I think I have just said that we are currently consulting on what will be in those. I would prefer to wait until after that consultation and then we will know what is going to be in them.
Amendments 332 and 333 seek to require a local authority to prepare an assessment of its affordable housing need and for the infrastructure levy rates to be set at a level that will meet this need in full. We must recognise that the total value that can be captured by the levy, or indeed any system of developer contributions, will not necessarily match the costs of meeting the entire affordable housing need of an area. Revenues will depend on the value of development that comes forward, and that will not always match need.
Nevertheless, new Section 204G(2) in Schedule 11 requires that charging authorities, when setting their rates, must have regard to the desirability of ensuring that affordable housing funded by developer contributions equals or exceeds present levels. That will ensure that affordable housing need is accounted for when levy rates are set. Furthermore, charging schedules will be subject to scrutiny by public examination to ensure that it does.
I want to make it clear that the list of infrastructure issues is not in priority order. Although affordable housing may be seventh on the list, that does not make it a priority. That list is also not necessarily complete.
As noble Lords will no doubt be aware, strategic housing market assessments or similar documents are currently part of the evidence base used to prepare a local plan. These are required as a result of national policy contained in the National Planning Policy Framework, rather than in primary legislation. Under the new system for preparing local plans, local authorities will continue to be required to prepare evidence regarding different types of housing need, including affordable housing. That will inform not only the local plan but the infrastructure delivery strategy.
I agree that it is important that the levy is based on up-to-date evidence of affordable housing need. It is the intention that local plans, charging schedules and infrastructure delivery strategies are prepared together. However, during the transition period, this may not always be possible. That is why our preferred approach is to use regulations and guidance to set out how evidence-based documents, including evidence on different types of housing need, should be considered. I hope I have given reassurance to the Committee that the provisions in the Bill will enable levy rates to be set with proper regard to affordable housing need, and that the noble and learned Lord, Lord Etherton, will feel able not to press his amendment.
Amendments 334 and 334A have the commendable purpose of ensuring that the levy meets its aims of delivering at least as much affordable housing as the current system, if not more, or otherwise addressing locally identified need for affordable housing. The Bill allows regulations to make provision about matters to be considered by charging authorities when setting rates, including the desirability of ensuring that affordable housing funded by developer contributions equals or exceeds present levels. This will ensure that affordable housing need is accounted for when rates are set but, if the Government are overly prescriptive about requirements, the development of an area could become unviable. That is because affordable housing need may exceed what can be captured through the levy. In such circumstances, rates would need to be set at such high levels that neither affordable housing nor market housing would come forward.
The Bill has been drafted carefully to enable local authorities to find the right balance when setting rates and capture as much value as they can while maintaining viability. As I have said, local authorities’ infrastructure levy charging schedules will be subject to public examination, meaning thorough scrutiny of how and why levy rates are set at a particular level. The infrastructure delivery strategy will also be subject to examination, alongside either a local authority’s charging schedule or its local plan. We envisage that the infrastructure delivery strategy will set out the proportion of levy payment that an authority will require to be delivered in kind as affordable housing. I hope that this provides the noble Baronesses, Lady Warwick and Lady Taylor, with sufficient reassurance not to press these amendments.
Amendments 340, 341, 344, 344A, 349 and 350 are all concerned with how local planning authorities should spend levy proceeds. With regard to Amendment 340, the infrastructure levy is an important tool to support sustainable development objectives at the local level. There is an existing requirement for local authorities, when exercising any function in relation to local plans, to do so with the objective of contributing to the achievement of sustainable development. This is set down in Section 39 of the Planning and Compulsory Purchase Act 2004 and will remain in the new plan-making system.
To create sustainable development and successful places, it is important that the infrastructure is appropriately planned for. Contributions from developers are a key tool in mitigating the impacts of new development, alongside wider government funding. The Bill provides a flexible framework to allow local authorities to decide which infrastructure projects they spend the proceeds on. When making such decisions, the Government expect local authorities to fulfil their functions by having regard to all their legal requirements in the round—for example, contributing to the achievement of sustainable development.
I turn to Amendments 341 and 344. As I hope that I have impressed on the Committee, we have designed the levy with the aim of delivering at least as much affordable housing as the current system of developer contributions, if not more. Should the levy generate more revenues than at present, local authorities would be able to choose to direct those additional revenues to
meeting their local affordable housing need. Nevertheless, local authorities will need to balance this objective of affordable housing delivery with the levy’s other objectives, such as supporting the development of new roads and medical facilities. We think it is right that local authorities, which know their areas best, are best placed to make local decisions in balancing funding for matters such as affordable housing and other local infrastructure need. I hope noble Lords will therefore feel able not to press these amendments.
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Amendment 344A proposes that the new infrastructure levy will be spent on retrofitting existing homes with measures to improve their energy efficiency. I applaud my noble friend Lord Young for raising this important point. The Government have set a new and ambitious target to reduce final energy demand from buildings and industry by 15% by 2030. That includes improving the energy performance of existing and new buildings. The programme is underpinned by £6.6 billion of public spending in this Parliament, with a further £6 billion to be provided between 2025 and 2028. In this way, there are already excellent measures proposed to address the important issue of retrofitting buildings.
In addition, we have already accelerated our work on the future homes standard, to require that new homes built from 2025 will produce 75% to 80% fewer carbon emissions than homes built under current building regulations. Where they wish to do so, local authorities could take further action to support these aims under the levy. The existing drafting of the Bill makes it clear that the levy can be used for the improvement, operation and maintenance of infrastructure. It is also explicit that affordable housing is a kind of infrastructure; facilities for the mitigation of, and adaption to, climate change are also explicitly referenced as infrastructure.
It would be open to local authorities to interpret these measures and allow retrofitting of homes as a form of levy spend if they considered that a priority having balanced other local infrastructure needs. If there were any doubt or lack of clarity, we would also be able to make further express clarifications through regulations or statutory guidance. I hope I have provided noble Lords with reassurance on these amendments, so that they do not press them.
Amendment 349 is concerned with the way in which local authorities intend to use the infrastructure levy to meet identified housing need in preparing and publishing their infrastructure delivery strategies. An infrastructure delivery strategy will set out how a local authority intends to spend its levy receipts, including the proportion of levy receipts that will be attributed to affordable housing through the new right to require. I have explained how this will be informed by evidence prepared to support the local plan in relation to different types of housing need, including affordable housing. New Section 204Q(12) allows regulations to make provisions for this.
However, as I have also explained, the total value that can be captured by the levy—or indeed any system of developer contributions—will not necessarily match the costs of meeting the entire affordable housing need in an area as specified in a local development plan.
Therefore, local authorities will need to consider and balance the delivery of affordable housing with the levy’s other aspirations, such as schools, roads and medical facilities. Much of what I have set out also applies to Amendment 350.
In relation to addressing any funding gap between what can be secured via the levy and what remains outstanding in affordable housing need, there are other sources of funding to deliver affordable housing. For example, the Government’s £11.5 billion affordable homes programme will provide tens of thousands of homes across the country. Annually, grant funding delivers around half of all affordable housing in England.
The second part of the noble Lord’s amendment, which is equally important, deals with transparency to communities about levy funding. I believe the Bill, as drafted, will deliver substantially more transparency to communities regarding the use of developer contributions. The new infrastructure delivery strategy will make it much clearer for communities to understand what infrastructure will be provided in their areas and when. Our technical consultation seeks views on the content and drafting requirements for the infrastructure delivery strategy. I hope the noble Lord feels able not to press his amendments given these reassurances.
Turning to Amendments 326 and 358, I have explained how local authorities will be able to require developers to pay a portion of their levy liability in kind through on-site affordable housing. We already have powers in the Bill to make provision in the levy regulations for this right to require and we are consulting on how it will operate to ensure that we get it right. The powers which we have are in new Section 204R(1) and (4). We can use these powers, along with other levy powers, to make detailed provision about the operation of the right to require in the levy regulations.
The Bill provides necessary enforcement powers in new Section 204S inserted by Schedule 11. Provision will be made for enforcement mechanisms in regulations. This will ensure that developers pay and deliver what they owe. Failure to pay infrastructure levy liability, including through the provision of affordable housing via the right to require, could result in enforcement action. For example, we will be able to impose restrictions on occupation, financial penalties or surcharges and more severe measures, including criminal prosecution. We are testing the right approach to enforcement through our technical consultation.
Moving on to Amendments 359 and 361, I have explained how, under the right to require, local authorities will be able to require developers to pay a portion of their levy liability in kind through on-site affordable housing. The noble Lord, Lord Best, is also concerned with the tenure of affordable homes delivered on-site. I have already set out why the definition of affordable housing has been drafted in the way it has in new Section 204A, and why it would not be appropriate to link the definition of social rent in primary legislation to specified directions on rent standards.
Amendment 361 is linked to Amendment 359. It proposes that regulation-making powers in relation to the earlier amendments should come into force within a year of the enactment of this Bill, and that any such requirements should not affect extant planning permissions.
As we propose to deal with issues such as the tenure mix of affordable housing secured through the right to require in levy regulations and guidance, these provisions are not needed. However, they make an important point about how we will manage the transition to the new system, which we need to address more generally, not just in relation to specific amendments. I confirm that the approach that we will take is broadly in line with the approach that the noble Lord put forward via this amendment. We will apply the new levy provisions to new planning permissions that are granted only after a local authority has introduced the levy in its area. For planning permissions granted prior to the introduction of the levy in an area, the existing developer contributions system will continue to apply. We have set out our proposed approach to the transitional arrangements as part of the consultation on the levy, which closes on 9 June. I hope that the noble Lord, Lord Best, therefore feels able not to press these amendments.
The introduction of the new infrastructure levy is important to creating a more transparent and streamlined developer contributions system which will enable the timely provision of infrastructure and the delivery of on-site affordable housing. Recognising the magnitude of these reforms, we propose to take a “test and learn” approach to introducing the infrastructure levy, as I said. This approach will mean that the community infrastructure levy—CIL—and Section 106 agreements will need to continue to be used in local planning authorities that have not yet transitioned to the new levy.
Therefore, Clause 126 is important because it will provide for CIL to be switched off in England, subject to necessary savings and transitional provisions. This clause makes necessary consequential amendments to Part 11 of the Planning Act 2008 on commencement of the new levy, in order to restrict the application of Part 11 to Wales and, in Greater London, to the Mayor of London only. This will be important to preserve the existing legislation in relation to Wales and, for the Mayor of London, in Greater London.
Secondly, this clause will ensure that, when the new levy is fully implemented, it will be mandated to apply to all local planning authorities in England, switching off CIL for England subject only to necessary savings and transitional provisions. Once an infrastructure levy charging schedule has been adopted in an area, it will be necessary to switch off the ability to use CIL in that area, apart from for developments granted planning permission prior to adoption, where CIL can still be collected. Without such an approach, we would limit the possible benefits of the levy and of moving to a new national system.
One final aspect of the clause to note is that it allows the Mayor of London to continue to use CIL in Greater London, which will ensure that continuing funds can be obtained to borrow and repay loans taken out for the Crossrail project, up to 2043. For these reasons, I commend the clause to the Committee.
I have spoken for an awfully long time because this was a big group. I have probably not answered all of the questions, but, because of timing, it is better that I write a letter at the end, when I have read Hansard.