Examination of Witnesses (Questions 160-179)
MR JOHN
CALCUTT, MR
TREVOR BEATTIE
AND MR
DENNIS HONE
8 MAY 2006
Q160 Mr Betts: We are quite convinced
that we have sufficient, say, in the south east to provide all
the sewage and the water and the transport infrastructure that
is needed?
Mr Beattie: The Treasury has said
that the Community Infrastructure Fund will be an additional sum
and on their figures that is 20% of the total planning gain supplement,
albeit a substantial amount of additional resource, to deal with
strategic infrastructures.
Q161 Mr Betts: You do say that there
might be an element of redistribution, that essentially most of
it should go to the local planning authority.
Mr Beattie: Yes.
Q162 Mr Betts: Have you got an idea
of the proportion? Have you got a figure in mind?
Mr Beattie: About 80% going back
to the local area and 20% for the Community Infrastructure Fund,
and that certainly seems to be about the right level from where
we are coming from.
Q163 Mr Betts: If we are then going
to hypothecate and ring-fence most of the money is there any case
for keeping existing tariff systems?
Mr Hone: Obviously we are a little
while away from the planning gain supplement coming into force
and therefore the tariff is a mechanism that promotes and accelerates
development at this point in time. The point was previously made
about transitional arrangements and I think it needs to be looked
at very carefully through the transitional arrangements for PGS
because nobody will enter into tariff arrangements unless they
get some sort of conditions regarding how planning gain supplement
will impact on the tariff arrangements. For instance, in Milton
Keynes the tariff arrangements are entered into by the landowners
but only on the basis that they do not get doubly taxed through
planning gain supplement, so if planning gain supplement comes
in in a number of years' time to the extent that that duplicates
the arrangements under the tariff there will have to be some system
of refund to them. The sooner the transitional arrangements are
clear the more confidence people will have to continue entering
into tariff arrangements to accelerate developments in the meantime.
Mr Calcutt: The point that I think
we are making is no more than, when circumstances permit and enlightened
self-interest bring the public and private sectors together to
try and cut a deal to bring development forward or do things more
efficiently by agreement, then it would be a shame if that opportunity
were no longer available and there was some mechanism for saying,
okay, you have struck a good deal here, maybe more than you might
get under the tariff for an accelerated programme or some such
economic bargain, and in those circumstances should you be precluded
from doing so? That is, I guess, the only logic that you can apply.
Mr Beattie: That is why our consultation
response says that tariffs should only be allowed to run alongside
PGS where they would raise at least as much as PGS.
Q164 John Cummings: You appear to
be wary of the extent to which self-assessment is likely to work.
Do you not think it is a valuable way of reducing bureaucracy
or do you believe it is just a recipe for tax avoidance?
Mr Beattie: We are wary because
we think that the detail and the information is not in the consultation
document. There was a pledge to consult further on self-assessment.
A lot more detail is necessary. Self-assessment as it stands is
a perfectly good mechanism for doing this; indeed, you would probably
need an army of inspectors to do it any other way, but the information
simply does not exist on self-assessment. There will be a natural
check and balance in the system, ensuring that developers will
want to put a proper assessment down of their PGS liability because
they will not want to be hit subsequently with any uncertainty
over the land or the development and so we think that self-assessment
can work very well but the information just is not there and a
lot more guidance is needed.
Q165 John Cummings: What mechanism
for assessment would you prefer?
Mr Beattie: I think we have said
that self-assessment would work very well but we need more guidance
on it. I do not think it could work with a central inspectorate
assessing it.
Q166 John Cummings: So you are quite
happy with self-assessment?
Mr Beattie: We need more details
on it. The principle of self-assessment is fine.
Q167 John Cummings: Do you have any
alternatives in mind?
Mr Calcutt: No. I think that any
alternative would be a bureaucratic nightmare, so I think what
you need to have is self-assessment backed up with the very clearest
guidelines on how those assessments are carried out and some fairly
interesting penalties should that system be abused. That is the
best you can do.
Q168 John Cummings: What appeals
system would you envisage?
Mr Calcutt: I would go along the
line that, where applications were made, in the circumstances
where people made valuations or views that had no reasonable basis
in reality then I would be expecting very significant penalties
for clear, dishonest behaviour to be imposed, like multiples of
the tax.
Mr Beattie: The Valuation Office
will take a view on all these matters, and they will be running
the system and checking self-assessments.
Q169 John Pugh: Is the Community
Infrastructure Fund, together with regional funds, an essential
ingredient for the PGS proposals to work effectively?
Mr Beattie: Yes, we think it is
fundamental to PGS working because PGS pivots on the distinction
between site-specific infrastructure and the broader strategic
infrastructure which the Community Infrastructure Fund will make
available. One of the fundamental pieces of logic behind here
is, as I have said before, the additional resource it will free
up for that essential strategic infrastructure.
Q170 John Pugh: You cannot think
of any other mechanisms that might be used to overcome the gap
between the point at which investment is required and the PGS
revenue flows?
Mr Beattie: You are talking about
phasing and timing?
Q171 John Pugh: Yes. Were it not
there, what other mechanisms are perceivable?
Mr Beattie: Plenty of other mechanisms
are conceivable. It would be perfectly practicable to use the
existing section 106 procedure to create a Community Infrastructure
Fund. There are plenty of other ways of doing it but the good
thing about this is that it is built into the structure of PGS
and the Treasury have said it will be additional.
Q172 John Pugh: With regard to the
national element of the Community Infrastructure Fund who do you
think should be administering that? Would English Partnerships
seek a role?
Mr Beattie: We could certainly
be one candidate, yes. It will need a body with a more than just
a local or regional overview in order to distribute that money
fairly and take a view on major cross-regional infrastructure.
Q173 John Pugh: So you would not
mind dispensing capital or helping to distribute that?
Mr Beattie: Certainly we would
be one candidate for that role.
Mr Calcutt: Obviously, it can
be used in an integrated manner to the extent that one can have
infrastructure pump-priming viable regeneration, and we can bring
those together. I think we would have something to offer in that
particular circumstance.
Q174 Mr Betts: You have looked into
certain exemptions to PGS and you have talked about the Code for
Sustainable Homes and that the land on which homes that met that
might be exempt from PGS. Again, it is another exemption into
the system. Is it reasonable for developers which, for example,
install grey water recycling to say that they are exempt from
PGS when surely the demands those developments place on the infrastructure
are not actually much different?
Mr Beattie: Can I just talk you
through what we propose? We do not propose a complete exemption.
We propose a reduced rate. We do not propose that such developments—and
for the sake of consistency let us call them five-star developments—should
be exempt from the Community Infrastructure Fund because they
make just as big a draw on strategic infrastructure, but it does
seem to us self-evident that developments that have a very high
level of environmental sustainability, that use less water, that
are more energy efficient, should be encouraged and they will
by definition make less demand on local services than inefficient
forms of development. Therefore we think this is a great opportunity
to tie up environmental and fiscal policies and provide incentives
for high quality development that we need particularly in the
growth areas, for the reasons you have given.
Q175 Mr Betts: So would a calculation
have to be done in some way to ensure that the reduction on demand
on local infrastructure that came from having these environmentally
friendly homes was no different from the reduction in the planning
gain supplement?
Mr Beattie: No. We would create
a whole industry if we allowed some kind of proportionality. We
are proposing quite a simple reduction for homes that meet a five-star
rating under the proposed code. It would be a set reduction.
Q176 Mr Betts: How much would it
be?
Mr Beattie: We have not made proposal.
It would be a discount. We would need to model that and it is
one of the areas we have said we are going to do further work
on.
Q177 Mr Betts: Do you really think
that the current Draft Code for Sustainable Homes is sufficient
to merit a reduction or do you think it ought to go further?
Mr Beattie: I am talking about
very high quality developments, whether they are EcoHomes excellent.
However they are measured, we are talking about high quality developments.
Mr Calcutt: We would have a single
standard. For the purposes of the proposition one would stay with
the only game in town at the moment, which is EcoHomes. We would
just say that if this was EcoHomes excellent, or excellent plus
as the hurdle rate rises, then against that single top standard
there would be a discount for those that were able to achieve
it and whatever elements it would have to contain in its new and
expanded form.
Q178 Mr Betts: In terms of housing
and non-housing, if this discount were offered for certain housing
schemes do you think there is a danger that that might skew the
market in favour of housing development or would you consider
offering some discount to eco-friendly non-housing schemes?
Mr Beattie: It should relate to
commercial as well, but we are trying to skew the market in favour
of high quality environmentally friendly development.
Q179 Mr Betts: Does that mean you
would have to have therefore a set standard for eco-friendly commercial
development as well?
Mr Calcutt: There is one. The
same system in principle applies to both. The Building Research
Establishment has EcoHomes for domestic and something called BREAM
for commercial, so all the standards are there and all the measuring
equipment is available to do that.
Mr Betts: We probably will have one or
two more questions to follow up on in writing to you on technical
points as well the one we asked you to come back on about option
agreements. Thank you very much indeed for giving your evidence.
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