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Planning-gain Supplement (Preparations) Bill

This Second Reading debate has been good humoured, informative and expert. It is unfair to compliment two speeches in particular, but I must confess that I greatly enjoyed the speech by the right hon. Member for Greenwich and Woolwich (Mr. Raynsford), which was not exactly supportive of his Front Bench colleagues’ position, but extraordinarily expert. I also appreciated the speech by my right hon. Friend the Member for Skipton and Ripon (Mr. Curry), who likewise has tremendous expertise. The pair of them could usefully do the music halls, if people still did, as a double act—a compliment unlikely ever to be offered to the Financial Secretary and me. The intrinsic difficulty with today’s debate is that, although it has ranged widely, its foundation has been very narrow: a Bill with only three clauses. A central difficulty has been that, although we know the general drift of the Government’s position, or at least we thought that we did, there is little detail to go on. Although the Bill—this exercise in pre-legislative legislation, as my hon. Friend the Member for South Staffordshire (Sir Patrick Cormack) called it—is contested and controversial, the debate has demonstrated widespread agreement on several important points, as the hon. Member for Waveney (Mr. Blizzard) pointed out. There is agreement that parts of the planning system are, as the Office of the Deputy Prime Minister once put it,"““opaque, slow, unfair, complex and reactive””." There is agreement that developers should meet planning obligations that are necessary, relevant to planning and directly related to proposed developments in scale and kind and there is agreement that section 106 agreements are in need of reform—a point on which the right hon. Gentleman offered some ideas. There is essentially agreement about many of the ends, but it cannot be emphasised strongly enough that what we are voting on tonight is not an end, but a means—namely, this Bill. As we all know, it is a paving Bill, which presages a further Bill, the contents of which are still a matter for consultation—indeed, for a second round of consultation, as announced in the pre-Budget report, following the first round of consultation that was announced in the pre-Budget report of 2005 and finished last February. The House is familiar—arguably, increasingly familiar—with paving Bills. I note in passing that the past paving Bill that the Library note maintains is the most similar to the present paving Bill is the Tax Credits (Initial Expenditure) Bill—not a happy precedent in any way. The House is familiar with paving Bills, but it may not be so familiar with paving Bills that presage Bills that are still the subject of formal consultation. We would be grateful to know—we are rather curious on this side of House—whether the Minister will, in her reply tonight, furnish the House with some precedents. In short, we do not yet know what the Bill that may follow this Bill will look like. Indeed, we cannot be absolutely certain, especially after the Financial Secretary’s opening speech, whether there will be a Bill at all. He referred specifically to the ““potential”” introduction of a Bill and saw the introduction of any planning gain supplement as a ““lead option””. It is all far from certain, and that fact alone should give the House considerable pause for thought before we vote tonight to permit expenditure in excess of £50 million—no small sum—on project staff in the Valuation Office Agency and, of course, the Treasury, as well as a related IT system. As my hon. Friend the Member for Rayleigh (Mr. Francois) said, IT projects are notoriously difficult to introduce on budget, as those of us with any knowledge of scrutinising the performance of the Child Support Agency’s computer difficulties could confirm. Although we cannot be certain what any planning gain supplement Bill will look like, the House can be reasonably clear about the drift of the Chancellor’s thinking. His favoured means of raising some additional revenue—either, on an uncharitable view of his motives, to reduce the £167 billion that he plans to borrow over the next five years or, on a more charitable view, to tackle the planning problems that the House has heard about this evening—is essentially to introduce a development land tax. It will first be centrally collected by the Treasury, which may—we are still not clear about it—take a slice of the proceeds, and it will then be recycled by the Treasury in part to the regions, which will take a slice of those proceeds. Only a part of this tax revenue will therefore be returned to the local authorities in which the developments that were taxed in the first place were sited, and even that arrangement is not written into the text of the Bill. I have to say on behalf of Conservative Members—I assume that it is the same for the Liberal Democrats—that we are not taking any of the Government’s guarantees seriously before we see the fine print of an actual Bill. The fact is that guarantees are not written into this Bill, which raises in turn the question of how whatever money is not grabbed first by the Treasury and then by the regions will be returned to local authorities. The Select Committee on Communities and Local Government has raised the possibility of the remaining money being filtered through a ““funding formula””, which presumably means—if we eventually see an actual Bill—the deployment of the full panoply of top-slicing, floors, ceilings and resource equalisation criteria that have made the shift from the standard spending assessment to the formula spending share such a model of clarity and transparency during recent years. Now the Chancellor may believe—indeed, he evidently does—that such a centrally collected and organised land development tax, the tax that may be presaged in the Bill, should be acceptable to this House. By contrast, we believe that such a tax, and therefore the Bill, should not be acceptable to this House, for four additional reasons to the one I have already given—namely, that the Bill is a wholly insufficient preparation for a second Bill that may or may not arrive. First, we believe that planning system problems will not be solved by a centrally collected tax that may be top-sliced first by the Treasury and then will be top-sliced by the regions before any money finds its way back to local authorities. Secondly, we believe that planning system problems will not be solved by a regionally administered tax that may give more powers to unelected, unaccountable and discredited regional bodies. When my hon. Friend the Member for Rayleigh mentioned that possibility earlier, the Financial Secretary was quick to his feet to say that it had not been specifically mentioned in respect of the Government, but when my hon. Friend challenged him further, he did not rule out the possibility. At the moment, we simply do not know. It is just one of the elements of vagueness in the Government’s proposals that leads us to oppose the Bill tonight. Thirdly, we believe that, since the Chancellor has not yet announced the rate at which the new tax will be set—the subject of much of this evening’s debate—the House cannot be sure that it will be set high enough to raise enough revenue for infrastructure while remaining low enough not to deter developers from building affordable housing in particular. That is admittedly a difficulty with any proposal, but I say again that we are being asked to vote tonight on a Bill when we do not know the level at which the Government will set the tax. Fourthly, we believe—and the right hon. Member for Greenwich and Woolwich made something of the point—that development land taxes have a chequered history. The Library brief cites the development charge, which was introduced in 1947 and scrapped in 1952; the betterment levy, which was introduced in 1967 and scrapped in 1970; and the development land tax itself, which was introduced in 1976 and eventually scrapped in 1986. It is striking that each of those taxes—let us not be overly distracted by the use of the word ““levy”” or ““charge”” or, in the case of the Bill, ““supplement””—was introduced by a Labour Government, who were succeeded at the subsequent election by a Conservative Government. It is also striking that each of those taxes was introduced at a time when the tide of public opinion was turning against the Labour Government in question. It is also significant that the Chancellor is repeating the approach of his predecessors. There is the same reliance on control and command from Westminster and Whitehall and on micro-management from the Treasury and taxation from the centre. This Bill is a revealing precursor of what is to come when the Chancellor, after his long wait of more than 12 years, finally makes it to No. 10. This Bill, and any planning gain supplement, will meet the same end as its predecessors: if introduced in the form we expect, it will be overturned by the next Conservative Government. I urge the House to reject the Bill tonight.