Levelling Up and Regeneration Bill, Second Reading, House of Lords, 17 January 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.
• The Bill includes (Part 1, Clause 4) information on draft metrics proposed in the Levelling Up White Paper to measure progress towards the twelve missions. This is a good first step, but they still fall short of the full breadth of what is needed to create thriving and inclusive communities. The LGA is supporting amendments which ensure that progress towards the missions is followed closely.
• However, we are seeking an amendment which would ensure that demographic disparities are also addressed as part of the levelling-up agenda.  Research published by the Local Government Association indicates that the health and economic welfare of BAME residents and young people in urban areas was put at greater risk by the coronavirus pandemic.  While the Government's ambition to address regional disparities between places is laudable, we remain concerned that particular communities within places will continue to experience economic and social disadvantage unless demographic disparities are also addressed as part of the levelling up agenda.  
• We support the measures, set out in clauses 75 and 76 of the Bill, which give councils more power to charge premium council tax for long term empty and second homes as it will give councils more power to influence local housing markets.
• We are deeply concerned that the proposed risk-mitigation measures in clause 74 of the Bill potentially give the Secretary of State significant powers to intervene in a local authority. There is a danger that the formula-based approach outlined in the Bill could impact more widely than intended. It is vital that the Government undertakes full engagement with the sector, including full consultation before enacting the regulations arising from the Bill. Advice from the sector could assist the Government in preserving the key concept of prudential borrowing while ensuring the new arrangements address genuine government concerns. We therefore supported an amendment in Commons Committee stages which would ensure that the Government undertakes a consultation with all local authorities before making regulations for all the subsections of 12b (2). We welcomed assurances from the Minister that the Government would consult more widely before laying the regulations and look forward to hearing further detail as the Bill enters the Lords.
• 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.
• Clause 77 sets conditions for councils when changing street names. The LGA is seeking to remove the clauses in the Bill, and replace with new clauses which would require local authorities to consult residents and the wider community before making changes to street names, and to have regard to the outcomes, but allow flexibility over the method adopted to consult. As the Bill enters the Lords, we will still be looking to encourage Government to make these changes to the Bill. The original clause is unworkable in practice and too narrow and prescriptive as it may exclude those who use a street but not live there. It is welcome the Minister has given assurances that the Government will be setting out clear, transparent and robust arrangements for the consultation process in secondary legislation.
• In the final stages, the Government tabled a new clause 210 which makes regulations requiring or permitting the registration of specified “short-term rental properties”. At Remaining Stages, the Government confirmed they will be consulting on this issue, and hope to bring in legislation as a result. This change to the Bill is welcome as LGA and member councils submitted evidence outlining the impact that unregulated lets were having on local areas.
• Also in the final stages, the Government introduced new clauses which create an obligation on water companies to go further to address nutrient pollution and clean up our rivers. We have concerns that NC77 only applies 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.

• 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. 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. We welcome the government’s stated commitment to ensure that the new Infrastructure Levy will be non-negotiable and set locally. But if we are seeking to improve the system, then the Levy must deliver more affordable housing than the current Section 106 system including those homes lost as a result of viability. It is vital that new occupants of homes and wider communities get the infrastructure they need, and that councils can access sufficient funding for this infrastructure in line with the ambition in Local Plans. We would therefore urge the government to reconsider the timing of the Levy. To enable sufficient financing to deliver the necessary infrastructure set out in local plans, there must be a financial mechanism to secure upfront infrastructure at an earlier stage than the point of occupation. We look forward to responding to the consultation on the Levy and councils would welcome the opportunity to work with the Government to develop the detail of this reform.
  • 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 to ensure that it is simple, inexpensive and effective for councils to use.
  • A proposal to introduce a new approach to environmental assessment, we will be taking action to ensure that 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 an attempt to make local plans more accessible.
• remove all clauses relating to the sale of vacant higher value local authority housing in the Housing and Planning Act 2016 (Clauses 69-79). This will implement the Government’s commitment to not take forward the powers to require councils to sell higher value council homes outlined in the Social Housing Green Paper (Page 8) – “We will not require local authorities to make a payment in respect of their vacant higher value council homes and are exploring new flexibilities over how they spend Right to Buy receipts.”
• 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 is 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. However, more than 1 million homes that have been granted planning permission are still to be built out. 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 18,000 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.
• 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, which could include the employment of qualified planners. This would put councils in a stronger position to address the issue of resourcing in the planning sector including a shortage of qualified planners. Planning fees do not cover the true cost of processing planning applications. Taxpayers currently subsidise the cost at a rate of nearly £180 million a year. Councils need the ability to recover the costs of processing applications, and therefore should be able to charge an appropriate fee. Therefore, while we welcome the increase in planning fees alongside the Bill, it does not go far enough to deliver a well-resourced planning sector.

• Proposals that seek to simplify and standardise the local plan process and limit speculative development applications are welcome. It is good that the new development plan system will be underpinned by greater legal force. However, we are concerned that National Development Management Policies could undermine a genuinely local, plan-led system, even with the reassurances set out by the Secretary of State in the Written Ministerial Statement on 6 December 2022.
• We are concerned that the introduction of street votes risks stifling the production and implementation of local plans. We want to work with the government to enhance opportunities for engagement and reach a wider audience within the process of developing local plans.
• It is right that local plans should be kept up to date. However, we are concerned about the proposal to deploy Local Plan Commissioners to take over plan-making in some cases. An approach that seeks to understand what the blockages are and seeks to resolve them, for example, through a mutually agreed sector-led approach, will be more beneficial in the long-term than the imposition of a plan on an area.
• 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.
• The proposal to introduce a new approach to environmental assessment must strengthen environmental protections whilst ensuring that councils can still deliver the new homes and supporting infrastructure that the country needs. We want to work with the Government as the outcomes are developed.
• We support the principle of local design codes, which will further empower communities to have input into the design and shape the area in which they live. However, the principles that underpin design codes are undermined by the permitted development rights policy, which should be revoked.
• We welcome the extension of planning protections to cover historic environments like registered parks and battlefields and World Heritage Sites. However, archaeological sites must also receive protection, most of which are undesignated and managed through the planning process.
• It is good to see that any new Infrastructure Levy will be non-negotiable and set at a local level. We will want to work with Government to ensure that it is a success and that it delivers more affordable housing and infrastructure contributions at a local authority level than the existing systems for developer contributions.
• The High Street Rental Auction power is broadly welcome. We would expect this power to be simple, inexpensive and effective to use if required.
• The introduction of measures that will genuinely make the Compulsory Purchase Order (CPO) process more efficient for councils is an encouraging step. It is good the Government has stated its intention to reform the hope value, which will make CPOs easier to use when required by councils. However, if the Government is serious about enabling regeneration by making CPOs easier to navigate, further legislative reforms should be introduced.
• We support the principle of councils being able to set up locally-led urban development corporations for the purpose of supporting regeneration projects. It is good that the cap on the number of board members and the aggregate borrowing cap are to be removed.
• We broadly welcome the introduction of additional tools and powers to achieve compliance and deal with those that breach planning provisions.
• Changes will be made to neighbourhood planning under the Bill. A digitalised system will seek to make local plans more accessible and increase the opportunity for engagement, which the LGA welcomes.
• While it is welcome that the Government are urging communities to have more say over planning matters, the “Standard Method”, which uses a formula to identify the minimum number of homes expected to be planned for, is still used by the Government and councils are also expected to use it. For example, councils in the 20 largest cities required to plan for a 35 per cent increase over and above the number generated by the Standard Method. Algorithms and formulas can never be a substitute for local knowledge and decision-making by councils and communities who know their areas best. We would urge the Government to consider how the Standard Method is currently used and whether it fits with the Government’s messaging on involving communities in planning decisions.

NC77 only applies 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. This is a cross boarder Bill and therefore needs a cross border solution. We ask the Government to clarify how this clause would work for water companies on the border with England and Wales.

We also question about how NC78 would work in practice. We believe NC78 could be strengthened to provide an adequately resourced monitoring and compliance process to ensure that required upgrades are on track. The LGA and councils want to work with Government on this issue.

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. To cite one example, in the Wye, the biggest issue is waste produced by intensive poultry farms.

The Bill will create a legal duty for the Government to set and report on a number of missions for levelling up the country. We welcome 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.

The experience of previous rounds of devolution negotiations has underlined the necessity of local collaboration and consensus between all partners and we expect the Government to continue on this basis.

The draft metrics proposed in the Levelling Up White Paper to measure progress towards the twelve missions also set out are a good first step. However, we are concerned they still fall short of the full breadth of what is needed to create thriving and inclusive communities.

We will work with Government to ensure that the metrics used to produce an annual report on the Levelling Up missions are fully consulted on and reflect the diverse needs and aspirations of communities across the country.

However, we are seeking an amendment which would ensure that demographic disparities are also addressed as part of the levelling-up agenda.  Research published by the Local Government Association indicates that the health and economic welfare of BAME residents in urban areas was put at greater risk by the coronavirus pandemic.  While the Government's ambition to address regional disparities between places is laudable, we remain concerned that particular communities within places will continue to experience economic and social disadvantage unless demographic disparities are also addressed as part of the levelling up agenda.  

We support the measures, set out in clauses 75 and 76 of the Bill, which give councils more power to charge premium council tax for long term empty and second homes as it will give councils more power to influence local housing markets.

We are deeply concerned that the proposed risk-mitigation measures in clause 71 of the Bill potentially give the Secretary of State significant powers to intervene in a local authority and are seeking clarification as to what the proposals mean.

It is crucial that the proposed changes do not have unintended consequences. There is a danger that the formula-based approach outlined in the Bill could impact more widely than intended. It is vital that the Government undertakes full engagement with the sector, including full consultation before enacting the regulations arising from the Bill. Advice from the sector could assist the Government in preserving the key concept of prudential borrowing while ensuring the new arrangements address genuine government concerns.

We are seeking an amendment to 12b (4) which would ensure that the Government undertakes a consultation with all local authorities before making regulations for all the subsections of 12b (2). This will set up a process that will enable the sector to highlight potential problems and unintended consequences of the proposals.

Clause 77 sets conditions for councils when changing street names. The LGA is seeking to remove the clauses in the Bill, and replace with new clauses which allow for Regulations to be laid (or statutory guidance published), requiring local authorities to undertake a referendum in order to change street names, including setting out the precise detail for how those referenda should be run (for instance, who would be eligible to vote on an alteration; the threshold needed for the number of residents to vote; and the threshold needed for supporting the alteration).

The LGA proposed alternative clauses in the Commons Committee Stage which would require local authorities to consult residents and the wider community before making changes to street names, and to have regard to the outcomes, allowing flexibility over the method adopted to consult. As the Bill enters the Lords, we will still be looking to encourage Government to make these changes to the Bill. The original clause is unworkable in practice and too narrow as it may exclude those who use a street but not live there. It is welcome the Minister has given assurances that the Government will be setting out clear, transparent and robust arrangements for the consultation process in secondary legislation.

Ultimately the decision for how best to consult should be a local one, reflecting the circumstances of the individual proposal. 

The LGA supports the Government’s plans to create a permanent pavement licensing regime. Councils have worked hard to implement the temporary provisions to support local hospitality businesses as they recover from the effects of the pandemic and have welcomed pavement licences as a way of reinvigorating the high street.  However, there is a need to ensure that the permanent regime more effectively balances the needs of businesses and local residents.

We are seeking an amendment to create 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.

We are pleased that the licence fee has been increased from a cap of £100 per application to being capped at £500 for new licence applications and £350 for renewals. Under the temporary regime, many councils were losing significant amounts of money by administering the regime.  This fee increase is therefore very welcome, although as a general principle, the LGA believes that licence fees should be locally set fees to ensure licensing regimes are cost neutral and self-funding. Locally set fees ensure that councils are able to fully recover their costs and also  that businesses  do not pay in excess of the local cost of processing an application.  If the Government is intent on setting a national fee, it should ensure there is a process for ensuring it is regularly uprated to take account of inflation and rising costs incurred by councils.

As an example of where this has not happened, fees under the Licensing Act 2003 have not been updated since 2005 and councils are incurring deficits on the cost of administering licensing work. At the very least, a flat rate fee increase is required.

It is welcome that the consultation and determination period for pavement licences has been increased from 14 days to 28 days. This change reflects that we are in a very different context now to when the Business and Planning Act 2020 was introduced as an emergency, temporary measure at a time when businesses were being hit hard by the COVID-19 pandemic.  By increasing the consultation and determination period, local residents have longer to engage in the consultation and feed in any concerns around issues such as noise or accessibility; businesses have the opportunity to work alongside the council to address any issues with their application rather than see them rejected and required to be re-submitted; and councils now have a realistic but fair amount of time for processing applications, which is in line with other licensing regimes and enables them to engage with other authorities, such as the police.

It is also welcome that the new legislation has provided councils with better enforcement powers to take action where businesses are flouting the rules, for example, by blocking pavements, which was not available under the temporary regime. However, the legislation does not outline a specific offence that licensing authorities can enforce but will require councils to confiscate furniture where businesses breach the terms of their licence. This could present logistical challenges for some councils who may not have the capacity to collect or store this furniture. A more streamlined approach to tackling non-compliance would be to create an offence of breaching a pavement licence or operating without one, and giving councils the ability to issue a fixed penalty notice for these offences.

It is helpful that this Bill repeals the pavement licensing regime as set out under the Highways Act 1980, as this provides one clear legislative framework for businesses and councils to work with. However, the LGA is aware that in some cases, businesses may have been granted open-ended licences under the Highways Act regime. It would be helpful for this Bill to be amended to ensure that businesses who have had a licence granted under the Highways Act regime have to apply for a licence under the new, permanent regime to ensure there is only one type of pavement licence in place locally.