructure levy can support new farm development, and the Bill as drafted ensures that that will be possible. As I have said, section 204D(5)(h) already provides powers to make provision to exempt or reduce levy liabilities through the regulations.
Our consultation explores where national exemptions and reductions to the levy are appropriate, and we will carefully consider all feedback that we obtain. I reassure the noble Lord, Lord Carrington, that an exemption
for buildings or infrastructure used for agricultural purposes will be considered as part of that process. While the Government are sympathetic to the amendment proposed by the noble Lord, we do not consider it appropriate to include such express provision on the face of the Bill. These matters are better dealt with in regulation. On that basis, I kindly request that this amendment not be pressed.
On Amendments 322 and 323, it is correct to raise the importance of the new levy in supporting the delivery of affordable housing for social rent. The levelling-up White Paper committed to building more genuinely affordable social housing, and the approach taken through the levy includes the right to require, which will help us to deliver on that objective. Both amendments seek to limit the definition of “affordable housing” to social rent homes only. That would remove the ability of the levy to fund other types of affordable housing, and it is important that the infrastructure levy can fund the full range of types of affordable housing. That will ensure that the levy can better cater to a wide range of housing needs.
We are also proposing, subject to the outcome of the consultation that we published before Christmas, to make changes to the NPPF to make it clear that local planning authorities should give greater importance to planning for social rent homes when addressing their overall housing requirements in their development plans and making planning decisions.
Lastly, it would not be appropriate to link the definition of “social rent” in primary legislation to specified directions on the rent standards, as these directions will be updated to reflect changes in circumstances. That is why any such detail is best set out in regulations. For that reason, I hope the noble Baronesses, Lady Armstrong and Lady Hayman, may feel able not to move these amendments.
Turning to Amendments 321 and 345, the Government recognise the role that Section 106 agreements play in supporting affordable housing delivery. However, those agreements can be complex and costly. Over 80% of local planning authorities agree that they can cause delay to development coming forward. Also, developers often negotiate down policy-compliant levels of affordable housing on viability grounds. That creates an incentive to overpay for land, in the expectation that contributions can be negotiated downwards. The design of the levy is intended to combat those issues. The new levy regulations will introduce a right to require for affordable housing contributions. That means that local authorities, not developers, will get the final say on the proportion of affordable homes delivered as an in-kind contribution. I fear that accepting the amendments would bake in uncertainty, protracted negotiation and delay so that we would not be able to secure positive results from the new system of developer contributions. With that explanation, I hope the noble Baroness, Lady Hayman, will feel able not to press her amendments.
On Amendments 356 and 357, the infrastructure levy will be a non-negotiable charge on the final gross development value of a completed development. It will be responsive to the market, reducing the need for negotiation. However, we acknowledge that site-specific infrastructure and mitigation are important. That is why the Government are proposing to retain Section
106 in some very limited circumstances—for instance, to secure integral infrastructure such as sustainable drainage, and to allow the negotiated in-kind delivery of infrastructure on large sites. We are consulting currently on these circumstances before we develop regulations.