Baroness Taylor of Stevenage (Lab)

My Lords, Amendments 188, 190 and 192 would add to the objectives of development corporations, such that all development corporations would be obliged to aim to contribute to the funding and financing of development proposals, with the option of using financial instruments such as bonds and debts to achieve this objective. In addition to my earlier comments about how there are still further discussions to take place in relation to financing, I should have mentioned that resource funding will be available for the costs associated with running a development corporation. There are capital grant programmes as well, such as the national housing delivery fund and the social and affordable housing programme. Development corporations will be able to enter joint ventures and land agreements to obtain private capital. They will also be able to obtain further capital financing through loans and equity from the national housing bank and the national wealth fund. I thought it was important to clarify all that. It is vital that development corporations, as well as the developments they co-ordinate and deliver, are properly financed. I therefore welcome the intent of the noble Lord’s amendments. They should not, however, be brought forward for two main reasons. First, the amendments would unnecessarily constrain the use of development corporations. This Bill seeks to ensure that the development corporation legislative framework is clear, flexible and robust. Importantly, development corporations are used to address different types of development challenges depending on the nature of the project, including planning, land assembly and convening private sector investment. Development corporations need not directly fund development to be successful, as, for example, is the case for the Stockport Mayoral Development Corporation. Requiring that all development corporations fund or finance development would unnecessarily constrain the use of development corporations, rendering the model unnecessarily inflexible. Secondly, development corporations are able to borrow more affordably from central government. The existing legislation provides that both new town development corporations and urban development corporations can borrow directly from central government, irrespective of whether they are centrally or locally led. A mayoral development corporation can also borrow indirectly via its oversight authority, including from the Public Works Loan Board. If, instead, development corporations were to issue bonds or raise debt directly to fund development, this would likely be at a higher interest rate and less affordable than if they borrowed from government. Amendment 197 relates to the technical area of compulsory purchase compensation. This seeks to amend the New Towns Act 1981 to allow new town development corporations to use their compulsory purchase powers under that Act to acquire land for large-scale housing and transport schemes without paying hope value compensation or needing to justify a direction in the public interest. This amendment would also ensure that land purchased under these powers would not count against departmental expenditure limits. While I sympathise with the spirit of the amendment and the aims it seeks to achieve, I am not able to support it. Compensation for the compulsory purchase of land is calculated on the basis of the value of the land if it was sold on the open market where no development is being proposed. The assessment of the open market value of land includes value attributed to the prospect of planning permission being granted for development other than for development which has planning permission. I think that is the term described as hope value. Compulsorily purchasing land raises questions of common-law fairness and engages the European Convention on Human Rights. Any reforms to compulsory purchase compensation rules must be made in accordance with the convention. To respond to this constraint, the Levelling-up and Regeneration Act 2023 introduced the power to allow development corporations, when making CPOs under the New Towns Act 1981 to facilitate affordable housing provision, to seek directions for the non-payment of hope value from compensation providing there is justification in the public interest. The power introduced by the Levelling-up and Regeneration Act 2023 allows a fair balance test to be conducted in each case between the public and private interests in making a direction and ensures compatibility with the European Convention on Human Rights. The proposed amendment is a blanket, non-discretionary approach to removing hope value. The Government do not consider they have sufficient evidence to be confident that the amendment is consistent with ECHR rights, because it is not clear that the public benefit of removing hope value in these situations would outweigh the impact on the individual landowners affected by the proposed measure in all cases. Under proposed new subsection (2B) in the amendment, land purchases would create an asset that does not have a direct financial return. Allowing development corporation land purchases to be excluded from departmental expenditure limits could significantly increase levels of public sector borrowing. The Government are committed to ensuring economic stability and sustainable levels of public debt through their fiscal rules. I therefore cannot support this change. For these reasons, I ask noble Lords not to press their amendments.