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Mr. Francois: I beg to move amendment No. 3, in page 1, line 10 at end add
(4) No expenditure shall be incurred under section 1 earlier than 90 days after the conclusion, on 28th February 2007, of the consultation exercises on the implementation of the Planning-Gain Supplement..
The amendment is designed to delay implementation of the Bill for at least 90 days after the consultation exercises on the PGS have ended next week. It has been tabled partly because the Treasury still appears confused about whether it intends to proceed with the PGS at all. Nevertheless, as my right hon. Friend the Member for Suffolk, Coastal (Mr. Gummer) said earlier, the Treasury is still asking Parliament to authorise expenditure to prepare for a tax that it has not yet decided to introduce. The money could ultimately go to waste if the Government do not intend to proceed.
I want to press the Financial Secretary on a point that my hon. Friend the Member for St. Albans (Anne Main) made in Committee about the purposes to which the Treasury wants to put the money that would be
authorised by the Bill and could be spent immediately after Royal Assent, which could theoretically happen as early as next month.
Rumours are circulating in the media that, despite doubts about the PGS, the Treasury still wants the Bill because it would like to begin work on a new IT system, which could be used for alternative planning-related purposes if the PGS collapsed. The new planning permission that the Government recently proposed might be an example. Can the Minister give a firm commitment that the funds being requested by the Bill will be used solely for PGS-related work? I ask that partly because, following the hostile reaction that the proposed PGS has provoked so far, the Treasury appears to have been gradually backing away from its introduction in recent months. We were originally told that the Government planned to introduce the PGS in 2008, and the Treasury issued a consultation document in 2005 on how that might be achieved.
The response to the Governments consultation was hardly encouraging from their point of view. The Institute of Directors called on the Government to drop their proposals, stating:
The proposals as currently envisaged are thoroughly bad both in principle and detail... the IoD feels that this additional tax would do nothing to help the housing supply.
It also said that the tax constituted
a direct attack on business competitiveness, contrary to the Government's own stated objectives,
introduce an added bureaucracy to allocate the money as well as collect it.
The Royal Town Planning Institute responded to the consultation exercise in a document entitled Consultation Paper Exposes Folly of New Land Tax. It said:
PGS will create a polarity of investment between north and south, it encourages land-banking, creates inflexibility in the market and fails to support infrastructure planning.
A detailed study of the proposed operation of the PGS was conducted by property experts Knight Frank on behalf of the British Property Federation, the Confederation of British Industry, the Home Builders Federation and the Royal Institution of Chartered Surveyors. Page 4 of its executive summary, produced last September, states:
It is clear that extensive further research is needed to achieve sufficient public confidence that that PGS would work effectively and meet the required increase in housing output. At present it is not clear that this would be the case.
Perhaps in the light of that reaction, in the December 2006 pre-Budget report the Treasury confirmed that the proposed introduction of the PGS was to be delayed until 2009.
By the time we reached Second Reading on 15 January, the Financial Secretary, introducing the Bill, had watered down the Governments commitment still further. He said:
Just as Kate Barker did, the Government have considered a range of alternatives. We will continue to do so, but at this point the PGS is our lead option.[ Official Report, 15 January 2007; Vol. 455, c. 569.]
So even the Government are now apparently backing away from their own idea, which has been downgraded from a proposal to the status of only a lead option.
To coincide with the delay announced in the pre-Budget report, the Treasury also announced a further three consultation documents on the proposed introduction of the PGS: Valuing planning gain, Paying PGS and, in co-operation with the Department for Communities and Local Government, Changes to Planning Obligations. The three consultations will not close until 28 Februarynext weekand presumably the Government will want to analyse the responses that it has received before deciding whether to proceed. The original consultation exercise produced some 700 responses, and we can assume that this exercise will produce quite a number as well. There is little point in seeking a wide range of opinions if the Government have already decided to plough on regardless, yet this evening they are still asking the House to vote for approval for preparatory spending before the consultations have even closed.
During the 30 January Committee sitting, at column 11, the Financial Secretary assured me that if the Government did resolve eventually to press ahead with the PGS, they would do so by means of a separate Bill rather than including primary legislation in a Finance Bill. Given that, and on the assumption that there will be a Budget statement in March followed by a Finance Bill in April, the Government need not rush preparation of the necessary clauses so that they are ready less than two months from today. If the Government are now contemplating introducing a separate Bill to allow implementation in 2009 rather than 2008 as originally envisaged, they have further time in which to reflect on what to do, and therefore need not seek the approval of the House to begin spending public funds almost immediately. That is particularly important, as there is no expenditure limit in the Bill. The expenditure could be theoretically be open-ended, particularly if the Treasury continues to dither on whether or not ultimately to proceed with the PGS.
The explanatory notes that accompany the Bill provide an indicative figure of up to £52 million for staffing in the procurement of an associated PGS IT system, but as the notes point out, they do not form a part of the Bill itself, so it is purely an estimate, not a cap. The actual figure could easily exceed the estimate, particularly if there are cost overruns on the associated computer systema point that we debated in some detail in Committee and in relation to which recent experiences in the Home Office and the NHS are hardly encouraging.
For instance, in respect of the new NHS IT system, Mr. Andrew Rollason, the health care practice leader at Fujitsuone of the major contractors running the £20 billion programmerecently said of the new NHS system:
It isnt working and it isnt going to work.
Even the Treasurys own IT systems projects are now running a collective total of 17 years late, which does little to inspire confidence that the estimates outlined in the notes will be adhered to in practice. At a time when our prisons are effectively full up, gun crime in inner cities is running out of control and most of our local NHS primary care trusts are under serious financial
pressure, why are the Government requesting permission to spend £50 million or so of public money on a tax that they may never actually introduce?
Dr. Starkey: May I draw the hon. Gentlemans attention to items that he left out of his list of things that are happening, such as the increasing housing crisis and the dire lack of affordable housing, particularly across London and the south-east? That might be related to the fact that the Government wish to have a tax that could fund the infrastructure.
Mr. Francois: As the hon. Lady well knows, the provision of affordable housing has gone down quite a lot under this Government by comparison with their predecessor. One of the reasons for that is that the Government have failed to provide the resources. I would have thought that the hon. Lady, as Chairman of the Select Committee, already knew that.
As I argued in Committee [Interruption.] I will give way in a moment. The right hon. Member for Greenwich and Woolwich (Mr. Raynsford) has only just entered the Chamber and I have already said that I will give way to him in a moment. [Interruption.] I said in a moment.
As I argued in Committee, the Bill puts the cart before the horse, so our amendment makes the case for delaying any expenditure in conjunction with the introduction of the planning gain supplement until three months after the latest consultation exercises have closed. The Treasury can then hopefully take those responses properly into account. I will now give way to the right hon. Gentleman, who is a former housing and planning Minister and who is firmly on the record as opposing the whole planning gain supplement concept.
Mr. Nick Raynsford (Greenwich and Woolwich) (Lab): I would not want the hon. Gentleman to mislead the House by implying that there has been a reduction in expenditure on housing under this Government when compared with the record of the previous Government. He will be aware that there has been a very substantial increase in resources and that many of them have been allocated to improving the quality and condition of the existing stock, which was left in a very poor state indeed by the previous Conservative Government, whom the hon. Gentleman supported. I hope that he will recognise that.
Mr. Deputy Speaker: Order. Before the hon. Gentleman responds, I remind him that we are not conducting a general debate on housing, but discussing amendment No. 3.
Mr. Francois: I understand that, Mr. Deputy Speaker, but if you will allow me, I have been accused of misleading the House, so I would like to explain for a few moments. My point was that, as I understand it, the number of new completions has gone down, although I take the right hon. Gentlemans point about refurbishment. [Interruption.] The number of new completions has fallen over the past few years I believe that that is correct. [Interruption.] I shall move on.
When the Treasury has received the responses to the consultation exercises and had 90 daysa reasonable periodto examine them, perhaps at that time, if not before, the Treasury will abandon the whole planning
gain supplement and save us a great deal of further time and trouble as a result. In the meantime, I urge the House to support the amendment this evening and to protect the interests of the UK taxpayer while this dithering Government desperately try to make their minds up about what they are going to do.
John Healey: As the hon. Member for Rayleigh (Mr. Francois) has made clear, the amendment is designed to insert a three-month delay between the end of the current consultation, which is completed on 28 February, and the spending of any money that the Bill would then authorise. I understand the purpose of the amendment, but I hope that the hon. Gentleman will accept that it is at best unnecessary, and at worst may complicate things and create additional risk for the successful and sensible introduction of any planning gain supplement.
I assured the House on Second Reading and in Committee that if the Government decided not to introduce the planning gain supplement, there would be no further expenditure under this legislation. I also want to make it clear, in response to the question that the hon. Gentleman has raised, that clause 1(1) of the Bill sets out the purposes for which expenditure under this legislation can be used, and that they are specifically and strictly related to preparations for the introduction of a possible planning gain supplement. They could not be used for an IT system for other purposes.
The Government gave a commitment in the pre-Budget report that we would not introduce a planning gain supplement unless we considered it to be a workable and effective policy. Of course, the decision on whether the planning gain supplement is workable and effective will be informed by the responses to the consultation. I should remind the hon. Gentleman that a consultation is not simply a 12-week period in which the Treasury and the other Departments involved shut up shop and officials sit on their hands, followed by a period of frenetic reading and analysis of correspondence. On the contrary, it is a period of intense activity, particularly by officials who, during the consultation period, have been out meeting and discussing the issues with representatives of all sorts of interested groups right across the United Kingdom in order to determine their concerns about the matters under consultation. So, officials and others have been out there, explaining the proposals and listening to peoples views on them. Many of the written responses to the consultation will formalise the views that we are already aware of and that have already been discussed, and which have been gathered during these meetings.
The amendment would simply delay expenditure for up to three months beyond the end of this month, even if we decided to introduce a planning gain supplement before the end of that 90-day period. At best, that would achieve nothing. At worst, it would increase the costs of any IT systems by reducing flexibility and by increasing the time pressures involved in bringing in a planning gain supplement in an orderly and timely way. I hope that the hon. Gentleman will not press the amendment to a vote, but if he does I shall have to ask my hon. Friends to resist it.
Mr. Francois:
Our debate on amendment No. 3 has given the House an opportunity to press the Government on why they insist on pressing ahead with
a request for the House to authorise expenditure in preparing for a tax that they have not yet decided to introduce. The sum of £52 millionor, potentially, even moreof public funds is a lot of money to shell out on what is only a lead option. By definition, another option might eventually be adopted instead. It would be preferable to delay any expenditure until the Government have definitively decided whether to go ahead with the substantive measure of the planning gain supplement.
The Governments approach was criticised by Mr. Peter Bill, the editor of the Estates Gazette, in a December 2006 editorial, in which he said:
In the face of a set of negative responses to a consultation paper, Ministers have baulked at driving a stake through PGSwell, for now. Instead they have executed the classic Whitehall manoeuvre: the introduction of PGS has been postponed for a year and no less than three more consultation documents have been issued. Read Paying PGS from the Revenue and weep.
In the light of all that, we believe that the Government are indulging in what my hon. Friend the Member for South Staffordshire (Sir Patrick Cormack) rightly described on Second Reading as pre-legislative legislation. We have not been sufficiently persuaded on this matter, and I should therefore like to test the will of the House.
Question put, That the amendment be made:
The House proceeded to a Division.
Mr. Deputy Speaker: I ask the Serjeant at Arms to investigate the delay in the Aye Lobby.
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