Levelling Up and Regeneration Bill, Report Stage, House of Lords, 13 September 2023

• The Levelling Up and Regeneration Bill acts upon long running asks from councils and the LGA for further devolution in England. We are pleased that the Government has proposed to speed up the process and make good on its commitment to offer all of England the opportunity to benefit from a devolution deal by 2030. It is also important that councils of all sizes are engaged in the devolution process.
• Councils are broadly supportive of the guiding principles of the planning reforms in the Bill. However, we have significant concerns that the proposed Infrastructure Levy (IL) will deliver fewer affordable homes and expose councils to excessive levels of financial risk. We are urging Government to scrap the IL and work with us and sector partners to improve the current system of developer contributions.
• Planning fees do not currently cover the true cost of processing planning applications. In 2020/21, 305 out of 343 local authority planning departments operated in a deficit, totalling £245.4 million. Our modelling has shown that even if all application fees were uplifted by 35 per cent, the overall national shortfall for 2020/21 would have remained above £80 million. It is vital that councils have the ability to set planning fees at a level which cover the true costs of processing an application. We therefore support amendment 235 to achieve this.
• In the Commons, Government introduced new clauses which put an obligation on water companies to go further to address nutrient pollution and clean up our rivers. We have concerns that these clauses only apply to water companies in England. This is a problem for councils on the border with Wales (the Wye and Lugg river catchments) as Welsh water companies could continue to discharge sewage that ends up in England. We ask the Government to clarify how this clause would work for water companies on the border with England and Wales.
• In addition, these clauses only impact water companies, although agriculture is a significant source of pollution. In 2021, the Environment Agency reported that about 70 per cent of total inputs of nitrates in water came from agriculture, with the secondary contributor nationally being sewage effluent at 25-30 per cent.
• Government Amendment 247YYA, which will allow development in areas currently impacted by nutrient neutrality advice, will allow new housing to be built. However, measures are needed to address the key drivers of nutrient pollution from agriculture and sewage. Our policy inquiry Stuck in neutral: a call for partnership working on river quality and water quantity set out a mix of recommendations for reducing water pollution at source, bringing forward mitigating schemes, and supporting partnership action. Our policy inquiry Stuck in neutral: a call for partnership working on river quality and water quantity set out a mix of recommendations for reducing water pollution at source, bringing forward mitigating schemes, and supporting partnership action.
• The LGA supports the Government’s plans to introduce a permanent pavement licensing regime. It is welcome that officials at the Department for Levelling Up, Housing and Communities (DLUHC) have engaged with councils to make improvements to the temporary regime and that this Bill increases pavement licence fees, provides a longer consultation and determination period, and improved enforcement powers for councils. However, we would support the creation of a specific offence of breach of a pavement licence, and for this to be dealt with by a fixed penalty notice rather than by the power to seize and store furniture, which is what councils are currently expected to do. Some councils have concerns about the logistical challenges associated with the current enforcement provisions in the Bill.

• Councils are broadly supportive of the guiding principles of the planning reforms, to embed a plan-led system; empowering local leaders and communities; with stronger regeneration powers; and a stronger framework for protecting and enhancing the environment. However, some detail is needed ensure these guiding principles can be applied in practice. We want to work with the government to support the effective implementation of the reforms and ensure that the reforms are a success for local government.
• The Levelling Up and Regeneration Bill also introduces a number of reforms to the planning system:
  • A new Infrastructure Levy. The LGA, along with 29 other bodies across the sector, have written to government to urge them not to introduce the proposed Infrastructure Levy (IL). We have significant concerns that the proposed IL will result in fewer, not more, affordable homes delivered, will expose councils to excessive levels of financial risks, and be increasingly burdensome and complex for local authorities to implement and manage. The signatories propose that retention and improvement of the current developer contribution system is the most appropriate solution. 
  • New powers for councils to bring vacant properties back into use. This high street rental auction power is an encouraging step, and we will work with the Government with the objective of ensuring that it is simple, inexpensive and effective for councils to use.
  • A proposal to introduce a new approach to environmental assessment. We will work with the Government to ensure it strengthens environmental protections whilst ensuring that councils can still deliver the new homes and supporting infrastructure that the country needs.
  • Changes to neighbourhood planning and digitalising the system in order to make local plans more accessible.
• The Secretary of State’s Written Ministerial Statement of 6 December 2022 asserted that the National Development Management Policies will not constrain the ability of local areas to set policies on specific local issues. However, in reality, local plans will be constrained in the event that they conflict with National Development Management Policies, in which case the latter will take precedence. We have previously sought an amendment to reverse this proposal so that local plans will take precedence in the event of conflict. This is critical to ensure that that one of the key principles of the planning reforms - ‘a genuinely plan-led system’ - is enshrined in the Bill.  Further, local plans are subject to robust and extensive testing during its preparation with communities, which includes a thorough examination process to establish its soundness. Therefore, local plans should carry full legal weight and particularly over policies and plans that are not subject to the same level of scrutiny. But if the government decides to retain the current proposal, then flexibility must be built into the system to enable councils to respond to local, complex and changing circumstances. This is because we are concerned that setting generic planning policies at national level will leave councils unable to tailor such policies to local circumstances. The policy must be workable at local level.
• Councils are committed to working with government and developers to build the housing the country needs, with land for more than 2.6 million homes allocated in local plans and nine in 10 planning applications being approved. The introduction of commencement notices in the Bill is a welcome starting point for addressing the ongoing challenges around build-out of schemes following planning permission. It is good that this measure will be introduced alongside powers for councils to deter and tackle non-compliance, including the possibility of a fine. We welcome the Secretary of State’s commitment to bring forward additional measures to tackle slow build-out. Specifically, we would welcome the introduction of powers to allow councils to charge full council tax for every unbuilt development from the point the original planning permission expires. It should also be made easier for councils to use compulsory purchase powers to acquire stalled housing sites or sites where developers do not build out to timescales contractually agreed with a local planning authority.
• We broadly welcome the announcement to remove the requirement for a rolling five-year land supply as it will curb speculative development and it will give more weight to local plans when making decisions on planning applications. However, we urge the Government to urgently revoke Permitted Development Rights in order to strengthen the role of local plans. As a result of Permitted Development Rights, more than 20,000 affordable homes have been lost and therefore this policy is at odds with the national ambition to increase the supply of affordable housing.
• The introduction of measures that will genuinely make the Compulsory Purchase Order (CPO) process more streamlined and efficient for councils is an encouraging step. It is good the government has stated its intention to reform the Land Compensation Act (1961) to diminish the hope value (the term used to describe the market value of land based on the expectation of getting planning permission for development on it) and allow councils to purchase land closer to its existing use value, which will make CPOs less costly for councils to use. However, we urge the government to remove the hope value entirely from the Land Compensation Act so that land can be purchased at its existing use value. This will ensure that compensation is fair and compulsory purchase orders can be used more easily by councils, when necessary, as a last resort.
• We support the principle of councils being able to set up locally-led urban development corporations for the purpose of supporting regeneration projects and also the principle of being directly accountable to councils, rather than the Secretary of State. It is good that the cap on the number of board members and the aggregate borrowing cap are to be removed. We have long been calling for the removal of the borrowing cap, which limits the scope of Development Corporations, creates uncertainty about investment beyond the cap and affects the delivery of Local Plans. We would also welcome powers to enable the creation of zero carbon and nature-rich places; the power to use a CPO; and ensure there is clear guidance and policy support in place for councils looking to establish successful Development Corporations.
• We welcome the confirmation by the Secretary of State that although targets will remain, they will be a starting point with a flexibility to take account of local circumstances. This is because the algorithms and formulas used by the Standard Method can never be a substitute for local knowledge and decision-making by councils and communities who know their areas best. We also welcome the commitment to consult on how the targets can better take account of local density. However, it would be helpful to have clarity about what “advisory” means in practice. We need to increase and accelerate the delivery of affordable housing – largely at social rent. It is our view that 100,000 new social rented home per annum is required to meet the housing needs of communities. We recognise that if advisory housing targets are to hold any credibility, those targets must be realistic and achievable. Therefore, advisory housing targets must be aligned – and must continue to be re-aligned going forward – with the latest population projection data published by the Office for National Statistics. The principle in planning of using the most up to date evidence must always be upheld. The most recent 2022 projection, which is based on the population estimate from 2020, indicates that population forecasts for both mid-2030 and mid-2045 are at its lowest point in eight years.

LGA view: We support this amendment. Planning fees do not cover the true cost of processing planning applications. In 2020/21, 305 out of 343 local authority planning departments operated in a deficit, which totalled £245.4 million.

We welcome the Government’s commitment to increase planning application fees. However, our modelling has shown that even if all application fees were uplifted by 35 per cent, the overall national shortfall for 2020/21 would have remained above £80 million.

Councils must have the flexibility to set planning fees at local level, or at the very least be able to vary planning fees and charges to cover their costs relating to planning. This would help to ensure planning departments are effectively resourced and put councils in a stronger position to address the skills and capacity challenges in planning departments.

LGA view: The LGA supports enshrining the ‘Agent of Change’ principle in law. This will build on the 2018 update to the National Planning Policy Framework which included detailed reference to the ‘Agent of Change’ principle and also the update to the section 182 guidance in 2022, which accompanies the Licensing Act 2003.

New development can have the potential to cause tension within communities, particularly where new homes are created near to already established licensed premises, such as live music venues. These venues can provide an important cultural contribution to an area, as well as promoting the next generation of musicians.

“Agent of change” means that those bringing about a change must take responsibility for its impact. In the case of building or converting properties into new homes near a music venue, it means that developers would responsible for identifying and solving any sound problems. This helps to avoid existing businesses or community infrastructure, such as music venues, community and sports clubs and even churches running into expensive issues as a result of complaints from new neighbours.

We would expect that a noise impact assessment is also accompanied by a detailed mitigation plan.

• In England, Natural England monitors the condition of special habitats and provides advice to local planning authorities. Nutrient neutrality refers to the advice Natural England have given to developers to ensure the amount of nutrient pollution (usually phosphates and nitrates) entering rivers does not increase as a result of new development.
• There is a legal requirement to keep pollution below prescribed levels in areas of particular ecological importance, such as Special Protection Areas or Special Areas of Conservation, and this applies to any areas which drain into a watercourse that ultimately flows into a protected area.
• Where these levels are exceeded, Natural England can put advice in place which means that Local Planning Authorities cannot lawfully grant permission for new development, unless they can satisfy themselves it will not cause further harm to the natural environment (i.e., they are nutrient neutral). Nutrient pollution neutrality advice is now in place in 74 areas and has effectively created a moratorium on new development.
• This amendment replaces Schedule 13 and amends the Conservation of Habitats and Species Regulations 2017, to state that local certain authorities/bodies, including local authorities, must assume that nutrients in waste water from proposed developments will not adversely affect the natural environment.
• In effect, this will overrule current nutrient neutrality advice and allow local authorities to go ahead with developments in areas where they are currently blocked.

LGA view: Our policy inquiry Stuck in neutral: a call for partnership working on river quality and water quantity set out a mix of recommendations for reducing water pollution at source, bringing forward mitigating schemes, and supporting partnership action.

New development is relatively small contributor of nutrient pollution. In 2021, the Environment Agency reported that about 70 per cent of pollution of nitrates in water came from agriculture, with the secondary contributor being sewage effluent at 25 to 30 per cent.

This amendment must be part of a package of measures to address the root causes of excess nutrients from agriculture and sewage.

Councils have been putting significant effort into mitigating the impact of nutrient and water neutrality, which allows planning permission for new developments to be signed off. However, these measures are only able to offset a small amount of the total amount of nutrient pollution entering our rivers.

The LGA has long called for the regulators and agencies, such as the Environment Agency, Ofwat and Natural England, to take a more proactive and stringent role in protecting rivers and preventing pollution at source. The fundamental issue is that the  legislative and regulatory framework is failing to protect the environment from harmful levels of nutrients and tackle pollution at source, which over many years has led to poor water quality and environment damage. 

Additionally, local solutions are urgently needed to address environmental risks and river pollution. We have called on Government to invest in a new model of “catchment nutrient plans”, backed by appropriate long-term funding, and give local authorities the flexibility to invest in locally available solutions to mitigate pollution and address pollution at source within river catchment areas. These plans would require strategic oversight from Government and include mechanisms to require the involvement of all key partners including Natural England, the Environment Agency, Ofwat, water companies and developers. These partnerships must be given the tools and resources to tackle the critical state of rivers and drive action to tackle the underlying causes of environmental damage.

Only 16 per cent of rivers are close to their natural state, according to Defra’s most recent annual report. We want to see the introduction of local level river restoration strategies, backed with the tools and funding to address existing pollution and restore the waterways to their natural state.

Local authorities need clarity from government on when this amendment would be implemented, as no date is specified. The Government has stated that their ambition is for house building to start on sites previously covered by nutrient neutrality advice within months. Councils need clarity over what will happen to current offsetting and mitigation schemes which are already in place, if the legal requirement for developers to participate in order to build new homes is removed.  

It is disappointing that government has not announced any solutions for the areas where housebuilding is blocked by water neutrality advice. While this currently only affects a small number of councils there is an underlying concern over the scarcity of water, and how to meet the demand for housing growth in areas where water supply is under pressure. Government must step up engagement with local government on water supply issues.

• This amendment would require the Government to undertake a public consultation on the proposals to introduce further nutrient neutrality legislation for the purposes of increasing housebuilding without any detrimental impact on the natural environment.
• The amendment specifies that the consultation must consider proposals to:
  • Amend the Conservation of Habitats and Species Regulations 2017;
  • Require nutrient neutrality mitigation as a pre-commencement planning condition;
  • Expedite approval of mitigation credits;
  • Introduce time-limited and short-term delays in mitigation requirements to planning consent in exchange for strategic mitigation actions by housebuilders;
  • Determine that affordable housing development in a nutrient affected catchment area constitutes an imperative reason of overriding public interest for the purposes of regulation 64 of the Conservation of Habitats and Species Regulations;
  • Support the reduction of pollution at source
  • Produce guidance for local planning authorities in relation to Nutrient Management Plans

LGA view:  We support the general ambition to retain appropriate environmental protections. The LGA has long called on the Government to work with councils and other partners to address nutrient pollution, both through mitigation schemes and preventing pollution at source.

It is vital that all approaches to reducing nutrient pollution are developed across a river catchment area, focused on reducing pollution at source in particular from water and agricultural processes.

Megan Edwards, Public Affairs and Campaigns Adviser

[email protected]