Growth and Infrastructure Bill

Dominic Raab Excerpts

Monday 5th November 2012 Commons Chamber

[Mr Dominic Raab (Esher and Walton) (Con)]

It is a pleasure to follow my hon. Friend the Member for Waveney (Peter Aldous); like him, I welcome the overall thrust of the Bill.

Although the economy has been making significant progress in difficult conditions, we have heard little about the wider economic backdrop to the measures in the Bill, so I shall touch on that at the start of my remarks. We need to build on that incremental progress, and although it goes without saying that Members on this side of the House are not for a second complacent, we ought not to stifle or muffle the fact that we are back to growth, despite the debt hangover inherited from the previous Government. Jobs have been created, net, in each of the past six months, pushing unemployment below 8%. Inflation is half its high of last year, and we are net exporters of cars for the first time since 1976. Although the eurozone market remains stagnant, UK exports to China have doubled since 2010.

The previous Government’s irresponsible approach to spending and their blunt over-regulation got us into this mess, and as the current Government recognise, it will take the dynamism of the private sector to get us out. The Bill is based on that broad template, and to that extent I welcome it. We must not, however, lose sight for a second of the context and scale of the challenges that we face, and the Bill needs to be viewed in that broader light. Those challenges include what I shall refer to as a triangular crossfire of Government and household debt, both of which are around 80% of GDP, not to mention UK banking liability—the third prong in that crossfire—at more than 400% of GDP. This last issue is one of the major factors hurting the construction sector, which the Bill aims, in part, to try to revive.

Banking liabilities are one reason the coalition’s banking reforms are so vital: we must ensure that the taxpayer never again has to bail out the banks. It is also vital to stick to our plans for Government debt to be falling by the end of this Parliament, and if further measures are required, we must show the resolve to find savings in spending, not hike up taxes that stifle growth.

As this country pays down its debts, we must also repair the frayed fabric of our underlying economic competitiveness. That is where our long-term prosperity lies, and the Bill targets that key priority area. We also, of course, require short-term dynamism to get us out of the rut we are in. Under the previous Government, Britain fell from fourth to 13th in the World Economic Forum international competitiveness rankings. It is good to see it climb back to eighth place, but that is not enough. We must be back at the top if we are to deliver the economic cutting edge to thrive in an intensely competitive global century, create opportunities for our youngsters, and deliver the revenue to pay for our precious public services.

A lot has been made of the regulatory burden facing business in this country, and the Bill is in part a response to that problem, albeit—in fairness—just one element of it. A recent report by the World Bank and International Finance Corporation, “Doing Business 2013”, provides a broader context for the regulatory challenges facing small and medium-sized enterprises that do business in Britain. It compares 185 economies and ranks Britain seventh for ease of doing business.

On the face of it, the report contains some real positives. Believe it or not, Britain comes top for credit facilities—not to be confused with the actual availability of credit funds. It also scores highly for export regulation, easing international trade. On the other hand, it still takes 13 days to set up a business in Britain, which has not improved since 2009. That contrasts with countries such as New Zealand, Australia, Singapore and Canada, where a business can be set up in between one and five days. That is the global reality outside the Westminster village. The World Bank IFC survey also found that it had become harder to secure construction permits in this country—an issue the Bill is designed to address.

That is the broader context. The Bill is rightly not presented as a panacea or silver bullet for those broad and deep issues, but there is some good stuff in it. The drive to streamline counter-productive bureaucracy is clearly welcome—many hon. Members have spoken of that. I want an increase in affordable housing. The shortfall has created acute hardship for constituents throughout the country, but certainly in my part of the world, where house prices are very high. Notwithstanding that important priority, it must be right not to let unviable central targets stymie wider projects from proceeding if they have substantial economic merit.

We heard a lot of thunder and lightning from Opposition Members on the plans in the Bill to offer new employees the option of shares in their company in return for more flexible contracts, but the measure is an innovative attempt to grapple with the over-zealous employment regulation that was pushed through in recent years. That regulation has discouraged firms from hiring people who are, we should remember, left to languish among the ranks of the unemployed, especially the 20% youth unemployed, which was the level left by the previous Government despite 13 years of spending splurge.

We should remember that the plans build on important proposals in the Enterprise and Regulatory Reform Bill, which is in the other place and will return to the House shortly. They are designed to address the broader concerns of business red tape, including measures to filter spurious or vexatious employment tribunal claims, which I welcome.

As the World Bank IFC report testifies, far too much overweening regulation will still afflict small and medium-sized enterprises. Focusing further on that is likely to yield greater economic dividends for business and jobs growth than diluting key safeguards in the planning process—a concern that I hope parliamentary scrutiny will address. As hon. Members on both sides of the House have said, clauses 1 and 2 are essentially centralising measures that will allow developers, or give them scope, to sidestep local authorities that are deemed to be poor performers. We need to do everything possible to drive economic growth, but, given the wider context and the debt problems to which I have referred, I suspect the planning process is only a small part of the problem in the construction sector. The clauses pose a risk to local democracy. The Bill states that the criteria for designating councils as poor performers will be published by the Secretary of State. In the absence of those published criteria, what assurance is there that the legitimate views of communities—represented faithfully by their locally elected representatives—will not be trumped by developers in some form of collusion with Whitehall?

Clauses 12 and 13 seek to alter the delicate balance between community interests in registering village greens and the property rights of landowners. For all the furore and froth generated by the measures, it is a finely balanced area of policy on a niche matter. What evidence does the Minister have to hand on the scale of the vexatious applications to register land as village greens? What is the size of the problem that the Bill is designed to filter out? Has an economic value been placed on it? Has he considered alternative proposals? I note that the Open Spaces Society proposes changes to the guidelines rather than primary legislation. Those proposals would help to streamline the current procedure, scrutinise applications more strictly and encourage mediation between developers and applicants. What consideration has been given to those milder and more modest proposals?

More generally, I am concerned that the Government’s wider planning proposals to expedite home extensions and related applications risk creating tension among neighbours as well as eroding local democracy, again with only minor countervailing economic benefits. Perhaps the Minister can reassure me that the benefits will be larger than they appear to be in the Bill.

Other hon. Members have described in detail clause 22, which postpones the revaluation of business rates. I understand the rationale for the measure and I listened carefully to the Secretary of State, but Ministers will be aware that the British Chambers of Commerce has expressed concern that it will hurt rather than help the many businesses that pay rates on the values established at the peak of the market in 2008. When I talk to local businesses in Elmbridge, the point they make to me almost uniformly—in goose step, as it were—is that they pay more and more after the creeping increases in business rates over the years, but get less and less back, because of the central funding formula, which is set in Whitehall. I pose the question: if we really want to help the retail sector, why not look at making savings in spending to cut business rates? I have looked at how we might do that in a number of pamphlets I have written, because in truth that would be the shot in the arm for small businesses and the high street, promoting business expansion as well as jobs growth.

The Government are rightly in the business of introducing targeted measures to build on the positive signs we are starting to see in the economy. There are a range of welcome measures in the Bill, along with some creases that we will need to iron out. I hope the Minister will engage closely and seriously to ensure that we focus our efforts on the right targets as the Bill proceeds through the House.