Levelling Up and Regeneration Bill Second Reading, House of Commons, 8 June 2022

The Levelling Up and Regeneration Bill aims to drive local growth, empower local leaders to regenerate their areas, and ensure everyone can share in the United Kingdom’s success.

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Introduction

The Levelling Up and Regeneration Bill, published on 11 May 2022 with an accompanying policy note, aims to drive local growth, empower local leaders to regenerate their areas, and ensure everyone can share in the United Kingdom’s success.

It will place a duty on the Government to set Levelling Up missions for a period of no less than five years, through a levelling up mission statement, and produce an annual report updating the country on the delivery of these missions.

Key messages

  • The Bill introduces a number of reforms to the planning system including:
    • A new Infrastructure Levy. 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. However, we would urge the government to reconsider the timing of the levy. Charging the levy at the point of the occupations is beneficial to developers, but does not help local authorities ensure infrastructure first as a key pillar of place-making.
    • New powers for councils to bring vacant properties back into use, which is also an encouraging step. We will work with the Government to ensure that these are 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.
  • The Bill also acts upon long running LGA asks 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.
  • 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.
  • We support the measures, set out in clauses 72 and 73 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.
  • Supporting councils to build a new generation of high-quality, energy efficient council homes also has to be a national priority if levelling-up ambitions are to be met. This needs to include urgent reform of the Right to Buy scheme to allow councils to keep 100 per cent of receipts from sales of homes and the ability to set discounts locally. This also needs to include zero carbon standards for energy efficiency in order to avoid the need for costly retrofit at a later date. 
  • It is disappointing that no tangible powers were brought forward in the Bill to enable councils to encourage developers to build-out. We would urge the Government as a matter of urgency to empower councils to take decisive action on this issue.
  • 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.
  • 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 (the term used to describe the market value of land based on the expectation of getting planning permission for development on it), which will make CPOs easier to use when required by councils. However, we urge the Government to introduce further legislation to enable regeneration by making CPOs easier to navigate.
  • We recognise that centralising policies that apply in most geographical areas in the form of National Development Management Policies will speed up the production of plan-making at local level. However, we are concerned that setting policies at national level will leave councils unable to tailor such policies to local circumstances. Flexibility must be built into the system to enable councils to respond to local, complex and changing circumstances. We are even more concerned that a determination would be made in favour of the national policy, when there is conflict with the local development plan. This undermines a local, plan-led system and the Government’s aspiration to empower local leaders and communities. We urge the Government to reconsider this proposal and we want to work with the Government to ensure that nationally set policies are workable at local level.
  • 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 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. 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 will be 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.
  • 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 will be seeking an amendment to the Bill to create a specific offence for pavement licence breaches to enable councils to take effective enforcement action.
  • The DLUHC is currently consulting on proposals in relation to the changing of street names, which will impose additional costs on council taxpayers and strain on electoral staff by requiring referenda to be held. The LGA urges the Government to wait until after the consultation has concluded and take into account the responses before they decide whether it is necessary and proportionate to pursue legislative change in this area.

Additional information

The Bill has far reaching implications for local authorities. Set out below are the key implications grouped by themes.

Housing and planning

  • 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. We are concerned that National Development Management Policies could undermine a genuinely local, plan-led system.
  • 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.
  • Clearer guidance of the expectations for developing local plans will support the Government’s ambition to standardise plan-making, which we welcome. The Government must review the resource implications on councils as a result of the new plan-making framework and provide the necessary support to councils.
  • 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, if the Government is serious about strengthening the role of Local Plans, they should also urgently revoke permitted development rights.
  • 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.
  • It is disappointing that no tangible powers were brought forward in the Bill to enable councils to encourage developers to build-out. We would urge the Government as a matter of urgency to empower councils to take decisive action on this issue.
  • 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 Biodiversity Net Gain (BNG) and the broader ambitions of the 25 Year Environment Plan to be the first generation to leave our natural environment in a better state than we found it. Our concerns relate to the practicality of implementing BNG and we would welcome further information on the issue of resourcing and supporting councils to access ecological expertise.
  • We would expect Active Travel England to have a proportionate response when undertaking its role as a statutory consultee.
  • 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.
  • It is a positive and welcome step that the Government has committed to improving capacity in the sector through skills development. We would urge the Government to progress this measure quickly as councils continue to express concerns regarding their capacity.
  • We welcome the proposal to increase planning application fees, as it has for a long time been our position that there is a need for a well-resourced planning system. However, the Government should go further by allowing councils to set planning fees locally.
  • 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.

Devolution and levelling up

  • 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.

Council tax

  • We support the measures, set out in clauses 72 and 73 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.

Risk mitigation measures

  • 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 will be 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.

Pavement licensing

  • 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.
  • It is good that the Government has engaged with councils and the LGA to improve the temporary pavement licensing regime under the Business and Planning Act 2020 and address some of councils’ concerns.

Licence fees

  • 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.

Consultation and determination period

  • 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.

Enforcement powers

  • 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.

Streamlining legislation

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.