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Planning-gain Supplement (Preparations) Bill

My Lords, competition to take part in this debate has been so fierce that the list of speakers has had to be substantially reorganised to accommodate us all. I should point out that I am not aiming to tread on the toes of my noble friend Lady Hanham, who will be a wind-up speaker. Thirty years ago, for my sins, I was appointed opposition spokesman on the then Development Land Tax Bill. My sins must have been great, because it turned out to be a long and gruelling committee, but I learned quite a bit about a subject with which I had not been previously very familiar. I do not want to get into the details of any particular previous tax, or of the potential tax gain that may follow this paving Bill. However, I want to make one or two brief remarks to highlight some concerns that arose—and of which I became particularly conscious—in considering the development land tax. It is not difficult to make an intellectual case for having some form of tax on the windfall element of gains, and I do not think that anyone would try to argue otherwise. The problem is how it is done; it is sensible that the Government are taking this at a steady pace and not a gallop, as there are many potentially conflicting elements to the case for or against such a charge. The points made by the Minister on benefits to local development are perfectly valid. The difficulty is that there are negative economic impacts with charges of this kind, because if there is a disincentive for owners to sell their land, they are likely not to sell it at all. The one thing that one would want to avoid, particularly in current market circumstances, would be anything that made it more difficult to bring forward land for development. One has to accept that any impost of that kind would be likely, if it had such an impact, to reduce the supply of land and aggravate shortages that already existed. Furthermore, the land sold would be likely to be more expensive, because if the seller wished to preserve the yield from the disposal of his land and less of it came to him, that would undoubtedly be a factor. One cannot get away from the fact that both those factors would put upward pressure on land prices and, therefore, on housing prices. I hope that the Government will think hard before taking any steps that would be likely to impede the supply of development land. I would have thought that it would be of benefit to take some steps—I do not know what they might be—to encourage the supply of development land, rather than to go in the opposite direction. We do not want to make dwellings more expensive than they are in the current market; so I ask the Minister, who has put forward the case for the paving Bill with his usual lucidity and good sense, to ensure that the Government look at the conflicting aspects of a charge of this kind and make sure that the measure does not run into the law of unintended consequences and find that the practical effect is not beneficial or counteracts the other beneficial elements of the proposed charge. I did not expect to be the second speaker in this debate, so I have confined my remarks to those brief reminiscences about the development land tax—but many lessons should be learned from that tax and need to be borne in mind if we are considering going down a similar path.