 House of Commons |
Session 2006 - 07 Publications on the internet General Committee Debates Planning-gain Supplement (Preparations) Bill |
Planning-gain Supplement (Preparations) Bill |
The Committee consisted of the following Members:Hannah
Weston, Committee
Clerk
†
attended the Committee
Public Bill CommitteeTuesday 30 January 2007(Morning)[Mr. Jimmy Hood in the Chair]Planning-gain Supplement (Preparations) Bill10.30
am
The
Chairman:
I remind the Committee that a money resolution
is connected to the Bill, and copies of it are available in the Room.
Adequate notice should be given of amendments. As a general rule, I do
not intend to call starred amendments, including any that we reach
during an afternoon sitting. I ask hon. Members to ensure that their
mobile phones are switched off. Hon. Members who find the heat
excruciating may remove their
jackets.
That—
(1)
the Committee shall (in addition to its first meeting at 10.30 a.m. on
Tuesday 30th January)
meet—
(a) at
4.30 p.m. on Tuesday 30th January,
and
(b) at 9.00 a.m.
and 1.00 p.m. on Thursday 1st
February;
(2) the
proceedings shall (so far as not previously concluded) be brought to a
conclusion at 4.00 p.m. on Thursday 1st
February.
I welcome
you the Chair, Mr. Hood. I look forward to serving under
your chairmanship for the first time on a Public Bill Committee. You
have an established interest in housing, so perhaps you will keep a
close eye on policy, as well as keeping a Chairman’s eye on
proceedings. I welcome all other members of the Committee, particularly
those who have already taken an interest in the subject, whether by
speaking on Second Reading, tabling parliamentary questions or serving
with distinction on the inquiry into the planning gain supplement
undertaken by the Select Committee on Communities and Local
Government.
This
brief paving Bill will ensure the regularity and propriety of
Government expenditure, in line with parliamentary and Government
accounting rules. It does not deal with the policy, nature or operation
of the planning gain supplement; it is a merely functional Bill to
authorise appropriate preparatory expenditure. As I explained on Second
Reading, if the Government were to decide to introduce a supplement, we
would announce it and legislate for it in the normal way, so there
would be a substantial opportunity to debate and scrutinise such
proposals.
Our debate
ranged widely on Second Reading, as the hon. Member for Rayleigh
recognised. Members of the Committee will notice that we do not propose
a long Committee stage for this three-clause Bill. The general view of
the Programming Sub-Committee was that the time allocated was more than
sufficient.
Mr.
Mark Francois (Rayleigh) (Con): I, too, welcome you,
Mr. Hood, and other members of the Committee to our
deliberations. I look forward to my debut serving under your
chairmanship, as we examine this brief but nevertheless important
paving Bill.
The
programme motion has been discussed through the usual channels and in
the Programming Sub-Committee, and it appears to allow sufficient time
to debate a three-clause Bill. I should like to raise a procedural
point, however, with regard to the status of Public Bill Committees, of
which this is one of the first. I understand that the programme motion
deals with the related issues, but I should like to make a point about
the change from the Standing Committee procedure for examining Bills to
Public Bill Committee procedure, which is now coming into
operation.
The
Chairman of Ways and Means recently wrote to all members of the
Committee—including, I trust, yourself, Mr.
Hood—to outline how the procedure is intended to operate
henceforth. The main difference between an old Standing Committee and a
Public Bill Committee is that the latter has additional powers to take
evidence, which includes examining witnesses, before undertaking
detailed scrutiny of the legislation and the explanatory
memorandum.
A large
number of organisations have expressed reservations about the planning
gains supplement, which the Bill will facilitate, and the Minister will
hear a few of those representations during our deliberations. The
recent guidance from the Chairman of Ways and Means, which was
forwarded to the Committee via the Committee Office scrutiny unit on 25
January, indicates that the new procedure for calling witnesses should
apply to legislation that was introduced after Christmas 2006. I see
several hon. Labour Members indicating assent; clearly, they too have
read the guidelines.
The Bill was read the First
time on 12 December, so it appears that we have missed the boat for
calling witnesses in person. I appreciate that we are talking about a
brand-new procedure that is bedding in. I welcome it in principle and
have no complaint about our inability to call witnesses in respect of
the Bill. The new procedure should produce better law by giving Members
of Parliament a chance to hear from experts before debating changes to
the legislation. In that sense, it is a good thing.
May I, through you,
Mr. Hood, ask the Chairmen’s Panel to consider the
suggestion that more should be done to promulgate the new procedure to
the public? I suspect that many interested parties do not know that it
has been introduced. It would be valuable for the Public Bill
Committees that follow ours if more members of the public and interest
groups knew that the procedure had been changed, so that people dealing
with subsequent legislation have the chance to call
witnesses—something that we, unfortunately, have not been able
to do.
Dr.
Vincent Cable (Twickenham) (LD): May I add my welcome to
you, Mr. Hood? I do not think that I have served under your
chairmanship before. As we discovered on Second Reading, the arguments
on the Bill are primarily about big issues of principle, rather than on
the detail of what is an extremely small Bill. However, I welcome the
opportunity to discuss one or two points and to tease out in detail
issues that we were unable to pursue on the Floor of the
House.
Joan
Walley (Stoke-on-Trent, North) (Lab): I, too, welcome your
chairmanship of the Committee on this important paving Bill,
Mr. Hood. I do not want to delay proceedings, but it seems
pertinent to take my mind back to the first Committee on which I sat as
a newly elected Member of Parliament, just under 20 years ago,
when we discussed the water privatisation paving Bill. That was before
the time of programme motions, and we spent countless weeks discussing
a paving measure. The important point is that we now have a new
procedure; the hon. Member for Rayleigh spoke about the arrangements
that relate to it.
Whether or
not the Committee qualifies for the benefit of calling witnesses, while
taking feedback to the relevant authorities, Mr. Hood, could
you ask how the use of witnesses in Public Bill Committees will sit
alongside the work of Select Committees? Select Committees, including
the Environmental Audit Committee, of which I am a member, look in
great detail at particular issues, including planning gain supplements.
Can the recommendations of Select Committees and the
Government’s responses to their reports be incorporated in some
way into the new procedures for Public Bill
Committees?
Mr.
Francois:
The hon. Lady will recall that I, too, served on
the Environmental Audit Committee in the previous Parliament. In fact,
we shared a number of inquiries. If it will assist her, as I understand
the procedure, a Public Bill Committee can call witnesses as it sees
fit, including the Chairman of a Select Committee that has produced a
report that pertains to the Bill. For example, the Select Committee on
Communities and Local Government and, before it, the Select Committee
on the Office of the Deputy Prime Minister have produced reports that
pertain to today’s proceedings. Does the hon. Lady agree that
calling such witnesses could be valuable for a Public Bill
Committee?
Joan
Walley:
I am grateful to the hon. Gentleman for that
intervention; it throws into focus the issues that the new Public Bill
Committees will have to grapple with in the pursuit of evidence if they
are to ensure that the House is producing new Acts of Parliament that
are fit for purpose. We are at the start of a new way of looking at
things. Although they might not be relevant to the Bill, such issues
will be of interest to those who consider any subsequent Bill that is
presented by my hon. Friend the Financial
Secretary.
Michael
Connarty (Linlithgow and East Falkirk) (Lab): Having
served under your chairmanship on the European Scrutiny Committee for
the past eight years, Mr. Hood, I continue to have the
pleasure of doing so on this Committee. My point is to try to focus on
the Bill, rather than on the wider issue of evidence taking. I brought
a delegation down to meet the Minister when this concept was first
discussed, so he knows that there is a great interest in the
forthcoming Bill, and there is no doubt that local authorities in my
area will want to put in written submissions and be heard if evidence
is taken.
My
understanding is that, if people want to write in evidence, they should
focus on this Bill. I notice the Minister has tabled a motion saying
that
“written evidence
received shall be reported to the House for
publication.”
Could the Minister clarify exactly the
relevance of any evidence that might be given now and say what it would
focus on? People might want to give evidence on the principle and the
impact of the planning gain supplement process, which will be
introduced in a second Bill.
I should also like
clarification of whether the rules for this Bill—that written
evidence can be submitted and will be tabled—are the same as
those that will apply to the next Bill, which will be separate
legislation to introduce the planning gain supplement, when people can
make both written submissions and ask to be heard in oral
evidence.
John
Healey:
It has been a useful preliminary discussion. As
the hon. Member for Twickenham quite rightly observes, the big
arguments are about the principle of the planning gain supplement,
rather than on the Bill, which is he rightly described as extremely
narrow.
I did indeed
meet my hon. Friend the Member for Linlithgow and East Falkirk,
together with a delegation that was led very ably by Willie Dunn, West
Lothian Council’s lead cabinet member on economic development.
They clearly have interests in the wider design and principle of the
planning gain supplement, rather than in the provisions of this narrow
paving Bill. I can assure my hon. Friend that, if the Government decide
to go ahead with a planning gain supplement, we will announce that
decision and then move towards legislating for it, and there will be
ample opportunity, as there has been to date, for all those interested
in and concerned about its precise provisions to have their say, to
consult and influence the final decisions that we take.
I hope that
we will not repeat the experience of interminable discussions that my
hon. Friend the Member for Stoke-on-Trent, North had 20 years ago on
the paving Bill for water privatisation. She makes an important point
about Select Committee recommendations that are relevant to the
concerns of a Public Bill Committee. I have not served with her on the
Environmental Audit Committee, but I feel that I am familiar with its
work and expertise, having appeared before it many times, and I look
forward to doing so again tomorrow. The important point that she makes
is one for the House to consider, as we move towards bedding down the
new Public Bill
process.
The hon.
Member for Rayleigh and all the other members of the Committee should
understand that the interest in a planning gain supplement is precisely
as the hon. Member for Twickenham asserted: much less in the provisions
of this paving Bill and much more in the feasibility, workability and
desirability of a planning gain
supplement.
Since Kate
Barker first recommended that the Government look at a planning gain
supplement in her report in March 2004, we have issued four
consultation papers, published a summary of the responses to the main
consultation, placed more than 700 responses to that consultation in
the Library for public record. I have given evidence, together with my
hon. Friend the Minister for Housing and Planning, to the Select
Committee on Communities and Local Government,
and the Government have responded to the Select Committee’s very
important and incisive inquiry into the planning gain
supplement.
I think
that hon. Members and others are much more interested in the substance
of the proposal for a planning gain supplement than in this paving
Bill. I hope that, as a Committee, we will be able to make that clear
distinction in our deliberations and scrutiny of this one-page,
three-clause
Bill.
Question put
and agreed
to.
10.45
am
The
Chairman:
I think that it would be appropriate for
me to respond to some of the comments made by hon. Members, because we
are at the beginning of a new process. The Chairmen’s Panel will
discuss the practical administration of that process; if it has to be
tweaked and improved, I am sure that will
happen.
Ordered,
That, subject to the discretion
of the Chairman, any written evidence received by the Committee shall
be reported to the House for publication.—[John
Healey.]
Clause 1Preparatory
expenditure
Mr.
Francois:
I beg to move amendment No. 1, in
clause 1, page 1, line 2, after
‘expenditure’, insert
‘not exceeding £25 million
in total’.
I do so in my
name and that of my hon. Friend the Member for West Chelmsford
(Mr. Burns), who is my parliamentary neighbour, as well as
my neighbour this morning, as he sits in his place on the Front
Bench.
The amendment
is designed to place a limit on the amount of expenditure that may be
incurred by the Government under this paving Bill, in preparation for
the implementation of the planning gain supplement. There are several
reasons for this approach. First, the Government are not committed to
introducing the planning gain supplement at all. In the debate on
amendment No. 2, I hope to lay out in more detail how, over a period of
time, the Treasury has gradually watered down its commitment to the
introduction of the PGS, to the point that the PGS was recently
described by the Financial Secretary on the Floor of the House as only
“a lead option”. However, we are now being asked to
commit significant amounts of public money in preparing to implement an
option that may yet be discarded. On Second Reading, my hon. Friend the
Member for South Staffordshire (Sir Patrick Cormack) said in an
intervention on the
Minister:
“The
Financial Secretary is speaking with great charm, and he is beguiling
and almost converting me, but although I am an advocate of
pre-legislative scrutiny, he has not yet made me an advocate of
pre-legislative legislation”.—[Official
Report, 15 January 2007; Vol. 455, c. 571.]
Secondly, the
Government’s hesitation in pressing ahead may have been
compounded by the number of organisations that are on the record as
opposing the introduction of the PGS. What follows is not an exhaustive
list, but those organisations include the Confederation
of British Industry, the Institute of Directors, the British Property
Federation, the Home Builders Federation, the Royal Institution of
Chartered Surveyors, the Royal Town Planning Institute and the
Chartered Institute of Taxation. In addition, a set of legal and
accounting firms, including companies such as Reed Smith, Deloittes and
PricewaterhouseCoopers, have all expressed reservations of one kind or
another about how the new system that the Bill is designed to
facilitate might operate in practice.
For instance, before we commit
the taxpayer to the financial requirements of the Bill, we should bear
in mind that the CBI said of the planning gain supplement
that
“the
Government’s proposals to implement PGS are likely to lead to a
number of unintended and negative consequences that would outweigh any
potential benefits of PGS and we would strongly urge the Government to
reconsider its
proposals”.
Similarly,
the British Property Federation, which has been staunchly opposed to
the PGS, said—among other things—that
“PGS is not suited for brownfield
or previously developed sites; removes the linkage between the
developer, the development and direct community benefit; can provide
for uncertainty in the development process; is unworkable on most
commercial developments; will slow the rate of developments coming
forward; will discourage regeneration schemes; will create a blockage
in the planning system; could lead to lengthy disputes in the
courts...and does not give any certainty that the necessary
infrastructure will be
provided.”
The Royal
Institution of Chartered Surveyors said of the PGS
that
“the proposals are
based on a misunderstanding of how land is valued, how planning gains
arise and how the property market
operates”.
For
good measure, Labour’s previous planning Minister, the right
hon. Member for Greenwich and Woolwich (Mr. Raynsford), who
is unfortunately not with us in the Committee, is on record as opposing
the planning gain concept. He reiterated that a fortnight ago on Second
Reading, when he gave the Minister the apposite
warning:
“Although
this is only a paving Bill, it begins a process that is inherently
complex and risky and that could end badly. I urge my right hon. and
hon. Friends to take stock and give careful thought to all the issues
involved, as well as the considered views of the people and
organisations who best know the minefield that they are approaching. If
they do so, they may well conclude that the alternatives available can
generate better outcomes and save them from repeating the mistakes of
the past. When history has such good lessons to teach us, it is
unwise—to say the least—to ignore
them.”—[Official Report, 15 January 2007;
Vol. 455, c. 582-83.]
Considering that even well respected
previous Labour Ministers are sounding warning bells, it is little
wonder that the Government have paused for thought before going ahead
with the supplement, yet they still want parliamentary approval to
spend the
money.
Thirdly, there
is no expenditure limit in the Bill, so the expenditure that we are
being asked to approve could theoretically be open-ended, particularly
if the Treasury continues to dither on whether to proceed with the PGS.
The Treasury’s explanatory notes provide an estimated cost for
project staff and an associated information technology system of up
to £52 million, which it justifies in the following
terms:
“Project
planning is at an early stage. The enactment of this Bill will allow
further development of the project by HMRC and their IT partners and
for the technology to be properly costed.
The current upper end estimate is that IT build, infrastructure and
service costs will be approximately £40 million, however these
are subject to change as the project is refined and policy
finalised.”
In arguing
for the need to authorise such expenditure, the notes add for good
measure:
“Between
enactment of the Bill and the implementation of PGS a core team of
project staff will also be needed to develop the new operating model
and recruit and train staff. These costs are currently estimated at
£12 million for HMRC and the Valuation Office Agency up to and
including 2008/09.”
Even
allowing for the notorious difficulty of forecasting accurately the
future cost of IT systems, a matter to which I hope to return on new
clause 1, we are entitled to ask why those estimates are so high. At a
time when most primary care trusts are under serious financial
pressure—I am sure that Members of all parties share that
experience—why are the Government requesting up to £50
million to prepare for a tax that they may never actually
introduce?
Moreover,
the Library briefing note that accompanies the Bill points out that the
“closest precedent” to such a paving Bill was not, I am
afraid, the Water Act 1989— almost 20 years ago—but the
Tax Credits (Initial Expenditure) Act 1998. In time, that led to the
much troubled tax credit system in which just under half of all
payments are incorrect each year. The financial memorandum that
accompanied that Bill explained that expenditure of between £15
million and £20 million would be required to facilitate the
introduction of tax credits. Even allowing for inflation since then,
are the Government seriously arguing that the preparatory work for the
introduction of the planning gains supplement is likely to cost twice
as much as that required to help bring in the tax credit system? If so,
that tells us something about how complicated and bureaucratic the
planning gains supplement system is likely to
be.
Anne
Main (St. Albans) (Con): As my hon. Friend knows, I serve
on the CLG Committee, and we examined the matter. One of the Select
Committee’s concerns was that the planning gain might not
deliver more, and could deliver less, than section 106 money. One of
the Committee’s recommendations was that the Government
undertake a comparative study. They dismissed that as being too costly,
but the Committee felt it vital. The open-ended approach has meant that
self-assessment and the training budget for those who will investigate
it have not been covered. My hon. Friend is right to suggest that we
shall create an open-ended cheque book if we go down this route,
because we do not know whether the proposals will deliver more
infrastructure and more money in many cases, and it might well be
costly to examine that.
Mr.
Francois:
I thank my hon. Friend for bringing her
considerable Select Committee experience to bear on the issue, and she
is right that the Bill’s drafting makes it something of an
open-ended cheque book. She mentioned a comparative study, and I hope
to come to that issue later, when we examine why the Government have
carried out only a thin, partial regulatory impact assessment of the
implications of the PGS. My hon. Friend’s point is well made,
and she may wish to intervene on me again when we reach that issue in
our deliberations.
In the light of the issues that
I have described, amendment No. 1 proposes a limit of £25
million, which is just under half the estimated cost in the
Treasury’s explanatory notes. Such a limit would still allow the
Treasury to undertake some preparatory work, but it would place a
finite limit on that work, at least until the Treasury takes a firm
decision in principle to proceed with the PGS. As the Minister
intimated, that decision would require primary legislation in the form
of a separate Bill or provisions in a subsequent Finance Bill. Such
legislation could provide for additional expenditure to facilitate the
introduction of the tax, but, crucially, only once a decision had been
taken in principle to go ahead.
For the moment, we are in
limbo, because the Government have asked for the money, but the
decision to proceed has not been taken. In the meantime, the amendment
would limit the United Kingdom taxpayer’s exposure until the
Treasury can finally make up its mind up about what it intends to do.
On that basis, I am happy to recommend the amendment to the
Committee.
Dr.
Cable:
I want to save most of my comments for the next
string of amendments, but I will speak briefly in support of amendment
No. 1.
The hon.
Member for Rayleigh is right for two reasons. First, the proposals may
never proceed—the Government may chose not to proceed with them,
or there may be a change of Government—so there needs to be a
tighter limitation on the spending commitments. Secondly, as we all
know from experience with big IT projects and so on—in the
private sector, as much as in government—the more money that is
committed to something, the deeper Governments are sucked into it, even
though they would probably think better of it if they were starting
with a clean slate.
The hon. Gentleman is actually
being quite generous in allowing for £25 million, and we could
probably think of a much tighter constraint. However, he is trying to
make the point that there needs to be a tight financial limitation on
the first stage of the process. The figure is arbitrary, but it is
useful to make the point, and I therefore support the
amendment.
John
Healey:
In moving his amendment, the hon. Member for
Rayleigh ranged rather wider than the Bill and rather widely over the
purpose of his later amendments and new clauses, so those who missed
his comments may have the chance to hear them a little later.
Clause 1 is the main provision
in this short, straightforward Bill. It gives the Secretary of State
for Communities and Local Government, a Northern Ireland Department and
the Commissioners for Her Majesty’s Revenue and Customs the
necessary authorisation to incur the preparatory expenditure necessary
for the possible introduction of a planning gain supplement. The clause
allows Parliament to provide the money in the normal way, so it is
subject to the usual procedure of
supply.
The
hon. Gentleman urges us to speed up the decisions that we might take on
the planning gain supplement, but he is in something of a minority in
that respect.
Industry representatives and the Select Committee on the Treasury have
welcomed the deliberate, consultative and detailed way in which we have
prepared and analysed our policy on this issue. We have approached it
with great seriousness and care ever since Kate Barker first included
it as a recommendation in her 2004 report. Last week, in its report on
the Chancellor’s pre-Budget report, the Select Committee
said:
“We
welcome the measured way in which the Government is consulting on and
taking forward proposals for a Planning-gain
Supplement.”
11
am
The Government
are proceeding towards a decision on a planning gain supplement with
two aims in mind: first, that we are thoroughly satisfied that the
planning gain supplement concept will work and that, if a decision to
proceed is taken, what will be on offer will be well thought out and
detailed as a proposal. As I said, there will be substantive
legislation, a full regulatory impact assessment and many more
opportunities to debate and to scrutinise such a plan outside and
inside Parliament.
Mr.
Francois:
If the Government were to decide to press ahead
with PGS, would it be their intention to introduce a separate Bill, or
are they minded to introduce the provision as part of the Finance
Bill?
The
second aim, and I think this is most pertinent to the paving Bill
before us, is that, if a decision is taken to proceed with the planning
gain supplement, the infrastructure that is needed to administer the
scheme can be ready to allow the Government the option to introduce the
PGS in 2009, should we wish to do so. That second aim is the narrow
object of this Bill.
If, after further consultation,
we believe that the planning gain supplement continues to be a workable
and effective new policy, we will move forward with its implementation.
In order to do so, the relevant parties that will need to manage the
preparation and introduction of the PGS must have the necessary
authority to prepare in advance.
Anne
Main:
Given that one of the reasons the home information
packs bit the dust was that there were not enough people trained to
administer the scheme, can the Minister perhaps give me some idea of
the infrastructure? I have concerns
about
“or in connection
with preparing for”.
That
could lead to quite an exhaustive list of experts needing to be
trained. Does that mean that they will all be in place and that we will
have paid for that, but that the PGS may not happen, very like the HIPs
scheme?
John
Healey:
The hon. Lady was present and participated, at
least with interventions, in the Second Reading debate on this Bill, so
I am sure that she has studied, like the hon. Member for Rayleigh, the
explanatory notes that set out in some detail what our expected
preparatory costs may be. She will also have
heard me on Second Reading make it clear that the costs in the
explanatory notes are our estimate at this stage of the costs of
preparing right up to the point of implementation of a planning gain
supplement. As members of the Committee will see, this is a
straightforward clause in a straightforward Bill, allowing the
necessary preparations to begin with the minimum of delay, should the
Government decide to proceed with the implementation of the
supplement.
The
amendment will place a limit of £25 million on the expenditure
that could be incurred by the persons named in subsection (2) of the
clause. As I explained on Second Reading, and as I have reiterated to
the hon. Member for St. Albans, the early estimate of the cost of
designing and building the administrative and IT systems needed for a
planning gain supplement in the full period prior to its introduction
is approximately £40 million.
As the hon. Member for Rayleigh
rightly said, and as we set out in the explanatory note, if the
Government decide to go ahead with the implementation of a planning
gain supplement, there will be additional costs associated with
recruiting and training staff. These are anticipated costs, however, up
to the point of implementation of a PGS. Well before that point, a
substantive programme Bill authorising the levying and the
administration of a PGS would have been debated, passed by both Houses
and would be on the statute book. That would give full and fresh
authority to spend as required, subject of course to the established
procedures of this House.
I turn to the precise terms of
the amendment. If the cost of a properly designed and comprehensively
tested IT system is more than £25 million, to place an arbitrary
limit of that amount on the preparatory expenditure is, as I hope
Committee members will agree, counter-productive. To spend £25
million on only part of a computer system or on a computer system that
could not do the job would be £25 million wasted. It would be
equally wasteful if the Government were to build an IT system, but were
not able to train and recruit the staff needed to prepare and implement
a supplement.
In
addition, members of the Committee would recognise that oversight of
any preparatory expenditure, particularly following the discussion and
scrutiny of this Bill, will come through the normal parliamentary
scrutiny procedures of the Public Accounts Committee and the National
Audit Office. Those are the established and proper mechanisms of
Parliament to ensure that any expenditure is kept to a prudent and
sensible level, while also making sure that we get the IT and
administrative systems right. I hope that the hon. Member for Rayleigh
is not going to press amendment No. 1; if he does, I shall have to ask
my hon. Friends to reject
it.
Mr.
Francois:
This has been a valuable debate, in that it has
allowed us to press the Government about why they believe that this
expenditure is necessary. For instance, my hon. Friend the Member for
St. Albans, who made a more substantive contribution on Second Reading
than the Minister acknowledged in his remarks, raised an interesting
parallel with regard to home information packs. The Government got a
lot of other people to spend a great deal of money and then
changed their mind. Other people had committed a lot of their own cash
and effort because of HIPs. Now the Government are asking the taxpayer
to commit quite a lot of time and, particularly, money when they have
not made a decision.
I take the point about
consulting widely and deliberating properly. On one level, that is
right, but the fact remains that since the Barker recommendations in
2004, the Government have had three years to decide whether to go ahead
with the measure. They have got everybody in the industry spun up; they
have created a tremendous amount of comment, most of it adverse; and
now the Minister comes to the Committee this morning, asks for the
money, yet is still unable to tell us definitively whether the
Government intend to go ahead or not. That is the key point behind our
amendment.
As the
hon. Member for Twickenham appreciated, to be fair, we are trying to
place some limit on the amount of money that can be spent until the
Government have taken a decision in principle to proceed with the tax
itself. The Minister has not entirely convinced me; in fact, he has not
convinced me at all. Nevertheless, rather than push the amendment at
this stage, I am minded to ask leave of the Committee to withdraw it
for now, although in so doing, I give notice that we may wish to return
to the matter on Report.
Amendment, by leave,
withdrawn.
‘, the
revenues from which shall accrue to the local planning
authority.’.
The
Chairman:
With this it will be convenient to discuss the
following amendments: No. 10, in clause 1, page 1, line 10, at end
add—
‘(4) But no expenditure
by virtue of subsection (2)(b) shall be incurred until the Secretary of
State has designated one or more local planning authorities for the
purpose of conducting pilot studies relevant to the tax referred to in
subsection
(1).’.
New
clause 3—Pilot
studies—
‘(1) The
Secretary of State must designate one or more local planning
authorities for the purpose of conducting pilot studies relevant to the
tax referred to in section
1(1).
(2) An authority
designated under subsection (1) must conduct a pilot study and report
the results to the Secretary of State and to the
Treasury.
(3) The Secretary of
State and the Treasury must have regard to the results of the pilot
study or studies conducted under this section in formulating proposals
for the imposition of the
tax.
(4) The Secretary of State
must reimburse any designated local planning authority for the expenses
incurred by it as a result of conducting a pilot
study.’.
Dr.
Cable:
These amendments are genuinely designed to improve
the Bill. They are not wrecking amendments; they address what seem to
be two of the most fundamental flaws in it, as it is currently
conceived, one of which is the lack of commitment to local funding,
withdrawing funding from local communities, and the second of which
addresses the issue of complexity by requiring the Government to go
through a process of properly structured pilot studies. Although I
could approach the Bill from the point of view of saying that it is a
bad idea and it will eventually
be repealed, so why should I bother with it, it seems to me that with a
bit of thought, it could be structured in a way that makes it possible
for the first time, at the sixth attempt, to make such a system
work.
Amendment No. 6
addresses the issue of local funding. We need to start by asking what
the principal purpose of the legislation is. What are the Government
really about? Is it a revenue-raising measure, or is it designed to
improve the efficiency and the speed of the planning process? I do not
think that it is the former, because if the Government wanted to raise
more money for infrastructure, there are more efficient and simpler
ways of doing that. However, it is clear, both from the terms of
reference that the Government gave to Kate Barker, and from the way
that she answered in her report, that the whole purpose of this
legislation is to make the planning system work quicker and better. If
the planning system is to work quicker and better, it needs to have
buy-in and support from local communities.
As we heard on Second Reading,
councils are, after 15 years of trial and error, reaching the point of
getting benefit for the community from using section 106 agreements.
They are an incentive for them to be positive about development.
Experienced Members such as the right hon. Member for Greenwich and
Woolwich spoke strongly about how the section 106 agreement was being,
and could be, used to facilitate development and to keep that community
involvement. That is why our amendment suggests that instead
of 70 per cent. of revenue being retained by the local
authority, 100 per cent. should be.
Mr.
Francois:
The Government like to cite a figure on section
106 agreements. They say that only about 7 to 8 per cent. of
planning applications carry a section 106 obligation. However, that is
not that surprising when we bear in mind that most applications to
build a conservatory will not require a section 106. Does the hon.
Gentleman accept that most large-scale developments have one type of
section 106 obligation or
another?
Dr.
Cable:
The hon. Gentleman is absolutely right. That issue
gets to the heart of the Bill and of the second amendment, which is
about complexity. If the Government were proposing a mechanism simply
for large-scale projects, that would be simpler and there would be a
clearer philosophy behind the revenue side of it. It is because there
is no de minimis limit in the Bill that we are confronting the
possibility of 300,000 development applications a year, with all the
complexity that that involves. As the hon. Member for Rayleigh says,
section 106 will not apply as it is usually inappropriate for very
small-scale development.
There were two contradictions
in what I think the Government were saying on Second Reading; perhaps
the Minister can clarify. I think that the Government were arguing that
under a planning gain supplement system, local authorities would none
the less make more money than at present under section 106. His
argument was that for that reason, they will continue to buy into the
process, work with it and be constructive about development. The logic
of that is that the tax on development would be significantly higher,
because the same amount of revenue would be involved, plus the
30 per cent. cut for the Government. If that were to happen—if
there were effectively a higher rate of tax on development—the
logic would be that less land would be brought forward for development.
It would be, in effect, a voluntary tax; developers do not have to
develop land. If that happened, there would be a fall in supply and
yield.
Anne
Main:
From my experience on the Communities and Local
Government Committee, my understanding is that that applies to the
granting of the planning permission, not the development itself. That
is part of the tortuous process; planning permissions are often
enhanced, sold on and added to. A whole chain would be involved in
trying to see how much had been accrued. As I said, I believe that the
issue applies not to the development but to planning permission being
granted. Perhaps the Minister can clarify. The money is only paid on
development.
Dr.
Cable:
The hon. Lady is right; there could be all kinds of
unforeseen consequences. Certainly, once planning permission has been
granted and planning gain supplement has been charged on that approval,
it will be in the interests of the developer to bring the development
forward, rather than sit on it. If the land has not got to the planning
stage, building in a higher rate of tax is a disincentive for
development. I am trying to get clarification on whether the Government
envisage a higher rate of tax overall on development to ensure that
local authorities receive a larger yield than at
present.
Michael
Connarty:
I wonder whether the hon. Gentleman has spent
any time in local government. I spent 10 years as leader of a council
and I work closely with two different councils because my new
constituency straddles two of them. I will not name names, but I have
listened to planning officers’ conversations in which one
boasted of how much they got per house, while planning development
proposers on the other side were talking about double that
sum.
It depends on
the ability and determination of the planning officers to get a certain
sum per house. Having some clear idea of what developers and landowners
had to pay would be an attractive proposition to local authorities.
Even developers say that if they knew what the sum was for doing their
developments, they could work out a proper economic programme for them.
I do not know whether the Government intend this, but it might be
useful to all local authorities if, when they were approached by
developers, there was a way of clearly signalling the value of a
development and what the local authority would receive, and that is the
point of the
provision.
11.15
am
Dr.
Cable:
That is a good question. On the personal point, I
sat on the planning committee of a local authority in Glasgow, as it
happens, but that was long before the current policy debates. At that
time, the Government of the day were unscrambling the land value
legislation of the 1960s, so the context was very
different. It is generally increasingly true that well trained planners
looking at good practice are able to take advantage of the flexibility
offered by section 106 agreements. As we discussed on Second Reading,
tariff systems are being used successfully by councils of all political
parties. That is now accepted as good practice, and most planners are
copying it. Why unpick that whole system when local authorities are
working well within
it?
The
second basic question on revenue is: why do the Government need to take
a 30 per cent. cut? I expect that the Minister will argue that they
need some money for regional developments, but the consultation paper
and the response to it are contradictory on Government revenue. It has
been said that more revenue will accrue to the Government through the
planning gain supplement, but we have also been told that it will be
allowable as a business expense against tax and that capital gains tax,
for example, will be cut when the planning gains supplement is imposed.
It is therefore not clear that it will make any money for the
Treasury.
Why not
simply say that all the revenue should go to local authorities? That
way, there would be local buy-in and there would not be the suspicion
about developments elsewhere being cross-subsidised. There would be no
argument between central and local government, because the money would
go straight to local authorities, as it does with section 106
agreements. That is the purpose of amendment No.
6.
Mr.
Francois:
I have been following the hon.
Gentleman’s argument closely. He says that all the revenue
should be recycled back to local authorities, whereas the
Government’s proposal—at least that which they have given
away—is that about 70 per cent. should go back and that there
will be a regional component of about 30 per cent. Historically, the
Liberal Democrats have been zealots for all things regional, so it is
interesting to hear the hon. Gentleman arguing that they do not want a
regional component, but want all the money to go back to local
authorities. Why this Damascene conversion within the Liberal
Democrats?
Dr.
Cable:
I do not think that this is about Damascus. In the
real world, we do not have regional government. The Deputy Prime
Minister led an experiment a few years ago with the aim of creating
regional government, but that was decisively rejected in the north-east
of England. That is the reality, so we are working with the world as it
is. There clearly will not be regional government in the foreseeable
future, so we are not arguing for it. A cleaner, simpler system of the
kind that I recommend will obviate any need to worry about
that.
Anne
Main:
We have regional targets on planning, carbon dioxide
and water, all of which are currently being discussed. Having regional
housing targets and giving money to the region to deliver a regional
strategy chimes in exactly with
that.
Dr.
Cable:
We could get on to a separate debate on regional
government, and I could have mentioned in my first answer that there is
regional government in
some parts of England—notably in London,
where some of us have parliamentary seats. My central point is that
even if the Government needed to earmark a certain amount of revenue to
achieve regional objectives, they have said elsewhere in the
consultation process that they will lose revenue through the surrender
of capital gains and other taxes against business relief. Therefore, it
is not clear from the Government’s proposals that there will be
a net yield for this regional infrastructure.
Amendment No. 10 is about the
merits of pilot studies. It is, in some ways, a non-controversial
proposal, and I hope that the Minister will look sympathetically at it.
It seeks to address the fact that the planning gain supplement promises
to be an extremely complicated system. We have discussed the fact that
300,000 developments a year will potentially need to be assessed in
terms of their pre-planning and post-planning values. That would be an
enormously complex process involving valuers, disputes and appeals.
There would then be the self-assessment process involving the Inland
Revenue and the problem of complex projects and mixed developments,
which come to fruition at different times and which have a different
tax base. In addition, we must consider how we handle improvements that
need planning permission, as opposed to new developments. That was
mentioned on Second
Reading.
Many
technically difficult issues will need to be dealt with by the new
planning gain supplement. Surely one of the sensible ways of
approaching the matter is to allow some local authorities to pilot the
scheme. My proposal is phrased in a way that is deliberately helpful to
the Government. It says that the Secretary of State should choose the
local authorities, which could mean solid Labour councils that are
completely on side, and experiment in them. Through experimentation it
will be possible to identify how the practical problems can be overcome
and, for example, whether it would be desirable to have a de minimis
limit to the level of development. There could be experiments with
different levels of planning gain supplement to work out what has the
best impact in terms of revenue and
development.
Anne
Main:
I note with interest that the hon. Gentleman said
that there could be experiments with different levels of planning gain
supplement. The Government’s reasoning for wanting to keep it
centrally collected is that it is a tax that could be buried in the
Budget so that the Chancellor could deliver other measures that
possibly have national significance for infrastructure. While I support
local authorities being given compensation for the harm they suffer,
that will not necessarily fit in with the Chancellor’s Budget
forecasts.
Dr.
Cable:
That may be the case, but, as I said at the outset
of my remarks, we need to be clear about whether the purpose of the
Bill is to raise revenue or to facilitate development and more
efficient planning. I understand that the latter is the primary
aim—at least, that is the declared aim. If that is the
objective, it is better to proceed by experiment. We know that
enlightened local authorities learn from experience and are developing
good practice. To prevent planning gain supplement from being a
disaster and from being thrown out, as all previous experiments of this
kind have been, it is in the
Government’s interest to take this step by step, to build
confidence and to demonstrate that councils can do this well. I hope
that the Minister will be able to respond positively to the idea of
pilot studies.
Mr.
Francois:
I listened to the arguments advanced by the hon.
Member for Twickenham with interest. He has clearly learned a fair
amount about these matters since serving on a planning committee in
Glasgow. We will not detain the Committee by asking him about the
background to that, although I would be intrigued to hear about
it.
The Conservatives
do not oppose the arguments behind amendment No. 10 in principle and
the associated new clause 3, which relate to the Government running
pilot studies with local authorities before the planning gain
supplement comes fully into effect. However, I would like the hon.
Gentleman to address a couple of questions about how the proposed
studies would work in practice.
First, will the hon. Gentleman
say a little more about how the pilot areas would be selected? As
drafted, his proposal confers the power of selection on the Secretary
of State. What criteria would be employed in deciding upon such a
selection? Should they concentrate on local authorities above a certain
size or population? Should they concentrate on certain local
authorities that have a particularly busy development record? Milton
Keynes is one example that obviously springs to mind, and it was
mentioned several times on Second Reading. Alternatively, should such
pilot studies involve a representative sample of different types of
local authorities, such as a basket of London boroughs, urban mets and
rural district councils? If that were the case, how many local
authorities would be required to provide a useful sample from which the
Government could draw conclusions? Presumably, it would need to be run
with more than one local authority in order to find out how it would
operate.
Secondly,
with regard to timing, how long does the hon. Gentleman envisage such
studies would take in practice? His amendment argues that the Secretary
of State and the Treasury should “have regard to” the
findings of such studies before introducing the planning gain
supplement. In order to allow them to do that, how long does he believe
that the process would take? If, in theory, the planning gain
supplement is to be introduced in 2009, does he believe that the
timetable allows sufficient time for the pilot studies to be carried
out and for lessons to be taken on board? If there were no time for the
lessons to be learned before the process kicked off, what would be the
point of his amendment?
Alternatively, does the hon.
Gentleman’s amendment imply further delay in the proposed
introduction of the planning gain supplement beyond 2009 while the
studies take place and interpreted? If it does imply such a delay, how
much more time are we talking about? I have listened carefully to what
he has said, and I would be grateful if he could respond to those
questions before we come to vote on the amendment, if he chooses to
press it to a
Division.
John
Healey:
I shall start with amendment No. 6, as the hon.
Member for Twickenham did. It would allow the Government to prepare for
a planning gain
supplement in which all revenues collected would be hypothecated to the
local planning authority level. I recognise the thinking behind the
amendment and I think that the hon. Gentleman would accept that the
Chancellor has made it quite clear that, as an essentially local
measure, the planning gain supplement will predominantly support
infrastructure provision at the local level. In the pre-Budget report
in December, we made a commitment to ensure that at least 70 per cent.
of planning gain supplement revenues are recycled back to the local
authority area from which the revenues are derived. That represents an
unprecedented commitment to funding local infrastructure and we would
not seriously consider a planning gain supplement unless we believed
that it could raise additional revenue and resources for the support of
the infrastructure required for development.
I have to say to the
hon. Gentleman, without being tempted to stray too widely, that even
after years of trial and implementation, section 106 is still very
patchy. Many local authorities are not negotiating section 106
agreements and therefore many local communities are not benefiting from
contributions from developers to their local area and to the
infrastructure required to support those developments. The Sheffield
Hallam university study recently showed that only 40 per cent. of major
developments had section 106 agreements and 60 per cent. did
not.
It is important
to recognise that the infrastructure to support the growth and
development needed may often have to be delivered beyond the local
authority area in which the planning gain supplement may be levied. It
may be required to be delivered at a regional level, and certainly
beyond the area in which the local authority concerned has any direct
jurisdiction. Simply to grant all the money to the local planning
authority—in two-tier areas, that would be the district
council—would preclude the planning gain supplement from funding
wider, more strategic projects, which could clearly affect the ability
to encourage the necessary development that may be
required.
11.30
am
Michael
Connarty:
This is a sensitive point because the arithmetic
is not on the table, but will the Minister assure the Committee that it
is unlikely that the local authorities will receive less than they
would if they had a section 106 agreement? If there is a perception of
a smash and grab by the Government that is likely to be very
unpopular.
John
Healey:
The purpose of the planning gain supplement is not
to raise funds for the Treasury. It is not a revenue grab by central
Government. Also, the specific revenues that may flow from planning
gain supplement will vary from area to area, just as section 106
agreements produce varying revenues, so it is impossible to say
precisely what will happen in any one local authority area. However,
overall—and I return here to the point that I made in response
to the hon. Member for Twickenham—we would not be considering
planning gain supplement unless we believed that we could introduce
such a supplement at a modest rate, while still raising additional
revenues for
the infrastructure that, all members of the Committee will I think
agree, is required to support commercial and housing development for
the
future.
Anne
Main:
The Minister must surely accept the findings of the
Select Committee on Communities and Local Government, which stressed
that in some cases less funding might come in as a result of the
planning gain supplement than under section 106. That is why we asked
for a comparative study, which we have still not been given. Hon.
Members on both sides of the House will be concerned that although
there may be a better cut for the Government, some areas may be
financially worse off under planning gain than under section 106. It
seems that assurances will not be forthcoming from the Minister,
because the figures are so
vague.
John
Healey:
The hon. Lady is a member of the Select Committee
and she will appreciate that precise judgments cannot be made until a
rate and any possible exemptions are confirmed—until, that is,
the detailed design in connection with such matters is confirmed in any
potential announcement that we plan to proceed with a planning gain
supplement. I hope that the hon. Lady will have read point by point the
Government’s very full response to the Select Committee
inquiry.
Perhaps it
would help the Committee if I gave an example demonstrating the flaws
in the approach of simply confining PGS revenues and arguing that
somehow infrastructure is required only in a particular local authority
area. It may be an example of interest to the hon. Member for
Mid-Bedfordshire, who I know has been following the proceedings closely
but who has not yet contributed to the debate. She will know that in
Bedfordshire the A421 is being dualled between the M1 and the A1. That
is to support new growth in the area. It involves multiple local
planning authorities, such as Bedford borough council and Mid
Bedfordshire district council. The work is being carried out by the
Highways Agency and is part of the east of England regional transport
plan. One local authority on its own simply could not carry out the
task, even if it were equipped with 100 per cent. of the PGS revenues
from the area.
The
Government consulted carefully and quite widely on the matter, in the
2005 consultation paper. Respondents often suggested that the split
should be in the range of 2:1 or 3:1. Very few argued that it was wise
to recycle all funding back to local authorities, particularly because
it is recognised that a lot of infrastructure, from trunk roads to
flood defence control systems, needs to be delivered by bodies that can
work across single local authority areas. If we do decide to introduce
a planning gain supplement there will be ample time to debate the
principles and proportions of the allocation of any PGS
revenues.
I am
touched that the hon. Member for Twickenham made it clear that
amendment No. 10 and new clause 3 were framed deliberately to be
helpful to the Government. I understand his sentiments, but in practice
planning gain supplement pilots would, as he may appreciate, be
difficult to set up. They would in any case be of limited value in
informing policy development. It is hard, for instance, so see how Her
Majesty’s Revenue and Customs and local authorities would be
able to run pilot schemes by authority of the
Bill, because to run those schemes—just as with a full planning
gain supplement—would require substantive legislation to be in
place, enabling the tax to be levied in the piloting areas. There needs
to be a framework of legislation well beyond this Bill to identify, for
example, who would administer the pilots or collect revenues; how those
revenues would be used; how the local planning systems would be changed
to accommodate the pilot schemes; and, of course, what the
responsibilities of local and national agencies would be. A successful
local pilot could not be implemented based on this Bill, if it were
amended as the hon. Gentleman proposes.
My other reservation about
pilot schemes is that they would result in different tax systems and
levels being payable for similar developments in one local authority
area that was in the pilot, compared with another that was not. I think
that the hon. Gentleman would accept that the impact of that is likely
to modify behaviour in the decisions of developers and, to that extent,
is likely to distort and so not really tell us that much about what a
full-scale, comprehensive planning gain supplement could
deliver.
Instead, I
assure the Committee that we will continue to work as hard as we have
in the past two or three years to get the full policy right—if
we decide to go ahead—and that we will do so in the same
measured way as we have to date, which the Treasury Committee
recognised and approved of last week in its report. I hope the hon.
Gentleman will not press his amendment, as I will have to ask my hon.
Friends to resist him if he does.
Dr.
Cable:
I thank the Minister and the hon. Member for
Rayleigh for their feedback. I was not proposing to press these
amendments to a division, but wanted to tease out the arguments on both
sides. We reserve the right to come back to these again.
On pilot studies, there was a
serious and specific question. If one were designing this, one would
try to do it in a scientific way and to get a diversity of boroughs and
districts. One would probably take several years over that, to get the
results properly teased out. There would be some merit in delay if that
were to ensure a successful project—rather than a fifth failure
and a return to this in 20 years’ time—but I deliberately
couched the amendments to give the Minister discretion, in order to
help the process along and make it as easy as possible.
The Minister is quite right
that to say that, with pilots, there would for a while be different
regimes in different parts of the country while the studies were going
on. But that is what we already have with different levels of tariff
and different applications of section 106. As the Minister said, it is
patchy, so introducing a few pilot studies changes nothing from the
present. It merely delays introducing a scheme so that some evidence
can be gathered on the ease of implementing it. I take the
Minister’s point that many of the issues I am raising will
perhaps be discussed more effectively when the full Bill is introduced.
We will then be clear on how the Government intend to address all the
administrative problems, whether they intend to exclude small
developments, and so on. I was merely anticipating how the process
might be facilitated. On amendment No. 6, the Minister acknowledged the
basic point that we are emphasising: planning decisions should be local,
and we should be stressing local autonomy. Our argument here is about
70 per cent or 100 per cent.
The Minister’s central
point was that the current section 106 system is patchy in the
competence and thoroughness with which it is implemented. He produced
an interesting statistic that I had not heard before: 40 per cent. of
major projects do not currently carry that levy. There may be good
reasons for that in some cases, but it may well reflect different
levels of competence. Local government is varied and has those
different levels. My experience of it, many years ago, was indeed of
patchiness: so much so that, on the planning committee on which I sat,
some of the members were in the habit of negotiating their own private
section 106 agreements with developers—and finished up in
Barlinnie prison as a result. I am not recommending that as one of our
pilot
studies.
Mr.
Francois:
The hon. Gentleman is obviously determined, one
way or another, to tell us the history of how he served on the planning
committee in Glasgow. Will he give the Committee a firm commitment that
he will return to the matter on
Report?
The patchiness argument works
both ways. There are currently very good systems of section 106
implementation and tariff. The Government risk wrecking them by
withdrawing revenue that those councils currently own—the Milton
Keynes example is one, but there are many others—and channelling
it to central Government, undermining all the good work and the local
competence that the planners have
developed.
Anne
Main:
The section 106 agreements are envisaged as
continuing in tandem with the planning gain supplement. It could be
that some accrue both 106 agreements and planning gain supplement
charges. I agree with the hon. Gentleman that the Committee was firmly
of the opinion that section 106 agreements work well. The whole process
of making them better should have been explored, particularly as we are
going to retain an element of
them.
Dr.
Cable:
Yes, indeed. The hon. Member for St.
Albans—I think I libelled her on Second Reading by calling her
the hon. Member for Watford—makes a perfectly valid point. It is
not clear how, in the diverse system that is going to be developed, one
is going to have section 106 plus affordable housing obligations plus
planning gain supplement. How is the value going to be squeezed out of
the development? The thought is mind-boggling. However, we are
anticipating the Bill in
full.
My final point
is that the Minister said that we of course need money for strategic
development. As I understand it, that funding is not there now. We are
talking about something new. That new funding is going to have to come
from the 30 per cent. revenue—at least 30 per cent.
revenue—less the amount of offset that the planning gain
supplement is going to attract through being an allowable relief. That
the money for regional development outside the district or borough
boundary is going to be sufficient is very uncertain. This whole area
is massively unclear. I am glad to have had the opportunity to raise
some of the issues. I thank the Minister and the hon. Member for
Rayleigh for their replies. We may get an opportunity to return to this
later, but as it stands I beg to ask leave to withdraw the
amendment.
Amendment,
by leave,
withdrawn.
‘(4) But no
expenditure by virtue of subsection (2) shall be incurred before the
publication of the Chancellor of the Exchequer’s Financial
Statement and Budget Report for
2007.’.
The
Chairman:
With this we may discuss the following
amendment: No. 3, in clause 1, page 1, line 10, at end
add—
‘(4) But no expenditure
by virtue of subsection (2) shall be incurred until the Treasury has
laid before the House of Commons a full regulatory impact assessment of
the likely effects on business of the introduction of the tax referred
to in subsection
(1).’.
Mr.
Francois:
The purpose of amendment No. 2 is to delay
spending on preparing for the introduction of the planning gain
supplement at least until the Budget statement of 2007, by which time
the Government may have finally decided whether to proceed with the tax
itself. Similarly, amendment No. 3 will also delay any such spending
until a detailed regulatory impact assessment has been carried out to
address the likely impact of the tax on business, including those
businesses that specialise in the provision of affordable
housing.
Taking
amendment No. 2 first, which concentrates primarily on the timing
involved, as I have already intimated, part of the reason for our
concern is that the Treasury appears confused about whether it is going
to go ahead with the tax at all. Parliament is still being asked to
authorise expenditure in preparing for it, but that money would
ultimately go to waste if the tax subsequently did not proceed. Given
the hostile reaction that the proposed planning gain supplement has
received, the Treasury appears gradually to have been backing away from
its introduction, particularly in recent months. Originally, we were
told that the Government planned to introduce the PGS in 2008. The
Treasury issued a consultation document in 2005 on how that might be
achieved in practice. The proposal resulted in a barrage of criticism
from experts in the
field.
11.45
am
The Chartered
Institute of Taxation gave a backhanded compliment to the consultation
document when it said:
“Not even a well thought
out consultation document can save a bad idea and we think that the law
of unintended consequences will apply, with the result that the
proposals will not deliver the
Government’s policy objectives without a major element of
compulsion being applied to local planning authorities, to allow
developments that they do not wish to
allow.”
Then there was
the consultation response from the Institute of Directors which called
on the Government to drop their proposals. It stated:
“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”,
that it
would be
“a direct attack
on business competitiveness, contrary to the Government's own stated
objectives”,
and
“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 engagingly 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.”
Other than
that, the institute thought that the proposals were a good idea.
Perhaps in reaction to that hostile response, after what might be
termed a period of reflection, the Treasury confirmed only last month
in the pre-Budget report 2006 that the proposed introduction of the PGS
has been delayed until
2009.
To coincide with
that announcement, the Treasury also announced a further three
consultation documents on the proposed detailed introduction of the
PGS: first, “Valuing Planning Gain: a Planning-gain Supplement
consultation”; secondly, “Paying PGS: a Planning-gain
Supplement technical consultation”; and thirdly, “Changes
to Planning Obligations”, a parallel consultation document
issued by the Department for Communities and Local
Government.
Mr. Peter Bill,
editor of “Estates Gazette”, derided that approach in a
December 2006 editorial in the following terms:
“In the face of a set of
negative responses to a consultation paper, Ministers have baulked at
driving a stake through PGS—well, 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.”
By
Second Reading on 15 January, the Financial Secretary, in introducing
the Bill on behalf of the Government, watered down the
Government’s commitment still further. As he put it that
afternoon:
“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. 568.]
Even the
Government are backing away from their idea. What was recommended in
2004 and consulted on in 2005 was going to be introduced by 2008, but
it is now delayed until at least 2009 and it has been downgraded from a
proposal to the status of a lead option. However, the Government still
want the House to approve spending up to £52 million, or perhaps
even
more, as a substitute for the fact that they cannot make up their mind
about what to do.
In
addition, and on a very practical point about timing, the
Government’s latest set of consultation exercises on the
proposed introduction of PGS, which I referred to, is due to close on
28 February, approximately one month from now. It would make convenient
timing for an announcement—one way or another—in the
course of the Budget, and our amendment has sought to recognise
that.
Even if the
Government eventually decide to press ahead with introducing the
planning gain supplement, despite the authoritative third-party advice
to the contrary, including advice from previous Labour Ministers who
know a thing or two about it, as the tax is not due to come into
operation until 2009 anyway, surely they can wait a further two months
before confirming their intentions in the Budget. We would at least
know that the money was being dedicated to something with which the
Government intend to proceed and there would be some purpose in
spending it, even if we disagreed with the principle behind why it was
being spent.
The Bill
puts the cart before the horse, so amendment No. 2 makes the case for
delaying any expenditure connected with the introduction of the PGS
until at least the Budget statement 2007, at which time the Treasury
will hopefully abandon the whole scheme. Thus, the taxpayer’s
money will not have been wasted. For that reason, I urge the Committee
to support the
amendment.
Amendment
No. 3 relates to the argument that no expenditure should proceed until
a regulatory impact assessment of the effects of the PGS have been
carried out. My hon. Friend the Member for St. Albans in part raised
the point that a regulatory impact assessment is needed because of the
complexity of the proposed tax, five previous versions of which have
failed in the last century—three since the second world war.
Historically, the principal reason for that failure has been the
difficulty in agreeing a valuation for the land that is to be taxed and
the protracted disputes between the developers and the tax
authorities.
Despite
that knotty problem, the Government have to date carried out only a
partial regulatory impact assessment on the likely effects of
introducing the PGS. In fairness, the Treasury acknowledges that in the
explanatory notes on the Bill, under the somewhat euphemistic heading,
“Summary of the regulatory impact assessment”, when it
says:
“The Bill
authorises the spending for the creation of the infrastructure
necessary to implement PGS. There is no regulatory impact expected,
therefore, no Regulatory Impact Assessment is required specifically for
this Bill, as there will not be any costs or benefits on business,
charities, or the voluntary sector. However, a partial Regulatory
Impact Assessment for PGS was published at the 2005 Pre-Budget
Report.”
I have
a copy of that report: it is partial, both in its bias and its brevity,
and stretches to barely eight pages, excluding any small firms impact
test, in contravention of the Government’s guidelines on RIAs,
and with precious little detail on many of the more controversial
points that have been raised so far despite various organisations in
both the commercial and voluntary sectors criticising the introduction
of PGS specifically on the grounds of its complexity. For instance, on
the
difficulty of agreeing a valuation that could be taxed, the Royal
Institution of Chartered Surveyors, which is expert in this field, said
in a submission to the Department for Communities and Local
Government:
“The
valuation of development sites comprises of making assumptions about
different variables, six of which can have a big impact on the opinion
of value. A change of around 5 per cent. in each of these variables can
result in an overall change in the value of the site of over 25 per
cent.”
In
looking at the proposed impact on business, the CBI, the British
Property Federation, the Home Builders Federation and the RICS
collectively commissioned Knight Frank to carry out a detailed audit of
the effect of the proposed
PGS,
“including its
effect on individual schemes and financial
viability.”
That detailed
study was published just a few months ago, in September 2006. Those
bodies argued that
“the
proposed valuation procedure could add a lot of complexity, as the
nature of valuation is
imprecise”.
However, page
4 of the executive summary of the same Knight Frank report, which
stretches for some 100 pages,
says:
“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.”
Such an issue
might be addressed if the Treasury undertook a credible PGS regulatory
impact assessment, as our amendment urges it to
do.
Concern has also
been expressed about the potential effect of introducing the PGS on
charities and on the creation of new affordable housing. In that
respect, the National Housing Federation—the umbrella body for
housing associations—argued in its evidence to the Select
Committee on the Office of the Deputy Prime Minister, as it was then
called, back in 2006,
that:
“"By
charging PGS on affordable housing the Treasury will simply be pushing
money around the public funding system....If PGS is levied on housing
associations a proportion of housing association grant for social
housing will effectively be paid back to the Treasury via PGS and fewer
homes will be provided. Moving funds from one part of the public purse
to another is not
efficient.”
Anne
Main:
I remember that evidence to the Select Committee
particularly well. The other thing that came out of our report was that
we would be creating a legal minefield. I note the Minister’s
comment about exemptions. I am sure that he has read the report as
closely as I did and it stated that exemptions could not be viable
because the more exemptions were allowed, such as for affordable
housing and the Playing Fields Association, the more the whole system
was left open to the minefield of legal challenge. Many members of the
Select Committee were concerned that it could be a counterproductive
tax which would delay the provision of extra facilities such as playing
fields, affordable housing, hospitals and so on if the Government do
not allow exemptions, which they do not look like
doing.
Mr.
Francois:
Again, my hon. Friend raises an important point.
It is true in principle that if any tax is introduced and exemptions or
opt-outs from it are allowed then, perforce, the procedure becomes more
complicated. This is already a very complicated tax.
Housing associations have argued specifically for an exemption if the
Government go ahead because they know full well from their experience
the deleterious effect the measure could have on the provision of
affordable housing.
The National Housing Federation
is not affiliated to any political party, but it represents housing
associations and registered social landlords across most of the
country. It knows what it is talking about. Therefore, I do not think
the Government have adequately answered the charge that if we proceed
with the Bill it could adversely affect the provision of affordable
housing which all members of the Committee would like to see
achieved.
A joint
memorandum was submitted to the same Select Committee in March 2006 by
the Labour Land Campaign and the Labour Housing Group, which describes
itself as
“A
socialist society affiliated to the Labour Party, who aim to promote
affordable housing”.
It
is nice to know there are still some socialists in the Labour party.
The memorandum
states:
“The
PGS proposals combined with the package of reforms proposed for the
planning system following the Barker Report will not address the
problem of the shortage of affordable housing, a severe problem in the
South West and many rural areas, including parts of Yorkshire,
Derbyshire and
Cumbria”.
Similarly,
there have been strong concerns about the effect on the charitable
sector, which the Government have not adequately examined in their very
partial impact assessment. The Charitable Properties Association argued
on this point in more recent evidence to the Select Committee on
Communities and Local Government when it said:
“The CPA believes the
PGS will have a seriously detrimental impact on the financial position
of property owning charities. This includes both charities which have
significant land holdings as part of their endowment...and charities
which develop their own land in order to fulfil their charitable
purposes, for example by providing affordable
housing.”
It is pretty
clear that there are strong concerns among both business organisations
and third sector bodies about the likely impact of the proposed
planning gain supplement. All of that strengthens the argument that
expenditure and preparing for it should not take place until a detailed
and reliable regulatory impact assessment has been carried
out.
For a further
point on the complexity inherent in the planning gain supplement and
its unsuccessful predecessors, I refer those members of the Committee
who have a sense of history back to the debates in 1965 on the proposed
introduction of what was then called the betterment levy. In November
1965, the Opposition spokesman arguing against the introduction of the
tax said:
“It
used to be said that a tax should be certain in incidence, cheap to
collect and simple. This is certainly not certain in its incidence, as
I shall show shortly, because of the enormous gaps in the White Paper.
It certainly will not be cheap to collect, because there is to be set
up a whole new machine especially to collect a tax most of which would
be collected otherwise. It is certainly not a simple tax in any
way...We are going to a bureaucrat’s
paradise”.—[Official Report, 11 November 1965;
Vol. 720, c.
483.]
12
noon
Margaret
Thatcher was right about the betterment levy in 1965, and we are
equally right to oppose the planning gain supplement in today’s
paving Bill. So before asking Parliament to commit public money to pave
the way for the introduction of the planning gain supplement, the
Treasury should have carried out a thorough assessment of the likely
effect of the tax on business and voluntary bodies, which it has
evidently failed to do.
[Interruption.]
The
Chairman:
Order. I must ask hon. Members not to shout
across the Committee Room. Hon. Members are at a great disadvantage
this morning, because since I have got my new digital hearing aid, I
cannot be selective in my hearing. I can hear murmur and chatter,
which, as all hon. Members know, is out of order. The hon. Gentleman,
who was concluding his remarks, was moving into a stand part debate,
and I ask him to return to his
amendment.
Mr.
Francois:
Thank you, Mr. Hood. Clearly, your
hearing aid is working perfectly. I have a few additional points to
raise in the clause stand part debate, but you are quite right—I
was winding up my remarks on the amendment. I am delighted to know that
Margaret Thatcher’s name still inspires a reaction in Committee,
as it always used
to.
Amendment No. 3
would deny the release of funds to begin preparing for the introduction
of the planning gain supplement until a full regulatory impact
assessment is carried out and the true effect on businesses and the
voluntary sector is properly calculated, which this little eight-page
missive absolutely fails to do. On that basis, I ask the Committee to
support amendment No. 3 as well as amendment No.
2.
John
Healey:
We need the paving Bill to fill the gap in the
Department’s authority when preparing for the possible
introduction of the planning gain supplement. As a matter of
accountability to this House, the Bill has been brought in Committee
for approval.
I say to
the hon. Member for Rayleigh that his amendment is simply unnecessary.
I would have thought that he would welcome the fact that we are
undertaking a serious consultation exercise, instead of belittling our
publication of the three consultation documents. Clearly, it is in no
one’s interest—certainly not the
Government’s—to proceed with the implementation of a
planning gain supplement before we are satisfied that the policy is
workable and effective in supporting growth and helping to finance the
infrastructure required for that growth. I shall repeat what I said on
Second Reading: the Bill only provides authority in connection to the
preparation and imposition of the planning gain supplement. If a
decision is taken not to introduce it, no further expenditure will be
made under the
Bill.
The hon. Member
for Rayleigh made a point about valuations, which do not directly
relate to either amendment, during his remarks on amendment No. 3. He
seemed to suggest that valuations are a new feature of the tax system,
but they are a regular part of it. The Valuation Office Agency
undertakes about 60,000
property valuations every year in relation to capital gains and
inheritance tax. He might be interested to know that only six of those
went to a land tribunal. The VOA does that now, and it would continue
to do so under a planning gain supplements
system.
Amendment
No. 3 would delay the expenditure provided under the Bill until a full
regulatory impact assessment is laid before the House. The Committee
will have appreciated from the hon. Gentleman’s remarks that, as
required by Cabinet Office guidelines, we have already carried out a
partial regulatory impact assessment on PGS, which was published
alongside the first consultation in December 2005. I am happy to
confirm to the Committee that we will continue to follow Cabinet Office
guidelines. We will publish a full RIA for the planning gain supplement
at the appropriate time, if we decide to proceed with it. Only then
will it be appropriate to include assessments of the impact on small
firms and on
competition.
Michael
Connarty:
I cannot resist the comparison with
Mrs. Thatcher’s approach to regulatory impact
assessments. Will the Financial Secretary assure us that his study will
be better than Mrs. Thatcher’s assessment of the poll
tax, which cost billions of pounds in lost
revenue?
John
Healey:
I am not sure that the then Government had
a system for regulatory impact assessments. If such an assessment had
been carried out, it would have shown the costs and consequences.
Perhaps Mrs. Thatcher would have been better off with a
political impact assessment, because the poll tax lost her not only
millions of pounds but millions of votes, including a lot of support in
the Conservative party.
The amendment, however,
confuses this Bill, which will merely authorise expenditure connected
with preparation for a planning gain supplement, with the substantive
Bill itself, which will capture the detail of the policy, operation and
design of any planning gain supplement. It is that substantive Bill on
which a full regulatory impact assessment should and will properly be
prepared. I therefore hope that the hon. Member for Rayleigh will not
press his amendments. If he does, I ask my hon. Friends to resist
them.
Mr.
Francois:
In response to the point made earlier
from the Labour Back Benches, I cannot help but say that the Government
looked in great detail at tax credits and had a paving Bill for that
before they brought it in. All the people who are suffering because of
demands for the clawing back of overpayments would have a very firm
view—
John
Healey:
Will the hon. Gentleman accept that around 6
million families are currently benefiting from tax credits? Tax credits
provide a boost to their take-home and household income that simply did
not exist before. He will find that any threat to remove that valuable
source of income to such families is deeply
unpopular.
Mr.
Francois:
I remind the Minister that some
6 million families in the United Kingdom are now in receipt of tax
credits. In the last year for which full figures are available, about 2
million of those families were overpaid and just under 1 million were
underpaid.
In short, almost half of all payments in the tax
credit system were wrong. The system is far too complicated for its own
good, because it was personally designed by the clunking fist. We made
it plain in our Opposition day debate last year that our policy is to
reform the tax credit system to make it operate more effectively. It
must be possible to come up with a better system than the
Government’s.
The
Chairman:
Order. I want to wrest the hon. Gentleman
away from the temptation of discussing
manifestos.
Mr.
Francois:
In fairness, I was responding directly to the
Minister’s intervention, but you are quite right, Mr.
Hood, to bring us back to the matter of the planning gain supplement
itself and the two
amendments—
Anne
Main:
I do not wish to go down the route of tax
credits, but I think that there is a lesson to be learned. A
self-assessment element comes into the planning gain supplement that
will not be transparent to the public and that will be open to
challenge by the Inland Revenue. We must be sure that the assessment
process is better than, for example, the existing process for tax
credits, because people are not sure what the liabilities are. That
will land people with a lot of issues when the self-assessment comes
in.
Mr.
Francois:
Again, my hon. Friend has raised an apposite
point. As I have said, the system has been tried five times before, and
it has broken down every time. Usually, the system has broken down
because both sides—the developers on one side and the tax
authority on the other—have spent endless amounts of time
arguing about the valuation of the land that is going to be
taxed.
The right hon.
Member for Greenwich and Woolwich has observed that that is a major
weakness in the Government’s proposals. To paraphrase him, he
has said that it will create a whole new industry of people who will be
employed in advising developers on how to depress the notional value of
their land to reduce their PGS tax liability. Such schemes have failed
on five previous occasions because of their inherent complexity, and
that is all the more reason to have a full regulatory impact assessment
before Parliament is asked to vote £52 million or more to allow
such a tax theoretically to be brought
in.
I hope that the
Minister has listened to me, although I am not sure that that was the
case, particularly in his response on amendment No. 2. I shall not
press the amendments now, however, although we may want to return to
the topic on Report. I beg to ask leave to withdraw the
amendment.
Amendment,
by leave,
withdrawn.
Question
proposed,
That the clause stand part of the
Bill.
Mr.
Francois:
I rise to argue that clause 1 should not stand
part of the Bill, and in doing so I shall seek to introduce information
further to that which we have already heard in the debate on the
amendments. The Government could save the taxpayer a considerable
amount of money by scrapping their plans
now.
On Second
Reading, I set out the Opposition’s reasons for opposing the PGS
in principle and thus for opposing the Bill, which is designed to incur
preliminary expenditure for the introduction of a tax with which we do
not agree and with which we would not continue were we to enter office.
The reasons for opposing the PGS itself have been set out in
Hansard, and I do not intend to repeat them in detail. Briefly,
however, our reasons for opposing the PGS are: first, it is supposed to
assist local communities, but it is designed to be centrally collected
and redistributed according to Government fiat; secondly, a significant
element is intended to be regionally administered by undemocratic and
unrepresentative regional bodies; thirdly, it is likely to hinder
rather than help the creation of affordable housing, as the National
Housing Federation has observed; and fourthly, it would be a highly
complex tax to administer in practice, not least because of lengthy
arguments on valuation, which were largely responsible for the failure
of the five similar impositions in the previous
century.
On the Bill
itself, we oppose the key enabling provision in clause 1. Central to
our case is that the Government are asking Parliament, through the
Bill, to sanction considerable public expenditure in preparation for a
tax that they have not yet decided to introduce. In the comparable
example of the 1998 paving Bill for tax credits, the Government had, in
fairness, already decided to proceed, and they asked Parliament to
approve initial facilitating expenditure, which is clearly not the case
now.
The Opposition
spokesman on that paving Bill was the late, great and much lamented
former right hon. Member for Bromley and Chislehurst, Eric Forth. I believe that he
would be pleased to know that he was still opposing the Government
today, albeit through an intermediary such as myself. If he will allow
me, I should be pleased to speak for him on this occasion. I understand
that once, during a debate that was taking place at about 1
o’clock in the morning, when he had spoken for over an hour and
was keeping all the Labour Back Benchers up, he famously uttered the
words, “And now, Mr. Deputy Speaker, turning to the
Bill
itself”.
As he
put it—I shall not attempt his accent—in the 1998 debate
on the paving Bill for tax
credits:
“The
Bill is like the famous prospectus for the south sea bubble—a
proposal was on offer to do things later about which no details could
be given at the time. The Bill allows Revenue commissioners to spend
sums of money that are not defined on projects that are ill defined. It
is not good legislation, so I urge the Financial Secretary to accept
the amendments.”—[Official Report, 14 May 1998;
Vol. 331, c. 544.]
Long live
his
memory.
12.15
pm
The Government
are not fully committed to introducing the planning gain supplement, as
they were with tax credits. If anything, as we have heard, they are
backing away from introducing the PGS and are now describing it only as
a “lead option”. In addition, they
now have three consultation exercises still open on how to implement the
proposed new tax, and those will remain incomplete for at least another
month. In theory, at least, the Government will want to assess the
responses to the further consultation. The original one apparently
generated some 700 replies, although most were kept confidential at the
respondents’ own request. Only a relatively small proportion,
mainly from the big organisations, are available in the public
domain.
Presumably,
the Government will want to examine the responses to the new
consultation before deciding whether to press ahead with the measures,
yet they are asking Parliament to sign up to £50 million or more
now with no guarantee that that will be the limit and no assurance that
the tax will eventually be introduced. Moreover, the Treasury has
failed to carry out any but the most cursory regulatory impact
assessment, despite warnings from industry, charitable bodies and
representatives from the voluntary sector that the PGS is a bad idea.
The Bill and clause 1, which is at its heart, do not represent good
value for money. Yet the Government plough on
regardless.
The tax
has few, if any, friends and a lot of opponents. As everyone in the
industry knows, the PGS itself is unlikely to be introduced
successfully without cross-party support. That has been stated in the
press on many occasions. For reasons that I outlined on Second Reading
and reiterated today, the Conservatives will not give it that support.
Indeed, my boss the shadow Chancellor made that plain in a speech last
year:
“All
Labour Chancellors try this one when they run out of money, and this
Chancellor is no different. He claims that the proceeds will be used to
support improvements in local infrastructure, but that is not true. It
is centrally-collected and centrally-distributed. The only concession
is that the majority of revenue ‘will be recycled within the
region from which they are derived’. So a planning gain
supplement drawn from new housing in Cornwall might pay for bus
shelters in Bristol, and proceeds from a retail park in Hertfordshire
could be spent in north Norfolk. So this centrally administered,
Treasury-driven planning gain supplement has nothing to do with
providing genuine local
infrastructure.”
As
I said on Second Reading, most MPs from all parties accept the
principle that developers should make an adequate contribution to
infrastructure costs in return for development rights, but the Bill is
not the best way to do that. Moreover, many suspect that the Treasury
may yet abandon its original commitment to the planning gain supplement
in response to the weight of opinion against it and indeed to the
lessons of history. The CBI, the Institute of Directors, the British
Property Federation and the Royal Institution of Chartered Surveyors
are against it. The National Housing Federation and the
Charities’ Property Association are against it. Margaret
Thatcher was always against it. Eric Forth is still against it from
beyond the grave. This piece of legislation has very few
fans.
Unless the
Minister can tell the Committee unequivocally that the Treasury has
decided to go ahead with the introduction of the PGS, and therefore
that the money that it is effectively asking Parliament to vote it will
go towards a tax that the Government intend to introduce, it will be
unwise for the Committee to authorise that amount of public spending
and to
indulge in what my hon. Friend the Member for South Staffordshire wisely
described as pre-legislative legislation.
I say again that we all have
primary care trusts in our constituencies that are under severe
financial pressure. Labour Members might not want to admit that in the
Chamber, but I am sure that in their heart of hearts they know that it
is true. Maybe they are lucky and their PCTs have not been top sliced,
although mine certainly has, but I expect that they all have some
financial burden or other. In those circumstances, why do the
Government propose to spend up to £52 million of public money
that could be spent to alleviate the pressures on our local health
services?
On that
point, I give way to the hon. Member for Wrexham, who also served on
the Environmental Audit
Committee.
Ian
Lucas (Wrexham) (Lab): Indeed I did. On a point of
information, at least three Committee members have local health boards,
not primary care trusts, in their constituencies, and I am not aware of
a financial crisis of the type that the hon. Gentleman
describes.
Mr.
Francois:
I am delighted to hear that the primary care
trusts in the hon. Gentleman’s constituency and the wider
area—
Lord
Commissioner of Her Majesty's Treasury (Kevin Brennan):
My
hon. Friend has just said that he does not have a
PCT.
Mr.
Francois:
I am sorry—of course, because he is a
Welsh MP. I am delighted to hear that his local health board is doing
rather well. I invite him to pop down to Essex for a day to visit some
of our
PCTs—
Mr.
Francois:
From behind me I hear Bedfordshire. I understand
that the situation is not quite so
rosy—
The
Chairman:
Order. I suspect that my generosity in allowing
the hon. Gentleman and other hon. Members to move away from the debate
on clause stand part has run its course. I invite him to return to the
stand part debate.
There
are other ways in which £52 million—or more—could
be spent. I make one plea to the Committee again on that point. The
Government are basically putting the cart before the horse. They might
not be far away from making a firm decision in principle to proceed or
not to proceed with the planning gain supplement. The Budget is not far
away; the consultation exercise closes in a month’s time. The
Government ought then to be in a good position to decide finally, one
way or another, whether they intend to go ahead. That being the case,
surely we should wait until that point to decide whether we should
authorise
the expenditure of public money on such a scale. I thank you for your
understanding, Mr. Hood, and for the reasons that I have
given I propose that clause 1 should be deleted from the
Bill.
Anne
Main:
I support my hon. Friend’s call for the
clause not to stand part of the Bill. Although the Minister regularly
mentioned “preparing for the imposition of a tax”, he did
not really address the words “or in connection with”.
Those words have enormously wide-ranging implications. Many things
would be considered to be “in connection with”.
A Bill on the planning gain
supplement would be full of holes, as we would not have the information
to be able to make a decision on whether it would deliver more or less
benefit to communities, and on what the impact would be on charities,
Churches, schools and bodies involved with sport. I believe that the
words “in connection with” could be incredibly
wide-ranging. They could lead to a far bigger budget than the
£52 million being run up.
The quotation from the dear,
great, late Eric Forth about
all
“projects that are
ill defined”—[Official Report, 14 May 1998; Vol.
331, c. 544.],
certainly meets
the criteria. We are not sure what we are being asked to consider. As I
believed when I sat on the Select Committee, the measure is supposed to
deliver money in addition to funds already allocated for
infrastructure, which people in many areas, including my own, feel is
sadly lacking and in deficit, but we have seen no figures to show that
that will be the case. Nothing in the Bill gives us any confidence that
we are not just going to spend far more money than we are likely to
gain.
I cannot accept
that we should sanction something that has only a vague connection with
the Bill. It could well be that, when a planning gain supplement Bill
is being drafted, more and more people will start to show concern about
what a bad impact it will have on delivery. I gather that the
Government have decided to resile from comparing funding under section
106 agreements with funding under the planning gain supplement, which
the Select Committee decided would have been advantageous. We are
supposed to take it on trust that the PGS will be a better process.
Some authorities that make good use of section 106 agreements may come
to the Minister and say, “We think that we might be worse
off”. I would say that a consultation process where they could
consider figures and comparisons would be “in connection
with” the Bill. I can see that there will be an open-ended
cheque book.
My hon.
Friend the Member for Rayleigh has rightly raised concerns about
providing an open-ended cheque book for something that the Government
have spoken so lukewarmly about in recent weeks. If they cannot feel
more confident about the positive delivery of a planning gain
supplement, I cannot feel confident about allowing them to have an
open-ended cheque book to explore the possibility of PGS and then, as
with the home information packs, to decide at the last minute to pull
the plug but perhaps to revisit it later in a different form.
The public would think less of
us if the Committee did not say, “Hang on a minute. What are we
being asked to sanction?” Frankly, we do not know. We are being
asked to sanction a large sum of money to explore a nebulous and ill
defined concept.
The
Minister said that we do not know about exemptions, but we do. It came
out loud and clear from the Select Committee report that exemptions
would not be allowable. He should put it on the record now that we are
not looking at exemptions. If that were the case, the list of people
who would like to be consulted in connection with the Bill and to
present their case before the planning gain supplement was put into
practice would grow ever more.
Clause 1 cannot stand part of
the Bill because it is too open-ended. It will allow every man and his
dog who will be affected by the proposal to have a say—quite
rightly. They must be dealt with, following the inclusion of the phrase
“in connection with”, or
ignored.
Mr.
Francois:
My hon. Friend touched on the section 106
process. When considering whether to sanction the expenditure, it is
important to bear in mind that the Government have not said that the
planning gain supplement will replace the section 106 process. They are
saying that it will run in parallel with it and that the section 106
process will be scaled back. As with so much else in connection with
the tax, they have not been specific about how exactly it will be
scaled back; they have not even told the House what the PGS levy will
be. It is impossible for people to calculate the precise impact until
they know the figures. Does my hon. Friend agree that the clause will
result in a double dollop of taxation, instead of just
one?
The
Chairman:
Order. Again, my generosity is running out.
Interventions should be a wee bit briefer than that, and we are having
a stand part
debate.
Anne
Main:
I will not revisit what my hon. Friend said, but he
is completely right on that matter. None of us is sure what the
planning gain supplement will mean. If the Government were to have a
firmer view now, we would perhaps have a firmer idea of what
“in connection with preparing
for”
meant. It is such a
nebulous concept—it seems to be a moveable feast as to who will
incur planning gain supplement. I understand from the Minister’s
response to the hon. Member for Twickenham that there would be a
minimum of at least one unit, but not particular extensions, so we are
looking at every development incurring a planning gain supplement. I
suspect that that will be open to challenge. Local communities would
like to have their say on the matter and the Government have said
nothing about having an extensive consultation process in which local
communities will have an input.
The clause is asking far too
much of Parliament and of our constituents, who must try to get their
heads around the fact that their taxes are going to go towards an
open-ended, ill defined Bill that is nebulous in concept and may be
dumped in the end. The proposal
should be shelved until the Government have done the work on the Bill
and come forward with a concrete proposal, so that we know what we are
paving the way
for.
John
Healey:
This Bill is not what the hon. Member for Rayleigh
principally spoke about, but it is useful to have on the record his
clear and emphatic opposition to a planning gain supplement. It is not
the view of Conservative leaders in some local authorities.
The Bill is a
narrowly drawn paving Bill. It is entirely in keeping with the proper
procedures of the House and in line with normal Government accounting
rules. It does not deal with the policy, the design or the operation of
the planning gain supplement, which the Opposition are keen to debate.
It authorises the preparatory expenditure necessary for a potential
planning gain supplement.
I say to the hon. Member for
St. Albans that the Bill is not an open-ended cheque book. If the
proposals to introduce a PGS are not confirmed, there will be no
expenditure on preparations that go beyond the Government’s
current work on the feasibility and the workability of the
scheme.
12.30
pm
Mr.
Simon Burns (West Chelmsford) (Con): On a point of
information, will the Minister explain which Secretary of State is
referred to in clause
1(2)(b)?
John
Healey:
I recognise that the hon. Gentleman has heavy
duties as the Opposition Whip on this Bill and may have missed my
earlier explanation. The specific Secretary of State referred to in the
clause is the Secretary of State for Communities and Local Government.
I hope that that helps
him.
If we go ahead,
substantive legislation will, as I have said, be debated and passed by
both Houses. It would be in place well before the point at which a
planning gain supplement is implemented. It would therefore provide
full and fresh authority to spend prior to the introduction of the
supplement itself. As the Committee knows well, paving Bills are used
sparingly. They are used to ensure the regularity and the propriety of
Government expenditure, where advance work is necessary. That is
precisely the case for the Planning-gain Supplement (Preparations)
Bill. Clause 1 is the principal provision of the Bill. I ask
that my hon. Friends support its standing part of the
Bill.
Mr.
Francois:
I assure the Committee that I shall be brief.
This debate on clause 1 stand part has been an important opportunity to
touch upon some of the background to the Bill and its proposed
implementation. I have listened carefully to the Minister’s
attempt to make a case for pre-legislative legislation, but I am afraid
that, despite his usual courtesy, which I am the first to acknowledge,
he has unfortunately not succeeded on this
occasion.
The
Government are still asking us to sanction around £50 million or
more of public spending to keep alive their lead option to introduce a
widely unpopular tax. Despite the blandishments of the Minister, I
still believe that clause 1 should not stand part of the Bill and I
would like to test the will of the Committee on that point.
Question put, That the
clause stand part of the
Bill:—
The
Committee divided: Ayes 8, Noes
6.
Division
No.
1
]
AYESNOES
Question
accordingly agreed to.
Clause 1 ordered to stand
part of the
Bill.
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