Examination of Witnesses (Questions 320-334)
YVETTE COOPER
AND JOHN
HEALEY
18 MAY 2006
Q320 Mr Betts: One issue that has
been raised in relation to that has been dealing with brownfield
sites that might exist in those areas having a different rate
of Planning-gain Supplement, perhaps a lower rate for brownfield
sites or sites that are contaminated land, than there would be
for greenfield sites. Is that something that is in your consideration?
Yvette Cooper: It is definitely
something that is in our consideration. We have had a lot of consultation
responses on that. What we have not yet done is reviewed all of
the consultation responses and come to any conclusions, but it
is clearly something we want to consider, should we do a different
rate for brownfield and greenfield.
Q321 Mr Betts: Presumably you considered
the point that there should not be a tax on any land with a negative
value where the planning gain brings it up to a nil value?
Yvette Cooper: I think that is
probably at a level of complexity that I am sure if John were
here he would be able to answer easily, but perhaps we will ask
him to write to you on that.
Q322 Mr Olner: Just a quick question,
Minister, and it touches on the answers you have given. Given
that there are a number of agencies, Regional Development Agencies,
city councils, shire councils and what have you, and all have
an input into determining the priorities of what infrastructure
is needed, could I ask are the regional offices going to sift
these priorities as they do now and stack them up so that they
can get government funding? I am fearful that there will be a
huge, huge temptation not to look at this money as additional
money for doing infrastructure. I am rather frightened that it
is going to go into the black hole in the Treasury and not come
out to help specific projects.
Yvette Cooper: The reason for
us coming up with the PGS in the first place was because Kate
Barker recommended it as a way to fund the additional homes we
need. We need the additional homes. We have to build the extra
homes for all of the issues that we have discussed as part of
your other inquiry.
Q323 Mr Olner: I do not have any
problem with that, Minister, but—
Yvette Cooper: I do not think
we can do the homes unless we do the infrastructure.
Q324 Mr Olner: Exactly.
Yvette Cooper: It is not going
to be possible. Given that we are clear on our commitment to deliver
the extra homes, we are going to have to come up with the investment
for the infrastructure. That is why I think there is a strong
disincentive on the Government and on everybody else to see this
as just replacing other resources. We have made it very clear
from the very beginning that we need this to provide additional
resources for that infrastructure.
Q325 Chair: Minister, can I just
press you on a question that we have explored before, which is
about the mismatch between when the housing development occurs
and when the money comes through to pay for the enabling infrastructure
or the infrastructure that is required in parallel. Could you
explain how the local authority will get the money if it has to
come through being paid through a central fund and coming back
again and how that will be delivered on time? I think this takes
us back to the forward-funding question again.
Yvette Cooper: We have not set
out any precise mechanisms about the way in which the resources
would flow through or what the timings of the processes would
be and obviously that is the kind of thing you have to work up.
If you are going to take the PGS forward you have to do that sort
of detailed design and consult on the way in which that would
work as well. If you have a transparent process and you know what
it is that is coming and if you know the way in which it is going
to work then that does give you all sorts of flexibility to use
prudential borrowing, to use other routes, to be able to make
sure the infrastructure is there on time. Also, if you have a
situation where you have a PGS that has been in place for, say,
five to 10 years then you have got a resource of money that is
coming through a PGS process in a rolling way so that also gives
you considerable flexibility. There may be issues in transition
that you may have to look at but, again, that is another question
about how transitional arrangements would work.
Q326 Alison Seabeck: I want to follow
up on the point the Chair made in relation to a successful section
106. If you look at the Greenwich Millennium Village which negotiated
the 106 way back in 1999 when the Dome was built, in that deal
the road junctions were put in place for potential future housing,
the bus terminuses were put in. Potentially section 106 can achieve
what you are doing through PGS. In a sense, I would like the assurance
that you have not entirely ruled out how you improve and get better
use of 106s if PGS does not stack up.
Yvette Cooper: We are very genuinely
consulting on this and looking at all of the responses that have
taken place. We have not taken firm decisions in terms of this
process at all, we are genuinely looking at all of the different
alternatives. All I would say on that is you are right, you can
get some excellent results from section 106 processes and there
are some local authorities who are brilliant at it. Greenwich
has been particularly good at doing section 106 deals on very
big sites. The thing that is very interesting about the research
we have just sent you is how many homes and developments are coming
through on small sites. I think part of the explanation for some
of the responses we have had is that people are still thinking
in terms of the big sites where they have experienced section
106s and how the PGS applies to those sites. Yes, that does raise
a series of important questions and you have to think that through
but also you have to think through how PGS would apply to the
majority of sites where you are getting no section 106 arrangements
at all. I think there are serious questions about our ability
to do section 106 agreements on all of those sites because many
of them will be small and, therefore, a section 106 process will
be much more cumbersome than a simple PGS process. Yes, you are
right, there are some very good things about the section 106 process
that you would not want to lose and, yes, there are some sites
on which section 106s have been very successful, but there also
a huge number of alternative sites where we are not capturing
any planning gain at all.
Q327 Chair: Can I just follow that
up. Are you considering a hybrid system where, for example, you
might have a variant on the infrastructure tariff system on very
large new developments but PGS as a backstop for everybody else?
Yvette Cooper: The main approach
that we are working on is the one that we have consulted on. That
is our central proposal and that is what we believe at this stage
would be the best way forward. As I said, we are going through
the consultation responses in some detail. As you know, we have
already set out proposals for an optional planning charge as an
alternative and we have looked at that as well. For many of the
reasons that John and I have both given, we do think that the
Planning-gain Supplement has the greatest advantages of all of
the alternatives. There are issues in the interim as well. One
of the reasons we wanted to promote the Milton Keynes tariff approach
is there are an awful lot of growth areas where a lot of planning
decisions will have been taken by the time the PGS could come
in where consents will have been given and the tariff approach
may be extremely useful in the interim regardless of what decisions
are taken about PGS.
Q328 Mr Betts: Can I follow up on
one or two points that Alison Seabeck was raising. Even if the
Planning-gain Supplement comes in we know that the section 106
agreement will be there on housing sites for affordable housing
and we also note from what you said, and I think all our constituents
would agree with you, that local authorities are very different
in how well or how badly they deal with the current situation.
As well as looking at how the Planning-gain Supplement might operate,
are you going to give details of how it will improve the operation
of section 106? Particularly, are you going to issue some guidance
to local authorities? That does not mean to say, "There is
section 106, use it if you want", but actually points them
in the way they ought to be using it to improve and increase the
number of affordable houses being built.
Yvette Cooper: We have practice
guidance already that we have been drawing up to try to improve
the existing system but that is the existing system separate from
how it might operate with the PGS. What we would certainly need
to do is to have some very clear approach to section 106 with
a PGS alongside it and we might well do that as part of the legislation,
for example, around the PGS. That could be one approach to it.
You could also consider much clearer guidance, a much clearer
framework, for example, about the way that affordable housing
is done through section 106. All of these are the sorts of things
that we are looking at where your recommendations would be very
helpful to us but we have not taken decisions.
Q329 Mr Betts: In the interim we
might get some interim guidance on section 106 use under the current
arrangements?
Yvette Cooper: Yes.
Q330 Mr Betts: It would be really
helpful if we could have that. In terms of the money coming into
the local authorities and how it is going to work, currently if
you get section 106 it tends to get spent on a specific infrastructure
project of some kind, whether it be affordable housing or traffic
arrangements, playgrounds, community facilities or whatever, but
if Planning-gain Supplement comes into the treasury of a local
autohrity I think most of our concerns would be the rubbing of
hands in the city treasury and the money disappearing to reduce
the council tax or plug the gap in social services spending that
year and much less getting spent on infrastructure and some of
those projects. Is that a real possibility or will something be
done to stop it?
Yvette Cooper: Again, that is
one of the issues that you need to take into account when designing
what the mechanism is for returning resources to the local authorities.
You would want it to be infrastructure funding so you could think
of that as being capital funding, as being resources. One option
might be to ring-fence it for infrastructure. Another approach
might be to say local authorities should have the flexibility,
and ultimately that is what they are elected to do and they should
be democratically accountable for those decisions. Again, we have
not set out the way in which that should work and there are arguments
from different points of view as to how you should do it.
Q331 Lyn Brown: One could argue that
the failure to put in a basic infrastructure in order to enable
a community to be sustainable causes calls on the public purse
for other services, ambulance, the police, doctors, et cetera.
Yvette Cooper: Some of the stakeholders
involved here have very strong views that it should be ring-fenced;
others, you can imagine, are quite keen for it not to be.
Q332 Mr Betts: One point that has
not been raised is the two different approaches people have taken.
Quite a bit of the evidence has said if you have a system make
it as simple as possible, we do not want any discounts, we do
not want exemptions, and then lots of other evidence has said
if you give exemptions this is where you draw the line. One point
that has been raised, I think by English Partnerships as well
as others, is if housing meets the five star rating in the draft
Code for Sustainable Homes because those homes would pose less
demands on the infrastructure they should be exempt from Planning-gain
Supplement, or at least the land they are built on or the value
should be exempt in those cases. Have you got a view on that?
Is that something you are considering?
Yvette Cooper: I think this is
a really interesting idea. There may well end up being a series
of practical difficulties with it, not least that it might be
sensible, as you say, to have a very simple process with very
limited exemptions. There are some difficulties about having something
which has to be paid at the point before development begins but
the standards that you want to put in place would be put in place
as part of the development. If you want to build to a particular
standard of building regulation or a particular standard in terms
of the Code for Sustainable Homes, that building has not taken
place at the point at which you would be paying your supposedly
discounted rate of Planning-gain Supplement. There would be a
whole series of questions like that. Also, there are some interesting
issues about whether you could use the Code for Sustainable Homes
as the test or whether you would look at some of the other issues
which are more easily built into the planning system. For example,
a lot of local authorities are now looking at requiring a certain
amount of micro-generation or onsite renewables to take place,
so requirements of 10% of the energy to be provided on onsite
renewables on new developments. It might be easier to look at
the sorts of things that you build into the planning system than
the kinds of things you traditionally tend to build into building
regulations and the Code for Sustainable Homes. I think this is
a really interesting area and it is far too early to be able to
take decisions. This might be something that you might have to
look at again over time and it might not be something you could
build in initially but something that you could consider over
time as it becomes clearer in terms of the way you might measure
things or take them into account.
Q333 Mr Betts: Do you have a timetable
yet for introduction or are you waiting for the cross-cutting
review on the implications on housing growth and the infrastructure
costs and then perhaps you could fix the rate of planning gain
to fill the cost of the infrastructure?
Yvette Cooper: The timetable is
we want to say a lot more about the Planning-gain Supplement by
the end of this year, so effectively our response to the consultation
by the end of this year. The spending review timetable takes us
through to next summer and that will be the timetable for the
cross-cutting review. The earliest that we could introduce a PGS
if we took it forward would be 2008. Beyond that, I do not think
we have set any further timetables.
Q334 Alison Seabeck: The Law Society
believes you are going to have to introduce primary legislation
to make changes to the planning law. Is that your understanding
and is that factored into your timetable?
Yvette Cooper: We have not taken
final decisions about how we would do it. We might need to look
at paving legislation in order to be able to do some of the preparations.
John might be able to give you a better answer to this because
a lot of these are Finance Bill considerations and there would
be implications for section 106. We have not come to any firm
decisions on this but we have anticipated the fact that legislation
will be needed.
Chair: Thank you very much, Minister.
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