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Planning-gain Supplement (Preparations) Bill

I am pleased to respond on behalf of Her Majesty’s Opposition. The measure is, in effect, a paving Bill, although the Minister said that it supports a lead option. It consists of just three clauses, but it is nevertheless important, as it permits preliminary expenditure related to the proposed introduction of the Chancellor’s planning gain supplement—PGS—in 2009. According to the section headed ““Financial Effects of the Bill”” in the explanatory notes, which have been prepared by the Treasury, expenditure under the Bill could exceed £50 million. That sum represents the combined cost of project staff in Her Majesty’s Revenue and Customs, the Valuation Office Agency and its Northern Ireland equivalent, and of new information technology systems which, as the Minister partly admitted, are often notoriously difficult to introduce on time and on budget. The Conservatives oppose the Bill, as it permits public expenditure in preparation for an impost with which we do not agree, and my intention is to set out for the House as clearly as I can the reasons behind our opposition. I am happy to be debating these matters with the Financial Secretary, whom I commend for his usual courtesy in giving way so often. We had anticipated the possibility of debating the Bill with his colleague, the Economic Secretary—but even if the Economic Secretary is not present in person, I sense that he is here in spirit. I therefore look forward to debating these matters with the Minister for Housing and Planning instead. There are several reasons why we oppose the planning gain supplement, and the Bill, which commits appreciable sums of public money in order to facilitate it, even before the Government have taken a firm decision to go ahead, poses problems for us. The first is that the planning gain supplement is designed to be centrally collected and then redistributed according to Government fiat. Under the Treasury’s concept, which is referenced in the explanatory notes and fleshed out at least a little further in the associated consultation documents, of which there have been several, the PGS will be redistributed from the centre, with an element going to the regional bodies and the remainder supposedly being given back to the local authority that permitted the development. The Minister gave us an indicative figure of 70 per cent. this afternoon. However, the Bill provides no guarantee that that will be the case. It is certainly not written into the Bill. Moreover, the Select Committee on Communities and Local Government, which examined the issue in detail in November 2006, pointed out in its report the prospect of a funding formula of some kind being used to determine how much revenue should be returned to each local authority. The Government’s record of collecting centrally and redistributing locally in recent years leaves much to be desired, to put it mildly. All those who witnessed the effect of the changes several years ago in another funding formula, the key local government one, from standard spending assessment to formula spending share—from SSA to FSS, as it is known—saw how the formula was altered in order to benefit predominantly urban authorities in the midlands and the north of England. Even if the Government were minded initially to redirect all of what one might call the local authority component straight back to the authority in question, many of us on the Opposition Benches wonder how long it would be before the measure incorporated some element of top-slicing, floors and ceilings, resource equalisation or some similar formula or criteria, so that Ministers could begin to interfere with the straight passporting of the money back to the authority that had been asked to accept the development in question. Experience of the Government to date suggests that that would be the case, and we are understandably sceptical as a result.