Clause
19
SDLT
relief for new zero-carbon
homes
Question
proposed, That the clause stand part of the
Bill.
Mr.
Goodman:
This clause covers relief for new zero-carbon
homes and as you know, Mr. Gale, Friends of the Earth and
the National Landlords Association do not always find cause to unite
them, but this clause seems to have done the trick. Friends of the
Earth said that it would affect
“a tiny number of new
properties”,
while the
National Landlords Association said that
“the impact of the tax break is
likely to be relatively
limited.”
Clearly, they
agree on that. I am sure that both organisations, none the less,
welcome the proposal, which we will not be opposing. However, their
reaction suggests some useful lines of inquiry.
The clause empowers the
Treasury to make regulations granting relief on zero-carbon homes,
which may take the form of an exemption from charge or a reduction in
the amount of tax chargeable. As the House of Commons Library points
out—I went to the Library to see what it had to
say—
“the budget
report itself does not give an estimate, stating the Exchequer impact
to be ‘negligible’. Item A.90 in the budget measures
shows the cost as...less than £3 million a
year”.
This is what the
Red Book describes as a relief to
“kick-start the market for new
highly efficient technologies in
homes.”
The Library also
says that
“at this stage
it is difficult to estimate how many homes would qualify for the tax
relief, and much will depend on the projected number of new homes that
may be built during the qualifying period.. .at this stage there does
not appear to be any reliable estimate or figure of the likely number
of houses to be covered and how much this will cost the Government
until 2012”.
That is the
Library’s assessment.
So it is not at once apparent
how this welcome but modest measure can accurately be described as
“likely to kick-start” a market, or how exactly it will
make a substantial contribution towards the Chancellor’s goal
announced last weekend of five eco-towns, containing 100,000
carbon-neutral homes.
When I say
“announced”, of course I
mean“re-announced”, since that goal was first
announced, according to my researches, by the Minister for Housing and
Planning almost exactly a year ago, on 17 May 2006. [Hon. Members:
“Hear, hear.”] I hear Government Members say
“Hear, hear” but I was about to go on to remark that the
process of passing this information on to the Economic Secretary, with
whom I believe the Minister in question is acquainted, and then for him
to pass the information on to the Chancellor, with whom he is also
acquainted—though not, of course, in the same way—has
taken the best part of the year.
When I say
“re-announced”, I mean, of
course,“re-announced and slightly modified”,
since the Housing Minister’s original speech, as the Economic
Secretary will know, referred to 120,000 homes, not 100,000, so there
has been a net loss of 20,000 homes. When I say
“re-announced”, I mean, “re-re-announced”,
since the Government apparently announced that they would build seven
new eco-communities, with 9,000 new homes 10 years ago, and have to
date built only one in 10 of those homes.
A number of questions obviously
follow. First, how many zero-carbon homes exist at present? The Chief
Secretary told the shadow Chief Secretary, my hon. Friend the Member
for Chipping Barnet, in the
Chamber that the answer is “a very small number”. He was a
bit more forthcoming on “Newsnight”, when he told Jeremy
Paxman that the answer is “I think a couple of
dozen”.
I will spare the
Committee the whole exchange, because it makes for painful reading.
However, because it is obviously unsatisfactory for
“Newsnight” to have the precise figure when the House
does not have it, we are confident that the Chief Secretary will
respond
appropriately.
Secondly,
what estimate has the Treasury made of the number of additional
zero-carbon homes that it expects to be in place by 2012 as a result of
this measure? Thirdly, what estimate has the Treasury made of the
number of zero-carbon homes that it expects to qualify for this tax
relief? What proportion does it expect to be exempted from charging
altogether?
11
am
Fourthly, can
the Minister give us an idea where these homes are expected to be built
and which local authorities have expressed an interest in seeing them
built? The Chief Secretary said on Second
Reading:
“a development
of zero-carbon homes is going forward at Gallions Park in my
constituency.”—[Official Report, 23 April 2007;
Vol. 459, c. 661.]
Can the
Economic Secretary confirm that, as common sense would suggest,
“going forward” means that planning permission for these
homes has been given? Fifthly, what carbon saving does the Treasury
expect as a result of the measure? Finally, does the estimate in the
table contribute to the cost of the five eco-towns and 100,000
zero-carbon homes and where in the Red Book are those costs
covered?
The clause
gives rise to a number of more specific questions as its main effect is
to give the Treasury the power to make regulations granting relief on
zero-carbon homes. Picking up on an exchange on the last clause, I may
be at fault but I am not aware of having seen the regulations that will
offer a definition of zero-carbon homes, that may extend the relevant
tax concessions beyond 2012, that may set up a process of certification
under the home information pack regime which could affect take-up, and
that may, although not necessarily, provide for relief to be withheld
where a person acquires more than one zero-carbon home within a
specified period. Obviously those are important regulations. If they
have not been published, when will they be published?
Can the Economic Secretary tell
the Committee whether the definition of zero-carbon home will include
carbon emitted during construction or in the manufacture of building
materials? What evidence on the carbon neutrality of their homes will
people be required to provide and through what process will they do so?
Above all, can he guarantee that the House will get the opportunity to
debate the regulations which, by their nature, will be unamendable
under the affirmative
procedure?
Finally,
may I offer some good news? Speaking of acquaintances of the Economic
Secretary, the hon. Member for Morley and Rothwell (Colin
Challen)—the future Lord Challen, as my colleagues insist on
calling him—is on the case. I received from him only yesterday an
invitation to a meeting entitled “Zero-carbon homes: how we can
meet housing costs and protect the environment.” His letter
begins: “Dear Helen Goodman”. I look forward to the Chief
Secretary’s
response.
The
Chairman:
Before we proceed, I am slightly concerned by
the hon. Gentleman’s remark that he has not had sight of the
regulations. I was under the impression that copies had been mailed out
to all members. My co-Chairman and I have received them. If they have
not been made available, are they available on the table? If not, why
not, and could all Members on both sides of the Committee have them as
swiftly as
possible?
The
Economic Secretary to the Treasury (Ed Balls):
On a point
of order, Mr. Gale. I told the hon. Gentleman at the end of
last week that we would send him the draft regulations. As I understand
it they were mailed out at the end of last week. If hon. Members have
not received them, I apologise, but I had them mailed out at the end of
last
week.
Mrs.
Theresa Villiers (Chipping Barnet) (Con): Further to that
point of order, Mr. Gale. I was sent a copy of the letter
that was sent to you, which I received this morning. I understand that
my office was forwarding it on to my hon. Friend. The error may lie
with me rather than the Minister. If so, I
apologise.
The
Chairman:
I will respond to the points of order. It would
appear that my co-Chairman and I have received the documents. While I
am grateful for them, I am concerned that they do not appear to have
been made available to all hon. Members. Perhaps the Minister could ask
his officials if they would be kind enough to run off copies
immediately and have them distributed to all members of the Committee,
so that everyone on both sides has the same information as I have
before
me.
Julia
Goldsworthy:
The regulations may have arrived with my mail
this morning, but it had not been processed by the time I arrived here
today. They may be sitting in my in-tray, but I have not had a chance
to look at them yet. In any event, there was hardly a huge amount of
time to scrutinise them before the debate.
As the hon. Member for Wycombe
said, we do not know what impact clause 19 will have on Treasury
revenues. My key concern is that although it will provide a demand-side
incentive for people to purchase new zero-carbon homes, there will not
be a similar incentive for builders to build them. That lack of
symmetry may mean that demand will not be met, thus there will be no
opportunity to take advantage of the tax
incentive.
Given that
the announcement was made in the pre-Budget report, I wonder if there
have been any applications since then for zero-carbon homes. Proposed
new section 58B(5)
states:
“The
relief may take the form
of—
(a)
exemption from charge,
or
(b) a reduction in
the amount of tax chargeable.”
Do I take it that it depends on the price
of the property—that if it is above the £500,000
threshold it will result in a reduction, but if it is below that
threshold it will result in an exemption? Exactly how will the measure
operate? Will the Economic Secretary explain why it should apply only
to the first time that the new building is sold? Why are not the
Government extending it to future sales, as that will clearly have an
impact on the price?
I
mentioned regulations, but my concerns revolve around the impact that
the proposal will have on affordable housing. A couple of years ago,
there was a high-profile demonstration in my constituency of a
zero-carbon house, a BedZED property, that could be built for less than
£70,000, which still puts it out of reach for people on an
average household income, which in my constituency is just below
£20,000 a year. The £70,000 is just the price of the
property; the key expense will be the plot of land. What impact does
the Economic Secretary think the measure will have on the entire price
scale, not just on the most expensive properties? People who want to
buy new, affordable housing will still find it very difficult to buy a
zero-carbon home.
What impact will the measure
have on social housing stock? It would be excellent if new social
housing could be built on a zero-carbon basis. The fundamental problem
is that the proposal will apply only to new properties when, as the
Chief Secretary said earlier, one third of all emissions from the UK
are from the housing stock. How does that break down between projected
new housing stock and existing housing stock? Three quarters of the
stock that is standing today will still be standing in 2050, and on
that basis the key target must be existing stock, not least because
that is where fuel poverty, for example, is at its
worst.
In my
constituency, there is very poor, usually very old, housing stock, a
high incidence of fuel poverty and a poor take-up of the Warm Front
scheme, not least because there are no installers anywhere in the
county of Cornwall. That deprived group of people cannot access the
environmental benefits of the clause or take advantage of provisions
that would have an impact on their pockets and save them money. The
problem is that those people, whether they are in rented or privately
owned housing stock, will not be in a position to benefit from the
proposal.
There is
great innovation out there, but I am worried that the measure is a very
limited way of stimulating increased development. In my constituency
there is a hot rocks project—technologies investigating making
use of disused mines as a way of cutting down on heating costs. Carrick
Housing is being innovative in retrofitting those technologies to its
existing social housing stock. The proposed incentive sits outside that
framework, however. What plans are there for incentives not only for
people looking to buy new houses, but for developers and builders?
Ultimately, if using more energy-efficient materials increases costs,
the builder who uses them faces increased risk. What plans do the
Government have to tackle the inherent inefficiencies in the existing
housing
stock?
The
Chairman:
Before we proceed, I confirm that I am arranging
to have the relevant document printed and circulated, within the
timescale of the debate, I hope.
Ed
Balls:
On a point of order, Mr. Gale. In
Committee last Thursday, I said to the hon. Member for Wycombe that I,
rather than the Chief Secretary, would respond for the Government on
these clauses, and that I would ensure that the regulations were
circulated in draft. I cleared them on Thursday. I understand that they
went from our office to the shadow Chief Secretary, the hon. Member for
Chipping Barnet, in the normal way on Friday. I should have endeavoured
to ensure that they got to the hon. Member for Wycombe directly as
well, so I appreciate the generosity of the shadow Chief Secretary. If
we were remiss, I apologise.
I shall re-examine the
procedural point that the hon. Member for Wycombe made. This is an
important part of the Bill, which creates a regulation-making power on
which we will consult. In that light, and given that we intend to
conclude the consultation by July and publish a further set of
regulations, I would be happy—subject to agreement from the
business managers—if we could deal with the regulations under
the affirmative, rather than the negative, procedure, to ensure that
the House has a further opportunity to scrutinise the detail of the
regulations before they come into effect.
For the purposes of
today’s debate, it would be good to have the regulations in
front of us. Some of us have them and some do not. I hope that there
will be an opportunity for the House to debate the regulations further
in due course, to satisfy the Committee that we are treating this issue
with the seriousness it deserves.
The
Chairman:
That is not strictly a point of order for me. As
the Economic Secretary said, it is a matter for discussion by the
business managers of the Government and the Opposition. I am sure that
the Committee appreciates the courtesy of the Economic
Secretary’s statement and will find his remarks
helpful.
Mr.
Newmark:
In an attempt to give the Clerks time to print
off whatever documents are necessary, I have a number of points to
make.
The
Chairman:
Order. I am sure that the hon.
Gentleman’s remarks will be in order; I would hate to think that
he was proposing a filibuster.
Mr.
Newmark:
My points are always in order and relevant,
Mr.
Gale.
The
Chairman:
I shall be the judge of
that.
Mr.
Newmark:
I welcome the initiative in the light of the 27
per cent. of the UK’s greenhouse gas emissions, or 40 million
tonnes a year, that are attributable to households. I am concerned that
from the outset there is a limited window of opportunity—five
years—attached to the scheme, however. As a business man, I
point out that the technology required to approach the standard of a
true zero-carbon home will require significant capital investment from
developers to reduce the high unit cost of microgeneration
technology.
11.15
am
If the Treasury
is committed to achieving a culture of change within the building
industry, which I wholly support, it is unhelpful that these provisions
will be curtailed in 2012. I do not think that proposed new section
58B(7), which mentions the possibility that the Treasury will extend
its largesse, will be reassuring to the building industry when looking
at long-term investment decisions. The Chancellor’s record shows
too many examples of initiatives that are cancelled once they have
begun to become effective—the home computing initiative springs
to mind.
The
rationale seems to be that stamp duty relief will act as a catalyst for
change, after which it can be reassessed and presumably quietly
scrapped. However, a five-year window for that process to occur is
almost hopelessly optimistic; just how optimistic is shown by the fact
that the zero-carbon home is not so much an endangered species as a
mythical beast. Although the Chief Secretary says that some zero-carbon
homes have now popped up in his constituency, they are hardly
widespread. My point is that, even if developers make the decision to
develop zero-carbon homes, there will be such a long lead time that the
relief will have expired before such homes begin to appear in
meaningful
numbers.
Mr.
Goodman:
What the Chief Secretary said was that a
development of zero-carbon homes is “going forward” at
Gallions Park in his constituency. Is my hon. Friend entirely
clear—I am not—about what “going forward”
means?
Mr.
Newmark:
I am not sure if the Chief Secretary is talking
about a new eco-friendly mobile home; perhaps he has the Foreign
Secretary in mind.
Julia
Goldsworthy:
If I could broaden the debate for a moment,
the hon. Gentleman was talking about lead times. Is it not the case
that, for individual planning applications, it may well be possible to
go ahead and submit a planning application for a very small
development? The problem is that there are very large developments on
the cards for the coming years which are exactly the type of
developments that need to be zero-carbon, but they will probably not go
ahead on that basis.
Mr.
Newmark:
The hon. Lady makes a good point in support of my
argument, and I thank her. As I said, my point is that, even if
developers make the decision to develop zero-carbon homes, there will
be such long lead times that the relief will have expired before such
homes start to appear in meaningful numbers.
Aberdeen-based developers the
Stuart Milne group have already unveiled a prototype for a low-carbon
home. The prototype includes microgeneration technology, such as solar
panels and wind turbines, together with reuse of grey water and so on.
However, it is telling that the plans still fall short of the desired
six-star zero-carbon rating. Quite simply, it will take time to reach
the required standard and to roll out both the technology and best
practice across the industry. The managing director of the Stuart Milne
group had this to say:
“The single biggest
impact on our business will be climate change and we felt we should
take an industry lead by building a
commercially viable house that reflected the Government’s
objective to achieve zero carbon houses within a
decade.” However, the key
remains that the project must be commercially viable. It is no good
making such projects commercially viable for five years, then pulling
the rug from under the developers just when they are beginning to catch
on.
I have one further
point to make on the envisaged time scale. As we have all heard, the
Chancellor has recently announced the construction of 100,000 new
eco-homes that will meet the zero-carbon standard. Perhaps we should
welcome the prospect that 100,000 new home owners will be able to buy
homes that benefit from clause 19, but precedent suggests that it will
take far longer than five years to deliver those homes. The last time
that this policy was launched was 10 years ago, as we heard from my
hon. Friend the Member for Wycombe. Then, there were high expectations
of the Government. Now, we know better.
Some £130
million has been spent on the seven millennium communities, delivering
homes to the excellence standard. I was amused to see—perhaps
this is what my hon. Friend was alluding to—that one of the
seven communities, which is in east Manchester, was in true new Labour
fashion named New Islington. It is a wonder that the Chancellor did not
go the whole hog and call it New Jerusalem, but I hope that he can at
least name a street after the Granita. The fact remains that after 10
years the homes have not been delivered, so the idea that a large
number of homes will be built in time to take advantage of clause 19
is, once again, optimistic.
We have a zero-carbon standard
that many people think is unattainable, we have a very limited window
of opportunity to take advantage of tax relief, and we have a
Government with a strong track record of scrapping tax reliefs that are
actually used. If the Chancellor’s 100,000 houses were to go on
the market at an average price of £200,000 each, the Treasury
would forgo £200 million in stamp duty. In contrast—I
note that paragraph A2.10 on page 230 of the Red Book predicts that
“The Exchequer cost” of clause 19
“is expected to rise to around
£15 million by
2011-12.”
I know that the
Chancellor is strong on mathematics, but that is an anticipated uptake
of only 7,500 carbon-free homes by 2012. Even if the Chief Secretary
cannot answer the question asked by my hon. Friend the Member for
Wycombe, I hope that I have.
Adam
Afriyie (Windsor) (Con): I have now had the pleasure, or
the disappointment, of reading the Stamp Duty Land Tax (Zero-Carbon
Homes Relief) Regulations 2007, and it is interesting to note that,
under regulation 14(4), the amount of tax chargeable will be reduced by
£15,000, which would mean that the £15 million going to
the Exchequer would represent only 1,000
homes.
Mr.
Newmark:
I am sure that my hon. Friend, in true fashion,
makes an even more conservative analysis of the numbers than I have,
but I was trying to be generous to the Government in my
analysis.
To put it
another way, if the Treasury’s projections of revenue impact are
not underestimated, it would take roughly 13 years to build the
Chancellor’s 100,000
eco-homes alone. In Second Reading, the Chief Secretary was unable to
tell my hon. Friend the Member for Buckingham (John Bercow) how much
clause 19 would cost each year. Perhaps now that he has had time to
reflect and do his homework he can tell us the
answer.
Mr.
Wayne David (Caerphilly) (Lab): The hon. Gentleman has
talked eloquently and at length about these new homes, but does he
anticipate Conservative local authorities supporting these new
homes?
Mr.
Newmark:
A mere Back Bencher, I am not here to make
Conservative policy on the hoof. However, I know that my own council in
Braintree is incredibly innovative when it comes to the use of
innovative financing and support for eco-friendly homes.
I want to conclude with a plea
to the Government for a commitment that clause 19 will become a valued
tool to effect a long-term culture change in the construction industry
and not just another short-term
gimmick.
Mr.
Philip Dunne (Ludlow) (Con): Like my hon. Friend, I
support the construction of energy-efficient housing and the
Government’s objective in that respect. To help out in response
to the intervention from the hon. Member for Caerphilly, there are a
number of projects around the country, including in my south Shropshire
constituency, where imaginative, creative construction engineers are
coming up with projects to develop energy-efficient homes. They are not
necessarily all new homes. Many of them include energy efficiency
measures for existing homes that we discussed under earlier
clauses.
That brings
me to the point of my contribution to this part of the debate. The
title of the clause that we are considering is not only misleading but
a misnomer. As my hon. Friend the Member for Wycombe mentioned, the
measure defines zero-carbon homes in terms of energy efficiency in
ongoing maintenance and running costs once the property has been
constructed. Nothing in the definition in the Bill or in the draft
statutory instrument covers the construction costs of such homes. They
are not, therefore, zero-carbon, but they are energy efficient going
forward. It is unfortunate that the Government have chosen to cloak the
clause in green credentials by claiming for it something that it will
not actually deliver.
A much more effective means of
encouraging energy efficiency than the intended relief from stamp duty
would be the introduction of a zero rate of VAT on energy efficiency
measures. What work was done by the Treasury to compare the cost of the
measure before us and the cost of introduction a zero rate of VAT? That
would seem to be a much more effective way of kick-starting the
development of such properties, which is the Government’s
objective.
In the Red
Book, paragraph 7.70 on page 183 includes a reminder of the
Government’s ambition
“to ensure that, within a decade,
all new homes will be zero
carbon.”
That is a very
ambitious objective. The proposed measure will go only a modest way
towards achieving it—such a modest way, in fact, that I have
been unable
to find out from the analysis of policy decisions what revenue impact it
will have. There is no line setting out the impact of zero-carbon homes
on Government revenues this year, next year or the following year. By
their own admission, the Government anticipate that this will be a puny
measure and will contribute little to the achievement of their
objective. It is no
surprise to those who have studied Government measures for energy
efficiency and VAT that a zero rate has not been introduced. Only last
year, the Government decided to apply VAT to grants given by the Energy
Saving Trust, which advises households on energy efficiency. Its
chairman told the BBC last
July:
“We
collect about £25m that we spend on energy efficiency measures
and reducing carbon, and we will now take about £5m of those and
return it back to the
Treasury'”.
So
the Government are using energy efficiency measures as a
revenue-raising mechanism rather than to encourage increased energy
efficiency. This measure smacks of green gestures rather than of a
genuine commitment to greater energy efficiency in housing
construction.
Adam
Afriyie:
I was not intending to speak to this clause, so I
shall be brief. I was stunned when I looked a few moments ago through
the regulations that have just arrived in front of us. Thank you for
ensuring their swift delivery, Mr. Gale.
Since 1997, carbon emissions
have risen, green taxes have fallen as a percentage of overall tax
take, and the Chancellor has missed his target on renewable energy. The
question to which all that gives rise is: why should we have confidence
in this new measure, which has
suddenly—miraculously—appeared in the Finance Bill,
almost as a knee-jerk reaction to pressure from other
parties?
11.30
am
My hon. Friend
the Member for Braintree mentioned the figure of £15 million,
which appears on page 230 of the Red Book in paragraph A2.10. That
says:
“The
Exchequer cost is expected to rise to around £15 million by
2011-12.”
Although I
might be misreading the regulations because I have looked at them so
quickly, it is clear that paragraph 14(3) on linked transactions
including the first acquisition of a zero-carbon home
says:
“The
amount of tax chargeable shall be reduced by £15,000 in respect
of each first acquisition of a zero-carbon
home”.
From a quick
calculation, it appears that the Government are allowing for only 1,000
homes to be sold under this regime. Where do the 100,000 zero-carbon
homes fit in? Where is the incentive to kick-start the market? How many
zero-carbon homes are expected to be built as a result of this measure?
It is trumpeted as being a wonderful thing, but as soon as one looks at
the detail, it appears almost trivial and irrelevant.
Finally could the Economic
Secretary give us one or two tangible reasons why we should have
confidence in the measure, given that the regulations seem to be
working against the picture that the Government try to paint and we do
not even know at the moment whether a single zero-carbon home
exists?
Mr.
Gauke:
I think it would be fair to summarise the
Opposition’s contributions as welcoming the principle behind the
clause while expressing concern that its provisions may not be used
very frequently. We can examine whether one or two developments might
come under the clause, given the time frame. Unless it is extended, the
provisions of the clause will come to an end on 30 September
2012.
The first and
most obvious example of a potential development was referred to by a
number of hon. Members, including my hon. Friend the Member for
Wycombe, namely the proposals made by the Chancellor over the weekend
for five new eco-towns, each consisting of 20,000 homes. My hon. Friend
described that as a re-announcement and he may be correct, but let me
for the moment assume that it is an exciting, new and wholly original
proposal. If so, the time frame—less than five and a half
years—is, as my hon. Friend the Member for Braintree pointed
out, a somewhat short period in which to benefit from the proposals in
the clause. Will there be time? If there is time, it suggests that
sites have already been identified. Perhaps there has been some
consultation with local authorities already. Perhaps local authorities
will not have a role within this area and planning will be done at a
central or regional level.
I would be grateful to know
what stage these proposals have reached. Perhaps, to be fair, they rely
on the work undertaken by the Minister for Housing and Planning. May I
say how pleased I am to see the spouse of a member of this Committee
feature in our deliberations, particularly when it is someone
else’s
spouse?
Ed
Balls:
But don’t call her Mrs.
Balls.
Mr.
Gauke:
I am well aware of that.
My hon. Friend the Member for
Wycombe referred to the announcement made in May 2006. Perhaps I can
focus on two other announcements made by the Minister for Housing and
Planning. In October 2006, she announced 45 new developments as part of
the new growth points programme. She described it as
“a significant opportunity for the
new communities to become exemplars of sustainability by pioneering
eco-development and encapsulating high design standards in parallel
with meeting the housing needs of local
communities.”
Perhaps
that work might be useful in assisting the Chancellor in his exciting,
new and wholly original proposals that he announced at the weekend.
Perhaps even more relevant would be the announcement made in March this
year about new towns. As the Minister
said:
“Now is
the time for us to look at new
eco-towns”.
As a
£2 million fund was also announced for the purposes of these new
eco-towns in March, will the Chancellor be making use of that fund for
his new proposals?
The
appointment of David Lock, chair of the Town and Country Planning
Association, was also announced; he will report to the Government on
further developing the criteria for eco-towns. Will Professor
Lock’s report be used for the Chancellor’s new proposals?
If the£2 million fund and Professor Lock’s
report will indeed be used for those purposes, it may well increase the
chance of those five new eco-towns being developed before October 2012,
but it might bring into question just how poor the original proposals
were. My hon. Friend
the Member for Braintree alluded to an important point, which is that
the Treasury tends to propose exemptions in order to encourage
particular behaviour. However, if that behaviour is actually carried
out on a much greater scale, that exemption and encouragement tends to
be withdrawn. The home computing initiative to which my hon. Friend
referred was a good example.
We know that, within the
provisions of the clause, the Treasury has the opportunity to extend
the stamp duty land tax relief available for zero-carbon homes. Does
the Economic Secretary have any criteria in mind that might be used in
deciding whether to do so? Given that, by 2016, as we have heard, all
new homes are supposed to be zero-carbon, if there are, in fact, many
developments by 2012 would it indicate to the Treasury that the relief
is successful and should therefore be continued, or would it then
constitute too great a cost to the Exchequer and be withdrawn?
Conversely, if it is little used—and, as my hon. Friend the
Member for Windsor pointed out, there are such indications—would
that be an argument for abandoning the relief, because it proves to be
useless, or for maintaining it? I am conscious that the Economic
Secretary cannot bind his successors and that, by the time that we come
to make this decision, I shall perhaps be referring my questions to
those sitting on my Front Bench rather than to this Government. None
the less, I should be grateful for an indication of what the criteria
will be.
Finally, as
this relief will apply only to properties of less than £500,000,
if house prices continue to grow substantially in the years ahead, a
home of £500,000 might not be that exceptional by 2012. Indeed,
in some parts of the south-east of England, it is already not that
exceptional a price. Would the Government then look at reviewing the
figure of £500,000, as that may preclude a lot of new properties
by 2012?
Julia
Goldsworthy:
I am very grateful to you, Mr.
Gale, for ensuring that all Committee members have been provided with
drafts of the regulations and for giving me the opportunity to speak
again. Looking through the draft regulations conjured up concerns borne
out of my experience from working as a regeneration officer for Carrick
district council before being elected to Parliament. The area of my
work was in helping small businesses to access objective 1 funds, and
part of the funding available was for work and business space. Because
there was a real shortage of business space in Cornwall, it was one of
the few areas where private developers could access objective 1 funds.
Because there was such demand, tight environmental standards were set
for the buildings, so only those applications with the highest
environmental standards went forward.
Two things arose from that.
First, concerns arose from the fact that the goalposts kept moving,
which echoes the concerns of other Members about how people can have
confidence that the scheme will not be withdrawn or that higher
standards will be set. The moving goalposts undermined confidence in
that scheme. Secondly, there was a total lack of capacity to assess the
environmental standards that had been set.
Even for those projects that were entirely compliant with all the
restrictions that had been specified by the objective 1 partnership, it
was impossible to find someone in the whole of the south-west
region—not just in Cornwall—who was qualified to say
whether the criteria had been met. The concern here is that an
accredited assessor will be appointed, but it is not clear from these
regulations whether all members of the accreditation scheme for the
energy performance and buildings regulations will be eligible to assess
whether a home is a zero-carbon home. I suspect that the experience
will be the same as mine when I worked for the Carrick regeneration
team. Particular people will be specifically qualified to comment on
whether a property is zero-carbon, but it is difficult to find such
people and, in practice, it could prove impossible.
I would appreciate the Economic
Secretary’s comments on how many people he thinks will be
accredited, and what the spread will be across the country. My concern
is that it will end up being impossible to accredit anyone and that we
will encounter exactly the same problems that came up during my
experience working for the Carrick regeneration team. I therefore urge
him to hold a conversation with the objective 1 partnership office in
Cornwall to discuss the problems that it encountered and to find some
practical solution. If he does not, the regulations may encounter
problems in terms of
delivery.
Ed
Balls:
Thank you, Mr. Gale, for your generosity
in dealing earlier with the points of order. It is a privilege to serve
under your chairmanship for the first time in a Finance Bill, and I
hope that we will be able to continue to have such a co-operative
relationship as we move towards the “thank yous”? As I
said in my point of order, to the extent that an error was made on my
part, I apologise in particular to the hon. Member for Wycombe, with
whom I had a direct conversation.
The comments just made by the
hon. Member for Falmouth and Camborne, which drew on her own
experience, show that it would be desirable to debate the regulations
under the affirmative procedure if that can be done. In the policy area
in which I have been active in the Treasury, I always welcome the use
of the affirmative procedure. When important areas of policy are taken
forward, it is right that there should be an opportunity to discuss the
detail in the House. I think that sensible Ministers welcome such
opportunities. In this case, both because of the problem that we have
had this morning but because of the importance of the issues, that
would be desirable. I should also say—I shall some back to this
in a moment—that these are genuinely draft regulations for
consultation.
The
consultation process over the next few months will be conducted
properly. There may well be changes, as an opportunity to revisit some
of the issues would be welcome if that could be achieved. I also think
that a debate would provide a welcome opportunity for Conservative
members to have a further chance to debate these matters. So far, I
have felt a sense of confusion among Conservative Members about the
measure. I cannot work out whether they think that it is a good thing,
or a bad thing; whether they think that it is insufficiently generous
or far too demanding; and
whether they believe that the objective of zero-carbon homes is beyond
reach or whether the measures are insufficient to the task. I have also noted the regular
tendency of Conservative Members, when talking about the environment,
to return to questions of presentation. When an announcement is made
and if we are to take forward an agenda on the environment or housing,
the important thing is to get beyond the presentation and start talking
about the substance. That is what the regulations are about.
The problem with matters of
substance is that, when it comes to housing and the building of new
houses for first-time buyers, Conservative Members have been consistent
in their local opposition to building new houses. When it comes to the
measures that we have taken forward since 1997 on the environment, such
as the climate change levy, Conservative Members have been consistent
in their opposition to taking forward concrete action on the
environment. It would be my guess that over the next two years, there
will be an increasing debate, not simply about presentation but about
substance. Labour Members will relish those debates, because the more
we focus on substance, the more people will see that it is this party
that produces concrete proposals that deliver for hard-working
families. For all their spin and bluster, Opposition Members
consistently oppose measures to take forward policies for hard-working
families.
11.45
am
The clause,
which deals with exemption from stamp duty and land tax for new
zero-carbon homes, will take effect from 1 October 2007. It will
kick-start the technologies and techniques needed to build zero-carbon
homes to meet our ambition that from 2016 all new homes should meet the
zero-carbon standard and make no net contribution to carbon emissions.
As hon. Members have noted, that has been a subject of much debate
lately. The issue has been with me day and night in recent
days—
Mr.
Mark Hoban (Fareham) (Con):
Months.
Ed
Balls:
And months. As Opposition Members point out, to
take an idea, to build support not only in Parliament but among
voluntary organisations and house builders, to discuss it with local
authorities and the wider public, and to persuade what looks likely to
be the next Prime Minister to back it in public is the process of
policy-making that delivers hard outcomes. That is what has been going
on over the past year. I cannot work out whether Opposition Members
support the proposal or oppose it, or whether they are just confused.
When people read the Hansard report, they will
conclude—
Mr.
Gauke:
The Economic Secretary places great significance on
being able to persuade the next Prime Minister to back a proposal that
was publicly made under the present Prime Minister. Is the hon.
Gentleman therefore saying that until the Chancellor publicly backs
announcements that were made under the previous Prime Minister, we
cannot necessarily assume that the Chancellor supports
them?
Ed
Balls:
As I said, a notable feature of the debate is that
one listens hard but ends up being very confused by the contributions
of Opposition Members. The Chancellor of the Exchequer announced in the
Budget a tax measure to back our zero-carbon homes plans, so he has
clearly been backing the proposal for some time. It was prefigured in
the pre-Budget
report.
My point is
that when the putative Prime Minister backs a measure on the campaign
trail it increases the substance and salience of the issue. Over the
next two years there will be two potential Prime Ministers—one
in office, and the Leader of the Opposition. Debates of substance on
these issues will be very much welcomed on the Labour
Benches.
Mrs.
Villiers:
The Economic Secretary is very focused on
concrete outcomes, but so far the concrete outcome of the measure is
that the Government cannot tell us that there are any zero-carbon homes
at
all.
Ed
Balls:
I was expecting you to allow your indulgence to be
stretched only so far, Mr. Gale, to encourage us to get back
to the substance of the
debate.
The
Chairman:
Order. The hon. Gentleman is very impressive; he
has hit the nail exactly on the
head.
Ed
Balls:
Encouraged by your good self, Mr. Gale,
and by the hon. Lady, I shall continue. I am happy to respond in detail
to the questions asked by the hon. Member for Wycombe and
others.
I shall
briefly put the proposal in context. We set ourselves a target to
reduce overall carbon emissions in the UK by 60 per cent. from 1990
levels by 2050. More than 25 per cent. of all carbon emissions in the
UK result from energy use in the home. In 2050, about one third of all
homes will have been built after 2016. If we can ensure that all homes
built after 2016 are zero carbon and that they will make no net carbon
emissions, it will make a very significant contribution towards the
2050 objectives. In answer to a question asked by Opposition Members,
if all new homes were zero carbon by 2016 the annual carbon saving
would be 8 million tonnes a year, amounting to 90 million tonnes saved
by 2050, which is a substantial potential contribution to meeting our
environmental challenge.
I encourage Opposition Members,
particularly the hon. Member for Ludlow, to be more confident and
ambitious in backing our objective for zero-carbon homes, rather than
starting from a position of scepticism and conservatism. Our ambition
to have zero-carbon homes from 2016 is bold and radical, but I believe
that it is deliverable and I shall explain why.
In recent years, we have used
building regulations to improve the energy efficiency of new homes.
Changes to the building regulations in 2006 achieved a 40 per cent.
improvement on pre-2002 standards, and a 70 per cent. improvement on
pre-1990 standards in the efficiency of new homes. However, this
Government want to go further. In part, we will do that through
regulations that require that by 2016 new build houses will meet the
zero-carbon standard. As the hon. Gentleman knows—this is
outside the scope of the Committee, but relevant to the debate—a
consultation
process on building regulations and the definition of
zero-carbon homes is under way, led by the Department for Communities
and Local Government.
Guidance on
six different levels of sustainability has been issued to help the
industry. The strategy of the DCLG is to build the regulations up over
time toward the level that will ensure the building of zero-carbon
homes. Building regulations will play an important part in our
achieving our objective. We will also, as we heard in the announcements
that were made at the weekend, depend on local leadership. The
Government’s objective is not to impose new planning
requirements or new eco-towns on local communities but to encourage
proposals for eco-towns to be made locally.
I urge hon. Members on both
sides of the House to back such proposals rather than to be sceptical
about them. It is crucial to build a cross-party consensus in our
country on the importance of building sustainable homes. I am
continually frustrated that, for all the talk, Opposition Members all
too often appear to stand in the way of such developments. The right
way forward is not to impose from the centre but to encourage local
leadership. That is our objective in the eco-towns
proposal.
Mr.
Goodman:
On the subject of frustration, I am waiting for
the Economic Secretary to answer some of the questions that were asked.
For example, given that he was able a few moments ago to give us a
figure for carbon savings, surely he can tell us how many zero-carbon
homes the Treasury estimates will be built as a result of this measure.
What is the
answer?
Ed
Balls:
The hon. Gentleman will have to hold back his
impatience and wait for me to answer his question. I said that I would
do so and I meant what I said, so I will—in due course and in my
own time.
Julia
Goldsworthy:
I am pleased to hear the Economic Secretary
speaking about the need for local leadership. However, I do not
understand how he can square that with the position that the Government
took on the Local Planning Authorities (Energy and Energy Efficiency)
Bill—the private Member’s Bill that came after Second
Reading of the Sustainable Communities Bill—which specifically
allows local authorities to set higher environmental standards when
giving planning permission for properties. Why did the Government take
that position and how does he resolve the
contradiction?
Ed
Balls:
That point goes well outside the responsibility of
the Treasury or the scope of this Committee. However, a consultation is
under way on building regulations for interim steps to improve
standards between 2010 and 2013, before we go to full zero-carbon homes
by 2016. The Government have launched the code for sustainable homes in
England as a voluntary standard. It will allocate a star rating from
one to six for new homes by assessing their overall sustainability and
setting out aspirations for new build housing. Progress is being
made.
It is important
that we make progress on social housing, too. We have announced that
the minimum requirement on all homes built with social housing
grant or on English Partnerships-developed land will be to meet code
level three. That is a 25 per cent. improvement on current building
regulations for energy performance. Obviously, we want to go further in
that area, too. The lead on that, however, will be taken by the
Minister for Housing and Planning rather than by me. My role is to talk
about the tax measure that we are introducing today, which I shall turn
to now. The clause
amends the stamp duty land tax legislation in the Finance Act 2003 by
inserting new sections to deal with relief or exemption for the first
sale of new zero-carbon homes. They will enable the Government to make
regulations to define zero-carbon homes, to quantify the amount of
relief or exemption and to deal with administrative matters. The
regulations will cease to have effect at the end of a five-year period,
on 30 September 2012, unless we decide to extend that relief further.
In the Budget, we said that we will review the effectiveness of the
relief before the end of that period to see whether it should be
extended. We will make that decision in the light of the circumstances
at the time and the effectiveness and cost of the
measure.
To
the hon. Member for South-West Hertfordshire, I say that we will use a
range of criteria to assess the measure. If it turns out that the
objective has already been reached by the time of the assessment and
every home is zero-carbon, that might suggest that we do not need to
continue with the measure. If, as I anticipate, developments are
proceeding apace but there is still further to go, it might be right to
extend the relief, subject to cost considerations, which the Chancellor
of the day will have to consider carefully. In this area, it is
sensible to make policy by setting out regulations for five years, to
assess performance along the way and to give a clear, public signal of
our future intentions well in advance of the end of that five-year
period. That is what we will
do.
Adam
Afriyie:
From my business background, and given how long
it takes to build properties, it seems to me that putting a short time
limit on the tax relief sends a signal that the Government are
uncertain whether the relief will continue. What confidence does that
inspire in builders, who have to invest hundreds of millions of pounds
developing new homes? It sends no confidence signal at
all.
Ed
Balls:
I have great respect for the hon.
Gentleman’s business background. Let me quote from Stewart
Baseley, the executive chairman of the Home Builders
Federation:
“We
welcome this package of measures in setting both the goal and direction
for achieving more and greener homes. Progress will be achieved most
effectively through a framework in which Government sets clear
objectives, industry is given the space to deliver and consumers are on
board.”
That is exactly
what we will achieve with these measures. Dave Hill, a developer in
Upton, Northampton,
said:
“The
costs of making a conventional home into a zero-carbon home
aren’t as bad as I thought. It gives me confidence that, in 10
years’ time, we will be building them for the mass
market.”
Hon. Members do
not have to take my word; they can take the word of the business men
who made those contributions.
Mr.
Newmark:
Will the Economic Secretary give
way?
Ed
Balls:
I want to make a bit more progress, then I shall
take the intervention.
The regulations that we set out
are in draft. For reasons of good policy making and wider politics, we
welcome the opportunity to have a further debate if the business
managers allow. We genuinely intend to consult on the regulations. The
Department for Communities and Local Government is currently consulting
on the definition of zero-carbon homes by 2016, which is part of the
reason why our approach must be consultative. Our regulations are
running in parallel, and it desirable that those consultations end up
with aligned definitions. That is our hope and expectation. The
regulations will therefore have to be considered in the light of those
wider
consultations.
The
first exemption will be complete for all new homes priced at less than
£500,000; purchases above that level will benefit by
£15,000. Stamp duty land tax will be paid only on the balance,
which is equivalent to stamp duty at £500,000. The regulations
set out a technical definition of a zero-carbon home, but that is in
draft and for consultation.
As the hon. Member for Falmouth
and Camborne said, the regulations provide for operational matters,
particularly certification. Stamp duty is a one-off tax, so it is
important to ensure that the certification is robust and protects us
against avoidance when we levy it, and that is partly why we need to
ensure that we get the consultation right. Finally, the regulations
also contain rules about microgeneration and dealing with linked
transactions.
12 noon
Let me now turn to the
questions that hon. Members put to me. The first relates to current
developments and costing, which I am happy to discuss. There is much
discussion of the Gallions Park development in the Chief
Secretary’s constituency, and that development is moving
forwards, not backwards.
Ed
Balls:
Shall I make the point first, or does the hon.
Gentleman want to intervene before I do so?
Mr.
Goodman:
I would like to intervene first. The Economic
Secretary says that things are moving forward, but will he clarify
whether that means that planning permission has been
given?
Ed
Balls:
The hon. Gentleman has intervened to make exactly
the same point that he made in his speech. Given that it is the same, I
will answer both his speech and his intervention now. The London
Development Agency has earmarked the site for the development of a
zero—[ Hon. Members: “Ah!”]
Ah? The agency has earmarked the site for the development of a
zero-carbon house—[ Hon. Members:
“A house?”] Sorry, homes. A developer has been announced
since the pre-Budget report, and the GLA has appointed an approved
contractor. The development is within GLA guidelines, as the hon.
Gentleman knows. In due
course, under the present process, planning permission will be
considered. Has planning permission been granted at this stage? As I
understand it, it has not. The reason is that the development is going
through the planning process. That is what happens when we build
houses: we go through a planning process, and that is what is going on
with that development.
There is also
a development on surplus public land at Northstowe in Cambridgeshire,
which is intended to be an exemplar growth-area development. The
development aims to be low carbon, but I do not believe that it is
intended to be zero carbon at this stage.
As I explained earlier, the
ambition is to move towards all homes being zero carbon by 2016. The
starting point today is that few or no homes are zero carbon. We have
set out to achieve our objective by 2016 and we believe that it can be
achieved by steadily building up building regulations and using a tax
incentive to encourage developers to take the necessary steps. That
objective can be achieved by 2016, but it is not being achieved today.
We are taking the proposed steps so that we can save a further 8
million tonnes by 2016.
There are few or no zero-carbon
homes today. As the Chief Secretary said on the Floor of the House,
there is intended to be a development in his constituency and there are
small demonstration projects around the country. However, we are
starting with no or few zero-carbon homes and we intend to get to the
point where 200,000 such homes are built each year by 2016—that
is the ambition. When hon. Members say that there are no zero-carbon
homes today and say “Ah!”, they are right, which is why
we are introducing a policy of regulations and tax incentives to
achieve our objective. Opposition Members were very sceptical about
whether our objective is deliverable, and I understand that, but I
disagree. By taking the right action, we can deliver on our objective
of moving from zero homes to 200,000 over the next eight
years.
Mr.
Mark Francois (Rayleigh) (Con): Let us return to Gallions
Park as an example of the process that is under way. If I heard the
Economic Secretary correctly, he said that planning permission had not
yet been granted for zero-carbon homes at that location. However, he
implied, although did not state, that a planning application had been
submitted. If so, it would have to specify how many zero-carbon homes
were proposed. Will he confirm whether a planning application has been
submitted for zero-carbon homes at Gallions Park and, if so, how many
are to be zero carbon?
Ed
Balls:
It would be inappropriate in a Finance Bill debate
for a Minister to set out the details of a particular planning
application, or to give indications of its
contents— [Interruption.]
Ed
Balls:
As for its content or its chances of success, the
question was raised with me, and I said that as I understand it, the
proposal is going through the
planning process but a decision on its acceptability or otherwise has
not been made. That decision would never, in any event, be made by a
Treasury Minister, so it would be inappropriate of me to
comment.
Mr.
Francois:
Will the Economic Secretary give
way?
Ed
Balls:
I shall finish the point first. The development
intends to deliver zero-carbon homes—that is its objective, as I
understand it. I also said that the proposal is within GLA guidelines
and a contractor has been approved. It is a good job that it is in a
constituency that has a Labour Member of Parliament. I fear that if it
had had an Opposition Member of Parliament, there would have been local
objections on the hon. Gentleman’s
website.
Mr.
Francois:
This doctrine that the Economic Secretary has
developed that Members of Parliament and Ministers do not comment on
planning applications is a revelation to me. The Secretary of State for
Communities and Local Government has a great history of commenting on
planning applications—usually to object to them in her own
constituency. He has reinvented parliamentary doctrine on his
feet.
To come back to
the point, a planning application, by definition, is a publicly
available document—under the planning process, it has to be.
Given that it is a publicly available document, there should be no
problem about the Economic Secretary’s commenting on it. Has a
planning application been submitted at Gallions Park and, if so, how
many zero-carbon homes are in it? Will he answer those two simple
questions?
Ed
Balls:
As I said, it would be entirely inappropriate for a
Treasury Minister, during proceedings on a Finance Bill, to comment on
a particular housing development. I am not going to comment on what
individual Members do in their constituencies. That is a matter for
them. I shall just point out that, as it happens, hon. Members opposite
consistently oppose housing developments in their
constituencies.
In
the case of Gallions Park, I am advised that the planning process is
under way. I do not know what stage it is at, and there is no reason
for me to know that. All I know is that the intention is that it will
be a development of zero-carbon homes. The hon. Gentleman is trying to
make the point that there are currently no zero-carbon homes. I would
say that he is right. There are none. That is why we are legislating in
the Finance Bill, with public money, for an incentive to deliver such
homes—in fact, for all homes to be zero carbon by
2016.
As I said to
the hon. Member for Wycombe last week, I cannot understand the point
that hon. Members are making. If they are claiming that there are no
zero-carbon homes today, they are correct. Luckily, we have a
Government with the confidence and commitment to set an objective to
deliver zero-carbon homes by 2016 and to take the actions on tax and
regulation to achieve that. If the hon. Gentleman would clarify his
point, it would help me very
much.
Mr.
Goodman:
I can certainly clarify it. We are trying get a
clear answer from the Economic Secretary as to whether the figure is a
couple of dozen, as the Chief Secretary claimed on
“Newsnight”, or, as he said today, very few or none. Very
few and none are not the same, so which is
it?
Ed
Balls:
The answer is that, to all intents and
purposes—given that our objective is to get to 200,000 a year by
2016, and we are currently consulting on regulation changes and
legislating on tax so that we can start the process of getting
zero-carbon homes—so far as I am concerned, today there may well
be none.
Julia
Goldsworthy:
Will the Economic Secretary give
way?
I do not know the answer to the
hon. Gentleman’s question. It may well be that there are a
number—a small number—of lower-carbon homes around the
country. Given that the Department for Communities and Local Government
is currently consulting on what the definition of zero-carbon homes
should be, and given that we are consulting on draft regulations about
what the definition of zero-carbon homes for tax purposes should be, I
am afraid that the answer to the question of how many zero-carbon homes
there are rather depends on the outcome of those two
consultations.
The
point that the hon. Gentleman seems to enjoy making is unbelievably
obscure, and therefore we might as well all agree that we are starting
from a position whereby the number of zero-carbon homes is low or zero
and our objective is to get to 200,000 a year. Perhaps we should get on
to the substance of whether we are taking the right decisions on
regulation and tax to reach that objective, rather than engaging in
this seemingly obscure and meaningless
debate.
Mr.
Goodman:
I will help the Minister to move on, passing over
the point that he has just given us a fourth answer, which is that he
does not know. The question that I would like to ask him is can he tell
us how many homes will be built as a result of this
measure?
Ed
Balls:
I will come on to the costing of the measure in a
second. I do not think that there is a single member of the Committee
who knows how many zero-carbon homes there are. We are currently
consulting on what the definitions should be exactly, for regulatory
and tax purposes.
Ed
Balls:
Perhaps some clarity can be provided by the Liberal
Democrats, because we are getting none from the
Conservatives.
Julia
Goldsworthy:
Because the definition of a zero-carbon home
has not been set—the clause establishes how that definition will
be achieved and what the tax reliefs will be—surely that means
that there are no zero-carbon homes at present? There may
be some energy-efficient homes out there; I can think of some in my
constituency. However, if the definition has not been set, one cannot
say how many exist. Is that not
straightforward?
The
Chairman:
Order. I have listened
carefully—probably rather more carefully than some other people
in the room—for quite a long time to this debate. It strikes me
that it is going round in circles.
When I first entered the House,
there were devices called parliamentary questions, which enabled Back
Benchers in particular to obtain information of the kind that is being
sought in the Committee. It seems to me that we are getting to the
point at which the Economic Secretary is being asked questions that are
probably, and properly, outside his ministerial remit. I would be
grateful if the Committee could return to clause 19 and the economic
substance of the Finance Bill.
Ed
Balls:
I shall come on to the substance of the hon.
Gentleman’s question, which is about the costings.
As I said, we start from a
position where a small number, or zero, homes are zero carbon. We are
consulting on exactly what the definition of zero-carbon homes should
be for tax purposes; it is a genuine consultation, and it was conducted
mainly to change the regulations following that consultation. Our aim
is to get from zero to 200,000 zero-carbon homes a year by 2016. At
this stage, given that this is uncharted territory, we do not know what
the pace of build-up will be. It will depend on the way in which the
regulations are calibrated and ratcheted up, and also on the success of
this tax measure. It is not easy for us to make a forecast. Therefore,
the Treasury has to make a decision as to how we sensibly cost this
measure in the Finance Bill, when we do not know exactly what the
outcome is likely to be. There is not really any sensible basis for a
forecast, because we are starting, essentially, from zero.
We took the view that we start
from zero and will get to 200,000 in 2016, and that the build-up will
not be linear, or like a straight line, but that there will be a
progressive acceleration over that period. On the basis of that, from
nought today to 200,000 a year by 2016, and on the basis of the stamp
duty relief that we have set out today, we will produce a
costing.
Mr.
Newmark:
Will the Minister give
way?
On the basis of the costing, as
set out in the Red Book, for the build-up that we have estimated or
projected, the costing by 2012 will be around
£15million.
Stewart
Hosie (Dundee, East) (SNP): Will the Minister give
way?
On that basis, costing by 2012
will be around£15 million a year. It may well be that
the target will be
reached faster than in that non-linear projection; it may well be that
that happens more slowly. If it happens more slowly, we will either
have a later acceleration or miss the target. We may need to make the
relief more generous. If it happens faster, it may well be that the
cost of the measure will exceed our estimates—a very desirable
thing indeed. This is one of those areas where the Treasury would be
pleased if the cost of the measure exceeded our expectations. We have
projected forward from zero to 200,000 on a curve, and produced some
costings on that basis. 12.15
pm
Given the
nature of the exercise, it would not be sensible for us to set out in
detail the actual numbers at each point along the curve because that
would give the impression that the process was based on science and
forecasting, and that it was an objective. Frankly, it does not have
that status. We do not know what the take-up will be, but we will have
much more evidence in a year or two. It is a sensible, projected way to
cost, and that is what we have
done.
I am sorry if
that does not satisfy the hon. Member for Wycombe, but it is the best
way to proceed, given that what we are doing is so innovative. It has
not been done before, and there is no sensible way of making a
forecast. He asked what my forecast was for 2012. We do not have a
forecast, but our objective is to get from zero to 200,000 a year by
2016.
Stewart
Hosie:
I like the Minister’s honesty in saying that
this is not based on science and that there is no sensible way of
making a forecast. However, given the consultation on the definition
and that only after the outcome of that will we know what the real cost
of a low or zero-carbon house will be, surely that should be the point
at which to determine what tax incentives might be necessary to provide
the correct incentive for a large number of such properties to be
built. Would not that be the correct
approach?
Ed
Balls:
I understand the hon. Gentleman’s point, but
we are using language carefully, which hon. Members mocked, and
kick-starting a process. If something like a motor bike is
kick-started, it is because it is stationary and one wants it to move
forward. There are very few carbon-zero homes and we want to kick-start
the process by saying that as well as regulatory change there will also
be a tax incentive on the table. That is what we are legislating for,
and consulting on in the case of the regulations, so that we can
kick-start a path towards 200,000 such houses a year by
2016.
The hon.
Gentleman is absolutely right to say that as we gain more experience we
will be able to see whether the stamp duty exemption—it is only
part of the package; the regulations are also important—is
sufficient. We do not know the answer, which is why we must return to
the matter following a debate in Committee on future Budgets. We may
need to make the measure more generous, or we may find when we look in
advance of 2012 that we were more generous that we needed to be and
that there is a lot of dead-weight cost.
The problem is that because we
are at the start of the process, we do not know the answers to the
questions. After five years’ experience we may know how we could
have kick-started the initiative, but logically that is beyond us. We
must set out a sensible incentive and use it to deliver our
goal.
Mr.
Newmark:
As I said at the beginning of my speech, I
support the aspirations and ambitions of the clause, as I believe we
all do, but we are questioning the detail. One question that the
Minister has not answered is about the time frame. He set an ambitious
target for 2016 and, as a business man, I have said that 2012 will be
challenging, given the planning challenges and so on. How many business
men did he consult in coming up with the 2012 and 2016 figures, and
what feedback did he receive on 200,000 a year being realistic, which I
would support if he could get
there?
Ed
Balls:
That point was also well made by the hon.
Member for South-West Hertfordshire, who asked in particular about
2012, and I answered the question then. Clearly, it is sensible at the
beginning of a process to set out tax relief over five years and then
to assess its effectiveness clearly before the end of that time frame.
I have said that if we have not achieved our objective but the tax
incentive is working, the sensible thing for us to do would be to
extend
it— [Interruption.]
Ed
Balls:
We will do that in plenty of time. I answered that
point carefully.
The hon.
Member for Braintree, again citing his business credentials, asked
about businesses being consulted and I read out two quotes from
business people who have given their views. We are now consulting on
the basis of the regulations for the stamp duty exemption.
Consultations on the wider zero-carbon homes initiative are being taken
forward by the Department for Communities and Local Government, and the
Treasury is part of that process.
I assure the hon. Gentleman
that in order to meet our objectives, we will be consulting the
business and wider communities in the coming months. As I said, we have
also consulted on the preparation of the policy. I was confused because
Opposition Members seemed to claim that the objective was both trivial
and unachievable. They had no coherence of view.
We are setting out a bold,
innovative, radical, coherent policy in which tax can play a part in
contributing to the wider objective of every home being a zero-carbon
home by 2016. I hope that it will be possible to have a debate in
Committee on the regulations because Labour Members relish debates on
housing and the environment. A further opportunity to set out thinking
following consultation on some of the detailed points would be welcome
and desirable. I hope that the Committee will allow us to move
forward.
Question
put and agreed
to.
Clause 19
ordered to stand part of the Bill.
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