Examination of Witnesses(Questions 220-237)
MR MICHAEL
ROBERTS, MR
DAVID COATS
AND MR
IAN BRINKLEY
TUESDAY 17 DECEMBER 2002
220. But, as a principle, if that consultation
could be done on the framework rather than on the individual applications,
would that be an improvement?
(Mr Roberts) Yes. There is potentially a danger of
confusing two things here. I think from the perspective of our
membership, local development schemes, or frameworks as they were
known before the Bill was published, really should be about establishing
the key strategic objectives for spatial development in the local
area. They are not about determining in a plan whether or not
you would approve this application or that application for permission
to develop, clearly that has to follow subsequently. It may be
that on individual applications there are significant issues for
the local community and in those circumstances it would be good
practice, clearly, for a developer to take soundings as to likely
issues for the community. That should be done within, hopefully,
a context whereby the principles for development within an area
have been established through an effective process of involving
the community in the establishment of the local development scheme.
Mr O'Brien
221. Section 106 agreements, we are advised
that it is costing businesses £2 billion a year. How much
do you think of that £2 billion is to enable developments
to go ahead and improve the planning applications or how much
is just a commercial or a profit made by local authorities. Have
you a view?
(Mr Roberts) I have not got a view on the precise
number. I can only report that anecdotally there is a concern
that in some cases there may be an element of the practice that
you indicate. I cannot be more specific than that.
222. Let me put another view to you. How much
of the £2 billion is actually passed on to the business end
users, the customers, and how much is absorbed by the reduction
of land value?
(Mr Roberts) I cannot answer that question. The £2
billion figure that you cite is one that we developed on the back
of some work that was done by the RICS on the incidence of planning
gain. I could not really give you the sort of detail that you
seek.
223. Does the TUC have a view on section 106
agreements?
(Mr Coats) Planning gain, we do not have a formal
view, no.
224. Can I move on then. Does not the cost of
section 106 agreements reflect the ability of developments to
bear the cost? How can they be a real problem? If there is this
fluctuation of land values, if there are benefits to the businesses,
should they not be able to absorb the cost?
(Mr Roberts) I think we accept the principle that
where a development has a significant impact on the local community
then the developer in some way should recompense the community
for that impact. What I think gives us concern is the extent to
which that opens up the opportunity for negotiations to secure
gain over and beyond the extent of that impact on the local community.
225. What does the CBI think of the alternatives
to the 106 agreement? Have they a view?
(Mr Roberts) We have not proposed an alternative to
section 106.
226. Would you prefer fixed impact fees instead
of the section 106 agreement?
(Mr Roberts) No. Our preference is for section 106
to be operated in a more transparent way through the implementation
of best practice grants.
227. Are you saying it is not transparent at
the moment?
(Mr Roberts) I think there is a view amongst our members
that it is not always transparent and that there are differences
in practice between local authorities.
228. Is that flagged up anywhere? If there is
this question of mystery or a shroud over the agreement, is that
presented anywhere?
(Mr Roberts) We have not given evidence of that in
our memorandum.
229. Why not?
(Mr Roberts) Being honest, because it is quite difficult
to establish that for the simple reason that in some cases developers
have secured permission. Clearly they do not wish to upset the
relationship they have with the local authorities where they have
succeeded in getting that permission.
230. Whistleblowers are now independent. Is
there a reason why your members do not blow the whistle if there
is some mystery there?
(Mr Roberts) I am not sure if the protection extends
to them.
Dr Pugh
231. House prices have clearly risen considerably
in recent years especially in the South East. To what extent do
you consider this to be due to planning constraints on new development?
That question is to both of you.
(Mr Brinkley) The short answer is we do not know,
but we think someone ought to find out. It could have two possible
effects: one is on destabilising the macro-economy by pushing
up house prices and at the moment we are in a house prime boom;
the second is it does price workers out of high property areas
and that is a particular problem with the public sector. So although
we do not have the answer, if you were going to follow this up
by suggesting new research or a new investigation, certainly we
would like to see the Treasury and the Office of the Deputy Prime
Minister look at what the structural causes of house price inflation
are and what role the planning system plays in that because at
the moment we do not know and I am not convinced many other people
do.
232. What about high incomes and low interest
rates, are they responsible?
(Mr Brinkley) Certainly these must all be part of
it. We have seen a very strong wage growth and we have seen low
unemployment so people feel secure in their job, but there is
clearly a puzzle going on there. Although the markets send the
strongest possible signals, new build in private housing has not
gone up, it has gone down a little bit in the private sector and
that does suggest there is something not quite right there which
is stopping the market from responding to this very clear price
signal.
233. The primary puzzle for most of us is trying
to figure out why very high prices in the South East have not
encouraged more businesses to locate elsewhere. What is your explanation
of that?
(Mr Brinkley) It may have to some extent in that some
of the inward investment projects have been encouraged towards
the Midlands and the north rather than the south, but in the south
you have a lot of demand for the high-tech industries in particular,
it is a prime location, you can sell your goods very easily, it
is close to the Continent so you can get your goods across to
Europe and by and large you do not tend to see an awful lot of
business mobility across regions and that is why I think the Government
is probably right in putting much more emphasis on encouraging
indigenous growth within regions rather than going back to the
old policy of trying to shift industry out of the South East to
the north because in the past that has not been terribly successful.
Chris Mole
234. We heard from earlier witnesses how difficult
it is to compare the situation in the UK with that in the US because
of different densities of population etcetera. Does that suggest
that the McKinsey Report in 1998 is not really a terribly reliable
source of opinion in these matters?
(Mr Coats) That is a fair summary of the view we took
in 1998. The TUC produced a fairly lengthy response to the Report
which we can let you have, Chairman, you might find it interesting.
We felt that McKinsey was ignoring those core productivity drivers
that I referred to earlier and by focussing on the planning system
they were really mis-diagnosing the UK's problem and the idea
that you could boost productivity dramatically by deregulating
product markets which we think are pretty open and competitive
at the moment or by dismantling the planning system with a recipe
for no significant change in productivity and potentially big
environmental dis-benefits. So we were never convinced by the
diagnosis that they proposed in 1998.
235. And the CBI?
(Mr Roberts) I think one of the challenges in the
analysis, particularly with regard to the link between planning
and productivity in the McKinsey Report, is that clearly they
are comparing two very different countries in terms of density.
However, what I think is useful is the fact that it signals in
those areas such as retail where the size of outlet is a significant
issue that that potentially could be a significant contributor
to that particular sector's productivity. I think the danger is
in comparing apples with pears in terms of type of geography.
(Mr Coats) The TUC assessment was that McKinsey had
failed to understand the kind of social and environmental trade-offs
which in a small and densely populated country like the UK we
have to make. It is entirely legitimate that you want to preserve
shopping in a downtown area rather than shift it all out to large
superstores on the periphery for all sorts of good social and
economic reasons. We also felt McKinsey failed to understand completely
that whereas land is readily available in the US, it is not in
the UK and while their Report may have been interesting and certainly
it was fun to write our response, I am not certain it contributed
to the sum of human knowledge all that much.
Chairman
236. You could say the 1947 Town and Country
Planning Act in this country was a jewel in the crown, could you
not, and that really for the last 50 years we
have had a planning system in this country which
has actually made the country much more attractive to live in?
Would you agree with that?
(Mr Coats) I would agree with that, Chairman,
yes.
(Mr Roberts) It has clearly been one of the factors.
I think the interesting point for the planning system is that
the context within which that Act was initiated is in many respects
very different from the context within which we find ourselves
now, a difference between a period of reconstruction to a period
of our modern Western economy seeking to retain its position in
a global environment.
237. Do you not think one of the key things
in retaining its position in a global environment is the quality
of the environment as opposed to encouraging people merely to
develop?
(Mr Roberts) Yes, and that is the quality of the build
as well as the rural environment and it is a point we make quite
explicitly in our memorandum.
Chairman: On that note, can I thank you very
much for your evidence.
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