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Mr. Paul Goodman (Wycombe) (Con): This Second Reading debate has been good humoured, informative and expert. It is unfair to compliment two speeches in particular, but I must confess that I greatly enjoyed the speech by the right hon. Member for Greenwich and Woolwich (Mr. Raynsford), which was not exactly supportive of his Front Bench colleagues position, but extraordinarily expert. I also appreciated the speech by my right hon. Friend the Member for Skipton and Ripon (Mr. Curry), who likewise has tremendous expertise. The pair of them could usefully do the music halls, if people still did, as a double acta compliment unlikely ever to be offered to the Financial Secretary and me.
The intrinsic difficulty with todays debate is that, although it has ranged widely, its foundation has been very narrow: a Bill with only three clauses. A central difficulty has been that, although we know the general drift of the Governments position, or at least we thought that we did, there is little detail to go on. Although the Billthis exercise in pre-legislative
legislation, as my hon. Friend the Member for South Staffordshire (Sir Patrick Cormack) called itis contested and controversial, the debate has demonstrated widespread agreement on several important points, as the hon. Member for Waveney (Mr. Blizzard) pointed out. There is agreement that parts of the planning system are, as the Office of the Deputy Prime Minister once put it,
opaque, slow, unfair, complex and reactive.
There is agreement that developers should meet planning obligations that are necessary, relevant to planning and directly related to proposed developments in scale and kind and there is agreement that section 106 agreements are in need of reforma point on which the right hon. Gentleman offered some ideas.
There is essentially agreement about many of the ends, but it cannot be emphasised strongly enough that what we are voting on tonight is not an end, but a meansnamely, this Bill. As we all know, it is a paving Bill, which presages a further Bill, the contents of which are still a matter for consultationindeed, for a second round of consultation, as announced in the pre-Budget report, following the first round of consultation that was announced in the pre-Budget report of 2005 and finished last February.
The House is familiararguably, increasingly familiarwith paving Bills. I note in passing that the past paving Bill that the Library note maintains is the most similar to the present paving Bill is the Tax Credits (Initial Expenditure) Billnot a happy precedent in any way. The House is familiar with paving Bills, but it may not be so familiar with paving Bills that presage Bills that are still the subject of formal consultation. We would be grateful to knowwe are rather curious on this side of Housewhether the Minister will, in her reply tonight, furnish the House with some precedents.
In short, we do not yet know what the Bill that may follow this Bill will look like. Indeed, we cannot be absolutely certain, especially after the Financial Secretarys opening speech, whether there will be a Bill at all. He referred specifically to the potential introduction of a Bill and saw the introduction of any planning gain supplement as a lead option. It is all far from certain, and that fact alone should give the House considerable pause for thought before we vote tonight to permit expenditure in excess of £50 millionno small sumon project staff in the Valuation Office Agency and, of course, the Treasury, as well as a related IT system. As my hon. Friend the Member for Rayleigh (Mr. Francois) said, IT projects are notoriously difficult to introduce on budget, as those of us with any knowledge of scrutinising the performance of the Child Support Agencys computer difficulties could confirm.
Although we cannot be certain what any planning gain supplement Bill will look like, the House can be reasonably clear about the drift of the Chancellors thinking. His favoured means of raising some additional revenueeither, on an uncharitable view of his motives, to reduce the £167 billion that he plans to borrow over the next five years or, on a more charitable view, to tackle the planning problems that the House has heard about this eveningis essentially to introduce a development land tax. It will first be
centrally collected by the Treasury, which maywe are still not clear about ittake a slice of the proceeds, and it will then be recycled by the Treasury in part to the regions, which will take a slice of those proceeds. Only a part of this tax revenue will therefore be returned to the local authorities in which the developments that were taxed in the first place were sited, and even that arrangement is not written into the text of the Bill.
I have to say on behalf of Conservative MembersI assume that it is the same for the Liberal Democratsthat we are not taking any of the Governments guarantees seriously before we see the fine print of an actual Bill. The fact is that guarantees are not written into this Bill, which raises in turn the question of how whatever money is not grabbed first by the Treasury and then by the regions will be returned to local authorities. The Select Committee on Communities and Local Government has raised the possibility of the remaining money being filtered through a funding formula, which presumably meansif we eventually see an actual Billthe deployment of the full panoply of top-slicing, floors, ceilings and resource equalisation criteria that have made the shift from the standard spending assessment to the formula spending share such a model of clarity and transparency during recent years.
Now the Chancellor may believeindeed, he evidently doesthat such a centrally collected and organised land development tax, the tax that may be presaged in the Bill, should be acceptable to this House. By contrast, we believe that such a tax, and therefore the Bill, should not be acceptable to this House, for four reasons additional to the one I have already givennamely, that the Bill is a wholly insufficient preparation for a second Bill that may or may not arrive.
First, we believe that planning system problems will not be solved by a centrally collected tax that may be top-sliced first by the Treasury and then will be top-sliced by the regions before any money finds its way back to local authorities.
Secondly, we believe that planning system problems will not be solved by a regionally administered tax that may give more powers to unelected, unaccountable and discredited regional bodies. When my hon. Friend the Member for Rayleigh mentioned that possibility earlier, the Financial Secretary was quick to his feet to say that it had not been specifically mentioned in respect of the Government, but when my hon. Friend challenged him further, he did not rule out the possibility. At the moment, we simply do not know. It is just one of the elements of vagueness in the Governments proposals that leads us to oppose the Bill tonight.
Thirdly, we believe that, since the Chancellor has not yet announced the rate at which the new tax will be setthe subject of much of this evenings debatethe House cannot be sure that it will be set high enough to raise enough revenue for infrastructure while remaining low enough not to deter developers from building affordable housing in particular. That is admittedly a difficulty with any proposal, but I say again that we are being asked to vote tonight on a Bill when we do not know the level at which the Government will set the tax.
Fourthly, we believeand the right hon. Member for Greenwich and Woolwich made something of the pointthat development land taxes have a chequered history. The Library brief cites the development charge, which was introduced in 1947 and scrapped in 1952; the betterment levy, which was introduced in 1967 and scrapped in 1970; and the development land tax itself, which was introduced in 1976 and eventually scrapped in 1986. It is striking that each of those taxeslet us not be over-distracted by the use of the word levy or charge or, in the case of the Bill, supplementwas introduced by a Labour Government, who were succeeded at the subsequent election by a Conservative Government. It is also striking that each of those taxes was introduced at a time when the tide of public opinion was turning against the Labour Government in question.
It is also significant that the Chancellor is repeating the approach of his predecessors. There is the same reliance on control and command from Westminster and Whitehall and on micro-management from the Treasury and taxation from the centre. This Bill is a revealing precursor of what is to come when the Chancellor, after his long wait of more than 12 years, finally makes it to No. 10. This Bill, and any planning gain supplement, will meet the same end as its predecessors: if introduced in the form we expect, it will be overturned by the next Conservative Government. I urge the House to reject the Bill tonight.
The Minister for Housing and Planning (Yvette Cooper): We have had a good and thoughtful debate on an extremely short Bill. It is remarkable how much we have managed to say about a Bill that is so sparse in its number of clauses.
My right hon. Friend the Member for Greenwich and Woolwich (Mr. Raynsford) asked a series of questions, to which I shall try to respond, and described some alternative means of developing section 106 provisions. The hon. Member for Twickenham (Dr. Cable) set out a series of alternatives, many of which would, in the words of civil servants, be considerably braver for Ministers than the PGS that we are setting out today. The hon. Member for Rayleigh (Mr. Francois) said that he definitely wanted an alternative, but not any of those that anyone had yet proposedperhaps a promise with no licking that the right hon. Member for Skipton and Ripon (Mr. Curry) described or the licking and sucking mentioned by the hon. Member for St. Albans (Anne Main) in the course of our debate.
The hon. Member for Northampton, South (Mr. Binley) gave us the enchanting vision of my hon. Friend the Financial Secretary in a midnight blue wedding dress; and the hon. Member for Wycombe (Mr. Goodman) subsequently sent him touring the music halls, dressed as such, in the company of the right hon. Member for Skipton and Ripon.
The hon. Member for Ludlow (Mr. Dunne) asked a series of questions and set out his preference for section 106. He said that, in his area, section 106 was sufficient to address affordable housing and
infrastructure issues. Section 106, as currently set out, is not sufficient to address the infrastructure and affordable housing pressures that many parts of the country face. The hon. Member for Northampton, South made his case for additional investment in infrastructure. We agree that we need that to support the necessary new homes. I welcome the points made by my hon. Friend the Member for Sheffield, Attercliffe (Mr. Betts), which were based on the Select Committee report. That detailed and constructive report raised a series of issues that we have tried to respond to and continue to respond to as part of the consultation.
My hon. Friend the Member for Waveney (Mr. Blizzard) made clear the limitations in relation to section 106 and, again, the need for additional investment in infrastructure. My hon. Friend the Member for Stoke-on-Trent, North (Joan Walley) pointed out the need for infrastructure investment in areas facing housing market renewal, not simply those facing housing market growth. Those are important points and we should be clear that a planning gain supplement would apply in all parts of the country and could certainly be used to address the infrastructure requirements in housing market renewal areas, not simply the pressures faced in growth areas and areas that will see the greatest increases in the level of housing. I am happy to follow up some of the other, more specific issues that she raised.
It is a pleasure to follow the hon. Member for Wycombe in the winding-up speeches. The hon. Member for Surrey Heath (Michael Gove) will know that I always miss him when he is not at the Dispatch Box opposite me, but the hon. Member for Wycombe gave a clear, if slightly less theatrical, account of Conservative Front-Bench policy. I know that he has expressed very few views about housing and planning before. When I searched for examples of his previous views on housing and planning, I found only that he had signed early-day motion 1100, which opposed development in the south-east and called for fewer homes to be built there. We will not hold that against him.
Mr. Goodman: I am grateful to the Minister for doing her homework so thoroughly. Will she tell me, as a matter of record, whether the Secretary of State has ever opposed a development in her constituency?
Yvette Cooper: If the hon. Gentleman has done his homework properly, he will know that Bolton is meeting its housing numbers. It is important that local areas meet their housing planning numberssomething that the south-east and the Conservative-led South East England regional assembly oppose. They are arguing for cuts to the overall level of housing development. I would be intrigued to know which camp he counts himself in. Is it the Surrey Heath camp, the metropolitans who are charging across the countryside shooting at nightjars and concreting over farmers fields, or the Meriden camp, the bananas brigade, who oppose building new homes wherever that is happening? He will be reassured to know that, whichever camp he chooses, he will find that the right hon. Member for Witney (Mr. Cameron) has already been in both camps on different occasions.
This is a paving Bill. My hon. Friend the Financial Secretary made it clear that we have not taken final decisions or made final announcements. Further work and consultation is under way. If it continues to be deemed workable and effective, we will introduce a planning gain supplement. There have been other such paving Bills, including, in addition to the one raised by the hon. Member for Wycombe, the British Coal and British Rail (Transfer Proposals) Act 1993 and section 137 of the Finance Act 2002, which gave authorisation for preparations for a lorry road-user charge Bill. We have not taken decisions, but we are clear on the principles that are involved. We need more houses across the country and we need more infrastructure.
We also believe that it is possible to raise additional resources from planning gain without deterring development. There are considerable increases in land value that are created by the planning system. The planning system is a vital part of our community and development framework in this country. It safeguards us from urban sprawl and from inappropriate development, but it also creates value and wealth. It is right that a proportion of that wealth should be used to support the local community and the infrastructure that makes the development possible in the first place. It is important to ensure that those extra resources are raised in a way that is sustainable and supports development, rather than hinders it. That is why we have said that the PGS would be at a modest rate. The advantages of a PGS is that it is proportionate to the planning gain, so if there were no gain through the planning system, no PGS would be paid. That is the reassurance for those who are dealing with sites requiring remediation, for example. We have set out in the consultation on valuation how that issue should be addressed.
A PGS would also apply to a much wider range of sites. It is difficult to apply section 106 to small sites without creating burdens for local authorities or developers. We should recognise that the evidence shows that only 40 per cent. of major residential planning permissions included a section 106 agreement. That means that 60 per cent. of major housing developments had no section 106 agreement in place at all. For the smaller sites, 90 per cent. had no affordable housing or infrastructure contribution included. That is a problem. If we can find a way to raise additional resources from the planning gain to put into the infrastructure, there will be a huge advantage, not just for housing growth areas, but for housing renewal areas and areas across the country.
Mr. Curry: The Minister talked about major developments. What does she mean by major? There are rules that say that, once a development is above a certain size, there has to be an element of affordable housing.
The right hon. Gentleman is right. He will know that different local authorities have different arrangements in their plans, which specify different kinds of thresholds. The major residential planning permissions were as described in the Sheffield research, which was conducted some time ago. That described major residential planning permissions as those with more than 10 houses. We have to recognise that that means that smaller developments were
unlikely to have section 106 agreements. It is difficult to have individually negotiated settlements on small sites. That will obviously mean additional pressures for local authorities, but also for developers. That is the advantage of a planning gain supplement approach: it allows us to have a system that can be applied to smaller sites and can raise additional revenue from smaller sites.
There are considerable merits in the optional planning charges approach, the tariffs and the expanded section 106. We support the tariff in Milton Keynes and other growth areas. However, there are some questions about how widely that can be applied to other areas that are not growth areas and do not see substantial levels of housing being built on similar sites. There are serious questions about how realistic some of the alternatives that other people have proposed are.
My right hon. Friend the Member for Greenwich and Woolwich has made important points about the experience in his constituency. Certainly Greenwich has considerable expertise in relation to raising resources from section 106 agreements. It has lots of large sites and considerable potential for relative increases in land value. On individual sites, the resources that can be raised through an individual section 106 negotiation may well be higher than they would be through a planning gain supplement. However, the advantage of a planning gain supplement might be that it could be extended to a wider range of sites. Those are the sorts of trade-offs that need to be taken into account.
We have received questions about valuations, which are being dealt with as part of the consultation that is under way. We need to recognise that, of course, some valuations will be more difficult than others, but those difficulties exist under the current system, when difficult and complex negotiations take place in relation to section 106 agreements.
At least 70 per cent. of the funding would go back to the local authority. That gives local authorities considerable power and responsibility. In many ways, this is a devolutionary approach. It gives local authorities more flexibility to make decisions across their areas. They can consider the balance between an area where there is considerable infrastructure need, but little planning gain, and, on the other side of the town, an area where there may be limited infrastructure requirement, but considerable planning gain. That gives local authorities considerable flexibility to make their decisions about where they think resources from a planning gain supplement could best be raised.
Opposition Members should reconsider before they decide to vote against the measure tonight. It is a paving Bill. It is a sensible Bill. They need to consider their opposition to this whole approachto building more homes and to building more infrastructure. They say that they want more infrastructure, but they must get serious about how it is funded so that the homes that we need are delivered. We cannot deliver the homes that the next generation will need without additional infrastructure funding, and their approach simply is not good enough.
The hon. Member for Rayleigh has said that the Conservatives are looking for alternatives, that they will set some out in this debate, and that they are
looking at the matter closely and will have more to say later this year. The hon. Member for Meriden has simply said that her party is drawing up exciting alternatives. We wait for those with bated breath, because the Conservatives are saying not only that they would refuse to support a planning gain supplement, but that they would cut public sector investment in infrastructure to reduce the proportion of public spending in the economy. They do not want the money to come from the taxpayer or from development gain. They must tell us where they want it to come from, because we need additional investment for infrastructure and for the homes that we need for the future.
We have set out a series of consultations on ways in which we want to raise money for the infrastructure for the future. We think that that is the right and responsible approach. Conservative Members are in serious danger of flagging up infrastructure as a way of hiding their real objectiontheir objection to building the new homes that we need for the future in the first place. For the sake of the next generation, which needs the new homes and this infrastructure, the Conservatives should support the Bill.
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