Growth and Infrastructure Bill

Lord Smith of Leigh Excerpts

Tuesday 8th January 2013 Lords Chamber

[Lord Smith of Leigh]

My Lords, I should have liked to welcome a Bill that encourages growth and improves infrastructure. The country certainly needs it. However, this Bill is largely a missed opportunity. Before I start, I need to declare my interests as well. I am leader of Wigan Council and chairman of the Greater Manchester Combined Authority. I remind London-based colleagues that theirs is not the only conurbation with a form of governance; we have one in Manchester. I am also a vice-president of the LGA.

Like other Members, I think that the evidence that the economy is being held up by the planning system is just not there. The Minister has not really added to our understanding of that. We are not holding back growth with an inadequate planning system. In fact, in housing, as the Minister herself said, there have been a large number of approvals in recent years. People have said that there are over 400,000 outstanding planning applications, so clearly there is an opportunity in the system to build homes if people want to take it. However, they are not being taken up, largely because of funding issues and the weaknesses in the housing market. In most parts of the country, economic uncertainties and the changes to mortgage funding have certainly fundamentally altered the demand for housing. Developers are uncertain and, assuming that they can find funding, they are unlikely to start building new homes which are likely to go unsold.

Contrasting with the Government’s view on the need to stimulate growth is the recent report, which many Members have already mentioned, of the noble Lord, Lord Heseltine, No Stone Unturned. He believes in a localist approach, not the centrist approach which the Bill seems to have. He wants to identify public funding and allocate it to infrastructure projects, making sure that local and central government have arrangements that can achieve growth.

I should like to make some more detailed comments on Clauses 1, 6 and 25. The most worrying aspect of Clause 1 is its undermining of local accountability. Any major development will have a significant impact on local communities. Local authorities are best able to understand the impact of this effect and to make sure that it can be considered—and where possible they can achieve some degree of mitigation. No inspector, wherever they come from, will have that level of understanding of a local area. They will come in and go out, but the local planning authority has to live with the consequences of its decisions in the future. We are, in fact, undermining localism.

Effectively, the clause intends to create a blacklist of planning authorities that cannot be trusted with major applications. We need to understand more about how this will work. It is a significant change to local authorities. While we might not want to see criteria put on the face of the Bill, we need to understand more about which criteria will be used and how they will be applied. The Government have mentioned the words “timeless” and “quality”, but how will that be judged—on a one-yearly, two-yearly or five-yearly basis? Clearly, if an authority has a very complex, major application in one particular year, it may distort the results, which could result in their being put on the blacklist. I am also intrigued to know how, if an authority has got on such a blacklist, it can get off it. How can it get off a blacklist if it is not dealing with major planning applications? How can it prove that it has now reformed itself and can deal with it? That is an important issue.

The Government also have a blind faith in the Planning Inspectorate’s ability to do the job better. It certainly does not seem to have the capacity to do it at the moment. In my experience of it dealing with planning decisions, it is not very timely, it is very expensive, and it does not always come to the right decision. I could quote many examples of that and I am sure that noble Lords could also do the same.

Under Clause 6, local authorities may seek Section 106 agreements so that they are able, when they approve major applications, to get the developer to attempt to mitigate some of the impacts on local communities. Affordable housing is the most important part of these obligations. It enables local authorities to start doing something about what I believe is a very urgent problem and one which was not tackled enough by the previous Government and is not being tackled enough by the present Government. Section 106 agreements were beginning to start to show an increase in that and I would be very concerned if that was not the case.

My authority renegotiates Section 106 agreements if we feel that it is necessary to do so. However, we do it on a case-by-case basis because we recognise that economic circumstances have changed. I feel that Clause 6 might give an opportunity for unscrupulous developers—I am sure that people do not know any of those but there may be one or two around—who will overpromise what they will deliver in order to get a planning permission and then not deliver it by seeking to have it undermined under this clause. The key to this is to determine the economic viability of a particular scheme. It is a very complicated deal. If developers have overpaid for a piece of land, is that not their responsibility? They made that judgment. We seem to be providing them with insurance. They can offer what they want for land and they will somehow get away with it because they will be able to renegotiate a Section 106 agreement. I am concerned that we are saying that if we are to give powers to the Secretary of State, then this will come under the Planning Inspectorate. Determining the economic viability of particular schemes is not the skill of the Planning Inspectorate.

I have tried my best to understand the Government’s objectives in Clause 25 with regard to deferring the revaluation of business rates. In her opening statement, the Minister referred to the need to give certainty to business. However, that is not a neutral act. We provide businesses with this certainty, but in fact we keep the unfairness, which is that businesses that have been badly affected by the economic changes from five years ago will not have revaluation at the moment. This will have a significant impact on certain parts of the economy.

As I began to look at what I would say in today’s debate I became more aware of the amazing feeling in the property sector against this clause. One property company has an online petition to try to stop this clause going through, and many others are complaining against it. Coming from the north, what concerns me, as Members might understand, is the regional differentiation that this will create. The economic performance of this country over the past five years has been different in different parts of the country. If we perpetuate the current level of business rate in the future, then we simply perpetuate that unfairness going forward. Of course, this is in favour of London and the south-east.

It will also impact differently on different sectors of the economy, not all of which have performed well. Much of the concern that I read about is for the retail sector. We have clearly seen today that the impact over Christmas has perhaps not been what the retail trade would have wanted. We have seen the closures of major retail companies over the past few months. Anywhere you go, in all parts of the country, you see in many town centres the blight of boarded-up shops and the consequences of that on shopping in towns.

What will this do if we then keep the high level of business rates for the retail sector for those town centres that need some stimulus? The Government are right that some sectors will benefit from the change, one of which will be caravan parks. With all respect to the Government, I do not feel that our economic future is dependent on a successful caravan park sector. We need to stimulate more important parts of the economy.

I am also concerned that once we stop what has been an agreed five-yearly review of business rates, when it comes to 2017 the government of the day may think, “Oh my goodness, this is going to be more difficult. It’s more turbulent than it would have been some years ago. We’ll put it off again. We don’t want to cause turbulence”. What is my belief about that? We have a system of council tax where the properties are valued as though we were back in 1991. No Government have had the courage to revalue council tax valuations since 1991. We are simply frightened of doing it. We are now fossilising the business rates as though we are back in 2012.

Following the inspiration of the noble Baroness, Lady Wheatcroft, I also thought about a song. Looking around the House, I see that noble Lords are mainly of my generation. Do noble Lords remember from their youth the song “The Grand Coulee Dam”? When I was a lad I did not understand that. Who would write a song about a dam? However, when I grew up I understood the importance of the “Grand Coulee Dam” as part of Roosevelt’s New Deal programme and the impact that it had on the north-west of America both in the short term and in the long term, providing the power that stimulated Boeing and other companies to provide all those bombers that were needed during the Second World War.

I would like to think, but I do not believe, that this Bill will provide such a stimulation for a piece of infrastructure in the north-west of England that would create jobs both in the short term and in the long term. However, I am an optimist, and I hope that we can improve the Bill so that it lives up to its name.