Supplementary memorandum by the Confederation
of British Industries (CBI) (PGS 43 (a))
As the Committee prepares to hear oral evidence
from ministers Yvette Cooper MP and John Healey MP, the CBI would
like to raise some key concerns, which have arisen since the end
of the Treasury's consultation. We would also like to highlight
how the CBI, along with industry partners, is taking our work
on PGS forward.
The CBI represents probably the widest range
of business interests in this review. The CBI speaks for retailers,
inward investors, companies involved in research and development
and businesses across all sectors who seeking to expand in the
UK in addition to the property and housing industries. And the
message from business is clear — PGS should not be pursued.
The CBI has very much welcomed the detailed
questioning of all witnesses by ODPM Committee members which has
covered many aspects of the proposals that business is concerned
about. However the Committee has not really questioned whether
PGS can be made to work at all, and therefore whether the proposals
should be pursued. The final evidence session with ministers offers
an important opportunity to grapple with some of the fundamental
questions which have not so far featured strongly in the debate:
— Why has the Treasury not published
any modelling of the PGS proposals?
— PGS could cost business several billion
pounds with huge implications for the property market. If the
Treasury has modelled the likely impact of PGS on the market (beyond
the scope of the original barker recommendation) it should be
made publicly available so that all stakeholders can analyse it.
— Similarly the "modest"
rate at which PGS could be set should be revealed so that we can
have an open debate about the implications of the Treasury's proposals.
— How will the significant amount of
public land, which the Government is committed to releasing be
treated under PGS?
— The Government seems to assume that
the cost of PGS will come off the cost of land. Given this assumption
we encourage the Committee to question Ministers on whether public
land would be discounted, thereby distorting the market, or whether
the Government would accept the recycling of public sector funds
in this way with potential implications for those agencies or
departments disposing of land?
— Ministers should be asked how they
propose to ensure that the delivery of infrastructure on which
vital developments rely is not delayed?
— There is an emerging consensus amongst
the business community and beyond that the certainty and "directness"
of delivery of infrastructure that the section 106 system now
allows would be lost if PGS goes ahead.
Ultimately we encourage the Committee to question
whether a new tax on development, based on intrinsically complex
and ambiguous land values can deliver the step-change in housing
supply that the Government and indeed business seeks. Instead
the CBI suspects that PGS would hinder the UK economy in terms
of discouraging inward investment, would disincentivise the release
of land and therefore development across all sectors and would
ultimately not achieve the Government's core objectives.
At the same time we recognise that the Committee
seeks positive suggestions about how PGS could work. And we agree
that there are problems to be tackled: the lack of housing supply
in certain areas impacts on the ability of business to recruit
and the lack of infrastructure is an obstacle to business productivity.
For these reasons, and in the absence of any published data from
the Treasury, the CBI is jointly commissioning some research with
the British Property Federation, Home Builders' Federation and
Royal Institute of Chartered Surveyors. The research will look
at a number of real life case studies across a range of sectors
and regions to explore the implications of PGS in more detail
and how the mechanics of the proposed system would work. We would
be very happy to share this research with the Committee in due
course.
Section 106 agreements have suffered criticism
in the past but there are now some positive signs of improvement
which bear testament to the work that has been done to tackle
key issues. We are however concerned that the attention being
paid to PGS should not detract from efforts to continue improving
planning obligations at the local level. The positive work of
those local authorities which have pursued a tariff system could
also be built upon in other areas perhaps through an expanded
section 106 system with more extensive pooling arrangements. We
will be continuing to focus efforts on how else key objectives
may be delivered more effectively
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