Growth and Infrastructure Bill

Lord Whitty Excerpts

Tuesday 8th January 2013 Lords Chamber

[Lord Whitty]

My Lords, as has been said already by several noble Lords, most notably the noble Lord, Lord Tope, and the noble Baroness, Lady Eaton, the Bill seems to be based on some fairly substantial fallacies, the first of which is that the principal reason for the lack of investment in infrastructure and housing in this country is the planning system. The second and related fallacy is that the planning performance of local authorities would somehow be seriously improved if there was an ever-present threat of central government taking it over. I would dispute both fallacies. There is probably a third fallacy in the Bill, relating specifically to housing—namely, that we would get more affordable housing if the one mechanism that has delivered more affordable housing in recent years was diluted and reversed.

The failure of investment in this country is due to much wider things than are tackled in the Bill. A serious lack of confidence on the part of private sector investment in the medium-term prospects of our economy is the central reason why we are not getting enough investment. That goes back to the Government’s economic strategy. There is a parallel lack of confidence in the regulatory framework within which those investment decisions are taken, sector by sector, to do with retaining a degree of stability and not being beset by uncertainty and indecision in government. There are different examples in housing and in renewable energy—indeed, energy of any sort—where investment has been seriously held up by that uncertainty.

Moreover, the Government themselves are not investing. A disproportionate amount of the cuts in public expenditure—whatever the arguments about the total—have fallen on the capital programme, both in direct investment by state institutions and in partnership with the private sector. As a result, there have been serious cutbacks not only in social housing, which I shall come to, but in schools, road building, flood defences and other forms of local authority investment. There is more on the cards.

When the Government themselves are not investing and are not encouraging partnership with the private sector in those areas, that discourages investment in general. In the face of that, there has been no serious intellectual development, let alone implementation, of novel forms of mobilisation of private sector money in infrastructure development. That is true even in areas where an economic return is pretty well guaranteed, such as housing or various parts of energy and transport, let alone where there is no direct income stream against it and where the private sector, in conjunction with the Treasury, ought to be working hard to find motivation for private finance, for example, into flood defences or road building.

There was a slight hint of that in the coalition announcement this week, but I hope that the Government can go a bit further. There is a serious need for a new approach and new thinking on infrastructure investment by the Government. None of that is in the Bill. Nor, for example, is there any reflection of what I understood to be the Chancellor’s serious intention to get together with private institutional funders to put their money into infrastructure investment. We heard a lot a few months ago about his discussion with pension funds, for example. What has that come to? It does not appear that the Government have been able to motivate serious investment in our infrastructure from the private sector—and that in an era when corporate coffers are quite full and large sums of money are resting with institutional investors.

That is a failure not of the planning system, local government or the business rate system; it is a failure of central government. As my noble friend Lord Adonis said, the Bill is also odd in that it is the antithesis of what we thought was the Government’s intention in relation to local government; it is the antithesis of the ethos of localism. I am not saying that there are not some measures in the Bill that may be a bit of help. It is a hotchpotch of a Bill and not everything about it is wrong, but the overall impact will be nugatory in raising the overall level of investment.

I shall say a quick word about housing, and I declare my interest as chair of Housing Voice, which campaigns for affordable housing. There is a crisis in all aspects of the housing market but, particularly, as the noble Baroness admitted during Question Time today, in affordable housing in all sectors—whether social housing, mortgages and owner-occupied housing or in the private rented sector.

One of the few measures that has delivered more affordable housing has been the intervention of Section 106 in planning agreements with developers. The Bill implies that many such agreements can be made null and void. There is no need for that. As has been said, local authorities can already renegotiate their Section 106 arrangements in relation to housing. The provisions that suggest that the Government will lean on local authorities to dilute them further moves in the wrong direction, and I will strongly oppose that part of the Bill. However, that is only one element of the apparent centralisation of the Bill. The first four clauses introduce a greater degree of centralisation than we have yet seen, which totally contradicts the Localism Act, which we have just passed. So does Clause 24.

I slightly part company with my noble friend Lord Rooker on this. I do not think that local authorities have performed their planning function absolutely ideally. I think that aspects could be reformed and that some degree of change in the structure of local authorities would facilitate that. However, I do not believe that the man in Whitehall or, indeed, the man in Bristol—I slightly object to the disparaging reference to Bristol by the noble Baroness—knows best. We need clearer national direction, but the logic of the Localism Act, as I understood it, was that local authorities would be given clearer responsibility for meeting the housing needs and delivering economic development in their area, in conjunction with neighbouring authorities, and that they would be given commensurate powers to get on with the job. If local authorities generally were put in that position, we would see serious investment in commercial and economic enterprise and in housing of all sorts.

Unfortunately, the Government do not trust local authorities to do that. They are not prepared to give them the powers; they are not even prepared to give them the responsibility without the powers in any clear way. The Bill, and certain other Bills that have been passed recently, clearly allow central government to override and take over those powers from local authorities. That is a step in the wrong direction. The Government are becoming increasingly Napoleonic in their ambitions in this area and, unfortunately, do not quite have in their strategic approach the generalship that Napoleon demonstrated.

I have three other quick points; I am running out of time. The noble Baroness, Lady Parminter, rightly said that the Government need to be aware of the environmental issues. I do not entirely go along with some of the environmental and countryside bodies that objected to the national planning framework in its initial form, but the Government need to take seriously their concerns about sustainability in the Bill. I am prepared to support the delay in the review of the business rate, provided that the Government assure us that the time taken by that review will allow us to look at the full effect of business rates and how they are implemented on investment decisions across the board—in other words, that it is not simply a delay but a reassessment.

Finally, on employee shareholdings, as I would expect, my noble friend Lord Monks has made the case, as have others. Some time ago, in Question Time, I asked the noble Lord, Lord Marland, how this would work: are you prepared to sell a few rights for a few shares, more important rights for more shares, or whether you have a job lot and all shares are bought out at a given time? This ought not to be a trading issue. People ought not to be asked to give up their rights for shares. That is completely different from all previous forms of employee share-ownership and undermines all the good work in that area and in the mutual area.

The lesson today, in the context of the Bill, is that that procedure—that way of getting Beecroft in by the back door—has absolutely nothing to do with growth or investment. Clause 27 should be deleted from the Bill as rapidly as possible.