Planning Bill

I have tabled Amendment No. 436 in this group, which deals with a simple and narrow point that I shall address before returning to the generality of the discussion. The amendment is not perfectly worded, but simply makes the point that there should be only one charging authority. By that, I mean that people undertaking development who will pay this charge, or whatever we choose to call it—I shall come to that in a moment—should have only one bill to deal with. It will be immensely complicated if there is any possibility of their receiving two, three, five or any number of bills. This is a probing amendment designed to ensure that the Government clarify precisely how they will deal with the dilemma which is immediately apparent to anybody who has read the Bill and noted that the London boroughs may charge authorities as planning authorities and that the Mayor of London may also be a charging authority. We have heard of an instance where this problem has to be overcome. Occasionally, in other parts of the country there are cross-boundary developments. Such a development will be difficult if one part pays one rate while another pays an entirely different rate because it happens to be in an authority that takes a different view of what the charge should be. Is this a charge or a tax? My noble friend Lord Jenkin of Roding properly addressed that and rightly said that it should be a charge, with local authorities having the discretion to set it within an approved system. The other place clearly takes a different view and sees this as a Revenue matter. The Treasury clearly sees it as a Revenue matter. When you sit down and consider the sum that the Government expect to raise from this charge, as suggested in at least one of their consultation papers—£500 million is mentioned—it is big enough to be a tax. We are into the argument that, ““A rose by any other name would smell as sweet””, but my noble friend raised the fundamental point that one classification gives us some control over the measure in the future whereas the other does not. I consider that in this instance we ought to have a role to play. Moreover, this is nothing new. We should not be left with the impression which might have been given by the noble Baroness, Lady Ford, that developers are not already subject, or may be subject, to paying a very considerable contribution towards all infrastructure costs. Section 106 has been in place for a long time. I know from personal experience that it can include playing fields, road improvements, sewerage extension and things that can be way off site. They may be related to a development, but they also provide real benefit to the whole of the wider community. We should not think this is an entirely novel provision that has not been around for a very long time. Indeed, my noble friend gave the background history to it. However, as I see it, the measure is designed to catch a lot of development that at present does not contribute towards infrastructure. Whether you call this a tax or a charge, it is an additional way of raising money for public finance. We have been given no assurance—I wish that we had—that the existing sources of funding used for these purposes will not be diminished because this new charge is being brought in. If there is any hint that this might be a substitute for existing sources of funding, we are doomed to failure. I suspect that for a time we are doomed to failure anyway, or the Government are because they have an unfortunate but immaculate sense of timing. They are picking the worst possible moment to introduce a charge on the construction and development industry. I put it in its widest sense. We should realise that this charge usually has to be paid from the landowner’s receipts; but so did Section 106. One must also remember that this will catch a lot of development where there is no change of ownership and in very many instances there will be no enhanced value, perhaps apart from the cost of construction. I am sorry if this seems like a Second Reading speech; it is a Second Reading speech, but it is absolutely vital that we should get the context of what is happening correct. I am immensely sorry that this provision is here at this time. That is not to say that there might not have been a time when this would have been more favourably received. We continually load fiscal charges on to desirable developments. There is only one long-term effect as a result, which is that the price of everything rises. It will be paid by people improving their houses, if the improvement requires planning permission. It will be paid as part of the cost of site value and the construction cost of a house and, ultimately, it will be paid by house purchasers. It is another twist of the inflationary screw. It may be said that this is justifiable, but I remind the Minister of the time when the development land tax was proposed. That was a deliberate attempt to tax enhanced value. What happened was quite simple; all development land disappeared from the market for as long as that proposal was around. It remained off the market until the price had risen to the extent that the receipt to the landowner, plus the tax, was sufficient that he was not losing money as a result of the introduction of the charge. We have picked another one of those glorious moments when that reaction will be significant. The only thing I want to add is that I doubt whether any local authority will want to consider a charge of this nature at present. I only have very limited intelligence—by which I mean information coming to me—but we ought to appreciate that on planning committee agendas, applications for new build have virtually disappeared. There are still applications around for housing extensions and that sort of thing, but very few applications are coming forward for anyone to do anything. I strongly suspect that it is much more important to get the development process moving forward again than it is to introduce this charge.