Select Committee on Treasury Minutes of Evidence

Examination of Witnesses (Questions 300-314)


12 DECEMBER 2006

  Q300  Angela Eagle: This will not happen until 2008, will it? My understanding is that it is for the next round.

  Mr Kingman: That is correct.

  Q301  Angela Eagle: And therefore we are stuck with this issue at the moment.

  Mr Kingman: That is correct but I think the analysis of the Stern Review, which has to be right, is that the EU ETS is in a sense the only game in town in terms of an international trading system that helps us establish a price for carbon and actually gets the dynamics that Nick described in his report.

  Q302  Angela Eagle: At the moment the price for carbon permits is fluctuating widely. In a couple of weeks it has come down from €30 to €8. That is not driving technology change in the UK. It is just making it cheaper to purchase a load of possibly German permits, just to use one example, so that people can carry on as before exceeding emissions.

  Mr Kingman: It has been volatile and it has also not been sufficiently tight, but there is no fundamental design reason about the scheme why that is necessarily so. What is needed is to get the allocation of permits right, and we are confident, as a result of the announcements made recently, that the Commission is getting a grip on this.

  Q303  Angela Eagle: This is a market mechanism to try to price carbon. What also needs to happen, surely, is mechanisms which drive technological change for cleaner energy production. The Budget has some minor measures in that respect. Are you thinking of tax changes to try to drive investment in cleaner energy production technology?

  Mr Kingman: We always look at tax changes that might help us meet our objectives. I think we are pushing on with a number of things in relation to innovation and environmentally friendly technologies, notably the creation of the Environmental Technologies Institute.

  Q304  Mr Love: The Barker Review of Land Use Planning: have you made any estimates of the likely improvements in productivity and competitiveness that will arise if it is implemented?

  Mr Kingman: No, we have not. I do not think it is possible—and Kate did try as part of her review—to try and isolate the impact of the planning regime on productivity. That is very difficult for all sorts of reasons. It is very clear, and it is clear from the analysis that others have done, the IMF and so on, that the planning regime is a relevant issue in the UK and that we need to get this right.

  Q305  Mr Love: That is true because your website states quite clearly that the UK Trade and Investment Organisation says how important it is for companies looking to invest in the UK and the OECD makes a comment on it. If it is that important why has no estimate been made? It seems kind of strange. To put it mildly, it is probably going to be a quite a controversial change that we are making so surely we should have some justification at national level of how important this is?

  Mr Kingman: I think there is ample justification in both the interim Barker Review and the final Review itself of why this matters. Isolating the precise impact on national productivity is simply an analytically undoable exercise.

  Q306  Mr Love: You have already stated that 70% of the take from any introduction of the Planning Gain Supplement will be hypothecated to local use but it does not specify that that should be local authorities. Can we take it that that it will go to the local authority?

  Mr Neale: A substantial proportion will go to local authorities, yes, I think we have said 70%.

  Q307  Mr Love: At least 70% and that will be to the local authority; it will not be for regional or national projects that happen to happen in their local area?

  Mr Neale: That is for the local authority specifically to invest in the infrastructure needed to support new development.

  Q308  Mr Love: Do you expect the yield from the Planning Gain Supplement to be greater than that currently estimated by the property industry, the £3 billion, that is raised from section 106?

  Mr Neale: Yes we do.

  Q309  Mr Love: Significantly greater?

  Mr Neale: It obviously depends on the precise rate at which Planning Gain Supplement is set but we do expect it to be greater.

  Q310  Mr Love: There has been quite a lot of talk about whether there should be a charge for vacant or derelict brownfield sites as an incentive to get them to bring those sites back into use and also some talk about providing tax incentives to encourage the development of brownfield land. Can you tell us what your thinking is in relation to that?

  Mr Neale: We are consulting on the development of PGS at the moment. We published two consultation papers with the PBR, but our view at the moment is that the value of brownfield land is already reflected in the price paid for it.

  Q311  Mr Love: Do you expect changes that you make will be neutral or will there be an increase in taxation? How do you expect that to pan out?

  Mr Neale: Sorry, what is your question?

  Q312  Mr Love: The suggestion is that there may be additional taxation to try and bring land back on. There has also been some talk about reliefs to get land back into use. Is it overall going to be the combination of taxation and reliefs or will it be neutral?

  Mr Neale: We do not expect that PGS will adversely affect the incentive to develop land because it will be a very modest proportion of the uplift created by the grant of planning permission so there will still be substantial incentive to bring land, both brownfield and greenfield, to development.

  Q313  Chairman: Mridul, you promised answers to education spending projections.

  Ms Brivati: I did and I knew there was a reason I could not add them up in my head. I am not satisfied with the numbers I have and rather than give you false numbers I would prefer to go back and send you a note, if I may.

  Q314  Mr Gauke: If we could have before tomorrow morning.

  Ms Brivati: That should be perfectly possible.

  Chairman: In answer to questions from George, Michael, myself, amongst others, you will be sending us information tonight so that we are prepared for tomorrow, is that okay? Can I thank you for your evidence session this morning and I look forward so seeing you again tomorrow.

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