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Mr. Clifton-Brown: My hon. Friend has great knowledge of the subject and no doubt he has read the submission by the Law Society, which is worried about the new tariff proposals. The society says:

Does my hon. Friend agree that giving local planning authorities the power to say, "No, on these developments you must pay a tariff", is a step too far?

Sir Sydney Chapman: I am trying to play devil's advocate to my hon. Friend to keep the quality of the debate high. There may be no fundamental difference between that arrangement and the procedure for section 106 agreements. I understand what the Law Society says but I do not necessarily agree. Section 106 agreements are negotiable, but the bottom line is that local authorities may say to applicants, "If you don't do what we want, you don't get what you want." Therefore, applicants might not get planning permission, although I suppose that they could still run off to the Secretary of State to appeal. Section 106 agreements are effectively compulsory, so I envisage no difference in principle compared with the arrangements for planning contributions.

Keith Hill: The hon. Gentleman is making an interesting speech and was absolutely right to respond somewhat cautiously to the invitation of the hon. Member for Cotswold (Mr. Clifton-Brown) to leap aboard the Law Society's bandwagon. Let me remind him of what I said about circumstances in which a local authority might say that a planning contribution would be inappropriate and not required. That would be a case if a development were proposed on a site with heavy contamination that would require costly remediation, or a site under multiple ownership if it were anticipated that there would be enormous complications when engaging in a land assembly exercise. It might be inappropriate to deem that either a section 106 or a planning contribution would be required for a large development in such circumstances. The Law Society has got the wrong end of the stick on this one, so I congratulate the hon. Gentleman, who has deep experience of these matters, on reacting in an appropriately careful, calm, calculated and cautious fashion to his colleague's suggestion.

Sir Sydney Chapman: I hardly know where to put myself. This is all a matter of relativity. The Minister said that the planning contribution was not a tax on developments—he prefers not to use the word "tax" and we should not put words in his mouth, so let us call it a tariff. However, I could equally argue, without being spurious, that a tax on most developments exists

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because people must pay a certain amount when they put in applications to local planning authorities. That requirement entered planning law only relatively recently. There is a movable shelf and people on both sides of the argument can properly make debating points because the situation is detailed and complicated.

Although I had not intended to speak for so long, I shall make one or two other points. I thought that one of the Government's new clauses stated that the planning contribution must be paid up front—in other words, applicants who had been given planning permission could not begin developments before they had paid the planning contribution. One can relate that situation to a point about the retail prices index escalator. Incidentally, although amendment (g) to new clause 1 says:

my hon. Friend the Member for Cotswold could have added the words, "or any other building industry inflation escalator attached to the agreement on a planning contribution" to the amendment.

A planning contribution might be agreed at a time when the building industry is booming, but that time could be a turning point before a recession. If there were a national economic recession or a building recession, the boom could go out of the housing market, which would mean that the developer might make a considerable loss. Developers speculate and make judgments, so there is already risk in the process. It is fair to say that an escalator on the contribution would represent an additional risk that developers would have to consider. I agree with my hon. Friend and believe that a planning contribution should not be changed in any way after it has been agreed, especially given that it must be paid up front.

Matthew Green: The hon. Gentleman is making a valuable contribution. I would have more sympathy with his argument if it were not up to developers to decide whether to pay the tariff or to provide work in kind. My understanding of the new system is that a council will not be able to tell developers that they must pay the tariff. A council may say that it is appropriate to impose a tariff on a specific site, but developers will have a choice because a council will not be able to force them to pay rather than undertaking work in kind.

Sir Sydney Chapman: There is little dispute among us. I understand that there may be payment in cash or in kind under a section 106 agreement. I can certainly tell the hon. Gentleman—I think that he knows already—that the new clauses provide that a planning contribution may be made in cash or in kind, or as a combination of both. I am glad to get that on the record.

My hon. Friend the Member for Cotswold talked about new clause 3 and Wales. He properly said that through devolution under the Government of Wales Act 1998, specific powers were reserved by the United Kingdom Government. The Minister will not remember that during the Bill's first Committee stage I asked why we required provisions on Wales, because as Wales has been given devolved powers, what right has the UK Parliament to say how Wales should treat planning issues? I did not receive a satisfactory answer in Committee but I received one today from my hon. Friend because he rightly identified the fact that the

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planning contribution is taxation—an economic matter—and that this House has the right to decide on such matters. The House owes a debt to my hon. Friend not only for tabling his amendments and making his contribution on new clauses 1 to 3, but for addressing the important aspect of the provisions for Wales.

Mr. Clifton-Brown: I have been consulting the regulations and reading new clause 1 carefully since my hon. Friend mentioned the possibility of paying the obligation in kind. New clause 1(3) says that the local plan must state the "prescribed means" when it is drawn up, and subsection (5) says that the prescribed means are:

I am not sure whether the tariffs will be set at a local planning or a more specific development level, so perhaps my hon. Friend will comment on that.

Sir Sydney Chapman: If I may say so, it is for the Minister on duty to respond to that. I see any development in kind being given an amount of money, an allocation of money, and that is deducted from the prescribed fee or the prescribed tax, or the tariff, that will be put on the specific development. That is not a matter for me, but that is my reading of new clause 1(5). That provision underlines that payment can be made in cash or in kind, or a combination of both.

6.30 pm

Mr. Andrew Turner: One problem in dealing with a number of complex new clauses on Report is that our deliberations tend to degenerate, if that is the right word, into something more akin to consideration in Committee. I hope that the Minister will forgive me if I follow his example and probe rather carefully my understanding of some of the new clauses.

I shall begin where my hon. Friend the Member for Chipping Barnet (Sir Sydney Chapman) left off, with new clause 1(5) and (6). Perhaps the Minister will correct me if I am wrong when I say that the developer can decide between subsections (5) and (6). If he opts for subsection (5), he must use whatever prescribed means the local authority prescribes, and if he opts for subsection (6), he must negotiate. That is my understanding of new clause 1. I see that the hon. Member for Ludlow (Matthew Green) shares my understanding, which makes at least two of us. That is good.

It is a question of who should have the right to choose. If it were not the developer—the applicant—that had the right to choose, that would go some way to solving the problem illustrated by the hon. Member for Ludlow and my hon. Friend the Member for South Holland and The Deepings (Mr. Hayes). The problem concerns developers' contributions—I use a neutral term—being gobbled up and spat out by the local authority at some development at the far end of the district or borough that may not provide any compensation for the people in whose backyard the unwanted development had taken place. Why does the Minister feel it appropriate that that should be a developer's decision rather than a community one? People expect something to be provided locally, not at the far end of the borough. They will view with great concern the failure of the supposed benefit to appear.

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The hon. Member for Stroud (Mr. Drew), who is no longer in his place, questioned the operation of section 106 agreements. He said that, in many cases, there is agreement in committee, the officers are sent away to write a section 106 agreement, and it is hoped that something turns up that is acceptable to local people. I know that some local authorities behave in that way, but others will reserve the grant of planning permission until the members are content with the section 106 agreement. The members may have a much better focus on whether, for example, a roundabout or a play area is preferable to the people of a particular small village. I know that the people of my villages would prefer a play area to a roundabout, but it is not always the case. Surely it is reasonable that the local authority's development control committee should reserve that matter and make a decision on the basis of officers' negotiations with the developer.

I say to the hon. Member for Stroud, in his absence, that it is unreasonable for local authorities to expect the right result if they do not make clear to their officers what results they expect. It is careless of local members, to say the least, to allow their planning committees to get away with that sort of thing, when doubtless those local members will suffer if they do not come up with the right community benefit.

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