My Lords, this may be the third occasion on which we have discussed the infrastructure levy, which simply illustrates how important a part it will play in future development if it is passed. I agree with much of what the noble Lord, Lord Lansley, said about the proposal for an infrastructure levy. It seems to me that there are too many variables in the infrastructure levy to give certainty to local communities, planning authorities and developers.
Growth development value on large-ish or medium-sized sites which are going to be developed across a number of years—300 houses over eight years, maybe—can significantly change in that period, as can the viability of the developer, because of lots of external factors. I had a lot of sympathy with the noble Lord, Lord Lansley, when he asked why we have this complicated system where viability assessments take place at various stages during the development. How can the change that will inevitably happen during a development period provide with some certainty the affordable housing a local area needs, for instance? One of the huge risks of the infrastructure levy is that, rather than increasing the number of affordable homes that are built, it will reduce it, because of the risks to local communities and councils, and to developers, across the planned period.
From what I have heard from the Minister, the purpose of the infrastructure levy is to provide more certainty for developers and to take away the requirement to sign legal and Section 106 agreements. However, it does not—we heard in the earlier group that we are retaining Section 106 for some aspects and deliveries. At the heart of this issue is the challenge of how local infrastructure, as part of a new development, is funded, who funds it, and what qualifies as infrastructure. Planning authorities will have the unenviable task of determining the proportion of infrastructure levy to subsidise housing against mitigating the impact on the community for school places, GP surgeries, open spaces, biodiversity, green spaces, play areas, and so on, all of which will have to be funded through the infrastructure levy.
I have said already that one of the risks of the infrastructure levy is the uncertainty that will be created. As I understand it, and maybe the Minister can help explain it, when a local plan is being developed, the infrastructure delivery strategy will have to be determined at the same time. That leads me to some questions. Where does the infrastructure delivery strategy fit in relation to local plans that have been agreed and are being implemented? Does a new one have to be developed on the back of the long and painful process of developing a local plan? Do we have to have another infrastructure delivery strategy on top of that, bearing in mind that local plans are in existence for 10 years? How does that fit in, because when local plans are developed, they will have had in mind a previous regime for funding infrastructure?
I have another pertinent question. As rates are going to be set by local planning authorities and councils, they will inevitably reflect local economic circumstances. The example of the rates agreed for community infrastructure levy—albeit that excludes Section 106—is informative in this regard. In a Yorkshire metropolitan authority that I will not name, of the charges for CIL that were calculated, the charge per square metre for the highest of the three tiers was £80. I then looked at a district council in Hampshire, where financial circumstances are better, and the highest tier there was £235 per square metre. It concerns me greatly that there should be a huge differential between a relatively poor Yorkshire metropolitan council area and a relatively well-off area towards the south of the country.
The differential rate is so large that I do not see how councils in the north, or areas where it is more difficult to extract funding from developers because of land values, will be able to fund the levels of infrastructure that are required. The risk is that those areas have less funding from the levy to implement affordable housing and all the other public services that normally come out of development, whereas better off areas could provide better facilities. That is one huge risk, and a worry for me.
I have some questions on that for the Minister—I hope she will be able to answer them. I read through the technical paper on the infrastructure levy but I could not see anywhere where the department had done some calculations as to what the rates are anticipated to be in different parts of the country. I am sure the department will have done that, otherwise you would not make this transformational move. It would be good to hear from the Minister what those acceptable estimated rates are. Currently, as we know, about 66% of funding from CIL and Section 106 goes on affordable housing. Perhaps the Minister will be able to tell us what proportion of different rates across the country it is anticipated will be spent on so-called affordable housing.
I come to my third question. Developers are interested in maximising their profits—quite rightly, as they have commercial interests. They will find ways, as they do with Section 106 and CIL, to challenge the requirements through viability assessments. The best thing that could happen is that those assessments disappear. Perhaps the Minister can talk a bit about that. If all this is to be dependent on viability assessments, the prospect of
raising more funds for subsidising housing and community benefits out of development schemes is more pie in the sky than reality.
The trouble with all this is that, as with many other parts of the Bill, there is insufficient information to make judgments about whether the efficacy of the new powers as against existing schemes—which are known, tried and tested—will work.
The big question for me is that the Government are hoping that the infrastructure levy will fund more so-called affordable housing, which, certainly in my authority, is now required to be in perpetuity: the 20% reduction in market value has to be passed on by a covenant on the house in perpetuity. You get a better bang for your buck from that, so I ask the Minister whether this, too, could be a requirement of any infrastructure levy subsidy of affordable housing. There are more questions than answers, and I look forward to what the Minister has to say.
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