Clause
2
Extent
Question
proposed, That the clause stand part of the
Bill.
Mr.
Burns:
I assure Members that I do not intend to detain the
Committee. I am a simple seeker of information. The Minister kindly
answered a question during the clause 1 stand part debate. However, I
thought he was a little churlish in his comments. I have been attending
very diligently to my duties as a Whip and I did listen to him early on
in the debate, but I wanted to be absolutely certain about the
definition of the Secretary of State so that I did not get this part of
my contribution wrong.
There is something that puzzles
me, which I hope the Minister will be able to explain. The clause
extends the Bill to the whole of the United Kingdom. I would be
grateful if the Minister could confirm that the Bill will apply to
Scotland as well as Northern Ireland, England and Wales. I assume that
the answer is yes, given the explanatory note. That puzzles me and
leads me to my main question.
On the assumption that the Bill
extends to Scotland, why is it that the Bill, if one looks at the front
page, has been presented to Parliament by the Chancellor of the
Exchequer, all the other Ministers in the Treasury team, the Secretary
of State for Wales, the Secretary of State for Communities and Local
Government but not the Secretary of State for Scotland. It seems an odd
omission that the Scottish Secretary has not been included on a piece
of legislation dealing with Scotland.
Mr.
Francois:
The clause is simply titled
“Extent”. It
states:
“This
Act extends to the United
Kingdom.”
By definition
it will include Scotland. I want to press the Minister a little on the
matter. One of the complaints about the PGS is that it is light on
detail thus far. With regard to how it will operate in the devolved
Administrations, both Scotland and Wales, the Government have provided
very little indeed. It has
said in effect that it will be left up to the two respective
Administrations to decide within their own nations.
The Minister
tweaked my nose a little earlier by suggesting that there were some
Conservative councils that he thought were in favour of the planning
gain supplement. I have to tell him that the Scottish Executive, who I
understand are effectively a coalition of Labour and the Liberal
Democrats, were also consulted on how the PGS would apply in Scotland.
Their response to the 2005 consultation was excoriating. Among other
things, they said in their reply—I have a copy of it here if the
Minister wishes to glance at it—that the new tax was
“misconceived”, that it would render otherwise
sustainable economic developments economically unviable, that it was
“highly difficult and complex”, that it would act as a
“disincentive” and would hinder a generation, that it
would place extra burdens on the delivery of affordable housing, a
theme we have heard again and again this morning and which now
resonates from north of the border, and that it would
“act as a break on development in
most areas of the United Kingdom”.
I take it from that that they include
Scotland as part of
that.
The Chancellor
himself hails from that part of the world. Perhaps we could ask the
Minister to explain what further discussions he has had with the
Scottish Executive, given that in Scotland it would appear that the
devolved Government have severe reservations about the introduction of
this tax, despite the fact that the First Minister in Scotland is, as I
understand it, a member of the Labour party, although whether he is a
member of the socialist housing group, or whatever it was, I am not
entirely sure.
Perhaps
the Minister could at least give us some view of how the tax might
operate in Scotland and, if he is unable to say in
detail—
Mr.
Burns:
My hon. Friend makes a very important point, which
raises an equally important question. If the Scottish Executive and the
Labour First Minister in Scotland strongly disapprove of the proposal,
does my hon. Friend have any idea what the Labour Members sitting on
this Committee think? Do they share the Chancellor of the
Exchequer’s views, or the First Minister in Scotland’s
views on the proposed legislation? How will they be campaigning in the
Scottish elections on the
issue?
The
Chairman:
Order. I am sure that that is of great interest
to us all but it is not for discussion in this
Committee.
Mr.
Francois:
I respect the ruling of the Chair but it is a
shame because that was of real interest to me. However, there are
Scottish Members present in the Committee and, if they choose to make a
contribution that is in order while I am speaking, I will do my best to
answer any questions that they may have. I see that the Government
Whips are giving them advice.
I say in all seriousness that
the Government have been very light on detail as to how the measure
will operate in Scotland. They have said in essence that they will
leave all that to the Scottish Executive, although, as I understand it,
this being taxation, it would be a UK
measure, so the Government could in theory impose that on Scotland, even
if the Scottish Executive were of the opinion that it would not work
well or be in the interests of the people of
Scotland.
Anne
Main:
That raises a bigger question. The ODPM Committee
recognised that many other Departments had to deliver the vision of the
ODPM—or, as it is now, the Department for Communities and Local
Government. One of our concerns was that we rested heavily on the
Treasury to deliver that. If the two Departments yet again cannot agree
on a way forward, I envisage the clash that my hon. Friend refers
to.
Mr.
Francois:
While the Deputy Prime Minister headed the ODPM,
a range of Departments struggled consistently to deliver his vision,
with mixed results. I shall not be drawn further down that
path.
I return
directly to Scotland. What would be the constitutional position if this
House voted to introduce the planning gain supplement in the United
Kingdom but the Scottish Executive were firmly against it? From their
consultation document, which is in the public domain, it seems that
they are not particularly pro it, to put it mildly. So the question
about extent is serious: what would the constitutional position be in
those
circumstances?
What
further consultations have the Government undertaken with the Scottish
Executive? Can the Minister at least give the Committee some idea of
how the Executive envisage the measure working in practice before we
vote him the money? Unfortunately, we were not able to call public
witnesses and we have no member of the Scottish Executive here to give
us an idea. Perhaps he, as best he is able, could act as their
interlocutor and explain his understanding of how they want to make his
tax work north of the
border.
Michael
Connarty:
Despite the worries of the hon. Member for
Rayleigh, although my hon. Friend the Member for Cardiff, West is a
grand Whip and a good friend of mine, Whips have tried for many years
to urge this Member from a Scottish constituency to behave, and I am
always likely to behave in line with the responsibilities of a
constituency MP and one who puts Scotland as high in his order of
concerns as the rest of the
UK.
I missed the
pantomime season this year, but I am glad that the performances from
the Opposition Benches provided me with some humour and pantomime
gestures. Concern for Scotland has never been high on the agenda of the
Conservative party, which is why they have one Member of Parliament
from Scotland. He is hanging on by the skin of his
teeth.
I am concerned
not just because of the technicality raised by the Opposition Whip, the
hon. Member for West Chelmsford, that there is no mention of a Scottish
Minister among those proposing the Bill, or the fact that there is no
reference to expenditure in Scotland. There are unique circumstances in
Scotland. Considering the figures given by the Minister, it is possible
that 40 per cent. of planning approvals do not
contain a section 106 agreement, which causes me deep concern. I presume
that most of those cases are in England and Wales because I assure him
that for a long time section 75 agreements, the equivalent of the
section 106 agreements, have been developed in Scotland. As I said earlier,
representations have been made to the Minister and meetings held with
him, organised by myself on behalf of one of my local authorities,
which has a sophisticated approach to the use of section 75. The
authority questioned whether it was necessary to introduce any
legislation at a central or national level and asked whether, if a
system of intervention were to be introduced by the
Government—call it a planning gain supplement or
otherwise—there would be a good case for having a different
system in Scotland. There are differences in the way in which Scotland
has developed its section 75 planning gain agreements, particularly in
an area such as West
Lothian.
12.45
pm
The Minister
paid a compliment to Councillor Willie Dunn, West Lothian
council’s cabinet member for economic development, and
Mr. Dickson, its planning and development director. Those
people explained the system that they have to deal with in West
Lothian—this is probably true of all the Lothians—because
of the pressure on developments exerted by Edinburgh, where it is very
expensive to find a home. That means that the council has had to become
very sophisticated in dealing with developers and land use agreements
in its area. It must provide additional facilities for schools, for
education in its revenue sense and for infrastructure in some of the
areas that are being developed. Many of those areas are on brownfield
sites in an old industrial area, and you, Mr. Hood, will be
familiar with such issues from your experience in the coal
industry.
Whether a
central planning gain supplement system would help depends whether, as
I discussed earlier, it results in a net financial gain that allows the
Government to meet the bureaucratic costs of their system, although we
do not really know what those costs will be in the long term. It would
also depend on the Government’s ambition to deal with not only
local authorities’ needs, but the area’s infrastructure
needs. That is why there is the question whether clause 2 is right.
Will the process of analysis show that there will be a net gain for
Scotland, which would justify introducing a Bill that includes
Scotland? There are serious concerns about the issue, which have been
expressed by West Lothian council. Those concerns have been expressed
very onomatopoeically, and the word used by the Conservative spokesman
showed not only the sense, but the heat and light of the Scottish
Executive’s
response.
I think that
we would get the same response from the Convention of Scottish Local
Authorities. At one time, I was the leader of a council and the deputy
leader of the convention’s Labour group, and my understanding is
that the section 75 planning agreements were not only agreed by the
Scottish Executive, but worked out using a guideline sent out by the
Executive after discussions with COSLA. I understand that such
agreements are approved by, and in use among, all local
authorities.
We are not only discussing
Labour local authorities in industrial areas. I bumped into Bill
Walker, an old colleague of some Members of the House, who represented
1,200 square miles of Perthshire. For purposes unknown, he happened to
be in the Lobby, and he had with him some people who are very
interested in this very topic. He said that, even in his day, his local
council in the county had been very sophisticated at getting planning
gain supplement to provide infrastructure. Indeed, he had a formula,
which I cannot recall, but it provided for a certain number of
classrooms for so many houses and, therefore, for education
infrastructure to be put in place alongside developments in Perthshire.
The provisions are, therefore, used by not only industrial Labour
authorities, but every local authority in Scotland.
Although Falkirk council did
not come down to see the Minister, it and West Lothian council, which
is the other council in my area, would probably echo the sentiments
that have been expressed, because they have a highly developed
procedure. They think that that procedure works to their advantage and
absorbs the tremendous pressures coming from the growing financial
centre of Edinburgh, which are spreading into Lothian, central Scotland
and Falkirk. The question is why that procedure should be absorbed into
a UK-wide
procedure.
The problem
concerns the filtration of funds, which is a soft way of describing
money going into the Treasury, but not coming back out. There is
already an example of that in operation. Everyone knows about
“Gordon Brown money for schools”, as educationalists call
it. Before returning to Glasgow, my wife rescued a few schools in
Essex, and Gordon Brown money came directly to those schools. In
Scotland, however, that Treasury money does not go directly to schools,
but to the Scottish Executive through a process in the block
grant.
I have been
investigating the issue in some detail. I have been told that a grant
goes to the local authority, but that it is not specified for schools,
so it may or may not go through the local authority and on to schools.
If the planning gain supplement levy or tax were to go into the
Government’s coffers at x before coming out of those coffers at
x minus y, then y might be 30 per cent. of x. As I have said to the
hon. Member for Twickenham, if the planning gain supplement were set at
a high enough level, so that one local authority did not get 50 per
cent. less than another for each house built, the system might benefit
the Scottish Executive, because the money would go to them and not
directly to local government. The equation is x minus y. However, if it
were x minus y minus z, which would be the case if the Scottish
Executive were to absorb some of the funds for their projects, the sum
that goes to local authorities would be less than that under a simple
section 75 agreement. I am concerned about that filtration
system.
Anne
Main:
The hon. Gentleman is making a perfect case. The
Select Committee came to exactly the same conclusion. That filtration
process—or whatever one would like to call it—was our
concern, and we came out with a statement that it may deliver the same
amount or more, but that it may also deliver less. That is a major
concern for those of us who oppose the
measure.
Michael
Connarty:
I am not sure about the Select
Committee’s conclusion, but I am grateful for the intervention.
I may come to a different conclusion from Opposition Members, but we
must apply the same logic. Our decisions must be evidence-based,
because this paving Bill gives authority to do something that will,
given the assurances by the Minister, involve a regulatory impact
assessment.
The
decision may be that this is not the way to go with regard to Scotland.
I do not know whether an equivalent level would apply in England, which
does not have an equivalent to the Scottish Executive—an
executive or regional authority—that would have the right and
the power to take a proportion of the money from the planning gain
supplement. If x minus y resulted in more money going directly to local
authorities in England, it would probably be beneficial. If central
Government were to take y—let us say, 30 per
cent.—and spend it on infrastructure to support the local
authority from which the money obtained through a planning gain
agreement came, it would be
beneficial.
The
problem in Scotland is that there is another level. In fact, the money
could be absorbed into the Scottish Executive budget and not come out
at the level required to give the local authority—for example,
West Lothian—the necessary money for infrastructure that would
allow it to absorb the housing. It is plain—I believe that this
was said to the Minister in my presence—that there is no reason
for West Lothian to absorb people from Edinburgh who need to live near
Edinburgh because of their employment, if that would result in a budget
deficit. In that case, the council would simply not allow the
development to go ahead, and many bids for housing plans would not be
approved. That would be a tragedy, and I would not support such a
retrograde
step.
Mr.
Francois:
The hon. Gentleman’s predecessor was
actually the originator of the West Lothian question, which seems to be
more and more important in view of this debate, and the hon. Gentleman
clearly knows a great deal about the subject. How does he think that
the Scottish Executive would operate in practice? The Government have
given an indication that the component of the planning gain supplement
that would come back to local authorities in England would be at least
70 per cent., and the remaining 30 per cent. would be the regional
component. For Scotland, there is no such guarantee at all. Money could
be raised in one part of Scotland and given to
another.
Michael
Connarty:
I will not venture into an analysis—not
even a hypothetical one—of how the Scottish Executive might or
might not absorb the money, but I will put my concern into a different
context. The problem is what percentage comes back to the local
authority, and whether a UK-wide system without a separate Scottish
component can be justified for Scotland. Obviously, guarantees would be
obtained by COSLA and the local authorities as to how it would operate,
but if it is operated at a UK level, there is no guarantee that local
authorities will have the ability to influence what happens. I can tell
hon. Members now that they do not influence what happens with the
Gordon Brown schools money. I get complaints from
people who say that they are not getting the money that they used to get
when they could understand and influence the system. That is no longer
the case, because the money is
absorbed.
I want to
touch on designation of expenditure, because my concern extends beyond
filtration. If the money goes to the Scottish Executive, they may
decide to improve the road infrastructure. For example, there is a
project on the stocks on which I have been campaigning for some time.
If they were to take £10 million out of the planning
gain that is available because of developments in West Lothian and
Falkirk and spend it on a bridge to join those two, it would be very
good for economic development, but that would be £10 million out
of the hoped-for planning gain for both Falkirk and West Lothian. In
particular, those councils would need to provide social services and
education for the people who will live in the houses that those areas
are going to absorb because of the pressure on Edinburgh. If there is
any question of the designation or use of the money being wrong in
terms of the priorities for the local authority, there will be a major
problem with the measure being accepted in
Scotland.
The
legislation extends to the United Kingdom. I would not like anyone to
think that if the Executive did not fight against this and the measure
were against the wishes of the people in Scotland, the Executive would
just hide behind the argument that the measure was passed at
Westminster. Devolution is about things that are not required to be
done at Westminster not being done at Westminster. In this case, I
think that there has to be serious debate during the process of the
Bill being implemented—I am not opposed to the Bill—to
decide whether it would be better to have a separate system for
Scotland, run by the Scottish Executive and controlled by the Scottish
Executive. There are many arguments for that, and I hope that the
Minister has not ruled them out by putting this clause in the Bill at
this
moment.
John
Healey:
I welcome the hon. Member for West Chelmsford and
his reinforcement of the efforts made by the hon. Member for Rayleigh
from the Front Bench, although I think that the hon. Member for
Rayleigh has been doing a pretty good job. I shall try to give him an
explanation. The proposal for a planning gain supplement would be
UK-wide. However, this Bill does not specify Scotland, because
preparatory expenditure needing new powers under this Bill would not be
incurred by the Scottish Executive. The agencies
requiring those preparatory expenditure powers are Her Majesty’s
Revenue and Customs, the Valuation Office Agency and, because the VOA
does not operate in Northern Ireland, the Northern Ireland
Departments.
My hon.
Friend the Member for Linlithgow and East Falkirk is right that section
75 is a devolved matter. It remains a devolved matter and would remain
a devolved matter if we introduce a planning gain supplement. The
devolved Administrations would keep all revenues raised in their
country under a planning gain supplement. Clearly, they would then have
the discretion to deploy those revenues to support infrastructure and
growth in whatever way they choose. That is properly a devolved
discussion that they need to have and are having with their local
authorities, which is the principle of devolution. There have been, as
members of the Committee would expect, detailed discussions involving
Government in both the Treasury and HMRC, and the Scottish Executive
and the Scottish Parliament. The Scottish Executive clearly have a very
active interest, given their devolved responsibility for planning. I
say clearly, however, to the hon. Member for Rayleigh and to the rest
of the Committee that we do not have any proposal to test the PGS a
year early in Scotland, as happened in the case of the poll
tax.
Mr.
Francois:
I have listened carefully to the
Minister’s reply but, unless I missed it, he did not give me a
clear answer to what I thought was a fairly straightforward question:
what would be the constitutional position if Westminster voted for the
introduction of the planning gain supplement across the United Kingdom,
but the Scottish Executive then voted against its introduction? Despite
what the hon. Member for Linlithgow and East Falkirk said from the Back
Benches about a pantomime, it is a pretty serious question and I did
not hear the Minister answer it, so before we allow clause 2 to stand
part of the Bill, perhaps he would be kind enough to rise to his feet
again, with your indulgence, Mr. Hood, and answer that
important
question.
John
Healey:
This Bill is a matter for this Parliament, and a
substantive PGS Bill would be a matter for this
Parliament.
Question
put and agreed
to.
Clause 2
ordered to stand part of the
Bill.
Further
consideration adjourned.—[Kevin
Brennan.]
Adjourned
accordingly at one minute to One o’clock till this day at
half-past Four
o’clock.
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