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Mr. Robert Syms (Poole): My hon. Friend mentioned section 106 agreements. Although it is right and proper that companies sometimes contribute to works associated with plans, there is always a suspicion among my constituents that when deals are negotiated between local authorities and companies, money is given for planning permission. Is not there a case for more transparency in such agreements, many of which are negotiated in great secrecy?

Mr. Clifton-Brown: My hon. Friend does me a great service by bringing me back to my script. The Green Papers refer to the introduction of a tariff system, and in principle we do not object to that. A system that speeds up negotiation of the 106 agreement and makes it less arbitrary, so that the developer, the local authority and local people know exactly what they are going to get from a particular development, must be a good thing. We need better targeting and definition, and that is the big challenge for the Government. There must be some flexibility in the system, so that it does not become merely a betterment levy tax. We must ensure that it is properly reapplied to the local infrastructure, rather than dissipated into further, more general causes. It is all very well targeting such schemes properly on their introduction. That is what happened with the lottery, but the Chancellor soon cast his eagle eye over the proceeds and used them for causes that are not strictly aligned with the five for which it was originally invented.

In the spirit of this debate, I should explain what the Opposition believe should be done. First, we would stop the fragmentation of our urban regeneration policy. We initiated some successful, cohesive and large-scale projects—for example, city challenge, the single regeneration bid scheme and urban development corporations—that, contrary to what the Minister said, were very successful in the 1980s. Probably the most successful inner-city regeneration took place under those imaginative schemes during the 1980s, so we want the Government to introduce a more streamlined system.

Ms Oona King: Does the hon. Gentleman agree that while there were great strides in regeneration, many communities—such as those in Tower Hamlets, which is next door to Canary Wharf—felt that they did not benefit? That was a sincere feeling that is replicated today. For example, on the Will Crooks estate—the closest to Canary Wharf—only two out of 400 adults have a job. That is what regeneration in this decade has to change.

Mr. Clifton-Brown: I entirely agree with the hon. Lady. We have seen this in docklands, and in Leeds, where there has been some very good regeneration of the city centre. However, within a mile of that city centre there is some of the worst deprivation to be found anywhere in the country.

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The challenge for the Government, having regenerated one or two beacon areas—including some of the worst areas, such as docklands—is that they now have to move out to the next band and apply some of the lessons learned from the urban development corporations. I agree with the hon. Lady that areas such as hers are among the worst in the country. It is a disgrace, 50 years on from the second world war, that such areas are still so deprived, and we must find schemes that lever in private money and also utilise all the resources of the local area. The voluntary sector, the private sector, the local authorities and business groups must all be levered into partnership to try to regenerate some of these areas.

The most serious question in the debate so far, and one that the Opposition want to address, is how we should move out into the next band after we have regenerated the centre. We should adopt some of the proposals that we used with the urban development corporations, which might supersede some of the local authority's powers by putting all those people together in partnership and coming up with a scheme to manage and regenerate those areas.

What else would we do if we were elected to power? I have already outlined our proposal for a single Minister to bring together all Departments to develop an effective, united strategy to regenerate some of the worst areas. It is a disgrace that a civilised country with the fourth biggest economy in the world still has some of the most deprived areas in Europe. We should all concentrate on that. A debate such as this is valuable in bringing the subject to the fore, so that we can discover what useful ideas can be culled from it.

During the election, we advocated spending at least £200 million on new tax cuts for deprived areas. Regeneration companies would be able to choose which tax cuts to implement, and fund a tax credit budget. Such tax cuts could, for example, take the form of lower VAT on brownfield development and conversion. It is a huge anomaly in our tax system that there is no VAT on new building on greenfield sites, yet the full rate is charged on the refurbishment of buildings on brownfield sites. We need to address that anomaly, because it sends out the wrong signal to developers.

Indeed, it is so much easier to develop greenfield sites than brownfield sites that the tax system should be skewed in favour of refurbishment and the cleaning up of our polluted areas. Many brownfield sites are polluted and difficult to develop, and no Government have so far come to grips with that problem. Having put the infrastructure into the dome site, for example, and having, at long last, started to regenerate it and clean it up, it would have been better to demolish the dome and use the area for much-needed social housing. For goodness' sake, we all recognise that there is a chronic shortage of social housing in London—there was a debate on the subject in Westminster Hall earlier this week—so why should an edifice such as the dome prevent much-needed building on a site that could be made suitable for housing?

Mr. Gray: My hon. Friend made an important point about the differential between VAT on new build and on regeneration. Lord Rogers made the same point when he suggested that VAT should be reduced to zero in areas of regeneration. Does my hon. Friend agree that to do the

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opposite and increase VAT on construction on greenfield sites would send out the wrong signal, and would in fact be a tax on housing that we would not want to encourage?

Mr. Clifton-Brown: My hon. Friend is interpreting my remarks as I wished them to be interpreted. I chose my words carefully in saying that the tax differential should be closed. What I had in mind was that the tax on brownfield sites should be reduced to zero, and I would certainly not advocate a wholesale increase in tax on greenfield sites. Our 17.5 per cent. VAT rate is plenty high enough compared to that of some of our international competitors. I certainly would not want it to be increased.

We want to look at business rates for firms locating into regeneration areas. Some of our imaginative schemes during the 1980s included the single regeneration bid and the city challenge. We gave business rate holidays to a number of firms moving into such areas. When the new town of Milton Keynes was built, for example, the business rate holiday was a key factor in bringing businesses into the area, and Milton Keynes has been one of our most successful new build and regeneration projects since the war. We need to learn lessons from that and, perhaps, consider more carefully how we apply business rates.

Ms Debra Shipley (Stourbridge): Will the hon. Gentleman give way?

Mr. Clifton-Brown: I will happily give way in a minute.

It is also an anomaly that shops in many city centres pay a higher business rate per square foot than a new build development on a greenfield site would pay. That is wrong. Those who operate similar types of business, whether in a city centre or on a greenfield site, should pay the same business rate per square foot. That would help to redress the balance. I shall now give way to the hon. Lady from Shipley.

Ms Shipley: I am not actually from Shipley. Will the hon. Gentleman refresh my memory? Was Milton Keynes—where all those companies enjoyed a tax holiday under the Conservative Government—a greenfield site or a brownfield site?

Mr. Clifton-Brown: Well, it was part and part. It was a new-build city, but it also took over some previously under-utilised and under-developed brownfield sites. It was not entirely green belt land. It involved a new development corporation and it has been one of our great successes. The hon. Lady may knock that, but she will probably find that her Government will come up with similar proposals. We shall have to build new towns like Milton Keynes to accommodate the increase in housing that we need, and the only way to do that will be to have a similar structure to the one developed there.

There is too much empty housing. We would consider lowering the council tax on housing that had previously been empty. There are 750,000 empty flats and houses in this country, of which 150,000 are in the public sector. That is an utter disgrace when, at a conservative estimate, at least 150,000 people are homeless. We need to come up with imaginative proposals to regenerate the empty housing in our inner cities, where row after row of flats

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over shops stand empty. One way of tackling the problem would be to encourage the private rented sector to let such properties by making it simpler to deal with tenants who misbehave and do not pay their rent. Every Government proposal to regulate residential lettings and make things more difficult for private landlords makes it more difficult to bring those empty properties back into use.

We have heard a lot of bluster from the Government about urban regeneration. They produced an urban White Paper, spawned by the architect Lord Rogers, which was immediately denigrated on the basis that many of his recommendations were not followed. That was a pity. The Government had employed someone who truly knows about the problems of regenerating our inner cities and it would have been nice to have seen some of his recommendations followed.

The Department for Transport, Local Government and the Regions has spent £2 billion less on regeneration than the Department of the Environment spent in the last four years of the previous Conservative Administration. Expenditure on the new deal for communities has been offset by the end of programmes such as the urban development corporations and city challenge funds that were so successful in the 1980s and 1990s under a Conservative Government.

Between 1993 and 1997, the Department of the Environment spent £6.1 billion on regeneration. Between 1997 and 2001, the Department of the Environment, Transport and the Regions and then the DTLR spent just £4.8 billion. Adjusting for inflation at 2001 prices, that is equivalent to a cut of £1.9 billion. Money in the rate support grant settlement is being taken away from London, which, as the hon. Member for Bethnal Green and Bow (Ms King) said, has some of our most deprived areas. Why are funds being taken away from London and given to the rest of the country?

We still have a huge challenge to regenerate some of our worst areas of deprivation. Conservative Members want to come up with constructive policies—we will get back to the situation that existed in the 1980s and 1990s when we had a proud record of doing just that.

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