---

Planning-gain Supplement (Preparations) Bill

I beg to move amendment No. 3, in page 1, line 10 at end add— ‘(4) No expenditure shall be incurred under section 1 earlier than 90 days after the conclusion, on 28th February 2007, of the consultation exercises on the implementation of the Planning-Gain Supplement.’. The amendment is designed to delay implementation of the Bill for at least 90 days after the consultation exercises on the PGS have ended next week. It has been tabled partly because the Treasury still appears confused about whether it intends to proceed with the PGS at all. Nevertheless, as my right hon. Friend the Member for Suffolk, Coastal (Mr. Gummer) said earlier, the Treasury is still asking Parliament to authorise expenditure to prepare for a tax that it has not yet decided to introduce. The money could ultimately go to waste if the Government do not intend to proceed. I want to press the Financial Secretary on a point that my hon. Friend the Member for St. Albans (Anne Main) made in Committee about the purposes to which the Treasury wants to put the money that would be authorised by the Bill and could be spent immediately after Royal Assent, which could theoretically happen as early as next month. Rumours are circulating in the media that, despite doubts about the PGS, the Treasury still wants the Bill because it would like to begin work on a new IT system, which could be used for alternative planning-related purposes if the PGS collapsed. The new planning permission that the Government recently proposed might be an example. Can the Minister give a firm commitment that the funds being requested by the Bill will be used solely for PGS-related work? I ask that partly because, following the hostile reaction that the proposed PGS has provoked so far, the Treasury appears to have been gradually backing away from its introduction in recent months. We were originally told that the Government planned to introduce the PGS in 2008, and the Treasury issued a consultation document in 2005 on how that might be achieved. The response to the Government’s consultation was hardly encouraging from their point of view. The Institute of Directors called on the Government to drop their proposals, stating: ““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””. It also said that the tax constituted ““a direct attack on business competitiveness, contrary to the Government's own stated objectives and would ““introduce an added bureaucracy to allocate the money as well as collect it.”” The Royal Town Planning Institute responded tothe consultation exercise in a document 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.”” A detailed study of the proposed operation of the PGS was conducted by property experts Knight Frank on behalf of the British Property Federation, the Confederation of British Industry, the Home Builders Federation and the Royal Institution of Chartered Surveyors. Page 4 of its executive summary, produced last September, states: ““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.”” Perhaps in the light of that reaction, in the December 2006 pre-Budget report the Treasury confirmed that the proposed introduction of the PGS was to be delayed until 2009. By the time we reached Second Reading on15 January, the Financial Secretary, introducing the Bill, had watered down the Government’s commitment still further. He said: ““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. 569.] So even the Government are now apparently backing away from their own idea, which has been downgraded from a proposal to the status of only a ““lead option””. To coincide with the delay announced in the pre-Budget report, the Treasury also announced a further three consultation documents on the proposed introduction of the PGS: ““Valuing planning gain””, ““Paying PGS”” and, in co-operation with the Department for Communities and Local Government, ““Changes to Planning Obligations””. The three consultations will not close until 28 February—next week—and presumably the Government will want to analyse the responses that it has received before deciding whether to proceed. The original consultation exercise produced some 700 responses, and we can assume that this exercise will produce quite a number as well. There is little point in seeking a wide range of opinions if the Government have already decided to plough on regardless, yet this evening they are still asking the House to vote for approval for preparatory spending before the consultations have even closed. During the 30 January Committee sitting, atcolumn 11, the Financial Secretary assured me that if the Government did resolve eventually to press ahead with the PGS, they would do so by means of a separate Bill rather than including primary legislation in a Finance Bill. Given that, and on the assumption that there will be a Budget statement in March followed by a Finance Bill in April, the Government need not rush preparation of the necessary clauses so that they are ready less than two months from today. If the Government are now contemplating introducing a separate Bill to allow implementation in 2009 rather than 2008 as originally envisaged, they have further time in which to reflect on what to do, and therefore need not seek the approval of the House to begin spending public funds almost immediately. That is particularly important, as there is no expenditure limit in the Bill. The expenditure could be theoretically be open-ended, particularly if the Treasury continues to dither on whether or not ultimately to proceed withthe PGS. The explanatory notes that accompany the Bill provide an indicative figure of up to £52 million for staffing in the procurement of an associated PGS IT system, but as the notes point out, they do not form a part of the Bill itself, so it is purely an estimate, not a cap. The actual figure could easily exceed the estimate, particularly if there are cost overruns on the associated computer system—a point that we debated in some detail in Committee and in relation to which recent experiences in the Home Office and the NHS are hardly encouraging. For instance, in respect of the new NHS IT system, Mr. Andrew Rollason, the health care practice leaderat Fujitsu—one of the major contractors running the £20 billion programme—recently said of the new NHS system: ““It isn’t working and it isn’t going to work””. Even the Treasury’s own IT system’s projects are now running a collective total of 17 years late, which does little to inspire confidence that the estimates outlined in the notes will be adhered to in practice. At a time when our prisons are effectively full up, gun crime in inner cities is running out of control and most of our local NHS primary care trusts are under serious financial pressure, why are the Government requesting permission to spend £50 million or so of public money on a tax that they may never actually introduce?